Investor

Presentation
Cautionary Statement
Regarding Forward-
Looking Information
Any statements included in this presentation that do not relate to historical or
current facts constitute for ward-looking statements. These statements include
estimates, projections, the expected length of contract terms, statements
relating to the C ompany’s business plans, objectives and expected operating
results, statements relating to possible future dividends, 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
uncer tainties 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 C ompany and its par tners, the abilit y of the C ompany
to renew existing contracts, and to sign contracts with new states, and federal
and local government agencies, as well as possible data securit y incidents.
You should not rely on any for ward-looking statement as a prediction or
guarantee about the future. A detailed discussion of risks and uncer tainties
that could cause actual results and events to dif fer materially from such
for ward-looking statements is included in the sections titled “Risk Factors”
and “Caution About For ward- Looking Statements” of the C ompany’s most
recent Forms 10 - K and 10 - Q filed with the SEC. These filings are available at
the SEC’s web site at w w w.sec.gov. Any for ward-looking statements made in
this release speak only as of the date of this presentation. E xcept as required
by applicable law, we under take no obligation to update or revise publicly any
for ward-looking statements, whether as a result of new information, future
events, or other wise.

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OUR MISSION

NIC makes government interactions more

accessible for everyone through technology.

• • Began in Kansas in 1992.

• • Today NIC partners with 5,500 federal, state, and local government agencies.
• • Headquar tered in Greater Kansas Cit y, NIC employs 950 + nationwide.

(pictured left to right)

H AR RY H E R I N G TON
Chief Executive Officer &
Chairman of the Board
(with NIC since 1995)

ROB E R T K N APP
Chief Operating Officer
(with NIC since 1999)

JAYNE FRIEDLAND HOLLAND

Chief Security Officer
(with NIC since 2005)

S TE VE KOV Z AN
Chief Financial Officer
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(with NIC since 1999)
NIC PARTNE RSHIPS

Y E AR OF E XPI R ATION
G OVE R N M E NT Y E AR S E RV IC E S
OR M AN DATORY
PAR TN E RS COM M E N C E D
CONTR AC T R E B I D

Illinois 2027 2017

Indiana 2025 1995
West Virginia 2024 2007
C olorado 2023 2005
Virginia (multiple agencies) 2023 1997
Wisconsin 2023 2013
Alabama 2022 2002
New Jersey 2022 2009
Pennsylvania 2022 2012
Kansas 2022 1992
Oregon 2021 2011
Mississippi 2021 2011
Nebraska 2021 1995
South Carolina 2021 2005
C onnecticut 2020 2014
Louisiana 2020 2015
Montana 2020 2001
Ok lahoma 2020 2001
Hawaii 2019 2000
M ar yland 2019 2011
Utah 2019 1999
Rhode Island 2019 2001
Vermont 2019 2006
Arkansas 2018 1997
Federal (DOT/FMCSA) 2018 2009
Kentuck y 2018 2003
M aine 2018 1999
New Mexico (MVD) 2018 2009
Texas 2018 2009
Idaho 2018 2000
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NIC PARTNE RSHIPS

Long-term contracts
provide high revenue
and operational
visibility, with
average partner
tenure of 12 years.

Enterprise-Wide
Par tner States

Government
Agency Par tners

NIC Ser vices

Par tners

PORTAL S & SUB SID IARIE S

R H O D E I S L A N D
I N T E R AC T I V E
FLE XIBLE FUND ING

NIC works with government on

flexible funding solutions for digital
government programs.

NIC takes a flexible approach to funding digital government solutions. While

most enterprise par tnerships are funded through a transaction-based funding
model, others are funded through fixed fees or a hybrid of fixed fees and
transaction-based funding.

NIC’s unique transaction-based funding

model does not require appropriated tax
dollar funding.

NIC makes up-front investment and funds ongoing operation and capital costs.

It is a transaction-based, population-driven model. For a select number of

ser vices, users pay a minimal fee in return for real-time, online ef ficiencies.

Ef ficiency fees provide recurring, annuit y-like revenues – do not have to win
back ser vices year af ter year.

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MODE L PROVIDE S COS T-AVOIDANCE

A study by the Universit y of Utah concluded that nine high-volume ser vices
using NIC’s model of digital government helped the state of Utah avoid
$ 61 million in costs over five years. A second study of 900 Utah businesses
found that having hundreds of business-to-government digital government
ser vices positioned Utah as a pro-business state.

