SciQuest Announces Fourth Quarter and Full Year Results


MORRISVILLE, N.C., Feb. 04, 2016 (GLOBE NEWSWIRE) -- SciQuest, Inc. (Nasdaq:SQI), the leading public provider of spend management solutions delivering value beyond savings, today announced its financial results for the fourth quarter and full year ended December 31, 2015.

“Q4 financial results were above the high end of our guidance ranges, and we delivered another solid sales quarter. For the second quarter in a row, the average selling price to new customers was high. In addition, cross-selling to existing customers was strong,” said Stephen Wiehe, Chief Executive Officer of SciQuest. “During 2015 we advanced all of our strategic priorities and set the stage for improving topline growth and profitability. We re-wrote four solutions onto our primary platform, which helped us attract a record 58 new logos during the year. The significant investments we are making in the business helped us generate strong results in the second half of 2015. Our recent performance gives us great confidence that we can gradually grow revenue while further enhancing our already healthy adjusted EBITDA margins and free cash flow in 2016 and beyond.”

 
Fourth Quarter 2015 Results
 
in millions, except for earnings per share and adjusted EBITDA margin
Metric Fourth Quarter
2015
 Fourth Quarter
2014
     
GAAP    
Revenues $26.7  $25.6 
Income from operations $1.3  $0.2 
Net income $1.5  $0.4 
Diluted net income per share $0.05  $0.01 
Weighted average diluted shares outstanding  27.9   27.8 
     
Non-GAAP    
Revenues(1) see above $25.6 
Income from operations(2) $3.9  $3.1 
Adjusted EBITDA(3) $5.8  $4.7 
Adjusted EBITDA margin(3)  21.7%  18.2%
Net income(4) $2.5  $1.9 
Diluted net income per share(4) $0.09  $0.07 
Weighted average diluted shares outstanding  27.9   27.8 
         


 
Full Year 2015 Results
 
in millions, except for earnings per share and adjusted EBITDA margin
Metric Full Year
2015
 Full Year
2014
     
GAAP    
Revenues $105.4  $101.9 
Income (loss) from operations $2.5  ($0.7)
Net income (loss) $1.9  ($0.1)
Diluted (basic) net income (loss) per share $0.07  ($0.00)
Weighted average diluted / basic shares outstanding  27.9   26.6 
     
Non-GAAP    
Revenues(1) $105.4  $103.3 
Income from operations(2) $13.1  $12.9 
Adjusted EBITDA(3) $20.2  $18.5 
Adjusted EBITDA margin(3)  19.1%  18.0%
Net income(4) $8.2  $8.0 
Diluted net income per share(4) $0.29  $0.30 
Weighted average diluted shares outstanding  27.9   27.0 
Free cash flow / adjusted free cash flow(5) $9.3  $10.6 
         


 
Business Outlook
 
SciQuest is issuing guidance for first quarter and full year 2016 as follows:
 
in millions, except for earnings per share and adjusted EBITDA margin
Metric Low High
     
FIRST QUARTER 2016    
GAAP    
Revenues $26.7  $26.9 
Diluted net income per share $0.03  $0.04 
Weighted average diluted shares outstanding Approximately 28.0
     
Non-GAAP    
Diluted net income per share(4) $0.07  $0.08 
     
     
FULL YEAR 2016    
GAAP    
Revenues $109  $111 
Diluted net income per share $0.11  $0.13 
Weighted average diluted shares outstanding Approximately 28.2
Net cash provided by operating activities $20  $22 
Capitalization of software development costs Approximately $6
Purchase of property and equipment Approximately $3
     
Non-GAAP    
Adjusted EBITDA margin(3) Approximately 21.5%
Diluted net income per share(4) $0.32  $0.34 
Free cash flow(5) $11  $13 
         
