NIC Grows Total Revenues 14 Percent in the Third Quarter; Declares Special Cash Dividend of $0.25 Per Share

  NIC Grows Total Revenues 14 Percent in the Third Quarter; Declares Special
  Cash Dividend of $0.25 Per Share

   New services in Texas and New Jersey drive 21 percent same-state non-DMV
                                revenue growth

Business Wire

OLATHE, Kan. -- November 08, 2012

NIC Inc. (NASDAQ: EGOV), the leading provider of eGovernment services, today
announced net income of $6.0 million, and earnings per share of 9 cents, on
total revenues of $53.2 million for the three months ended September 30, 2012.
Operating income was $10.5 million for the current quarter as compared to
$11.0 million in the prior year quarter. In the third quarter of 2011, the
company reported net income of $6.8 million, and earnings per share of 11
cents, on total revenues of $46.7 million.

On November 5, 2012, NIC’s Board of Directors declared a special cash dividend
of $0.25 per share, payable on December 5, 2012, to stockholders of record on
November 23, 2012. The dividend payout will total approximately $16.3 million
based on the current number of shares outstanding.

“NIC’s financial success has allowed us to return more than $133 million to
stockholders in the form of special cash dividends since 2007, and we are
pleased to be able to do so again,” said Harry Herington, NIC Chief Executive
Officer and Chairman of the Board. “As with many other companies, we believe
now is the time to pay a special cash dividend given the uncertainty of future
dividend tax rates.”

Quarterly portal revenues grew 14 percent over the prior year quarter to a
record $50.2 million, with same-state portal revenues increasing 8 percent in
the current quarter. Same-state, transaction-based revenues from non-driver
record (non-DMV) services rose 21 percent over third quarter 2011 driven in
part by the September launch of the motor vehicle inspection service included
in the DPS Direct suite of services for the Texas Department of Public Safety,
and increased adoption of the New Jersey temporary automobile tag service.
Same-state DMV revenues declined 3 percent for the quarter, while same-state
time & materials revenues relating to portal software development decreased 12
percent from the prior year quarter.

“At NIC, we take pride in our ability to help government bring efficiencies to
citizens and businesses by deploying new services,” said Herington. “Once
again our portal business continued to produce solid organic revenue growth,
as same-state non-DMV revenues grew a healthy 21 percent. In fact our
Company’s growth was recognized for the fourth consecutive year by Forbes, as
NIC recently ranked No. 31 among their list of the ‘100 Best Small Companies
in America.’”

Current quarter revenues from the Maryland portal, which began generating
revenues in May 2012, were $1.4 million, while revenues from the Oregon
portal, which began generating revenues in June 2012, were $1.2 million.
Quarterly revenues from the Delaware portal, which began generating revenues
in October 2011, were $0.3 million. Current quarter cost of portal revenues
included approximately $2.7 million in costs from these portals. Cost of
portal revenues in the prior year quarter included approximately $0.3 million
in new portal start-up costs. The portal gross profit percentage was 37
percent in the current quarter, down from 38 percent in the third quarter of
2011, due in part to non-recurring start-up and transition costs totaling
approximately $0.9 million related to the Oregon portal.

“NIC achieved significant operational milestones during the current quarter,
as we completed the start-up phase and transition of legacy services in Oregon
and launched the first service in the Texas DPS Direct suite of services on
schedule in September,” said NIC’s Chief Financial Officer Steve Kovzan.
“While the Oregon and Texas DPS contracts required significant start-up
investment, we currently expect these contracts will begin to contribute
favorably to our bottom line, serving as catalysts for future growth.”

Software & services revenues were $3.0 million in the current quarter, up 6
percent from the prior year quarter, driven by revenues from the Company’s
self-funded contract with the U.S. Department of Transportation’s Federal
Motor Carrier Safety Administration to operate the Pre-Employment Screening
Program.

