Successful core digital government services
drive solid same state growth;Company declares regular quarterly
dividend of 8 cents per share
NIC Inc. (NASDAQ: EGOV), the dominant provider of digital
government services, today announced net income of $12.8 million
and earnings per share of 19 cents on record total revenues of
$85.3 million for the three months ended June 30, 2017. In the
second quarter of 2016, the Company reported net income of $13.1
million and earnings per share of 20 cents on total revenues of
$80.8 million.
Quarterly portal revenues were a record $79.4 million, a 5
percent increase over the second quarter of 2016. On a same-state
basis, portal revenues were $77.6 million in the current quarter, a
7 percent increase over the second quarter of 2016. Same-state,
transaction-based revenues from Interactive Government Services
(IGS) rose 12 percent over the second quarter of 2016, due
primarily to higher volumes from a variety of services including
motor vehicle inspections and registrations and business filings,
among others. Same-state, transaction-based revenues from Driver
History Records (DHR) were up 1 percent. Same-state portal software
development and services revenues decreased 22 percent, due to the
timing of project-based, time and material initiatives across
several portals.
Second quarter 2017 revenues from the Company’s newest portal in
Louisiana totaled $1.7 million, compared to $0.3 million in the
prior year quarter during the pilot phase of the contract. In the
prior year quarter, revenues from the legacy Tennessee portal
contract totaled $2.0 million, while revenues from the legacy Iowa
portal contract totaled $0.5 million. As previously announced, the
Company’s contract with the state of Tennessee expired on March 31,
2017, and the Company’s contract with the state of Iowa expired on
November 30, 2016.
Software & services revenues were $6.0 million in the
current quarter, up 12 percent from the second quarter of 2016,
driven by an increase in revenues from the delivery of the Library
of Congress Copyright Royalty Board electronic filing and case
management system and from an increase in transactional revenues
from the federal Pre-employment Screening Program.
NIC’s operating income margin was 23 percent for the current
quarter, down from 25 percent in the prior year quarter. This
decrease reflects higher development costs for the new enterprise
licensing and permitting platform to be used for the state of
Illinois and other NIC partner states, a decrease in profit
contribution from the legacy Tennessee portal contract, and higher
selling & administrative expenses due mainly to
personnel-related costs and costs to support and enhance
corporate-wide information technology, security and portal
operations, including development of the citizen-centric Gov2Go
enterprise platform.
“I was pleased to see continued solid growth of our core
business during the second quarter,” said Harry Herington, NIC
Chief Executive Officer and Chairman of the Board.
“Transaction-based services are the foundation of our business, and
every quarter I am impressed with the new services our teams launch
on behalf of our government partners.”
Declaration of Quarterly Dividend
On July 31, 2017, NIC’s Board of Directors declared a regular
quarterly cash dividend of 8 cents per share to be paid on
September 20, 2017 to stockholders of record as of the close of
business on September 6, 2017. The dividend is expected to total
approximately $5.4 million and will be paid out of NIC’s available
cash.
Operational Highlights
During the quarter, the Company signed a contract with the state
of Illinois to develop an enterprise licensing and permitting
platform. The agreement includes a six-year base contract, with
four, one-year renewal options the state can exercise to extend the
contract through July 2027.
In addition, several NIC subsidiaries received contract
extensions during the second quarter of 2017. The Company’s
subsidiaries, Rhode Island Interactive, LLC, and New Mexico
Interactive, LLC, received one-year contract extensions from the
state of Rhode Island and New Mexico, respectively, taking both
contracts through June 2018. Also, the Federal Motor Carrier Safety
Administration exercised a one-year extension with the Company,
taking the contract to manage the Pre-Employment Screening Program
through August 2018. In addition, the state of Pennsylvania awarded
NIC’s subsidiary, Pennsylvania Interactive, LLC, a two-year
contract extension taking the agreement through November 2019.
Second Quarter Earnings Call and Webcast Details
On the August 2, 2017 call, the Company will discuss its 2017
second quarter financial and operational results, and answer
questions from the investment community. The call may also include
discussion of Company developments, and forward-looking and other
material information about business and financial matters.
