×

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.

Conference Call Information
What: SciQuest's third quarter results conference call
When: Thursday October 30, 2014
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: 13593017

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.

SQI-F

SCIQUEST, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands except per share amounts)
As of September 30, As of December 31,
2014 2013
(unaudited)
Assets
Current assets:
Cash and cash equivalents $ 46,850 $ 19,117
Short-term investments 77,360 15,105
Accounts receivable, net 8,652 12,987
Prepaid expenses and other current assets 2,880 3,268
Deferred tax asset 324 290
Total current assets 136,066 50,767
Property and equipment, net 13,054 10,028
Goodwill 64,290 65,280
Intangible assets, net 25,283 29,490
Deferred commissions 5,980 6,701
Deferred tax asset, less current portion 11,592 10,885
Other 263 294
Total assets $ 256,528 $ 173,445
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 158 $ 741
Accrued liabilities 10,256 13,765
Deferred revenues 55,709 57,417
Total current liabilities 66,123 71,923
Deferred revenues, less current portion 10,610 13,343
Stockholders' equity:
Common stock, $0.001 par value; 50,000 shares authorized; 27,520 and 23,811 shares issued and outstanding as of September 30, 2014 and December 31, 2013, respectively 28 24
Additional paid-in capital 201,886 108,864
Accumulated other comprehensive loss (2,374) (1,401)
Accumulated deficit (19,745) (19,308)
Total stockholders' equity 179,795 88,179
Total liabilities and stockholders' equity $ 256,528 $ 173,445
SCIQUEST, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(in thousands except per share amounts)
Three Months Ended September 30, Nine Months Ended September 30,
2014 2013 2014 2013
(unaudited) (unaudited)
Revenues $ 25,670 $ 22,513 $ 76,364 $ 64,383
Cost of revenues (1)(2) 7,854 6,759 23,400 19,942
Gross profit 17,816 15,754 52,964 44,441
Operating expenses: (1)
Research and development 7,146 7,132 21,261 20,525
Sales and marketing 6,208 6,334 19,409 17,064
General and administrative 4,348 3,462 10,791 9,446
Amortization of intangible assets 795 602 2,395 1,545
Total operating expenses 18,497 17,530 53,856 48,580
Loss from operations (681) (1,776) (892) (4,139)
Other income (expense), net:
Interest income 124 10 182 50
Other (expense) income, net (37) (13) (48) (58)
Total other income (expense), net 87 (3) 134 (8)
Loss before income taxes (594) (1,779) (758) (4,147)
Income tax benefit (expense) 164 (603) 321 633
Net loss $ (430) $ (2,382) $ (437) $ (3,514)
Other comprehensive loss:
Foreign currency translation adjustments (898) 426 (973) (606)
Comprehensive loss $ (1,328) $ (1,956) $ (1,410) $ (4,120)
Net loss per share
Basic $ (0.02) $ (0.10) $ (0.02) $ (0.15)
Diluted $ (0.02) $ (0.10) $ (0.02) $ (0.15)
Weighted average shares outstanding used in computing per share amounts
Basic 27,514 23,068 26,295 22,803
Diluted 27,514 23,068 26,295 22,803
(1) Amounts include stock-based compensation expense, as follows:
Three Months Ended September 30, Nine Months Ended September 30,
2014 2013 2014 2013
(unaudited) (unaudited)
Cost of revenues $ 187 $ 124 $ 533 $ 368
Research and development 201 442 582 1,288
Sales and marketing 338 533 1,112 1,415
General and administrative 852 717 2,445 2,031
$ 1,578 $ 1,816 $ 4,672 $ 5,102
(2) Cost of revenues includes amortization of capitalized software development costs of:
Amortization of capitalized software development costs: $ 791 $ 466 $ 2,022 $ 1,287
Amortization of acquired software: 519 402 1,558 1,052
$ 1,310 $ 868 $ 3,580 $ 2,339
SCIQUEST, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Nine Months Ended September 30,
2014 2013
(unaudited)
Cash flows from operating activities
Net loss $ (437) $ (3,514)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization 7,954 5,460
Loss on disposal of fixed assets 430 --
