NIC Inc. (NASDAQ:EGOV)
Q2 2016 Results Earnings Conference Call
August 04, 2016, 04:30 PM ET
Angela Davied - Director, IR & Corporate Communications
Harry Herington - CEO
Robert Knapp - COO
Steve Kovzan - CFO
Peter Heckmann - Avondale Partners
Brian Kinstlinger - Maxim Group
Jeff Kessler - Imperial Capital
Gary Prestopino - Barrington Research
Good day, and welcome to the NIC's Incorporated 2016 Second Quarter Earnings Announcement. Today's conference is being recorded.
At this time, I'll turn the conference over to Angela Davied. Please go ahead.
Thank you, Jessica. Good afternoon, everyone, and welcome to NIC's second quarter earnings call. The press release for our second quarter earnings announcement was issued 30 minutes ago and our earnings release is also available on our corporate website at egov.com/investor-relations. You can also call our headquarters at 877-234-3468, and we will email the information to you.
Following a reading of our cautionary statement regarding forward-looking information, CEO, Harry Herington; Chief Operating Officer, Robert Knapp; and Steve Kovzan, NIC's Chief Financial Officer, 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 include estimates, projections, the expected length of contract terms, statements relating to the company's business plans, objectives, and expected operating results 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, including regional and 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, and to sign contracts with new states and federal government agencies, as well as possible data security incidents.
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 of the company's most recent Forms 10-Q and 10-K filed with the SEC.
These filings are available at the SEC's website at sec.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, we do not undertake to update or revise publicly any forward-looking statements, whether as a result of new information, future events, or otherwise.
Now it is my pleasure to introduce Harry Herington, NIC's Chief Executive Officer and Chairman of the Board.
Thank you, Angela.
Welcome to NIC's second quarter 2016 earnings call and thank you for joining us today. In June NIC was featured in a CNNMoney News Story entitled, Their Mission a Tech Savvy Government. I would could not put it better myself. Our Chief Operating Office, Robert Knapp was quoted in this article noting how government is willing to embrace technology and how NIC serves as government's R&D shop. That is absolutely true. And once again our mission of a tech savvy government produced strong financial results for this quarter.
Our growth for the quarter was a testament to our core business. Our portals are developing and launching new services and we continue to track new users to existing services. This drives more transactions and results in strong revenue growth from interactive government services. Specifically, it was a combination of strong performance from services such as motor vehicle registrations in Colorado and Maryland, as well as business registration filings also in Maryland that helped move the needle.
Plus as we announced last quarter, the comprehensive outdoor recreational licensing service Go Wild Wisconsin launched in March and generated a full quarter of revenues this quarter bolstered by a busy fishing season in the Badger state.
That is not the only good news I have to share. Our Louisiana portal completed the pilot phase and went enterprise wide on July 1, when we launched the driver history record service. As you may recall, we kicked off the pilot phase in the first quarter of 2015 to build and manage a limited number of digital government services for the Department of Public Safety and the Office of Motor Vehicles, Louisiana's equivalent to DMV.
I am pleased to announce Louisiana is now a full-fledged portal just like the other enterprise wide state portals we operate. Our contract with the state runs through late January 2020 and I look forward to all of the ways we will help make services more accessible by delivering cutting edge digital government solutions. Thank you for government partners in Louisiana for placing your confidence in us.
Moving on to another portal update. Some of you have been closely following the portal RFQ or request for qualifications issued by the state of Tennessee this past January. NIC submitted a response in April and participated in oral presentations.
On June 30, the state announced it was canceling the RFQ due to cessation of need. At this time, we are uncertain as to how the state will develop and manage digital government services beyond the expiration date of our contract on March 31, 2017 or what our role will be going forward beyond that date.
In the meantime, we continue to manage the portal, maintain existing services, develop new digital government solutions under our current contract. As always, we will deliver our very best work and assist the state in advancing its digital government program in any way we can. In the coming weeks and months, we will continue our discussions with the state about its long-term digital government strategy.
One final update comes from the state of Iowa our partner since 1997. On June 30, our contract with the state expired and the state chose not to exercise any remaining renewals or put the contract out for rebid. While it is tough anytime we end a long-term partnership. From a financial standpoint transitioning out of Iowa will have almost no impact on our bottom line.
For the past 20 years, our work in Iowa has primarily consisted of website development and some local government services. This is one component of a value proposition we provide but far from the comprehensive scope of innovative digital government services we deliver in nearly all of our other partner sates. With this limited scope, the Iowa portal routinely generated the lowest revenue per capita of all our state portals.
