2016 guidance reflects continued strong organic
growth of core business
NIC Inc. (NASDAQ: EGOV), the dominant provider of eGovernment
services, today announced net income of $9.0 million and earnings
per share of 13 cents on total revenues of $71.2 million for the
three months ended December 31, 2015. In the fourth quarter of
2014, the Company reported net income of $8.3 million and earnings
per share of 12 cents on total revenues of $66.0 million.
Fourth Quarter 2015 Performance
Fourth quarter 2015 portal revenues were $66.4 million, a 7
percent increase over the fourth quarter of 2014. On a same state
basis, portal revenues increased 8 percent over the prior year
quarter. Revenues from same state Interactive Government Services
(IGS) increased 11 percent during the current quarter due to a
variety of services, including vehicle registrations, property
taxes, and professional licensing. Same state transaction-based
revenues from Driver History Record (DHR) services rose 5 percent
over the fourth quarter of 2014 due primarily to a DHR monitoring
service in one state, which became effective in the second quarter
of 2015, and a price increase in another state, which became
effective in the first quarter of 2015. Same state software
development revenues decreased 9 percent, as the Company cycled
against a stronger quarter of project-based, time and materials
revenues in the prior year quarter.
Software & services revenues were $4.7 million, up 22
percent from the fourth quarter of 2014, driven by an increase in
revenues from the federal Pre-employment Screening Program and a
new payment processing service for the City of Portland.
NIC’s operating income increased 9 percent to $14.1 million for
the current quarter, while NIC’s operating income margin was 20
percent in both the current and prior year quarters.
The Company’s effective tax rate in the current quarter was 36
percent, and includes a favorable benefit related to the full-year
effect of the federal research & development tax credit for the
2015 tax year. Legislation making the tax credit permanent was
signed into law during the fourth quarter of 2015. The tax rate in
the prior year quarter was also 36 percent.
Operational Highlights
During the fourth quarter of 2015, the State of Nebraska signed
a new three-year contract with the Company after a competitive
re-bid to continue operating the state’s official web portal and
digital government services. The agreement also includes two,
one-year renewal options the State may exercise to extend the
contract through April 2021.
Also, during the fourth quarter, the State of Hawaii extended
its contract with the Company for an additional three years, taking
the agreement through January 2019. In addition, the State of
Mississippi recently extended its contract with the Company for two
years, taking the agreement through December 2017.
“I am pleased with our fourth quarter 2015 financial results as
once again, our core business produced solid organic growth,” said
Harry Herington, NIC’s Chief Executive Officer and Chairman of the
Board. “In addition, I truly appreciate the confidence the States
of Nebraska, Hawaii, and Mississippi continue to place in NIC.”
Full-Year 2015 Performance
Fiscal year 2015 total revenues rose 7 percent to $292.4
million, and portal revenues grew 7 percent to $273.5 million.
Portal revenue growth in 2015 was driven by new IGS services in
several states, DHR price increases in three states and DHR volume
growth across several states. On a same state basis, portal
revenues were 8 percent higher than in 2014, with same state IGS
transactional revenues up 11 percent for the year, and same state
DHR revenues growing 5 percent. Same state time & materials
revenues relating to portal software development decreased 8
percent for the year.
Software & services revenues for the full year were $18.9
million, up 15 percent from 2014, driven by an increase in revenues
from the federal Pre-employment Screening Program and new payment
processing services.
Operating income increased 7 percent to $67.3 million for the
year. NIC’s operating income margin was 23 percent in both the
current and prior year.
NIC earned 63 cents per share in 2015, up from 59 cents in 2014,
meeting the high end of the Company’s 2015 earnings guidance.
On November 2, 2015, NIC’s Board of Directors declared a special
cash dividend of 55 cents per share, which was paid to stockholders
on January 4, 2016. NIC used a total of $36.5 million of its cash
reserves to pay the special dividend.