Stock-based compensation expense 4,672 5,102
Deferred taxes (457) (676)
Changes in operating assets and liabilities:
Accounts receivable 4,293 2,709
Prepaid expense and other current assets 379 (469)
Deferred commissions and other assets 753 785
Accounts payable (582) (1,631)
Accrued liabilities (3,769) 1,093
Deferred revenues (4,328) 470
Net cash provided by operating activities 8,908 9,329
Cash flows from investing activities
Business acquisition, net of cash acquired -- (25,533)
Addition of capitalized software development costs (4,231) (2,942)
Purchase of property and equipment (3,304) (1,841)
Purchase of short-term investments (92,735) (23,525)
Maturities of short-term investments 30,480 38,035
Net cash used in investing activities (69,790) (15,806)
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 452 1,608
Proceeds from employee stock purchase plan activity 766 760
Net cash provided by financing activities 88,651 2,368
Effect of exchange rate change on cash and cash equivalents (36) (39)
Net increase (decrease) in cash and cash equivalents 27,733 (4,148)
Cash and cash equivalents at beginning of the period 19,117 15,606
Cash and cash equivalents at end of the period $ 46,850 $ 11,458
RECONCILIATION DATA
(UNAUDITED)
(in thousands except per share amounts)
Reconciliation of Net Loss to Non-GAAP Net Income: Three Months Ended September 30, Nine Months Ended September 30,
2014 2013 2014 2013
Net loss $ (430) $ (2,382) $ (437) $ (3,514)
Purchase accounting deferred revenue adjustment 186 950 1,311 2,435
Amortization of intangible assets 795 602 2,395 1,545
Amortization of acquired software 519 402 1,558 1,052
Stock-based compensation 1,578 1,816 4,672 5,102
Headquarter relocation costs 830 -- 830 --
Acquisition related costs -- 1,631 -- 4,031
Tax effect of adjustments (1,454) (807) (4,217) (4,533)
Non-GAAP net income $ 2,024 $ 2,212 $ 6,112 $ 6,118
Non-GAAP net income per share:
Basic $ 0.07 $ 0.10 $ 0.23 $ 0.27
Diluted $ 0.07 $ 0.09 $ 0.23 $ 0.26
Weighted average shares outstanding used in computing per share amounts:
Basic 27,514 23,068 26,295 22,803
Diluted 27,778 23,516 26,731 23,249
Reconciliation of Loss from Operations to Non-GAAP Income from Operations: Three Months Ended September 30, Nine Months Ended September 30,
2014 2013 2014 2013
Loss from operations $ (681) $ (1,776) $ (892) $ (4,139)
Purchase accounting deferred revenue adjustment 186 950 1,311 2,435
Amortization of intangible assets 795 602 2,395 1,545
Amortization of acquired software 519 402 1,558 1,052
Stock-based compensation 1,578 1,816 4,672 5,102
Headquarter relocation costs 830 -- 830 --
Acquisition related costs -- 1,631 -- 4,031
Non-GAAP income from operations $ 3,227 $ 3,625 $ 9,874 $ 10,026
Reconciliation of Operating Expenses to Non-GAAP Operating Expenses: Three Months Ended September 30, Nine Months Ended September 30,
2014 2013 2014 2013
Operating expenses $ 18,497 $ 17,530 $ 53,856 $ 48,580
Amortization of intangible assets (795) (602) (2,395) (1,545)
Stock-based compensation (1,391) (1,692) (4,139) (4,734)
Headquarter relocation costs (830) -- (830) --
Acquisition related costs -- (1,631) -- (4,031)
Non-GAAP operating expenses $ 15,481 $ 13,605 $ 46,492 $ 38,270
Reconciliation of Net Cash Provided by Operating Activities to Adjusted Free Cash Flow: Three Months Ended September 30, Nine Months Ended September 30,
2014 2013 2014 2013
Net cash provided by operating activities $ 12,013 $ 6,393 $ 8,908 $ 9,329
Purchase of property and equipment (1,745) (175) (3,304) (1,841)
Capitalization of software development costs (1,479) (946) (4,231) (2,942)
Free cash flow 8,789 5,272 1,373 4,546
Acquisition related costs -- 56 3,600 2,456
Headquarter relocation costs (568) -- (568) --
Adjusted free cash flow $ 8,221 $ 5,328 $ 4,405 $ 7,002
RECONCILIATION DATA
(UNAUDITED)
(in thousands)
Reconciliation of Revenues to Non-GAAP Revenues: Three Months Ended September 30, Nine Months Ended September 30,
