CARY, N.C., Feb. 16, 2012 (GLOBE NEWSWIRE) -- SciQuest, Inc. (Nasdaq:SQI), a leading provider of on-demand strategic procurement and supplier management solutions, today announced its financial results for the fourth quarter and full year ended December 31, 2011.
Stephen Wiehe, President and Chief Executive Officer of SciQuest, said, "We are pleased with our overall performance in the fourth quarter. While revenue was slightly below our expectations, we executed strongly and exceeded guidance from a profitability and cash flow perspective. We are very excited to enter 2012 in a position to be able to accelerate our long-term growth by stepping up investments in new products and broadening our customer focus. While these incremental costs means that profitability margins will decrease slightly in 2012, we expect our efforts to result in longer-term revenue growth that is above our prior expectations with no change in profit margin targets, improving our overall profitability. In addition to improving our long-term financial position, we believe our broadened product portfolio and customer focus will further strengthen our leadership position in the eProcurement marketplace."
Fourth Quarter 2011 Results
SciQuest reported total revenue of $14.2 million for the quarter ended December 31, 2011, an increase of 29% compared to revenue of $11.0 million for the comparable period in 2010.
GAAP income from operations in the fourth quarter of 2011 was $2.0 million, compared to an income from operations of $1.5 million in the fourth quarter of 2010. GAAP net income was $1.1 million, or $0.05 per share, in the fourth quarter of 2011, compared to $1.0 million, or $0.05 per share, in the comparable period in 2010.
Non-GAAP income from operations was $3.3 million in the fourth quarter of 2011, excluding stock-based compensation expenses and amortization of intangible assets. Non-GAAP income from operations was $2.1 million in the fourth quarter of 2010, excluding stock-based compensation expenses, amortization of intangible assets and acquisition-related expenses.
Non-GAAP net income was $2.0 million, or $0.09 per share, for the fourth quarter of 2011, based on 22.5 million weighted average diluted shares outstanding, excluding stock-based compensation expenses, amortization of intangible assets, and distribution of acquisition escrow. This compared to non-GAAP net income of $1.3 million, or $0.06 per share, in the fourth quarter of 2010, based on 21.0 million weighted average diluted shares outstanding, excluding stock-based compensation expenses, amortization of intangible assets and acquisition related expenses.
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.
Other Fourth Quarter and Recent Highlights
- SciQuest ended the fourth quarter with 321 customers, an increase from 195 customers at the end of the fourth quarter of 2010
- SciQuest ended 2011 with $271 million of backlog revenue with assumed renewals for the next five years, a 35% increase from the end of 2010. At the end of 2011 contracted backlog revenue not including renewals was $161 million for the next five years, a 25% increase from the end of 2010.
- The company will webcast its analyst and investor day presentation at NextLevel on Monday, February 20, 2012 beginning at 2:30 pm ET. Both a live webcast and replay will be available under the "Events & Presentations" section on the company's investor relations website at http://investor.sciquest.com.
Full Year 2011 Results
On a full year basis, revenue was $53.4 million in 2011, an increase of 26% from the prior year.
GAAP income from operations was $5.3 million in 2011, compared to $1.1 million in 2010. GAAP net income in 2011 was $2.8 million or $0.13 per diluted share based on 22.2 million weighted average diluted shares outstanding. This compared to GAAP net loss in 2010 of ($336,000) or ($0.02) per diluted share based on 15.8 million weighted average diluted shares outstanding.
On a non-GAAP basis income from operations was $10.4 million in 2011, excluding stock-based compensation expenses, amortization of intangible assets and acquisition-related expenses. Non-GAAP income from operations increased 17% compared to non-GAAP income from operations of $8.9 million in 2010, excluding stock-based compensation expenses, amortization of intangible assets, a non-recurring management bonus associated with the company's initial public offering, a non-recurring contribution of stock to fund a charitable trust established by the company and acquisition-related expenses.