For example, revenues totaled approximately just one half of 1% of NIC’s total revenues in 2015 and in the first half of this year. It was also our least profitable portal in terms of both operating income and profit margins. Sufficed to say that our portal was a significant financial outlier for NIC and ultimately ending the portal contract may provide a slight lift to our profit margins and same-state growth revenue rate.
We currently expect the transition out of portal contract by the end of September. We wish the state all the best in its digital government efforts and hope someday to return and deliver our full suite of digital government capabilities.
However, this does not mean all of our work in Iowa is going away. We've developed a solid relationship with the Iowa league of cities providing payment processing services. Contractually, these services were separate and distinct from the state portal master contract and will continue. Under this contract, we currently provide payment processing services to 35 of Iowa's 850 cities and we're continuing to marking our payment processing services to the remaining cities.
Those are all the updates I have for you today. Our second quarter financial results were healthy and continue to reinforce the strength of our core business and partnering to create tech savvy government. It is this commitment to be in the R&D shop for government that has produced solid financial results in the past and will continue to drive our growth in future.
With that, I will turn the call over to Robert Knapp, NIC's Chief Operating Officer for additional insights into portal operations. Robert?
Thank you, Harry.
It was great to share with CNNMoney all of the ways in which we are driving government innovation and partnering to create a tech savvy government. We are the digital government experts extremely knowledgeable in delivering a superior online user experience that is easily accessed from a number of devices. While I'm biased I would say our teams are second to none at delivering the best digital government innovation on any type of device with the screen.
But we know that the technology of today is constantly being enhanced and may soon be eclipsed by technology that doesn't utilize the screen at all but it’s voice-activated. That's why our teams in Utah and Mississippi went to work finding applicable government uses for the Amazon Echo device with its Alexa voice-activated system.
Citizens in Utah can now use the device to take a practice drivers exam using the app which is known as a skill Alexa asked test-takers questions such as when approached by emergency vehicle the driver must immediately, and the correct response would be pulled to the right and stop. Or true or false, do not pass the school bus when its red lights are flashing and the correct response would be true. No screens required, user simply have a conversation with Alexa through the Amazon Echo device to take the practice drivers exam.
In Mississippi voice activation was used to bring the existing My Mississippi or My MS application to live so to speak. Users can ask Alexa about renewal deadlines for hunting, fishing, professional and driver's license, in addition Mississippians can also access Amber alerts, obtain contact information for state offices, verify elected officials and gather state facts.
I think this is just the beginning in the shift from the screens we interact with today to a conversational user interface of the future. I know our teams are developing more innovative solutions as I speak and we will continue to drive government utilization of new technology in the best possible way.
Speaking of innovation, I also want to congratulate five of our teams and their government partners whose innovative work was recognized as part of the StateScoop 50 Awards this past spring. Arkansas received an award for the Gov2Go personal government assistant which we debuted to the broader public at our Annual Stockholders Meeting this past May.
Gov2Go is breaking down agency silos and transforming government interactions as we know them to focus on the citizen. Marilyn received an award for the AccessDNR Apple Watch app one of the first government apps designed specifically for the Apple Watch which provides regulation, guidelines and information about the nearest water entry point right from your wrist.
Also winning StateScoop50 Awards were Montana for its business checklist which is the name for its business One Stop System that brings together multiple agencies in one location for Montana entrepreneurs to set up and grow their businesses.
Nebraska for its new bilingual online voter registration application and Oregon for its ethics filing system which provides an online filing solution for lobbyist to fulfill reporting requirements. Congratulations to each of our teams and partners in Arkansas, Marilyn, Montana, Nebraska and Oregon for the innovation you have deployed in your state.
While innovation is one of NIC's core values, we also value having local teams in every capital city in which we do business. Our local teams are primarily comprised of employees who were born and raised in that state and they take great pride in being a part of the fabric of their community.
This was on full display recently in West Virginia after the state battled some of the worst flooding in over a century. In June many areas of the state received rainfall amounts in a single day that were equivalent to 25% of the rain received in an entire year. Our team in Charleston knew it had to help in partnership with other state agencies and volunteer groups, our team helped to launch WVFlood.com to help connect the dots between those needing assistance and those prepared to help.
