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NIC Inc (NASDAQ:EGOV)
Q3 2020 Earnings Call
Oct 28, 2020, 4:30 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good day, and welcome to the NIC Q3 2020 Earnings Conference Call. [Operator Instructions] At this time, I would like to turn the conference over to our presenters.

Kara Cowie -- Director of Corporate Communications

Good afternoon, and welcome to NIC's earnings call. The press release for NIC's earnings announcement was issued 30 minutes ago. Our earnings release is also available on our corporate website at www.egov.com/investor-relations. You may also call our headquarters at 844-944-3468 and we will email the information to you. Joining us on the call today are NIC's CEO, Harry Herington; and Steve Kovzan, NIC's 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 facts constitute forward-looking statements. These statements often address the Company's potential financial performance for the 2020 fiscal year or future fiscal years estimates, projections, the expected length of contract terms, statements relating to the Company's business plans, objectives and expected operating results, statements relating to potential new contract or renewals, statements relating to the Company's expected effective tax rate, statements relating to possible future dividends and share repurchases, statements related to the ongoing effect the COVID-19 pandemic is expected to have on our business and financial results, including statements relating to the duration, profitability and unsatisfied performance obligation of our COVID-19 testing solution and other possible future events, including potential acquisition 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 uncertainties, which may cause actual results to 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 agencies, the impact of potential information technology, cybersecurity or data security breaches or incidents, the Company's ability to identify and acquire suitable acquisition candidates and to successfully integrate any acquired businesses and the effects the COVID-19 pandemic may have on continued demand for and profitability of the Company' services, including our COVID-19 testing solution, as well as its government agency partners, its 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 event to differ materially from such forward-looking statements, is included in the sections titled Risk Factors and Cautions About Forward-Looking Statements of the Company's most recent Form 10-K and subsequent reports filed with the SEC. These filings are available at the SEC's website at www.sec.gov. Any forward-looking statement made during this call speak only as of the date of this call. Except as may be 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.

Now, it is my pleasure to turn the call over to Harry Herington, NIC's Chief Executive Officer and Chairman of the Board.

Harry H. Herington -- Chairman of the Board and Chief Executive Officer

Thank you, Kara, and good afternoon, everyone. Like many companies throughout the world, this pandemic forced the team at NIC to manage our business differently. However, one thing that did not change was our absolute laser focus on deploying the right solutions for our partners and our communities. And it was that focus and determination of our employees that enabled us to deliver a remarkable quarter.

To begin with, we are proud to announce, we finalized the multiyear contract with State of Florida for payment processing across all agencies and we are pleased to welcome Iowa back to the NIC's State Enterprise family, also with a multiyear contract. In addition, we expanded TourHealth, our COVID-19 testing partnership we formed last quarter with Impact Health and NEXT Marketing. Since inception in August, TourHealth has administered more than 120,000 rapid COVID-19 tests in South Florida and thousands of tests on behalf of University of Mississippi and the Alabama Department of Corrections. I will touch more on TourHealth in a moment, but first, I'll provide a little more clarity on the payment processing contract we won with the State of Florida, following a year-long competitive bid process.

The contract covers payment processing of all payment types across all 19 executive branch agencies. The five-year transaction-funded contract, which may be extended by up to five additional years also provides the ability for cities and municipalities to work with NIC for payment processing services, promoting a comprehensive and seamless experience for Florida citizens and businesses. For its fiscal year ended June 2018, the State of Florida processed 74 million transactions for a total of $52 billion in payments across the 19 state agencies and processed 21 million transactions for total of more than $1 billion across more than 90 local governments.

Given the scale and complexity of providing payment services to the third largest state in the United States, we will put an experienced and dedicated team on the ground in Tallahassee to leverage our industry-leading payment platform in addition to a few of our other value-added platforms, to enhance payment collection and processing services across the state. This includes Gov2Go, our citizen-centric platform and personal government assistant. Gov2Go has been a critical solution for many of NIC's in-demand services during COVID-19, including Florida's COVID-19 rapid testing initiative with TourHealth. Our Tallahassee-based team will run the operations similar to our NIC State Enterprise contracts with 100% focus on delivering the highest level of service to the Sunshine State.

