 |
2Q 2007 EARNINGSFor Immediate Release |
| Contact: David Oboyski (913) 754-7054 doboyski@nicusa.com |
NIC Earns Four Cents per Share in Second Quarter
Same-state portal revenues increase 14 percent
OLATHE, Kan. – August 1, 2007 – NIC Inc. (Nasdaq: EGOV) today announced net income of $2.8 million and earnings per share of four cents on total revenues of $21.5 million for the three months ended June 30, 2007. Operating income was $4.5 million for the quarter. In second quarter 2006, the company reported net income of $3.2 million and earnings per share of five cents on total revenues of $18.8 million.
Quarterly portal revenues were a record $20.6 million, a 16 percent increase over second quarter 2006. On a same-state basis, portal revenues grew 14 percent in the second quarter, compared to a nine percent increase during the same period a year ago. NIC’s vehicle registration, online income tax payment and hunting and fishing license services performed well in the second quarter, helping same-state, transaction-based revenues from non-driver record exchange (non-DMV) applications rise 37 percent. DMV revenues grew 10 percent on a same-state basis in the second quarter, up from two percent growth during the same period last year.
“Today’s report is a product of our specialization,” said Jeff Fraser, chief executive officer of NIC. “No other organization can match the depth or breadth of NIC’s experience in eGovernment. Our eGovernment focus attracts new partners, like Arizona, because they know we will deliver exceptional value to state agencies as well as the citizens and businesses they serve. NIC’s eGovernment experience and focus also delivers the kind of numbers we reported today and expect to report in the future.”
In the second quarter, NIC’s portals launched a record 110 new non-DMV revenue-generating services. The company also has an all-time high of 170 applications in the development pipeline.
Reflecting NIC’s ongoing investment in long-term growth, selling and administrative expenses rose to $5.4 million in the current quarter compared to $3.6 million in the second quarter of 2006. As a percentage of portal revenue, selling and administrative expenses were 26 percent in the current quarter, up from 20 percent in the second quarter of 2006.
“Our strategic growth investments are already starting to pay off,” said Harry Herington, president of NIC. “Our sales pipeline is the best we’ve had in the history of the company, and the progress our portals are making is driving our success on non-DMV revenue.”
NIC estimates the cost of these initiatives will be $4 million to $6 million in 2007.
NIC ended the second quarter with approximately $43.2 million in cash and investments, up $10.2 million from March 31, 2007. As announced earlier this year, the company declared a $0.75 per-share special dividend in the first quarter that it paid to shareholders on February 20, 2007. NIC paid the $46.7 million dividend from its short-term investments and cash reserves.
Operating Highlights
The company announced recently that it had finalized a contract with the state of Arizona, bringing the total number of state partners to 20 and increasing the population served to 67 million.
“We’re grateful for the vote of confidence given us by Arizona,” said Fraser. “We look forward to developing outstanding eGovernment solutions for the state and its citizens and businesses for years to come.”
2007 Outlook
For full-year 2007, NIC’s updated projections reflect strong performance in the first two quarters, normal seasonality in the second half of the year and a partial year of start-up costs from the Arizona contract. The company projects: total revenues of $82.5 million to $83.8 million, portal revenues of $79.5 million to $80.5 million, software and services revenues of $3.0 million to $3.3 million, operating income between $12.7 million and $13.2 million and net income between $8.1 million and $8.6 million. The company’s projections do not include any new, unsigned portal contracts.
“Our portal business continues its strong performance,” said Steve Kovzan, NIC’s vice president of financial operations. “Portal gross margins should range from 45 to 47 percent in 2007, with selling and administrative expenses as a percentage of portal revenues remaining in the 28 to 29 percent range we projected earlier this year, as we continue to invest in our long-term growth initiatives.”
Second Quarter Earnings Webcast Details
Wednesday, August 1, 2007
4:30 p.m. EDT
To sign in and listen: The Webcast system is available at www.nicusa.com/investor.
Some users may need to refresh their browsers to view the Webcast information. A replay of the Webcast will be available until 5:10 p.m. EST on October 31, 2007 by visiting www.nicusa.com/investor.
A replay of NIC's first quarter earnings call will be available until 11:59 p.m. (EDT) on August 8 by dialing 1-800-405-2236 and using passcode 11092664. The conference call replay can also be accessed via Podcast download by visiting www.nicusa.com/investor.