Non-GAAP net income was $6.4 million in 2011, or $0.29 per share based on 22.2 million diluted weighted average shares, excluding stock-based compensation expenses, amortization of intangible assets, distribution of acquisition escrow and acquisition-related expenses. Non-GAAP net income increased 16% compared to non-GAAP net income of $5.5 million in 2010, or $0.34 per share based on 16.4 million diluted weighted average shares, excluding stock-based compensation expenses, amortization of intangible assets, a non-recurring management bonus associated with the company's initial public offering, a non-recurring contribution of stock to fund a charitable trust established by the company, acquisition-related expenses, and gains on the sale of an investment.
On a full-year basis, operating cash flow was $17.4 million, compared to $5.9 million in 2010. Free cash flow was $14.3 million, compared to $4.4 million in 2010. Adjusted free cash flow was $14.3 million, a 35% increase from $10.6 million in the year-ago period.
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 the release.
Business Outlook
Based on information available as of February 16, 2012, SciQuest is issuing guidance for the first quarter and full year 2012 as follows:
First Quarter 2012: The company expects first quarter revenue to be in the range of $14.2 million to $14.4 million. The company expects GAAP net income per share to be breakeven.
The company expects non-GAAP net income per share of $0.04 to $0.05 based on diluted weighted average shares outstanding of 22.7 million shares. Non-GAAP net income excludes stock-based compensation expenses of approximately $1.3 million and amortization of acquired software and intangible assets of approximately $0.3 million.
Full Year 2012: The company expects full year 2012 revenue to be in the range of $62.0 million to $64.0 million. The company expects full year GAAP net income per share to be in the range of $0.05 to $0.09.
Non-GAAP net income per share is expected to be in the range of $0.25 to $0.29 based on diluted weighted average shares outstanding of 22.8 million shares. Non-GAAP net income excludes stock-based compensation expenses of approximately $5.5 million, amortization of acquired software and intangible assets of approximately $1.0 million.
The company expects operating cash flow in 2012 to be in the range of $20.0 to $21.0 million. Free cash flow, which is defined as cash flow from operations less purchases of property and equipment of approximately $1.5 million, and capitalization of software development costs of approximately $2.5 million, to be in the range of $16.0 to $17.0 million in 2012.
Conference Call Information
| What: | SciQuest's fourth quarter and full year 2011 financial results conference call |
| When: | Thursday, February 16, 2012 |
| Time: | 5:00 p.m. ET |
| Webcast: | http://investor.sciquest.com/ (live and replay) |
| Live Call: | (877) 430-3736, domestic |
| (760) 298-5046, international | |
| Replay: | (855) 859-2056, domestic |
| (404) 537-3406, international | |
| Live and replay conference ID code: 43317773 | |
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, including acquisition related expense in 2011, distribution of acquisition escrow in 2011, management bonuses paid in connection with the initial public offering in 2010, and gains on the sale of an investment in 2010, and (iv) the income tax effect of non-GAAP pre-tax adjustments from the provision for income taxes; 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. 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 a leading provider of an integrated, web-based end-to-end eProcurement solution that enables users to realize significant efficiencies and savings on their purchases of indirect goods and services. SciQuest's unique industry segment expertise and innovative "source-to-settle" approach to eProcurement enables Fortune 1000 companies and organizations in the higher education, life sciences, healthcare and public sector markets, as well as other industries, to identify savings opportunities they may otherwise have missed, while improving contract management, compliance and supplier management. SciQuest's solutions help customers turn spending into a source of savings.
SciQuest is a registered trademark of SciQuest, Inc. Other trademarks contained herein remain the property of their respective owners. For more information about SciQuest, please visit www.sciquest.com or call 888-638-7322 in the U.S. or +44 1794 341182 in Europe.
Cautionary Note Regarding Forward-Looking Statements
Any statements in this release that are not historical or current facts are forward-looking statements, including all references to long-term growth, investment in new products, future profit margins, long-term financial position, and 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 Registration Statement on Form S-1 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.