Selling & administrative expenses were $8.2 million in the current quarter, up
from $6.3 million in the prior year quarter, and as a percentage of total
revenues were 15 percent in the current quarter, up from 13 percent in the
prior year quarter. In connection with the previously disclosed SEC matter and
derivative action, current quarter selling & administrative expenses included
approximately $0.1 million in legal fees and other third-party costs, net of
reimbursement from the Company’s directors’ and officers’ liability insurance
carrier. In the prior year quarter, insurance reimbursement exceeded costs
related to the SEC matter and derivative action by $0.9 million. Other selling
& administrative expenses in the current quarter increased by approximately
$0.9 million from the prior year quarter, due in part to higher costs to
enhance corporate-wide information technology infrastructure as a result of
the Company’s growth.

Depreciation & amortization expense in the current quarter increased 38
percent from the prior year quarter to $1.6 million, due mainly to capital
expenditures to enhance corporate-wide information technology infrastructure
and to implement the motor vehicle inspection service of Texas DPS Direct. As
a percentage of total revenues, depreciation & amortization expense was 3
percent in the current quarter, up from 2 percent in the prior year quarter.

The Company’s effective tax rate in the current quarter increased to 43
percent from 38 percent in the prior year quarter due mainly to higher
non-deductible compensation-related expenses. In addition, the effective tax
rate in the prior year quarter reflects a favorable benefit related to the
Federal research and development tax credit totaling approximately $0.2
million.

Third Quarter Operational Highlights

Eight NIC partner states ranked among the Top 10 state websites in the country
as part of the Center for Digital Government’s “Best of the Web” competition.
Alabama was named the best state website in the country for the first time in
state history, with Utah, Rhode Island, and Mississippi placing third, fourth,
and fifth, respectively. Maine, Nebraska, Texas, and Virginia rounded out the
Top 10. In addition, the Center for Digital Government recognized 12 NIC
partners for developing outstanding individual online services, with 75
percent of all awards in the government-to business category going to NIC and
its partners.

Also during the third quarter, NIC’s Utah portal extended its contract with
the state ahead of schedule for an additional three years.

Third Quarter Earnings Call and Webcast Details

Dial-In Information

Thursday, November 8, 2012

4:30 p.m. (EST)

Call bridge:   877-941-6009 (U.S. callers) or 480-629-9722 (international
                callers)
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, visit http://www.egov.com/investors.

A replay of NIC’s 2012 third quarter earnings call will be available until 11
p.m. (EDT) on May 9, 2013, by visiting http://www.egov.com/investors.

About NIC

NIC Inc. (NASDAQ: EGOV) is the nation’s premier provider of official
government portals, online solutions, and secure payment processing. The
Company’s innovative eGovernment services help reduce costs and increase
efficiencies for citizens, businesses, and government agencies. The NIC family
of companies provides eGovernment solutions for more than 3,500 federal,
state, and local agencies across the United States. Additional information is
available at http://www.egov.com.

Cautionary Statement Regarding Forward-Looking Information

Any statements contained 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
current fiscal year, statements regarding the planned implementation of new
portal contracts, and statements regarding continued implementation of NIC’s
business model and its development of new products and services.
Forward-looking statements are subject to inherent risks and uncertainties and
there can be no assurance that such statements will prove to be correct. 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, NIC’s ability to successfully
complete negotiations of pending contracts and integrate into its operations
recently awarded eGovernment contracts; NIC's ability to implement its new
portal contracts in a timely and cost-effective manner; NIC’s ability to
successfully increase the adoption and use of eGovernment services; the
possibility of reductions in fees or revenues as a result of budget deficits,
government shutdowns or changes in government policy; the success of the
Company in renewing existing contracts and in signing contracts with new
states and federal government agencies; continued favorable government
legislation; NIC’s ability to successfully transition out of expired
contracts; NIC’s ability to develop new services; existing states and agencies
adopting those new services; acceptance of eGovernment services by businesses
and citizens; competition; the possibility of security breaches through cyber
attacks; and general economic conditions and the other important cautionary
statements and risk factors described in NIC's 2011 Annual Report on Form 10-K
filed with the Securities and Exchange Commission on February 24, 2012. Any
forward-looking statements made in this release speak only as of the date of
this release. NIC does not intend to update these forward-looking statements
and undertakes no duty to any person to provide any such update under any
circumstances.