About NIC
NIC manages more eGovernment services than any provider in the world. The Company is helping governments communicate more effectively with citizens and businesses by putting essential services online. NIC provides eGovernment solutions for 2,600 state and local agencies that serve more than 67 million people in the United States. Additional information is available at www.nicusa.com.
The statements in this release regarding continued implementation of NIC's business model and its development of new products and services are forward-looking statements. There are a number of important factors that could cause actual results to differ materially from those suggested or indicated by such forward-looking statements. These include, among others, the success of the company in signing contracts with new states and government agencies, including continued favorable government legislation; NIC's ability to develop new services; existing states and agencies adopting those new services; acceptance of eGovernment services by businesses and citizens; competition; and general economic conditions and the other important cautionary statements and risk factors described in NIC's 2006 Annual Report on Form 10-K filed on March 15, 2007, and Quarterly Report on Form 10-Q for the quarter ended March 31, 2007 filed on May 7, 2007, with the Securities and Exchange Commission.
(financial tables follow)
NIC Inc.
FINANCIAL SUMMARY
(UNAUDITED)
thousands except per share amounts
Three months ended Six months ended
June 30, June 30,
------------------ -----------------
2007 2006 2007 2006
--------- -------- -------- --------
Revenues:
Portal revenues $20,610 $17,794 $40,478 $34,783
Software & services revenues 866 968 1,632 (274)
--------- -------- -------- --------
Total revenues 21,476 18,762 42,110 34,509
--------- -------- -------- --------
Operating expenses:
Cost of portal revenues,
exclusive of
depreciation & amortization 10,419 8,931 20,873 17,208
Cost of software & services
revenues, exclusive
of depreciation & amortization 493 767 964 (563)
Selling & administrative 5,445 3,560 10,565 6,988
Depreciation & amortization 577 525 1,112 1,030
--------- -------- -------- --------
Total operating expenses 16,934 13,783 33,514 24,663
--------- -------- -------- --------
Operating income 4,542 4,979 8,596 9,846
--------- -------- -------- --------
Other income (expense):
Interest income 317 498 897 878
Equity in net loss of affiliates - - - (97)
--------- -------- -------- --------
Total other income (expense) 317 498 897 781
--------- -------- -------- --------
Income before income taxes 4,859 5,477 9,493 10,627
Income tax provision 2,107 2,232 3,995 4,464
--------- -------- -------- --------
Net income $2,752 $3,245 $5,498 $6,163
========= ======== ======== ========
Basic net income per share $0.04 $0.05 $0.09 $0.10
========= ======== ======== ========
Diluted net income per share $0.04 $0.05 $0.09 $0.10
========= ======== ======== ========
Weighted average shares
outstanding:
Basic 61,769 61,381 61,711 61,250
========= ======== ======== ========
Diluted 62,256 61,839 62,113 61,713
========= ======== ======== ========
Key Financial Metrics:
Revenue growth - outsourced
portals 16% 24% 16% 24%
Same state revenue growth -
outsourced portals 14% 9% 15% 9%
Gross profit % - outsourced
portals 49% 50% 48% 51%
Selling & administrative as a % of
portal revenue 26% 20% 26% 20%
Recurring portal revenue
percentage 95% 96% 94% 97%
Operating income margin as % of
portal revenue 22% 28% 21% 28%
Portal Revenue Analysis:
DMV transaction-based $11,275 $10,837 $22,736 $22,014
Non-DMV transaction based 7,266 6,297 13,281 11,559
Software development & portal
management 2,069 660 4,461 1,210
--------- -------- -------- --------
Total $20,610 $17,794 $40,478 $34,783
========= ======== ======== ========
NIC Inc.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
thousands
June 30, December 31,
2007 2006
--------------------------
ASSETS
Current assets:
Cash and cash equivalents $41,244 $36,745
Marketable securities 2,000 45,008
Trade accounts receivable 28,312 28,729
Unbilled revenues 441 1,069
Deferred income taxes 4,934 5,290
Prepaid expenses & other current assets 1,477 1,645
--------------------------
Total current assets 78,408 118,486
Property and equipment, net 4,384 3,790
Deferred income taxes 15,435 17,434
Other assets 555 424
--------------------------
Total assets $98,782 $140,134
==========================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $30,180 $34,202
Accrued expenses 7,007 5,911
Application development contracts 433 513
Other current liabilities 359 255
--------------------------
Total current liabilities 37,979 40,881
Other long-term liabilities 1,241 -
--------------------------
Total liabilities 39,220 40,881
--------------------------
Commitments and contingencies - -
Shareholders' equity:
Common stock, no par, 200,000 shares
authorized 61,781 and 61,574 shares issued
and outstanding - -
Additional paid-in capital 165,089 210,210
Accumulated deficit (105,359) (110,789)
--------------------------
59,730 99,421
Less treasury stock (168) (168)
--------------------------
Total shareholders' equity 59,562 99,253
--------------------------
Total liabilities and shareholders' equity $98,782 $140,134
==========================
NIC INC.
