Q3 2020 NIC Inc Earnings Call

Good day and welcome to the Nic Q3, 2020 earnings Conference call. Today's conference is being recorded at this time I would like to turn the conference over to our presenters.

Good afternoon, and welcome to Nic is earning call. The press release for Nic is earnings announcement was issued 30 minutes ago. Our earnings release is also available on our corporate website at Www Dot ego Dot com forward Slash Investor Gosh really shows you now.

Color headquarters at eight or nine or or report X eight and we will email the information to you John.

Joining us on the call today are in <unk> C O, Harry Herington, and E Com and I use Chief financial Officer.

Following a reading of our cautionary statement regarding forward looking information, our CEO and CFO will deliver prepared remarks, then we'll open for questions.

Any statements made during this call that do not relate to historical or current stock constitute forward looking statements.

These statements often address the companys potential financial performance for the 2020 fiscal year or future fiscal years.

Projections, the expected length of contract terms.

Statements relating to the company's business plans objectives, and expected operating hurdle statements relating to potential new contract or renewal date.

Payments relating to the company's expected [laughter] desktop straight.

Statements relating to possible future dividends and share repurchases.

Statements related to the ongoing effects. The COVID-19 pandemic is expected to have on our business and financial results, including statements relating to the duration profit ability and I'm satisfied performance obligations.

Our COVID-19 testing solution and other possible future about including potential acquisition and the assumptions upon which those statements Darby.

Forward looking statements are based on current expectations and assumptions that are subject to risks and uncertainties, which may cause actual results could differ materially from the forward looking statements.

These risks include regional or national business, political economic competitive social and market conditions, including various termination rights of the company and its partners the ability of the company to renew existing contracts in whole or in part and to sign contracts with new federal state and local government either.

Yes.

Yeah, Hi, potential information technology, cyber security or data security breaches are incident.

Companys ability to identify and acquire suitable acquisition candidates.

Successfully integrate any acquired businesses and the effects of the COVID-19 pandemic may have on continued demand for and profitability of the company services, including October 19 testing solution as well as its government agency partner <unk> workforce and the broader economy.

You should not rely on any forward looking statement as a prediction or guarantee about the future.

A detailed discussion of risks and uncertainties that could cause actual results and events to differ materially from such forward. Looking statements is included in the sections titled risk factors and caution about forward looking statements.

The company's most recent form 10-K, and subsequent reports filed with the EPS easy <unk>.

These filings are available at <unk> as he sees website at www Dot E. Dot Gov.

Any forward looking statements made during this call speak only as of the date of this call except as maybe required by applicable law. The company undertakes no obligation to update or revise publicly any forward looking statement, whether as a result of new information future events or otherwise.

No. It is my pleasure to turn the call over to Harry Herington, Nic Chief Executive Officer, and chairman of the board.

Thank you Karen and good afternoon, everyone.

Like many companies dropped world, there's been forced the team and I see manage our business differently.

One thing that did not change what's your absolute laser focus on employment rationalizations for partners and our communities and it was that focus on termination burn toys and they wish bone.

Core.

To begin with.

We are proud to announce we finalized the multiyear contract with the state of Florida.

Processing across all agencies and we're pleased to welcome back.

Back to the NRC State Enterprise family also with a multi year contract.

In addition, we expanded drill arc over 19 testing partnerships, we formed last quarter were killed and that's working.

Consumption in August true has administered more than 120000 revenue totaled 19, Kansas and South Florida thousands of show on behalf of the University of Mississippi, and Alabama operations.

Much more than tripled in a moment, but first.

Parity on the payment processing contract, we want with the state of Florida, following a year long competitive bid process.

[laughter] processing, Oh payment types across all 19 executive branch I guess.

The five year transaction for the contract.

Maybe extended by up to five additional years ultimately building for cities and municipalities. Its work with you Narsi for payment processing services.

A comprehensive and seamless experience citizens and businesses.

