10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2014

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-34875

SCIQUEST, INC.

(Exact Name of Registrant as Specified in Its Charter)

Delaware	56-2127592
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)

6501 Weston Parkway, Suite 200

Cary, North Carolina 27513

(Address of Principal Executive Offices, Including Zip Code)

(919) 659-2100

(Registrant’s Telephone Number, Including Area Code)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

(Check one):

Large accelerated filer	¨	Accelerated filer	x
Non-accelerated filer	¨  (Do not check if a smaller reporting company)	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

As of April 30, 2014, 27,433,246 shares of the registrant’s outstanding common stock, $0.001 par value per share, were outstanding.

SCIQUEST, INC.

FORM 10-Q

FOR THE QUARTER ENDED March 31, 2014

TABLE OF CONTENTS

		Pages
	PART I. FINANCIAL INFORMATION
ITEM 1.	CONSOLIDATED FINANCIAL STATEMENTS	2
	Consolidated Balance Sheets as of March 31, 2014 (unaudited) and December 31, 2013	2
	Consolidated Statements of Operations and Comprehensive Loss for the three months ended March 31, 2014 and 2013 (unaudited)	3
	Consolidated Statement of Stockholders’ Equity for the three months ended March 31, 2014 (unaudited)	4
	Consolidated Statements of Cash Flows for the three months ended March 31, 2014 and 2013 (unaudited)	5
	Notes to Consolidated Financial Statements (unaudited)	6
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	22
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	27
ITEM 4.	CONTROLS AND PROCEDURES	27
	PART II. OTHER INFORMATION
ITEM 1.	LEGAL PROCEEDINGS	29
ITEM 1A.	RISK FACTORS	29
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	29
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	29
ITEM 4.	MINE SAFETY DISCLOSURES	29
ITEM 5.	OTHER INFORMATION	29
ITEM 6.	EXHIBITS	30
	SIGNATURES	31

1

PART I. FINANCIAL INFORMATION

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS

SciQuest, Inc.

Consolidated Balance Sheets

(in thousands, except per share amounts)

	As ofMarch 31,2014			As ofDecember 31, 2013
Assets		(unaudited)
Current assets:
Cash and cash equivalents	$	16,067		$	19,117
Short-term investments		15,105			15,105
Accounts receivable, net		9,918			12,987
Prepaid expenses and other current assets		2,450			3,268
Deferred tax asset		306			290
Total current assets		43,846			50,767
Property and equipment, net		10,292			10,028
Goodwill		64,732			65,280
Intangible assets, net		27,962			29,490
Deferred commissions		6,245			6,701
Deferred tax asset, less current portion		10,955			10,885
Other		334			294
Total assets	$	164,366		$	173,445
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	348		$	741
Accrued liabilities		7,220			13,765
Deferred revenues		55,023			57,417
Total current liabilities		62,591			71,923
Deferred revenues, less current portion		12,532			13,343
Commitments and contingencies
Stockholders’ equity:
Common stock, $0.001 par value; 50,000 shares authorized; 23,983 and 23,811 shares issued and outstanding as of March 31, 2014 and December 31, 2013, respectively		24			24
Additional paid-in capital		110,619			108,864
Accumulated other comprehensive loss		(2,158	)		(1,401	)
Accumulated deficit		(19,242	)		(19,308	)
Total stockholders’ equity		89,243			88,179
Total liabilities and stockholders’ equity	$	164,366		$	173,445

The accompanying notes are an integral part of the consolidated financial statements.

2

SciQuest, Inc.

Consolidated Statements of Operations and Comprehensive Loss

(in thousands, except per share amounts)

	Three Months Ended March 31,
	2014			2013
	(unaudited)
Revenues	$	25,407		$	20,665
Cost of revenues		7,670			6,614
Gross profit		17,737			14,051
Operating expenses:
Research and development		6,927			6,542
Sales and marketing		6,960			5,471
General and administrative		3,110			2,895
Amortization of intangible assets		797			454
Total operating expenses		17,794			15,362
Loss from operations		(57	)		(1,311	)
Other (expense) income:
Interest income		6			20
Other (expense) income, net		(9	)		(26	)
Total other (expense) income, net		(3	)		(6	)
Loss before income taxes		(60	)		(1,317	)
Income tax benefit		126			705
Net income (loss)	$	66		$	(612	)
Other comprehensive loss:
Foreign currency translation adjustments		(757	)		(324	)
Comprehensive loss	$	(691	)	$	(936	)
Net income (loss) per share:
Basic	$	0.00		$	(0.03	)
Diluted	$	0.00		$	(0.03	)
Weighted average shares outstanding used in computing per share amounts:
Basic		23,908			22,564
Diluted		24,499			22,564

The accompanying notes are an integral part of the consolidated financial statements.

3

SciQuest, Inc.

Consolidated Statement of Stockholders’ Equity

(unaudited)

(in thousands)

	Common Stock				Additional Paid-InCapital		Accumulated OtherComprehensiveLoss			AccumulatedDeficit			TotalStockholders’Equity
	Shares		Amount
Balance at December 31, 2013		23,811	$	24	$	108,864	$	(1,401	)	$	(19,308	)	$	88,179
Issuance of stock in connection with stock option exercises		40		—		292		—			—			292
Issuance of stock in connection with business acquisition		132		—		—		—			—			—
Stock-based compensation		—		—		1,463		—			—			1,463
Foreign currency translation adjustments		—		—		—		(757	)		—			(757	)
Net income		—		—		—		—			66			66
Balance at March 31, 2014		23,983	$	24	$	110,619	$	(2,158	)	$	(19,242	)	$	89,243

The accompanying notes are an integral part of the consolidated financial statements.

4

SciQuest, Inc.

Consolidated Statements of Cash Flows

(in thousands)

	Three Months Ended March 31,
	2014			2013
	(unaudited)
Cash flows from operating activities
Net income (loss)	$	66		$	(612	)
Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities:
Depreciation and amortization		2,485			1,620
Stock-based compensation expense		1,463			1,562
Deferred taxes		(86	)		(636	)
Changes in operating assets and liabilities:
Accounts receivable		3,017			4,334
Prepaid expenses and other current assets		805			(665	)
Deferred commissions and other assets		418			211
Accounts payable		(392	)		(719	)
Accrued liabilities		(6,521	)		(844	)
Deferred revenues		(3,101	)		(1,835	)
Net cash (used in) provided by operating activities		(1,846	)		2,416
Cash flows from investing activities
Addition of capitalized software development costs		(1,308	)		(1,079	)
Purchase of property and equipment		(174	)		(887	)
Purchase of available-for-sale short-term investments		—			(12,425	)
Maturities of available-for-sale short-term investments		—			6,560
Net cash used in investing activities		(1,482	)		(7,831	)
Cash flows from financing activities
Proceeds from exercise of common stock options		292			340
Net cash provided by financing activities		292			340
Effect of exchange rate changes on cash and cash equivalents		(14	)		(10	)
Net decrease in cash and cash equivalents		(3,050	)		(5,085	)
Cash and cash equivalents at beginning of period		19,117			15,606
Cash and cash equivalents at end of period	$	16,067		$	10,521

The accompanying notes are an integral part of the consolidated financial statements.

5

SciQuest, Inc.

Notes to Consolidated Financial Statements

(unaudited)

(in thousands, except per share amounts)

1. Description of Business

SciQuest, Inc. (the Company) provides leading cloud-based business automation solutions for spend management. The Company’s solutions include procurement solutions that automate the source-to-settle process, spend analysis solutions that cleanse and classify spend data to drive and measure cost savings, supplier management solutions that facilitate our customers’ interactions with their suppliers, contract lifecycle management solutions that automate the complete contract lifecycle from contract creation through maintenance and accounts payable solutions that automate the invoice processing and vendor payment processes. The Company’s solutions are designed to meet customer needs to reduce costs, simplify and improve visibility into key business processes, further strategic initiatives, enhance control over spending decisions and improve compliance and risk management. By simplifying and streamlining cumbersome, and often manual, processes and creating a comprehensive view of spending and compliance across the organization, organizations can identify and capitalize on opportunities to reduce costs by gaining control over suppliers, contracts, purchases and payments. The Company is headquartered in Cary, North Carolina.

2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the three months ended March 31, 2014 are not necessarily indicative of the results to be expected for the fiscal year or any future period. The balance sheet at December 31, 2013 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by GAAP for complete financial statements. For further information, refer to the financial statements and footnotes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2013, which was filed with the Securities and Exchange Commission on February 21, 2014.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ materially from those estimates.

Revenue Recognition

The Company primarily derives its revenues from subscription fees and related services, permitting customers to access and utilize the Company’s cloud-based business automation solutions for spend management. Customers may also purchase a perpetual license for certain software products. Revenue is recognized when there is persuasive evidence of an arrangement, the service has been provided or delivered to the customer, the collection of the fee is probable and the amount of the fee to be paid by the customer is fixed or determinable. The Company’s arrangements do not contain general rights of return.

Because customers do not have the right to take possession of the Software-as-a-Service (“SaaS”) based software, these arrangements are considered service contracts and are not within the scope of Industry Topic 985, Software. The Company’s contractual agreements generally contain multiple service elements and deliverables, for which we follow the guidance provided in Accounting Standards Codification (“ASC”) 605-25, Revenue Recognition for Multiple-Element Arrangements. These elements include access to the hosted software, implementation or data classification services and, on a limited basis, perpetual licenses for certain software products and related maintenance and support. The Company evaluates each element in a multiple-element arrangement to determine whether it represents a separate unit of accounting. An element constitutes a separate unit of accounting when the delivered item has standalone value and delivery of the undelivered element is probable and within the Company’s control.

6

SciQuest, Inc.

Notes to Consolidated Financial Statements

(unaudited)

(in thousands, except per share amounts)

For arrangements in which elements do have stand-alone value, the Company allocates revenue to each element in the arrangement based on a selling price hierarchy. The selling price for a deliverable is based on vendor-specific objective evidence of selling price (“VSOE”), if available, third-party evidence of selling price (“TPE”), if VSOE is not available, or estimated selling price (“ESP”) if neither VSOE nor TPE is available. Because the Company has neither VSOE nor TPE for its deliverables, the allocation of revenue is based on ESP.

The Company’s process for determining ESP for its deliverables considers multiple factors that may vary depending upon the facts and circumstances related to each deliverable. Key factors considered in developing ESP related to deliverables include established pricing and approval policies, type and size of customer, number of products purchased, and historical transactions. The Company regularly reviews ESP and maintains internal controls over the establishment and updates of these estimates.

The Company evaluates its SaaS subscription agreements and considers whether the associated services have standalone value to its customers. For arrangements when implementation services do not have standalone value to the customer, licenses and related implementation services are considered a single unit of accounting. Accordingly, the consideration allocated to licenses and services is recognized ratably over the term of the subscription agreement, beginning with the later of the start date specified in the subscription agreement, or the date access to the software is provided to the customer, provided all other revenue recognition criteria have been met. Fees for professional services that are contingent upon future performance are recognized ratably over the remaining subscription term once the performance milestones have been met. Alternatively, when services have standalone value to the customer, licenses and related services are considered separate units of accounting. For separate units of accounting, services are recognized as the services are performed and delivered to the customer and licenses are recognized over the term of the subscription arrangement, beginning with the later of the start date specified in the subscription agreement, or the date access to the software is provided to the customer, provided all other revenue recognition criteria have been met.

Revenue from sales of certain of the Company’s perpetual software products and related implementation services and maintenance is recognized as a single unit of accounting since VSOE of fair value does not exist for the contractual elements. Accordingly, revenue for all elements in these arrangements is recognized over the contractual maintenance term, which is typically one year.

The Company recognizes revenue from any professional services that are sold separately as the services are performed.

Deferred revenue primarily consists of billings or payments received in advance of revenue recognition from the Company’s software and services described above. For multi-year subscription agreements, the Company generally invoices its customers in annual installments. Accordingly, the deferred revenue balance does not represent the total contract value of these multi-year subscription agreements. The Company’s services, such as implementation, are generally sold in conjunction with subscription agreements. These services are recognized ratably over the remaining term of the subscription agreement once any contingent performance milestones have been satisfied. The portion of deferred revenue that the Company anticipates will be recognized after the succeeding 12-month period is recorded as non-current deferred revenue and the remaining portion is recorded as current deferred revenue.

Cost of Revenues

Cost of revenues primarily consists of costs related to hosting the Company’s subscription software services, compensation and related expenses for implementation services, supplier enablement services, customer support staff and client partners, amortization of capitalized software development costs and allocated fixed asset depreciation and facilities costs. Cost of revenues is expensed as incurred.

