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SciQuest Announces Fourth Quarter and Full Year Financial Results

MORRISVILLE, N.C., Feb. 5, 2015 (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, 2014.

"Fourth quarter capped a year of transition and investment with solid progress against our long-term priorities that drive growth and profitability. We posted quarterly results that were consistent with our guidance ranges. During the quarter, we added 17 new customers and generated robust cross-selling to existing customers. We also generated a significant number of smaller deals, helping us to reduce our reliance on large transactions whose timing can be difficult to predict," said Stephen Wiehe, President and Chief Executive Officer of SciQuest. "The improvements we made during 2014 and our achievements in the fourth quarter position us for success in 2015 and beyond. Our confidence in our ability to increase both revenue growth rates and margin levels by the end of 2015 is based on a number of catalysts including our enhanced solution suite, our strengthened sales organization and our increased ability to capitalize on our Commercial market opportunity."

Fourth Quarter 2014 Results

SciQuest reported GAAP revenues of $25.6 million for the quarter ended December 31, 2014 compared to $25.8 million in the fourth quarter of 2013.

GAAP income from operations in the fourth quarter of 2014 was $0.2 million compared to GAAP loss from operations of $1.0 million in the fourth quarter of 2013. GAAP net income was $0.4 million in the fourth quarter of 2014 compared to GAAP net loss of $1.2 million in the same quarter in the prior year.

GAAP diluted net income per share was $0.01 in the fourth quarter of 2014 based on 27.8 million weighted average diluted shares outstanding. GAAP basic net loss per share in the fourth quarter of 2013 was $0.05 based on 23.8 million weighted average basic shares outstanding.

Non-GAAP revenue(1) in the fourth quarter was $25.6 million, which was generally in-line with the fourth quarter of 2013 after deducting approximately $0.5 million of one-time settlement fees and approximately $0.5 million of impact from higher service revenues and early deal signings from a year ago.

Non-GAAP income from operations(2) in the fourth quarter of 2014 was $3.1 million compared to non-GAAP income from operations(2) of $4.4 million in the fourth quarter of 2013. Non-GAAP net income(3) in the fourth quarter of 2014 was $1.9 million compared to non-GAAP net income(3) in the fourth quarter of 2013 of $2.7 million.

Non-GAAP diluted net income per share(3) was $0.07 in the fourth quarter of 2014 based on 27.8 million weighted average diluted shares outstanding. Non-GAAP diluted net income per share(3) in the fourth quarter of 2013 was $0.11 based on 24.3 million weighted average diluted shares outstanding.

Full Year 2014 Results

On a full year basis, GAAP revenues were $101.9 million in 2014 compared to $90.2 million in 2013. GAAP loss from operations was $0.7 million in 2014 compared to GAAP loss from operations of $5.1 million in 2013. GAAP net loss was $0.1 million in 2014 and GAAP basic net loss per share during the year was breakeven based on 26.6 million weighted average basic shares outstanding. In 2013, GAAP net loss was $4.7 million and GAAP basic net loss per share was $0.20 based on 23.0 weighted average basic shares outstanding.

Non-GAAP revenues(1) in 2014 were $103.3 million. This represented an annual growth rate of approximately 12% over non-GAAP revenue in 2013 after deducting approximately $0.5 million of one-time settlement fees and approximately $0.5 million of impact from higher service revenues and early deal signings from a year ago.

Non-GAAP income from operations(2) was $12.9 million in 2014 compared to non-GAAP income from operations(2) of $14.5 million in 2013. Non-GAAP net income(3) was $8.0 million in 2014 compared to non-GAAP net income(3) of $8.8 million in 2013.

Non-GAAP diluted net income per share(3) in 2014 was $0.30 based on 27.0 million weighted average diluted shares outstanding. Non-GAAP diluted net income per share(3) in 2013 was $0.38 based on 23.5 million weighted average diluted shares outstanding.

Net cash provided by operating activities in 2014 was $17.4 million and adjusted free cash flow(4) in 2014 was $10.6 million.

Business Outlook

SciQuest is issuing the following guidance:

First Quarter 2015

  • GAAP revenues between $25.6 million and $25.9 million.
  • GAAP basic net loss per share between $0.01 and $0.02.
  • Weighted average basic shares outstanding of approximately 27.6 million.
  • Non-GAAP revenues(1) between $25.7 million and $26.0 million.
  • Non-GAAP diluted net income per share(3) between $0.04 and $0.05.
  • Weighted average diluted shares outstanding of approximately 27.9 million.

