Achieves High End of Guidance Ranges
Builds Sales Momentum for Newer Solutions
Advances Strategic Growth Initiatives
CARY, N.C., Nov. 8, 2012 (GLOBE NEWSWIRE) -- SciQuest, Inc. (Nasdaq:SQI), a leading provider of cloud-based spend management solutions, today announced its financial results for the third quarter ended September 30, 2012.
Stephen Wiehe, President and Chief Executive Officer of SciQuest, said, "We delivered strong third quarter financial results that were at the upper end of our guidance ranges. Demand for our spend management solutions was strong with 19 new customers signed during the quarter. The new customers were spread across all of our market verticals – commercial, higher education, state & local government and healthcare. Sales of our new accounts payable and contract lifecycle management solutions to new and existing customers contributed to our success. Moreover, we made further progress toward our strategic growth initiatives with our acquisitions of Spend Radar and Upside Software. We believe that healthy interest from customers and prospects across our expanding portfolio of spend management solutions reinforces our leadership position in the marketplace and positions us for continued growth."
Third Quarter 2012 Results
SciQuest reported GAAP revenue of $17.2 million for the quarter ended September 30, 2012. GAAP revenue in the third quarter of 2011 was $13.8 million.
GAAP loss from operations in the third quarter of 2012 was $0.1 million compared to GAAP income from operations of $1.5 million in the third quarter of 2011. GAAP net income was $0.7 million in the third quarter of 2012, which compares to GAAP net income of $0.8 million in the same quarter in the prior year. The primary drivers of these changes were the expected impact of the Upside Software acquisition and increased stock-based compensation.
GAAP diluted earnings per share was $0.03 in the third quarter of 2012 based on 22.7 million average diluted shares outstanding. Based on 22.6 million average diluted shares outstanding, GAAP diluted earnings per share in the third quarter of 2011 was $0.03.
Non-GAAP revenue(1) in the third quarter of 2012 was $17.6 million.
Non-GAAP income from operations(2) was $2.3 million and non-GAAP net income(3) was $1.4 million in the third quarter of 2012. In the third quarter of 2011 non-GAAP income from operations(2) and non-GAAP net income(3) were $2.9 million and $1.8 million, respectively. The primary driver of these changes was the expected impact of the Upside Software acquisition.
Non-GAAP diluted earnings per share(3) was $0.06 in the third quarter of 2012 based on 22.7 million average diluted shares outstanding. Based on 22.6 million average diluted shares outstanding, non-GAAP diluted earnings per share(3) in the third quarter of 2011 was $0.08.
Results from Upside Software are included in SciQuest's results on and after the date it was acquired, August 1, 2012.
A reconciliation of the most comparable GAAP financial measure to the non-GAAP measures used above is included in the financial tables at the end of this release.
Business Outlook
Based on the Company's strong third quarter performance and the impact of recent acquisitions, SciQuest is issuing the following guidance:
Fourth quarter 2012
- GAAP revenue to be between $19.3 million and $19.7 million.
- GAAP basic loss per share to be between $0.11 and $0.12.
-
Basic weighted average shares outstanding to be approximately 22.4 million.
- Non-GAAP revenue(1) to be between $20.1 million and $20.5 million.
- Non-GAAP diluted earnings per share(3) to be between $0.05 and $0.06, including approximately $0.01 of dilution from the Spend Radar acquisition.
- Diluted weighted average shares outstanding to be approximately 22.8 million.
Full Year 2012
- GAAP revenue to be between $66.1 million and $66.5 million.
- GAAP basic loss per share to be between $0.05 and $0.06.
- Basic weighted average shares outstanding to be approximately 22.3 million.
-
Net cash provided by operating activities to be between $20.3 million and $21.3 million.
- Non-GAAP revenue(1) to be between $67.3 million and $67.7 million.
- Non-GAAP diluted earnings per share(3) to be between $0.22 and $0.23.
- Diluted weighted average shares outstanding to be approximately 22.7 million.
- Adjusted free cash flow(4) to be between $16.0 million and $17.0 million.