For its fiscal year ended June 2019, the state of Florida process 74 million transactions for a total of $52 billion in payments are close to 19 state agencies, and processed 21 million transactions more than $1 billion across more than 90 local governments.

Given the scale and complexity providing payment services.

Works state in the United States, we will put an experienced and dedicated team on the ground in Tallahassee and leverage our industry leading payment park.

In addition to it.

You bet.

To enhance payment collection and processing services across the state isn't commscope ago or citizen centric platform personal government assistance.

Okay.

Critical solution for many of the NRC into managed services during October 19, including foreigners COVID-19 rapid testing initiative we've drilled.

Oh, how she based team run the operation. So I am sure you know actually state enterprise contracts with 100% focus on delivering the highest level of service to the Sunshine state.

Well, Steve will cover some financial specifics on board in a moment I will conclude my remarks on sort of by emphasizing how honored by the confidence. The state has placed in there nicely as we continue to expand our payment processing and digital government services across the country.

Another contract in the state of Harlem after.

After a competitive bid process I will once again placed its confidence in Nic and selected us as their state enterprise digital government solutions partner That's me.

You know actually had a 15 year partnership I conclude at the end of her contract in 2017.

Under the new five year transaction funded contract, which includes five one year renewal options. They can exercise to extend the contract 2030.

Good morning, she will work with the state leadership consulting services into a unified digital experience for all at once and deploying a world class digital government applications and services in Iowa, We will leverage our comprehensive suite, a predevelopment software as a service solutions in which we have invested significantly in Brazil.

Years, including Junco would you be the centerpiece serving as a repository for all digital services across the state.

We're also for our industry, leading payment platform comprehensive suite of solutions not exclusively from government, which includes our secure payment gateway common share count pages comes from doing application and the digital World. In addition.

<unk> App engine or low code application development platform to rapidly deploy digital government services.

<unk> costs and in a more repeatable manner to purchase additional software development and fine.

We will leverage our market services platform for MSP, which is an 80 I face weaker prebuilt basic software building blocks out in the cloud security and scalability microservices enable our teams to build applications faster and with West coast and in turn with less technology does.

Initial funding source on Iowa will be centered around payment processing and our focus for the remainder of this year and into the first half from 2021 will be on integrating our payments platform with existing state agency services promoting a streamlined approach to payment processing across the state we.

We will also immediately start good relationships with state agencies that we intend to extend beyond payments. It's an important one class digital revenue.

Applications and services.

Create a one stop solution for all things digital.

He will provide some additional financial trouble about in a moment.

We view the I. remodel as an additional go to market strategy for enterprise opportunities leveraging the significant investments. We've made in our payment terms go App engine microservices platforms to drive down startup and implementation costs, while increasing the speed and efficiency of application development and deployment.

Also do well with payment processing as initial funding source to be a compelling option for new state enterprise opportunities.

While on the topic of state enterprises I'm pleased to share. The Nic also executed a new five year state enterprise contracts with Oklahoma This past quarter and extended its state enterprise contracts with Wisconsin May 2023.

She also secured a six month contract extension with Maryland, with one six month renewal option remain.

As I mentioned earlier and I see continues to accelerate its important government and the citizens they serve with unique and innovative solutions during dependent.

Our tour Health partnership is a great example of that unique innovation.

Its profit 19 testing solution first launched in South Florida in early August approximately 95% of the sort of test results have been delivered in two hours or less you got to go through that.

It is a statistic we're very products as record results have been critical to helping communities response to this crisis in confidence the trail solution continues to expand we began testing asymptomatic students.

And staff at the University of Mississippi in September and testing for the Alabama Department of Corrections also launched in September when trail scheduled to administer 26600 PCR tests for approximately 19600 inmates and 7000 staff in 33 locations over 41 testing.

Nice results returned within 72 hours I'm pretty directly to the government.

Most recently, we signed a new contract with the state of South Carolina.

