SciQuest Announces Second Quarter Financial Results

SciQuest Announces Second Quarter Financial Results

                         Achieves Quarterly Guidance
             Continues to Build Momentum in the Commercial Market
                            Updates 2013 Guidance

CARY, N.C., Aug. 1, 2013 (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 second quarter ended
June 30, 2013.

Stephen Wiehe, President and Chief Executive Officer of SciQuest, said,
"During the second quarter we continued to execute our strategic plan while we
generated results that were at the high end of our quarterly guidance ranges.
Non-GAAP revenue grew 45 percent and non-GAAP earnings per share increased by
50 percent compared to second quarter 2012 levels. Significant wins in the
Commercial market together with the impact of the two acquisitions completed
in the second half of 2012 helped fuel topline performance. In addition, we
drove additional integration progress during the quarter and completed the
vast majority of the work necessary to ensure a successful rollout of our July
software release. As a result, we continued to add new customers such as
Microsoft, The Chicago Cubs and the state of Wisconsin. We are therefore well
positioned to overcome two short-term challenges in the second half of the
year that have caused a moderation in 2013 financial guidance. However, our
future prospects remain strong and our long-term financial targets for growth
and profitability are unchanged."

Second Quarter 2013 Results

SciQuest reported GAAP revenues of $21.2 million for the quarter ended June
30, 2013 compared to $15.2 million in the second quarter of 2012.

GAAP loss from operations in the second quarter of 2013 was $1.1 million
compared to GAAP income from operations of $0.8 million in the second quarter
of 2012. GAAP net loss was $0.5 million in the second quarter of 2013 compared
to GAAP net income of $0.4 million in the same quarter in the prior year. The
primary drivers of the decline from 2012 were the expected impacts of the
SciQuest Canada (formerly known as Upside Software) and Spend Radar
acquisitions.

GAAP basic net loss per share was $0.02 in the second quarter of 2013 based on
22.8 million average basic shares outstanding. GAAP diluted net income per
share in the second quarter of 2012 was $0.02 based on 22.7 million average
diluted shares outstanding.

Non-GAAP revenues^(1) in the second quarter of 2013 were $22.0 million, up 45%
from the prior year.

Non-GAAP income from operations^(2) in the second quarter of 2013 was $3.5
million compared to $2.2 million in the second quarter of 2012. Non-GAAP net
income^(3) in the second quarter of 2013 was $2.1 million compared to $1.4
million in the same quarter in the prior year.

Non-GAAP diluted net income per share^(3) was $0.09 in the second quarter of
2013 based on 23.3 million average diluted shares outstanding. Based on 22.7
million average diluted shares outstanding, non-GAAP diluted net income per
share^(3) in the second quarter of 2012 was $0.06.

Business Outlook

SciQuest is issuing the following guidance for the third quarter and updating
its full year 2013 guidance:

Third quarter 2013

  *GAAP revenues to be between $21.2 million and $21.5 million.
  *GAAP basic net loss per share to be between $0.03 and $0.04.
  *Basic weighted average shares outstanding to be approximately 22.8
    million.
    
  *Non-GAAP revenues^(1) to be between $22.0 million and $22.3 million.
  *Non-GAAP diluted net income per share^(3) to be between $0.08 and $0.09.
  *Diluted weighted average shares outstanding to be approximately 23.4
    million.

Full Year 2013

  *GAAP revenues to be between $84.9 million and $85.5 million.
  *GAAP basic net loss per share to be between $0.11 and $0.13.
  *Basic weighted average shares outstanding to be approximately 22.7
    million.
  *Net cash provided by operating activities to be between $15.8 million and
    $16.3 million.
  *Purchase of property and equipment of approximately $3.5 million,
    capitalization of software development costs of approximately $4.2 million
    and acquisition related cash costs of approximately $2.4 million.
    