Full Year 2015

  • GAAP revenues between $105.9 million and $109.9 million.
  • GAAP diluted net income per share between $0.02 and $0.06.
  • Weighted average diluted shares outstanding of approximately 28.0 million.
  • Net cash provided by operating activities between $21.5 million and $23.5 million.
  • Capitalization of software development costs of approximately $6.0 million, purchase of property and equipment of approximately $2.5 million.
  • Non-GAAP revenues(1) between $106.0 million and $110.0 million.
  • Non-GAAP diluted net income per share(3) between $0.29 and $0.33.
  • Adjusted free cash flow(4) between $13.0 million and $15.0 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 fourth quarter results conference call
When: Thursday February 5, 2015
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: 13598788

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) spend management solutions enable procurement, sourcing and financial professionals to focus on strategic decisions that transform business processes. Used by hundreds of organizations including many Fortune 500 and leading global companies, our feature-rich products combined with our expert services, help hundreds of organizations improve, automate and optimize their source-to-settle processes – driving bottom line results.

Learn more about our solutions and how we can help your organization turn spending into savings at 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 success in 2015 and beyond and to increasing revenue growth rates and margin levels by the end of 2015 as well as capitalizing on our Commercial market opportunity 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,
2014 2013
(unaudited)
Assets
Current assets:
Cash and cash equivalents $ 59,419 $ 19,117
Short-term investments 71,493 15,105
Accounts receivable, net 12,032 12,987
Prepaid expenses and other current assets 2,666 3,268
Deferred tax asset 400 290
Total current assets 146,010 50,767
Property and equipment, net 13,595 10,028
Goodwill 63,779 65,280
Intangible assets, net 23,846 29,490
Deferred commissions 6,094 6,701
Deferred tax asset, less current portion 11,657 10,885
Other 234 294
Total assets $ 265,215 $ 173,445
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 375 $ 741
Accrued liabilities 10,051 13,765
Deferred revenues 59,751 57,417
Total current liabilities 70,177 71,923
Deferred revenues, less current portion 11,350 13,343
Deferred rent, less current portion 2,027 --
Stockholders' equity:
Common stock, $0.001 par value; 50,000 shares authorized; 27,574 and 23,811 shares issued and outstanding as of December 31, 2014 and December 31, 2013, respectively 28 24
Additional paid-in capital 204,065 108,864
Accumulated other comprehensive loss (3,055) (1,401)
Accumulated deficit (19,377) (19,308)
Total stockholders' equity 181,661 88,179
Total liabilities and stockholders' equity $ 265,215 $ 173,445
SCIQUEST, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(in thousands except per share amounts)
Three Months Ended December 31, Year Ended December 31,
2014 2013 2014 2013
(unaudited) (unaudited)
Revenues $ 25,568 $ 25,848 $ 101,932 $ 90,231
Cost of revenues (1)(2) 8,097 7,469 31,497 27,411
Gross profit 17,471 18,379 70,435 62,820
Operating expenses: (1)
Research and development 7,046 7,742 28,307 28,267
Sales and marketing 6,208 7,197 25,617 24,261
General and administrative 3,254 3,587 14,045 13,033
Amortization of intangible assets 759 837 3,154 2,382
Total operating expenses 17,267 19,363 71,123 67,943
Income (loss) from operations 204 (984) (688) (5,123)
Other income, net:
Interest income 115 11 297 61
Other (expense) income, net (99) 10 (147) (48)
Total other income, net 16 21 150 13
Income (loss) before income taxes 220 (963) (538) (5,110)
Income tax benefit (expense) 148 (257) 469 376
Net income (loss) $ 368 $ (1,220) $ (69) $ (4,734)
Other comprehensive loss:
Foreign currency translation adjustments (681) (680) (1,654) (1,286)
Comprehensive loss $ (313) $ (1,900) $ (1,723) $ (6,020)
Net income (loss) per share
Basic $ 0.01 $ (0.05) $ (0.00) $ (0.20)
Diluted $ 0.01 $ (0.05) $ (0.00) $ (0.20)
Weighted average shares outstanding used in computing per share amounts
Basic 27,540 23,759 26,609 23,044
Diluted 27,789 23,759 26,609 23,044
(1) Amounts include stock-based compensation expense, as follows:
