updated 11/9/2010 4:45:35 AM ET 2010-11-09T09:45:35

CARY, N.C., Nov. 8, 2010 (GLOBE NEWSWIRE) -- SciQuest, Inc. (Nasdaq:SQI), a leading provider of on-demand strategic procurement and supplier enablement solutions, today announced its financial results for the third quarter ended September 30, 2010.

"We are pleased with the company's third quarter performance and strong financial results," said Stephen Wiehe, President and Chief Executive Officer of SciQuest. "During the third quarter, we added a number of new customers across our targeted vertical markets, and renewal and follow-on sales activity at existing customers remained high. SciQuest's ability to continue growing at a solid pace throughout the more challenging economic environment is a result of the compelling return on investment that our customers can realize from using our suite of on-demand eprocurement solutions."

Wiehe added, "Our successful IPO in September was a milestone event that helped to further reinforce SciQuest as a leading eprocurement provider for higher education, public sector, healthcare and life sciences organizations. In addition to raising our profile, our IPO generated proceeds that provide the company with expanded resources to execute our long-term growth strategy."

SciQuest reported total revenue of $10.8 million for the quarter ended September 30, 2010, an increase of 19% compared to revenue of $9.0 million for the comparable period in 2009. 

GAAP operating loss in the third quarter was $4.0 million, compared to an operating loss of $1.3 million in the third quarter of 2009. GAAP net loss was $3.2 million, or ($0.22) per share, in the third quarter of 2010, compared to a net loss of $2.0 million, or ($0.14) per share, in the comparable period in 2009. 

Non-GAAP operating income increased to $2.4 million in the third quarter, excluding stock-based compensation expenses, amortization of intangible assets, a non-recurring management bonus associated with the company's initial public offering and a non-recurring contribution of stock to fund a charitable trust established by the company. Non-GAAP operating income was $2.0 million in the third quarter of 2009, excluding stock-based compensation expenses, amortization of intangible assets and a litigation settlement.  

Non-GAAP net income was $1.5 million, or $0.10 per share, for the third quarter, before dividends on redeemable preferred stock. This compared to non-GAAP net income of $2.0 million, or $0.14 per share, before dividends on redeemable preferred stock in the third quarter of 2009. The year-over-year decrease in non-GAAP net income is the result of realizing a 38% effective tax rate for the third quarter of 2010 compared to no income tax provision for the third quarter of 2009.

On a year-to-date basis, at the end of the third quarter operating cash flow was $2.8 million, compared to an outflow of $0.3 million in the year-ago period. Free cash flow, on a year-to-date basis, was $1.8 million, compared to an outflow of $0.9 million in the year-ago period. Adjusted free cash flow, on a year-to-date basis, was $7.7 million, a significant increase from $2.2 million in the year-ago period. A reconciliation of the most comparable GAAP financial measure to the non-GAAP measure used above is included with the financial tables at the end of this release.

Rudy Howard, Chief Financial Officer of SciQuest, said, "The combination of our subscription-based license model, long-term customer contracts and high renewal rates provides SciQuest with strong visibility in our revenue model. In addition, SciQuest is delivering healthy margins and we believe there is further operating leverage potential as our business scales."

Other Third Quarter and Recent Highlights

  • SciQuest ended the third quarter with 177 customers, an increase from 139 customers at the end of the third quarter of 2009.
  • The company was again included in Software Magazine's annual ranking of the 500 largest software and service providers, the Software 500.  SciQuest was ranked 274 this year, compared to 307 in last year's ranking.

Business Outlook

Based on information available as of November 8, 2010, SciQuest is issuing guidance for the fourth quarter and full year 2010 and for 2011 as follows:

Fourth Quarter 2010: The company expects fourth quarter revenue to be in the range of $10.8 million to $11.0 million and non-GAAP net income per share of $0.04 to $0.05 based on diluted weighted average shares outstanding of 21.1 million shares. We expect non-GAAP net income for all future periods to be determined in a manner consistent with historical practices as set forth in the reconciliation included with the financial tables at the end of this release.

The company expects GAAP net income per share to be in the range of $0.03 to $0.04. GAAP net income per share includes an estimated stock-based compensation expense of approximately $200,000, and amortization of intangible assets of $75,000.

Full Year 2010: The company expects full year 2010 revenue to be in the range of $42.2 million to $42.4 million and non-GAAP net income per share before dividends on redeemable preferred stock to be in the range of $0.31 to $0.32, based on diluted weighted average shares outstanding of approximately 16.5 million shares.