  *Non-GAAP revenues^(1) to be between $87.6 million and $88.2 million.
  *Non-GAAP diluted net income per share^(3) to be between $0.33 and $0.35.
  *Diluted weighted average shares outstanding to be approximately 23.2
    million.
  *Adjusted free cash flow^(4) to be between $10.5 million and $11.0 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 and loss from operations excludes the purchase accounting
    deferred revenue adjustment; stock-based compensation expense; acquisition
    related 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; and the amortization of (i) intangible
    assets and (ii) acquired software. Non-GAAP net income includes the
    negative tax effect of these items.
4.Adjusted free cash flow is defined as net cash provided by operating
    activities plus acquisition-related costs, less purchases of (i) property
    and equipment and (ii) capitalization of software development costs.

Conference Call Information
          
What:      SciQuest's second quarter 2013 financial results conference call
When:      Thursday, August 1, 2013
Time:      4:30 p.m. ET
Webcast:   http://investor.sciquest.com (live and replay)
Live Call: (855) 297-9383, domestic
          (708) 290-1311, international
Replay:    (855) 859-2056, domestic
          (404) 537-3406, international
          
Live and replay conference ID code: 19700346

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, such as acquisition related
expenses; (iv) the purchase accounting impact on deferred revenue; 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

With a reputation for deep domain knowledge, a solid customer-driven
portfolio, and industry-leading customer satisfaction, SciQuest (Nasdaq:SQI)
is the largest public provider of cloud-based business automation solutions
for spend management that turn spending into savings. 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.

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

Cautionary Note Regarding Forward-Looking Statements

Any statements in this release that are not historical or current facts are
forward-looking statements, including references to the remainder of 2013,
long-term targets 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 most recent Annual Report on
Form 10-K 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 per share amounts)
                                                         
                                          As of June 30, As of December31,
                                          2013            2012
                                          (unaudited)     
Assets                                                    
Current assets:                                           
Cash and cash equivalents                 $11,097       $15,606
Short-term investments                     35,310         29,740
Accounts receivable, net                   10,598         12,916
Prepaid expenses and other current assets 1,317          1,434
Deferred tax asset                         90             77
Total current assets                      58,412         59,773
Property and equipment, net               8,882          7,093
Goodwill                                  36,553         37,295
Intangible assets, net                    14,426         16,346
Deferred project costs                    6,438          6,962
Deferred tax asset                         13,929         12,682
Other                                     120            173
Total assets                              $138,760      $140,324
Liabilities and Stockholders' Equity                      
Current liabilities:                                      
Accounts payable                          $1,220        $1,864
Accrued liabilities                       7,597          8,771
Deferred revenues                         46,283         47,821
Total current liabilities                 55,100         58,456
Deferred revenues, less current portion   13,468         14,640
Stockholders' equity:                                     
Common stock, $0.001par value;
50,000shares authorized; 22,893 and
22,525shares issued and outstanding as of 23             23
June 30, 2013 and December 31, 2012,
respectively
Additional paid-in capital                87,022         81,894
Accumulated other comprehensive loss       (1,147)        (115)
Accumulated deficit                       (15,706)       (14,574)
Total stockholders' equity                 70,192         67,228
Total liabilities and stockholders' equity $138,760      $140,324


SCIQUEST, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME
(in thousands except per share amounts)
                                                              
                           Three Months Ended June Six Months Ended June 30,
                            30,
                           2013         2012       2013          2012
                           (unaudited)             (unaudited)
                                                              