Three Months Ended December 31, Year Ended December 31,
2014 2013 2014 2013
(unaudited) (unaudited)
Cost of revenues $ 179 $ 131 $ 712 $ 499
Research and development 132 426 714 1,714
Sales and marketing 379 577 1,491 1,992
General and administrative 827 696 3,272 2,727
$ 1,517 $ 1,830 $ 6,189 $ 6,932
(2) Cost of revenues includes amortization of capitalized software development costs of:
Amortization of capitalized software development costs: $ 912 $ 555 $ 2,934 $ 1,842
Amortization of acquired software: 520 528 2,078 1,580
$ 1,432 $ 1,083 $ 5,012 $ 3,422
SCIQUEST, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Three Months Ended December 31, Year Ended December 31,
2014 2013 2014 2013
(unaudited) (unaudited)
Cash flows from operating activities
Net income (loss) $ 368 $ (1,220) $ (69) $ (4,734)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization 2,897 2,503 10,851 7,963
Loss on disposal of fixed assets -- -- 430 --
Stock-based compensation expense 1,517 1,830 6,189 6,932
Deferred taxes (141) 233 (598) (443)
Changes in operating assets and liabilities, net of effects of acquisitions:
Accounts receivable (3,410) (212) 883 2,497
Prepaid expense and other current assets 181 (1,041) 560 (1,510)
Deferred commissions and other assets (72) (495) 681 290
Accounts payable 218 417 (364) (1,214)
Accrued liabilities 49 3,077 (3,720) 4,170
Deferred revenues 4,860 3,597 532 4,067
Deferred rent 2,027 -- 2,027 --
Net cash provided by operating activities 8,494 8,689 17,402 18,018
Cash flows from investing activities
Business acquisition, net of cash acquired -- (59) -- (25,592)
Addition of capitalized software development costs (1,319) (712) (5,550) (3,654)
Purchase of property and equipment (892) (1,032) (4,196) (2,873)
Purchase of short-term investments (29,993) -- (122,728) (23,525)
Maturities of short-term investments 35,860 125 66,340 38,160
Net cash provided by (used in) investing activities 3,656 (1,678) (66,134) (17,484)
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 279 495 731 2,103
Proceeds from employee stock purchase plan activity 156 170 922 930
Net cash provided by financing activities 435 665 89,086 3,033
Effect of exchange rate change on cash and cash equivalents (16) (17) (52) (56)
Net increase in cash and cash equivalents 12,569 7,659 40,302 3,511
Cash and cash equivalents at beginning of the period 46,850 11,458 19,117 15,606
Cash and cash equivalents at end of the period $ 59,419 $ 19,117 $ 59,419 $ 19,117
RECONCILIATION DATA
(UNAUDITED)
(in thousands except per share amounts)
Reconciliation of Net Income (Loss) to Non-GAAP Net Income: Three Months Ended December 31, Year Ended December 31,
2014 2013 2014 2013
Net income (loss) $ 368 $ (1,220) $ (69) $ (4,734)
Purchase accounting deferred revenue adjustment 54 888 1,365 3,323
Amortization of intangible assets 759 837 3,154 2,382
Amortization of acquired software 520 528 2,078 1,580
Stock-based compensation 1,517 1,830 6,189 6,932
Headquarter relocation costs -- -- 830 --
Acquisition related costs -- 1,346 -- 5,377
Tax effect of adjustments (1,343) (1,482) (5,560) (6,015)
Non-GAAP net income $ 1,875 $ 2,727 $ 7,987 $ 8,845
Non-GAAP net income per share:
Basic $ 0.07 $ 0.11 $ 0.30 $ 0.38
Diluted $ 0.07 $ 0.11 $ 0.30 $ 0.38
Weighted average shares outstanding used in computing per share amounts:
Basic 27,540 23,759 26,609 23,044
Diluted 27,789 24,306 26,995 23,520
Reconciliation of Income (Loss) from Operations to Non-GAAP Income from Operations: Three Months Ended December 31, Year Ended December 31,
2014 2013 2014 2013
Income (loss) from operations $ 204 $ (984) $ (688) $ (5,123)
Purchase accounting deferred revenue adjustment 54 888 1,365 3,323
Amortization of intangible assets 759 837 3,154 2,382
Amortization of acquired software 520 528 2,078 1,580
Stock-based compensation 1,517 1,830 6,189 6,932
Headquarter relocation costs -- -- 830 --
Acquisition related costs -- 1,346 -- 5,377
Non-GAAP income from operations $ 3,054 $ 4,445 $ 12,928 $ 14,471
Reconciliation of Operating Expenses to Non-GAAP Operating Expenses: Three Months Ended December 31, Year Ended December 31,
2014 2013 2014 2013
Operating expenses $ 17,267 $ 19,363 $ 71,123 $ 67,943
Amortization of intangible assets (759) (837) (3,154) (2,382)
Stock-based compensation (1,338) (1,699) (5,477) (6,433)
