SciQuest Reports First Quarter 2003 Results; Recurring Base of Revenues Continues to Grow from Multi-Year Subscription Customers

Business Wire, April 29, 2003

Business Editors/Health/Medical Writers

RESEARCH TRIANGLE PARK, N.C.--(BUSINESS WIRE)--April 29, 2003

Increased Revenues and Reduced Expenses Drive Improved EPS;

Solid Quarter-End Cash Position of $27 Million

SciQuest, Inc. (NASDAQ: SQST) today reported a net loss of $3.7 million, or ($.12) per share, before non-cash and other charges, for the first quarter of 2003, based on pro forma diluted weighted average shares outstanding.

On a GAAP basis, the net loss, including non-cash and other charges, for the first quarter of 2003 was $5.5 million, or ($.19) per share.

"During the first quarter, the SciQuest team made great progress in building the sales pipeline, expanding our market presence among customers, introducing several new software products and reducing expenses," said Stephen J. Wiehe, CEO of SciQuest. "These efforts resulted in simultaneous improvements in revenue and expense performance and position the Company well for future success."

"We continue to execute on a very targeted marketing and sales program designed to enhance lead generation and contract closings. SciQuest is gaining market penetration, in part, because of its vertically focused business model. By building solutions, marketing programs and a streamlined sales force that are focused by vertical competence, SciQuest is aligned to meet the unique procurement and materials management needs of its targeted markets," Wiehe explained.

"We remain confident that our persistence, focus, and long-term customer relationships will ultimately reward our shareholders," Wiehe concluded. "Deep customer relationships in attractive verticals with recurring revenue streams is our formula for maximizing value for our customers and stockholders."

First Quarter Results

Revenues in the first quarter of 2003 consisted of $1.9 million from licenses and other professional services, which is up from $1.7 million in the fourth quarter of 2002 and $1.7 million in the first quarter of 2002.

Gross profit, before non-cash and other charges, in the first quarter of 2003 was $1.2 million, compared to $1.1 million in the fourth quarter of 2002. Gross profit, before non-cash and other charges, was $1.0 million in the first quarter of 2002. Gross margin, before non-cash and other charges, in the first quarter of 2003 was 62%, which compared to 64% in the fourth quarter of 2002 and 62% in the first quarter of 2002. In the first quarter of 2003, gross profit, including non-cash and other charges, was ($120,799) compared to ($144,014) in the fourth quarter of 2002 and $137,472 in the first quarter of 2002.

In the first quarter of 2003, operating expenses, before non-cash and other charges, were $5.0 million, a 14% reduction from $5.8 million in the fourth quarter of 2002. The decrease reflected continuing efforts to control and reallocate resources throughout the organization. In addition to operating expenses in the first quarter of 2003, the Company recorded a restructuring charge of $380,000 related to severance costs for eliminated positions, which is excluded from operating expenses before non-cash and other charges. In the first quarter of 2002, operating expenses, before non-cash and other charges, were $5.0 million. In the first quarter of 2003, operating expenses, including non-cash and other charges, were $5.5 million compared to $8.8 million in the fourth quarter of 2002 and $14.8 in the first quarter of 2002.

The Company's net loss, before non-cash and other charges, for the first quarter of 2003 was $3.7 million, or ($.12) per share, based on 29.5 million pro forma diluted weighted average shares outstanding. In the fourth quarter of 2002, SciQuest reported a net loss, before non-cash and other charges, of $4.6 million, or ($.15) per diluted share. In the first quarter of 2002, SciQuest reported a net loss, before non-cash and other charges, of $3.7 million, or ($.11) per diluted share.

In the first quarter of 2003, the net loss, including non-cash and other charges, was $5.5 million, or ($.19) per share. In the fourth quarter of 2002, the net loss, including non-cash and other charges, was $8.8 million, or ($.30) per share. In the first quarter of 2002, the net loss, including non-cash and other charges, was $52.6 million, or ($1.81) per share, which included the cumulative effect of an accounting change for the impairment of goodwill equal to $38 million, or ($1.32) per share.

Cash and investments at March 31, 2003 equaled $27.2 million.

This release contains financial measures that exclude "non-cash and other charges", which are non-GAAP financial measures. SciQuest management believes that these non-GAAP financial measures provide investors with greater insight to its operating results, including the impact of SciQuest's operating performance on its cash position, by excluding expenses that do not result in cash charges, require cash settlement or are non-recurring. SciQuest management uses these non-GAAP financial measures internally to measure and analyze the company's operating and financial performance. This release contains a reconciliation of these non-GAAP financial measures to SciQuest's GAAP financial statements under the caption "Reconciliation of Pro Forma Earnings and Other Pro Forma Financial Measures to GAAP Financial Statements (Unaudited)."