Revenues                   $21,205    $15,180  $41,870     $29,588
Cost of revenues (1)(2)     6,569       4,409     13,183       8,586
Gross profit               14,636      10,771    28,687       21,002
Operating expenses: (1)                                        
Research and development   6,851       3,134     13,393       6,171
Sales and marketing        5,259       4,009     10,730       8,115
General and administrative 3,089       2,599     5,984        5,171
Amortization of intangible  489         209       943          418
assets
Total operating expenses   15,688      9,951     31,050       19,875
(Loss) income from          (1,052)     820       (2,363)      1,127
operations
Other income (expense),                                        
net:
Interest income            20          32        40           56
Other (expense) income,     (19)        (18)      (45)         (3)
net
Total other income          1           14        (5)          53
(expense), net
(Loss) income before income (1,051)     834       (2,368)      1,180
taxes
Income tax benefit          531         (434)     1,236        (627)
(expense)
Net (loss) income          $(520)     $400     $(1,132)    $553
                                                              
Other comprehensive (loss)                                     
income:
Foreign currency            (708)       --        (1,032)      6
translation adjustments
Comprehensive (loss) income $(1,228)   $400     $(2,164)    $559
                                                              
Net (loss) income per share                                    
Basic                       $(0.02)    $0.02    $(0.05)     $0.02
Diluted                     $(0.02)    $0.02    $(0.05)     $0.02
                                                              
Weighted average shares
outstanding used in                                            
computing per share amounts
Basic                       22,788      22,237    22,677       22,213
Diluted                     22,788      22,676    22,677       22,653
                                                              
(1) Amounts include
stock-based compensation                                       
expense, as follows:
                           Three Months Ended June Six Months Ended June 30,
                            30,
                           2013         2012       2013          2012
                           (unaudited)             (unaudited)
Cost of revenues            $124       $(39)    $244        $82
Research and development   434         258       846          499
Sales and marketing        449         352       882          650
General and administrative 717         570       1,314        1,063
                           $1,724     $1,141   $3,286      $2,294
                                                              
(2) Cost of revenues
includes amortization of                                       
capitalized software
development costs of:
                                                              
Amortization of capitalized $454       $194     $821        $342
software development costs:
Amortization of acquired    325         42         650          84
software:
                           $779       $236     $1,471      $426


SCIQUEST, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
                                                                
                                                   Six Months Ended June 30,
                                                   2013          2012
                                                   (unaudited)
Cash flows from operating activities                             
Net (loss) income                                   $(1,132)    $553
Adjustments to reconcile net (loss) income to net                
cash provided by operating activities:
Depreciation and amortization                      3,431        1,501
Stock-based compensation expense                   3,286        2,294
Deferred taxes                                      (1,260)      515
Changes in operating assets and liabilities:                    
Accounts receivable                                2,216        3,286
Prepaid expense and other current assets           110          (341)
Deferred project costs and other assets            576          (27)
Accounts payable                                   (632)        (102)
Accrued liabilities                                (1,141)      (1,161)
Deferred revenues                                  (2,518)      (123)
Net cash provided by operating activities          2,936        6,395
Cash flows from investing activities                             
Addition of capitalized software development costs (1,996)      (1,323)
Purchase of property and equipment                 (1,666)      (1,529)
Purchase of short-term investments                  (13,925)     (1,200)
Maturities of short-term investments                8,355        8,925
Net cash (used in) provided by investing            (9,232)      4,873
activities
Cash flows from financing activities                             
Proceeds from exercise of common stock options     1,296        266
Proceeds from employee stock purchase plan activity 547          --
Net cash provided by financing activities          1,843        266
Effect of exchange rate change on cash and cash     (56)         6
equivalents
Net (decrease) increase in cash and cash            (4,509)      11,540
equivalents
Cash and cash equivalents at beginning of the       15,606       14,958
period
Cash and cash equivalents at end of the period      $11,097     $26,498


RECONCILIATION DATA
(UNAUDITED)
(in thousands except per share amounts)
                                                                 