“Our 2015 financial results were solid and in line with the
growth we anticipated,” said Steve Kovzan, NIC’s Chief Financial
Officer. “Our business operated exactly as it was designed, as we
launched hundreds of new digital government services that produced
recurring transactional revenues, steady organic revenue growth,
and strong cash flow, of which we were again able to return a
significant portion to stockholders in the form of a special cash
dividend.”
Full-Year 2016 Outlook
For fiscal year 2016, NIC currently expects total revenues of
$303.0-316.0 million, with portal revenues ranging from
$283.5-295.5 million and software & services revenues ranging
from $19.5-20.5 million. The Company also currently expects
earnings per share to range from 64-68 cents. Capital expenditures
are currently expected to range from $7-8 million, and capitalized
internal use software development costs to range from $2-3
million.
“The upper end of our financial guidance reflects consistent
same state revenue growth and gross profit and operating margins
comparable to recent historical averages,” said Steve Kovzan, NIC’s
Chief Financial Officer. “We also currently expect incremental
revenue contributions from the Louisiana portal following the
anticipated completion of the pilot phase in the second half of the
year, pending the state’s approval.”
The Company’s projections do not include revenues or costs from
any unannounced contracts.
Fourth Quarter Earnings Call and Webcast Details
On February 4, 2016, the Company will host a call to discuss its
2015 fourth quarter and year-end financial and operational results
and to answer questions from the investment community. The call may
also include a discussion of Company developments, and
forward-looking and other material information about business and
financial matters.
Dial-In Information
Thursday, February 4, 20164:30 p.m.
(EST)Conference ID: 7245652Call bridge: 888-329-8893 (U.S. callers)
or 719-325-2495 (international callers)
Call leaders: Harry Herington, Chief Executive Officer and
Chairman of the Board Steve Kovzan, Chief Financial Officer Robert
Knapp, Chief Operating Officer
Webcast Information
To sign in and listen: The Webcast system is available at
http://www.egov.com/investor-relations.
A replay of NIC’s fourth quarter earnings call will be available
by visiting
http://www.egov.com/investor-relations.
About NIC
Founded in 1992, NIC Inc. (NASDAQ: EGOV) is the nation's leading
provider of official government websites, online services, and
secure payment processing solutions. The Company's innovative
eGovernment services help make government more accessible to
everyone through technology. The family of NIC companies provides
eGovernment solutions for more than 3,500 federal, state, and local
agencies in the United States. Forbes has named NIC as one of the
“100 Best Small Companies in America” six times, and the Company
has been included four times on the Barron’s 400 Index. Additional
information is available at http://www.egov.com.
Cautionary Statement Regarding Forward-Looking
Information
Any statements included in this release that do not relate to
historical or current facts constitute forward-looking statements.
These statements include estimates, projections, the expected
length of contract terms, statements relating to the Company’s
business plans, objectives and expected operating results, and the
assumptions upon which those statements are based. Forward-looking
statements are based on current expectations and assumptions that
are subject to risks and uncertainties which may cause actual
results to differ materially from the forward-looking statements,
including regional or national business, political, economic,
competitive, social and market conditions, including various
termination rights of the Company and its partners, the ability of
the Company to renew existing contracts, and to sign contracts with
new states and federal government agencies, as well as possible
data security incidents. You should not rely on any forward-looking
statement as a prediction or guarantee about the future. A detailed
discussion of risks and uncertainties that could cause actual
results and events to differ materially from such forward-looking
statements is included in the sections titled “Risk Factors” and
“Caution About Forward-Looking Statements” of the Company’s most
recent Forms 10-K and 10-Q filed with the SEC. These filings are
available at the SEC's website at www.sec.gov. Any forward-looking
statements made in this release speak only as of the date of this
release. We undertake no obligation to update or revise publicly
any forward-looking statements, whether as a result of new
information, future events, or otherwise.
