Core digital government services drive strong
same-state portal revenue growth
NIC Inc. (Nasdaq: EGOV), the dominant provider of digital
government services, today announced net income of $17.0 million
and earnings per share of 25 cents on total revenues of $92.5
million for the three months ended June 30, 2018. In the second
quarter of 2017, the Company reported net income of $12.8 million
and earnings per share of 19 cents on total revenues of $85.3
million.
Quarterly portal revenues were $86.6 million, a 9 percent
increase over the second quarter of 2017. On a same-state basis,
portal revenues increased 8 percent over the prior year quarter.
Same-state, transaction-based revenues from Interactive Government
Services (IGS) rose 10 percent over the second quarter of 2017, due
primarily to higher volumes from a variety of services, including
driver’s license renewals, motor vehicle inspections, and motor
vehicle and business registration filings, among others.
Same-state, transaction-based revenues from Driver History Records
(DHR) were up 4 percent due to a price increase in one state and
higher volumes across several states. Same-state portal software
development revenues increased 39 percent, driven primarily by time
& materials projects deployed in various states.
Second quarter 2018 portal revenues included $0.5 million from
Illinois, the Company’s newest partnership.
Driven by strong same-state portal revenue growth, quarterly
operating income increased 14 percent to $22.4 million,
contributing to the increase in the Company’s operating income
margin to 24 percent for the current quarter, from 23 percent in
the prior year quarter.
The Company’s effective tax rate in the current quarter was 24
percent, down from 35 percent in the prior year quarter. The lower
rate was attributable to favorable benefits related to the Tax Cuts
and Jobs Act of 2017.
As previously announced, the Company recently purchased a suite
of prescription drug monitoring program (PDMP) software assets
developed by Leap Orbit, a Maryland-based, privately held company.
The solution will be branded by NIC as RxGov, and leverages the
Company’s expertise with PDMP solutions along with the
industry-leading features of the acquired software to deliver a
best-in-class solution to the marketplace.
“I was pleased with our strong financial results this quarter
and I am excited about how we are strengthening our technology
platforms and executing our healthcare vertical strategy,” said
Harry Herington, NIC’s Chief Executive Officer and Chairman of the
Board. “We look forward to delivering a completely re-imagined,
industry-leading prescription drug monitoring solution, as well as
choice and flexibility to this market.”
On July 30, 2018, the Company’s Board of Directors declared a
regular quarterly cash dividend of 8 cents per share, payable to
stockholders of record as of September 5, 2018. The dividend, which
is expected to total approximately $5.4 million based on the
current number of shares outstanding, will be paid on September 19,
2018, out of the Company’s available cash.
Operational Highlights
During the second quarter of 2018, several of the Company’s
contracts were extended. The State of Wisconsin extended its
contract with the Company’s Wisconsin Interactive, LLC subsidiary
for three years, taking the agreement through May 2021. The states
of Arkansas, Rhode Island, Hawaii, Nebraska, and Idaho extended
their contracts with the Company for one year, and the state of
Maine extended its contract with NIC subsidiary, Maine Information
Network through December 31, 2018. In addition, the Library of
Congress agreed to extend its contract with the Company to provide
a second year of maintenance for the e-filing solution developed
for the Copyright Royalty Board.
Second Quarter Earnings Call and Webcast Details
On the August 1, 2018 call, the Company will discuss its 2018
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 1, 2018 4:30 p.m. (EDT) Call
bridge: 888-394-8218 (U.S. callers) or 323-794-2588 (international
callers) Webcast slides:
https://streaming.webcasts.com/starthere.jsp?ei=1199775&tp_key=a873485471
Conference ID: 519774 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 for audio and slide presentation: 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
NIC Inc. (Nasdaq: EGOV) is 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 personal assistant for
government, 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 made in this release that do not relate to
historical or current facts constitute forward-looking statements.
These statements include statements regarding the Company’s
potential financial performance for the 2018 fiscal year,
estimates, projections, the expected length of contract terms,
statements relating to the Company’s business plans, objectives and
expected operating results, statements relating to potential new
contracts or renewals, statements relating to the Company’s
expected effective tax rate and the potential effect of tax law
changes, statements relating to possible future dividends and share
repurchases, and other possible future events, including potential
acquisitions, 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. These risks include 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 –in whole or in part, and to sign contracts with
new federal, state, and local government agencies, the Company’s
ability to identify and acquire suitable acquisition candidates and
to successfully integrate any acquired businesses, risks related to
the outcome of the Texas procurement process, as well as possible
data security incidents. Any statements regarding our expected
effective tax rate for 2018 reflect provisional amounts subject to
adjustment during the one-year measurement period permitted under
applicable law. 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
“Cautions 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 included in this release speak only as of the date of