While Steve will cover some financial specifics on Florida in a moment, I will conclude my remarks on Florida by emphasizing how honored we are by the confidence the state has placed in NIC as we continue to expand our payment processing and digital government services across the country. Another new contract is the State of Iowa. After a competitive bid process, Iowa once again placed its confidence in NIC and selected us as a State Enterprise digital government solutions partner. As many of you know, NIC had a 15-year partnership that concluded at the end of our contract in 2017. Under the new five-year transaction-funded contract, which includes five one-year renewal options that they can exercise to extend the contract to 2030. Our Des Moines team will work with the state leadership to consolidate services into a unified digital experience for all Iowans and deploy our world-class digital government applications and services.

In Iowa, we will leverage our comprehensive suite of pre-developed Software as a Service solutions, in which we have invested significantly in recent years, including Gov2Go, which will be the centerpiece serving as a repository for all digital services across the state. We're also deploying our industry-leading payment platform, a comprehensive suite of solution build exclusively for government, which includes our secure payment gateway, common checkout pages, customer billing application and a digital wallet. In addition, we utilize AppEngine, our low-code application development platform to rapidly deploy digital government services at less cost and in a more repeatable manner compared to traditional software development.

And finally, we will leverage our Microservices Platform or MSP, which is an API-based suite of pre-built basic software building blocks housed in the cloud for security and scalability. Microservices enable our teams to build applications faster and with less code and in turn with less technology debt. Initial funding source in Iowa will be centered around payment processing and our focus for the remainder of this year and into the first half of 2021 will be on integrating our payment platform with existing state agency services, promoting a streamlined approach to payment processing across the state. We will also immediately start to build relationships with state agencies that we intend to extend beyond payments to deploy our world-class digital government applications and services and create a one-stop solution for all things digital.

Steve will provide some additional financial color on Iowa in a moment. We view the Iowa model as an additional go-to-market strategy for enterprise opportunities, leveraging the significant investments we've made in our payment, Gov2Go, AppEngine and Microservices platforms to drive down start-up and implementation costs, while increasing the speed and efficiency of application development and deployment. We also view Iowa with payment processing as the initial funding source to be a compelling option for new state enterprise opportunities.

While on the topic of state enterprises, I am pleased to share that NIC also executed a new five-year State Enterprise contract with Oklahoma this past quarter and extended its State Enterprise contract with Wisconsin to May 2023. NIC also secured a six-month contract extension with Maryland with one six-month renewal option remaining.

As I mentioned earlier, NIC continues to accelerate support of government and the citizens they serve with unique and innovative solutions during the pandemic. Our TourHealth partnership is a great example of that unique innovation. This COVID-19 testing solution first launched in South Florida, in early August, approximately 95% of the Florida test results have been delivered in two hours or less through Gov2Go. That is a statistic we are very proud of, as rapid results have been critical to helping communities respond to this crisis with confidence.

The TourHealth solution continues to expand and we began testing asymptomatic students, faculty and staff at the University of Mississippi in September and testing for the Alabama Department of Corrections also launched in September. With TourHealth scheduled to administer 26,600 PCR tests for approximately 19,600 inmates and 7,000 staff in 33 locations over 41 testing dates. Results are returned within 72 hours and put it directly to the government.

Most recently, we signed a new contract with the State of South Carolina for TourHealth testing at four sites in the Myrtle Beach area. Those sites are now open to the community. The TourHealth solution is also listed on three multi-vendor contracts in Utah, Nevada and Missouri. TourHealth is not the only critical solution that NIC has deployed to aid government partners and communities during the pandemic. As we previously shared, NIC's Gov2Go solution continues to be the core service offering for all pandemic unemployment assistant claims and pandemic emergency unemployment compensation claims in the Commonwealth of Virginia.