Deferred Commissions

The Company capitalizes sales commission costs that are directly related to the execution of its subscription agreements. The commissions are deferred and amortized over the contractual term of the related non-cancelable subscription agreement. The Company believes this is the appropriate method of accounting, as the commission costs are so closely related to the revenues from the subscription agreements that they should be recorded as an asset and charged to expense over the same period that the subscription revenues are recognized. Amortization of deferred commissions is included in sales and marketing expense in the accompanying consolidated statements of operations and comprehensive (loss) income. The deferred commissions are reflected in the accompanying consolidated balance sheets.

7

SciQuest, Inc.

Notes to Consolidated Financial Statements

(unaudited)

(in thousands, except per share amounts)

Cash and Cash Equivalents

The Company considers all highly liquid debt investments with an original maturity of three months or less at the date of purchase to be cash equivalents. The Company maintains cash balances at financial institutions that may at times exceed federally insured limits. The Company maintains this cash at reputable financial institutions and, as a result, believes credit risk related to its cash is minimal.

Short-Term Investments

Management determines the appropriate classification of investments at the time of purchase and evaluates such determination as of each balance sheet date. The Company’s investments were classified as available-for-sale securities and are stated at fair value at March 31, 2014 and December 31, 2013. Realized gains and losses are included in other (expense) income based on the specific identification method. There were no realized gains or losses for the three months ended March 31, 2014 or 2013. Net unrealized gains and losses on available-for-sale securities are reported as a component of other comprehensive (loss) income, net of tax. As of March 31, 2014 and December 31, 2013, there were no unrealized gains or losses on available-for-sale securities. The Company regularly monitors and evaluates the fair value of its investments to identify other-than-temporary declines in value. Management believes no such declines in value existed at March 31, 2014 or December 31, 2013.

Accounts Receivable

The Company assesses the need for an allowance for doubtful accounts based on estimates of probable credit losses. This assessment is based on several factors including aging of customer accounts, known customer specific risks, historical experience and existing economic conditions. The Company generally does not require collateral for receivable balances. Accounts would be charged against the allowance after all means of collection were exhausted and recovery was considered remote. Based on management’s analysis of its outstanding accounts receivable, the Company recorded an allowance of $421 and $556 at March 31, 2014 and December 31, 2013, respectively.

Property and Equipment

Property and equipment are recorded at cost and depreciated using the straight-line method over their estimated useful lives, which are usually seven years for furniture and three to five years for computer software and equipment. Leasehold improvements are amortized over the shorter of the estimated useful lives of the assets or the remainder of the lease term. Costs for repairs and maintenance are expensed as incurred. Upon retirement or sale, the cost of the disposed assets and the related accumulated depreciation are removed from the accounts, and any resulting gain or loss is credited or charged to operations.

Software Development Costs

The Company incurs certain costs associated with the development of its cloud-based solution, which are accounted for as internal-use software. Certain qualifying costs incurred during the application development phase are capitalized and amortized to expense over the estimated useful life of the related applications, which is generally three years.

Although the Company’s development efforts are primarily focused on its hosted, cloud-based solution, the Company also incurs costs in connection with the development of certain of its software products licensed to customers on a perpetual basis, which are accounted for as costs of software to be sold, leased or otherwise marketed. Under this guidance, capitalization of software development costs begins upon the establishment of technological feasibility (based on a working model approach), subject to net realizable value considerations. To date, the dates between achieving technological feasibility and the general availability of such software have substantially coincided; therefore, software development costs for these products that would qualify for capitalization have been immaterial. Accordingly, the Company has not capitalized any software development costs related to these software products and has charged all such costs to research and development expense.

Goodwill

Goodwill represents the excess of the cost of an acquired entity over the net fair value of the identifiable assets acquired and liabilities assumed. Goodwill is not amortized, but rather is assessed for impairment at least annually. Additionally, the Company would also review the carrying value of goodwill whenever events or changes in circumstances indicated that its carrying amount may not be recoverable. The Company has concluded that it has one reporting unit for purposes of its annual goodwill impairment testing. To assess goodwill impairment, the first step is to identify if a potential impairment exists by comparing the fair value of a reporting unit

8

SciQuest, Inc.

Notes to Consolidated Financial Statements

(unaudited)

(in thousands, except per share amounts)

with its carrying amount, including goodwill. If the fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is not considered to have a potential impairment and the second step of the impairment test is not necessary. The results of our most recent annual assessment did not indicate any impairment of goodwill, and as such the second step of the impairment test was not required. Additionally, we do not believe there have been any triggering events that would result in potential impairment of goodwill as of March 31, 2014.

Stock-Based Compensation

Stock-based payments to employees, including grants of employee stock options, are recognized in the consolidated statement of operations and comprehensive (loss) income based on their fair values. Stock-based compensation costs are measured at the grant date based on the fair value of the award and are recognized as expense on a straight-line basis over the requisite service period, which is the vesting period.

Stock-based compensation costs are based on the fair value of the underlying option calculated using the Black-Scholes option-pricing model on the date of grant for stock options. Determining the appropriate fair value model and related assumptions requires judgment, including estimating stock price volatility, forfeiture rates and expected term. The Company uses the historical volatility of its stock price to calculate the expected volatility. Prior to the second half of 2013, the expected volatility rates were estimated based on the actual volatility of comparable public companies over the expected term. The expected term for the three months ended March 31, 2014 and 2013, represents the average time that options that vest are expected to be outstanding based on the mid-point between the vesting date and the end of the contractual term of the award. The Company has not paid dividends and does not anticipate paying a cash dividend in the foreseeable future and, accordingly, uses an expected dividend yield of zero. The risk-free interest rate is based on the rate of U.S. Treasury securities with maturities consistent with the estimated expected term of the awards.

Foreign Currency and Operations

The reporting currency for all periods presented is the U.S. dollar. The functional currency for the Company’s foreign subsidiaries is generally their local currency. The translation of each subsidiary’s financial statements into U.S. dollars is performed for assets and liabilities using exchange rates in effect at the balance sheet date and for revenue and expense accounts using an average exchange rate during the period. The resulting translation adjustments are recognized in accumulated other comprehensive loss, a separate component of stockholders’ equity. Also included in accumulated other comprehensive loss is the foreign translation loss adjustment of $2,763 and $1,729 at March 31, 2014 and December 31, 2013, respectively, related to the intercompany balance with the Company’s Canadian subsidiary not expected to be settled in the foreseeable future. Realized foreign currency transaction gains and losses are included in other income (expense) in the consolidated statements of operations and comprehensive (loss) income.

Segment Data

The Company manages its operations on a consolidated basis for purposes of assessing performance and making operating decisions. Accordingly, the Company has determined that it has a single reportable segment.

Income (Loss) Per Share

Basic net income (loss) per share is computed by dividing net income (loss) by the weighted-average number of shares of common stock outstanding for the period. Outstanding unvested restricted stock purchased by employees is subject to repurchase by the Company and therefore is not included in the calculation of the weighted-average shares outstanding until vested. Diluted net income per share is computed giving effect to all potentially dilutive common stock, including options and restricted stock. The dilutive effect of outstanding awards is reflected in diluted earnings per share by application of the treasury stock method.

9

SciQuest, Inc.

Notes to Consolidated Financial Statements

(unaudited)

(in thousands, except per share amounts)

The following summarizes the calculation of basic and diluted net income (loss) per share:

	Three Months Ended March 31,
	2014		2013
Basic:
Net income (loss)	$	66	$	(612	)
Weighted average common shares, basic		23,908		22,564
Basic net income (loss) per share	$	0.00	$	(0.03	)
Diluted:
Net income (loss)	$	66	$	(612	)
Weighted average common shares, basic		23,908		22,564
Dilutive effect of:
Options to purchase common stock		569		—
Nonvested shares of restricted stock		22		—
Weighted average common shares, diluted		24,499		22,564
Diluted net income (loss) per share	$	0.00	$	(0.03	)

The following equity instruments have been excluded from diluted net income (loss) per common share as they would be anti-dilutive.

	Three Months Ended March 31,
	2014		2013
Common stock options		92		84

For the three months ended March 31, 2013, the Company incurred net losses and, therefore, the effect of the Company’s outstanding stock options, nonvested restricted stock and common stock issuable pursuant to the employee stock purchase plan was not included in the calculation of diluted net loss per share as the effect would be anti-dilutive. For the three months ended March 31, 2013, diluted net loss per share excluded the impact of 335 outstanding stock options, 37 nonvested shares of restricted stock, and 3 shares of common stock issuable pursuant to the employee stock purchase plan.

Income Taxes

Deferred income taxes are provided using tax rates enacted for periods of expected reversal on all temporary differences. Temporary differences relate to differences between the book and tax basis of assets and liabilities, principally intangible assets, property and equipment, deferred subscription revenues, accruals and stock-based compensation. Valuation allowances are established to reduce deferred tax assets to the amount that will more likely than not be realized. To the extent that a determination is made to establish or adjust a valuation allowance, the expense or benefit is recorded in the period in which the determination is made.

Judgment is required in determining the provision for income taxes. Additionally, the income tax provision is based on calculations and assumptions that are subject to examination by many different tax authorities and to changes in tax law and rates in many jurisdictions. The Company would adjust its income tax provision in the period in which it becomes probable that actual results differ from management estimates.

The Company accounts for uncertain tax positions by recognizing and measuring tax benefits taken or expected to be taken on a tax return. A tax benefit from an uncertain position may be recognized only if it is more likely than not that the position is sustainable, based solely on its technical merits and consideration of the relevant taxing authority’s widely understood administrative practices and precedents. If the recognition threshold is met, only the portion of the tax benefit that is more likely than not to be realized upon settlement with a taxing authority is recorded. The tax benefit that is not recorded is considered an unrecognized tax benefit. Interest and penalties related to uncertain tax positions are recognized as a component of income tax expense.

Recent Accounting Pronouncements

In July 2013, the FASB issued a revised accounting standard, which clarifies that an unrecognized tax benefit, or a portion of an unrecognized tax benefit, should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward if such settlement is required or expected in the event the uncertain tax

10

SciQuest, Inc.

Notes to Consolidated Financial Statements

(unaudited)

(in thousands, except per share amounts)

position is disallowed. In situations where a net operating loss carryforward, a similar tax loss, or a tax credit carryforward is not available at the reporting date under the tax law of the applicable jurisdiction or the tax law of the jurisdiction does not require, and the entity does not intend to use, the deferred tax asset for such purpose, the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets. This standard is effective prospectively for fiscal years, and interim periods within those years, beginning after December 15, 2013. Retrospective application is permitted. The Company adopted this guidance on January 1, 2014. The adoption of this guidance did not have a material impact on the Company’s financial position, results of operations, or cash flows.

3. Business Combinations

CombineNet

On August 30, 2013, the Company acquired all of the outstanding capital stock of CombineNet, Inc. (“CombineNet”), a leading provider of advanced sourcing software. The acquisition of CombineNet expands the Company’s strategic sourcing footprint with an advanced, cloud-based tool that improves procurement decisions for spend categories that are typically beyond the capabilities of traditional eSourcing software.

The purchase price consisted of approximately $26,575 in cash and 820 shares of the Company’s common stock at a fair value of $17,055. The purchase price was subject to an adjustment based on the closing amount of working capital of CombineNet and accordingly as a result of this adjustment, the Company paid an additional $59 in cash and issued approximately 1 shares of common stock at a fair value of $38. The purchase price included $2,465 in cash and 76 shares of common stock that were deposited in escrow to satisfy potential indemnification claims. The acquisition was accounted for under the purchase method of accounting. The operating results of CombineNet are included in the accompanying consolidated financial statements from the date of acquisition.

The purchase consideration consisted of the following:

Cash	$	26,634
Fair value of common stock		17,093
Total purchase consideration		43,727
Cash acquired		1,042
Net purchase consideration	$	42,685

The purchase price was allocated to the tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values as of the acquisition date. Acquired technology, trademarks and the covenant not to compete are amortized on a straight-line basis over their respective estimated useful lives. Acquired customer relationships are amortized over a fifteen-year estimated life in a pattern consistent with which the economic benefit is expected to be realized. The excess of the purchase price over the net tangible and identifiable intangible assets acquired was recorded as goodwill, which is not deductible for tax purposes. This asset is attributed to a trained workforce and buyer-specific value resulting from synergies that are not included in the fair values of assets.

11

SciQuest, Inc.