SQI-F
| SCIQUEST, INC. | ||
| CONSOLIDATED BALANCE SHEETS | ||
| (in thousands except share and per share amounts) | ||
| As of December 31, | As of December 31, | |
| 2011 | 2010 | |
| (unaudited) | ||
| Assets | ||
| Current assets: | ||
| Cash and cash equivalents | $ 14,958 | $ 17,494 |
| Short-term investments | 44,685 | 20,000 |
| Accounts receivable, net | 10,746 | 6,400 |
| Prepaid expenses and other current assets | 1,015 | 1,297 |
| Deferred tax asset | 70 | 45 |
| Total current assets | 71,474 | 45,236 |
| Property and equipment, net | 4,028 | 1,993 |
| Goodwill | 15,719 | 6,765 |
| Intangible assets, net | 5,433 | 1,039 |
| Deferred project costs | 7,025 | 5,667 |
| Deferred tax asset | 12,634 | 15,837 |
| Other | 55 | 150 |
| Total assets | $ 116,368 | $ 76,687 |
| Liabilities and Stockholders' Equity | ||
| Current liabilities: | ||
| Accounts payable | $ 102 | $ 51 |
| Accrued liabilities | 5,945 | 4,200 |
| Deferred revenues | 36,836 | 28,305 |
| Total current liabilities | 42,883 | 32,556 |
| Deferred revenues, less current portion | 12,778 | 9,896 |
| Stockholders' equity: | ||
| Common stock, $0.001 par value; 50,000,000 shares authorized; 22,133,036 and 20,532,443 shares issued and outstanding as of December 31, 2011 and December 31, 2010, respectively | 22 | 20 |
| Additional paid-in capital | 74,083 | 50,462 |
| Notes receivable from stockholders | -- | (15) |
| Accumulated deficit | (13,398) | (16,232) |
| Total stockholders' equity | 60,707 | 34,235 |
| Total liabilities and stockholders' equity | $ 116,368 | $ 76,687 |
| SCIQUEST, INC. | ||||
| CONSOLIDATED STATEMENTS OF OPERATIONS | ||||
| (in thousands except per share amounts) | ||||
| Three Months Ended December 31, | Year Ended December 31, | |||
| 2011 | 2010 | 2011 | 2010 | |
| (unaudited) | (unaudited) | |||
| Revenues | $ 14,230 | $ 11,018 | $ 53,438 | $ 42,477 |
| Cost of revenues (1)(2) | 3,819 | 2,586 | 13,340 | 9,361 |
| Gross profit | 10,411 | 8,432 | 40,098 | 33,116 |
| Operating expenses: (1) | ||||
| Research and development | 2,563 | 2,303 | 11,233 | 8,395 |
| Sales and marketing | 3,467 | 2,808 | 14,282 | 11,592 |
| General and administrative | 2,183 | 1,704 | 8,403 | 5,810 |
| Management bonus plan associated with initial public offering | -- | -- | -- | 5,888 |
| Amortization of intangible assets | 236 | 75 | 864 | 301 |
| Total operating expenses | 8,449 | 6,890 | 34,782 | 31,986 |
| Income from operations | 1,962 | 1,542 | 5,316 | 1,130 |
| Other income (expense), net: | ||||
| Interest income | 24 | 19 | 91 | 40 |
| Other income (expense), net | 218 | (9) | 207 | 1,687 |
| Total other income, net | 242 | 10 | 298 | 1,727 |
| Income before income taxes | 2,204 | 1,552 | 5,614 | 2,857 |
| Income tax | (1,129) | (548) | (2,780) | (1,114) |
| Net income | $ 1,075 | $ 1,004 | $ 2,834 | $ 1,743 |
| Dividends on redeemable preferred stock | -- | -- | -- | 2,079 |
| Net income (loss) attributable to common stockholders | $ 1,075 | $ 1,004 | $ 2,834 | $ (336) |
| Net income (loss) attributable to common stockholders per share | ||||
| Basic | $ 0.05 | $ 0.05 | $ 0.13 | $ (0.02) |
| Diluted | $ 0.05 | $ 0.05 | $ 0.13 | $ (0.02) |