The site was set up in just days immediately following the flood and includes information on recovery assistance, drop-off locations, disaster recovery centers and how to help flood relief efforts. I am very proud of our West Virginia team and want everyone in the state to know that NIC stands prepared to offer assistance in any way we can.
And finally, I would like to close by sharing with you four states who have extended contracts with us since our last call Indiana, Kentucky, New Mexico and Vermont all recently extended their contracts with our local subsidiaries. The renewal in Indiana extends our contract with the state for one year with an additional one-year renewal the state can exercise. And the Commonwealth of Kentucky extended the contract with our subsidiary Kentucky interactive for two years. Our New Mexico interactive subsidiary also received a one-year contract extension from the New Mexico motor vehicle division. And the state of Vermont extended its contract with our subsidiary for three years through June, 2019.
In addition to these renewals our West Virginia interactive subsidiary recently completed a competitive rebid process and signed a new five-year contract with the state of West Virginia to continue providing enterprise-wide digital government services. This contract includes renewals the state can exercise to take its contract through June, 2024.A big thank you goes out to the states of Indiana, Kentucky, New Mexico, Vermont and West Virginia for continuing to place their confidence in us as we partner to advance their digital government programs.
Finally I will echo Harry's comments and thank the state of Louisiana for placing your long-term trust in our digital government solutions. We look forward to a very long and mutually beneficial partnership.
And with that, I'll turn the call over to Steve Kovzan, NIC's Chief Financial Officer. Steve?
Thanks, Robert and good afternoon to everyone on the call. During the second quarter of 2016,NIC earned $0.20 per share which record total revenues of $80.8 million. For the quarter portal revenues were a record $75.5 million up 6% over the prior year quarter. Total same state portal revenues were also up 6% for the quarter. Breaking down the components of same state revenue growth, same state IGS transactional revenues grew 11% this quarter which I'll touch on more in a moment. Same state DHR transactional revenues were up just 1% this quarter.
As we mentioned on our first quarter earnings call in May, we expect a DHR growth to decelerate this quarter as we hit the anniversary date of the DHR monitoring service in one of our states. Finally, same state portal software development revenues decreased 10% due to the timing of project-based initiatives across several states. As we’ve shared in the past this portion of our business comprising only 4% of total portal revenues is lumpy and less protectable quarter-to-quarter than our transaction based revenues.
Back to the discussion of same state IGS revenue growth this quarter, our same state IGS revenue growth was 11% this quarter down sequentially from 16% in the first quarter of this year. Our growth this quarter was negatively affected by the Texas vehicle inspection service, our single largest IGS revenue service across all our states. As I shared over the last few quarters beginning March 1, 2016 we contractually began recognizing vehicle inspection revenues when registrations occur instead of when inspections occur, for vehicles inspected on or after March 1, 2016.
As you may recall, this did in fact result in a dip in revenues this past March totaling approximately $500,000 as compared to the revenues we would have ordinarily expected from this service. While we were hopeful volumes would return to normal levels this quarter, we continue to experience a shortfall, with revenues from this service down approximately $1 million from the second quarter of last year. Removing Texas from the calculation same state IGS revenues would have been of a stellar 19% over the second quarter of 2015.
And total same state revenue growth would have been 9% compared to our actual results of 6%.Clearly the rest of our business is performing at a very high level reflecting continued strong growth from a number of IGS services including motor vehicle registration services and business registration filings in addition to a full quarter of revenues from the Go Wild Wisconsin, outdoor recreational licensing service.
Go Wild Wisconsin is off to a strong start generating more than $600,000 in revenue for the quarter. And we look forward to additional contributions from this service later in the year as we enter the main hunting season in the fall.
Needless to say, we continue to monitor results from the Texas vehicle inspection service and are hopeful volumes will return to normal levels sooner than later.
Moving on, once again we saw another quarter of solid growth in software and services revenues, up 11% for the quarter and again driven by continued strong performance from the employment screening program which we manage for the U.S. Department of Transportation Federal Motor Carrier Safety Administration and to a lesser extent from continued in payment processing serving including the City of Portland contract.
For the quarter operating income totaled $20.3 million, up 10% from the prior year quarter resulting in an operating income margin for the quarter of 25% up from 24% in the second quarter of 2015.
As a final housekeeping item our full year 2016 financial guidance remains unchanged although we recognize our strong year-to-date performance currently puts us on a trajectory to finish the year toward or possibly above the high end our guidance.
With that I’ll turn the call back over the Harry.