this release. Except as may be 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. CONSOLIDATED STATEMENTS OF INCOME AND
FINANCIAL SUMMARY (In thousands, except per share amounts
and percentages) (Unaudited)
Three Months Ended
June 30,
Six Months Ended
June 30,
Revenues:
2018 2017 2018
2017 Portal revenues $ 86,555 $ 79,374 $ 167,346 $
156,572 Software & services revenues 5,943 5,952
11,877 11,931 Total revenues 92,498 85,326
179,223 168,503 Operating expenses: Cost of
portal revenues, exclusive of depreciation & amortization
51,711 49,009 100,353 96,041 Cost of software & services
revenues, exclusive of depreciation & amortization 2,235 1,779
4,463 3,542 Selling & administrative 14,003 13,131 27,153
24,791 Depreciation & amortization 2,145 1,688
4,210 3,301 Total operating expenses 70,094
65,607 136,179 127,675 Operating income 22,404
19,719 43,044 40,828 Other income: Interest income 57 —
58 — Income before income taxes 22,461 19,719
43,102 40,828 Income tax provision 5,450 6,950 10,582
14,074 Net income $ 17,011 $ 12,769 $
32,520 $ 26,754 Basic net income per share $
0.25 $ 0.19 $ 0.48 $ 0.40 Diluted net
income per share $ 0.25 $ 0.19 $ 0.48 $ 0.40
Weighted average shares outstanding: Basic 66,541
66,248 66,432 66,147 Diluted 66,561
66,248 66,447 66,147 Key
Financial Metrics: Revenue growth - outsourced portals 9 % 5 % 7 %
5 % Same state revenue growth - outsourced portals 8 % 7 % 8 % 6 %
Recurring portal revenue as a % of total portal revenues 96 % 97 %
97 % 97 % Gross profit % - outsourced portals 40 % 38 % 40 % 39 %
Revenue growth - software & services — % 12 % — % 14 % Gross
profit % - software & services 62 % 70 % 62 % 70 % Selling
& administrative expenses as a % of total revenues 15 % 15 % 15
% 15 % Operating income as a % of total revenue 24 % 23 % 24 % 24 %
Portal Revenue Analysis: IGS $ 55,111 $ 50,217 $ 105,379 $
96,142 DHR 26,645 25,689 53,883 53,858 Portal software development
3,562 2,193 5,609 4,022 Portal management 1,237 1,275
2,475 2,550 Total portal revenues $ 86,555 $
79,374 $ 167,346 $ 156,572
NIC INC. CONSOLIDATED BALANCE SHEETS (In
thousands, except par value amount) (Unaudited)
June 30,
2018
December 31, 2017 ASSETS Current
assets: Cash $ 172,725 $ 160,777 Trade accounts receivable, net
92,757 103,938 Prepaid expenses & other current assets 13,013
12,843 Total current assets 278,495 277,558 Property and equipment,
net 9,930 10,306 Intangible assets, net 7,460 5,214 Deferred income
taxes, net 53 667 Other assets 1,880 1,986 Total assets $ 297,818 $
295,731
LIABILITIES AND STOCKHOLDERS' EQUITY Current
liabilities: Accounts payable $ 69,460 $ 88,920 Accrued expenses
22,274 26,501 Other current liabilities 3,412 3,673 Total current
liabilities 95,146 119,094 Other long-term liabilities 9,153
8,395 Total liabilities 104,299 127,489 Commitments and
contingencies — — Stockholders' equity: Common stock,
$0.0001 par, 200,000 shares authorized, 66,556 and 66,271 shares
issued and outstanding 7 7 Additional paid-in capital 114,507
111,275 Retained earnings 79,005 56,960 Total stockholders' equity
193,519 168,242 Total liabilities and stockholders' equity $
297,818 $ 295,731
NIC INC. CONSOLIDATED
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (In
thousands) (Unaudited) Common
Stock
AdditionalPaid-inCapital
RetainedEarnings
Shares Amount
Total Balance, January 1, 2018 66,271 $ 7 $ 111,275 $ 56,960
$ 168,242 Net cumulative effect of adoption of accounting standard
— — — 208 208 Net income — — — 32,520 32,520 Restricted stock
vestings 246 — — — — Dividends declared — — — (10,755 ) (10,755 )
Dividend equivalents on unvested performance-based restricted stock
awards — — 68 (68 ) — Dividend equivalents cancelled upon
forfeiture of performance-based restricted stock awards — — (140 )
140 — Shares surrendered and cancelled upon vesting of restricted
stock to satisfy tax withholdings (83 ) — (1,165 ) — (1,165 )
Stock-based compensation — — 3,087 — 3,087 Issuance of common stock
under employee stock purchase plan 122 — 1,382
— 1,382 Balance, June 30, 2018 66,556 $ 7
$ 114,507 $ 79,005 $ 193,519
NIC INC. CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands) (Unaudited)
Six Months Ended June 30, 2018
2017 Cash flows from operating activities: Net income
$ 32,520 $ 26,754 Adjustments to reconcile net income to net cash
provided by operating activities: Provision for losses on accounts
receivable 343 379 Depreciation & amortization 4,210 3,301
Stock-based compensation expense 3,087 3,178 Deferred income taxes
614 796 Changes in operating assets and liabilities: Decrease in
trade accounts receivable, net 10,838 2,994 (Increase) decrease in
prepaid expenses & other current assets (170 ) 2,651 Decrease
(increase) in other assets 262 (1,507 ) (Decrease) in accounts
payable (19,460 ) (14,535 ) (Decrease) in accrued expenses (4,393 )
(1,271 ) (Decrease) increase in other current liabilities (209 )
644 Increase in other long-term liabilities 758 1,010
Net cash provided by operating activities 28,400 24,433
Cash flows from investing activities: Purchases of
property and equipment (2,411 ) (2,395 ) Proceeds from sale of
property and equipment — 7 Capitalized software development costs
(3,503 ) (1,692 ) Net cash used in investing activities (5,914 )
(4,080 ) Cash flows from financing activities: Cash
dividends on common stock (10,755 ) (10,692 ) Proceeds from
employee common stock purchases 1,382 1,330 Tax withholdings
related to stock-based compensation awards (1,165 ) (2,614 ) Net
cash used in financing activities (10,538 ) (11,976 ) Net
increase in cash 11,948 8,377 Cash, beginning of period 160,777
127,009 Cash, end of period $ 172,725 $
135,386 Other cash flow information: Non-cash
investing activities: Capital expenditures accrued but not yet paid
$ 166 $ 83 Cash payments: Income taxes paid, net $ 8,883 $ 12,405
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version on businesswire.com: https://www.businesswire.com/news/home/20180801005235/en/
NIC Inc.Angela Davied, 913-754-7054adavied@egov.com
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