| Weighted average shares outstanding used in computing per share amounts | ||||
| Basic | 22,042 | 20,306 | 21,673 | 15,754 |
| Diluted | 22,519 | 20,966 | 22,241 | 15,754 |
| (1) Amounts include stock-based compensation expense, as follows: | ||||
| Three Months Ended December 31, | Year Ended December 31, | |||
| 2011 | 2010 | 2011 | 2010 | |
| (unaudited) | (unaudited) | |||
| Cost of revenues | $ 100 | $ 31 | $ 313 | $ 83 |
| Research and development | 220 | 39 | 1,014 | 236 |
| Sales and marketing | 288 | 28 | 1,142 | 167 |
| General and administrative | 478 | 85 | 1,480 | 602 |
| $ 1,086 | $ 183 | $ 3,949 | $ 1,088 | |
| (2) Cost of revenues includes amortization of capitalized software development costs of: | ||||
| Amortization of capitalized software development costs: | $ 119 | $ 74 | $ 390 | $ 241 |
| Amortization of acquired software: | 42 | -- | 168 | -- |
| $ 161 | $ 74 | $ 558 | $ 241 | |
| SCIQUEST, INC. | |||||
| NON-GAAP CONSOLIDATED STATEMENTS OF OPERATIONS | |||||
| (in thousands except per share amounts) | |||||
| Three Months Ended December 31, | Year Ended December 31, | ||||
| 2011 | 2010 | 2011 | 2010 | ||
| (unaudited) | (unaudited) | ||||
| Revenues | $ 14,230 | $ 11,018 | $ 53,438 | $ 42,477 | |
| Non-GAAP cost of revenues (1)(2) | 3,677 | 2,555 | 12,859 | 9,278 | |
| Gross profit | 10,553 | 8,463 | 40,579 | 33,199 | |
| Non-GAAP operating expenses: (1) | |||||
| Research and development | 2,343 | 2,264 | 10,219 | 8,159 | |
| Sales and marketing | 3,179 | 2,780 | 13,140 | 11,425 | |
| General and administrative | 1,705 | 1,354 | 6,789 | 4,705 | |
| Management bonus plan associated with initial public offering | -- | -- | -- | -- | |
| Amortization of intangible assets | -- | -- | -- | -- | |
| Total Non-GAAP operating expenses | 7,227 | 6,398 | 30,148 | 24,289 | |
| Non-GAAP income from operations | 3,326 | 2,065 | 10,431 | 8,910 | |
| Other Non-GAAP income (expense), net: | |||||
| Interest income | 24 | 19 | 91 | 40 | |
| Other income (expense), net | (5) | (9) | (16) | (13) | |
| Total other Non-GAAP income, net | 19 | 10 | 75 | 27 | |
| Income before income taxes | 3,345 | 2,075 | 10,506 | 8,937 | |
| Income tax | (1,129) | (548) | (2,780) | (1,114) | |
| Tax effect of adjustments | (173) | (185) | (1,310) | (2,287) | |
| Non-GAAP net income | $ 2,043 | $ 1,342 | $ 6,416 | $ 5,536 | |
| Non-GAAP net income per share | |||||
| Basic | $ 0.09 | $ 0.07 | $ 0.30 | $ 0.35 | |
| Diluted | $ 0.09 | $ 0.06 | $ 0.29 | $ 0.34 | |
| Weighted average shares outstanding used in computing per share amounts | |||||
| Basic | 22,042 | 20,306 | 21,673 | 15,754 | |
| Diluted | 22,519 | 20,966 | 22,241 | 16,368 | |
| (1) Amounts exclude stock-based compensation expense, as follows: | |||||
| Three Months Ended December 31, | Year Ended December 31, | ||||
| 2011 | 2010 | 2011 | 2010 | ||
| (unaudited) | (unaudited) | ||||
| Cost of revenues | $ 100 | $ 31 | $ 313 | $ 83 | |
| Research and development | 220 | 39 | 1,014 | 236 | |
| Sales and marketing | 288 | 28 | 1,142 | 167 | |
| General and administrative | 478 | 85 | 1,480 | 602 | |
| $ 1,086 | $ 183 | $ 3,949 | $ 1,088 | ||
| (2) Cost of revenues excludes amortization of acquired software of: | $ 42 | $ -- | $ 168 | $ -- | |