Thank you, Steve. As we continue to serve as the R&D shop for government, we will drive innovation and work to continue to grow the core business just as we did during the second quarter which is evidenced in our healthy financial results.
With that Jessica, we’ll open the call for questions.
[Operator Instructions] We’ll first to go to Peter Heckmann from Avondale Partners.
Good afternoon everyone. One thing you didn’t mention the 8-K that you came out with inter-quarter talking about the win as a subcontractor to Booz Allen for the Recreational One Stop. If I am correct I think that’s under protest but if possible could you talk a little bit about that win and when you expect it to ramp up and how you would expect it to hit the numbers.
Well I’ll start, and then I’ll turn it over to Robert and Steve because I get the easy part. The easy part is, you are correct it is under protest. This is extremely common in a whole set of procurement and this is something that we learned early on. We’re going that process. Because of that we really can’t speak to timing. We’ve got to get to the process and just like everything else with the federal government, they are very thorough and there are lot of bureaucracy involved with it and so we’re following the lead with Booz Allen and our team there on the ground we’ll hopefully have some clarity in the future. With that…
I have nothing to add to that Harry.
The only thing I might add would be that and Pete you probably are aware of this that the protest is scheduled currently to conclude on August 30.
Right, okay. And we’ll follow-up on that. Switching gears then to Tennessee, little bit of an odd development there and I am sure you are a bit at a loss but for modeling perspective if I am correct that contract expires March 31, 2017. Could you help us size that contract like you did for Iowa?
Well Pete, I think given that’s an ongoing contract I won’t speak just to specifics on Tennessee. With Iowa it was really - from a financial it was or at least significant contract and because it’s going away by the end of this quarter we gave some perspective in terms of size wise. But in our public filings, we do point out Tennessee as being one our larger portal contacts.
Okay. Would you say that it would be in line, larger or smaller than your average per capital?
Again, won’t get into specifics needless to say it’s certainly a meaningful contract for us.
Okay, I’ll get back in the queue.
And we’ll now go to Brian Kinstlinger from Maxim Group.
Hi, great good evening. Could you provide an update on the ePark Pass Pilots maybe how the implementations are going, if they are live I can’t remember and then have there be any discussions to that end on additional parks.
Yes, Brian this is Robert. All three of our pilots as you probably recall they were five total of which we were able to implement three Acadia National Park In Maine, Theodore Roosevelt National Park in North Dakota and Colorado National Monument and all three of those were launched January 31 of this year, between January 31, the last one was on March 21 and so those are all now in production and working well and we continue to have conversations with the National Park Service regarding the expansion and their evaluation of that pilot to make sure that we understand how they see it as going.
Now if they decide other parks are going to move forward with a similar solution would that be a procurement or if they like what you are doing could it be not a competitive situation, could you just take us through how future procurements might happen of if they are willing to be one?
Well since it’s a pilot they do have some, they have flexibility to expand that pilot to include multiple parks and clearly they also have an option if they choose, they could go to a full blown procurement. But given that they have gone into this pilot with a couple of other vendors in these five parks, I think they certainly are hoping I think that the pilot proves successful with one of the current vendors and can move from there.
Right. Then also on the recreation one contract, are you able to share maybe the size - the procurements are up and the numbers are out there. Can you talk about maybe how you see that moves forward your role is it 10% subcontract or is it much larger, how should we sort of think about what you are doing and your role and percentage of the contract.
I would love to be able - this is Harry, I would love to be able to give you some but I am going to be able to. Mainly it’s just because of the process. Like I said we joined with them as a subcontractor, we haven’t even started the negotiation piece with the federal agency and so that’s going to dictate as we get through all the different elements. To speculate would be dangerous at this point.
Can you also, two more questions. The first one, could you share if there are new RFPs for the new states outstanding.
Currently there are no RFPs out on the street
Right. And then the last one, in the past Harry, sometimes when your margins have got a little bit higher, you guys have elected to reinvest some of that profit so they didn’t get too high as your states obviously see your margins. Are there plans to reinvest any of that incremental profit right now or the investments you made last year right now are suffice.
What I would say is we’re continuously looking at what we can invest that’s going to bring a better return to the stockholders and I am not being flip - we constantly are looking at different areas that we should reinvest. It does give you more flexibility when business are good and business is good right now and it does give you that flexibility to get more aggressive, there is nothing that I would say that I am ready to share with anyone but I am not nervous about partner perception, I believe that the partners are happy with this and where we’re at.