NIC INC.
FINANCIAL SUMMARY
(UNAUDITED)
Thousands except per share amounts and percentages
                                                             
                        Three months ended            Nine months ended
                        September 30,                 September 30,
                         2012         2011         2012          2011    
Revenues:
Portal revenues         $ 50,198       $ 43,850       $ 144,952       $ 127,988
Software & services      3,008        2,839        8,979         7,858   
revenues
Total revenues           53,206       46,689       153,931       135,846 
Operating expenses:
Cost of portal
revenues, exclusive       31,794         27,122         91,095          78,905
of depreciation &
amortization
Cost of software &
services revenues,
exclusive of
depreciation &
amortization              1,079          1,063          3,045           3,069
Selling &                 8,218          6,275          24,536          21,381
administrative
Amortization of
acquisition-related       53             81             214             242
intangible assets
Depreciation &           1,606        1,167        4,236         3,361   
amortization
Total operating          42,750       35,708       123,126       106,958 
expenses
Operating income          10,456         10,981         30,805          28,888
Other expense, net       -            (10    )      (1      )      (6      )
Income before             10,456         10,971         30,804          28,882
income taxes
Income tax               4,461        4,139        13,088        11,462  
provision
Net income              $ 5,995       $ 6,832       $ 17,716       $ 17,420  
                                                                      
Basic net income        $ 0.09        $ 0.11        $ 0.27         $ 0.27    
per share
Diluted net income      $ 0.09        $ 0.11        $ 0.27         $ 0.27    
per share
                                                                      
Weighted average
shares outstanding:
Basic                    64,586       64,120       64,458        63,964  
Diluted                  64,604       64,200       64,475        64,040  
                                                                      
Key Financial
Metrics:
Revenue growth -          14     %       10     %       13      %       10      %
outsourced portals
Same-state revenue
growth - outsourced       8      %       8      %       7       %       9       %
portals
Recurring portal
revenue as a % of         92     %       91     %       92      %       91      %
total portal
revenues
Gross profit % -          37     %       38     %       37      %       38      %
outsourced portals
Revenue growth -          6      %       45     %       14      %       83      %
software & services
Gross profit % -          64     %       63     %       66      %       61      %
software & services
Selling &
administrative            15     %       13     %       16      %       16      %
expenses as a % of
total revenues
Operating income as
a % of total              20     %       24     %       20      %       21      %
revenues
                                                                      
Portal Revenue
Analysis:
DMV                     $ 18,575       $ 16,813       $ 53,691        $ 49,906
transaction-based
Non-DMV                   25,290         20,834         71,900          60,153
transaction-based
Portal software           3,955          4,165          12,283          11,816
development
Portal management        2,378        2,038        7,078         6,113   
Total portal            $ 50,198      $ 43,850      $ 144,952      $ 127,988 
revenues
                                                                                

                                                         
NIC INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
Thousands except par value amount
                                                             
                                      September 30, 2012     December 31, 2011
ASSETS
Current assets:
Cash and cash equivalents             $    73,044            $   61,639
Cash restricted for payment of             -                     16,231
dividend
Trade accounts receivable, net             54,379                49,306
Deferred income taxes, net                 867                   916
Prepaid expenses & other current          11,060              5,994     
assets
Total current assets                       139,350               134,086
Property and equipment, net                17,058                8,853
Intangible assets, net                     1,013                 1,088
Deferred income taxes, net                 -                     83
Other assets                              251                 243       
Total assets                          $    157,672          $   144,353   
                                                             
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable                      $    47,763            $   45,038
Accrued expenses                           20,205                16,293
Dividend payable                           -                     16,231
Other current liabilities                 194                 310       
Total current liabilities                  68,162                77,872
                                                             
Deferred income taxes, net                 2,407                 -
Other long-term liabilities               1,292               1,405     
Total liabilities                         71,861              79,277    
                                                             
Commitments and contingencies              -                     -
                                                             
Stockholders' equity:
Common stock, $0.0001 par, 200,000
shares authorized,
64,625 and 64,178 shares issued and        6                     6
outstanding
Additional paid-in capital                 99,818                96,799
Accumulated deficit                       (14,013   )          (31,729   )
Total stockholders' equity                85,811              65,076    
Total liabilities and stockholders'   $    157,672          $   144,353   
equity
                                                             