$ 13
PE R TR AN SAC TION SAVE D WH E N PL AC I N G

S E RVI C E S ON LI N E VS . OF F LI N E

$ 61M
S TATE OF UTAH COS T AVOI DAN C E I N PA S T 5 Y E ARS

85%
OF UTAH B US I N E S S E S B E LI E VE A ROB US T

UTAH .G OV D R IVE S A PRO - B US I N E S S PE RC E P TION

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NIC DE LIVE RS VALUE

D E D IC ATE D, LOC AL TE AM in capital cit y

E NTE R PR ISE-WID E APPROACH supports all agencies by pooling

efficiency fees

Focus on our par tners’ customers – D E LIVE R ING D IG ITAL

GOVE R NM E NT SOLUTIONS to citizens and businesses

IN D US TRY- LE AD ING payment processing – More than $ 26 billion

processed securely on behalf of government par tners in 2016

C entralized SECU R IT Y team provides PC I -DSS compliance, helps keep

ser vices and systems secure, and monitors for vulnerabilities and threats

IN NOVATION is in our DNA . We pair private sector creativit y with

a deep understanding of how government works

MAR K ETING SE RVICE S help drive adoption

Par tners benefit from a NATIONWID E SU PPOR T S TRUC TU R E

of best practices, code reuse, and collaboration

A FLE XIBLE FU N D ING MOD E L provides for the development of digital

government solutions, as well as the continuous investment for ongoing
securit y, customer ser vice suppor t, and maintenance

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NIC DRIVE S INNOVATION

Both Inc. magazine and CNN Money

have reported that NIC serves as the
“R&D shop” for government.

We drive innovation and help government harness the latest technology

to deliver ef ficient government interactions.

This includes launching the first of ficial government mobile app for the
iPhone ( 2007), as well as developing the first state government “skills”
( 2016 ), which provide ser vices on Ama zon Echo using Alexa , the device’s
voice-activated system. NIC teams have also used vir tual realit y to develop
vir tual capitol tours using Google Cardboard in several states.

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GOV2GO

What if you could interact with

government using any device? What if
you no longer had to navigate a variety
of government jurisdictions and agency
websites or mobile apps?

TODAY, THAT IS POSSIBLE WITH GOV2GO.

GOV2GO IS THE NATION’S FIRST PERSONAL

A SSIS TANT FOR GOVE R NM E NT THAT
BR ING S TOG ETHE R ALL INTE R AC TIONS
WITH ALL LE VE L S OF GOVE R NM E NT IN ONE
C ITI Z E N - CE NTR IC PL ATFOR M .

IT LE AR NS about your interactions

with government.

IT TR ACK S those interactions throughout

the year.

IT NOTIF IE S you with timely aler ts when

renewals and payments are due.

IT COM PLETE S transactions with

one-click payments.

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AR K ANSA S WA S THE F IRS T S TATE TO ADOP T GOV2GO.

• • Used by more than 500,000 people in Arkansas

• • Winner of several national awards, including NASC IO’s State IT
Recognition Award, StateScoop 50 : Innovation of the Year, ACT- IAC
Igniting Innovation Award, and NASS’s IDE AS Award

TH IS PL ATFOR M INCLU D E S THE FOLLOWING COR E SE RVICE S

THAT S TATE S C AN D E PLOY QU ICK LY:

• • vehicle registration
• • recreational licensing and permitting
• • election registration and polling
• • business filings and franchise ta x payments

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NIC ’S BUSINE SS CYCLE

1 R F P & CONTR AC T AWAR D

• •Dedicated national sales team

• •Identif y champion: Governor, Chief of Staf f, C IO
• •18-24 month process to state issuing RFP
• •Multi-year base contract term with renewals is t ypical

2 L AU NC H

• •Establish dedicated team in capital cit y

• •Significant intellectual proper t y value brought into states
• •Modest up-front investment per por tal t ypically $ 500K- $1M –
payback usually within 12 months

3 FOU N DATIONAL FU N D ING SE RVIC E

• •Driver histor y record ( DHR ) ser vice used primarily by insurance

companies to set premiums is single largest revenue-generating
ser vice in most states

• •Ser ves as foundational funding source for enterprise-wide

ser vices in most states

• •‘Go live’ t ypically 3- 6 months af ter state contract is secured

4 INTE R AC TIVE GOVE R NM E NT SE RVICE S = G ROW TH

• •Hundreds of business-to-government ser vices other than

driver histor y records ( IGS )

• •Business applications : (~75 % of revenue ) banking & legal, licensed

professionals, limited criminal histories, various ta x filings

• •Citizen applications: vehicle registrations, hunting & fishing licenses,

vital records ( bir th & death cer tificates ), various ta x filings

• •C ontinuous investment into digital government and por tal

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NIC FINANCIAL METRIC S

~$ 0. 50 // per capita of revenue from foundational funding ser vice

~30 % // gross margins in first year of revenue

8 % + // annual same-state revenue grow th goal by launching new

digital government ser vices

40 % + // gross margin goal over time

POR TAL L AU NCH & G ROW TH

Initial service priced to New digital government services

cover fixed costs plus profit drive revenue and margin growth
$3M

$2M

$1M
Expense

YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5

T YPE S OF POR TAL R E VE N UE

Interactive Government Services // Hundreds

of services, excluding driver history records,
transaction-based /recurring, 10 %+ growth goal,
~64% of portal revenue in 2017