I guess maybe the last question is, your thought about hiring more people within the states to drive and would it even drive more same-state growth?
We constantly look at different ways to drive growth and that's everything with social media, marketing to traditional marketing to hiring individuals that go out there. Keep in mind when we deal with government it’s unlike any other service. Our service, they have to use it, the citizens and businesses have to use it and so it is more of an education than it is a marketing or sales education of how this brings them efficiency.
And we’ve gotten very effective over the years at driving that through our agency partners. And I think you saw that when you see what we spoke to this quarter. The increase in IGF's revenue from our existing application, we’re successful there and we continue to revisit those that we’ve launched as well as launching new ones.
All right, thank you so much.
[Operator Instructions] We'll go to Jeff Kessler from Imperial Capital.
Thank you. Hi guys. You mentioned - I have two questions, one is you mentioned at the very beginning some new apps that you wanted to highlight in various states that you have where that you are obviously proud of. Can you give us some idea of going down the road for the next couple of six or so months what other new apps we should be looking at without giving up state secretes or anything like that. What states do you have some exciting things going on that you either generated for them or they’re working with you, or they’ve actually come to you on and you’ve developed it for them.
Hi, Jeff this is Robert. This maybe a little of a boring answer for you but we’ve got things going on in every one of our states and as you saw through the comments from Harry's opening comments about some of the more traditional apps around vehicle registration and a few of our states combined with some of the newer innovations that I talked about with Utah and Mississippi and the use of Alexa with the Gov2Go award with our Go Wild Wisconsin service.
I mean those are services that individually obviously are very great for those states. But I challenge in my role I challenge all our states to be looking for not only what is the next app that they're going to be generating but also how do they use one of these apps that’s already been delivered and how do they take advantage of an app in their state that we've already launched in Colorado for example.
Yes, and the one thing that I would add to that Jeff is that, it’s not too often where we have a quarter like we did this quarter where you’ve got one service, one new IGS revenue generating service that's generating over $0.5 million, in its first quarter up and running like Wisconsin hunting and fishing licensing service. We’d love to be able to do that in a number of places more so than we are today.
But our growth really does come from a lot of smaller individual services. Our growth last year which was 8% came from launching over 500 services across the United States. So I don’t think anything has changed in that regard but we’d like to hit some more of those doubles and triples like Wisconsin.
Is there is approximate number of apps you have out there now, it’s always a nice figure to throw out?
I’m looking at Andrew and yes, I think I mean in terms of total number of apps, now again this includes revenue generating non-revenue-generating we're well over 10,000 probably closer to 12,000. In terms of revenue generating we're probably over 2000, I’m not sure what the exact number is right now.
Okay. Now my second question was about - is the more general question about the value proposition that you have to go through in making sure that states who have been with you for a while but who are paying this - who are paying these fees sometimes they forget what the value proposition is and realize - and may think that they can do it again the way they did it 10 or 12 years ago which they don't remember usually. But they think they can do a cheaper.
How do you make sure that you get away from states who may want to drop you simply because they believe they don't have need or because there - because you’ve been running so well with them and they’re running well with you, they all of a sudden believe that their systems are great and they're running smoothly, how do you keep them, how do you keep them focus on your value proposition beyond you’re not going to get a softer renewal and upgrade when the contract is over?
I'll start and then Harry will probably jump into. And this is Robert. What I would say is I mean that’s - that is exactly what you described the job of every one of our general managers out there is to make sure on a day-in and day-out basis they are demonstrating and articulating the value of what we bring. And I think we've talked with you before I mean that when we get into renewals and RFP processes, that starts 18 months in advance of that renewal day to make sure that we're understanding where we stand and sit and what opportunities we have in the value that we haven't.
And I think you know as we continue to bring out new services like Gov2Go, like Alexa those are new - the conversational interface - those are new technologies. And our partners look at that and recognize that we are continuing to provide leadership to them. And so that that helps also articulate that value that there we’ve been providing for many years. And I think as you saw from our announcement relative to the five extensions and the RP win in West Virginia. The states are recognizing that and they continue to see the value that we have.
Yes, I would echo Robert, so that's exactly the case. And states might look at and say, what would it take to run the applications? Remember what I’ve started with and Robert spoke to CNNMoney about. And that is we are the R&D supplement. They don't have the talent to go out there and get the creative innovative solutions to citizens and businesses need. And we’ve constantly shown this such as like Robert said Echo and those other services that we bring to them.