| SCIQUEST, INC. | ||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||
| (in thousands) | ||||
| Three Months Ended December 31, | Year Ended December 31, | |||
| 2011 | 2010 | 2011 | 2010 | |
| (unaudited) | (unaudited) | |||
| Cash flows from operating activities | ||||
| Net income | $ 1,075 | $ 1,004 | $ 2,834 | $ 1,743 |
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||
| Depreciation and amortization | 591 | 293 | 2,142 | 1,093 |
| Gain on sale of investment | -- | -- | -- | (1,700) |
| Stock-based compensation expense | 1,086 | 183 | 3,949 | 1,088 |
| Non-recurring contribution of stock to fund a charitable trust established by the Company | -- | -- | -- | 238 |
| Deferred taxes | 1,534 | 469 | 2,481 | 918 |
| Loss from disposal of property and equipment | -- | 2 | -- | 2 |
| Changes in operating assets and liabilities: | ||||
| Accounts receivable | (4,072) | (2,947) | (3,515) | (1,554) |
| Prepaid expense and other current assets | 97 | (227) | 456 | (463) |
| Deferred project costs and other assets | (700) | (700) | (1,263) | (626) |
| Accounts payable | 102 | 28 | 51 | 5 |
| Accrued liabilities | 1,038 | 826 | 1,221 | 1,220 |
| Deferred revenues | 5,310 | 4,126 | 9,051 | 3,926 |
| Net cash provided by operating activities | 6,061 | 3,057 | 17,407 | 5,890 |
| Cash flows from investing activities | ||||
| Business acquisition, net of cash acquired | -- | -- | (7,346) | -- |
| Addition of capitalized software development costs | (409) | (127) | (1,004) | (648) |
| Purchase of property and equipment | (1,297) | (350) | (2,058) | (832) |
| Purchase of short-term investments | (21,340) | (20,000) | (36,340) | (20,000) |
| Maturities of short-term investments | 3,760 | -- | 11,655 | -- |
| Proceds from sale of investment | -- | -- | -- | 1,700 |
| Restricted cash | -- | -- | -- | 350 |
| Net cash used in investing activities | (19,286) | (20,477) | (35,093) | (19,430) |
| Cash flows from financing activities | ||||
| Proceeds from public offering, net of underwriting discount | -- | -- | 15,405 | 53,010 |
| Public offering costs | -- | (550) | (408) | (2,421) |
| Redemption of preferred stock | -- | -- | -- | (36,151) |
| Issuance of common and restricted stock | -- | -- | -- | 39 |
| Repurchases of restricted stock | (28) | -- | (28) | (273) |
| Repayment of notes payable | -- | -- | -- | (350) |
| Repayment of notes receivable from stockholders | -- | -- | 15 | 4 |
| Proceeds from exercise of warrants | -- | 15 | -- | 15 |
| Proceeds from exercise of common stock options | 37 | 5 | 166 | 29 |
| Net cash provided by (used in) financing activities | 9 | (530) | 15,150 | 13,902 |
| Net (decrease) increase in cash and cash equivalents | (13,216) | (17,950) | (2,536) | 362 |
| Cash and cash equivalents at beginning of the period | 28,174 | 35,444 | 17,494 | 17,132 |
| Cash and cash equivalents at end of the period | $ 14,958 | $ 17,494 | $ 14,958 | $ 17,494 |
| RECONCILIATION DATA | ||||
| (UNAUDITED) | ||||
| (in thousands except share and per share amounts) | ||||
| Reconciliation of Net Income to Non-GAAP Net Income: | Three Months Ended December 31, | Year Ended December 31, | ||
| 2011 | 2010 | 2011 | 2010 | |
