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Q2 2008 Earnings Call

July 30, 2008 4:30 pm ET


Nancy Beaton - Director of IR and Communications

Harry Herington - Chairman of the Board and CEO

Steve Kovzan - CFO


Charlie Anderson - Doherty & Co

Nick Gogerty - Fertilemind Capital

James Cakmak - Sidoti & Co

Chad Bennett - Northland Securities, Inc



Good afternoon, ladies and gentlemen, and thank you for standing by. Welcome to the NIC second-quarter earnings announcement conference call. During today's presentation, all parties will be in a listen-only mode. Following the presentation, the conference will be open for questions. (Operator Instructions) This conference is being recorded today, Wednesday, July 30, 2008.

I would now like to turn the conference over to Nancy Beaton, Director of Investor Relations and Communications. Please go ahead, ma'am.

Nancy Beaton

Thank you, operator. The press release for NIC's second-quarter earnings announcement was issued 30 minutes ago. For those of you who haven't received the release, the announcement is available on our corporate website at And you may also call our headquarters at 1-877-234-3468, and Chris Davies will fax the information to you.

But before we begin, let's cover our customary Safe Harbor statement. Specifically, 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 statement and risk factors described in NIC's 2007 annual report on Form 10-K filed with the SEC on March 17, 2008 and NIC's Form 10-Q for the quarter ended March 31, 2008 filed with the SEC on May 12, 2008.

I would now like to introduce Harry Herington, Chairman of the Board and Chief Executive Officer of NIC.

Harry Herington

Thank you, Nancy. Good afternoon, and thank you for joining us for NIC's second-quarter earnings call. We truly appreciate your time today as we discuss the events of the quarter and our financial performance.

I will begin with the important topics and metrics for the second quarter, and then Steve Kovzan, our Chief Financial Officer, will provide additional financial details. After that, we will open up the call and take your questions.

First, let's discuss new state opportunities. As you know, we don't normally talk about active opportunities on these calls, as it has been our longstanding belief that the time to talk about new deals is after the contract has been signed. However, as we continue to see our enhanced sales efforts paying off, there has been a lot of discussion around several large opportunities. Thus, I believe it is important to clarify what those opportunities are, the timing, and the next steps around each.

Let's start with New Jersey. The New Jersey RFP issued earlier this summer was a self-funded enterprise portal opportunity, and one we are excited about. The original due date of our response was moved from mid-June to August 8 due to changes within the state's internal timeline. This is very common in government procurements, and does not cause us any concerns.

Next is Georgia. Georgia issued a request for qualified contractors in mid-May, which was used to downselect a small number of providers to which the RFP was issued. NIC was selected as one of three providers for Georgia. BearingPoint and Deloitte are the other two. As usual, we expect this to be a very competitive procurement. We received the Georgia RFP late last week, and as the state has publicly stated, our bid is due September 2.

We are currently in the process of reviewing the RFP and we are under a nondisclosure agreement with the state. Thus, we are unable to make further comments on the contents of the RFP. With both of these opportunities, we believe NIC has the best experience, expertise, and financial models to deliver an outstanding portal, which is the belief that is shared by our 21 state partners.

Now, on to Texas. The state has said its current portal contract will go out for rebid. The last communication from the state is that the RFP will be issued later this year, and an award will be made in the latter half of 2009. California is still working on certain aspects of its bid. The business model addendum originally expected in mid-June is now slated for mid-September, and then the new award date for California is June 2009. Again, delays are very common.

Finally, I have received questions concerning the current New York website redesign. It is important to note that this is not an enterprise-wide portal opportunity. This is strictly a time and materials opportunity with a $500,000 cap on it. This project has numerous and highly complex requirements and a very short delivery timeframe. We do not feel this is a solution we can provide profitably within the time required; thus, we have elected not to bid on it. That being said, we do not believe this decision will impact our ability to obtain a potential enterprise-wide portal opportunity in New York, and we continue to actively pursue that opportunity.

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