Results from Upside Software and Spend Radar are included in SciQuest's results on and after the date they were acquired, August 1, 2012 and October 1, 2012, respectively.
The main drivers of the fourth quarter and full year GAAP guidance for net loss are the result of specific GAAP accounting rules related to acquisition costs, the impact of purchase accounting on recent acquisitions and the related income tax effects.
A reconciliation of the most comparable GAAP financial measure to the non-GAAP measures used above is included with the financial tables at the end of this release.
ENDNOTES
1) Non-GAAP revenue excludes the purchase accounting impact on deferred revenue adjustment.
2) Non-GAAP income and loss from operations excludes the purchase accounting impact on deferred revenue adjustment; stock-based compensation expense; and the amortization of (i) intangible assets, (ii) acquired software and (iii) acquisition-related costs.
3) Non-GAAP net income and non-GAAP diluted earnings per share exclude the purchase accounting impact on deferred revenue adjustment; stock-based compensation expense; and the amortization of (i) intangible assets, (ii) acquired software and (iii) acquisition-related costs. Non-GAAP net income includes the negative tax-effect of these items.
4) Adjusted free cash flow is defined as net cash provided by operating activities plus acquisition-related costs less purchases of (i) property and equipment and (ii) capitalization of software development costs.
Conference Call Information
| What: | SciQuest's third quarter 2012 financial results conference call | |
| When: | Thursday, November 8, 2012 | |
| Time: | 4:30 p.m. ET | |
| Webcast: | http://investor.sciquest.com (live and replay) | |
| Live Call: | (855) 297-9383, domestic | |
| (708) 290-1311, international | ||
| Replay: | (855) 859-2056, domestic | |
| (404) 537-3406, international | ||
| Live and replay conference ID code: 43083968 | ||
Non-GAAP Financial Measures
SciQuest provides all information required in accordance with GAAP, but believes evaluating its ongoing operating results may not be as useful if an investor is limited to reviewing only GAAP financial measures. Accordingly, SciQuest presents non-GAAP financial measures in reporting its financial results to provide investors with additional tools to evaluate SciQuest's operating results in a manner that focuses on what SciQuest believes to be its ongoing business operations and what SciQuest uses to evaluate its ongoing operations and for internal planning and forecasting purposes. SciQuest's management does not itself, nor does it suggest that investors should, consider such non-GAAP financial measures in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. SciQuest's management believes it is useful for itself and investors to review, as applicable, both GAAP information that includes: (i) the amortization of acquired intangible assets; (ii) the impact of stock-based compensation; (iii) other significant items, such as acquisition related expenses; (iv) the income tax effect of non-GAAP pre-tax adjustments from the provision for income taxes; and (v) the purchase accounting impact on deferred revenue; and the non-GAAP measures that exclude such information in order to assess the performance of SciQuest's business and for planning and forecasting in subsequent periods. Whenever SciQuest uses such a non-GAAP financial measure, it provides a reconciliation of the non-GAAP financial measure to the most closely applicable GAAP financial measure to the extent possible. Investors are encouraged to review the related GAAP financial measures and the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measure as detailed herein.
About SciQuest
SciQuest's (Nasdaq:SQI) easy to use solutions help contract management, procurement, and accounts payable professionals make daily operations efficient through smart automation, and turn the focus on more strategic decisions that impact the bottom line. With unmatched visibility into spending, combined with the Power of Q — the Company's unique combination of products and support — SciQuest provides organizations with a strategic approach to procurement, improving bottom-line results.
To join the conversation, please visit our blog, The Open Kitchen—http://www.sciquest.com/blog/ or follow us on Twitter @SciQuest.