| Net income | $ 1,075 | $ 1,004 | $ 2,834 | $ 1,743 |
| Management bonus plan associated with initial public offering | -- | -- | -- | 5,888 |
| Amortization of intangible assets | 236 | 75 | 864 | 301 |
| Amortization of acquired software | 42 | -- | 168 | -- |
| Stock-based compensation | 1,086 | 183 | 3,949 | 1,088 |
| Contribution of stock to fund a charitable trust established by the Company | -- | -- | -- | 238 |
| Acquisition-related costs | -- | 265 | 134 | 265 |
| Distribution of acquisition escrow | (223) | -- | (223) | -- |
| Gain on sale of investment | -- | -- | -- | (1,700) |
| Tax effect of adjustments | (173) | (185) | (1,310) | (2,287) |
| Non-GAAP net income | $ 2,043 | $ 1,342 | $ 6,416 | $ 5,536 |
| Non-GAAP net income per share: | ||||
| Basic | $ 0.09 | $ 0.07 | $ 0.30 | $ 0.35 |
| Diluted | $ 0.09 | $ 0.06 | $ 0.29 | $ 0.34 |
| Weighted average shares outstanding used in computing per share amounts: | ||||
| Basic | 22,042 | 20,306 | 21,673 | 15,754 |
| Diluted | 22,519 | 20,966 | 22,241 | 16,368 |
| Reconciliation of Income from Operations to Non-GAAP Income from Operations: | Three Months Ended December 31, | Year Ended December 31, | ||
| 2011 | 2010 | 2011 | 2010 | |
| Income from operations | $ 1,962 | $ 1,542 | $ 5,316 | $ 1,130 |
| Management bonus plan associated with initial public offering | -- | -- | -- | 5,888 |
| Amortization of intangible assets | 236 | 75 | 864 | 301 |
| Amortization of acquired software | 42 | -- | 168 | -- |
| Stock-based compensation | 1,086 | 183 | 3,949 | 1,088 |
| Contribution of stock to fund a charitable trust established by the Company | -- | -- | -- | 238 |
| Acquisition-related costs | -- | 265 | 134 | 265 |
| Non-GAAP income from operations | $ 3,326 | $ 2,065 | $ 10,431 | $ 8,910 |
| Reconciliation of Operating Expenses to Non-GAAP Operating Expenses: | Three Months Ended December 31, | Year Ended December 31, | ||
| 2011 | 2010 | 2011 | 2010 | |
| Operating expenses | $ 8,449 | $ 6,890 | $ 34,782 | $ 31,986 |
| Management bonus plan associated with initial public offering | -- | -- | -- | (5,888) |
| Amortization of intangible assets | (236) | (75) | (864) | (301) |
| Stock-based compensation | (986) | (152) | (3,636) | (1,005) |
| Contribution of stock to fund a charitable trust established by the Company | -- | -- | -- | (238) |
| Acquisition-related costs | -- | (265) | (134) | (265) |
| Non-GAAP operating expenses | $ 7,227 | $ 6,398 | $ 30,148 | $ 24,289 |
| Reconciliation of Net Cash Provided by Operating Activities to Adjusted Free Cash Flow: | Three Months Ended December 31, | Year Ended December 31, | ||
| 2011 | 2010 | 2011 | 2010 | |
| Net cash provided by operating activities | $ 6,061 | $ 3,057 | $ 17,407 | $ 5,890 |
| Purchase of property and equipment | (1,297) | (350) | (2,058) | (832) |
| Capitalization of software development costs | (409) | (127) | (1,004) | (648) |
| Free cash flow | 4,355 | 2,580 | 14,345 | 4,410 |
| Distribution of acquisition escrow | (223) | -- | (223) | -- |
| Management bonus plan associated with initial public offering | -- | -- | -- | 5,888 |
| Acquisition-related costs | -- | 265 | 134 | 265 |
| Adjusted free cash flow | $ 4,132 | $ 2,845 | $ 14,256 | $ 10,563 |
