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Investor Presentation October 2011

Investor Presentation October 2011. NASDAQ: EGOV www.egov.com/investors. Forward -looking statements. Cautionary Statement Regarding Forward-Looking Information

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Investor Presentation October 2011

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  1. Investor Presentation October 2011 NASDAQ: EGOV www.egov.com/investors

  2. 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 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.

  3. Company overview • NIC begins with 1 contract – Kansas • Creates the outsourced eGovernment • industry • Pioneers innovative funding model 2011 1992 • 25 state & 2 federal partners • Headquarters: Kansas City area • 625+ 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.

  4. YEAR OFMANDATORYCONTRACTREBID 2021 2020 2019 2018 2018 2017 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 2011 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 Delaware 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!

  5. 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.

  6. 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

  7. 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)

  8. 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

  9. 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

  10. Balance sheet & capital structure SEPTEMBER30, 2011 Working capital $ 66.8M 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

  11. 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.

  12. 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

  13. Contacts ANGELA SKINNER Director of Corporate Communications & Investor Relations913.754.7054askinner@egov.com STEVE KOVZANChief Financial Officer913.754.7007stevek@egov.com NASDAQ: EGOV www.egov.com/investors

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