<unk> testing at four sites in the Myrtle Beach area. Those sites are now open to the community. The Trust solutions is also listed on three multi vendor contracts in Utah, Nevada, Missouri.

Well, it's not the only critical solution. The NRC has supported a government partners and communities during the pandemic.

As we previously shared actually he's got to go solution continues to be a core service offerings for all Pandemics unemployment assistant claims and they may come or see unemployment compensation claims in the Commonwealth of Virginia since launch I've got to go in Virginia, there have been more than 5.8 million. We took claims fall by citizens more than.

1 million subscriptions to the service at more than 400000, new downloads Gulfstream.

Also and I see recently launched a new online scheduling tool.

Yes.

Software as a service solution selling government thinks like reopened office by allowing the citizens to schedule appointments for government services and even decide parts of citizens visits the government offices. So ago enables agencies through the years to come at 19, social distancing guidelines and improve the overall customer experience through the decree.

Just wait times.

Oh I see partner stake, Mississippi was the first implement telecom as part of the Skip the line program Department of public safety.

Our services bureaus, and Bossy and Jackson begin pilot program on September 14, offering online scheduling from 15 different types of licenses since its launch when an 18000 appointments have been scheduled seizing the telecom bubble.

With over 70% using a mobile device.

These online appointments, we place well would've been walk in customers at individual driver license locations. This.

The system initially launched in two locations, which has since been increased to 30 locations and allows users to flex from 16 different important tests once.

One citizen reporting schedule apartments world after spending more than seven hours in line at a government office last year.

And the same serves.

In addition, Arkansas and New Jersey are also expected to implement the surface and.

Another solution getting attraction is checked free paid a cash payment solution, that's the unbanked and underbanked population through a strategic partnership with Pfizer, which we announced last quarter.

Lastly County, Treasurer's office unlock Arkansas was the first to integrate with the solution for property tax payments lots, which met with excitement with more than $300000 in cash payments collected on behalf of the county at retail sites within the first few weeks and we find are aggressively marketing the benefits of this service for other Nic partners.

Yes.

Each of these solutions, new contracts and contract extensions and add it to the incredible momentum and I see experienced 2020, I'm grateful for the confidence our government partners. It plays tennis and the perseverance of our employees.

And again I see strong financial position as we enter the fourth quarter of the year and look forward to 2021 with that I'm pleased to turn the call over to Nic is Chief Financial Officer, Steve Johnson.

Here in.

In the third quarter of 2020, we earned 37 cents per share compared to 21 cents in the prior year quarter.

Highlighted in our earnings release this afternoon, COVID-19 initiatives, where material contributors to our quarterly results.

Putting our tour held open 19 rapid testing partnership which commenced in August.

And the continuation of endemic unemployment services in Virginia, which began last quarter.

Poor health contributed $24.8 million in software and services revenues and approximately six cents in EPS for the quarter Walmart.

Oh, Virginia, Pandemics unemployment services contributed $7.6 million in state enterprise revenues and approximately two cents in EPS for the quarter.

On a year to date basis, Virginia pandemic unemployment services have contributed revenues of $11.1 million in earnings per share of three cents.

Also.

EPS for the quarter was higher by four cents due to certain discrete tax items that are more fully described in our earnings release.

In the prior year quarter, certain discrete tax items increased EPS by one cents.

Moving on to core results for the quarter same state enterprise revenues grew a phenomenal 25% year over year bolstered by revenue from Virginia.

So significant rebound in key I Gs revenue segments from the early months of the pandemic. We saw starting in June continued throughout the third quarter in a major way.

While it is difficult to quantify with precision we believe a portion of the rebound we saw in Q3, the catch up revenues from the softness in the early months of the pandemic. For example in July we saw a surge in various tax filing services due to the expiration of tax filing extensions.

In addition, the pandemic and the need to socially distance push.

For small businesses and citizens online to interact with government digitally instead of inline in government offices.