                                                                  
NIC INC.
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(UNAUDITED)
Thousands
                                                                             
                                              Additional
                      Common Stock            Paid-in        Accumulated
                      Shares       Amount     Capital        Deficit         Total
Balance, January      64,178       $   6      $ 96,799       $ (31,729 )     $ 65,076
1, 2012
Net income            -                -        -              17,716          17,716
Restricted stock      536              -        204            -               204
vestings
Shares
surrendered and
cancelled upon
vesting of
restricted stock
to satisfy tax        (167   )         -        (2,093 )       -               (2,093 )
withholdings
Stock-based           -                -        3,109          -               3,109
compensation
Tax deductions
relating to           -                -        1,197          -               1,197
stock-based
compensation
Shares issuable
in lieu of
dividend payments
on unvested
performance-based
restricted stock      -                -        (204   )       -               (204   )
awards
Issuance of
common stock
under employee
stock
purchase plan         78             -       806          -             806    
Balance,
September 30,         64,625      $   6      $ 99,818      $ (14,013 )     $ 85,811 
2012
                                                                             

                                                               
NIC INC.
CASH FLOW SUMMARY
(UNAUDITED)
Thousands

                          Three months ended            Nine months ended
                          September 30,                 September 30,
                           2012         2011         2012          2011   
                                                                        
Cash flows from
operating activities:
  Net income              $ 5,995        $ 6,832        $ 17,716        $ 17,420
  Adjustments to
  reconcile net
  income to net cash
  provided by
  operating
  activities:
  Amortization of
  acquisition-related       53             81             214             242
  intangible assets
  Depreciation &            1,606          1,167          4,236           3,361
  amortization
  Stock-based
  compensation              1,252          1,052          3,109           3,417
  expense
  Deferred income           1,544          (57    )       1,080           (483   )
  taxes
  Loss on disposal of
  property and              -              10             1               8
  equipment
  Changes in
  operating assets
  and liabilities:
  (Increase) decrease
  in trade accounts         750            2,047          (5,073  )       (1,797 )
  receivable, net
  (Increase) decrease
  in prepaid expenses       (1,021 )       1,841          (3,607  )       (328   )
  & other current
  assets
  (Increase) in other       (6     )       (13    )       (8      )       (3     )
  assets
  Increase (decrease)       (428   )       (4,829 )       2,725           (6,985 )
  in accounts payable
  Increase in accrued       1,664          2,439          1,162           2,162
  expenses
  Increase (decrease)
  in other current          (16    )       42             (116    )       (139   )
  liabilities
  Increase (decrease)
  in other long-term       (40    )      119          (113    )      270    
  liabilities
  Net cash provided
  by operating             11,353       10,731       21,326        17,145 
  activities
Cash flows from
investing activities:
  Purchases of
  property and              (8,710 )       (1,317 )       (11,374 )       (3,890 )
  equipment
  Capitalized
  internal use             (201   )      (127   )      (550    )      (319   )
  software
  development costs
  Net cash used in
  investing                (8,911 )      (1,444 )      (11,924 )      (4,209 )
  activities
Cash flows from
financing activities:
  Proceeds from
  employee common           -              -              806             652
  stock purchases
  Tax deductions
  related to               427          480          1,197         1,492  
  stock-based
  compensation
  Net cash provided
  by financing             427          480          2,003         2,144  
  activities
Net increase in cash        2,869          9,767          11,405          15,080
and cash equivalents
Cash and cash
equivalents,               70,175       57,000       61,639        51,687 
beginning of period
Cash and cash
equivalents, end of       $ 73,044      $ 66,767      $ 73,044       $ 66,767 
period
                                                                        
Other cash flow
information
Non-cash investing
activities:
  Capital
  expenditures            $ 657          $ -            $ 657           $ -
  accrued but not yet
  paid
Cash payments:
  Income taxes paid       $ 3,205        $ 2,500        $ 11,854        $ 9,645
  Cash dividends on
  common stock
  previously                -              -              16,231          -
  restricted for
  payment of dividend

Contact:

NIC Inc.
Angela Skinner, 913-754-7054
askinner@egov.com