SciQuest Announces Fourth Quarter and Full Year 2013 Financial Results

Posted Strong Quarterly and Annual Results

Attained 2013 Priorities

Generated Significant Growth in Commercial Market

CARY, N.C., Feb. 6, 2014 (GLOBE NEWSWIRE) -- SciQuest, Inc. (Nasdaq:SQI), a leading provider of cloud-based business automation solutions for spend management, today announced its financial results for the fourth quarter and full year ended December 31, 2013.

"2013 was an important year of execution that accelerated our transformation from a niche eProcurement solutions company to the leading provider of cloud-based spend management solutions. In the fourth quarter, we extended our track record of rapid growth. We increased non-GAAP revenues by 26% from a year ago, excluding a settlement fee we received. On this same basis, full-year revenue increased 37%. Strong non-GAAP revenue helped to generate non-GAAP net income per share that exceeded our guidance ranges. In addition, adjusted free cash flow beat expectations," said Stephen Wiehe, President and Chief Executive Officer of SciQuest. "Success was fueled by a combination of robust customer additions, solid cross-selling and the transformation of our sales organization that enhanced the team's people, processes and structure. We are particularly encouraged by the strong contribution from the commercial market, which complemented continued growth in other market segments. On the financial front, we are beginning to drive leverage from the operations we acquired in the second half of 2012. We also substantially completed operational integration of CombineNet.

"Looking ahead, we plan to leverage our successes and continue executing on the strategy that drove our performance in 2013: attract new customers, increase cross-selling, enhance and expand the solution suite and improve operational and financial efficiency, particularly at acquired entities. Our 2013 accomplishments and ongoing improvement efforts are expected to enable us to achieve our long-term targets of 20% non-GAAP revenue growth and 20% non-GAAP operating margins."

Fourth Quarter 2013 Results

SciQuest reported GAAP revenues of $25.8 million for the quarter ended December 31, 2013 compared to $19.7 million in the fourth quarter of 2012.

GAAP loss from operations in the fourth quarter of 2013 was $1.0 million compared to GAAP loss from operations of $2.1 million in the fourth quarter of 2012. GAAP net loss was $1.2 million in the fourth quarter of 2013 compared to GAAP net loss of $2.4 million in the same quarter in the prior year. The primary drivers of the fourth quarter 2013 losses were the expected impacts of acquisition related costs and stock-based compensation.

GAAP basic net loss per share was $0.05 in the fourth quarter of 2013 based on 23.8 million weighted average basic shares outstanding. GAAP diluted net loss per share in the fourth quarter of 2012 was $0.11 based on 22.4 million weighted average basic shares outstanding.

Non-GAAP revenue⁽¹⁾ in the fourth quarter was $26.7 million. Excluding the additional revenue generated by a settlement fee that we received from a former customer, non-GAAP revenues⁽¹⁾ would have been $26.2 million, an increase of 26% from the prior year.

Non-GAAP income from operations⁽²⁾ in the fourth quarter of 2013 was $4.4 million compared to non-GAAP income from operations⁽²⁾ of $2.7 million in the fourth quarter of 2012. Non-GAAP net income⁽³⁾ in the fourth quarter of 2013 was $2.7 million compared to non-GAAP net income⁽³⁾ in the fourth quarter of 2012 of $1.6 million.

Non-GAAP diluted net income per share⁽³⁾ was $0.11 in the fourth quarter of 2013 based on 24.3 million weighted average diluted shares outstanding. Excluding the additional revenue generated by the settlement fee, non-GAAP diluted net income per share⁽³⁾ in the quarter would have been $0.10. Based on 22.8 million weighted average diluted shares outstanding, non-GAAP diluted net income per share⁽³⁾ in the fourth quarter of 2012 was $0.07.

Full Year 2013 Results

On a full year basis, GAAP revenues were $90.2 million in 2013 compared to $66.5 million in 2012. GAAP loss from operations was $5.1 million in 2013 compared to GAAP loss from operations of $1.1 million in 2012. GAAP net loss was $4.7 million in 2013 and GAAP basic net loss per share during the year was $0.21 based on 23.0 million weighted average basic shares outstanding. In 2012, GAAP net loss was $1.2 million and GAAP basic net loss per share was $0.05 based on 22.3 weighted average basic shares outstanding. The primary drivers of these losses were the expected impacts of acquisition related costs and stock-based compensation.

Non-GAAP revenues⁽¹⁾ in 2013 were $93.6 million. Excluding additional revenue generated by a settlement fee that we received from a former customer, non-GAAP revenues⁽¹⁾ would have been $93.1 million, up 37% from 2012.