Since the launch of Gov2Go in Virginia, there have been more than 5.8 million weekly claims filed by citizens, more than 1 million subscriptions to the service and more than 400,000 new downloads of the Gov2Go App. Also NIC recently launched a new online scheduling tool, teleGov. This Software as a Service solution is helping government safely reopen offices by allowing citizens to schedule appointments for government services and even digitize parts of citizens' visit to the government offices.

TeleGov enables agencies to adhere to COVID-19 social distancing guidelines and improve the overall customer experience through the decreased wait times. NIC partner State Mississippi was the first to implement teleGov as part of the Skip the Line program by Department of Public Safety. Driver services bureaus in Biloxi and Jackson began piloting program on September 14th by offering online scheduling for 15 different types of licenses.

Since its launch, more than 18,000 appointments have been scheduled using the teleGov platform, with over 70% using a mobile device. These online appointments replaced what would have been walk-in customers at individual driver license locations. The system initially launched with two locations, which has since then increased to 30 locations and allows users to select from 15 different appointment types.

One citizen reported, scheduling appointments rock, after spending more than seven hours in line at a government office last year to perform the same service. In addition, Arkansas and New Jersey are also expected to implement this service soon. Another solution gaining attraction is CheckFreePay, a cash payment solution with the unbanked and under-bank population through a strategic partnership with Fiserv, which we announced last quarter.

The Pulaski County Treasurers office in Lower Arkansas, was the first to integrate with this solution for property tax payments. The launch was met with excitement with more than $300,000 in cash payments collected on behalf of the county at retail sites within the first few weeks and we plan to aggressively market the benefits of this service for other NIC partner states.

Each of these solutions, new contracts and contract extensions have added to the incredible momentum NIC experienced in 2020. I'm grateful for the confidence our government partners have placed in us and the perseverance of our employees and NIC's strong financial position as we enter the fourth quarter of the year and look forward to 2021.

With that, I am pleased to turn the call over to NIC's Chief Financial Officer, Steve Kovzan.

Stephen M. Kovzan -- Chief Financial Officer

Thank you, Harry. In the third quarter of 2020, we earned $0.37 per share compared to $0.21 in the prior year quarter. As highlighted in our earnings release this afternoon, COVID-19 initiatives were material contributors to our quarterly results, including our TourHealth COVID-19 rapid testing partnership, which commenced in August and the continuation of pandemic unemployment services in Virginia, which began last quarter. TourHealth contributed $24.8 million in Software & Services revenues and approximately $0.06 in EPS for the quarter. While Virginia pandemic unemployment services contributed $7.6 million in State Enterprise revenues and approximately $0.02 in EPS for the quarter.

On a year-to-date basis, Virginia pandemic unemployment services have contributed revenues of $11.1 million and earnings per share of $0.03. Also EPS for the quarter was higher by $0.04 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 $0.01. Moving on to core results for the quarter. Same-state enterprise revenues grew a phenomenal 25% year-over-year bolstered by revenues from Virginia, also significant rebound in key IGS revenue segment from the early month of the pandemic that 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 was a catch-up of 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 pushed more businesses and citizens online to interact with government digitally instead of in-line in government offices, which was a tailwind in the third quarter from any digital services we manage on behalf of our government partners.

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 IGS revenues were up a remarkable 25% for the quarter, driven by higher revenues for DMV-related services across several states, including the new auto titling and 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 continued to flock to the great outdoors to hunt fish and socially distant.

On a monthly basis for the quarter, same-state IGS revenues grew 33% in July, 22% in August and 21% in September. As a frame of reference, we've historically been able to grow same-state IGS revenues by approximately 10% to 15% per year. Next, same-state transaction-based Driver History Record or DHR revenues were down 6% for the quarter, which was a 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 trendline continues to head in a positive direction, following a historically weak second quarter, 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 the last few quarters.

