UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2020

Or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 000-26621

NIC INC.

(Exact name of registrant as specified in its charter)

Delaware	52-2077581
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

25501 West Valley Parkway, Suite 300, Olathe, Kansas 66061

(Address of principal executive offices, including Zip Code)

Registrant’s telephone number, including area code:   (877) 234-3468

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.0001 par value per share	EGOV	The Nasdaq Stock Market, LLC

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes  ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☑	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).  Yes  ☐ No  ☑

On July 24, 2020, the registrant had 67,021,356 shares of common stock outstanding.

NIC INC.

Form 10-Q for the Quarter Ended June 30, 2020

Table of Contents

		Page
PART I - FINANCIAL INFORMATION
Item 1.	Financial Statements (unaudited)	3
	Consolidated Balance Sheets	3
	Consolidated Statements of Income	4
	Consolidated Statements of Changes in Stockholders' Equity	5
	Consolidated Statements of Cash Flows	7
	Notes to Unaudited Consolidated Financial Statements	8
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	16
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	26
Item 4.	Controls and Procedures	26
PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	27
Item 1A.	Risk Factors	27
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	29
Item 6.	Exhibits	29
	Signatures	30

2

PART I - FINANCIAL INFORMATION

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS

NIC INC.

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

thousands except par value amount

	June 30, 2020		December 31, 2019
ASSETS
Current assets:
Cash	$	220,351	$	214,380
Trade accounts receivable, net	106,537		85,399
Prepaid expenses & other current assets	13,364		12,944
Total current assets	340,252		312,723
Property and equipment, net	10,656		10,091
Right of use lease assets, net	10,957		10,778
Intangible assets, net	21,937		22,398
Goodwill	5,965		5,965
Other assets	1,244		404
Total assets	$	391,011	$	362,359
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	75,896	$	63,685
Accrued expenses	27,781		25,940
Lease liabilities	3,905		3,776
Other current liabilities	8,772		7,191
Total current liabilities	116,354		100,592
Deferred income taxes, net	2,862		2,463
Lease liabilities	7,453		7,373
Other long-term liabilities	5,913		6,003
Total liabilities	132,582		116,431
Commitments and contingencies (Notes 2, 3 and 6)	—		—
Stockholders' equity:
Common stock, $0.0001 par, 200,000 shares authorized, 67,019 and 66,968 shares issued and outstanding	7		7
Additional paid-in capital	125,404		123,208
Retained earnings	133,018		122,713
Total stockholders' equity	258,429		245,928
Total liabilities and stockholders' equity	$	391,011	$	362,359

See accompanying notes to unaudited consolidated financial statements.

3

NIC INC.

CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)

thousands except per share amounts

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Revenues:
State enterprise revenues	$	77,804	$	74,871	$	152,215	$	144,724
Software & services revenues	15,785		16,695		32,493		32,023
Total revenues	93,589		91,566		184,708		176,747
Operating expenses:
State enterprise cost of revenues, exclusive of depreciation & amortization	45,876		45,081		92,147		87,060
Software & services cost of revenues, exclusive of depreciation & amortization	10,344		10,525		21,069		19,922
Selling & administrative	8,316		8,356		16,379		18,320
Enterprise technology & product support	7,201		6,745		14,455		13,190
Depreciation & amortization	3,473		3,130		6,955		5,551
Total operating expenses	75,210		73,837		151,005		144,043
Operating income	18,379		17,729		33,703		32,704
Other income:
Interest income	—		577		389		1,181
Income before income taxes	18,379		18,306		34,092		33,885
Income tax provision	4,583		3,846		8,433		7,923
Net income	$	13,796	$	14,460	$	25,659	$	25,962
Basic net income per share	$	0.20	$	0.21	$	0.38	$	0.38
Diluted net income per share	$	0.20	$	0.21	$	0.38	$	0.38
Weighted average shares outstanding:
Basic	66,999		66,940		66,993		66,806
Diluted	66,999		66,940		66,993		66,806

See accompanying notes to unaudited consolidated financial statements.

