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): May 2, 2016

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)

Not Applicable
(Former name or former address, if changed since last report)

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 May 2, 2016, NIC Inc. (the “Company”) issued a press release announcing its 2016 first quarter financial results. A copy of the press release is furnished with this report on Form 8-K as Exhibit 99.1, 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 first quarter financial results at 4:30 p.m. EDT on May 2, 2016.  The call may also include discussion of company developments, and forward-looking and other material information about business and financial matters.

In accordance with General Instruction B.2 of Form 8-K, the information in Items 2.02 and 7.01 of this Form 8-K and Exhibit 99.1 is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (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, as amended, or the Exchange Act, except as shall be expressly set forth in such filing.


ITEM 9.01

FINANCIAL STATEMENTS AND EXHIBITS

(d) Exhibits

99.1 - Press release issued by NIC Inc. dated May 2, 2016, announcing its first 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: May 2, 2016

/s/ Stephen M. Kovzan

Stephen M. Kovzan

Chief Financial Officer


- 3 -

Exhibit 99.1

NIC Earns 19 Cents Per Share in First Quarter 2016; Company Reports Record Quarterly Revenues and Operating Income

OLATHE, Kan.--(BUSINESS WIRE)--May 2, 2016--NIC Inc. (NASDAQ: EGOV), the dominant provider of digital government services, today announced net income of $12.9 million and earnings per share of 19 cents on total revenues of $78.4 million for the three months ended March 31, 2016. In the first quarter of 2015, the Company reported net income of $8.9 million and earnings per share of 14 cents on total revenues of $70.4 million.

Quarterly portal revenues were a record $73.2 million, an 11 percent increase over the first quarter of 2015. On a same-state basis, portal revenues were $73.0 million in the current quarter, a 12 percent increase over the first quarter of 2015. Same-state, transaction-based revenues from Interactive Government Services (IGS) rose 16 percent over the first quarter of 2015, due primarily to higher volumes from a variety of services, including motor vehicle inspections and registrations, tax filings and professional licensing, among others. Same-state, transaction-based revenues from Driver History Records (DHR) were up 6 percent due mainly to higher transaction volumes in several states and to a DHR monitoring service in one state, which became effective in the second quarter of 2015. Same-state portal software development revenues increased 25 percent, driven mainly by a stronger quarter of project-based, time and materials revenues in a few states.

For the quarter, portal management revenues were down 30 percent from the prior year reflecting the expiration of the Delaware contract in March 2015.


NIC’s portal gross profit percentage was 40 percent in the current quarter, up from 37 percent in the first quarter of 2015, driven mainly by strong organic revenue growth and higher gross profits across several states including Texas, Wisconsin, and Maryland.

Software & services revenues were $5.2 million in the current quarter, up 17 percent from the first quarter of 2015, driven by an increase in transactional revenues from the federal Pre-employment Screening Program and other payment processing services.

Quarterly operating income increased 38 percent to a record $20.4 million, contributing to an operating margin of 26 percent for the current quarter, up from 21 percent in the prior year quarter.

“The year is off to an exceptional start, and I am very pleased with our strong financial results for the quarter,” said NIC Inc. CEO Harry Herington. “It is great to see our core business of offering convenient digital government services continue to perform so well.”

Operational Highlights

During the quarter, three NIC subsidiaries received contract extensions. The Company’s Kansas Information Consortium, LLC subsidiary received a one-year contract extension from the State of Kansas, taking the contract through 2022. Alabama Interactive, LLC received a one-year contract renewal from the State of Alabama through March 2017, and the State of Oklahoma extended its contract with Oklahoma Interactive, LLC for one year through March 2017.

First Quarter Earnings Call and Webcast Details

On the May 2, 2016 call, the Company will discuss its 2016 first 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

Monday, May 2, 2016
4:30 p.m. (EDT)
         
Call bridge: 888-438-5519 (U.S. callers) or 719-457-2689 (international callers)
Conference ID: 6964685
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 the nation's leading provider of official government websites, online services, and secure payment processing solutions. The Company's innovative digital government services help make government more accessible to everyone through technology. The family of NIC companies provides digital government solutions for more than 4,500 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 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, 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 web site 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
March 31,
  2016   2015
Revenues:
Portal revenues $ 73,197 $ 65,914
Software & services revenues   5,193   4,445
Total revenues   78,390   70,359
Operating expenses:
Cost of portal revenues, exclusive of depreciation & amortization 43,615 41,494
Cost of software & services revenues, exclusive of depreciation &
amortization 1,413 1,290
Selling & administrative 11,342 10,538
Depreciation & amortization   1,664   2,292
Total operating expenses   58,034   55,614
Operating income before income taxes 20,356 14,745
Income tax provision   7,462   5,804
Net income $ 12,894 $ 8,941
 