Reconciliations of the most comparable GAAP financial measure to the non-GAAP measures used in the tables above are 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; the amortization of (i) intangible assets and (ii) acquired software; and, when applicable: (i) acquisition related costs and (ii) headquarter relocation costs.
      3)    Adjusted EBITDA deducts from net income the purchase accounting deferred revenue adjustment; stock-based compensation; depreciation and amortization; income tax; total other expenses, net; and, when applicable: (i) acquisition related costs and (ii) headquarter relocation costs. Adjusted EBITDA margin is calculated by dividing adjusted EBITDA by non-GAAP revenue or GAAP revenue if there is no purchase accounting deferred revenue adjustment in the period.
      4)    Non-GAAP net income and non-GAAP diluted net income per share exclude the purchase accounting deferred revenue adjustment; stock-based compensation; the amortization of (i) intangible assets and (ii) acquired software; and, when applicable: (i) acquisition related costs and (ii) headquarter relocation costs. Non-GAAP net income includes the burden of the tax effect related to these excluded items.
      5)    Free cash flow is defined as net cash provided by operating activities less (i) the purchase of property and equipment and (ii) capitalization of software development costs. Adjusted free cash flow adds acquisition-related costs, when applicable, and subtracts tenant improvement credits net of lease exit costs, when applicable, to free cash flow.

Conference Call Information

  
What: SciQuest’s fourth quarter and full year results conference call
When: Thursday February 4, 2016
Time:  4:30 p.m. ET
Webcast: http://investor.sciquest.com (live and replay)
Live Call:  (877) 407-8289, domestic
 (201) 689-8341, international
Replay:  (877) 660-6853, domestic
 (201) 612-7415, international
Live and replay conference ID code: 1362-8170
  

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 when 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) depreciation and amortization; (ii) stock-based compensation; (iii) purchase accounting deferred revenue adjustment; (iv) other significant items, when applicable; and (v) the beneficial income tax effect related to these included 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 leading public provider of spend management solutions delivering value beyond savings. Through the continued release of key innovative technology and a fanatical drive toward making our customers successful, we deliver exceptional value in user experience, productivity and operational efficiency. Our cloud-based, mobile-enabled, source-to-settle platform addresses all stages of procurement from the automation of core processes to enabling sophisticated, strategic and multifaceted sourcing solutions. We specialize in handling simple procurement needs to the most advanced supplier and supply chain requirements. SciQuest serves a wide range of industries and organizations including many of the Global Fortune 500. For more information visit http://www.sciquest.com

To join the conversation, please visit our blog 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 future revenue and revenue growth rates, adjusted EBITDA margins, free cash flow 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.  

SQI-F

  
SCIQUEST, INC. 
CONSOLIDATED BALANCE SHEETS 
(in thousands except per share amounts) 
     
 As of December 31,  As of December 31,  
  2015   2014  
 (unaudited)   
Assets    
Current assets:    
Cash and cash equivalents $  67,893  $  59,419  
Short-term investments   74,612     71,493  
Accounts receivable, net   12,632     12,032  
Prepaid expenses and other current assets    3,253     2,666  
Total current assets    158,390     145,610  
Property and equipment, net    15,200     13,595  
Goodwill    61,500     63,779  
Intangible assets, net    18,510     23,846  
Deferred commissions   6,745     6,094  
Deferred tax asset, net of deferred tax liability   11,296     12,057  
Other    260     234  
Total assets $  271,901  $  265,215  
Liabilities and Stockholders’ Equity    
Current liabilities:    
Accounts payable $  183  $  375  
Accrued liabilities    11,006     10,051  
Deferred revenues    60,697     59,751  
Total current liabilities    71,886     70,177  
Deferred revenues, less current portion    9,479     11,350  
Deferred rent, less current portion   1,949     2,027  
Stockholders’ equity:    
Common stock, $0.001 par value; 50,000 shares authorized; 27,851 and 27,574 shares issued and outstanding as of December 31, 2015 and December 31, 2014, respectively   28     28  
Additional paid-in capital    212,129     204,065  
Accumulated other comprehensive loss   (6,055)  (3,055) 
Accumulated deficit    (17,515)  (19,377) 
Total stockholders’ equity   188,587     181,661  
Total liabilities and stockholders’ equity$  271,901  $  265,215  
    

 

  
SCIQUEST, INC. 
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) 
(in thousands except per share amounts) 
         
 Three Months Ended December 31,  Twelve Months Ended December 31,  
  2015   2014   2015   2014  
 (unaudited) (unaudited) 
         