Reconciliation of Net (Loss)     Three Months Ended June Six Months Ended June
Income to Non-GAAP Net Income:   30,                    30,
                                2013         2012       2013        2012
Net (loss) income                $(520)     $400     $(1,132)  $553
Purchase accounting deferred     829         --       1,485      --
revenue adjustment
Amortization of intangible       489         209       943        418
assets
Amortization of acquired         325         42        650        84
software
Stock-based compensation         1,724       1,141     3,286      2,294
Acquisition related costs        1,200       --       2,400      --
Tax effect of adjustments        (1,900)     (433)     (3,726)    (921)
Non-GAAP net income              $2,147     $1,359   $3,906    $2,428
                                                                 
Non-GAAP net income per share:                                    
Basic                            $0.09      $0.06    $0.17     $0.11
Diluted                          $0.09      $0.06    $0.17     $0.11
                                                                 
Weighted average shares
outstanding used in computing                                     
per share amounts:
Basic                            22,788      22,237    22,677     22,213
Diluted                          23,276      22,676    23,107     22,653
                                                                 
                                                                 
Reconciliation of (Loss) Income  Three Months Ended June Six Months Ended June
from Operations to Non-GAAP      30,                    30,
Income from Operations:
                                2013         2012       2013        2012
(Loss) income from operations    $(1,052)   $820     $(2,363)  $1,127
Purchase accounting deferred     829         --       1,485      --
revenue adjustment
Amortization of intangible       489         209       943        418
assets
Amortization of acquired         325         42        650        84
software
Stock-based compensation         1,724       1,141     3,286      2,294
Acquisition related costs        1,200       --       2,400      --
Non-GAAP income from operations  $3,515     $2,212   $6,401    $3,923
                                                                 
                                                                 
Reconciliation of Operating      Three Months Ended June Six Months Ended June
Expenses to Non-GAAP Operating   30,                    30,
Expenses:
                                2013         2012       2013        2012
Operating expenses               $15,688    $9,951   $31,050   $19,875
Amortization of intangible       (489)       (209)     (943)      (418)
assets
Stock-based compensation         (1,600)     (1,180)   (3,042)    (2,212)
Acquisition related costs        (1,200)     --       (2,400)    --
Non-GAAP operating expenses      $12,399    $8,562   $24,665   $17,245
                                                                 
                                                                 
Reconciliation of Net Cash       Three Months Ended June Six Months Ended June
Provided by Operating Activities 30,                    30,
to Adjusted Free Cash Flow:
                                2013         2012       2013        2012
Net cash provided by operating   $520       $4,789   $2,936    $6,395
activities
Purchase of property and         (779)       (527)     (1,666)    (1,529)
equipment
Capitalization of software       (917)       (734)     (1,996)    (1,323)
development costs
Free cash flow                   (1,176)     3,528     (726)      3,543
Acquisition-related costs        2,400       --       2,400      --
Adjusted free cash flow          $1,224     $3,528   $1,674    $3,543


RECONCILIATION DATA
(UNAUDITED)
(in thousands)
                                                                
Reconciliation of Revenues to    Three Months Ended June Six Months Ended June
Non-GAAP Revenues:               30,                    30,
                                2013        2012        2013       2012
Revenues                         $21,205   $15,180   $41,870  $29,588
Purchase accounting deferred     829        --        1,485     --
revenue adjustment
Non-GAAP Revenues                $22,034   $15,180   $43,355  $29,588
                                                                
Reconciliation of Cost of        Three Months Ended June Six Months Ended June
Revenues to Non-GAAP Cost of     30,                    30,
Revenues:
                                2013        2012        2013       2012
Cost of revenues                 $6,569    $4,409    $13,183  $8,586
Amortization of acquired         (325)      (42)       (650)     (84)
software
Stock-based compensation         (124)      39         (244)     (82)
Non-GAAP Cost of revenues        $6,120    $4,406    $12,289  $8,420
                                                                
Reconciliation of Research and   Three Months Ended June Six Months Ended June
Development to Non-GAAP Research 30,                    30,
and Development:
                                2013        2012        2013       2012
Research and development         $6,851    $3,134    $13,393  $6,171
Stock-based compensation         (434)      (258)      (846)     (499)
Acquisition related costs        (600)      --        (1,200)   --
Non-GAAP Research and            $5,817    $2,876    $11,347  $5,672
development
                                                                