Which was a tailwind in the third quarter from any digital services, we manage on behalf of our government partners next.

Next I'll break down the major components of same state enterprise revenue growth for the quarter.

Same state transaction based interactive government services or I guess revenues were up a remarkable 25% for the quarter driven by higher revenues for GNC related services across several states, including the new auto title Lincoln registration system in Wisconsin, which launched in the fourth quarter of last year.

In addition, we saw higher revenues from tax related services as I mentioned, a moment ago and outdoor recreation services, which grew by 36% for the quarter as people continue to flock to the great outdoors Hunt fish and socially distance.

On a monthly basis for the quarter same state I guess revenues grew 33% in July 22% in August and 21% in September.

Frame of reference historically.

Historically been able to grow same state by GE EPS revenues by approximately 10% to 15% per year.

Next thing.

Same state transaction base driver history records or DHR revenues were down 6% for the quarter.

The second sequential improvement from the 12% decline we saw in the second quarter.

On a monthly basis same state DHR revenues were down 7% in July 9% in August and down 1% in September.

While this trend line continues to head in a positive direction.

Following and historically weak second quarter we.

We continue to anticipate weakness in DHR volumes compared to historical levels for at least the remainder of the year. As this service is more closely aligned with broader U.S. economic conditions in certain industries as we discussed at length last few quarters.

Moving on.

Same state revenues from development services increased more than twofold or approximately $7.9 million from the prior year quarter, driven almost entirely by endemic unemployment services in Virginia as I just mentioned.

We currently expect to provide these services for the remainder of the year and possibly beyond depending on the duration and severity of the pandemic and the related impact on the level of unemployment claims in Virginia.

Next I will touch on our ongoing implementations on the outdoor recreation front in Pennsylvania and Illinois.

For the quarter, we incurred $700000 of state enterprise costs to implement our outdoor recreation platform in Pennsylvania and Illinois.

Compared to $1 million in the prior year quarter.

I am pleased to report we remain on track to go live in both states first quarter 2021.

As I've mentioned in the past. We currently expect combined annual run rate revenues to approximately $7 million, which will be a nice contribution to our top and bottom lines into our gross profit and operating margins.

Finally, let's.

The state enterprise gross profit margin for the quarter was 41% compared to 40% in the prior year quarter. Despite lower margin revenues from Virginia endemic unemployment services.

Software and services revenues increased more than 150% were $26 million over the prior year quarter with toward health contributing nearly $25 million for the quarter.

Looking ahead.

Poor health is currently contracted to deliver testing services in the fourth quarter, representing revenues of approximately $17 million.

The state of Florida, and South Carolina.

Damage Department of corrections and the University of Mississippi. This.

At this point toward health has not contracted for services beyond 2020, but it's possible services will continue into 2021, depending on the severity and duration of the pandemic and the testing needs States correctional facilities and higher education institutions across the U.S.

Next we spoke the last few quarters about the federal pre employment screening program and our expectation that revenue softness from the service will continue for the remainder of the year due to the impact of the pandemic on the trucking industry.

We also expect that the softness was moderate as the year progressed and that is precisely what we saw in the third quarter with PSP revenues down 15%.

Sequential improvement from the 27% decline we saw in the second quarter.

On a monthly basis PSP revenues were down 18% July in July 15% in August and 10% in September.

Through the first three weeks of October PSP revenues were down 11%.

The trend line for P.S.P. has improved.

We currently anticipate continued weakness for at least the remainder of the year given the ongoing effects of the pandemic on the broader economy in the trucking industry.

Moving on recreation Dot Gov had a phenomenal quarter with revenues growing 93% continuing the momentum we saw starting in June when national parks insights reopened and experience an influx of visitors seeking a safe place to experience the great outdoors.

Vacation for the summer well.

While we don't expect this spectacular level of growth to continue in the fourth quarter, which is also the seasonally weakest quarter for the service and the cold fall and winter months.