Revenues $  26,655  $  25,568  $  105,353  $  101,932  
Cost of revenues (1)(2)   8,128     8,097     33,567     31,497  
Gross profit    18,527     17,471     71,786     70,435  
Operating expenses: (1)        
Research and development    6,690     7,046     27,303     28,307  
Sales and marketing    6,887     6,208     26,928     25,617  
General and administrative    2,971     3,254     12,295     14,045  
Amortization of intangible assets   639     759     2,753     3,154  
Total operating expenses    17,187     17,267     69,279     71,123  
Income (loss) from operations    1,340     204     2,507     (688) 
Other income (expense), net:        
Interest income    134     115     605     297  
Other income (expense), net    102     (99)    (309)    (147) 
Total other income (expense), net    236     16     296     150  
Income (loss) before income taxes    1,576     220     2,803     (538) 
Income tax (expense) benefit    (59)    148     (941)    469  
Net income (loss)$  1,517  $  368  $  1,862  $  (69) 
         
Other comprehensive income (loss):        
Foreign currency translation adjustments   (669)    (681)    (3,000)    (1,654) 
Comprehensive income (loss) $  848  $  (313) $  (1,138) $  (1,723) 
         
Net income (loss) per share        
Basic$  0.05  $  0.01  $  0.07  $  (0.00) 
Diluted$  0.05  $  0.01  $  0.07  $  (0.00) 
         
Weighted average shares outstanding used in computing per share amounts        
Basic   27,832     27,540     27,721     26,609  
Diluted   27,931     27,789     27,889     26,609  
         
(1) Amounts include stock-based compensation expense, as follows:        
 Three Months Ended December 31,  Twelve Months Ended December 31,  
  2015   2014   2015   2014  
 (unaudited) (unaudited) 
Cost of revenues$  198  $  179  $  810  $  712  
Research and development    120     132     560     714  
Sales and marketing    493     379     1,641     1,491  
General and administrative    632     827     2,777     3,272  
 $  1,443  $  1,517  $  5,788  $  6,189  
         
(2) Cost of revenues includes amortization of capitalized software development costs of:        
         
Amortization of capitalized software development costs:$  1,175  $  912  $  4,284  $  2,934  
Amortization of acquired software:   497     520     1,987     2,078  
 $  1,672  $  1,432  $  6,271  $  5,012  
         

 

 
SCIQUEST, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
    
 Twelve Months Ended December 31, 
  2015   2014 
 (unaudited)
Cash flows from operating activities   
Net income (loss)$  1,862  $  (69)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:   
Depreciation and amortization    11,827     10,851 
Loss on disposal of fixed assets   -     430 
Stock-based compensation expense    5,788     6,189 
Deferred taxes   761     (598)
Changes in operating assets and liabilities:    
Accounts receivable    (670)    883 
Prepaid expense and other current assets    (620)    560 
Deferred commissions and other assets    (697)    681 
Accounts payable    (193)    (364)
Accrued liabilities    989     (3,720)
Deferred revenues    (716)    532 
Deferred rent   (78)    2,027 
Net cash provided by operating activities    18,253     17,402 
Cash flows from investing activities   
Addition of capitalized software development costs    (6,180)    (5,550)
Purchase of property and equipment    (2,765)    (4,196)
Purchase of short-term investments   (163,449)    (122,728)
Maturities of short-term investments   160,330     66,340 
Net cash used in investing activities    (12,064)    (66,134)
Cash flows from financing activities   
Proceeds from public offering, net of underwriting discount   -     87,673 
Public offering costs   -     (240)
Proceeds from exercise of common stock options    1,531     731 
Proceeds from employee stock purchase plan activity   812     922 
Net cash provided by financing activities    2,343     89,086 
Effect of exchange rate change on cash and cash equivalents   (58)    (52)
Net increase in cash and cash equivalents    8,474     40,302 
Cash and cash equivalents at beginning of the period   59,419     19,117 
Cash and cash equivalents at end of the period$  67,893  $  59,419 
    

 

  
RECONCILIATION DATA 
(UNAUDITED) 
(in thousands except per share amounts) 
    
Reconciliation of Net Income (Loss) to Non-GAAP Net Income:Three Months Ended December 31,  Twelve Months Ended December 31,  
  2015  2014   2015  2014  
Net income (loss)$  1,517 $  368  $  1,862 $  (69) 
Purchase accounting deferred revenue adjustment   -     54     46    1,365  
Amortization of intangible assets   639    759     2,753    3,154  
Amortization of acquired software   497    520     1,987    2,078  
Stock-based compensation   1,443    1,517     5,788    6,189  
Headquarter relocation costs   -     -      -     830  
Tax effect of adjustments   (1,559)   (1,343)    (4,267)   (5,560) 
Non-GAAP net income$  2,537 $  1,875  $  8,169 $  7,987  
       