Non-GAAP income from operations⁽²⁾ was $14.5 million in 2013 compared to non-GAAP income from operations⁽²⁾ of $8.9 million in 2012. Non-GAAP net income⁽³⁾ was $8.8 million in 2013 compared to non-GAAP net income⁽³⁾ of $5.5 million in 2012.

Non-GAAP diluted net income per share⁽³⁾ in 2013 was $0.38 based on 23.5 million weighted average diluted shares outstanding. Based on 22.7 million weighted average diluted shares outstanding, non-GAAP diluted net income per share⁽³⁾ in 2012 was $0.24.

Net cash provided by operating activities in 2013 was $18.0 million. Adjusted free cash flow⁽⁴⁾ in 2013 was $14.5 million. Excluding the additional cash generated by the settlement fee, adjusted free cash flow⁽⁴⁾ would have been $14.0 million.

Business Outlook

Based on the Company's strong fourth quarter performance, SciQuest is issuing the following guidance:

First quarter 2014

• GAAP revenues to be between $25.5 million and $25.8 million.
• Per share results to be between GAAP basic net loss per share of $0.01 and breakeven.
• Weighted average basic shares outstanding to be approximately 24.0 million.
• Non-GAAP revenues⁽¹⁾ to be between $26.1 million and $26.4 million.
• Non-GAAP diluted net income per share⁽³⁾ to be between $0.08 and $0.09.
• Weighted average diluted shares outstanding to be approximately 24.5 million.

Full Year 2014

• GAAP revenues to be between $106.5 million and $111.5 million.
• GAAP diluted net income per share of between $0.05 and $0.10.
• Weighted average diluted shares outstanding to be approximately 24.6 million.
• Net cash provided by operating activities to be between $22.4 million and $26.4 million.
• Purchase of property and equipment of approximately $5.5 million, capitalization of software development costs of approximately $4.8 million, acquisition related cash costs of $3.6 million and headquarter relocation costs of approximately $0.3 million.
• Non-GAAP revenues⁽¹⁾ to be between $108.0 million and $113.0 million.
• Non-GAAP diluted net income per share⁽³⁾ to be between $0.40 and $0.44.
• Adjusted free cash flow⁽⁴⁾ to be between $16.0 million and $20.0 million.

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 revenues exclude the purchase accounting deferred revenue adjustment.

2) Non-GAAP income from operations excludes the purchase accounting deferred revenue adjustment; stock-based compensation expense; acquisition related costs; and the amortization of (i) intangible assets and (ii) acquired software.

3) Non-GAAP net income and non-GAAP diluted net income per share exclude the purchase accounting deferred revenue adjustment; stock-based compensation expense; acquisition related costs; and the amortization of (i) intangible assets and (ii) acquired software. Non-GAAP net income includes the burden of the tax effect of these items.

4) Adjusted free cash flow is defined as net cash provided by operating activities plus acquisition-related costs, less (i) the purchase of property and equipment and (ii) capitalization of software development costs.

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 purchase accounting impact on deferred revenue; and (v) the beneficial income tax effect of these items; 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 (Nasdaq:SQI) is the largest publicly held pure-play provider of cloud-based, business automation solutions for spend management – offering deep domain knowledge and a leading, customer-driven portfolio. SciQuest solutions enable greater visibility and compliance organization-wide to help you gain control, optimize efficiencies, and reduce spend. These cloud-based solutions are easy to implement and proven to deliver measurable, sustainable value with SciQuest's high-touch support, analysis and automation. Learn more about our solutions and how we can help your organization turn spending into savings at www.sciquest.com.

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Cautionary Note Regarding Forward-Looking Statements

Forward-looking statements include information concerning SciQuest's possible or assumed future results of operations, business strategies, financing plans, competitive position, industry environment, potential growth opportunities, potential market opportunities, the effects of competition and other factors that could impact future performance. Forward-looking statements, which include references to the our business strategy, long-term targets and all statements in the "Business Outlook" section, consist of statements that are not historical facts and can be identified by terms such as, but not limited to, "accelerates", "anticipates," "believes," "could," "seeks," "estimates," "expects," "intends," "may," "plans," "potential," "predicts," "projects," "should," "will," "would" or similar expressions and the negatives of those terms. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Certain of these risks are discussed in "Part I, Item 1A, Risk Factors" and elsewhere in SciQuest's most recent Annual Report on Form 10-K and other reports, as filed with the United States Securities and Exchange Commission ("SEC"). The company's SEC reports are available free of charge on the SEC's website at http://www.sec.gov or on the company's website at www.sciquest.com. All forward-looking statements in this release are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Also, forward-looking statements represent management's beliefs and assumptions only as of the date of this release. Except as required by law, SciQuest assumes no obligation to update these forward-looking statements publicly or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future. Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results.  

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