NIC INC.FINANCIAL
SUMMARY(UNAUDITED)Thousands except per share amounts
and percentages Three months ended Twelve
months ended December 31, December 31,
2015 2014 2015
2014 Revenues: Portal revenues $ 66,436
$ 62,149 $ 273,502 $ 255,744 Software & services revenues
4,723 3,869 18,874
16,353 Total revenues 71,159 66,018
292,376 272,097 Operating
expenses: Cost of portal revenues, exclusive of depreciation &
amortization 42,799 39,985 168,166 156,185 Cost of software &
services revenues, exclusive of depreciation & amortization
1,456 1,259 5,432 4,784 Selling & administrative 11,166 9,491
43,098 38,937 Depreciation & amortization 1,673
2,358 8,385 9,177 Total
operating expenses 57,094 53,093
225,081 209,083 Operating income before income
taxes 14,065 12,925 67,295 63,014 Income tax provision 5,081
4,634 25,316 23,956
Net income $ 8,984 $ 8,291 $ 41,979 $
39,058 Basic net income per share $ 0.13 $
0.12 $ 0.63 $ 0.59 Diluted net income per
share $ 0.13 $ 0.12 $ 0.63 $ 0.59
Weighted average shares outstanding: Basic 65,622
65,302 65,555 65,224
Diluted 65,716 65,363
65,640 65,278 Key Financial Metrics:
Revenue growth - outsourced portals 7 % 8 % 7 % 9 % Same state
revenue growth - outsourced portals 8 % 8 % 8 % 8 % Recurring
portal revenue as a % of total portal revenues 96 % 96 % 96 % 95 %
Gross profit % - outsourced portals 36 % 36 % 39 % 39 % Revenue
growth - software & services 22 % 12 % 15 % 16 % Gross profit %
- software & services 69 % 67 % 71 % 71 % Selling &
administrative expenses as a % of total revenues 16 % 14 % 15 % 14
% Operating income as a % of total revenue 20 % 20 % 23 % 23 %
Portal Revenue Analysis: IGS transaction-based $ 38,846 $
34,975 $ 155,164 $ 139,716 DHR transaction-based 23,786 22,565
101,506 95,753 Portal software development 2,529 2,789 11,187
12,205 Portal management 1,275 1,820
5,645 8,070 Total portal revenues $
66,436 $ 62,149 $ 273,502 $ 255,744
NIC INC.CONSOLIDATED BALANCE
SHEETS(UNAUDITED)Thousands except par value
amount December 31,
2015 December 31, 2014 ASSETS Current assets:
Cash $ 98,388 $ 87,983 Cash restricted for payment of dividend
36,456 - Trade accounts receivable, net 80,362 57,468 Prepaid
expenses & other current assets 12,584 11,502
Total current assets 227,790 156,953 Property and equipment, net
9,333 12,247 Intangible assets, net 2,267 2,394 Deferred income
taxes, net 1,421 - Other assets 426 446 Total assets
$ 241,237 $ 172,040
LIABILITIES AND STOCKHOLDERS'
EQUITY Current liabilities: Accounts payable $ 61,133 $ 41,402
Accrued expenses 20,986 19,751 Dividend payable 36,456 - Other
current liabilities 2,597 2,902 Total current
liabilities 121,172 64,055 Deferred income taxes, net - 497
Other long-term liabilities 4,259 3,350 Total
liabilities 125,431 67,902 Commitments and
contingencies - - Stockholders' equity: Common stock,
$0.0001 par, 200,000 shares authorized, 65,637 and 65,303 shares
issued and outstanding 7 7 Additional paid-in capital 100,929
94,690 Retained earnings 14,870 9,441 Total
stockholders' equity 115,806 104,138 Total
liabilities and stockholders' equity $ 241,237 $ 172,040
NIC INC. CONSOLIDATED STATEMENT OF CHANGES IN
STOCKHOLDERS' EQUITY (UNAUDITED) Thousands
Additional Common
Stock Paid-in Shares Amount Capital
Retained Earnings Total Balance, January 1,
2015 65,303 $ 7 $ 94,690 $ 9,441 $ 104,138 Net income - - -
