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Investor Presentation First Quarter 2012. NASDAQ: EGOV www.egov.com/investors. Forward -looking statements. Cautionary Statement Regarding Forward-Looking Information

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Investor Presentation First Quarter 2012

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Investor presentation first quarter 2012

Investor Presentation

First Quarter 2012

NASDAQ: EGOV www.egov.com/investors


Investor presentation first quarter 2012

Forward-looking statements

Cautionary Statement Regarding Forward-Looking Information

Any statements contained in today’s presentation 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 an application consolidation project in Texas 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 implement its new portal contracts and portal consolidation project 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 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 possibility of security breaches through cyber attacks; 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 first quarter 2012

Company overview

  • First contract – Kansas

  • Creates the outsourced eGovernment

  • industry

  • Pioneers innovative funding model

2012

  • 26 state & 2 federal partners

  • Headquarters: Kansas City area

  • 650+ employees nationwide – in state capitals

20 Years of eGovernment Innovation

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.


Investor presentation first quarter 2012

YEAR OFMANDATORYCONTRACTREBID

2021

2021

2020

2019

2019

2018

2018

2017

2016

2016

2016

2016

2015

2015

2014

2014

2014

2014

2014

2013

2013

2013

2013

2012

2012

2012

2012

2012

2012

YEAR SERVICES COMMENCED

2011

2011

2001

2012

1999

1997

1999

2011

1992

1995

2000

2009

2000

2003

2005

2009

1995

2001

2005

2007

2000

2009

2007

2002

1997

1997

2001

2006

1997

Leading the industry: current partners

GOVERNMENTPARTNERS

Oregon

Mississippi

Montana

Maryland

Utah

Arkansas

Maine

Delaware

Kansas

Nebraska

Tennessee

Texas

Idaho

Kentucky

Colorado

Federal DOT/FMCSA

Indiana

Oklahoma

South Carolina

Arizona

Hawaii

New Mexico MVD

West Virginia

Alabama

Federal Election Commission

Iowa

Rhode Island

Vermont

Virginia

Partner state

State with active RFPs

Contract signed; not yet financially viable

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- and citizen-to-government online services

  • Proprietary, government payment processing – more than $17 billion secure payments in 2011

  • Security*

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

  • Marketing of services 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 first quarter 2012

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


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 first quarter 2012

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 goal by launching non-DMV services

40%+ Gross margin goal over time

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 goal

  • ~ 45% of portal revenue

  • Recurring portal management feearrangements in Arizona, Delaware, and Indiana

  • ~ 5% of portal revenue

  • Driver history records

  • Transaction-based/recurring

  • 1-3% growth

  • ~ 40% 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 first quarter 2012

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


Federal self funded opportunities leveraging state success

  • Pre-Employment Screening Program

    • 1st self-funded federal service

    • Truck driver safety records for new hires

    • 600,000 records accessed in 2011

    • $6 million in revenue in 2011

  • New Federal Opportunities

    • Dedicated business development team

    • Educating federal agencies about our model

    • Focus on business-to-government transactions

Federal self-funded opportunities: leveraging state success


Investor presentation first quarter 2012

Balance sheet & capital structure

DECEMBER 31, 2011

Working capital$ 61.6M

Days sales outstanding (DSO) 6

Long-term/short-term debtNONE

Strong cash flow and balance sheet provide financial flexibility

  • Cash generation = more than $133M 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

    • $16M ($0.25/share) paid 1/2012

  • ≈ 64.3M diluted shares outstanding

  • Board and management own ~10% of TSO


Investor presentation first quarter 2012

2012 investments pave way for accelerated growth in 2013

GUIDANCE

2012*

(MILLIONS EXCEPT FOR EPS)

2011

2010

2009

*2012 guidance does not include revenue from unannounced contracts.


Investor presentation first quarter 2012

Investment highlights: superior value and consistent growth

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

Unique focus – 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

stockholders


Investor presentation first quarter 2012

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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