Current Report


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
______________

FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of Earliest Event Reported): August 6, 2015

NIC INC.
(Exact name of registrant as specified in its charter)

Delaware

000-26621

52-2077581

(State or other jurisdiction

of incorporation or organization)

(Commission

File Number)

(I.R.S. Employer

Identification No.)

25501 West Valley Parkway, Suite 300
Olathe, Kansas 66061
(Address of principal executive offices, including zip code)

(877) 234-3468
(Registrant's telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))


ITEM 2.02          RESULTS OF OPERATIONS AND FINANCIAL CONDITION

On August 6, 2015, NIC Inc. (the “Company”) issued a press release announcing its 2015 second quarter financial results. A copy of the press release is furnished with this report on Form 8-K as Exhibit 99, and is incorporated by reference herein.

ITEM 7.01          REGULATION FD DISCLOSURE

The Company will host a conference call, which will also be available by webcast, to discuss its second quarter financial results at 4:30 p.m. EDT on August 6, 2015.  The call may also include discussion of company developments, and forward-looking and other material information about business and financial matters.

The information in this Form 8-K and Exhibit 99 is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as shall be expressly set forth in such filing.

ITEM 9.01          FINANCIAL STATEMENTS AND EXHIBITS

(d) Exhibits

99 - Press release issued by NIC Inc. dated August 6, 2015, announcing its second quarter financial results is being furnished as part of this report.

- 2 -

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

NIC Inc.

 

Date: August 6, 2015

/s/ Stephen M. Kovzan

Stephen M. Kovzan

Chief Financial Officer

- 3 -

Exhibit 99

NIC Earns 17 Cents Per Share in Second Quarter 2015; Solid Performance of Transaction-based Services Drives Revenue Growth

OLATHE, Kan.--(BUSINESS WIRE)--August 6, 2015--NIC Inc. (NASDAQ: EGOV), the dominant provider of official eGovernment services, today announced net income of $11.3 million and earnings per share of 17 cents on total revenues of $75.8 million for the three months ended June 30, 2015. In the second quarter of 2014, the Company reported net income of $11.0 million and earnings per share of 17 cents on total revenues of $71.2 million.

Quarterly portal revenues were $71.0 million, a 6 percent increase over the second quarter of 2014. On a same-state basis, total revenues increased 7 percent, with transaction-based revenues from Interactive Government Services (IGS) up 11 percent over the second quarter of 2014, and transaction-based revenues from Driver History Records (DHR) up 3 percent due mainly to price increases in two states. Same-state portal software development revenues increased 6 percent in the quarter due mainly to new projects in Wisconsin, Indiana, and Colorado.

Start-up costs from the pilot program with the Louisiana Department of Public Safety totaled $0.3 million during the current quarter.

NIC’s portal gross profit percentage was 40 percent in the current quarter, down from 41 percent in the second quarter of 2014, in part reflecting start-up costs from the Louisiana pilot and the expiration of the Company’s contract with the State of Delaware in the first quarter of 2015.


Software & services revenues were $4.8 million in the current quarter, up 10 percent from the second quarter of 2014, driven by an increase in transactional revenues from the federal Pre-employment Screening Program.

“I am pleased with the results NIC produced during the second quarter of 2015,” said NIC Chief Executive Officer and Chairman of the Board, Harry Herington. “Our teams continue to be focused on what drives our core business -- launching new transaction-based online government services and looking for ways to harness new innovation for the development of future services.”

Operational Highlights

Recently, three NIC subsidiaries received contract extensions. The Maryland Division of NICUSA and Kentucky Interactive, LLC received one-year contract extensions from the states of Maryland and Kentucky, respectively. In addition, the State of Utah extended its contract with Utah Interactive, LLC for three years.