We also bring to the payment processing and the security element, and the security is huge and as you know that is the number one thing everyone has talked about whether it is public companies or whether it is government entities. And so we educate them there. I will address what we're circling and that is Iowa.
In Iowa we never got great partner, who was great partner for almost 20 years but we did service level there. We were - we built webpages for them and never really was allowed or got into building those services. And so it's unfortunate that we lost Iowa and like I said it’s not going to have a financial, negative financial impact to us. But almost all of our other partners we have a very deep relationship in which we have brought solid secured services to them. And it's our job to continue to show them that value and what they’d miss without us.
Was Iowa attempting to build its own apps all this time that when it was under contract with you for the apps that you were providing to them?
We weren’t providing apps for them for the most part. I mean a couple of things here and there. Yes I mean, what we focus was local government when realized we weren’t going to get a lot of traction and we still have those contracts and we're still very focused and there’s a lot of fertile ground there.
All right, great. Thank you very much.
And we will go to Gary Prestopino from Barrington Research.
Hi, good afternoon. This is Matt Gall filling in for Gary today. Thanks for taking the questions. One thing I just wanted to just to make sure that I’ve got it down quickly Steve, the same state IGS revenues ex Texas I think you point out was actually would've been up 19% is that the correct figure that you gave?
That’s correct, okay. And so then as far of - as far as the IGS revenues, kind of what's driving that more so from, is it more new services or financial services it within existing - what you’re already providing?
Yes, we specifically mentioned vehicle registrations and business registration filings in a couple state, Maryland, Colorado. But a big driver this quarter was the new hunting and fishing licensing service in Wisconsin which was the first full quarter revenues that that service didn’t launch until late in March. So we had a full quarter revenues from that service which was over $600,000 in revenues. So that was a nice kicker this quarter as well.
Okay, great. And then one thing just kind of more housekeeping, I believe that the tax rate in the quarter was maybe a little bit lower in the quarter than maybe what I think this 38% had been for the year, do you still expect that to normalize throughout the year or how should we think about that as far as the tax rate?
I’ll tell you, the tax rates for the quarter was a little bit lower. I think in general we're anticipating a little bit better benefit from the research and development tax credit which is a good thing. And so it'll be similar in around 38% probably for the rest of the year.
Got you. Okay. And then I know you'd mentioned that that you’re comfortable with maintaining the guidance that you had provided for the full year. But just kind of I was looking at the second half of the year, I mean, just thinking that you know if we compare the second half of the year to last year that, there could be - that could provide some deceleration or slowing of earnings growth. I mean what are your thoughts on maintaining the guidance there when you’re obviously having good top line growth?
Well I mean I’ll get to - one thing I would say is that I’ll just point you to our guidance in that we're comfortable with that. And I did share some color in my commentary that we're on a trajectory certainly to finish the year toward or possibly above our guidance and we recognize that.
The only thing that we've got going on in the second half of the year which happens every second half of the year is just normal seasonality in our business.
Typically the first two quarters of the year for us are the strongest. With the third quarter probably in line with or maybe a little bit lower than the first or second quarter and the fourth quarter being our seasonally weakest because of fewer business days. So other than that I don’t really have any color of significance of the second half of the year.
Okay. Well I appreciate it and congrats on the great quarter. Thank you.
[Operator Instructions] We’ll now go to Peter Heckmann from Avondale Partners.
Hi, Steve just a follow-up on that. I didn’t understand how the math worked when you said that the same state IGS sort of gone from - what was it - 11 to 19?
Yes, I’m just saying taking…
…Texas or just…
Yes, just taking Texas out of the equation, it would've gone 11 to 19.So we were just saying we saw the vehicle inspection revenues drag it down. So we just removed Texas from the entire equation, from both calculations. So it went from 6 to 9 on a total same-state revenue growth and 11 to 19 on a same state IGS revenue growth. Just simply saying, rest of the business setting Texas aside performed at a pretty high level.
I got it. Thanks.
And this all the time we have for questions today. I’ll turn the conference back over to you Mr. Herington for any additional or closing remarks.
Thank you, Jessica. And thank you to everyone who joined us this afternoon. I look forward to speaking with you in November during our third quarter earnings call. Thank you very much.
This concludes today’s presentation. Thank you for your participation.
Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.
THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.
If you have any additional questions about our online transcripts, please contact us at: email@example.com. Thank you!