We are hopeful the national parks and sites remain open safe destinations during the pandemic.

A final software and services revenue category I will touch on today is our payments segment as a refresher our payments segment within the software and services category, which includes the Texas payment processing contracts provide payment processing related transaction based services to state and local government agencies.

In states, where we do not maintain in enterprise contracts.

Payments segment revenues were up a strong 16% in the third quarter and up sequentially from a 2% decline in the second quarter.

The decline in the software and services gross profit margin for the quarter to 27% from 41% in the prior year quarter was mainly attributable to lower margin revenues from the tour health partnership and to a lesser extent to the year over year decline in higher margin Federal PSP revenues.

Finally, operating income for the quarter totaled $29.8 million, increasing 66% or $11.8 million, reflecting a $4.9 million contribution toward health and a 2 million dollar contribution from Virginia endemic unemployment services.

This resulted in an operating margin of 22% up from 20% in the prior year quarter turning.

Turning briefly now to our annual guidance for 2020.

We continue to evaluate the impact could be 19, maybe potentially have on our business for the rest of the year given what we know today about the pandemic.

Taking into consideration recent revenue trends, we have seen in our business, including significant over 19 related revenue contributions from somewhere else in Virginia.

For full year 2020, we now expect to come in above the high end of our previously issued guidance for total revenues, which was.

$391 million.

The high end of our previously issued adjusted EBITDA guidance, which was $93 million and above the high end of our previously issued EPS guidance of 81 cents.

Moving on I'm.

I'm excited to discuss our new Florida payments, and Iowa enterprise contracts and cover some brown on the financial side that Harry did.

I'll start with Florida.

Once we fully integrate our payments platform with agencies and departments at the state level over the course of the next 12 to 18 months, we expect transaction based revenues net of credit card merchant processing in interchange fees to approximate $6 million per year based on historical volumes.

As a frame of reference this is almost double the net revenues, we collect each year in Texas health.

Harry mentioned, we can also work with counties and cities, which has not been incorporated into our revenue estimates. So we have the potential for some nice upside to our current revenue estimates.

Unlike most of our government payment processing relationships in Florida, We will pass through credit card merchant processing in interchange fees and our cost to the stage.

As a result, we will not recognize revenues rose of credit card merchant processing in interchange fees like we do in Texas. For example, instead, we will do so on a net basis as reflected in our 6 million dollar annual revenue estimate, which will contribute to a higher reported gross margin as compared.

To our typical payment payment processing arrangements.

We currently expect to generate meaningful that news in Florida in 2020, as our teams focus for the remainder of the year will be on integrating our payments platform and got to go we state agency services and building relationships across the state.

Current expectations for Florida has a more meaningful revenue contribution in 2021, which we will discuss after we have more clarity on the timing and rollout of agency integrations. We will however decreased startup cost in the fourth quarter of this year, but we don't expect them to be significant.

And finally, we will report, Florida in the software and services category in our income statement and within the payments segment in our public filings along with the Texas Siemens contract.

I'll Echo Harry's comments that we could not be more excited about the opportunity to just sort of say the state of Florida.

This contract further solidifies our leadership in the state government payment space and validates our strategic focus on the payments variables to grow and diversify our business.

Next I'll briefly touch in Iowa.

Well, we may begin to generate minor in transaction based revenues in Iowa in the fourth quarter. This year.

Our current expectation is for either have a more meaningful revenue contribution in 2021 and beyond.

Which we will discuss after we have more clarity on the timing and rollout of agency payment integrations and application deployments.

From a revenue recognition standpoint like in Florida. The state currently intends to absorb all credit card merchant processing interchange fees.

So we will recognize transaction based revenues net of such fees. Furthermore, we will incur some startup costs in the fourth quarter of this year, but don't expect them to be significant [noise]. Finally, we will report lie within the state Enterprise segment in our income statement and in our public filings.