Notes to Consolidated Financial Statements

(unaudited)

(in thousands, except per share amounts)

The allocation of the purchase price as of the acquisition date was as follows:

	EstimatedUseful Life		EstimatedFair Value
Accounts receivable			$	2,679
Prepaid expenses and other current assets				334
Property and equipment				464
Deferred project costs				121
Deferred tax assets				5,323
Other assets				30
Covenant not to compete		2 years		100
Trademarks		3 years		300
Acquired technology		7 years		4,100
Customer relationships		15 years		13,000
Goodwill				28,908
Accounts payable				(98	)
Accrued expenses				(786	)
Deferred tax liability				(7,350	)
Deferred revenues				(4,440	)
Total purchase consideration			$	42,685

The measurement period for the acquisition purchase accounting was closed December 31, 2013.

The following unaudited pro forma consolidated results of operations for the three months ended March 31, 2013 assume that the CombineNet acquisition occurred at the beginning of 2012. The unaudited pro forma information combines the historical results for the Company with the historical results for CombineNet for the same period. The unaudited pro forma financial information includes amortization of acquired intangible assets of $569 and includes the fair value adjustment for deferred revenue of $16 for the three months ended March 31, 2013.

The following unaudited pro forma information is not intended to be indicative of future operating results.

	Three Months EndedMarch 31, 2013
Pro forma revenue	$	24,053
Pro forma net loss	$	(750	)
Pro forma net loss per share, basic	$	(0.03	)
Pro forma net loss per share, diluted	$	(0.03	)

Spend Radar

On October 1, 2012, the Company completed the acquisition of substantially all of the assets of Spend Radar LLC (“Spend Radar”), a leading provider of spend analysis solutions. The acquisition of Spend Radar added cloud-based software for cleansing and classifying spend data to drive and measure cost savings to the Company’s existing business automation solutions for spend management.

The purchase price consisted of $8,000 in cash and 113 shares of the Company’s common stock at a fair value of $2,087. The purchase agreement also contained an earnout provision for up to $6,000 in cash and 85 shares of the Company’s common stock based on the successful achievement of certain performance targets and continued employment with the Company from the closing date to December 31, 2013. The performance conditions for Q4 2012 and Q1 2013 were met and the Company paid $2,400 and issued 34 shares of common stock on April 29, 2013. Additionally, the performance conditions for Q2, Q3 and Q4 2013 were met and the Company paid $3,600 on January 31, 2014 and issued 51 shares of common stock on February 3, 2014. The cash earn-out was recognized as compensation expense in the consolidated statement of operations and comprehensive (loss) income in the period in which it was earned. The fair value of the shares under the stock earn-out was recognized as stock-based compensation expense in the consolidated statement of operations and comprehensive (loss) income over the requisite service period of the award. During the three

12

SciQuest, Inc.

Notes to Consolidated Financial Statements

(unaudited)

(in thousands, except per share amounts)

months ended March 31, 2013, the Company recognized compensation expense of $1,200 and stock-based compensation expense of $313 related to this earn-out arrangement.

The acquisition was accounted for under the purchase method of accounting. The operating results of Spend Radar are included in the accompanying consolidated financial statements from the date of acquisition.

The purchase consideration consisted of the following:

Cash	$	8,000
Fair value of common stock		2,087
Total purchase consideration		10,087
Cash acquired		259
Net purchase consideration	$	9,828

The purchase price was allocated to the tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values as of the acquisition date. Acquired technology, trademarks and the covenant not to compete are amortized on a straight-line basis over their respective estimated useful lives. Acquired customer relationships are amortized over a five-year estimated life in a pattern consistent with which the economic benefit is expected to be realized. The excess of the purchase price over the net tangible and identifiable intangible assets acquired was recorded as goodwill, which is deductible for tax purposes. This asset is attributed to a trained workforce and buyer-specific value resulting from synergies that are not included in the fair values of assets.

The allocation of the purchase price as of the acquisition date was as follows:

	Estimated Useful Life		Estimated Fair Value
Accounts receivable			$	634
Prepaid expenses and other current assets				100
Property and equipment				147
Covenant not to compete		5 years		203
Trademarks		5 years		566
Acquired technology		7 years		2,693
Customer relationships		5 years		1,338
Goodwill				5,682
Accrued expenses				(305	)
Deferred revenues				(1,230	)
Total purchase consideration			$	9,828

The measurement period for the acquisition purchase accounting was closed December 31, 2012.

Upside Software

On August 1, 2012, the Company completed the acquisition of substantially all of the assets of Upside Software, Inc. (“Upside”), a privately-owned Canadian corporation that provides contract lifecycle management solutions. The acquisition of Upside added a contract lifecycle management solution, which includes collaborative contract creation and maintenance technology, to the Company’s existing business automation solutions for spend management.

The purchase price consisted of $22,447 in cash. The acquisition was accounted for under the purchase method of accounting. The operating results of Upside are included in the accompanying consolidated financial statements from the date of acquisition.

The purchase price was allocated to the tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values as of the acquisition date. Acquired technology, trademarks and the covenant not to compete are amortized on a straight-line basis over their respective estimated useful lives. Acquired customer relationships are amortized over a ten-year estimated life in a pattern consistent with which the economic benefit is expected to be realized. The excess of the purchase price over the net

13

SciQuest, Inc.

Notes to Consolidated Financial Statements

(unaudited)

(in thousands, except per share amounts)

tangible and identifiable intangible assets acquired was recorded as goodwill which is deductible for tax purposes. This asset is attributed to a trained workforce and buyer-specific value resulting from synergies that are not included in the fair values of assets.

The allocation of the purchase price as of the acquisition date was as follows:

	Estimated Useful Life		Estimated Fair Value
Accounts receivable			$	2,096
Prepaid expenses and other current assets				230
Property and equipment				478
Covenant not to compete		5 years		30
Trademarks		5 years		263
Acquired technology		7 years		4,064
Customer relationships		10 years		3,594
Goodwill				15,927
Accrued expenses				(530	)
Deferred revenues				(3,705	)
Total purchase consideration			$	22,447

The measurement period for the acquisition purchase accounting was closed December 31, 2012.

AECsoft

On December 21, 2010, the Company entered into a Stock Purchase Agreement to acquire all of the issued and outstanding shares of capital stock of AECsoft USA, Inc., a Texas corporation, and AEC Global (Shanghai) Co., Ltd., a Chinese corporation (collectively, “AECsoft”), which together are a leading provider of supplier management and sourcing technology.

The Company completed the acquisition of AECsoft, USA, Inc. on January 1, 2011 and the acquisition of AEC Global (Shanghai) Co., Ltd. on March 31, 2011. The acquisition of AECsoft added comprehensive supplier management, sourcing and compliance reporting to the Company’s existing business automation solutions for spend management.

The total purchase price of $13,795 consisted of $9,256 in cash and 351 shares of the Company’s common stock at a fair value of $4,539. The issuance of 25 of these shares, with an estimated fair value of $300, was subject to successful completion of certain performance targets under an earn-out arrangement with a former shareholder of AECsoft. Additionally, 300 shares of the Company’s common stock were issuable under an earn-out arrangement with the other former shareholders of AECsoft, upon the successful achievement of performance conditions over three fiscal years, including continued employment with the Company. The performance conditions for 2012 and 2011 were met in full, and the Company issued 122 shares of common stock on March 20, 2013 and April 14, 2012, respectively. The performance conditions for 2013 were met in full, and the Company issued 81 shares of common stock on February 5, 2014. The fair value of these shares was recognized as stock-based compensation expense in the consolidated statement of operations and comprehensive (loss) income over the requisite service period of the award. During the three months ended March 31, 2013, the Company recognized stock-based compensation expense of $244 related to this earn-out arrangement.

4. Cash Equivalents and Short-Term Investments

The components of cash equivalents and short-term investments at March 31, 2014 and December 31, 2013 are as follows:

	March 31, 2014				December 31, 2013
	Cost		Fair Market Value		Cost		Fair Market Value
Cash equivalents:
Money market accounts	$	8,354	$	8,354	$	5,349	$	5,349
Short-term investments:
Variable rate demand notes		15,105		15,105		15,105		15,105
Total	$	23,459	$	23,459	$	20,454	$	20,454

14

SciQuest, Inc.

Notes to Consolidated Financial Statements

(unaudited)

(in thousands, except per share amounts)

There were no unrealized gains or losses as of March 31, 2014 or December 31, 2013.

5. Fair Value Measurements

Under GAAP, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., “the exit price”) in an orderly transaction between market participants at the measurement date. GAAP also establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are obtained from independent sources and can be validated by a third party, whereas unobservable inputs reflect assumptions regarding what a third party would use in pricing an asset or liability. The fair value hierarchy is broken down into three levels based on the reliability of inputs as follows:

— Level 1 – Valuations based on quoted prices in active markets for identical instruments that the Company is able to access. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these products does not entail a significant degree of judgment.

— Level 2 – Valuations based on quoted prices in active markets for instruments that are similar, or quoted prices in markets that are not active for identical or similar instruments, and model-derived valuations in which all significant input and significant value drivers are observable in active markets.

— Level 3 – Valuations based on inputs that are unobservable and significant to the overall fair value measurement.

The financial assets for which the Company performs recurring fair value remeasurements are cash equivalents and short-term investments.

As of March 31, 2014 and December 31, 2013, the Company had cash equivalents of $8,354 and $5,349, respectively, which consist of money market accounts. As of March 31, 2014 and December 31, 2013, the Company had short-term investments of $15,105 and $15,105, respectively, which consist of variable rate demand notes that are invested in corporate and municipal bonds. These variable rate demand notes have final maturities between 2017 and 2042, but are puttable by the Company at any time with seven days notice. These cash equivalents and short-term investments are classified within Level 1 of the fair value hierarchy since they are valued using quoted market prices. As of March 31, 2014 and December 31, 2013, the Company did not have any financial assets or liabilities with observable inputs not quoted on active markets (Level 2), or without observable market values that would require a high level of judgment to determine fair value (Level 3).

The fair value measurements of the Company’s financial assets at March 31, 2014 are as follows:

	Total		Level 1		Level 2		Level 3
Cash equivalents	$	8,354	$	8,354	$	—	$	—
Short-term investments		15,105		15,105		—		—
Total	$	23,459	$	23,459	$	—	$	—

The fair value measurements of the Company’s financial assets at December 31, 2013 are as follows:

	Total		Level 1		Level 2		Level 3
Cash equivalents	$	5,349	$	5,349	$	—	$	—
Short-term investments		15,105		15,105		—		—
Total	$	20,454	$	20,454	$	—	$	—

15

SciQuest, Inc.

Notes to Consolidated Financial Statements

(unaudited)

(in thousands, except per share amounts)

6. Property and Equipment

Property and equipment consist of the following as of March 31, 2014 and December 31, 2013:

	March 31, 2014			December 31, 2013
Furniture and fixtures	$	1,281		$	1,284
Computer software and equipment		18,455			17,036
Leasehold improvements		714			715
Total costs		20,450			19,035
Less accumulated depreciation and amortization		(10,158	)		(9,007	)
Property and equipment, net	$	10,292		$	10,028

Depreciation expense related to property and equipment (excluding capitalized internal-use software) was $610 and $474 for the three months ended March 31, 2014 and 2013, respectively.

Computer software and equipment includes capitalized software development costs incurred during development of the Company’s cloud-based solution. The Company capitalized software development costs of $1,271 and $1,079 during the three months ended March 31, 2014 and 2013, respectively. Net capitalized software development costs totaled $6,066 and $5,349 at March 31, 2014 and December 31, 2013, respectively. Amortization expense for the three months ended March 31, 2014 and 2013 related to capitalized software development costs was $558 and $367, respectively, which is classified within cost of revenues in the accompanying consolidated statements of operations and comprehensive (loss) income.

7. Goodwill and Other Intangible Assets

The Company acquired goodwill and certain identifiable intangible assets as part of the acquisitions in August 2013, October 2012, August 2012 and January 2011 and the going private transaction in July 2004.

The changes in the carrying amount of goodwill for the three months ended March 31, 2014 were as follows:

Balance at December 31, 2013	$	65,280
Foreign currency translation		(548	)
Balance at March 31, 2014	$	64,732

As the functional currency of the Company’s Canadian subsidiary, where certain of the Company’s goodwill is recorded, is its local currency, there are related foreign currency translation adjustments. The foreign currency is translated into U.S. dollars using the exchange rate in effect at period end, with any adjustment included in other comprehensive (loss) income.

A summary of intangible assets at March 31, 2014 and December 31, 2013 follows:

	March 31, 2014
	Weighted Average Amortization Period		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Acquired technology		7.0 years	$	19,749	$	(10,471	)	$	9,278
Customer relationships		12.1 years		26,993		(9,781	)		17,212
Covenant not to compete		4.2 years		381		(133	)		248
Acquired trademarks		4.5 years		1,104		(310	)		794
Trademarks		indefinite		430		—			430
Total			$	48,657	$	(20,695	)	$	27,962

16

SciQuest, Inc.

