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Investor Presentation August 2011. NASDAQ: EGOV www.egov.com/investors. Forward -looking statements. Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995

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Investor Presentation August 2011

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Investor presentation august 2011

Investor Presentation

August 2011

NASDAQ: EGOV www.egov.com/investors


Investor presentation august 2011

Forward-looking statements

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995

Any statements contained in today’s presentation that do not relate to historical or current facts constitute forward-looking statements. These statements include NIC’s financial guidance for the current fiscal year, including statements regarding the potential for growth in revenues and income, 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 integrate into its operations recently awarded eGovernment contracts; NIC's ability to successfully increase the adoption and use of eGovernment services; the success of the company in signing contracts with new states and federal 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; the SEC investigation; pending litigation involving the Company; and general economic conditions and the other important cautionary statements and risk factors described in NIC's 2010 Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 16, 2011 and in NIC’s Quarterly Reports on Form 10-Q filed with the SEC in 2011. 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.


Investor presentation august 2011

Company overview

  • NIC begins with 1 contract – Kansas

  • Creates the outsourced eGovernment

  • industry

  • Pioneers innovative funding model

2011

1992

  • 24 state & 2 federal partners

  • Headquarters: Kansas City area

  • 600+ employees nationwide – in state capitals

NIC is the nation’s premier provider of official government websites, online services, and secure payment processing solutions

for more than 3,000 federal, state, and local agencies

across the United States.

NIC’s unique self-funded business model delivers superior value and consistent growth.


Investor presentation august 2011

YEAR OFMANDATORYCONTRACTREBID

2021

2020

2019

2018

2018

2016

2016

2016

2016

2015

2015

2014

2014

2014

2014

2014

2013

2013

2013

2013

2012

2012

2012

2012

2012

2011

YEAR SERVICES COMMENCED

2011

2001

1999

1997

1999

1992

1995

2000

2009

2000

2003

2005

2009

1995

2001

2005

2007

2000

2009

2007

2002

1997

2001

2006

1997

1997

Leading the industry: current partners

GOVERNMENTPARTNERS

Mississippi

Montana

Utah

Arkansas

Maine

Kansas

Nebraska

Tennessee

Texas

Idaho

Kentucky

Colorado

Federal DOT/FMCSA

Indiana

Oklahoma

South Carolina

Arizona

Hawaii

New Mexico MVD

West Virginia

Alabama

Iowa

Rhode Island

Vermont

Virginia

Federal Election Commission

Partner states

States with active RFPs

Long-term contracts = high revenue and operational visibility. Barriers to exit: NIC has renewed every contract extension and competitive rebid. All partners are references – the gold standard in government!


Delivering end to end egovernment value

  • Dedicated, local team in capital city

  • Unique business model – enterprise-wide services to all agencies, even those that don’t generate revenue

  • Focus on our partners’ customers – application development and web expertise for business-to-government and citizen-to-government online services

  • Proprietary, government payment processing – more than $12 billion secure payments in 2010

  • Security*

  • Fee collection and disbursement, with financial reports tailored to government agencies’ specific needs

  • Marketing of applications to promote use by citizens and businesses

  • Transparency

Delivering end-to-end eGovernment value

* NIC’s rigorous security practices include PCI-DSS compliance, third-party audits and SAS 70 Type II certification for payment processing.


Investor presentation august 2011

A unique self-funded business model

Partner benefits:

- sustained funding - updated technology/ reduced risk

- vast applicationlibrary/deployment speed

- efficiencies/cost- savings - award-winning sites & services

  • No tax appropriated funding required

  • NIC makes up-front investment and funds ongoing operating and capital costs

  • Fees generated by services that create efficiencies for businesses and citizens

  • Transaction-based, population-driven model

  • Recurring, annuity-like revenues: do not have to win back customers year after year

User benefits:

- efficiencies

- one-stop convenience

- security - awareness

- in-demand services

- quick interaction

NIC benefits:

- non-cyclical, recurrring revenues

- highly scalable model - barriers to exit

5


Business cycle an rfp to applications

Business cycle: an RFP to applications

1

2

RFP & CONTRACT AWARD

- National sales team of ~15

- Identify champion: Governor, Chief

of Staff, CIO

- 18-24 mo. process to state issuing RFP

- Multi-year base contract term with renewals

LAUNCH

- Establish dedicated team in capital city

- Modest up-front investment per

portaltypically $500K-$1M – payback

usually within 12 mos.