The company expects full year GAAP net income per share before dividends on redeemable preferred stock to be in the range of $0.09 to $0.10. GAAP net income per share includes an estimated stock-based compensation expense of $1.1 million, amortization of intangible assets of $300,000, a non-recurring management bonus associated with the company's initial public offering of $5.9 million, a non-recurring contribution of stock to fund a charitable trust established by the company of $238,000, and a gain in the sale of investments of $1.7 million.

The company expects full year operating cash flow to be in the range of $5.5 to $6.0 million. Free cash flow, which is defined as cash flow from operations less purchases of property and equipment of approximately $0.8 million and capitalization of software development costs of approximately $0.6 million, to be in the range of $4.1 to $4.6 million in 2010. The company expects adjusted free cash flow, which is free cash flow, excluding a non-recurring management bonus associated with the company's initial public offering of $5.9 million, to be in the range of $10.0 to $10.5 million. 

Full Year 2011: The company expects full year 2011 revenue to be in the range of $49.0 million to $50.0 million and non-GAAP net income per share to be in the range of $0.24 to $0.25 based on diluted weighted average shares outstanding of 21.3 million shares.

The company expects full year GAAP net income per share to be in the range of $0.20 to $0.21. GAAP net income per share includes an estimated stock-based compensation expense of $1.4 million and amortization of intangible assets of $0.3 million.

The company expects operating cash flow in 2011 to be in the range of $13.7 to $14.7 million. Free cash flow, which is defined as cash flow from operations less purchases of property and equipment of approximately $1.0 million and capitalization of software development costs of approximately $0.7 million, to be in the range of $12.0 to $13.0 million in 2011. 

Conference Call Information

Non-GAAP Financial Measures

SciQuest provides all information required in accordance with GAAP, but believes evaluating its ongoing operating results may not be as useful if an investor is limited to reviewing only GAAP financial measures. Accordingly, SciQuest presents non-GAAP financial measures in reporting its financial results to provide investors with additional tools to evaluate SciQuest's operating results in a manner that focuses on what SciQuest believes to be its ongoing business operations and what SciQuest uses to evaluate its ongoing operations and for internal planning and forecasting purposes. SciQuest's management does not itself, nor does it suggest that investors should, consider such non-GAAP financial measures in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. SciQuest's management believes it is useful for itself and investors to review, as applicable, both GAAP information that includes: (i) the amortization of acquired intangible assets; (ii) the impact of stock-based compensation; (iii) other significant items, including a non-recurring management bonus associated with the company's initial public offering and a non-recurring contribution of stock to fund a charitable trust established by the company, and (iv) the income tax effect of non-GAAP pre-tax adjustments from the provision for income taxes; and the non-GAAP measures that exclude such information in order to assess the performance of SciQuest's business and for planning and forecasting in subsequent periods. Whenever SciQuest uses such a non-GAAP financial measure, it provides a reconciliation of the non-GAAP financial measure to the most closely applicable GAAP financial measure. Investors are encouraged to review the related GAAP financial measures and the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measure as detailed herein.

About SciQuest

SciQuest (Nasdaq:SQI) provides a leading on-demand strategic procurement and supplier enablement solution that integrates customers with their suppliers to improve procurement of indirect goods and services.  Our on-demand software enables organizations to realize the benefits of strategic procurement by identifying and establishing contracts with preferred suppliers, driving spend to those contracts and promoting process efficiencies through electronic transactions.  Using our managed SciQuest Supplier Network, our customers do business with more than 30,000 unique suppliers and spend billions of dollars annually.  

Our current target markets are higher education, life sciences, healthcare and state and local governments.  We tailor our solution for each of the vertical markets we serve by offering industry-specific functionality, content and supplier connections.  We serve more than 175 customers operating in 16 countries and offer our solution in five languages and 22 currencies.  

SciQuest is a registered trademark of SciQuest, Inc. Other trademarks contained herein remain the property of their respective owners. 

For more information about SciQuest, please visit www.sciQuest.com or call 888-638-7322 in the U.S. or +44 1794 341182 in Europe.

The SciQuest, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=8288

Cautionary Note Regarding Forward-Looking Statements

Any statements in this release that are not historical or current facts are forward-looking statements. These forward-looking statements include references to the return on investment customers can realize, our long-term growth strategy, potential operating leverage and the visibility in our revenue model as well as all statements under the heading "Business Outlook." All forward-looking statements in this release are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performances or achievements expressed or implied by the forward-looking statements. Certain of these risks and uncertainties are described in the "Risk Factors" section of our Registration Statement on Form S-1 and other required reports, as filed with the SEC, which are available free of charge on the SEC's website at http://www.sec.gov or on our website at www.sciquest.com .  Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results. These forward-looking statements speak only as of the date hereof, and we undertake no obligation to update, amend or clarify any forward-looking statement for any reason.

SQI-F

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