Cautionary Note Regarding Forward-Looking Statements
Any statements in this release that are not historical or current facts are forward-looking statements, including all statements in the "Business Outlook" section. All forward-looking statements in this release are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performances or achievements expressed or implied by the forward-looking statements. Certain of these risks and uncertainties are described in the "Risk Factors" section of our most recent Annual Report on Form 10-K and other required reports, as filed with the SEC, which are available free of charge on the SEC's website at http://www.sec.gov or on our website at www.sciquest.com. Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results. These forward-looking statements speak only as of the date hereof, and we undertake no obligation to update, amend or clarify any forward-looking statement for any reason.
| SCIQUEST, INC. | ||
| CONSOLIDATED BALANCE SHEETS | ||
| (in thousands except share and per share amounts) | ||
|
As of September 30, 2012 |
As of December 31, 2011 |
|
| (unaudited) | ||
| Assets | ||
| Current assets: | ||
| Cash and cash equivalents | $ 20,810 | $ 14,958 |
| Short-term investments | 26,545 | 44,685 |
| Accounts receivable, net | 6,808 | 10,746 |
| Prepaid expenses and other current assets | 1,587 | 1,015 |
| Deferred tax asset | 1,363 | 70 |
| Total current assets | 57,113 | 71,474 |
| Property and equipment, net | 6,653 | 4,028 |
| Goodwill | 31,613 | 15,719 |
| Intangible assets, net | 12,402 | 5,433 |
| Deferred project costs | 7,047 | 7,025 |
| Deferred tax asset | 11,562 | 12,634 |
| Other | 95 | 55 |
| Total assets | $ 126,485 | $ 116,368 |
| Liabilities and Stockholders' Equity | ||
| Current liabilities: | ||
| Accounts payable | $ 289 | $ 102 |
| Accrued liabilities | 6,027 | 5,945 |
| Deferred revenues | 39,527 | 36,836 |
| Total current liabilities | 45,843 | 42,883 |
| Deferred revenues, less current portion | 14,851 | 12,778 |
| Stockholders' equity: | ||
| Common stock, $0.001 par value; 50,000,000 shares authorized; 22,346,078 and 22,133,036 shares issued and outstanding as of September 30, 2012 and December 31, 2011, respectively | 22 | 22 |
| Additional paid-in capital | 78,004 | 74,083 |
| Accumulated other comprehensive loss | (103) | -- |
| Accumulated deficit | (12,132) | (13,398) |
| Total stockholders' equity | 65,791 | 60,707 |
| Total liabilities and stockholders' equity | $ 126,485 | $ 116,368 |
| SCIQUEST, INC. | ||||
| CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME | ||||
| (in thousands except per share amounts) | ||||
| Three Months Ended September 30, | Nine Months Ended September 30, | |||
| 2012 | 2011 | 2012 | 2011 | |
| (unaudited) | (unaudited) | |||
| Revenues | $ 17,173 | $ 13,774 | $ 46,761 | $ 39,208 |
| Cost of revenues (1)(2) | 5,343 | 3,560 | 13,929 | 9,521 |
| Gross profit | 11,830 | 10,214 | 32,832 | 29,687 |
| Operating expenses: (1) | ||||
| Research and development | 4,734 | 3,001 | 10,905 | 8,670 |
| Sales and marketing | 4,073 | 3,396 | 12,188 | 10,815 |
| General and administrative | 2,835 | 2,107 | 8,006 | 6,220 |
| Amortization of intangible assets | 318 | 209 | 736 | 628 |
| Total operating expenses | 11,960 | 8,713 | 31,835 | 26,333 |
| (Loss) income from operations | (130) | 1,501 | 997 | 3,354 |
| Other (expense) income, net: | ||||
| Interest income | 19 | 23 | 75 | 67 |
| Other (expense) income, net | (38) | (24) | (41) | (11) |