4

3

DMV = foundation

- Driver history records (DMV) used

primarily by insurance companies to set

rates - Single largest revenue generating service

in every state; serves as foundational

funding source

- ‘Go live’ typically 3-6 mos. after state

contract is secured

NON-DMV = growth

- Hundreds of business-to-government and citizen-to-government services

- Business applications: ( ~75% of revenue)

Banking & legal, licensed professions,

limited criminal histories

- Citizen applications: Vehicle registrations,

hunting & fishing license, vital records

(birth & death certificates)


Investor presentation august 2011

Self-funded: low-risk, high-reward model

$0.50 Per capita

of revenue from DMV

30%+ Gross margins 1st year

of DMV revenue

10%+ Annual same-state revenue growth rate by launching non-DMV services

40%+ Company-wide portal gross margin goal

Add-on non-DMV services drive revenue and margin growth

Initial DMV service priced to cover fixed costs plus profit

Four Categories of Portal Revenue:

NON-DMV

DMV

FIXED FEES

TIME & MATERIALS

  • Hundreds of services

  • Transaction-based/recurring

  • 20%+ growth

  • ~ 40-45% of portal revenue

  • Recurring portal management feearrangements in Arizona and Indiana

  • ~ 5% of portal revenue

  • Driver history records

  • Transaction-based/recurring

  • 1-3% growth

  • ~ 40-45% of portal revenue

  • Project-based fees paid by states

  • Non-recurring

  • ~ 10% of portal revenue

85%+ recurring portal revenues, secured by long-term contracts


Investor presentation august 2011

A successful foundation delivering consistent growth

  • Long-term growth:

  • New services:Organic, same-state growth driven by new services and adoption, which includes mobile innovation, and county & local services

  • New partners:Goal of adding 2 states per year

  • New federal opportunities: Building on the momentum of the DOT FMCSA self-funded contract


Investor presentation august 2011

Balance sheet & capital structure

JUNE 30, 2011

Working capital$ 57.0M

Days sales outstanding (DSO) 5

Long-term/short-term debtNONE

Strong cash flow and balance sheet provide financial flexibility

  • Cash generation = more than $117M in special dividends paid since 2007:

    • $47M ($0.75 /share) paid 02/2007

    • $16M ($0.25/share) paid 02/2008

    • $19M ($0.30/share) paid 02/2009

    • $19M ($0.30/share) paid 02/2010

    • $16M ($0.25/share) paid 12/2010

  • ≈ 63.8M diluted shares outstanding

  • Insiders and management own ~10% of TSO

  • 2-3 % total equity compensation stock overhang


Investor presentation august 2011

Organic growth + market opportunity = long-term earnings potential

2011 % GROWTH

GUIDANCE

2011*

(MILLIONS EXCEPT FOR EPS)

2010

2009

2008

*2011 guidance does not include revenue from new or unannounced contracts.


Investor presentation august 2011

Investment highlights: superior value and consistent growth

NIC is eGovernment – we created it and we lead the industry

Unique focus – we focus on bringing efficiencies and convenience to our partners’ customers

Self-funded business model – no tax appropriated dollars,

especially important during

a slow economy

Consistency – recurring revenues and organic growth secured by

long-term contracts

A healthy state pipeline – and we’ve recently expanded our

federal presence

High returnon investment – and a history of returning capital to

shareholders


Investor presentation august 2011

Contacts

ANGELA SKINNER

Director of Corporate Communications & Investor [email protected]

STEVE KOVZANChief Financial [email protected]

NASDAQ: EGOV www.egov.com/investors


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