2014 2013 2014 2013
Revenues $ 25,670 $ 22,513 $ 76,364 $ 64,383
Purchase accounting deferred revenue adjustment 186 950 1,311 2,435
Non-GAAP Revenues $ 25,856 $ 23,463 $ 77,675 $ 66,818
Reconciliation of Cost of Revenues to Non-GAAP Cost of Revenues: Three Months Ended September 30, Nine Months Ended September 30,
2014 2013 2014 2013
Cost of revenues $ 7,854 $ 6,759 $ 23,400 $ 19,942
Amortization of acquired software (519) (402) (1,558) (1,052)
Stock-based compensation (187) (124) (533) (368)
Non-GAAP Cost of revenues $ 7,148 $ 6,233 $ 21,309 $ 18,522
Reconciliation of Research and Development to Non-GAAP Research and Development: Three Months Ended September 30, Nine Months Ended September 30,
2014 2013 2014 2013
Research and development $ 7,146 $ 7,132 $ 21,261 $ 20,525
Stock-based compensation (201) (442) (582) (1,288)
Acquisition related costs -- (600) -- (1,800)
Non-GAAP Research and development $ 6,945 $ 6,090 $ 20,679 $ 17,437
Reconciliation of Sales and Marketing to Non-GAAP Sales and Marketing: Three Months Ended September 30, Nine Months Ended September 30,
2014 2013 2014 2013
Sales and marketing $ 6,208 $ 6,334 $ 19,409 $ 17,064
Stock-based compensation (338) (533) (1,112) (1,415)
Acquisition related costs -- (600) -- (1,800)
Non-GAAP Sales and marketing $ 5,870 $ 5,201 $ 18,297 $ 13,849
Reconciliation of General and Administrative to Non-GAAP General and Administrative: Three Months Ended September 30, Nine Months Ended September 30,
2014 2013 2014 2013
General and administrative $ 4,348 $ 3,462 $ 10,791 $ 9,446
Stock-based compensation (852) (717) (2,445) (2,031)
Acquisition related costs -- (431) -- (431)
Headquarter relocation costs (830) -- (830) --
Non-GAAP General and administrative $ 2,666 $ 2,314 $ 7,516 $ 6,984
Reconciliation of Amortization of Intangible Assets to Non-GAAP Amortization of Intangible Assets: Three Months Ended September 30, Nine Months Ended September 30,
2014 2013 2014 2013
Amortization of intangible assets $ 795 $ 602 $ 2,395 $ 1,545
Amortization of intangible assets (795) (602) (2,395) (1,545)
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 30, 2014 Twelve Months Ended December 31, 2014
Low end of Range High end of Range Low end of
Range
High end of
Range
Revenues $ 25,200 $ 25,600 $ 101,600 $ 102,000
Purchase accounting deferred revenue adjustment 100 100 1,400 1,400
Non-GAAP revenues $ 25,300 $ 25,700 $ 103,000 $ 103,400
Reconciliation of (Loss) Earnings per Share Outlook to Non-GAAP Earnings per Share Outlook: Three Months Ended December 30, 2014 Twelve Months Ended December 31, 2014
Low end of Range High end of Range Low end of
Range
High end of
Range
Loss per Share $ (0.01) $ (0.00) $ (0.02) $ (0.01)
Purchase accounting deferred revenue adjustment per share 0.00 0.00 0.05 0.05
Amortization of intangible assets per share and acquired software per share 0.05 0.05 0.19 0.19
Stock-based compensation per share 0.06 0.06 0.24 0.24
Headquarter relocation costs per share 0.00 0.00 0.03 0.03
Tax effect of adjustments per share (0.04) (0.04) (0.20) (0.20)
Non-GAAP earnings per share $ 0.06 $ 0.07 $ 0.29 $ 0.30
Reconciliation of Net Cash Provided by Operating Activities Outlook to Adjusted Free Cash Flow Outlook: Twelve Months Ended December 31, 2014
Low end of
Range
High end of
Range
Net cash provided by operating activities $ 16,500 $ 18,500
Capitalization of software development costs (5,200) (5,200)
Purchase of property and equipment (4,300) (4,300)
Acquisition related costs 3,600 3,600
Headquarter relocation costs (600) (600)
Adjusted free cash flow $ 10,000 $ 12,000

CONTACT: SciQuest Media contact: SciQuest, Inc. Roberta Patterson, 919-659-2230 rpatterson@SciQuest.com fama PR for SciQuest Dan Gaffney, 617-986-5036 sciquest@famapr.com SciQuest Investor contact: Jamie Andelman SciQuest, Inc. 919-659-2322 jandelman@sciquest.comSource:SciQuest, Inc.