Notes to Consolidated Financial Statements

(unaudited)

(in thousands, except per share amounts)

	December 31, 2013
	Weighted Average Amortization Period		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Acquired technology		7.0 years	$	19,889	$	(10,070	)	$	9,819
Customer relationships		12.1 years		27,117		(9,013	)		18,104
Covenant not to compete		4.2 years		382		(112	)		270
Acquired trademarks		4.5 years		1,113		(246	)		867
Trademarks		indefinite		430		—			430
Total			$	48,931	$	(19,441	)	$	29,490

As the functional currency of the Company’s Canadian subsidiary, where certain intangible assets are recorded, is its local currency, there are related foreign currency translation adjustments. The foreign currency is translated into U.S. dollars using the exchange rate in effect at period end, with any adjustment included in other comprehensive (loss) income.

Amortization expense of intangible assets was $1,317 and $779 for the three months ended March 31, 2014 and 2013, respectively, of which $520 and $325 is recorded in cost of revenues in the accompanying consolidated statements of operations and comprehensive (loss) income for the three months ended March 31, 2014 and 2013, respectively.

The Company estimates the following amortization expense related to its intangible assets for the years ended December 31:

2014 (remaining nine months)	$	3,802
2015		4,633
2016		4,211
2017		3,756
2018		3,147
Thereafter		7,983
	$	27,532

8. Debt

On November 2, 2012, the Company established a $30,000 revolving credit facility which will be available for use until November 2, 2015. The revolving credit facility will be used for general corporate purposes. The facility consists of a $20,000 securities secured revolving credit facility and a $10,000 receivables secured revolving credit facility. The securities secured revolving credit facility and the receivables secured revolving credit facility bear interest equal to the BBA LIBOR Daily Floating Rate plus 0.75% and the BBA LIBOR Daily Floating Rate plus 1.50%, respectively. In addition, the Company pays a quarterly fee equal to 0.10% on any unused funds under the facility. As collateral for extension of credit under the facility, the Company and a domestic subsidiary granted security interests in substantially all of their assets, and the Company pledged the stock of a domestic subsidiary and 66% of the shares of one of its foreign subsidiaries. As of March 31, 2014 and December 31, 2013, the Company had $0 outstanding under the revolving credit facility.

9. Stockholders’ Equity

Preferred Stock

The Company is authorized to issue up to 5,000 shares of $0.001 par value preferred stock, of which 222 shares are designated as Series A redeemable preferred stock. The Company’s Board of Directors has the authority to issue up to 4,778 shares of preferred stock in one or more series and to fix the designations, rights, preferences and privileges and any qualifications, limitations or restrictions of the shares of each such series of preferred stock, including dividend rights and rates, conversion rights, voting rights, terms of redemption including price and sinking fund provisions, liquidation preferences and number of shares constituting any series or the designation of that series. As of March 31, 2014 and December 31, 2013, no shares of preferred stock were issued or outstanding.

17

SciQuest, Inc.

Notes to Consolidated Financial Statements

(unaudited)

(in thousands, except per share amounts)

Stock Incentive Plan

The Company’s 2013 Stock Incentive Plan (the “Plan”) allows the Company to grant common stock options, stock appreciation rights, restricted stock units and restricted stock awards to employees, board members and others who contribute materially to the success of the Company. The Company reserved 3,500 shares of its common stock for issuance under the Plan. Additionally, per the terms of the Plan, shares of common stock previously reserved for issuance under the 2004 Stock Incentive Plan (the “Prior Plan”) as well as shares reserved for outstanding awards under the Prior Plan for which the awards are canceled, forfeited, repurchased or otherwise result in common stock not being issued will be added to the number of shares available for issuance under the Plan. Restricted stock units and restricted stock awards that are granted shall count towards the total number of shares reserved for issuance under the Plan as 1.65 shares. As of March 31, 2014, 3,496 shares of common stock were available for issuance under the Plan.

The following table summarizes the number of shares outstanding and the number of shares available for future grant under the stock incentive plan at March 31, 2014:

	March 31, 2014
Number of shares reserved under the 2013 Plan		3,500
Number of shares remaining for future grants transferred from Prior Plan		844
Number of stock options outstanding under the 2013 Plan		(780	)
Weighted average exercise price	$	25.05
Weighted average term (in years)		9.8
Number of restricted stock units issued under the 2013 Plan		(68	)
Number of shares remaining for future grants
SciQuest, Inc. 2013 Stock Incentive Plan		3,496

The Company’s Board of Directors approves the terms of stock options granted. Individual option grants generally become exercisable ratably over a period of four years from the grant date. The contractual term of the options is approximately ten years from the date of grant.

The Company recognizes compensation expense associated with restricted stock and common stock options based on the grant-date fair value of the award on a straight-line basis over the requisite service period of the individual grantees, which generally equals the vesting period.

Restricted Stock

The Company issues restricted stock units to certain employees and non-employee directors. Restricted stock units differ from restricted stock awards in that restricted stock units represent the right to receive shares of common stock once such shares are vested and issuable in accordance with the terms of the restricted stock units. Once issued, such shares are not subject to further restrictions. Stock-based compensation expense related to these restricted stock units is recognized in the consolidated statements of operations and comprehensive (loss) income based on the fair value of these awards, which is the grant date market value of the Company’s common stock. Stock-based compensation expense of $144 and $128 was recorded during the three months ended March 31, 2014 and 2013, respectively, in connection with these restricted stock units. The total unrecognized compensation cost related to these awards is approximately $1,436 at March 31, 2014. This amount is expected to be recognized over a weighted-average period of 3.5 years.

The following summarizes the activity of restricted stock units for the three months ended March 31, 2014:

	Number ofShares			Weighted-Average GrantDate Fair Value
Nonvested as of December 31, 2013		49		$	18.02
Issued		41			25.01
Vested		(9	)		16.30
Nonvested as of March 31, 2014		81		$	21.78

Additionally, the Company previously issued restricted shares of its common stock to certain employees under the Prior Plan. These awards are recognized in the consolidated statements of operations and comprehensive (loss) income based on their fair values. Stock-

18

SciQuest, Inc.

Notes to Consolidated Financial Statements

(unaudited)

(in thousands, except per share amounts)

based compensation expense of $11 was recorded during the three months ended March 31, 2013 in connection with these restricted stock awards.

Stock Options

The Company also issues common stock options. The following summarizes stock option activity for the three months ended March 31, 2014:

	Number of Options			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (In Years)		Aggregate Intrinsic Value as of March 31, 2014
Balance outstanding as of December 31, 2013		1,967		$	15.22		8.0	$	26,168
Options granted		431			26.05
Options exercised		(40	)		7.56
Options canceled		(24	)		16.35
Balance outstanding as of March 31, 2014		2,334		$	17.33		8.2	$	22,918
Vested and expected to vest at March 31, 2014		2,054		$	16.82		8.1	$	22,132
Exercisable as of March 31, 2014		930		$	11.72		6.9	$	14,235

The aggregate intrinsic value in the table above represents the difference between the exercise price of the underlying awards and the estimated fair value of the Company’s common stock at March 31, 2014 multiplied by the number of shares that would have been received by the option holders had all option holders exercised their options on March 31, 2014. The aggregate intrinsic value of options exercised during the three months ended March 31, 2014 and 2013 was $831 and $1,098, respectively.

The total unrecognized compensation cost related to outstanding stock options is $14,373 at March 31, 2014. This amount is expected to be recognized over a weighted-average period of 3.1 years.

The following table summarizes information about stock options outstanding and exercisable at March 31, 2014:

	Options Outstanding at March 31, 2014						Options Exercisable at March 31, 2014
Range of Exercise Price	Number		Weighted- Average Remaining Contractual Term (In Years)		Weighted- Average Exercise Price		Number		Weighted- Average Exercise Price
$0.08 –$0.14		29		1.1	$	0.09		29	$	0.09
$0.14 –$1.90		3		4.5		1.34		3		1.34
$2.04 –$8.18		224		5.7		3.66		224		3.65
$11.45 –$17.41		1,194		7.8		14.87		642		14.53
$17.50 –$27.64		709		9.5		23.76		28		22.66
$27.91 –$29.14		175		9.9		28.71		4		28.68
Total		2,334		8.2	$	17.33		930	$	11.72

The fair value of common stock options for employees and non-employees is estimated on the date of grant using the Black-Scholes option-pricing model with the following assumptions used:

	Three Months Ended March 31,
	2014			2013
Estimated dividend yield		0	%		0	%
Expected stock price volatility		46.11 - 46.33	%		55.00	%
Weighted-average risk-free interest rate		1.75 - 1.84	%		1.1	%
Expected life of options (in years)		6.25			6.25

19

SciQuest, Inc.

Notes to Consolidated Financial Statements

(unaudited)

(in thousands, except per share amounts)

Stock-based compensation expense of $1,238 and $789 was recorded during the three months ended March 31, 2014 and 2013, respectively, related to the Company’s outstanding stock options. The weighted average grant date fair value per share for stock options granted in the three months ended March 31, 2014 and 2013 was $12.20 and $8.62, respectively. The aggregate fair value of stock options that vested during the three months ended March 31, 2014 and 2013 was $971 and $796, respectively.

As discussed in Note 3, the Company recognized stock-based compensation expense of $313 in the accompanying consolidated statement of operations and comprehensive (loss) income during the three months ended March 31, 2013 related to the earn-out arrangement associated with the Spend Radar acquisition. In addition, the Company recognized stock-based compensation of $244 in the accompanying consolidated statement of operations and comprehensive (loss) income during the three months ended March 31, 2013 related to the earn-out arrangement with certain former shareholders of AECsoft.

Employee Stock Purchase Plan

The Company adopted an Employee Stock Purchase Plan (the “Purchase Plan”) effective June 1, 2012. Eligible employees can contribute up to 10% of their gross earnings for each pay period, up to a maximum of $25 for any calendar year. The initial offering period that commenced on June 1, 2012 was a period of 12 months, and thereafter six month offering periods begin on December 1 and June 1 of each year. During the offering period eligible employees may elect to purchase shares of the Company’s common stock according to the terms of the offering. The per share purchase price is equal to the lesser of 85% of the fair market value of the Company’s common stock on the offering date or 85% of the fair market value of the Company’s common stock on the purchase date. The fair value of stock purchase rights granted under the Purchase Plan is estimated on the date of grant using the Black-Scholes option-pricing model. As of March 31, 2014, 943 shares of common stock were available for issuance to participating employees under the Purchase Plan. During the three months ended March 31, 2014 and 2013, the Company recognized stock-based compensation expense of $81 and $77 related to the Purchase Plan.

10. Income Taxes

The Company computes its provision for income taxes by applying the estimated annual effective tax rate, adjusted for any material items. The Company’s effective tax rate for the three months ended March 31, 2014 was (210.0)%, which was lower than the federal statutory rate of 34% primarily due to research and development credits generated, non-deductible expenses, including stock-based compensation and stock-based compensation associated with the earn-out arrangement. The Company’s effective tax rate for the three months ended March 31, 2013 was (53.5)%, which was lower than the federal statutory rate of 34% primarily due to research and development credits generated, non-deductible expenses, including stock-based compensation and stock-based compensation associated with the earn-out arrangement.

11. Commitments and Contingencies

Legal Contingencies

From time to time, the Company is subject to legal proceedings and claims that arise in the ordinary course of business. The Company records an accrual for a contingency when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. The Company is not currently subject to any material legal proceedings.

Warranties and Indemnification

The Company’s hosting service is typically warranted to perform in a manner consistent with general industry standards that are reasonably applicable under normal use and circumstances. The Company’s arrangements also include certain provisions for indemnifying customers against liabilities if its products or services infringe a third party’s intellectual property rights. The Company to date has not incurred costs to settle claims or pay awards under these indemnification obligations. The Company accounts for these indemnity obligations as contingencies and records a liability for these obligations when a loss is probable and reasonably estimable. To date, the Company has not incurred any material costs as a result of these indemnifications and has not accrued any liabilities related to the obligations in the accompanying consolidated financial statements.

The Company enters into service level agreements with its on-demand solution customers warranting certain levels of uptime reliability. To date, the Company has not incurred any material costs and has not accrued any liabilities related to such obligations.

20

SciQuest, Inc.

Notes to Consolidated Financial Statements

(unaudited)

(in thousands, except per share amounts)

12. Subsequent Event

Public Offering

On April 1, 2014 the Company completed a public offering of 3,000 shares of common stock at an offering price of $26.75 per share. An additional 450 shares of common stock were sold at an offering price of $26.75 per share pursuant to the underwriters’ over-allotment option. The Company received aggregate net proceeds of approximately $87,433, after payment of underwriting discounts and commissions and estimated legal, accounting, and other fees incurred in connection with the offering and the over-allotment option.