We are very excited for our new enterprise partnership with familiar friend in Iowa, and we could not agree more with chief information officer and debt done statement that our solutions align perfectly with governor Rendell visions of the state where technology is centered around the citizen and all transactions are stored in the digital wallet.

To conclude my prepared remarks today I was thrilled with our results in the third quarter and I'm, particularly proud of all the incredible things. Our teams are doing to help government and their constituents during the pandemic.

Resiliency of our core business and major contributions from pandemic related initiatives have put us in a position to exceed the high end of our annual guidance, which is remarkable given the unprecedented revenue declines we experienced in the early months of the pandemic.

Looking ahead I'm excited about the new business Tailwinds, we have heading into 2021 complement to consistent growth of our core business, including the Pennsylvania, and Illinois outdoor recreation launches currently slated for Q1 2021.

The new Florida payments contract and the new Iowa Enterprise contract.

Going forward, we are also optimistic our value proposition and business model resonate in these tough economic times and government revenues are declining 90 leaders.

Looking for creative improving digital government solutions to help alleviate their budget constraints.

Finally.

Financial strengths, including our consistent cash flow debt free balance sheet and significant cash surplus gives us the flexibility to payout.

A regular quarterly dividend and pursue strategic.

Acquisitions that complement our business and augment our growth and with that I will turn the call back over to Harry Thanks.

Thank you Steve I'm extremely proud that we're in I see team members and their ability to deliver value. During these uncertain times. It is their dedication and hard work.

Led to such tremendous quarter for us.

With that well open.

The golf course.

Thank you and at this time well begin the question and answer session.

If you would like to ask a question. Please signal by pressing star one on your telephone keypad if.

If you're using a speaker phone. Please make sure your mute function is turned off to allow your signal to reach our equipment.

Again press Star one to ask a question.

And we'll pause for just a moment to allow everyone an opportunity to signal.

And our first question comes from Peter Heckmann with Davidson. Please go ahead Sir.

Hey, good afternoon, everyone lots of things to talk about Hey, [laughter].

Starting with [laughter], just pretty mature helps your just to be clear that the 25 million.

In the third quarter related to the three relationships you noted South Florida University of Mississippi, Alabama Collection Center centers, and so somebody other stuff, Utah self.

South Carolina in Nevada.

With that that is going to be more of a fourth quarter issue.

Yes, absolutely some of those that your program such as Utah, and Nevada are opportunities for us to go out and win business. We're just all we have been selected.

As one of them the providers of the probably 19 testing solutions within the state.

Got it got it and then just to clarify on the 17 million that was contracted in the fourth quarter can you just run through that real quick, which which contracts that represent and and then which ones are not in the seventies.

Sure I'm happy to Steve Hello, before or that the contracts are represented in that $17 million or the state of Florida and South Carolina.

The Alabama Department of Corrections and the University of Mississippi.

The other states, Utah, Nevada in Missouri, we are a vendor among multiple vendors and set the stage to choose from and we have not yet contracted for any work in those days.

Got it got it okay, and and a and then just that your to your point, though is that these contracts right now run through the end of 2020 and and and.

They would need.

Extended or renewed.

If they want it to continue that the partnership and the customers want to continue to do it again to 2021.

Absolutely what we have right now and I think it makes sense is you know everyone is reevaluating rent was just endemic reevaluating their approach to it you know and everybody, including US is extremely hopeful that testing becomes something that we don't have to do because this is behind us. So you know it is a sort of an ongoing.

Weekly type and we deal with with different customers.

Got it got it Okay and then just one last one before I, let you go out and Florida 6 million of net revenue. So when you recorded in that I guess, we would expect it to come in it.

Corporate average margins when when we're fully ramped.

Yeah, I I would say just generally speaking yes.

Got it got it okay. Good good stuff I'll get back in the queue.

All right. Thanks.

Thank you and our next question comes from Keith Housum with Northcoast Research. Please go ahead Sir.