Second Quarter Earnings Call and Webcast Details

On the call, the Company will discuss its 2015 second quarter, 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

Thursday, August 6, 2015

4:30 p.m. (EDT)    
 
Call bridge: 888-395-3227 (U.S. callers) or 719-325-2393 (international callers)
Conference ID: 5339033
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 (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, most recently ranked at No. 36 (2014), and the Company has been included four times on the Barron’s 400 Index. Additional information is available at https://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, 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 the ability of the Company to renew existing contracts and 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 section titled “Risk Factors” of the Company’s most recently filed Forms 10-K and 10-Q. Any forward-looking statements made during this call speak only as of the date of this call. 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,
2015 2014 2015 2014
Revenues:
Portal revenues $ 71,030 $ 66,809 $ 136,944 $ 128,291
Software & services revenues   4,782   4,346   9,227   8,261
Total revenues   75,812   71,155   146,171   136,552
Operating expenses:
Cost of portal revenues, exclusive of depreciation & amortization (1) 42,815 39,549 84,309 77,110
Cost of software & services revenues, exclusive of depreciation &
amortization (1) 1,321 1,245 2,611 2,238
Selling & administrative (1) 10,818 9,841 21,356 19,049
Depreciation & amortization   2,304   2,277   4,596   4,527
Total operating expenses   57,258   52,912   112,872   102,924
Operating income before income taxes 18,554 18,243 33,299 33,628
Income tax provision   7,251   7,213   13,055   13,223
Net income $ 11,303 $ 11,030 $ 20,244 $ 20,405
 
Basic net income per share $ 0.17 $ 0.17 $ 0.31 $ 0.31
Diluted net income per share $ 0.17 $ 0.17 $ 0.31 $ 0.31
 
Weighted average shares outstanding:
Basic   65,588   65,245   65,488   65,151
Diluted   65,588   65,245   65,488   65,151
 
Key Financial Metrics:
Revenue growth - outsourced portals 6% 8% 7% 7%
Same state revenue growth - outsourced portals 7% 8% 7% 7%
Recurring portal revenue as a % of total portal revenues 95% 95% 96% 95%
Gross profit % - outsourced portals 40% 41% 38% 40%
Revenue growth - software & services 10% 13% 12% 18%
Gross profit % - software & services 72% 71% 72% 73%
Selling & administrative expenses as a % of total revenues 14% 14% 15% 14%
Operating income as a % of total revenue 24% 26% 23% 25%
 
Portal Revenue Analysis:
IGS transaction-based $ 40,635 $ 36,684 $ 76,782 $ 69,053
DMV transaction-based 25,643 25,017 51,295 48,493
Portal software development 3,477 3,288 5,772 6,315
Portal management   1,275   1,820   3,095   4,430
Total portal revenues $ 71,030 $ 66,809 $ 136,944 $ 128,291
(1) The Company reclassified certain income statement employee benefit-related expenses for the three- and six-month periods ended June 30, 2014 to conform to the 2015 presentation. The reclassification resulted in a reduction of selling & administrative expenses of $1.0 million and $2.1 million, respectively, for the three- and six-month periods ended June 30, 2014 and corresponding increases of $1.0 million and $2.0 million, respectively, in cost of portal revenues and an increase of $0.1 million in cost of software & services revenues for the six-month period ended June 30, 2014. In addition, the reclassification resulted in a reduction of selling & administrative expenses as a percentage of total consolidated revenues of 1% and 2%, respectively, for the three- and six-month periods ended June 30, 2014 and corresponding decreases in portal gross profit percentage and a 1% decrease in software & services gross profit percentage for the six-month period ended June 30, 2014. The reclassification had no effect on total operating expenses, operating income, net income, earnings per share or cash flows.
 