Moving on, same-state revenues from development services increased more than two-fold for approximately $7.9 million from the prior year quarter, driven almost entirely by pandemic 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 upon 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 $700,000 of State Enterprise costs to implement our outdoor recreation platform in Pennsylvania and Illinois compared to $1 million in the prior year quarter. And I am pleased to report we remain on track to go live in both states the first quarter of 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 and to our gross profit and operating margins.

Finally, 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 pandemic unemployment services. Software & Services revenues increased more than 150% or $26 million over the prior year quarter with TourHealth contributing nearly $25 million for the quarter. Looking ahead, TourHealth is currently contracted to deliver testing services in the fourth quarter, representing revenues of approximately $17 million from the states of Florida and South Carolina, the Alabama Department of Corrections and the University of Mississippi. At this point, TourHealth has not contracted for services beyond 2020, but it is possible services will continue into 2021, depending on the severity and the duration of the pandemic and the testing needs of states, correctional facilities and higher education institutions across 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 expected the softness would moderate as the year progressed and that is precisely what we saw in the third quarter with PSP revenues down 15%, a 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 And through the first three weeks of October, PSP revenues were down 11%. While the trendline for PSP 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 and the trucking industry.

Moving on Recreation.gov had a phenomenal quarter with revenues growing 93%, continuing the momentum we saw starting in June when national parks and sites reopened and experienced an influx of visitors seeking a safe place to experience the great outdoors and vacation for the summer. 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 in the cold fall and winter months, we are hopeful the national parks and sites remain open as safe destinations during the pandemic.

The final Software & Services revenue category I will touch on today is our payment segment. As a refresher, our payment segment within the Software & Services category, which includes the Texas payment processing contract provides payment processing-related transaction-based services to state and local government agencies in states where we do not maintain an enterprise contract. Payment 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 & 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 TourHealth 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 for TourHealth and a $2 million contribution from Virginia pandemic unemployment services, which resulted in an operating margin of 22%, up from 20% in the prior year quarter.

Turning briefly now to our annual guidance for 2020. We continue to evaluate the impact COVID-19 may potentially have on our business for the rest of year, given what we know today about the pandemic and taking into consideration recent revenue trends we have seen in our business, including significant COVID-19-related revenue contributions from TourHealth and 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 above 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 $0.81.

Moving on, I'm excited to discuss our new Florida payments and Iowa enterprise contract and cover some ground on the financial side that Harry didn't. I'll start with Florida. Once we fully integrate our payment 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 and interchange fees to approximately $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. Harry mentioned, we can also work with counties and cities, which have 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 and interchange fees at our cost to the state. As a result, we will not recognize revenues gross of credit card merchant processing and interchange fees like we do in Texas, for example, instead, we will do so on a net basis. As reflected in our $6 million annual revenue estimate, which will contribute to a higher reported gross margin as compared to our typical payment processing arrangement. We currently do not expect to generate meaningful revenues in Florida in 2020 as our team's focus for the remainder of the year will be on integrating our payment platform and Gov2Go with state agency services and building relationships across the state.

Our current expectation is for Florida to have 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, incur start-up 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 & Services category in our income statement and within the payments segment in our public filings along with the Texas payments contract. I'll echo Harry's comments that we could not be more excited about the opportunity to serve the State of Florida. This contract further solidified our leadership in the state government payment space and validates our strategic focus on the payment verticals to grow and diversify our business.

Next, I'll briefly touch on Iowa. While we may begin to generate minor transaction-based revenues in Iowa in the fourth quarter of this year, our current expectation is for Iowa to 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 deployment. 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 start-up cost in the fourth quarter of this year, but don't expect them to be significant. Finally, we will report Iowa 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, Annette Dunn's statement that our solutions align perfectly with Governor Reynolds' vision for the state where technology is centered around the citizen and all transactions are stored in a digital wallet.