| Total other (expense) income, net | (19) | (1) | 34 | 56 |
| (Loss) income before income taxes | (149) | 1,500 | 1,031 | 3,410 |
| Income tax benefit (expense) | 862 | (741) | 235 | (1,651) |
| Net income | $ 713 | $ 759 | $ 1,266 | $ 1,759 |
| Other comprehensive income: | ||||
| Foreign currency translation adjustments | (109) | -- | (103) | -- |
| Comprehensive income | $ 604 | $ 759 | $ 1,163 | $ 1,759 |
| Net income per share | ||||
| Basic | $ 0.03 | $ 0.03 | $ 0.06 | $ 0.08 |
| Diluted | $ 0.03 | $ 0.03 | $ 0.06 | $ 0.08 |
| Weighted average shares outstanding used in computing per share amounts | ||||
| Basic | 22,278 | 22,012 | 22,235 | 21,549 |
| Diluted | 22,703 | 22,551 | 22,676 | 22,149 |
| (1) Amounts include stock-based compensation expense, as follows: | ||||
| Three Months Ended September 30, | Nine Months Ended September 30, | |||
| 2012 | 2011 | 2012 | 2011 | |
| (unaudited) | (unaudited) | |||
| Cost of revenues | $ 109 | $ 105 | $ 191 | $ 213 |
| Research and development | 274 | 279 | 773 | 794 |
| Sales and marketing | 359 | 295 | 1,009 | 854 |
| General and administrative | 573 | 476 | 1,636 | 1,002 |
| $ 1,315 | $ 1,155 | $ 3,609 | $ 2,863 | |
| (2) Cost of revenues includes amortization of capitalized software development costs of: | ||||
| Amortization of capitalized software development costs: | $ 299 | $ 105 | $ 641 | $ 271 |
| Amortization of acquired software: | 145 | 42 | 229 | 126 |
| $ 444 | $ 147 | $ 870 | $ 397 | |
| SCIQUEST, INC. | ||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | ||
| (in thousands) | ||
| Nine Months Ended September 30, | ||
| 2012 | 2011 | |
| (unaudited) | ||
| Cash flows from operating activities | ||
| Net income | $ 1,266 | $ 1,759 |
| Adjustments to reconcile net income to net cash provided by operating activities: | ||
| Depreciation and amortization | 2,673 | 1,551 |
| Loss on disposal of fixed assets | 36 | -- |
| Stock-based compensation expense | 3,609 | 2,863 |
| Deferred taxes | (221) | 947 |
| Changes in operating assets and liabilities: | ||
| Accounts receivable | 6,026 | 557 |
| Prepaid expense and other current assets | (378) | 359 |
| Deferred project costs and other assets | (30) | (563) |
| Accounts payable | 189 | (51) |
| Accrued liabilities | (442) | 183 |
| Deferred revenues | 1,068 | 3,741 |
| Net cash provided by operating activities | 13,796 | 11,346 |
| Cash flows from investing activities | ||
| Business acquisition, net of cash acquired | (22,447) | (7,346) |
| Addition of capitalized software development costs | (2,179) | (595) |
| Purchase of property and equipment | (1,710) | (761) |
| Purchase of short-term investments | (1,200) | (15,000) |
| Maturities of short-term investments | 19,340 | 7,895 |
| Net cash used in investing activities | (8,196) | (15,807) |
| Cash flows from financing activities | ||
| Proceeds from public offering | -- | 15,405 |
| Public offering costs | -- | (408) |
| Repayment of notes receivable from stockholders | -- | 15 |
| Proceeds from exercise of common stock options | 312 | 129 |
| Net cash provided by financing activities | 312 | 15,141 |
| Effect of exchange rate change on cash and cash equivalents | (60) | -- |
| Net increase in cash and cash equivalents | 5,852 | 10,680 |
| Cash and cash equivalents at beginning of the period | 14,958 | 17,494 |
| Cash and cash equivalents at end of the period | $ 20,810 | $ 28,174 |
| RECONCILIATION DATA | ||||
| (UNAUDITED) | ||||
| (in thousands except per share amounts) | ||||