| RECONCILIATION DATA | ||||
| (UNAUDITED) | ||||
| (in thousands) | ||||
| Reconciliation of Cost of Revenues to Non-GAAP Cost of Revenues: | Three Months Ended December 31, | Year Ended December 31, | ||
| 2011 | 2010 | 2011 | 2010 | |
| Cost of revenues | $ 3,819 | $ 2,586 | $ 13,340 | $ 9,361 |
| Amortization of acquired software | (42) | -- | (168) | -- |
| Stock-based compensation | (100) | (31) | (313) | (83) |
| Non-GAAP Cost of revenues | $ 3,677 | $ 2,555 | $ 12,859 | $ 9,278 |
| Reconciliation of Research and Development to Non-GAAP Research and Development: | Three Months Ended December 31, | Year Ended December 31, | ||
| 2011 | 2010 | 2011 | 2010 | |
| Research and development | $ 2,563 | $ 2,303 | $ 11,233 | $ 8,395 |
| Stock-based compensation | (220) | (39) | (1,014) | (236) |
| Non-GAAP Research and development | $ 2,343 | $ 2,264 | $ 10,219 | $ 8,159 |
| Reconciliation of Sales and Marketing to Non-GAAP Sales and Marketing: | Three Months Ended December 31, | Year Ended December 31, | ||
| 2011 | 2010 | 2011 | 2010 | |
| Sales and marketing | $ 3,467 | $ 2,808 | $ 14,282 | $ 11,592 |
| Stock-based compensation | (288) | (28) | (1,142) | (167) |
| Non-GAAP Sales and marketing | $ 3,179 | $ 2,780 | $ 13,140 | $ 11,425 |
| Reconciliation of General and Administrative to Non-GAAP General and Administrative: | Three Months Ended December 31, | Year Ended December 31, | ||
| 2011 | 2010 | 2011 | 2010 | |
| General and administrative | $ 2,183 | $ 1,704 | $ 8,403 | $ 5,810 |
| Stock-based compensation | (478) | (85) | (1,480) | (602) |
| Acquisition-related costs | -- | (265) | (134) | (265) |
| Contribution of stock to fund a charitable trust established by the Company | -- | -- | -- | (238) |
| Non-GAAP General and administrative | $ 1,705 | $ 1,354 | $ 6,789 | $ 4,705 |
| Reconciliation of Amortization of Intangible Assets to Non-GAAP Amortization of Intangible Assets: | Three Months Ended December 31, | Year Ended December 31, | ||
| 2011 | 2010 | 2011 | 2010 | |
| Amortization of intangible assets | $ 236 | $ 75 | $ 864 | $ 301 |
| Amortization of intangible assets | (236) | (75) | (864) | (301) |
| Non-GAAP Amortization of intangible assets | $ -- | $ -- | $ -- | $ -- |
| Reconciliation of Management Bonus Plan Associated With Initial Public Offering to Non-GAAP Management Bonus Plan Associated With Initial Public Offering: | Three Months Ended December 31, | Year Ended December 31, | ||
| 2011 | 2010 | 2011 | 2010 | |
| Management bonus plan associated with initial public offering | $ -- | $ -- | $ -- | $ 5,888 |
| Management bonus plan associated with initial public offering | -- | -- | -- | (5,888) |
| Non-GAAP Management bonus plan associated with initial public offering | $ -- | $ -- | $ -- | $ -- |
| Reconciliation of Other Income (Expense) to Non-GAAP Other Income (Expense): | Three Months Ended December 31, | Year Ended December 31, | ||
| 2011 | 2010 | 2011 | 2010 | |
| Other income (expense) | $ 218 | $ (9) | $ 207 | $ 1,687 |
| Distribution of acquisition escrow | (223) | -- | (223) | -- |
| Gain on sale of investment | -- | -- | -- | (1,700) |
| Non-GAAP Other income (expense) | $ (5) | $ (9) | $ (16) | $ (13) |