Non-GAAP net income per share:      
Basic$  0.09 $  0.07  $  0.29 $  0.30  
Diluted$  0.09 $  0.07  $  0.29 $  0.30  
       
Weighted average shares outstanding used in computing per share amounts:      
Basic   27,832    27,540     27,721    26,609  
Diluted   27,931    27,789     27,889    26,995  
       
       
Reconciliation of Income (Loss) from Operations to Non-GAAP Income from Operations:Three Months Ended December 31,  Twelve Months Ended December 31,  
  2015  2014   2015  2014  
Income (loss) from operations$  1,340 $  204  $  2,507 $  (688) 
Purchase accounting deferred revenue adjustment   -     54     46    1,365  
Amortization of intangible assets   639    759     2,753    3,154  
Amortization of acquired software   497    520     1,987    2,078  
Stock-based compensation   1,443    1,517     5,788    6,189  
Headquarter relocation costs   -     -      -     830  
Non-GAAP income from operations$  3,919 $  3,054  $  13,081 $  12,928  
 
    
Reconciliation of Net Income (Loss) to Adjusted EBITDA:Three Months Ended December 31,  Twelve Months Ended December 31,  
  2015  2014   2015  2014  
Net income (loss)$  1,517 $  368  $  1,862 $  (69) 
Income tax expense (benefit)   59    (148)    941    (469) 
Total other (income) expense, net    (236)   (16)    (296)   (150) 
Purchase accounting deferred revenue adjustment   -     54     46    1,365  
Depreciation and amortization   3,007    2,897     11,827    10,851  
Stock-based compensation   1,443    1,517     5,788    6,189  
Headquarter relocation costs   -     -      -     830  
Adjusted EBITDA$  5,790 $  4,672  $  20,168 $  18,547  
       
       
Calculation of Adjusted EBITDA Margin:Three Months Ended December 31,  Twelve Months Ended December 31,  
 2015  2014   2015  2014  
Adjusted EBITDA$  5,790 $  4,672  $  20,168 $  18,547  
÷ Non-GAAP revenues   26,655    25,622     105,399    103,297  
Adjusted EBITDA margin 21.7% 18.2%  19.1% 18.0% 
       
       
Reconciliation of Operating Expenses to Non-GAAP Operating Expenses:Three Months Ended December 31,  Twelve Months Ended December 31,  
  2015  2014   2015  2014  
Operating expenses$  17,187 $  17,267  $  69,279 $  71,123  
Amortization of intangible assets   (639)   (759)    (2,753)   (3,154) 
Stock-based compensation   (1,245)   (1,338)    (4,978)   (5,477) 
Headquarter relocation costs   -     -      -     (830) 
Non-GAAP operating expenses$  15,303 $  15,170  $  61,548 $  61,662  
       
       
Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow / Adjusted Free Cash Flow:Three Months Ended December 31,  Twelve Months Ended December 31,  
  2015  2014   2015  2014  
Net cash provided by operating activities$  9,087 $  8,494  $  18,253 $  17,402  
Purchase of property and equipment   (1,183)   (892)    (2,765)   (4,196) 
Capitalization of software development costs   (1,436)   (1,319)    (6,180)   (5,550) 
Free cash flow   6,468    6,283     9,308    7,656  
Acquisition related costs   -     -      -     3,600  
Tenant improvement credits net of lease exit costs   -     (41)    -     (609) 
Free cash flow / adjusted free cash flow$  6,468 $  6,242  $  9,308 $  10,647  
       

 

  
RECONCILIATION DATA 
(UNAUDITED) 
(in thousands) 
    
Reconciliation of Revenues to Non-GAAP Revenues:Three Months Ended December 31,  Twelve Months Ended December 31,  
  2015  2014   2015  2014  
Revenues$  26,655 $  25,568  $  105,353 $  101,932  
Purchase accounting deferred revenue adjustment   -     54     46    1,365  
Non-GAAP revenues$  26,655 $  25,622  $  105,399 $  103,297  
       