4

NIC INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

(UNAUDITED)

thousands

	Six Months Ended June 30, 2020
	Common Stock			Additional Paid-in Capital		Retained Earnings
	Shares	Amount						Total
Balance, January 1, 2020	66,968	$	7	$	123,208	$	122,713	$	245,928
Net cumulative effect of adoption of accounting standard (Note 2)	—	—		—		339		339
Net income	—	—		—		11,863		11,863
Dividends declared	—	—		—		(6,105)		(6,105)
Dividend equivalents on unvested performance-based restricted stock awards	—	—		35		(35)		—
Dividend equivalents canceled upon forfeiture of performance-based restricted stock awards	—	—		(84)		84		—
Restricted stock vestings	228	—		—		—		—
Shares surrendered and canceled upon vesting of restricted stock to satisfy tax withholdings	(91)	—		(1,865)		—		(1,865)
Repurchase of shares	(241)	—		(439)		(3,505)		(3,944)
Stock-based compensation	—			1,319		—		1,319
Issuance of common stock under employee stock purchase plan	104	—		1,509		—		1,509
Balance, March 31, 2020	66,968	7		123,683		125,354		249,044
Net income	—	—		—		13,796		13,796
Dividends declared	—	—		—		(6,097)		(6,097)
Dividend equivalents on unvested performance-based restricted stock awards	—	—		35		(35)		—
Restricted stock vestings	53	—		—		—		—
Shares surrendered and canceled upon vesting of restricted stock to satisfy tax withholdings	(2)	—		(53)		—		(53)
Stock-based compensation	—	—		1,739		—		1,739
Balance, June 30, 2020	67,019	$	7	$	125,404	$	133,018	$	258,429

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NIC INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

(UNAUDITED)

thousands

	Six Months Ended June 30, 2019
	Common Stock			Additional Paid-in Capital		Retained Earnings
	Shares	Amount						Total
Balance, January 1, 2019	66,569	$	7	$	117,763	$	93,919	$	211,689
Net income	—	—		—		11,502		11,502
Dividends declared	—	—		—		(5,402)		(5,402)
Dividend equivalents on unvested performance-based restricted stock awards	—	—		27		(27)		—
Dividend equivalents canceled upon forfeiture of performance-based restricted stock awards	—	—		(122)		122		—
Restricted stock vestings	364	—		—		—		—
Shares surrendered and canceled upon vesting of restricted stock to satisfy tax withholdings	(153)	—		(2,609)		—		(2,609)
Stock-based compensation	—			2,272		—		2,272
Shares issuable in lieu of dividend payments on performance-based restricted stock awards	3	—		—		—		—
Issuance of common stock under employee stock purchase plan	128	—		1,443		—		1,443
Balance, March 31, 2019	66,911	7		118,774		100,114		218,895
Net income	—	—		—		14,460		14,460
Dividends declared	—	—		—		(5,416)		(5,416)
Dividend equivalents on unvested performance-based restricted stock awards	—	—		27		(27)		—
Restricted stock vestings	47	—		—		—		—
Shares surrendered and canceled upon vesting of restricted stock to satisfy tax withholdings	(2)	—		(28)		—		(28)
Stock-based compensation	—	—		1,431		—		1,431
Balance, June 30, 2019	66,956	$	7	$	120,204	$	109,131	$	229,342

See accompanying notes to unaudited consolidated financial statements.

6

NIC INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

thousands

	Six Months Ended June 30,
	2020		2019
Cash flows from operating activities:
Net income	$	25,659	$	25,962
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation & amortization	6,955		5,551
Stock-based compensation expense	3,058		3,703
Deferred income taxes	282		976
Provision (recoveries) for losses on accounts receivable	1,043		(148)
Changes in operating assets and liabilities:
Trade accounts receivable, net	(21,725)		(31,613)
Prepaid expenses & other current assets	(420)		1,130
Other assets	1,411		2,191
Accounts payable	12,211		23,616
Accrued expenses	1,841		(1,439)
Other current liabilities	970		32
Other long-term liabilities	(1,700)		(2,190)
Net cash provided by operating activities	29,585		27,771
Cash flows from investing activities:
Purchases of property and equipment	(2,540)		(2,831)
Business combination	—		(10,000)
Asset acquisition	—		(3,486)
Capitalized software development costs	(4,520)		(4,607)
Net cash used in investing activities	(7,060)		(20,924)
Cash flows from financing activities:
Cash dividends on common stock	(12,202)		(10,818)
Proceeds from employee common stock purchases	1,509		1,443
Shares surrendered upon vesting of restricted stock to satisfy tax withholdings	(1,917)		(2,637)
Repurchase of shares	(3,944)		—
Net cash used in financing activities	(16,554)		(12,012)
Net increase (decrease) in cash	5,971		(5,165)
Cash, beginning of period	214,380		191,700
Cash, end of period	$	220,351	$	186,535
Other cash flow information:
Non-cash activities:
Contingent consideration - business combination	$	—	$	960
Cash payments:
Income taxes paid, net	$	5,189	$	6,925

See accompanying notes to unaudited consolidated financial statements.