Reconciliation of Sales and      Three Months Ended June Six Months Ended June
Marketing to Non-GAAP Sales and  30,                    30,
Marketing:
                                2013        2012        2013       2012
Sales and marketing              $5,259    $4,009    $10,730  $8,115
Stock-based compensation         (449)      (352)      (882)     (650)
Acquisition related costs        (600)      --        (1,200)   --
Non-GAAP Sales and marketing     $4,210    $3,657    $8,648   $7,465
                                                                
Reconciliation of General and    Three Months Ended June Six Months Ended June
Administrative to Non-GAAP       30,                    30,
General and Administrative:
                                2013        2012        2013       2012
General and administrative       $3,089    $2,599    $5,984   $5,171
Stock-based compensation         (717)      (570)      (1,314)   (1,063)
Non-GAAP General and             $2,372    $2,029    $4,670   $4,108
administrative
                                                                
Reconciliation of Amortization
of Intangible Assets to Non-GAAP Three Months Ended June Six Months Ended June
Amortization of Intangible       30,                    30,
Assets:
                                2013        2012        2013       2012
Amortization of intangible       $489      $209      $943     $418
assets
Amortization of intangible       (489)      (209)      (943)     (418)
assets
Non-GAAP Amortization of         $--      $--      $--     $--
intangible assets


RECONCILIATION DATA
(UNAUDITED)
(in thousands except per share amounts)
                                                               
                                                               
Reconciliation of Revenue        Three Months Ended     Twelve Months Ended
Outlook to Non-GAAP Revenue      September 30, 2013     December 31, 2013
Outlook:
                                Low end of High end of Low end of High end of
                                 Range      Range       Range      Range
Revenues                         $21,200  $21,500   $84,900  $85,500
Purchase accounting deferred     $800     $800      $2,700   $2,700
revenue adjustment
Non-GAAP revenues                $22,000  $22,300   $87,600  $88,200
                                                               
                                                               
                                                               
Reconciliation of (Loss)
Earnings per Share Outlook to    Three Months Ended     Twelve Months Ended
Non-GAAP Earnings per Share      September 30, 2013     December 31, 2013
Outlook:
                                Low end of High end of Low end of High end of
                                 Range      Range       Range      Range
Loss per Share                   $(0.04)  $(0.03)   $(0.13)  $(0.11)
Purchase accounting deferred     0.04       0.04        0.12       0.12
revenue adjustment per share
Amortization of intangible
assets per share and acquired    0.03       0.03        0.13       0.13
software per share
Stock-based compensation per     0.08       0.08        0.30       0.30
share
Acquisition related costs per    0.05       0.05        0.21       0.21
share
Tax effect of adjustments per    (0.08)     (0.08)      (0.30)     (0.30)
share
Non-GAAP earnings per share      $0.08    $0.09     $0.33    $0.35
                                                               
                                                               
                                                               
Reconciliation of Net Cash
Provided by Operating Activities                       Twelve Months Ended
Outlook to Adjusted Free Cash                           December 31, 2013
Flow Outlook:
                                                     Low end of High end of
                                                        Range      Range
Net cash provided by operating                        $15,800  $16,300
activities
Purchase of property and                              $(3,500) $(3,500)
equipment
Capitalization of software                            $(4,200) $(4,200)
development costs
Acquisition related costs                             $2,400   $2,400
Adjusted free cash flow                               $10,500  $11,000

CONTACT: SciQuest media contact:
         Michelle Perkins
         SciQuest, Inc.
         919-659-2228
         mperkins@sciquest.com
        
         SciQuest Investor contact:
         Jamie Andelman
         SciQuest, Inc.
         919-659-2322
         jandelman@sciquest.com
 
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