Thank you Hey, good afternoon, guys and congratulations on a good quarter lots of stuff going on as well I'm just to kind of grow on that growth isn't there have to be tour held question can you just provide a little bit of color into your guidance in terms of your 25 million you saw our third quarter versus your 17 million guidance for the fourth quarter. What's your assumptions are you expecting a decline in the market.

Thing or how do we think about that.

Yeah. That's a great question I'll tell you I mean, yeah.

I tried to be as transparent as I can at least since you know and.

Third quarter were first to market I mean, there were very few companies that were out there and there was a tremendous need there was a lot of federal funding that was there we stepped in with a couple of partners and provided something that enabled us to get a pretty good all right off the bat. Since then there's more people that are coming in to this space you know and pricing was an issue with it are we still we are a pumping.

Resource there and we're very confident with our slippers and Keith Hi, welcome to the call I'm here I'm. This is this is Steve Harry made a good point earlier and that sometimes we're going weeks two weeks at a time that they renew us not necessarily you know months and months at a time and so our guidance there.

For the fourth quarter is what we have currently contracted for today, so that could change by the end of the quarter, but that's the that is the visibility that we have today.

Got you that's very helpful. Thank you and then I guess just forgive me here, but you know your guidance for the full year why not provide arrange the answer is yes, we started to saying you're going to be above what you previously guided toward.

Yeah, well jeez I think our our kind of philosophy. There is we generally don't provide quarterly guidance and if we provide a range for the year, that's kind of essentially providing quarterly guidance. So we are acknowledging we should you know come.

Come in decently above the high end of our range. So got you fair enough fair enough. That's question then I'll jump back in the queue as well forget things like the two were held in the Virginia pandemic I'm Kinda assistant contracts you guys use your existing employee base are you guys have to bring in contractors to help get that job done.

That's great question really is and we didn't use our existing plumbing, we did bring its contractors and part of it as you look in Virginia, but it is something that we've done before we had to supplement from the call centers on heavy we bring in from there. When you look at Toronto. It's a partnership so we had our team we didnt add for a d. we have.

Our team there you know we must run on a project manager to just system for the most part it's our team. But then we had two partners that already had their teams and experience out that they brought to bear on this.

Great got it thanks, guys I appreciate it.

Right.

Yep.

Thank you and our next question comes from Gary Prestopino with Barrington Research. Please go ahead.

Hey, good afternoon, everyone.

Is the question Hi whole series of questions here first of all the.

The P.S.P. contract or is that still extended through February or did I, Miss something as an RFP out there or what's going on with that.

Yes.

This is Harry yes, there is a RFP has been issue.

Speed and we are evaluating you know with our fees that we don't speak to the Navy RFP itself, but it is out there we're evaluating and moving forward.

Yeah. So we did we do we are.

Early contract you're correct. We're currently contracted through the end of February.

Okay, Great and then on the Rx stuck up in licensing solutions businesses did you give any kind of revenue generation in the quarter for both of those [noise].

No, we didnt, specifically, Gary they weren't they weren't significantly greater or less than last year. I think we were somewhere between 800 $900000 in combined revenue for both of those for them for the quarter. Okay.

Okay, No I want to visit this Florida contract for a second because I'm just a little bit confused your first of all if theres $53 billion worth of.

Dollar volume processed in Florida was that all electronic transactions or is that some cash check that you know at a at a government agency office.

You know I I, you know I think those numbers are numbers that that that we received that were done from that from a.

Vast majority of those from a payment standpoint, yes.

So their electronic alright. So here is my issue with this is this is like in the state of Illinois, When I tell you anything there's a 3% charge on top of that right because the state those need the interchange that you said, Florida is going to be the interchange, but if you take 53 billion you take 3% of it you get about 1.6 billion it.

Seems to me that you know your run rate on the on the revenue said it was going to run rate annual lead about $6 million is that correct did I hear right.