21

SCIQUEST, INC.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our financial statements and related notes that appear elsewhere in this report. In addition to historical financial information, the following discussion contains forward-looking statements that reflect our plans, estimates, assumptions and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this report under “Part II, Other Information--Item 1A, Risk Factors.” Forward-looking statements include information concerning our possible or assumed future results of operations, business strategies and operations, financing plans, potential growth opportunities, potential market opportunities and the effects of competition. Forward-looking statements include all statements that are not historical facts and can be identified by terms such as “anticipates,” “believes,” “could,” “seeks,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “projects,” “should,” “will,” “would” or similar expressions and the negatives of those terms. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Also, forward-looking statements represent our management’s plans, estimates, assumptions and beliefs only as of the date of this report. Except as required by law, we assume 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.

As used herein, except as otherwise indicated by context, references to “we,” “us,” “our,” or the “Company” refer to SciQuest, Inc.

Overview

We provide leading cloud-based business automation solutions for spend management that include:

— procurement solutions that automate the source-to-settle process;

— spend analysis solutions that cleanse and classify spend data to drive and measure cost savings;

— supplier management solutions that facilitate our customers’ interactions with their suppliers;

— contract lifecycle management solutions that automate the contract lifecycle from contract creation through maintenance; and

— accounts payable solutions that automate the invoice processing and vendor payment processes.

Our solutions are designed to meet customer needs to reduce costs, simplify and improve visibility into key business processes, further strategic initiatives, enhance control over spending decisions and improve compliance and risk management. By simplifying and streamlining cumbersome, and often manual, processes and creating a comprehensive view of spending and compliance across the organization, organizations can identify and capitalize on opportunities to reduce costs by gaining control over suppliers, contracts, purchases and payments.

We deliver our cloud-based solutions using a Software-as-a-Service, or SaaS, model, which enables us to offer greater functionality, faster innovation, easier integration and improved reliability with less cost and risk to the organization than traditional on-premise solutions. Customers pay us subscription fees and implementation service fees for the use of our solutions under either multi-year contracts that are generally three to five years in length or one-year contracts with annual renewal provisions.

In 2001, we began developing and marketing our procurement solutions. We initially acquired a critical mass of customers in the higher education and life sciences vertical markets and selectively expanded to serve the healthcare and state and local government markets. In 2010, we completed an initial public offering of our common stock. In 2011, we acquired all of the capital stock of AECsoft USA, Inc., or “AECsoft”, a leading provider of supplier management and sourcing solutions. In 2012, we acquired substantially all of the assets of Upside Software, Inc., or “Upside”, a leading provider of contract lifecycle management solutions, and substantially all of the assets of Spend Radar LLC, or “Spend Radar”, a leading provider of spend analysis solutions. In 2013, we acquired all of the capital stock of CombineNet, Inc., or “CombineNet”, a leading provider of advanced sourcing software to organizations with large and potentially complex strategic sourcing needs.

Due to our historical focus on vertical markets, we have had a relatively high concentration of higher education, life sciences, healthcare and state and local government customers. But a majority of our customers now span the general commercial market as a result of our acquisitions as well as our own marketing efforts. We currently market our solutions across the entire addressable market for spend management solutions.

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Key Financial Terms and Metrics

We have several key financial terms and metrics. During the three months ended March 31, 2014, there were no changes with respect to our key financial terms and metrics, which are discussed in more detail under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations--Financial Terms and Metrics” included in our annual report on Form 10-K for the year ended December 31, 2013, which was filed with the Securities and Exchange Commission on February 21, 2014.

Critical Accounting Policies

Our financial statements are prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, costs and expenses and related disclosures. We evaluate our estimates and assumptions on an ongoing basis. Our actual results may differ from these estimates under different assumptions or conditions.

We believe that of our significant accounting policies, which are described in Note 2 to the financial statements, the following accounting policies involve a greater degree of judgment and complexity. A critical accounting policy is one that is both material to the preparation of our financial statements and requires us to make difficult, subjective or complex judgments for uncertain matters that could have a material effect on our financial condition and results of operations. Accordingly, these are the policies we believe are the most critical to aid in fully understanding and evaluating our financial condition and results of operations:

— revenue recognition;

— stock-based compensation;

— deferred commissions;

— software development costs;

— goodwill; and

— income taxes.

During the three months ended March 31, 2014, there were no significant changes in our critical accounting policies or estimates. See Note 2 to our financial statements included elsewhere in this Quarterly Report on Form 10-Q and under the heading “Critical Accounting Policies” in our annual report on Form 10-K for the year ended December 31, 2013, which was filed with the Securities and Exchange Commission on February 21, 2014, for additional information regarding our critical accounting policies, as well as a description of our other significant accounting policies.

Results of Operations

The following table sets forth, for the periods indicated, our results of operations:

	Three Months Ended March 31,
	2014		2013
Revenues	$	25,407	$	20,665
Cost of revenues (1) (2)		7,670		6,614
Gross profit		17,737		14,051
Operating expenses: (1)
Research and development		6,927		6,542
Sales and marketing		6,960		5,471
General and administrative		3,110		2,895
Amortization of intangible assets		797		454
Total operating expenses		17,794		15,362
Loss from operations		(57)		(1,311	)
Interest and other (expense) income, net		(3)		(6	)
Loss before income taxes		(60)		(1,317	)
Income tax benefit		126		705
Net income (loss)	$	66	$	(612	)

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(1) Amounts include stock-based compensation expense, as follows:

	Three Months Ended March 31,
	2014		2013
Cost of revenues	$	163	$	120
Research and development		180		412
Sales and marketing		362		433
General and administrative		758		597
	$	1,463	$	1,562

(2) Cost of revenues includes amortization of capitalized software development costs of:

	Three Months Ended March 31,
	2014		2013
Amortization of capitalized software development costs	$	558	$	367
Amortization of acquired software		520		325
	$	1,078	$	692

The following table sets forth, for the periods indicated, our results of operations expressed as a percentage of revenues:

	Three Months Ended March 31,
	2014			2013
Revenues		100	%		100	%
Cost of revenues		30			32
Gross profit		70			68
Operating expenses:
Research and development		27			32
Sales and marketing		28			26
General and administrative		12			14
Amortization of intangible assets		3			2
Total operating expenses		70			74
Loss from operations		—			(6	)
Interest and other (expense) income, net		—			—
Loss before income taxes		—			(6	)
Income tax benefit		—			3
Net income (loss)		—	%		(3	)%

Three Months Ended March 31, 2014 Compared to Three Months Ended March 31, 2013

Revenues. Revenues for the three months ended March 31, 2014 were $25.4 million, an increase of $4.7 million, or 23%, over revenues of $20.7 million for the three months ended March 31, 2013. The increase in revenues resulted primarily from the recognition of revenue for a full three-month period for the new customers added in, and subsequent to, the three months ended March 31, 2013, as well as revenue relating to customers acquired as a result of our acquisition of CombineNet in August 2013.

Cost of Revenues. Cost of revenues for the three months ended March 31, 2014 was $7.7 million, an increase of $1.1 million, or 17%, over cost of revenues of $6.6 million for the three months ended March 31, 2013. As a percentage of revenues, cost of revenues decreased to 30% for the three months ended March 31, 2014 from 32% from the three months ended March 31, 2013. The increase in dollar amount primarily resulted from a $0.4 million increase in employee-related costs attributable primarily to personnel gained through our CombineNet acquisition, as well as our additional and existing implementation services, supplier enablement services, customer support and client partner personnel, a $0.2 million increase in amortization of capitalized software development costs, a $0.2 million increase in amortization of acquired software due to our acquisition of CombineNet, and a $0.1 million increase in other spend. We had 200 full-time equivalents in our implementation services, supplier enablement services, customer support and client partner organizations at March 31, 2014 compared to 188 full-time equivalents at March 31, 2013.

Research and Development Expenses. Research and development expenses for the three months ended March 31, 2014 were $6.9 million, an increase of $0.4 million, or 6%, from research and development expenses of $6.5 million for the three months ended March 31, 2013. As a percentage of revenues, research and development expense decreased to 27% for the three months ended March 31, 2014 from 32% for the three months ended March 31, 2013. The increase in dollar amount was primarily due to a $0.4

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million increase in maintenance and hardware costs required to support our growing business. We had 219 full-time equivalents in our research and development organization at March 31, 2014 compared to 184 full-time equivalents at March 31, 2013.

Sales and Marketing Expenses. Sales and marketing expenses for the three months ended March 31, 2014 were $7.0 million, an increase of $1.5 million, or 27%, over sales and marketing expenses of $5.5 million for the three months ended March 31, 2013. As a percentage of revenues, sales and marketing expenses increased to 28% for the three months ended March 31, 2014 from 26% for the three months ended March 31, 2013. The increase in dollar amount was due primarily to a $0.5 million increase in employee-related costs attributable primarily to personnel gained through our CombineNet acquisition, as well as our additional and existing sales and marketing personnel, a $0.5 million increase in trade show related costs, a $0.1 million increase in amortized commission expense, and a $0.3 million increase in other sales and marketing spend. We had 104 full-time equivalents in our sales and marketing organization at March 31, 2014 compared to 68 full-time equivalents at March 31, 2013.

General and Administrative Expenses. General and administrative expenses for the three months ended March 31, 2014 were $3.1 million, an increase of $0.2 million, or 7%, over general and administrative expenses of $2.9 million for the three months ended March 31, 2013. As a percentage of revenues, general and administrative expenses decreased to 12% for the three months ended March 31, 2014, from 14% for the three months ended March 31, 2013. The increase in dollar amount was primarily due to a $0.2 million increase in stock-based compensation expense. We had 28 full-time equivalents in our general and administrative organization at March 31, 2014 compared to 24 full-time equivalents at March 31, 2013.

Amortization of Intangible Assets. Amortization of intangible assets for the three months ended March 31, 2014 were $0.8 million, an increase of $0.3 million, or 60%, over amortization of intangible assets of $0.5 million for the three months ended March 31, 2013. As a percentage of revenues, amortization of intangible assets increased to 3% for the three months ended March 31, 2014, from 2% for the three months ended March 31, 2013. The increase in dollar amount was due to amortization attributable to intangible assets acquired in connection with our CombineNet acquisition in August 2013.

Income Tax Benefit. Income tax benefit for the three months ended March 31, 2014 was $0.1 million compared to income tax benefit of $0.7 million for the three months ended March 31, 2013. The change in income tax benefit was due to a difference in our pre-tax net loss for the three months ended March 31, 2014 as compared to the three months ended March 31, 2013.

Liquidity

Net Cash Flows from Operating Activities

Net cash used in operating activities was $1.8 million during the three months ended March 31, 2014. Our cash flow from operations is primarily a result of the timing of cash payments from our customers, offset by the timing of our primary cash expenditures, which are employee salaries. Since annual subscription fees are typically due on each anniversary of contract signing, the amount of cash received for annual subscription fees typically fluctuates on a quarterly basis based on the historical levels of new business sales in that quarter. Due to lower historical sales levels in our first quarter, combined with the payment of annual bonuses from the prior year in our first quarter, our cash flow from operations is typically lowest in our first quarter. Due also to the historical timing of business sales, our cash flow from operations is lower in our second quarter as compared to our third and fourth quarters.The cash payments from customers were approximately $26 million during the three months ended March 31, 2014. The cash expenditures for employee salaries, including incentive payments, were approximately $17 million during the three months ended March 31, 2014.

For the three months ended March 31, 2014, net cash used in operating activities of $1.8 million was primarily the result of $0.1 million of net income plus a $3.0 million decrease in accounts receivable, a $0.8 million decrease in prepaid expenses, $1.5 million of stock-based compensation, and $2.5 million of depreciation and amortization, less a $3.1 million decrease in deferred revenues, and a $6.5 million decrease in accrued liabilities.

For the three months ended March 31, 2013, net cash provided by operating activities of $2.4 million was primarily the result of $0.6 million of net loss plus a $4.3 million decrease in accounts receivable, $1.6 million of stock-based compensation, and $1.6 million of depreciation and amortization, less a $1.8 million decrease in deferred revenues, a $0.8 million decrease in accrued liabilities, a $0.7 million decrease in accounts payable, a $0.6 million increase in deferred taxes, and a $0.7 million increase in prepaid expenses.

As of March 31, 2014, we had net operating loss carryforwards of approximately $204.8 million available to reduce future federal taxable income. Use of these carryforwards is subject to significant limitations. In the future, we may fully utilize our available net operating loss carryforwards and would begin making income tax payments at that time. In addition, the limitations on utilizing net operating loss carryforwards and other minimum state taxes may also increase our overall tax obligations. We expect that if we

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generate taxable income and/or we are not allowed to use net operating loss carryforwards for federal/state income tax purposes, our cash generated from operations will be adequate to meet our income tax obligations.