 
NIC INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
Thousands except par value amount
       
 

   June 30, 2015   

December 31, 2014
ASSETS

 

Current assets:
Cash $ 107,411 $ 87,983
Trade accounts receivable, net 76,476 57,468
Deferred income taxes, net 1,109 1,039
Prepaid expenses & other current assets   11,496   11,502
Total current assets 196,492 157,992
Property and equipment, net 10,524 12,247
Intangible assets, net 2,365 2,394
Other assets   438   446
Total assets $ 209,819 $ 173,079
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 55,449 $ 41,402
Accrued expenses 19,512 19,751
Other current liabilities   2,269   2,902
Total current liabilities 77,230 64,055
 
Deferred income taxes, net 707 1,536
Other long-term liabilities   3,965   3,350
Total liabilities   81,902   68,941
 
Commitments and contingencies - -
 
Stockholders' equity:
Common stock, $0.0001 par, 200,000 shares authorized,
65,615 and 65,303 shares issued and outstanding 7 7
Additional paid-in capital 98,168 94,690
Retained earnings   29,742   9,441
Total stockholders' equity   127,917   104,138
Total liabilities and stockholders' equity $ 209,819 $ 173,079
 

 
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 - - - 20,244 20,244
Restricted stock vestings 332 - 74 - 74
Dividend equivalents cancelled upon forfeiture of
performance-based restricted stock awards - - 18 57 75
Shares surrendered and cancelled upon vesting of restricted
stock to satisfy tax withholdings (95 ) - (1,624 ) - (1,624 )
Stock-based compensation - - 3,796 - 3,796
Tax deductions relating to stock-based compensation - - 232 - 232
Shares issuable in lieu of dividend payments on unvested
performance-based restricted stock awards - - (149 ) - (149 )
Issuance of common stock under employee stock purchase plan 75     -   1,131     -   1,131  
Balance, June 30, 2015 65,615   $ 7 $ 98,168   $ 29,742 $ 127,917  
 
               
NIC INC.
CASH FLOW SUMMARY
(UNAUDITED)
Thousands
 
Three months ended Six months ended
June 30, June 30,
2015 2014 2015 2014
 
Cash flows from operating activities:
Net income $ 11,303 $ 11,030 $ 20,244 $ 20,405
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation & amortization 2,304 2,277 4,596 4,527
Stock-based compensation expense 1,637 1,414 3,796 2,414
Deferred income taxes (1,319 ) (818 ) (2,755 ) (1,494 )
Loss on disposal of property and equipment 2 24 29 128
Changes in operating assets and liabilities:
(Increase) decrease in trade accounts receivable, net (8,654 ) 404 (19,008 ) (8,393 )
Decrease in prepaid expenses & other current assets 1,467 129 1,862 2,370
(Increase) decrease in other assets 6 (9 ) 8 (42 )
Increase (decrease) in accounts payable 7,131 (1,282 ) 14,047 6,705
Increase (decrease) in accrued expenses 2,967 2,811 (1,993 ) (4,416 )
Increase (decrease) in other current liabilities (189 ) (313 ) (633 ) 102
Increase in other long-term liabilities   402     252     615     413  
Net cash provided by operating activities   17,057     15,919     20,808     22,719  
Cash flows from investing activities:
Purchases of property and equipment (1,527 ) (1,734 ) (2,204 ) (2,653 )
Capitalized internal use software development costs   (251 )   (332 )   (539 )   (657 )
Net cash used in investing activities   (1,778 )   (2,066 )   (2,743 )   (3,310 )
Cash flows from financing activities:
Proceeds from employee common stock purchases - - 1,131 1,107
Tax deductions related to stock-based compensation   28     207     232     897  
Net cash provided by financing activities   28     207     1,363     2,004  
Net increase in cash 15,307 14,060 19,428 21,413
Cash, beginning of period   92,104     81,598     87,983     74,245  
Cash, end of period $ 107,411   $ 95,658   $ 107,411   $ 95,658  
Other cash flow information:
Non-cash investing activities:
Capital expenditures accrued but not yet paid $ 130 $ 50 $ 130 $ 50
 
Cash payments:
Income taxes paid $ 6,659 $ 7,305 $ 13,073 $ 13,837
Cash dividends on common stock previously restricted for payment of dividend $ - $ - $ - $ 22,982
 

CONTACT:
NIC Inc.
Angela Davied, 913-754-7054
adavied@egov.com