| Reconciliation of Net Income to Non-GAAP Net Income: | Three Months Ended September 30, | Nine Months Ended September 30, | ||
| 2012 | 2011 | 2012 | 2011 | |
| Net income | $ 713 | $ 759 | $ 1,266 | $ 1,759 |
| Purchase accounting deferred revenue adjustment | 406 | -- | 406 | -- |
| Amortization of intangible assets | 318 | 209 | 736 | 628 |
| Amortization of acquired software | 145 | 42 | 229 | 126 |
| Stock-based compensation | 1,315 | 1,155 | 3,609 | 2,863 |
| Acquisition-related costs | 250 | -- | 250 | 134 |
| Tax effect of adjustments | (1,752) | (390) | (2,672) | (1,137) |
| Non-GAAP net income | $ 1,395 | $ 1,775 | $ 3,824 | $ 4,373 |
| Non-GAAP net income per share: | ||||
| Basic | $ 0.06 | $ 0.08 | $ 0.17 | $ 0.20 |
| Diluted | $ 0.06 | $ 0.08 | $ 0.17 | $ 0.20 |
| Weighted average shares outstanding used in computing per share amounts: | ||||
| Basic | 22,278 | 22,012 | 22,235 | 21,549 |
| Diluted | 22,703 | 22,551 | 22,676 | 22,149 |
| Reconciliation of (Loss) income from Operations to Non-GAAP Income from Operations: | Three Months Ended September 30, | Nine Months Ended September 30, | ||
| 2012 | 2011 | 2012 | 2011 | |
| (Loss) income from operations | $ (130) | $ 1,501 | $ 997 | $ 3,354 |
| Purchase accounting deferred revenue adjustment | 406 | -- | 406 | -- |
| Amortization of intangible assets | 318 | 209 | 736 | 628 |
| Amortization of acquired software | 145 | 42 | 229 | 126 |
| Stock-based compensation | 1,315 | 1,155 | 3,609 | 2,863 |
| Acquisition-related costs | 250 | -- | 250 | 134 |
| Non-GAAP income from operations | $ 2,304 | $ 2,907 | $ 6,227 | $ 7,105 |
| Reconciliation of Operating Expenses to Non-GAAP Operating Expenses: | Three Months Ended September 30, | Nine Months Ended September 30, | ||
| 2012 | 2011 | 2012 | 2011 | |
| Operating expenses | $ 11,960 | $ 8,713 | $ 31,835 | $ 26,333 |
| Amortization of intangible assets | (318) | (209) | (736) | (628) |
| Stock-based compensation | (1,206) | (1,050) | (3,418) | (2,650) |
| Acquisition-related costs | (250) | -- | (250) | (134) |
| Non-GAAP operating expenses | $ 10,186 | $ 7,454 | $ 27,431 | $ 22,921 |
| Reconciliation of Net Cash Provided by Operating Activities to Adjusted Free Cash Flow: | Three Months Ended September 30, | Nine Months Ended September 30, | ||
| 2012 | 2011 | 2012 | 2011 | |
| Net cash provided by operating activities | $ 7,401 | $ 5,820 | $ 13,796 | $ 11,346 |
| Purchase of property and equipment | (181) | (314) | (1,710) | (761) |
| Capitalization of software development costs | (856) | (190) | (2,179) | (595) |
| Free cash flow | 6,364 | 5,316 | 9,907 | 9,990 |
| Acquisition-related costs | 250 | -- | 250 | 134 |
| Adjusted free cash flow | $ 6,614 | $ 5,316 | $ 10,157 | $ 10,124 |
| RECONCILIATION DATA | ||||
| (UNAUDITED) | ||||
| (in thousands) | ||||
| Reconciliation of Revenues to Non-GAAP Revenues: | Three Months Ended September 30, | Nine Months Ended September 30, | ||
| 2012 | 2011 | 2012 | 2011 | |
| Revenues | $ 17,173 | $ 13,774 | $ 46,761 | $ 39,208 |
| Purchase accounting deferred revenue adjustment | 406 | -- | 406 | -- |
| Non-GAAP Revenues | $ 17,579 | $ 13,774 | $ 47,167 | $ 39,208 |
| Reconciliation of Cost of Revenues to Non-GAAP Cost of Revenues: | Three Months Ended September 30, | Nine Months Ended September 30, | ||
| 2012 | 2011 | 2012 | 2011 | |
| Cost of revenues | $ 5,343 | $ 3,560 | $ 13,929 | $ 9,521 |
| Amortization of acquired software | (145) | (42) | (229) | (126) |
| Stock-based compensation | (109) | (105) | (191) | (213) |