Net Cash Flows from Investing Activities

For the three months ended March 31, 2014, net cash used in investing activities was $1.5 million, consisting of various capital expenditures of $0.2 million and capitalization of $1.3 million of software development costs. In general, our capital expenditures are for our network infrastructure to support our increasing customer base and growth in new business and for internal use, such as equipment for our increasing employee headcount.

For the three months ended March 31, 2013, net cash used in investing activities was $7.8 million, consisting of net purchases of $5.9 million of short-term investments, various capital expenditures of $0.9 million and capitalization of $1.1 million of software development costs.

Net Cash Flows from Financing Activities

For the three months ended March 31, 2014, net cash provided by financing activities was $0.3 million, representing proceeds from the exercise of common stock options.

For the three months ended March 31, 2013, net cash provided by financing activities was $0.3 million, representing proceeds from the exercise of common stock options.

Line of Credit

On November 2, 2012, we established a $30 million revolving credit facility to cost effectively increase our liquidity, though we have no current plans to utilize it. The facility consists of a $20 million securities secured revolving credit facility and a $10 million receivables secured revolving credit facility and will be available for use until November 2, 2015. The securities secured facility and the receivables secured facility bear interest equal to the BBA LIBOR Daily Floating Rate plus 0.75% and the BBA LIBOR Daily Floating Rate plus 1.50%, respectively. We pay a quarterly fee equal to 0.10% on any unused funds under the facility. As of March 31, 2014 and December 31, 2013, we had $0 outstanding.

Off-Balance Sheet Arrangements

As of March 31, 2014, we did not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. Other than our operating leases for office space, we do not engage in off-balance sheet financing arrangements. In addition, we do not engage in trading activities involving non-exchange traded contracts. As such, we are not materially exposed to any financing, liquidity, market or credit risk that could arise if we had engaged in these relationships.

Capital Resources

Our future capital requirements may vary materially from those now planned and will depend on many factors, including the costs to develop and implement new products and services, the sales and marketing resources needed to further penetrate our targeted vertical markets as well as the broader commercial market and gain acceptance of new products we develop or acquire, the expansion of our operations in the United States and internationally and the response of competitors to our products and services. Historically, we have experienced increases in our expenditures consistent with the growth in our operations and personnel, and we anticipate that our expenditures will continue to increase as we grow our business. We expect our cost of revenues, research and development, sales and marketing, general and administrative and capital expenditures to increase in absolute dollars in the future. As a percentage of revenues, we expect cost of revenues and sales and marketing to remain relatively consistent and research and development, general and administrative and capital expenditures to decline in the future. In the future, we may also acquire complementary businesses, products or technologies. We have no formal agreements or commitments with respect to any acquisitions at this time.

We believe our cash and cash equivalents and our cash flows from our operations will be sufficient to meet our working capital and capital expenditure requirements for at least the next 12 months.

During the last three years, inflation and changing prices have not had a material effect on our business, and we do not expect that inflation or changing prices will materially affect our business in the foreseeable future.

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Contractual and Commercial Commitment Summary

We have contractual obligations that require us to make future cash payments. During the three months ended March 31, 2014, there were no material changes in the contractual and commercial commitments that are discussed in more detail under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations--Contractual and Commercial Commitment Summary” included in our annual report on Form 10-K for the year ended December 31, 2013, which was filed with the Securities and Exchange Commission on February 21, 2014.

Seasonality

Historically, our new business sales have fluctuated as a result of seasonal variations in our business, principally due to the timing of client budget cycles, with lower new sales in our first and third quarters than in the remainder of our year. Due in large part to the expansion of our product portfolio and market focus, however, we do not believe that we currently experience material seasonality with respect to new business sales. Our expenses have not and do not vary significantly as a result of these historical factors, but they do fluctuate on a quarterly basis due to varying timing of expenditures. Our cash flow from operations normally fluctuates quarterly due to the combination of the historical timing of new business sales and the payment of annual bonuses. Since annual subscription fees are typically due on each anniversary of contract signing, the amount of cash payments for annual subscription fees typically fluctuates on a quarterly basis based on the historical levels of new business sales in that quarter. Due to lower historical sales levels in our first quarter, combined with the payment of annual bonuses from the prior year in our first quarter, our cash flow from operations is lowest in our first quarter. Due also to the historical timing of business sales, our cash flow from operations is lower in our second quarter as compared to our third and fourth quarters. In addition, deferred revenues can vary on a seasonal basis for the same reasons. These seasonal patterns for cash flow and deferred revenues may lessen or otherwise change in the future as the impact of our historical seasonality of new business sales lessens over time.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Foreign Currency Exchange Risk.

We bill and receive payments from our customers predominately in U.S. dollars as well as make payments predominately in U.S. dollars. With the acquisition of Upside, the amount of payments received in Canadian dollars has increased slightly while remaining an immaterial portion of total payments received, but the amount of payments made in Canadian dollars, primarily payroll, is a material portion of our total payments made. Given our limited exposure to foreign currencies, the relative stability of currency exchange rates between the U.S. dollar and the Canadian dollar and our ability to monitor a single exchange rate, we believe that our results of operations and cash flows are not materially subject to fluctuations due to changes in foreign currency exchange rates. If we further grow sales of our solution outside the United States or establish other material operations outside the United States, we may become subject to greater risks with respect to changes in currency exchange rates.

Interest Rate Sensitivity.

Interest income and expense are sensitive to changes in the general level of U.S. interest rates. However, based on the nature and current level of our investments, which are primarily cash and cash equivalents and short-term investments, we believe there is no material risk of exposure.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the rules and forms, and that such information is accumulated and communicated to us, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating our disclosure controls and procedures, we recognize that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, as ours are designed to do, and we necessarily were required to apply our judgment in evaluating whether the benefits of the controls and procedures that we adopt outweigh their costs.

As required by Rule 13a-15(b) of the Securities Exchange Act of 1934, as amended, an evaluation as of March 31, 2014 was conducted under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended). Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures, as of March 31, 2014, were effective for the purposes stated above.

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Changes in Internal Control over Financial Reporting

There was no change in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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SCIQUEST, INC.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We are not party to any material legal proceedings at this time. From time to time, we may be subject to legal proceedings and claims in the ordinary course of business.

ITEM 1A. RISK FACTORS

There have been no material changes to the Risk Factors we previously disclosed in our annual report on Form 10-K for the year ended December 31, 2013, which was filed with the Securities and Exchange Commission on February 21, 2014.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

On February 3, 2014, we issued 50,963 shares of common stock to Spend Radar pursuant to an Asset Purchase Agreement, dated September 27, 2012, by and among SciQuest, Spend Radar, Rodney True and Brian Daniels (the “Purchase Agreement”). Such shares constitute a portion of the purchase price payable by SciQuest for the purchase of the assets of Spend Radar pursuant to the Purchase Agreement and were issuable based upon the successful achievement of certain performance targets through December 31, 2013. Such shares were issued in a private placement under Section 4(2) of the Securities Act and/or Regulation D under the Securities Act. Each recipient meets the accredited investor definition of Rule 501 of the Securities Act. The offering was not conducted in connection with a public offering and no public solicitation or advertisement was made or relied upon by the investor in connection with the offering.

On February 5, 2014, we issued an aggregate of 81,301 shares of common stock to the former stockholders of AECsoft USA, Inc. pursuant to a Stock Purchase Agreement, dated December 21, 2010, by and among SciQuest and Tom (Yitao) Ren, Ying (Lily) Xiong, John Paul Gutierrez and Ronald Dressin (the “Purchase Agreement”). Such shares constitute a portion of the purchase price payable by SciQuest for the purchase of the outstanding capital stock of AECsoft USA, Inc. pursuant to the Purchase Agreement and were issuable based upon the successful achievement of certain performance targets through December 31, 2013 and continued employment with the Company. Such shares were issued in a private placement under Section 4(2) of the Securities Act and/or Regulation D under the Securities Act. Each recipient meets the accredited investor definition of Rule 501 of the Securities Act. The offering was not conducted in connection with a public offering and no public solicitation or advertisement was made or relied upon by the investor in connection with the offering.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

Not applicable.

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ITEM 6. EXHIBITS

Exhibit Number	Description
31.1*	Rule 13a-14(a)/15d-14(a) Certification, executed by Stephen J. Wiehe, President, Chief Executive Officer and Director of SciQuest.
31.2*	Rule 13a-14(a)/15d-14(a) Certification, executed by Rudy C. Howard, Chief Financial Officer of SciQuest.
32.1**	Section 1350 Certification, executed by Stephen J. Wiehe, President, Chief Executive Officer and Director of SciQuest.
32.2**	Section 1350 Certification, executed by Rudy C. Howard, Chief Financial Officer of SciQuest.
101	Interactive Data Files pursuant to Rule 405 of Regulation S-T (XBRL)

* Filed herewith.

** Furnished herewith.

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SCIQUEST, INC.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

SCIQUEST, INC.
(Registrant)
By:	/s/    Rudy C. Howard
	Rudy C. Howard
	Chief Financial Officer
	(Principal Financial and Accounting Officer)
	Date: May 9, 2014

31

EX-31

Exhibit 31.1

CERTIFICATION

I, Stephen J. Wiehe, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of SciQuest, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a. designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and to the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

By:	/s/ Stephen J. Wiehe
	Stephen J. Wiehe
	President, Chief Executive Officer and Director (Principal Executive Officer)
Date:	May 9, 2014

EX-31

Exhibit 31.2

CERTIFICATION

I, Rudy C. Howard, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of SciQuest, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a. designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and to the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

By:	/s/ Rudy C. Howard
	Rudy C. Howard
	Chief Financial Officer (Principal Financial and Accounting Officer)
Date:	May 9, 2014

EX-32

Exhibit 32.1

STATEMENT REQUIRED BY 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

This certificate is being delivered pursuant to the requirements of Section 1350 of Chapter 63 (Mail Fraud) of Title 18 (Crimes and Criminal Procedures) of the United States Code and shall not be relied on by any other person for any other purpose.

In connection with the Quarterly Report on Form 10-Q of SciQuest, Inc. (the “Company”) for the period ended March 31, 2014, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, Stephen J. Wiehe, President, Chief Executive Officer and Director of the Company, certifies that:

— the Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

— the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: May 9, 2014

/s/ Stephen J. Wiehe 

Stephen J. Wiehe

President, Chief Executive Officer and Director

(Principal Executive Officer)

The foregoing certification is being furnished with the Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2014, pursuant to 18 U.S.C. Section 1350. It is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and it is not to be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general information language in such filing.

EX-32

Exhibit 32.2

STATEMENT REQUIRED BY 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

This certificate is being delivered pursuant to the requirements of Section 1350 of Chapter 63 (Mail Fraud) of Title 18 (Crimes and Criminal Procedures) of the United States Code and shall not be relied on by any other person for any other purpose.

In connection with the Quarterly Report on Form 10-Q of SciQuest, Inc. (the “Company”) for the period ended March 31, 2014, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, Rudy C. Howard, Chief Financial Officer of the Company, certifies that:

— the Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

— the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: May 9, 2014

/s/ Rudy C. Howard

Rudy C. Howard

Chief Financial Officer

(Principal Financial and Accounting Officer)

The foregoing certification is being furnished with the Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2014, pursuant to 18 U.S.C. Section 1350. It is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and it is not to be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general information language in such filing.