To conclude my prepared remarks today, I was thrilled with our results in the third quarter and I am particularly proud of all the incredible things our teams are doing to help government and the constituents during the pandemic. The resiliency of our core business and major contributions from pandemic-related initiatives have put us in 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 to complement the consistent growth of our core business, including the Pennsylvania and Illinois outdoor recreation launches currently slated for Q1 2021, the new Florida payment contract and the new Iowa enterprise contract.

Going forward, we are also optimistic our value proposition and business model will resonate in these tough economic times when government revenues are declining and IT leaders are looking for creative improving digital government solutions to help alleviate their budget constraints. And finally, our financial strength, including our consistent cash flow, debt-free balance sheet and significant cash surplus gives us the flexibility to pay our 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.

Harry H. Herington -- Chairman of the Board and Chief Executive Officer

Thank you, Steve. I am extremely proud of our NIC team members and their ability to deliver value during these uncertain times. It is their dedication and hard work that led to such tremendous quarter for NIC.

With that, I'll open the call for questions.

Questions and Answers:

Operator

Thank you. [Operator Instructions] And our first question comes from Peter Heckmann with Davidson. Please go ahead, sir.

Peter Heckmann -- D.A. Davidson & Co. -- Analyst

Hey, good afternoon, everyone. Lots of...

Harry H. Herington -- Chairman of the Board and Chief Executive Officer

Hey, Pete.

Peter Heckmann -- D.A. Davidson & Co. -- Analyst

Things to talk about. Hey, starting with -- just starting with TourHealth. So just to be clear, the $25 million in the third quarter related to the three relationships you noted South Florida, University of Mississippi and the Alabama Corrections Centers and so some of the other stuff, Utah, South Carolina, Nevada, is that is going to be more of a fourth quarter issue?

Harry H. Herington -- Chairman of the Board and Chief Executive Officer

Yes, absolutely. Some of those that you referenced, such as Utah and Nevada are opportunities for us to go out and still win business. We're just -- we have been selected as one of the providers of the COVID-19 testing solutions within the state.

Peter Heckmann -- D.A. Davidson & Co. -- Analyst

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

Stephen M. Kovzan -- Chief Financial Officer

Sure. Pete, this is Steve. Hello. The four or the contracts that are represented in that $17 million are the states of Florida and South Carolina, the Alabama Department of Corrections and the University of Mississippi. So the other states Utah, Nevada and Missouri, we are a vendor among multiple vendors that the state can choose from and we have not yet contracted for any work in those states.

Peter Heckmann -- D.A. Davidson & Co. -- Analyst

Got it, got it. Okay, and then just to your point of the -- these contracts right now run through the end of 2020 and they would need to be extended or renewed, if they wanted to continue the partnership and the customers want to continue doing it into 2021.

Harry H. Herington -- Chairman of the Board and Chief Executive Officer

Absolutely. What we have right now and I think it makes sense is, everyone is reevaluating where we're at with this pandemic, reevaluating their approach to it and everybody including us is extremely hopeful that testing becomes something that we don't have to do, because this is behind us. So it is a sort of an ongoing weekly pattern that we deal with our different customers.

Peter Heckmann -- D.A. Davidson & Co. -- Analyst

Got it, got it. Okay, and then just one last one before I let you go, in Florida, $6 million of net revenue, so when you recorded net, I guess, we would expect it to come in at above corporate average margins when we're fully ramped?

Stephen M. Kovzan -- Chief Financial Officer

Yeah, I would say generally speaking. Yeah.

Peter Heckmann -- D.A. Davidson & Co. -- Analyst

Got it, got it. Okay. Good stuff. I'll get back in the queue.

Harry H. Herington -- Chairman of the Board and Chief Executive Officer

All right. Thanks, Pete.

Operator

Thank you. And our next question comes from Keith Housum with Northcoast Research. Please go ahead, sir.

Keith Housum -- Northcoast Research -- Analyst

Thank you. Hey, good afternoon guys and congratulations on a good quarter. Lots of stuff going on as well. Just to kind of...

Harry H. Herington -- Chairman of the Board and Chief Executive Officer

Thank you.