7

NIC INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1.  THE COMPANY

NIC Inc., together with its subsidiaries (the "Company" or "NIC") is a leading provider of digital government services that help governments use technology to provide a higher level of service to businesses and citizens and increase efficiencies. The Company accomplishes this currently through two channels: its state enterprise businesses and its software & services businesses.

In the Company's state enterprise businesses, it generally designs, builds, and operates digital government services on an enterprise-wide basis on behalf of state and local governments desiring to provide access to government information and to complete secure government-based transactions through multiple online channels. These digital government services consist of websites and applications the Company has built that allow consumers, such as businesses and citizens, to access government information, complete transactions and make electronic payments. The Company typically manages operations for each contractual relationship through separate local subsidiaries that operate as decentralized businesses with a high degree of autonomy. The Company is typically responsible for funding the up-front investments and ongoing operations and maintenance costs of the digital government services. The Company’s software & services businesses primarily include its subsidiaries that provide payment processing services, software development and digital government services, other than those services provided under state enterprise contracts, to federal agencies as well as state and local governments.

2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the U.S. (“U.S. GAAP”). The consolidated financial statements include all the Company's direct and indirect wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated.

Pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”), certain information and note disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. In the opinion of management, the unaudited consolidated financial statements contain all adjustments (consisting of normal and recurring adjustments) necessary to fairly present the consolidated financial position and the results of operations, changes in stockholders' equity and cash flows of the Company as of the dates and for the interim periods presented. The unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements of the Company for the year ended December 31, 2019, including the notes thereto, set forth in the Company’s 2019 Annual Report on Form 10-K.

Certain amounts in the consolidated statements of income for the three and six months ended June 30, 2019 were reclassified to conform to the current year presentation. In 2020, the Company began classifying its Texas payment processing contract in the software & services category. The Company reclassified $8.0 million and $15.4 million of revenues for the three and six months ended June 30, 2019, respectively, and $7.2 million and $13.9 million of cost of revenues for the three and six months ended June 30, 2019, respectively, from this contract from the state enterprise category to the software & services category. The reclassification had no impact on net income or cash flows for the periods ended June 30, 2019.

Use of estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the unaudited consolidated financial statements and accompanying notes. Actual results could differ from those estimates. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year ending December 31, 2020.

Recently issued accounting pronouncements

Credit Losses

In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326), to replace the incurred loss impairment methodology in current U.S. GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. For trade and other

8

receivables, the Company will be required to use a forward-looking expected loss model rather than the incurred loss model for recognizing credit losses which reflects losses that are probable. On January 1, 2020, the Company adopted the standard and all the related amendments, using a modified retrospective approach. The adoption of the standard resulted in a cumulative-effect adjustment to retained earnings of approximately $0.3 million. The adoption of the standard did not have a significant impact on the Company’s consolidated earnings or cash flows.

Revenue recognition

The Company accounts for revenue in accordance with Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers. Revenue is recognized when a customer obtains control of promised goods or services. The amount of revenue recognized reflects the consideration which the Company expects to receive in exchange for those goods or services.  

Disaggregation of Revenue

The Company currently earns revenues from three main sources: (i) transaction-based fees, which consist of interactive government services (“IGS”), driver history records (“DHR”) and other transaction-based revenues, (ii) development services and (iii) fixed-fee services.

The following table summarizes, by reportable and operating segment, the principal activities from which the Company generates revenue for the three months ended June 30 (in thousands):

2020	State Enterprise		Payments		All Other		Consolidated Total
IGS	$	50,055	$	—	$	—	$	50,055
DHR	20,607		—		—		20,607
Other	—		9,713		4,838		14,551
Total transaction-based	70,662		9,713		4,838		85,213
Development services	5,904		—		—		5,904
Fixed-fee services	1,238		—		1,234		2,472
Total revenues	$	77,804	$	9,713	$	6,072	$	93,589
2019	State Enterprise		Payments		All Other		Consolidated Total
IGS	$	47,595	$	—	$	—	$	47,595
DHR	23,396		—		—		23,396
Other	—		9,884		5,996		15,880
Total transaction-based	70,991		9,884		5,996		86,871
Development services	2,642		—		—		2,642
Fixed-fee services	1,238		—		815		2,053
Total revenues	$	74,871	$	9,884	$	6,811	$	91,566