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Business Combinations - AECsoft - (Narrative) (Detail) (Aecsoft, USD $) In Thousands, unless otherwise specified	1 Months Ended				3 Months Ended
	Feb. 28, 2014	Mar. 31, 2013	Apr. 30, 2012	Jan. 31, 2011	Mar. 31, 2013	Jan. 02, 2011
Aecsoft
Business Acquisition [Line Items]
Cash				$ 9,256
Fair value of common stock, shares				351
Common stock shares issued under earn-out arrangement	81	122	122
Common stock shares potentially issuable under earn-out arrangement						300
Total purchase consideration				13,795
Contingent consideration, common stock shares						25
Contingent consideration, fair value of common stock						300
Fair value of common stock				4,539
Stock-based compensation expense related to earn-out arrangement					$ 244

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Stockholders' Equity - Restricted Stock (Narrative) (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Restricted Stock Units (RSUs)
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Unrecognized compensation cost	$ 1,436
Weighted average period over which unrecognized compensation cost is expected to be recognized	3 years 6 months
Stock-based compensation expense	144	128
Restricted Stock
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock-based compensation expense		$ 11

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Goodwill and Other Intangible Assets - (Narrative) (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Goodwill [Line Items]
Amortization of intangible assets	$ 1,317	$ 779
Amortization of intangible assets recorded in cost of revenues	$ 520	$ 325

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Stockholders' Equity - Schedule of Restricted Stock Unit Activity (Detail) (Restricted Stock Units (RSUs), USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2014
Restricted Stock Units (RSUs)
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Nonvested, Number of Shares, Beginning balance	49
Issued, Number of Shares	41
Vested, Number of Shares	(9)
Nonvested, Number of Shares, Ending balance	81
Nonvested, Weighted-Average Grant Date Fair Value, Beginning balance	$ 18.02
Issued, Weighted-Average Grant Date Fair Value	$ 25.01
Vested, Weighted-Average Grant Date Fair Value	$ 16.30
Nonvested, Weighted-Average Grant Date Fair Value, Ending balance	$ 21.78

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Goodwill and Other Intangible Assets - Carrying Amount of Goodwill (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014
Carrying amount of goodwill
Goodwill, beginning balance	$ 65,280
Foreign currency translation	(548)
Goodwill, ending balance	$ 64,732

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Business Combinations - CombineNet (Schedule of Pro Forma Operating Results) (Detail) (CombineNet, USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2013
CombineNet
Business Acquisition [Line Items]
Pro forma revenue	$ 24,053
Pro forma net loss	$ (750)
Pro forma net loss per share, basic	$ (0.03)
Pro forma net loss per share, diluted	$ (0.03)

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Stockholders' Equity - Stock Options (Narrative) (Detail) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Aecsoft
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock-based compensation expense related to earn-out arrangement		$ 244
Spend Radar
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock-based compensation expense related to earn-out arrangement		313
Common stock options
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Aggregate intrinsic value of options exercised	831	1,098
Unrecognized compensation cost	14,373
Weighted average period over which unrecognized compensation cost is expected to be recognized	3 years 1 month 6 days
Stock-based compensation expense	1,238	789
Weighted average grant date fair value per share for stock options granted	$ 12.20	$ 8.62
Aggregate fair value of stock options vested	$ 971	$ 796

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Goodwill and Other Intangible Assets (Tables)

3 Months Ended

Mar. 31, 2014

Carrying Amount of Goodwill

The changes in the carrying amount of goodwill for the three months ended March 31, 2014 were as follows:

Balance at December 31, 2013	$	65,280
Foreign currency translation		(548	)
Balance at March 31, 2014	$	64,732

Summary of Intangible Assets

A summary of intangible assets at March 31, 2014 and December 31, 2013 follows:

	March 31, 2014
	Weighted Average Amortization Period		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Acquired technology		7.0 years	$	19,749	$	(10,471	)	$	9,278
Customer relationships		12.1 years		26,993		(9,781	)		17,212
Covenant not to compete		4.2 years		381		(133	)		248
Acquired trademarks		4.5 years		1,104		(310	)		794
Trademarks		indefinite		430		—			430
Total			$	48,657	$	(20,695	)	$	27,962

	December 31, 2013
	Weighted Average Amortization Period		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Acquired technology		7.0 years	$	19,889	$	(10,070	)	$	9,819
Customer relationships		12.1 years		27,117		(9,013	)		18,104
Covenant not to compete		4.2 years		382		(112	)		270
Acquired trademarks		4.5 years		1,113		(246	)		867
Trademarks		indefinite		430		—			430
Total			$	48,931	$	(19,441	)	$	29,490

Future Amortization Expense Related to Intangible Assets

The Company estimates the following amortization expense related to its intangible assets for the years ended December 31:

2014 (remaining nine months)	$	3,802
2015		4,633
2016		4,211
2017		3,756
2018		3,147
Thereafter		7,983
	$	27,532

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Debt - (Narrative) (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Dec. 31, 2013	Nov. 02, 2012
Revolving Credit Facility
Line Of Credit Facility [Line Items]
Maximum available borrowing capacity			$ 30,000
Unused fee	0.10%
Percentage of stock pledged of foreign subsidiary	66.00%
Revolving credit facility, balance outstanding	0	0
Revolving credit facility initiation date	Nov. 02, 2012
Revolving credit facility maturity date	Nov. 02, 2015
Securities Secured Revolving Credit Facility
Line Of Credit Facility [Line Items]
Maximum available borrowing capacity			20,000
Interest rate	BBA LIBOR Daily Floating Rate plus 0.75%
Debt instrument, basis spread on variable rate	0.75%
Receivables Secured Revolving Credit Facility
Line Of Credit Facility [Line Items]
Maximum available borrowing capacity			$ 10,000
Interest rate	BBA LIBOR Daily Floating Rate plus 1.50%,
Debt instrument, basis spread on variable rate	1.50%

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Fair Value Measurements - (Narrative) (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Dec. 31, 2013
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Cash equivalents	$ 8,354	$ 5,349
Short-term investments	15,105	15,105
Investment maturity date range, start	2017
Investment maturity date range, end	2042
Variable rate demand notes puttable notice period	7 days
Financial assets, fair value disclosure	23,459	20,454
Level 2
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Financial assets, fair value disclosure	0	0
Financial liabilities, fair value disclosure	0	0
Level 3
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Financial assets, fair value disclosure	0	0
Financial liabilities, fair value disclosure	$ 0	$ 0

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Business Combinations - Upside Software - (Narrative) (Detail) (Upside Software, USD $) In Thousands, unless otherwise specified	1 Months Ended
	Aug. 31, 2012
Business Acquisition [Line Items]
Cash	$ 22,447
Customer Relationships
Business Acquisition [Line Items]
Estimated useful life	10 years

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Stockholders' Equity - Stock Incentive Plan (Narrative) (Detail)	3 Months Ended
	Mar. 31, 2014
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock incentive plan, shares authorized for grant	3,500,000
Restricted stock awards, rate against shares available for issuance	1.65
Shares available for issuance	3,496,000
Common stock options
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Vesting period	4 years
Contractual term of options	10 years

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Income Taxes - (Narrative) (Detail)	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Income Tax Disclosure [Abstract]
Effective tax rate	(210.00%)	(53.50%)
Federal statutory rate	34.00%	34.00%

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Goodwill and Other Intangible Assets - Summary of Intangible Assets (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended	12 Months Ended
	Mar. 31, 2014	Dec. 31, 2013
Indefinite And Finite Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 48,657	$ 48,931
Finite Lived Intangible Accumulated Amortization	(20,695)	(19,441)
Net Carrying Amount	27,962	29,490
Trademarks
Indefinite And Finite Lived Intangible Assets [Line Items]
Indefinite Intangible Assets	430	430
Acquired Technology
Indefinite And Finite Lived Intangible Assets [Line Items]
Weighted Average Amortization Period	7 years	7 years
Finite Lived Intangible Gross Carrying Amount	19,749	19,889
Finite Lived Intangible Accumulated Amortization	(10,471)	(10,070)
Net Carrying Amount	9,278	9,819
Customer Relationships
Indefinite And Finite Lived Intangible Assets [Line Items]
Weighted Average Amortization Period	12 years 1 month 6 days	12 years 1 month 6 days
Finite Lived Intangible Gross Carrying Amount	26,993	27,117
Finite Lived Intangible Accumulated Amortization	(9,781)	(9,013)
Net Carrying Amount	17,212	18,104
Covenant Not to Compete
Indefinite And Finite Lived Intangible Assets [Line Items]
Weighted Average Amortization Period	4 years 2 months 12 days	4 years 2 months 12 days
Finite Lived Intangible Gross Carrying Amount	381	382
Finite Lived Intangible Accumulated Amortization	(133)	(112)
Net Carrying Amount	248	270
Acquired Trademarks
Indefinite And Finite Lived Intangible Assets [Line Items]
Weighted Average Amortization Period	4 years 6 months	4 years 6 months
Finite Lived Intangible Gross Carrying Amount	1,104	1,113
Finite Lived Intangible Accumulated Amortization	(310)	(246)
Net Carrying Amount	$ 794	$ 867

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Business Combinations

3 Months Ended

Mar. 31, 2014

Business Combinations

3. Business Combinations

CombineNet

On August 30, 2013, the Company acquired all of the outstanding capital stock of CombineNet, Inc. (“CombineNet”), a leading provider of advanced sourcing software. The acquisition of CombineNet expands the Company’s strategic sourcing footprint with an advanced, cloud-based tool that improves procurement decisions for spend categories that are typically beyond the capabilities of traditional eSourcing software.

The purchase price consisted of approximately $26,575 in cash and 820 shares of the Company’s common stock at a fair value of $17,055. The purchase price was subject to an adjustment based on the closing amount of working capital of CombineNet and accordingly as a result of this adjustment, the Company paid an additional $59 in cash and issued approximately 1 shares of common stock at a fair value of $38. The purchase price included $2,465 in cash and 76 shares of common stock that were deposited in escrow to satisfy potential indemnification claims. The acquisition was accounted for under the purchase method of accounting. The operating results of CombineNet are included in the accompanying consolidated financial statements from the date of acquisition.

The purchase consideration consisted of the following:

Cash	$	26,634
Fair value of common stock		17,093
Total purchase consideration		43,727
Cash acquired		1,042
Net purchase consideration	$	42,685

The purchase price was allocated to the tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values as of the acquisition date. Acquired technology, trademarks and the covenant not to compete are amortized on a straight-line basis over their respective estimated useful lives. Acquired customer relationships are amortized over a fifteen-year estimated life in a pattern consistent with which the economic benefit is expected to be realized. The excess of the purchase price over the net tangible and identifiable intangible assets acquired was recorded as goodwill, which is not deductible for tax purposes. This asset is attributed to a trained workforce and buyer-specific value resulting from synergies that are not included in the fair values of assets.

The allocation of the purchase price as of the acquisition date was as follows:

	EstimatedUseful Life		EstimatedFair Value
Accounts receivable			$	2,679
Prepaid expenses and other current assets				334
Property and equipment				464
Deferred project costs				121
Deferred tax assets				5,323
Other assets				30
Covenant not to compete		2 years		100
Trademarks		3 years		300
Acquired technology		7 years		4,100
Customer relationships		15 years		13,000
Goodwill				28,908
Accounts payable				(98	)
Accrued expenses				(786	)
Deferred tax liability				(7,350	)
Deferred revenues				(4,440	)
Total purchase consideration			$	42,685

The measurement period for the acquisition purchase accounting was closed December 31, 2013.

The following unaudited pro forma consolidated results of operations for the three months ended March 31, 2013 assume that the CombineNet acquisition occurred at the beginning of 2012. The unaudited pro forma information combines the historical results for the Company with the historical results for CombineNet for the same period. The unaudited pro forma financial information includes amortization of acquired intangible assets of $569 and includes the fair value adjustment for deferred revenue of $16 for the three months ended March 31, 2013.

The following unaudited pro forma information is not intended to be indicative of future operating results.

	Three Months EndedMarch 31, 2013
Pro forma revenue	$	24,053
Pro forma net loss	$	(750	)
Pro forma net loss per share, basic	$	(0.03	)
Pro forma net loss per share, diluted	$	(0.03	)

Spend Radar

On October 1, 2012, the Company completed the acquisition of substantially all of the assets of Spend Radar LLC (“Spend Radar”), a leading provider of spend analysis solutions. The acquisition of Spend Radar added cloud-based software for cleansing and classifying spend data to drive and measure cost savings to the Company’s existing business automation solutions for spend management.

The purchase price consisted of $8,000 in cash and 113 shares of the Company’s common stock at a fair value of $2,087. The purchase agreement also contained an earnout provision for up to $6,000 in cash and 85 shares of the Company’s common stock based on the successful achievement of certain performance targets and continued employment with the Company from the closing date to December 31, 2013. The performance conditions for Q4 2012 and Q1 2013 were met and the Company paid $2,400 and issued 34 shares of common stock on April 29, 2013. Additionally, the performance conditions for Q2, Q3 and Q4 2013 were met and the Company paid $3,600 on January 31, 2014 and issued 51 shares of common stock on February 3, 2014. The cash earn-out was recognized as compensation expense in the consolidated statement of operations and comprehensive (loss) income in the period in which it was earned. The fair value of the shares under the stock earn-out was recognized as stock-based compensation expense in the consolidated statement of operations and comprehensive (loss) income over the requisite service period of the award. During the three months ended March 31, 2013, the Company recognized compensation expense of $1,200 and stock-based compensation expense of $313 related to this earn-out arrangement.

The acquisition was accounted for under the purchase method of accounting. The operating results of Spend Radar are included in the accompanying consolidated financial statements from the date of acquisition.