SUMMARY OF CHANGES IN SHAREHOLDERS' EQUITY
(UNAUDITED)
Thousands
Common Stock Additional
------------- Paid-in Accumulated Treasury
Shares Amount Capital Deficit Stock Total
------ ------ ---------- ----------- -------- --------
Balance,
January 1,
2007 61,574 $- $210,210 $(110,789) $(168) $99,253
Cumulative
effect of FIN
48 - - - (68) - (68)
Net income - - - 5,498 - 5,498
Cash dividends
on common
stock - - (46,730) - - (46,730)
Stock option
exercises &
restricted
stock vestings 154 - 506 - - 506
Stock-based
compensation - - 864 - - 864
Issuance of
common stock
under employee
stock purchase
plan 53 - 239 - - 239
------ ------ ---------- ----------- -------- --------
Balance, June
30, 2007 61,781 $- $165,089 $(105,359) $(168) $59,562
====== ====== ========== =========== ======== ========
CASH FLOW SUMMARY
(UNAUDITED)
Thousands
Three months ended Six months ended
June 30, June 30,
------------------ -----------------
2007 2006 2007 2006
--------- -------- -------- --------
Cash flows from operating
activities:
Net income $2,752 $3,245 $5,498 $6,163
Adjustments to reconcile net
income to net cash provided by
operating activities:
Depreciation & amortization 577 525 1,112 1,030
Stock-based compensation expense 453 152 864 352
Application development
contracts (41) (99) (80) (655)
Deferred income taxes 1,750 1,999 3,406 4,070
Equity in net loss of affiliates - - - 97
Changes in operating assets and
liabilities:
(Increase) decrease in trade
accounts receivable 9,125 (105) 417 (4,463)
(Increase) decrease in unbilled
revenues (236) 1,070 628 3,099
(Increase) decrease in prepaid
expenses & other current assets (282) 290 168 177
Decrease in other assets 2 - 2 9
Increase (decrease) in accounts
payable (4,517) (4,815) (4,022) 3,078
Increase (decrease) in accrued
expenses 1,037 152 1,096 (1,831)
Increase (decrease) in other
current liabilities 101 78 104 (63)
Increase in other long-term
liabilities 122 - 122 -
--------- -------- -------- --------
Net cash provided by operating
activities 10,843 2,492 9,315 11,063
--------- -------- -------- --------
Cash flows from investing
activities:
Purchases of property and
equipment (612) (491) (1,658) (1,276)
Capitalized internal use
software development costs (122) (37) (181) (83)
Purchases of marketable
securities (2,000) (8,000) (2,000) (13,000)
Sales and maturities of
marketable securities - - 45,008 -
--------- -------- -------- --------
Net cash provided by (used in)
investing activities (2,734) (8,528) 41,169 (14,359)
--------- -------- -------- --------
Cash flows from financing
activities:
Cash dividends on common stock - - (46,730) -
Proceeds from sale of treasury
stock - - - 65
Proceeds from employee common
stock purchases - - 239 157
Proceeds from exercise of
employee stock options 52 691 506 998
--------- -------- -------- --------
Net cash provided by (used in)
financing activities 52 691 (45,985) 1,220
--------- -------- -------- --------
Net increase (decrease) in cash
and cash equivalents 8,161 (5,345) 4,499 (2,076)
Cash and cash equivalents,
beginning of period 33,083 40,171 36,745 36,902
--------- -------- -------- --------
Cash and cash equivalents, end of
period $41,244 $34,826 $41,244 $34,826
========= ======== ======== ========
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