Dial-In Information
Wednesday, August 2, 2017
4:30 p.m. (EDT)
Call bridge: 866-548-4713 (U.S. callers) or 323-794-2093
(international callers) Conference ID: 7605357 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
https://www.egov.com/investor-relations.
A replay of the Webcast will be available by visiting
https://www.egov.com/investor-relations.
About NIC
Founded in 1992, NIC Inc. (NASDAQ: EGOV) is celebrating 25 years
as the nation’s premier provider of innovative digital government
solutions and secure payment processing, which help make government
interactions more accessible for everyone through technology. The
family of NIC companies has developed a library of more than 13,000
digital government services for more than 5,500 federal, state, and
local government agencies. Among these solutions is the
ground-breaking digital government personal assistant, Gov2Go,
delivering citizens personalized reminders and a single access
point for government interactions. More information is available at
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,
statements relating to possible future dividends, 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 and local 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 web site at www.sec.gov. Any
forward-looking statements made in this release speak only as of
the date of this release. Except as required by applicable law, 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 Six months
ended June 30, June 30, 2017
2016 2017
2016 Revenues: Portal revenues $ 79,374 $ 75,513 $
156,572 $ 148,710 Software & services revenues 5,952
5,297 11,931 10,490
Total revenues 85,326 80,810
168,503 159,200 Operating expenses:
Cost of portal revenues, exclusive of depreciation &
amortization 49,009 46,123 96,041 89,738 Cost of software &
services revenues, exclusive of depreciation & amortization
1,779 1,445 3,542 2,858 Selling & administrative 13,131 11,165
24,791 22,507 Depreciation & amortization 1,688
1,736 3,301 3,400 Total
operating expenses 65,607 60,469
127,675 118,503 Operating income before income
taxes 19,719 20,341 40,828 40,697 Income tax provision 6,950
7,280 14,074 14,742
Net income $ 12,769 $ 13,061 $ 26,754 $
25,955 Basic net income per share $ 0.19 $
0.20 $ 0.40 $ 0.39 Diluted net income per
share $ 0.19 $ 0.20 $ 0.40 $ 0.39
Weighted average shares outstanding: Basic 66,248
65,953 66,147 65,846
Diluted 66,248 65,967
66,147 65,859 Key Financial Metrics:
Revenue growth - outsourced portals 5 % 6 % 5 % 9 % Same state
revenue growth - outsourced portals 7 % 6 % 6 % 9 % Recurring
portal revenue as a % of total portal revenues 97 % 96 % 97 % 96 %
Gross profit % - outsourced portals 38 % 39 % 39 % 40 % Revenue
growth - software & services 12 % 11 % 14 % 14 % Gross profit %
- software & services 70 % 73 % 70 % 73 % Selling &
administrative expenses as a % of total revenues 15 % 14 % 15 % 14
% Operating income as a % of total revenue 23 % 25 % 24 % 26 %
Portal Revenue Analysis: IGS transaction-based $ 50,217 $
45,276 $ 96,142 $ 87,209 DHR transaction-based 25,689 25,830 53,858
52,956 Portal software development 2,193 3,132 4,022 5,995 Portal
management 1,275 1,275 2,550
2,550 Total portal revenues $ 79,374 $
75,513 $ 156,572 $ 148,710
NIC
INC. CONSOLIDATED BALANCE SHEETS (UNAUDITED)
Thousands except par value amount
June 30, 2017 December 31, 2016 ASSETS Current
assets: Cash $ 135,386 $ 127,009 Trade accounts receivable, net
79,349 82,722 Prepaid expenses & other current assets
12,382 15,033 Total current assets 227,117 224,764 Property
and equipment, net 9,653 9,726 Intangible assets, net 4,484 3,588
Deferred income taxes, net 1,511 2,307 Other assets 1,984
477 Total assets $ 244,749 $ 240,862
LIABILITIES
AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable
