What happened

In response to an upbeat earnings report, shares of NIC (EGOV), a provider of digital government services, rose 22% as of 3:05 p.m. EDT on Thursday.

So what

Here are the headline numbers from the second quarter:

  • Revenue dropped 1% to $91.6 million. This was still several million dollars higher than what Wall Street was looking for.
  • Operating income dropped 21% to $17.7 million.
  • Net income fell 15% to $14.5 million.
  • EPS dropped 16% to $0.21, but was still $0.03 higher than what Wall Street was expecting.
Business people with their thumbs up

Image source: Getty Images.

Commenting on the quarter, CEO Harry Herington stated:

We continued to execute well on our 2019 strategic objectives in the second quarter. We extended several long-term government partnerships and generated double-digit organic revenue growth in our core business for the second consecutive quarter. Furthermore, we leveraged our recent acquisitions and expanded our vertical solutions in multiple states.

Turning to full-year guidance, here's what management now expects:

  • Revenue between $347.5 million and $352.5 million. This is a sharp increase from its prior range of $333.5 million to $342.5 million, and nicely ahead of Wall Street's estimate of $342 million.
  • EPS is now expected to land between $0.71 and $0.73, versus its previous guidance range of $0.70 to $0.74. The midpoint of this new range is above the $0.70 that analysts were expecting.

Traders are bidding up shares in response to the upbeat quarterly results and bullish guidance.

Now what

NIC is still recovering after losing its large contract with the State of Texas. This quarter's results clearly show that it is making progress, but the company still has a lot of work to do if it wants to produce the kind of numbers that get growth investors' attention. I'm hopeful that this momentum can continue, but I'm content to focus my capital and attention on more-compelling growth stocks right now.