SciQuest Announces Third Quarter Financial Results

MORRISVILLE, N.C., Oct. 30, 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 third quarter ended September 30, 2014.

"During the third quarter, we generated solid financial results that were at the high end of expectations. We also advanced operational priorities, including successfully transitioning more clients to our re-platformed supplier management and sourcing solutions as well as preparing for our latest release that will go live next weekend," said Stephen Wiehe, President and Chief Executive Officer of SciQuest. "We added 9 new customers across multiple verticals and cross-selling remained robust.

"We have been pleased with the results we've generated selling to mid-sized commercial prospects and believe that they represent a more significant opportunity than we previously anticipated. In order to better capture this opportunity, we are continuing to enhance our sales organization and tailor our marketing approach. We remain confident in our ability to deliver attractive long-term growth rates and profitability based on the strength of our broad suite of differentiated, modular technology that delivers a compelling ROI to a large and underpenetrated addressable market. Our expectations are further supported by healthy pipelines across the business, particularly in commercial, which continues to be our fastest growing market."

Third Quarter 2014 Results

SciQuest reported GAAP revenues of $25.7 million for the quarter ended September 30, 2014 compared to $22.5 million in the third quarter of 2013.

GAAP loss from operations in the third quarter of 2014 was $0.7 million compared to GAAP loss from operations of $1.8 million in the third quarter of 2013. GAAP net loss was $0.4 million in the third quarter of 2014 compared to GAAP net loss of $2.4 million in the same quarter in the prior year.

GAAP basic net loss per share was $0.02 in the third quarter of 2014 based on 27.5 million weighted average basic shares outstanding. GAAP basic net loss per share in the third quarter of 2013 was $0.10 based on 23.1 million weighted average basic shares outstanding.

Non-GAAP revenue⁽¹⁾ in the third quarter was $25.9 million, an increase of 10% from the prior year.

Non-GAAP income from operations⁽²⁾ in the third quarter of 2014 was $3.2 million compared to non-GAAP income from operations⁽²⁾ of $3.6 million in the third quarter of 2013. Non-GAAP net income⁽³⁾ in the third quarter of 2014 was $2.0 million compared to non-GAAP net income⁽³⁾ in the third quarter of 2013 of $2.2 million.

Non-GAAP diluted net income per share⁽³⁾ was $0.07 in the third quarter of 2014 based on 27.8 million weighted average diluted shares outstanding. Based on 23.5 million weighted average diluted shares outstanding, non-GAAP diluted net income per share⁽³⁾ in the third quarter of 2013 was $0.09.

Business Outlook

SciQuest is issuing the following guidance:

Fourth quarter 2014

• GAAP revenues between $25.2 million and $25.6 million.
• Per share results between GAAP basic net loss per share of breakeven and $0.01.
• Weighted average basic shares outstanding of approximately 27.6 million.
   
• Non-GAAP revenues⁽¹⁾ between $25.3 million and $25.7 million.
• Non-GAAP diluted net income per share⁽³⁾ between $0.06 and $0.07.
• Weighted average diluted shares outstanding of approximately 27.9 million.

Full Year 2014

• GAAP revenues between $101.6 million and $102.0 million.
• GAAP diluted net loss per share between $0.01 and $0.02.
• Weighted average basic shares outstanding of approximately 26.8 million.
• Net cash provided by operating activities between $16.5 million and $18.5 million.
• Capitalization of software development costs of approximately $5.2 million, purchase of property and equipment of approximately $4.3 million, acquisition related cash costs of $3.6 million and a positive source of cash from tenant improvement credits net of lease exit costs of $0.6 million.
   
• Non-GAAP revenues⁽¹⁾ between $103.0 million and $103.4 million.
• Non-GAAP diluted net income per share⁽³⁾ between $0.29 and $0.30.
• Weighted average diluted shares outstanding of approximately 27.0 million.
• Adjusted free cash flow⁽⁴⁾ between $10.0 million and $12.0 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; headquarter relocation 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; headquarter relocation 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, (ii) capitalization of software development costs and (iii) tenant improvement credits net of lease exit 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) amortization of intangible assets and acquired software; (ii) stock-based compensation; (iii) purchase accounting deferred revenue adjustment; (iv) other significant items, such as acquisition related expenses and headquarter relation costs; 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 one of the leading pure-play providers 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 easier 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 http://www.sciquest.com.

To join the conversation, please visit our blog, The Open Kitchen at http://www.sciquest.com/blog or follow us on Twitter @SciQuest.

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. In particular, forward-looking statements include references to opportunities with mid-sized commercial prospects, references to delivery of attractive long-term growth rates and profitability and all statements in the "Business Outlook" section. Forward-looking statements 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"). In particular, we call your attention to the risk factors in our Annual Report on Form 10-K entitled "Our actual operating results may differ significantly from our guidance", "If we are unable to attract new customers, or if our existing customers do not purchase additional products or services, the growth of our business and cash flows will be adversely affected", "Our failure to sustain our historical renewal rates, pricing and terms of our customer contracts would adversely affect our operating results" and "We are subject to a lengthy sales cycle and delays or failures to complete sales may harm our business and result in slower growth." 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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