$ 58,717 $ 73,252 Accrued expenses 22,207 23,395 Other current
liabilities 3,794 3,150 Total current liabilities
84,718 99,797 Other long-term liabilities 8,172
7,162 Total liabilities 92,890 106,959
Commitments and contingencies - - Stockholders' equity:
Common stock, $0.0001 par, 200,000 shares authorized, 66,265 and
65,982 shares issued and outstanding 7 7 Additional paid-in capital
108,996 106,669 Retained earnings 42,856 27,227 Total
stockholders' equity 151,859 133,903 Total
liabilities and stockholders' equity $ 244,749 $ 240,862
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, 2017
(previously reported) 65,982 $ 7 $ 106,669 $ 27,227 $ 133,903
Cumulative effect of adoption of new accounting standard -
- 409 (409 ) -
Balance, January 1, 2017 (as adjusted) 65,982 7 107,078
26,818 133,903 Net income - - - 26,754 26,754 Restricted stock
vestings 319 - 107 - 107 Dividends declared - - - (10,692 ) (10,692
) Dividend equivalents on performance-based restricted stock awards
- - - (55 ) (55 ) Dividend equivalents cancelled upon forfeiture of
- performance-based restricted stock awards - - - 31 31 Shares
issuable in lieu of dividend payments on unvested performance-based
restricted stock awards - - (83 ) - (83 ) Shares surrendered and
cancelled upon vesting of restricted stock to satisfy tax
withholdings (123 ) - (2,614 ) - (2,614 ) Stock-based compensation
- - 3,178 - 3,178 Issuance of common stock under employee stock
purchase plan 87 - 1,330 -
1,330
Balance, June 30, 2017 66,265
$ 7 $ 108,996 $ 42,856 $ 151,859
NIC INC.CONSOLIDATED STATEMENTS OF CASH
FLOWS(UNAUDITED)thousands Six
months ended June 30, 2016 2017
(as adjusted) Cash flows from operating activities: Net
income $ 26,754 $ 25,955 Adjustments to reconcile net income to net
cash provided by operating activities: Provision for losses
(recoveries) on accounts receivable 379 (23 ) Depreciation &
amortization 3,301 3,400 Stock-based compensation expense 3,178
3,005 Deferred income taxes 796 51 Excess tax benefits from
stock-based compensation - 427 (Gain) loss on disposal of property
and equipment 39 (4 ) Changes in operating assets and liabilities:
Decrease in trade accounts receivable, net 2,994 2,941 (Increase)
decrease in prepaid expenses & other current assets 2,651
(2,168 ) (Increase) in other assets (1,507 ) (26 ) Increase
(decrease) in accounts payable (14,535 ) 1,599 (Decrease) in
accrued expenses (1,271 ) (1,515 ) Increase in other current
liabilities 644 169 Increase in other long-term liabilities
1,010 746 Net cash provided by operating
activities 24,433 34,557 Cash
flows from investing activities: Purchases of property and
equipment (2,395 ) (2,748 ) Proceeds from sale of property and
equipment 7 6 Capitalized internal use software development costs
(1,692 ) (1,142 ) Net cash used in investing
activities (4,080 ) (3,884 ) Cash flows from
financing activities: Cash dividends on common stock (10,692 ) -
Proceeds from employee common stock purchases 1,330 1,114 Tax
withholdings related to stock-based compensation awards
(2,614 ) (2,073 ) Net cash used in financing activities
(11,976 ) (959 ) Net increase in cash 8,377
29,714 Cash, beginning of period 127,009
98,388 Cash, end of period $ 135,386 $ 128,102
Other cash flow information: Non-cash investing activities:
Capital expenditures accrued but not yet paid $ 83 $ 27 Cash
payments: Income taxes paid $ 12,405 $ 13,941 Cash dividends on
common stock previously restricted for payment of dividend $ - $
36,456
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version on businesswire.com: http://www.businesswire.com/news/home/20170802005031/en/
NIC Inc.Angela Davied, 913-754-7054adavied@egov.com
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