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The following table summarizes, by reportable and operating segment, the principal activities from which the Company generates revenue for the six months ended June 30 (in thousands):

2020	State Enterprise		Payments		All Other		Consolidated Total
IGS	$	98,243	$	—	$	—	$	98,243
DHR	43,456		—		—		43,456
Other	—		19,729		10,304		30,033
Total transaction-based	141,699		19,729		10,304		171,732
Development services	8,041		—		—		8,041
Fixed-fee services	2,475		—		2,460		4,935
Total revenues	$	152,215	$	19,729	$	12,764	$	184,708
2019	State Enterprise		Payments		All Other		Consolidated Total
IGS	$	90,347	$	—	$	—	$	90,347
DHR	47,081		—		—		47,081
Other	—		19,237		11,529		30,766
Total transaction-based	137,428		19,237		11,529		168,194
Development services	4,821		—		—		4,821
Fixed-fee services	2,475		—		1,257		3,732
Total revenues	$	144,724	$	19,237	$	12,786	$	176,747

Transaction-based Revenues

Under the majority of contracts with its government partners, the Company agrees to provide continuous access to digital government services that allow consumers to complete secure transactions, such as applying for a permit, retrieving government records, or filing a government-mandated form or report, in exchange for transaction-based fees. The Company satisfies its performance obligation by providing access to applications over the contractual term and by processing transactions as they are initiated by consumers. The performance obligation is satisfied when the Company provides the access and it is used by the consumer.

Development Services Revenues

The Company earns development services revenues primarily under contracts to provide software development and other time and materials services to its government partners. These contracts are generally not longer than one year in duration. For services provided under development contracts, the performance obligation is either satisfied over time or at a point in time upon customer acceptance.

Under its development services contracts, the Company typically does not have significant future performance obligations that extend beyond one year. As of June 30, 2020, the total transaction price allocated to unsatisfied performance obligations was approximately $6.7 million.

Fixed-fee Services Revenues

Fixed-fee services revenues primarily consist of revenues from providing recurring fixed fee digital government services to the Company’s government partner in Indiana and other contracts for software-as-a-service (“SaaS”) subscription-based services in the Company's software & services businesses. As of June 30, 2020, the Company’s Indiana contract had unsatisfied performance obligations for one month. The total transaction price allocated to the unsatisfied performance obligation is not significant.

The subscription-based service contracts in the Company's software & services businesses are a fixed-fee single performance obligation to provide government partners continuous access to digital services. As of June 30, 2020, the unsatisfied

10

performance obligations related to these contracts was $18.8 million, which will be recognized over the term of such contracts, generally 1 - 5 years.

Unearned Revenues

Unearned revenues at June 30, 2020 and December 31, 2019 were approximately $4.6 million and $3.8 million, respectively. The change in the deferred revenue balance for the six months ended June 30, 2020 is primarily driven by $5.2 million of cash payments received or due in advance of satisfying the Company's performance obligations, offset by $4.4 million of revenues recognized that were previously included in deferred revenue.

Trade accounts receivable

The Company records trade accounts receivable at net realizable value. This value includes an appropriate allowance for estimated uncollectible accounts. The Company calculates this allowance based on its history of write-offs, and its relationship with, and the expected future economic status of, its customers. Trade accounts receivable are written off when deemed uncollectible. Recoveries of receivables previously written off are recorded when received. The Company’s allowance for doubtful accounts at June 30, 2020 and December 31, 2019 was approximately $1.8 million and $1.2 million, respectively.

3.  GOVERNMENT CONTRACTS

State enterprise contracts

The Company’s state enterprise contracts generally have an initial multi-year term with provisions for renewals for various periods at the option of the government. The Company’s primary business obligation under these contracts is generally to design, build, and operate digital government services on an enterprise-wide basis on behalf of government entities desiring to provide access to government information and to digitally complete government-based transactions and payments. NIC typically markets the services and solicits consumers to complete government-based transactions and to enter into subscriber contracts permitting the user to access online applications and the government information contained therein in exchange for transactional and/or subscription user fees. The Company enters into statements of work with various agencies and divisions of the government to provide specific services and to conduct specific transactions. These statements of work preliminarily establish the pricing of the online transactions and data access services the Company provides and the division of revenues between the Company and the government agency. The government oversight authority must approve prices and revenue sharing agreements. The Company has limited control over the level of fees it is permitted to retain.

