And your final pick?
NIC Inc. (EGOV). They provide outsourced Website development and management services to state and local governments. Their services allow governments to provide citizens and businesses with access to information and the ability to complete various government-related actions online including payments, registrations, verifications, or renewals.
When NIC goes in to set up a Website, the government client pays nothing up front. NIC builds the Website essentially for free, and then they get a share of the fees generated from transactions on the site. So if you go to renew your driver’s license or pay your property taxes and there’s a convenience fee built into the cost of the transaction, there’s a revenue sharing agreement.
NIC’s 2009 revenue was $133 million. Over the last several years they’ve grown revenues from existing clients in excess of 10% annually. Texas, Indiana, Virginia, and Colorado are among the 22 states that are clients. In 2009, they added their first ever federal contract with the division of the U.S. Department of Transportation. They are continually expanding the number of services, increasing the types of transactions that can be accomplished online. We believe they’re well positioned to continue to grow revenue and profits—at least at a 15% level—for years to come.
This article originally appeared in the May 2010 issue of Black Enterprise magazine.