Keith Housum -- Northcoast Research -- Analyst

Drill on that. So I was going to ask the TourHealth question. Can you just provide us a little bit of color into your guidance in terms of your $25 million you saw in the third quarter versus your $17 million guidance for the fourth quarter. What's your assumptions? Are you expecting a decline in the amount of testing or how do we think about that?

Harry H. Herington -- Chairman of the Board and Chief Executive Officer

Yeah, that's a great question. I'll tell you, I mean, I tried to be as transparent as I can on these things. In the third quarter, we 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 given a pretty good foothold right of the bat, seeing there's more people that are coming in to this space and price is an issue with it, but we still -- we are a proven resource there and we're very confident with our solution.

Stephen M. Kovzan -- Chief Financial Officer

And Keith -- hi, welcome to call.

Harry H. Herington -- Chairman of the Board and Chief Executive Officer

Absolutely.

Keith Housum -- Northcoast Research -- Analyst

Thank you.

Stephen M. Kovzan -- Chief Financial Officer

This is Steve. Harry made a good point earlier in that sometimes, we're going week to two weeks at a time that they renew us not necessarily months and month 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 is the visibility that we have today.

Keith Housum -- Northcoast Research -- Analyst

Got you. Very helpful. Thank you. And then yes, forgive me here, but your guidance for the full year, why not provide a range, just without the saying, you're going to be above what you previously guided toward?

Stephen M. Kovzan -- Chief Financial Officer

Yeah, well, Keith. I think 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 come in decently above the high end of our range. So.

Keith Housum -- Northcoast Research -- Analyst

Got you. Fair enough, fair enough. Last question and then I'll jump back in the queue as well. For things like the TourHealth and the Virginia pandemic unemployment assistant contracts, you guys use your existing employee base or you guys have to bring contractors to help get that job done?

Harry H. Herington -- Chairman of the Board and Chief Executive Officer

That's a great question, Keith, it really is and we did use our existing -- we did bring in contractors in part of it, as you look in Virginia, but it's something that we've done before. We had to supplement from the call centers on heavy, we bring in from there. We look at TourHealth, it's a partnership, so we had our team, we didn't add to our team. We had our team there. We might have brought on a project manager to two to assist, but for the most part, it's our team but then we had two partners that already had their teams and the experience that they brought to bear on this.

Keith Housum -- Northcoast Research -- Analyst

Great, got it. Thanks guys. I appreciate it.

Stephen M. Kovzan -- Chief Financial Officer

All right, Keith.

Harry H. Herington -- Chairman of the Board and Chief Executive Officer

Marking [Phonetic] call.

Keith Housum -- Northcoast Research -- Analyst

Thank you.

Operator

And our next question comes from Gary Prestopino with Barrington Research. Please go ahead.

Gary Prestopino -- Barrington Research Associates -- Analyst

Hey, good afternoon, everyone.

Harry H. Herington -- Chairman of the Board and Chief Executive Officer

Hi, Gary.

Gary Prestopino -- Barrington Research Associates -- Analyst

Whole series of questions -- hi, whole series of questions here. First of all, the PSP contract, is that still extended through February or did I miss something as an RFP out there or what's going on with that?

Harry H. Herington -- Chairman of the Board and Chief Executive Officer

Yes. Hey, this is Harry. Yes, there is a -- RFP has been issued for PSP and that we are evaluating -- with RFPs that we don't speak to, the next RFP itself, but it is out there, we are evaluating them and moving forward.

Stephen M. Kovzan -- Chief Financial Officer

Yeah. So we...

Gary Prestopino -- Barrington Research Associates -- Analyst

Okay.

Stephen M. Kovzan -- Chief Financial Officer

We do -- we are currently contract -- you're correct, we're currently contracted through the end of February.

Gary Prestopino -- Barrington Research Associates -- Analyst

Okay, great. And then, on the Rx.gov and licensing solutions businesses, did you give any kind of revenue generation in the quarter for both of those?