Reconciliation of Cost of Revenues to Non-GAAP Cost of Revenues:Three Months Ended December 31,  Twelve Months Ended December 31,  
  2015  2014   2015  2014  
Cost of revenues$  8,128 $  8,097  $  33,567 $  31,497  
Amortization of acquired software   (497)   (520)    (1,987)   (2,078) 
Stock-based compensation   (198)   (179)    (810)   (712) 
Non-GAAP cost of revenues$  7,433 $  7,398  $  30,770 $  28,707  
       
Reconciliation of Research and Development to Non-GAAP Research and Development:Three Months Ended December 31,  Twelve Months Ended December 31,  
  2015  2014   2015  2014  
Research and development$  6,690 $  7,046  $  27,303 $  28,307  
Stock-based compensation   (120)   (132)    (560)   (714) 
Non-GAAP research and development$  6,570 $  6,914  $  26,743 $  27,593  
       
Reconciliation of Sales and Marketing to Non-GAAP Sales and Marketing:Three Months Ended December 31,  Twelve Months Ended December 31,  
  2015  2014   2015  2014  
Sales and marketing$  6,887 $  6,208  $  26,928 $  25,617  
Stock-based compensation   (493)   (379)    (1,641)   (1,491) 
Non-GAAP sales and marketing$  6,394 $  5,829  $  25,287 $  24,126  
       
Reconciliation of General and Administrative to Non-GAAP General and Administrative:Three Months Ended December 31,  Twelve Months Ended December 31,  
  2015  2014   2015  2014  
General and administrative$  2,971 $  3,254  $  12,295 $  14,045  
Stock-based compensation   (632)   (827)    (2,777)   (3,272) 
Headquarter relocation costs   -     -      -     (830) 
Non-GAAP general and administrative$  2,339 $  2,427  $  9,518 $  9,943  
       
Reconciliation of Amortization of Intangible Assets to Non-GAAP Amortization of Intangible Assets:Three Months Ended December 31,  Twelve Months Ended December 31,  
  2015  2014   2015  2014  
Amortization of intangible assets$  639 $  759  $  2,753 $  3,154  
Amortization of intangible assets   (639)   (759)    (2,753)   (3,154) 
Non-GAAP amortization of intangible assets$  -  $  -   $  -  $  -   
 

 

 
RECONCILIATION DATA
(UNAUDITED)
(in thousands except per share amounts)
      
      
Reconciliation of Net (Loss) Income per Share Outlook to Non-GAAP Income per Share Outlook:Three Months Ended March 31, 2016 Twelve Months Ended December 31, 2016
 Low end of RangeHigh end of Range Low end of RangeHigh end of Range
Net income per share$  0.03 $  0.04  $  0.11 $  0.13 
Amortization of intangible assets per share and acquired 0.04  0.04   0.15  0.15 
software per share     
Stock-based compensation per share 0.04  0.04   0.20  0.20 
Tax effect of adjustments per share (0.04) (0.04)  (0.14) (0.14)
Non-GAAP net income per share$  0.07 $  0.08  $  0.32 $  0.34 
      
      
      
Reconciliation of Net Income to Adjusted EBITDA:  Twelve Months Ended December 31, 2016
     Expected
Net income    $  3,700 
Income tax expense     2,300 
Other income, net      0 
Depreciation and amortization     12,300 
Stock-based compensation     5,600 
Adjusted EBITDA    $  23,900 
      
      
      
Calculation of Adjusted EBITDA Margin:   Twelve Months Ended December 31, 2016
     Expected
Adjusted EBITDA    $  23,900 
÷ Non-GAAP Revenues (High End of Range)     111,000 
Adjusted EBITDA margin     21.5%
      
      
      
Reconciliation of Net Cash Provided by Operating Activities
  Outlook to Adjusted Free Cash Flow Outlook:
  Twelve Months Ended December 31, 2016
    Low end of RangeHigh end of Range
Net cash provided by operating activities   $  20,000 $  22,000 
Capitalization of software development costs    (6,000) (6,000)
Purchase of property and equipment    (3,000) (3,000)
Adjusted free cash flow   $  11,000 $  13,000 
      
      

SciQuest Media contact:

SciQuest, Inc.
Roberta Patterson, 919-659-2230
rpatterson@SciQuest.com

Edelman for SciQuest
Megan Smith, 404-832-6776
Megan.smith3@edelman.com

SciQuest Investor contact:

Jamie Andelman
SciQuest, Inc., 919-659-2322
jandelman@sciquest.com