Headquarter relocation costs -- -- (830) --
Acquisition related costs -- (1,346) -- (5,377)
Non-GAAP operating expenses $ 15,170 $ 15,481 $ 61,662 $ 53,751
Reconciliation of Net Cash Provided by Operating Activities to Adjusted Free Cash Flow: Three Months Ended December 31, Year Ended December 31,
2014 2013 2014 2013
Net cash provided by operating activities $ 8,494 $ 8,689 $ 17,402 $ 18,018
Purchase of property and equipment (892) (1,032) (4,196) (2,873)
Capitalization of software development costs (1,319) (712) (5,550) (3,654)
Free cash flow 6,283 6,945 7,656 11,491
Acquisition related costs -- 521 3,600 2,977
Headquarter relocation costs (41) -- (609) --
Adjusted free cash flow $ 6,242 $ 7,466 $ 10,647 $ 14,468
RECONCILIATION DATA
(UNAUDITED)
(in thousands)
Reconciliation of Revenues to Non-GAAP Revenues: Three Months Ended December 31, Year Ended December 31,
2014 2013 2014 2013
Revenues $ 25,568 $ 25,848 $ 101,932 $ 90,231
Purchase accounting deferred revenue adjustment 54 888 1,365 3,323
Non-GAAP Revenues $ 25,622 $ 26,736 $ 103,297 $ 93,554
Reconciliation of Cost of Revenues to Non-GAAP Cost of Revenues: Three Months Ended December 31, Year Ended December 31,
2014 2013 2014 2013
Cost of revenues $ 8,097 $ 7,469 $ 31,497 $ 27,411
Amortization of acquired software (520) (528) (2,078) (1,580)
Stock-based compensation (179) (131) (712) (499)
Non-GAAP Cost of revenues $ 7,398 $ 6,810 $ 28,707 $ 25,332
Reconciliation of Research and Development to Non-GAAP Research and Development: Three Months Ended December 31, Year Ended December 31,
2014 2013 2014 2013
Research and development $ 7,046 $ 7,742 $ 28,307 $ 28,267
Stock-based compensation (132) (426) (714) (1,714)
Acquisition related costs -- (600) -- (2,400)
Non-GAAP Research and development $ 6,914 $ 6,716 $ 27,593 $ 24,153
Reconciliation of Sales and Marketing to Non-GAAP Sales and Marketing: Three Months Ended December 31, Year Ended December 31,
2014 2013 2014 2013
Sales and marketing $ 6,208 $ 7,197 $ 25,617 $ 24,261
Stock-based compensation (379) (577) (1,491) (1,992)
Acquisition related costs -- (600) -- (2,400)
Non-GAAP Sales and marketing $ 5,829 $ 6,020 $ 24,126 $ 19,869
Reconciliation of General and Administrative to Non-GAAP General and Administrative: Three Months Ended December 31, Year Ended December 31,
2014 2013 2014 2013
General and administrative $ 3,254 $ 3,587 $ 14,045 $ 13,033
Stock-based compensation (827) (696) (3,272) (2,727)
Acquisition related costs -- (146) -- (577)
Headquarter relocation costs -- -- (830) --
Non-GAAP General and administrative $ 2,427 $ 2,745 $ 9,943 $ 9,729
Reconciliation of Amortization of Intangible Assets to Non-GAAP Amortization of Intangible Assets: Three Months Ended December 31, Year Ended December 31,
2014 2013 2014 2013
Amortization of intangible assets $ 759 $ 837 $ 3,154 $ 2,382
Amortization of intangible assets (759) (837) (3,154) (2,382)
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 March 31, 2015 Twelve Months Ended December 31, 2015
Low end of Range High end of Range Low end of Range High end of Range
Revenues $ 25,600 $ 25,900 $ 105,900 $ 109,900
Purchase accounting deferred revenue adjustment 100 100 100 100
Non-GAAP revenues $ 25,700 $ 26,000 $ 106,000 $ 110,000
Reconciliation of (Loss) Earnings per Share Outlook to Non-GAAP Earnings per Share Outlook: Three Months Ended March 31, 2015 Twelve Months Ended December 31, 2015
Low end of Range High end of Range Low end of Range High end of Range
(Loss) Earnings per Share $ (0.02) $ (0.01) $ 0.02 $ 0.06
Purchase accounting deferred revenue adjustment per share 0.00 0.00 0.00 0.00
Amortization of intangible assets per share and acquired software per share 0.05 0.05 0.18 0.18
Stock-based compensation per share 0.06 0.06 0.25 0.25
Tax effect of adjustments per share (0.05) (0.05) (0.16) (0.16)
Non-GAAP earnings per share $ 0.04 $ 0.05 $ 0.29 $ 0.33
Reconciliation of Net Cash Provided by Operating Activities Outlook to Adjusted Free Cash Flow Outlook: Twelve Months Ended December 31, 2015
Low end of Range High end of Range
Net cash provided by operating activities $ 21,500 $ 23,500
Capitalization of software development costs (6,000) (6,000)
Purchase of property and equipment (2,500) (2,500)
Adjusted free cash flow $ 13,000 $ 15,000

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.