| Non-GAAP Cost of revenues | $ 5,089 | $ 3,413 | $ 13,509 | $ 9,182 |
| Reconciliation of Research and Development to Non-GAAP Research and Development: | Three Months Ended September 30, | Nine Months Ended September 30, | ||
| 2012 | 2011 | 2012 | 2011 | |
| Research and development | $ 4,734 | $ 3,001 | $ 10,905 | $ 8,670 |
| Stock-based compensation | (274) | (279) | (773) | (794) |
| Non-GAAP Research and development | $ 4,460 | $ 2,722 | $ 10,132 | $ 7,876 |
| Reconciliation of Sales and Marketing to Non-GAAP Sales and Marketing: | Three Months Ended September 30, | Nine Months Ended September 30, | ||
| 2012 | 2011 | 2012 | 2011 | |
| Sales and marketing | $ 4,073 | $ 3,396 | $ 12,188 | $ 10,815 |
| Stock-based compensation | (359) | (295) | (1,009) | (854) |
| Non-GAAP Sales and marketing | $ 3,714 | $ 3,101 | $ 11,179 | $ 9,961 |
| Reconciliation of General and Administrative to Non-GAAP General and Administrative: | Three Months Ended September 30, | Nine Months Ended September 30, | ||
| 2012 | 2011 | 2012 | 2011 | |
| General and administrative | $ 2,835 | $ 2,107 | $ 8,006 | $ 6,220 |
| Stock-based compensation | (573) | (476) | (1,636) | (1,002) |
| Acquisition-related costs | (250) | -- | (250) | (134) |
| Non-GAAP General and administrative | $ 2,012 | $ 1,631 | $ 6,120 | $ 5,084 |
| Reconciliation of Amortization of Intangible Assets to Non-GAAP Amortization of Intangible Assets: | Three Months Ended September 30, | Nine Months Ended September 30, | ||
| 2012 | 2011 | 2012 | 2011 | |
| Amortization of intangible assets | $ 318 | $ 209 | $ 736 | $ 628 |
| Amortization of intangible assets | (318) | (209) | (736) | (628) |
| Non-GAAP Amortization of intangible assets | $ -- | $ -- | $ -- | $ -- |
| RECONCILIATION DATA | ||||
| (UNAUDITED) | ||||
| (in thousands except per share amounts) | ||||
| Reconciliation of Revenue Outlook to Non-GAAP Revenue Outlook: | Three Months Ended December 31, | Twelve Months Ended December 31, | ||
| Low end of Range | High end of Range | Low end of Range | High end of Range | |
| Revenues | $ 19,300 | $ 19,700 | $ 66,100 | $ 66,500 |
| Purchase accounting deferred revenue adjustment | 800 | 800 | 1,200 | 1,200 |
| Non-GAAP Revenues | $ 20,100 | $ 20,500 | $ 67,300 | $ 67,700 |
| Reconciliation of Loss per Share Outlook to Non-GAAP Earnings per Share Outlook: | Three Months Ended December 31, | Twelve Months Ended December 31, | ||
| Low end of Range | High end of Range | Low end of Range | High end of Range | |
| Loss per share | ($0.12) | ($0.11) | ($0.06) | ($0.05) |
| Purchase accounting deferred revenue adjustment per share | 0.04 | 0.04 | 0.05 | 0.05 |
| Amortization of intangible assets per share and acquired software per share | 0.03 | 0.03 | 0.07 | 0.07 |
| Stock-based compensation per share | 0.06 | 0.06 | 0.22 | 0.22 |
| Acquisition-related costs per share | 0.06 | 0.06 | 0.07 | 0.07 |
| Tax effect of adjustments per share | ($0.02) | ($0.02) | ($0.13) | ($0.13) |
| Non-GAAP earnings per share | $0.05 | $0.06 | $0.22 | $0.23 |
| Reconciliaton of Net Cash Provided by Operating Activities Outlook to Adjust Free Cash Flow Outlook: | Twelve Months Ended December 31, | |||
| Low end of Range | High end of Range | |||
| Net cash provided by operating activities | $ 20,300 | $ 21,300 | ||
| Purchase of property and equipment | (2,000) | (2,000) | ||
| Capitalization of software development costs | (2,700) | (2,700) | ||
| Acquisition-related costs | 400 | 400 | ||
| Adjusted Free cash flow | $ 16,000 | $ 17,000 | ||
SQI-F