The Company is typically responsible for funding the up-front development and ongoing operations and maintenance costs of digital government services and generally owns all the intellectual property in connection with the applications developed under these contracts. After completion of a defined contract term or upon termination for cause, the government partner typically receives a perpetual, royalty-free license to use the applications built by the Company only in its own state. However, certain enterprise applications, proprietary customer management, billing, payment processing and other software applications that the Company has developed and standardized centrally are provided to government partners on a SaaS basis, and thus would not be included in any royalty-free license. If the Company’s contract expires after a defined term or if its contract is terminated by a government partner for cause, the government agency would be entitled to take over the applications in place, and NIC would have no future revenue from, or obligation to, such former government partner, except as otherwise provided in the contract.

Any renewal of these contracts beyond the initial term by the government is optional and a government may terminate its contract prior to the expiration date if the Company breaches a material contractual obligation and fails to cure such breach within a specified period or upon the occurrence of other events or circumstances specified in the contract. In addition, 15 contracts under which the Company provides enterprise-wide digital government services, as well as the Company’s contract with the Federal Motor Carrier Safety Administration (“FMCSA”), can be terminated by the other party without cause on a specified period of notice. Collectively, revenues generated from these contracts represented approximately 56% and 58% of the Company’s total consolidated revenues for the three and six months ended June 30, 2020. If any of these contracts is terminated without cause, the terms of the respective contract may require the government to pay the Company a fee to continue to use the Company’s applications.

Under a typical state enterprise contract, the Company is required to fully indemnify its government partners against claims that the Company’s services infringe upon the intellectual property rights of others and against claims arising from the Company’s performance or the performance of the Company’s subcontractors under the contract.

11

Software & services contracts

The Company’s subsidiary NIC Federal, LLC has a contract with the FMCSA to develop and manage the FMCSA’s Pre-Employment Screening Program (“PSP”) for motor carriers nationwide using a transaction-based business model.

Expiring contracts

There are currently 9 state enterprise contracts, as well as the Company's contract with the FMCSA, that have expiration dates within the 12-month period following June 30, 2020. Collectively, revenues generated from these contracts represented approximately 27% and 28% of the Company’s total consolidated revenues for the three and six months ended June 30, 2020. Although six of these state enterprise contracts have renewal provisions, any renewal is at the option of the Company’s government partner. As described above, if a contract is not renewed after a defined term, the government partner would be entitled to take over the applications in place, and NIC would have no future revenue from, or obligation to, such former government partner, except as otherwise provided in the contract.

Performance Bond Commitments

At June 30, 2020, the Company was bound by performance bond commitments totaling approximately $25.2 million on certain government contracts and other business relationships.

4.  EARNINGS PER SHARE

Unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and are included in the computation of earnings per share pursuant to the two-class method for all periods presented. The two-class method is an earnings allocation formula that treats a participating security as having rights to undistributed earnings that would otherwise have been available to common stockholders. The Company’s service-based restricted stock awards contain non-forfeitable rights to dividends and are participating securities. Accordingly, service-based restricted stock awards were included in the calculation of earnings per share using the two-class method for all periods presented. Unvested service-based restricted shares totaled 0.7 million for both the three and six months ended June 30, 2020 and 2019. Basic earnings per share is calculated by first allocating earnings between common stockholders and participating securities. Earnings attributable to common stockholders are divided by the weighted average number of common shares outstanding during the period. Diluted earnings per share is calculated by giving effect to dilutive potential common shares outstanding during the period. The dilutive effect of shares related to the Company’s employee stock purchase plan is determined based on the treasury stock method. The dilutive effect of service-based restricted stock awards is based on the more dilutive of the treasury stock method or the two-class method assuming a reallocation of undistributed earnings to common stockholders after considering the dilutive effect of potential common shares other than the participating unvested restricted stock awards. The dilutive effect of performance-based restricted stock awards is based on the treasury stock method.

The following table sets forth the computation of basic and diluted earnings per share (in thousands, except per share amounts):

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Numerator:
Net income	$	13,796	$	14,460	$	25,659	$	25,962
Less: Income allocated to participating securities	(146)		(160)		(276)		(286)
Net income available to common stockholders	$	13,650	$	14,300	$	25,383	$	25,676
Denominator:
Weighted average shares - basic	66,999		66,940		66,993		66,806
Performance-based restricted stock awards	—		—		—		—
Weighted average shares - diluted	66,999		66,940		66,993		66,806
Basic net income per share:	$	0.20	$	0.21	$	0.38	$	0.38