Stephen M. Kovzan -- Chief Financial Officer

No, we didn't specifically, Gary. They weren't significantly greater or less than last year. I think, we were somewhere between $800,000 and $900,000 in combined revenue for both of those -- for the quarter.

Gary Prestopino -- Barrington Research Associates -- Analyst

Okay. And now I want to visit this Florida contract for a second, because I'm just a little bit confused here. First of all, if there is $53 billion worth of dollar volume processed in Florida, was that all-electronic transactions or is that some cash-check at a government agency office?

Stephen M. Kovzan -- Chief Financial Officer

I think, those numbers are numbers that we receive that were done from a -- the vast majority of those from a payment standpoint, yes.

Gary Prestopino -- Barrington Research Associates -- Analyst

So they are electronic. All right. So here look, my issue with this is this is like in the State of Illinois, when I pay anything, there is a 3% charge on top of that, right? Because the state does need the interchange, so you said Florida is going to need the interchange, but if you take $53 billion, you take 3% of it, you get about $1.6 billion. It seems to me that your run rate on the revenues, you said it was going to run rate annually at about $6 million, is that correct? Did I hear right?

Stephen M. Kovzan -- Chief Financial Officer

Yeah, that's correct. So our net revenue from state agency services, we're currently projecting right now at $6 million, that does not include revenues that we have the potential to earn from local governments, cities and counties and such.

Harry H. Herington -- Chairman of the Board and Chief Executive Officer

Which is how you are getting...

Gary Prestopino -- Barrington Research Associates -- Analyst

So it seem...

Harry H. Herington -- Chairman of the Board and Chief Executive Officer

To the $53 billion, so there is $52 billion and then $1 billion from local last year.

Stephen M. Kovzan -- Chief Financial Officer

That's right.

Gary Prestopino -- Barrington Research Associates -- Analyst

Right, yeah. So it seems to me that you're probably getting a very small basis point hit -- or positive impact on the total transaction, is that about right? I calculated back of the envelope like 30 basis points, 38 basis points, is that about right?

Harry H. Herington -- Chairman of the Board and Chief Executive Officer

However, the math works out, Gary. I haven't calculated on the basis point...

Gary Prestopino -- Barrington Research Associates -- Analyst

Okay.

Harry H. Herington -- Chairman of the Board and Chief Executive Officer

We'll be getting paid on a per transaction basis. Yes.

Gary Prestopino -- Barrington Research Associates -- Analyst

Right. I'm just trying to understand how that flows through and that -- and then you would really not have any real cost with that $6 million in terms of other any cost except your process --- your platform cost, right?

Stephen M. Kovzan -- Chief Financial Officer

No, that's not correct. We're going to -- we will have a team on the ground, not as big as a typical state enterprise team on the ground, but we will have a team on the ground of a few of our payment experts in Tallahassee. So we will have some cost, absolutely that I will state that.

Harry H. Herington -- Chairman of the Board and Chief Executive Officer

We are starting to grow that business -- just grow that business and then we try to -- definitely in the local business, there is plenty of opportunity.

Stephen M. Kovzan -- Chief Financial Officer

Yes.

Gary Prestopino -- Barrington Research Associates -- Analyst

Okay. And then just very briefly, because I don't want to ask a -- kind of questions here, but on the testing services side with TourHealth, what exactly you're doing there again? Could you just refresh my memory? You're not actually doing the tests, right?

Harry H. Herington -- Chairman of the Board and Chief Executive Officer

We as a company, as NIC, are not doing the test, but our solution is doing the test as NIC, we are the prime, we are the principal sales force, we're the prime on the contracts, we have the government relations. So we go out and if state government find out what their needs are and then we get the contracts and then we deploy our Gov2Go solution that does everything from setting up the appointments, tracking the appointments all the way through to returning the results, we have two different partners. One partner comes in, sets everything up, the other one actually does the test, has a relationship with the labs and most of the time...