Yeah, that's correct. So our net our net revenue from State Agency services. We're currently projecting right now and at $6 million that does not include revenue that we have the potential to earn from a local governments cities and counties and such which is sold.

Because they do it and then 1 billion from the local and last year.

Right, Yes, that's true so it seems to me that you're you're you're probably getting a very small base as we get more or are positive impact on the.

Total transactions is that about right I calculate a back of the envelope like 30 basis points to 30 basis points is that about right.

However, the math works out Gary I haven't counted calculated okay point, you're getting paid on a on a per transaction basis, yes, right I'm just trying to understand how that flows through and that and then you wont really not have any real real cost with that 6 million in terms of any other any other cost sucks up your process your platform costs right.

No that's not correct, we're going to ramp will have a a team on the ground not as big as that typical state enterprise team on the ground, but we will have a team on the ground of a few of our payment experts.

Yeah. So we will have some cost absolutely there [laughter] remember its first it definitely in the local business.

Excuse me.

Okay, and then just very briefly because I don't want to ask kind of questions here, but on the testing services side with tour held what exactly you're doing there again could you just refresh my memory, you're not actually doing the tests right.

Well, we as a company and they're not see are not doing the test, but our solution is doing the test and I see we are the prime we are the principal sales force for the prime on the contracts we have the government relations. So we go out and educate them and find out what their needs are and then we get the contracts and then we deploy.

Good to go solution that does everything from system departments tracking impairments all the way through to returning the results. We have two different partners. One partner comes instead everything up you don't want to actually does it has a relationship with the labs and most of my back you know we didn't just come out so yeah, we're actually out there doing the test.

Okay. Thank.

Thank you.

Absolutely that Gary.

Thank you and as a reminder to our audience you may ask your question by pressing star one now.

And we will go back to Keith Housum. Please go ahead.

Hi, guys. Just one more question why we had a time here in terms of one time costs that you guys are building out some of your other platforms. I believe me I think you might you referenced one or something like that there's an extra costs, but was there anything else in there that was perhaps you know cost you know upfront cost that you ever driven any revenue I forgot.

No that's the big one that's the big one we called out for for the Pennsylvania, and Illinois outdoor recreation implementation costs that that's that's the only thing of significance I can think of.

Gotcha and then in terms of like these state wide enterprise you guys called out I think the DHR and I think another item in terms of where demand may have been altered because of Kobe, but everything else no significant movement for it in terms of pacing compared to normal times.

Yeah. So at you know we saw as I mentioned in my remarks, we saw a heck of a rebound, particularly in you know a good number above our interactive government services. So keep that that four state enterprise services other than driver history Records, and we really didn't see strength across the board.

Throughout the throughout the third quarter. The one continued weak spot that Weve seen is driver history records at the state enterprise level and then the pre employment screening program, which is essentially.

Records for commercial truck drivers at the federal level through the pre employment screening program, although both of those have improved.

In this quarter, yeah, yeah, so we still feel comfortable improvement, but still down year over year.

Okay got it and then last question then I'll get off here in terms of the Pfizer relationship I'm, assuming this will take several quarters until he hit its stride is that a kind of a good way to think about that.

Absolutely I mean right now this is a nominal opportunity and when we get out there and we show, especially during Combet, where individuals do not have you don't tend to go into the Austin <unk> commitment to walk into a CBS or I was sort of like yet and use cash to pay for this this is one that we're expecting to get very good traction.

Promoting mid sized firms out promoting it and we proved that now and Arkansas.

Great. Thanks, Scott.

All right. Thank you.

Thank you and as a reminder for an audience you may ask your question by pressing star one now.

And we have no additional questions at this time I'll now turn it back to Mr. Harrington for closing remarks.

Thank you, Nick and I want to thank everybody, who joined US today, we had a great quarter. It was a great time, I sincerely hope that everybody stays healthy or stay safe and healthy drop this pandemic.

Good afternoon.

Thank you ladies and gentlemen. This concludes today's presentation you may now disconnect.

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