41,979 41,979 Dividends declared - -
-
(36,456 ) (36,456 ) Dividend equivalents on performance-based
restricted stock awards - - - (159 ) (159 ) Dividend equivalents
cancelled upon forfeiture of performance-based restricted stock
awards - - 18 65 83 Restricted stock vestings 365 - 74 - 74 Shares
surrendered and cancelled upon vesting of restricted stock to
satisfy tax withholdings (106 ) - (1,839 ) - (1,839 ) Stock-based
compensation - - 6,441 - 6,441 Tax deductions relating to
stock-based compensation - - 412 - 412 Shares issuable in lieu of
dividend payments on unvested performance-based restricted stock
awards - - 2 - 2 Issuance of common stock under employee stock
purchase plan 75 - 1,131 -
1,131
Balance, December 31, 2015 65,637
$ 7 $ 100,929 $ 14,870 $ 115,806
NIC INC.CASH FLOW
SUMMARY(UNAUDITED)Thousands
Three months ended Twelve months ended
December 31, December 31, 2015
2014 2015
2014 Cash flows from operating activities: Net
income $ 8,984 $ 8,291 $ 41,979 $ 39,058 Adjustments to reconcile
net income to net cash provided by operating activities:
Depreciation & amortization 1,673 2,358 8,385 9,177 Provision
for losses on accounts receivable 217 148 290 414 Stock-based
compensation expense 1,056 1,536 6,441 6,104 Deferred income taxes
(107 ) 2 (3,815 ) (2,461 ) Loss on disposal of property and
equipment 72 28 98 175 Changes in operating assets and liabilities:
(Increase) decrease in trade accounts receivable, net (1,958 )
4,282 (23,184 ) (5,064 ) (Increase) decrease in prepaid expenses
& other current assets (2,858 ) (665 ) 815 1,631 (Increase)
decrease in other assets 7 (94 ) 20 (156 ) Increase (decrease) in
accounts payable 5,898 (77 ) 19,731 2,325 Increase (decrease) in
accrued expenses 242 354 (605 ) (3,449 ) Increase (decrease) in
other current liabilities 127 224 (305 ) 2,628 Increase in other
long-term liabilities 434 299
908 901 Net cash provided by operating
activities 13,787 16,686 50,758
51,283 Cash flows from investing activities:
Purchases of property and equipment (1,196 ) (1,393 ) (4,453 )
(5,381 ) Proceeds from sale of property and equipment 1 - 4 -
Capitalized internal use software development costs (368 )
(408 ) (992 ) (1,479 ) Net cash used in
investing activities (1,563 ) (1,801 ) (5,441
) (6,860 ) Cash flows from financing activities: Cash
dividends on common stock - (32,977 ) - (32,977 ) Cash restricted
for payment of dividend (36,456 ) - (36,456 ) - Proceeds from
employee common stock purchases - - 1,131 1,107 Tax deductions
related to stock-based compensation 177 120
413 1,185 Net cash used in
financing activities (36,279 ) (32,857 )
(34,912 ) (30,685 ) Net increase (decrease) in cash (24,055
) (17,972 ) 10,405 13,738 Cash, beginning of period 122,443
105,955 87,983 74,245
Cash, end of period $ 98,388 $ 87,983 $ 98,388
$ 87,983 Other cash flow information: Non-cash
investing activities: Capital expenditures accrued but not yet paid
$ 1 $ 102 $ 1 $ 102 Cash payments: Income taxes paid $ 7,713 $
4,395 $ 27,222 $ 25,059 Cash dividends on common stock previously
restricted for payment of dividend $ - $ - $ - $ 22,982
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160204006033/en/
NIC Inc.Angela Davied, 913-754-7054Director of
Communications& Investor Relationsadavied@egov.com
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