Gary Prestopino -- Barrington Research Associates -- Analyst

Okay.

Harry H. Herington -- Chairman of the Board and Chief Executive Officer

We get back within just couple of hours. So yeah, we're actually having to doing the tests.

Gary Prestopino -- Barrington Research Associates -- Analyst

Okay. Thank you.

Harry H. Herington -- Chairman of the Board and Chief Executive Officer

Absolutely.

Stephen M. Kovzan -- Chief Financial Officer

Thanks, Gary.

Operator

Thank you. [Operator Instructions] And we will go back to Keith Housum. Please go ahead.

Keith Housum -- Northcoast Research -- Analyst

Great. Hey guys, just one more question while we have time here. In terms of one-time costs as you guys are building out some of your other platforms, I believe you -- I think, you might have referenced one sort of thousand dollars [Phonetic] investor cost, but was there anything else in there that was perhaps costs -- upfront cost that you haven't driven any revenue off of yet?

Stephen M. Kovzan -- Chief Financial Officer

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

Keith Housum -- Northcoast Research -- Analyst

Got you. And then in terms of like the statewide enterprise. You guys called out, I think the DHR and I think in terms of when demand may have been altered because of it COVID, but everything else, no significant movement for -- in terms of pacing compared to normal times?

Stephen M. Kovzan -- Chief Financial Officer

Yeah. So we saw, as I mentioned in my remarks, we saw a heck of a rebound particularly in a good number of our Interactive Government Services. So Keith, that's our State Enterprise services other than Driver History Records and...

Keith Housum -- Northcoast Research -- Analyst

Okay.

Stephen M. Kovzan -- Chief Financial Officer

We really did see strength across the board throughout the third quarter. The one continued weak spot that we've seen is Driver History Records at the State Enterprise level and then the Pre-Employment Screening program, which is essentially driver records for commercial truck drivers at the federal level through the Pre-Employment Screening Program.

Harry H. Herington -- Chairman of the Board and Chief Executive Officer

Although both of those have improved last quarter and this quarter.

Stephen M. Kovzan -- Chief Financial Officer

Yeah.

Keith Housum -- Northcoast Research -- Analyst

Yeah.

Harry H. Herington -- Chairman of the Board and Chief Executive Officer

So we saw...

Keith Housum -- Northcoast Research -- Analyst

Yes, got it.

Harry H. Herington -- Chairman of the Board and Chief Executive Officer

Improvement, but still down year-over-year.

Keith Housum -- Northcoast Research -- Analyst

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

Harry H. Herington -- Chairman of the Board and Chief Executive Officer

Absolutely. I mean, right now, this is a phenomenal opportunity and when we get out there and we can show, especially during COVID, where individuals do not have the opportunity to go into the offices, but then be able to walk into CBS or other sources like -- and use cash to pay for this. This is the one that we're expecting to get very good traction. We're out promoting this, Fiserv is out promoting this and we've proven it now in Arkansas.

Keith Housum -- Northcoast Research -- Analyst

Great. Thanks, guys.

Stephen M. Kovzan -- Chief Financial Officer

Bye Keith.

Harry H. Herington -- Chairman of the Board and Chief Executive Officer

Thank you.

Operator

Thank you. [Operator Instructions] And we have no additional questions at this time. I'll now turn it back to Mr. Herington for closing remarks.

Harry H. Herington -- Chairman of the Board and Chief Executive Officer

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 health -- or stays safe and healthy throughout this pandemic. Everybody, have a great afternoon.

Operator

[Operator Closing Remarks]

Duration: 44 minutes

Call participants:

Kara Cowie -- Director of Corporate Communications

Harry H. Herington -- Chairman of the Board and Chief Executive Officer

Stephen M. Kovzan -- Chief Financial Officer

Peter Heckmann -- D.A. Davidson & Co. -- Analyst

Keith Housum -- Northcoast Research -- Analyst

Gary Prestopino -- Barrington Research Associates -- Analyst

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