Basic net income per share $ 0.19 $ 0.14
Diluted net income per share $ 0.19 $ 0.14
 
Weighted average shares outstanding:
Basic   65,739   65,387
Diluted   65,739   65,387
 
Key Financial Metrics:
Revenue growth - outsourced portals 11% 7%
Same state revenue growth - outsourced portals 12% 7%
Recurring portal revenue as a % of total portal revenues 96% 97%
Gross profit % - outsourced portals 40% 37%
Revenue growth - software & services 17% 14%
Gross profit % - software & services 73% 71%
Selling & administrative expenses as a % of total revenues 14% 15%
Operating income as a % of total revenue 26% 21%
 
Portal Revenue Analysis:
IGS transaction-based $ 41,933 $ 36,147
DHR transaction-based 27,126 25,652
Portal software development 2,863 2,295
Portal management   1,275   1,820
Total portal revenues $ 73,197 $ 65,914
 

 
NIC INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
Thousands except par value amount
               
 
March 31, 2016 December 31, 2015
ASSETS
Current assets:
Cash $ 105,783 $ 98,388
Cash restricted for payment of dividend - 36,456
Trade accounts receivable, net 79,187 80,362
Prepaid expenses & other current assets   13,961   12,584
Total current assets 198,931 227,790
Property and equipment, net 9,462 9,333
Intangible assets, net 2,523 2,267
Deferred income taxes, net 828 1,421
Other assets   446   426
Total assets $ 212,190 $ 241,237
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 57,743 $ 61,133
Accrued expenses 17,347 20,986
Dividend payable - 36,456
Other current liabilities   2,842   2,597
Total current liabilities 77,932 121,172
 
Other long-term liabilities   4,646   4,259
Total liabilities   82,578   125,431
 
Commitments and contingencies - -
 
Stockholders' equity:
Common stock, $0.0001 par, 200,000 shares authorized,
65,911 and 65,637 shares issued and outstanding 7 7
Additional paid-in capital 101,814 100,929
Retained earnings   27,791   14,870
Total stockholders' equity   129,612   115,806
Total liabilities and stockholders' equity $ 212,190 $ 241,237
 

           
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, 2016 65,637 $ 7 $ 100,929 $ 14,870 $ 115,806
Net income - - - 12,894 12,894
Restricted stock vestings 314 - 135 - 135
Dividend equivalents cancelled upon forfeiture of
performance-based restricted stock awards - - - 27 27
Shares surrendered and cancelled upon vesting of restricted
stock to satisfy tax withholdings (115 ) - (2,034 ) - (2,034 )
Stock-based compensation - - 1,622 - 1,622
Tax deductions relating to stock-based compensation - - 210 - 210
Shares issuable in lieu of dividend payments on unvested
performance-based restricted stock awards - - (162 ) - (162 )
Issuance of common stock under employee stock purchase plan 75     -   1,114     -   1,114  
Balance, March 31, 2016 65,911   $ 7 $ 101,814   $ 27,791 $ 129,612  
 
     
NIC INC.
CASH FLOW SUMMARY
(UNAUDITED)
Thousands
 
Three months ended
March 31,
  2016     2015  
 
Cash flows from operating activities:
Net income $ 12,894 $ 8,941
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation & amortization 1,664 2,292
Stock-based compensation expense 1,622 2,159
Deferred income taxes (1,263 ) (1,436 )
Loss on disposal of property and equipment - 27
Changes in operating assets and liabilities:
(Increase) decrease in trade accounts receivable, net 1,175 (10,354 )
Decrease in prepaid expenses & other current assets 479 395
(Increase) decrease in other assets (20 ) 2
Increase (decrease) in accounts payable (3,390 ) 6,916
(Decrease) in accrued expenses (5,696 ) (4,960 )
Increase (decrease) in other current liabilities 245 (444 )
Increase in other long-term liabilities   387     213  
Net cash provided by operating activities   8,097     3,751  
Cash flows from investing activities:
Purchases of property and equipment (1,485 ) (677 )
Proceeds from sale of property and equipment 2 -
Capitalized internal use software development costs   (543 )   (288 )
Net cash used in investing activities   (2,026 )   (965 )
Cash flows from financing activities:
Proceeds from employee common stock purchases 1,114 1,131
Tax deductions related to stock-based compensation   210     204  
Net cash provided by financing activities   1,324     1,335  
Net increase in cash 7,395 4,121
Cash, beginning of period   98,388     87,983  
Cash, end of period $ 105,783   $ 92,104  
Other cash flow information:
Non-cash investing activities:
Capital expenditures accrued but not yet paid $ 23 $ 126
Cash payments:
Income taxes paid $ 6,853 $ 6,414
Cash dividends paid on common stock previously restricted for payment of dividend $ 36,456 $ -
 

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