Driver History Records // Transaction-based /

recurring, flat/low growth, ~31% of portal revenue in 2017

Fixed Fees // Recurring portal management fee

arrangement in IN, ~2% of portal revenue in 2017

Software Development // Project-based fees paid by

states, non-recurring, ~3 % of portal revenue in 2017

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NIC G ROW TH DRIVE RS
State
NE W SE RVIC E S
• •Organic, same-state grow th driven
by new ser vices and increased
adoption of existing ser vices
• •Includes emerging technology,
mobile innovation, plus count y
and local ser vices
NE W PAR TNE RS
• •Goal of adding one or more
states per year
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Federal
• •Dedicated business development
team in Washington, D.C.
• •Transaction-based, no-cost funding
of Pre-Employment Screening
Program for U.S. Depar tment of
Transpor tation Federal Motor
Carrier Safet y Administration
• •YourPassNow digital park entrance
passes provided at select locations
in par tnership with Depar tment of
Interior National Park Ser vice and
U.S. Depar tment of Agriculture
U.S. Forest Ser vice
• •Solutions also developed for
Librar y of C ongress, Federal
Bureau of Investigation, and more
NIC DE LIVE RS CONSIS TE NT G ROW TH

TOTAL R E VE N UE S ( $ M )
R
8 % CAG
$336.5
$350.0 $317.9
$292.4
$300.0 $272.1
$249.3
$250.0

$200.0

$150.0

$100.0

$50.0

2013 2014 2015 2016 2017

E AR N ING S PE R SHAR E
G R
12 % CA
$ 0.90 $0.84*
$0.77
$0.80

$0.70 $0.63
$0.59
$0.60
$0.49
$0.50

$0.40

$0.30

$0.20

$0.10

2013 2014 2015 2016 2017

* 2016 includes certain discrete and non-recurring income tax adjustments that increased EPS
by $0.08 for the year

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CAPITAL ALLOCATION

High returns on invested capital, strong cash flow, and a debt-free

balance sheet provide significant financial flexibilit y.

$280M in special Initiation of regular

dividends paid quarterly cash
since 2007 dividend in 2017

$ 47M ( $ 0.75 /share ) paid Feb. 2007 • $ 0.32 /share annualized dividend
( $ 21.5M )
$16M ( $ 0.25 /share ) paid Feb. 2008

$19M ( $ 0.30 /share ) paid Feb. 2009
$19M ( $ 0.30 /share ) paid Feb. 2010
$16M ( $ 0.25 /share ) paid Dec. 2010
• First quar terly dividend of $ 0.08 /
share ( $ 5.3M ) paid in March 2017
• ~45 % net income payout ratio

$16M ( $ 0.25 /share ) paid Jan. 2012 • • Maintain financial flexiblit y and
option to pay occasional special
$16M ( $ 0.25 /share ) paid Dec. 2012 dividends with surplus cash

$ 23M ( $ 0.35 /share ) paid Jan. 2014 Approximately 66 million diluted

shares outstanding
$ 33M ( $ 0.50 /share ) paid Nov. 2014

$ 37M ( $ 0.55 /share ) paid Jan. 2016

$ 43M ( $ 0.65 /share ) paid Dec. 2016

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IN SUMMARY

NIC IS D IG ITAL GOVE RNME NT // we created it, and we lead the industr y

UNIQUE FOCUS // deliver ef ficiencies and convenience to

our government par tners’ customers

TR ANSAC TION - FUNDE D BUSINE SS MODE L // no ta x appropriated

dollars required

CONSIS TE NCY & VISIBILIT Y // high qualit y, recurring revenues and

organic grow th secured by long-term contracts

A L ARG E ADDRE SSABLE S TATE MARK ET // also focused on

expanding our federal government presence

S TRONG CA SH FLOW G E NE R ATION // a commitment of returning

capital to stockholders

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NIC FOUND ING PRINCIPLE S

To be the best partner government

has ever had.
To be the best place employees
have ever worked.
To be the best investment stockholders
have ever made.

S TE VE KOV Z AN // Chief Financial Of ficer

913.754.7007 | stevek @ egov.com

ANG E L A DAVIE D // Vice President, C orporate C ommunications

913.754.7054 | adavied @ egov.com

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