The purchase consideration consisted of the following:

Cash	$	8,000
Fair value of common stock		2,087
Total purchase consideration		10,087
Cash acquired		259
Net purchase consideration	$	9,828

The purchase price was allocated to the tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values as of the acquisition date. Acquired technology, trademarks and the covenant not to compete are amortized on a straight-line basis over their respective estimated useful lives. Acquired customer relationships are amortized over a five-year estimated life in a pattern consistent with which the economic benefit is expected to be realized. The excess of the purchase price over the net tangible and identifiable intangible assets acquired was recorded as goodwill, which is deductible for tax purposes. This asset is attributed to a trained workforce and buyer-specific value resulting from synergies that are not included in the fair values of assets.

The allocation of the purchase price as of the acquisition date was as follows:

	Estimated Useful Life		Estimated Fair Value
Accounts receivable			$	634
Prepaid expenses and other current assets				100
Property and equipment				147
Covenant not to compete		5 years		203
Trademarks		5 years		566
Acquired technology		7 years		2,693
Customer relationships		5 years		1,338
Goodwill				5,682
Accrued expenses				(305	)
Deferred revenues				(1,230	)
Total purchase consideration			$	9,828

The measurement period for the acquisition purchase accounting was closed December 31, 2012.

Upside Software

On August 1, 2012, the Company completed the acquisition of substantially all of the assets of Upside Software, Inc. (“Upside”), a privately-owned Canadian corporation that provides contract lifecycle management solutions. The acquisition of Upside added a contract lifecycle management solution, which includes collaborative contract creation and maintenance technology, to the Company’s existing business automation solutions for spend management.

The purchase price consisted of $22,447 in cash. The acquisition was accounted for under the purchase method of accounting. The operating results of Upside are included in the accompanying consolidated financial statements from the date of acquisition.

The purchase price was allocated to the tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values as of the acquisition date. Acquired technology, trademarks and the covenant not to compete are amortized on a straight-line basis over their respective estimated useful lives. Acquired customer relationships are amortized over a ten-year estimated life in a pattern consistent with which the economic benefit is expected to be realized. The excess of the purchase price over the net tangible and identifiable intangible assets acquired was recorded as goodwill which is deductible for tax purposes. This asset is attributed to a trained workforce and buyer-specific value resulting from synergies that are not included in the fair values of assets.

The allocation of the purchase price as of the acquisition date was as follows:

	Estimated Useful Life		Estimated Fair Value
Accounts receivable			$	2,096
Prepaid expenses and other current assets				230
Property and equipment				478
Covenant not to compete		5 years		30
Trademarks		5 years		263
Acquired technology		7 years		4,064
Customer relationships		10 years		3,594
Goodwill				15,927
Accrued expenses				(530	)
Deferred revenues				(3,705	)
Total purchase consideration			$	22,447

The measurement period for the acquisition purchase accounting was closed December 31, 2012.

AECsoft

On December 21, 2010, the Company entered into a Stock Purchase Agreement to acquire all of the issued and outstanding shares of capital stock of AECsoft USA, Inc., a Texas corporation, and AEC Global (Shanghai) Co., Ltd., a Chinese corporation (collectively, “AECsoft”), which together are a leading provider of supplier management and sourcing technology.

The Company completed the acquisition of AECsoft, USA, Inc. on January 1, 2011 and the acquisition of AEC Global (Shanghai) Co., Ltd. on March 31, 2011. The acquisition of AECsoft added comprehensive supplier management, sourcing and compliance reporting to the Company’s existing business automation solutions for spend management.

The total purchase price of $13,795 consisted of $9,256 in cash and 351 shares of the Company’s common stock at a fair value of $4,539. The issuance of 25 of these shares, with an estimated fair value of $300, was subject to successful completion of certain performance targets under an earn-out arrangement with a former shareholder of AECsoft. Additionally, 300 shares of the Company’s common stock were issuable under an earn-out arrangement with the other former shareholders of AECsoft, upon the successful achievement of performance conditions over three fiscal years, including continued employment with the Company. The performance conditions for 2012 and 2011 were met in full, and the Company issued 122 shares of common stock on March 20, 2013 and April 14, 2012, respectively. The performance conditions for 2013 were met in full, and the Company issued 81 shares of common stock on February 5, 2014. The fair value of these shares was recognized as stock-based compensation expense in the consolidated statement of operations and comprehensive (loss) income over the requisite service period of the award. During the three months ended March 31, 2013, the Company recognized stock-based compensation expense of $244 related to this earn-out arrangement.

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Subsequent Events - (Narrative) (Detail) (Subsequent Event, USD $) In Thousands, except Per Share data, unless otherwise specified	1 Months Ended
	Apr. 01, 2014
Subsequent Event
Subsequent Event [Line Items]
Public offering, shares sold	3,000
Offering price, per share	$ 26.75
Public offering, over-allotment shares sold	450
Net proceeds	$ 87,433

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Fair Value Measurements - Fair Value Measurements (Detail) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total assets measured at fair value	$ 23,459	$ 20,454
Level 1
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total assets measured at fair value	23,459	20,454
Level 2
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total assets measured at fair value
Level 3
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total assets measured at fair value
Cash Equivalents
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total assets measured at fair value	8,354	5,349
Cash Equivalents | Level 1
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total assets measured at fair value	8,354	5,349
Cash Equivalents | Level 2
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total assets measured at fair value
Cash Equivalents | Level 3
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total assets measured at fair value
Short-term Investments
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total assets measured at fair value	15,105	15,105
Short-term Investments | Level 1
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total assets measured at fair value	15,105	15,105
Short-term Investments | Level 2
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total assets measured at fair value
Short-term Investments | Level 3
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total assets measured at fair value

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Summary of Significant Accounting Policies - Anti-Dilutive Equity Instruments Excluded from Diluted Net Income (Loss) Per Share (Detail) (Common stock options) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Common stock options
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Antidilutive Securities Excluded from Computation of Earnings Per Share	92	84

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Summary of Significant Accounting Policies - Calculation of Basic and Diluted Net Income (Loss) Per Share (Detail) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Basic:
Net income (loss)	$ 66	$ (612)
Weighted average common shares, basic	23,908	22,564
Basic net income (loss) per share	$ 0.00	$ (0.03)
Diluted:
Net income (loss)	$ 66	$ (612)
Weighted average common shares, basic	23,908	22,564
Dilutive effect of:
Options to purchase common stock	569
Nonvested shares of restricted stock	22
Weighted average common shares, diluted	24,499	22,564
Diluted net income (loss) per share	$ 0.00	$ (0.03)

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Stockholders' Equity - Schedule of Stock Option Activity (Detail) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended	12 Months Ended
	Mar. 31, 2014	Dec. 31, 2013
Share-based Compensation Arrangement by Share-based Payment Award, Options, Additional Disclosures [Abstract]
Number of Options Outstanding, Beginning	1,967
Options granted	431
Options exercised	(40)
Options canceled	(24)
Number of Options Outstanding, Ending	2,334	1,967
Number of Options Outstanding, Vested and expected to vest	2,054
Number of Options Outstanding, Exercisable	930
Weighted-Average Exercise Price, Beginning	$ 15.22
Weighted-Average Exercise Price, Options granted	$ 26.05
Weighted-Average Exercise Price, Options exercised	$ 7.56
Weighted-Average Exercise Price, Options canceled	$ 16.35
Weighted-Average Exercise Price, Ending	$ 17.33	$ 15.22
Weighted-Average Exercise Price, Vested and expected to vest	$ 16.82
Weighted-Average Exercise Price, Exercisable	$ 11.72
Weighted-Average Remaining Contractual Term (In Years)	8 years 2 months 12 days	8 years
Weighted-Average Remaining Contractual Term (In Years), Vested and expected to vest	8 years 1 month 6 days
Weighted-Average Remaining Contractual Term (In Years), Exercisable	6 years 10 months 24 days
Aggregate Intrinsic Value	$ 22,918	$ 26,168
Aggregate Intrinsic Value, Vested and expected to vest	22,132
Aggregate Intrinsic Value, Exercisable	$ 14,235

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Property and Equipment - Property and Equipment (Detail) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013
Property Plant And Equipment [Line Items]
Total costs	$ 20,450	$ 19,035
Less accumulated depreciation and amortization	(10,158)	(9,007)
Property and equipment, net	10,292	10,028
Furniture and Fixtures
Property Plant And Equipment [Line Items]
Total costs	1,281	1,284
Computer Software and Equipment
Property Plant And Equipment [Line Items]
Total costs	18,455	17,036
Leasehold Improvements
Property Plant And Equipment [Line Items]
Total costs	$ 714	$ 715

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Business Combinations - CombineNet - (Narrative) (Detail) (CombineNet, USD $) In Thousands, unless otherwise specified	1 Months Ended	3 Months Ended
	Aug. 31, 2013	Mar. 31, 2013	Aug. 30, 2013
Business Acquisition [Line Items]
Cash	$ 26,575
Fair value of common stock, shares	820
Fair value of common stock	17,055
Cash balance in escrow			2,465
Common stock in escrow			76
Acquisition working capital cash adjustment	59
Acquisition working capital stock adjustment	1
Fair value of acquisition working capital stock adjustment	38
Business acquisition, pro forma amortization of acquired intangible assets		569
Business acquisition, pro forma fair value adjustment for deferred revenue		$ 16
Customer Relationships
Business Acquisition [Line Items]
Estimated useful life	15 years

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Business Combinations - CombineNet (Schedule of Purchase Price Consideration) (Detail) (CombineNet, USD $) In Thousands, unless otherwise specified	1 Months Ended
	Aug. 31, 2013
CombineNet
Business Acquisition [Line Items]
Cash	$ 26,634
Fair value of common stock	17,093
Total purchase consideration	43,727
Cash acquired	1,042
Net purchase consideration	$ 42,685

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Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2014

Summary of Significant Accounting Policies

2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the three months ended March 31, 2014 are not necessarily indicative of the results to be expected for the fiscal year or any future period. The balance sheet at December 31, 2013 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by GAAP for complete financial statements. For further information, refer to the financial statements and footnotes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2013, which was filed with the Securities and Exchange Commission on February 21, 2014.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ materially from those estimates.

Revenue Recognition

The Company primarily derives its revenues from subscription fees and related services, permitting customers to access and utilize the Company’s cloud-based business automation solutions for spend management. Customers may also purchase a perpetual license for certain software products. Revenue is recognized when there is persuasive evidence of an arrangement, the service has been provided or delivered to the customer, the collection of the fee is probable and the amount of the fee to be paid by the customer is fixed or determinable. The Company’s arrangements do not contain general rights of return.

Because customers do not have the right to take possession of the Software-as-a-Service (“SaaS”) based software, these arrangements are considered service contracts and are not within the scope of Industry Topic 985, Software. The Company’s contractual agreements generally contain multiple service elements and deliverables, for which we follow the guidance provided in Accounting Standards Codification (“ASC”) 605-25, Revenue Recognition for Multiple-Element Arrangements. These elements include access to the hosted software, implementation or data classification services and, on a limited basis, perpetual licenses for certain software products and related maintenance and support. The Company evaluates each element in a multiple-element arrangement to determine whether it represents a separate unit of accounting. An element constitutes a separate unit of accounting when the delivered item has standalone value and delivery of the undelivered element is probable and within the Company’s control.

For arrangements in which elements do have stand-alone value, the Company allocates revenue to each element in the arrangement based on a selling price hierarchy. The selling price for a deliverable is based on vendor-specific objective evidence of selling price (“VSOE”), if available, third-party evidence of selling price (“TPE”), if VSOE is not available, or estimated selling price (“ESP”) if neither VSOE nor TPE is available. Because the Company has neither VSOE nor TPE for its deliverables, the allocation of revenue is based on ESP.

The Company’s process for determining ESP for its deliverables considers multiple factors that may vary depending upon the facts and circumstances related to each deliverable. Key factors considered in developing ESP related to deliverables include established pricing and approval policies, type and size of customer, number of products purchased, and historical transactions. The Company regularly reviews ESP and maintains internal controls over the establishment and updates of these estimates.

The Company evaluates its SaaS subscription agreements and considers whether the associated services have standalone value to its customers. For arrangements when implementation services do not have standalone value to the customer, licenses and related implementation services are considered a single unit of accounting. Accordingly, the consideration allocated to licenses and services is recognized ratably over the term of the subscription agreement, beginning with the later of the start date specified in the subscription agreement, or the date access to the software is provided to the customer, provided all other revenue recognition criteria have been met. Fees for professional services that are contingent upon future performance are recognized ratably over the remaining subscription term once the performance milestones have been met. Alternatively, when services have standalone value to the customer, licenses and related services are considered separate units of accounting. For separate units of accounting, services are recognized as the services are performed and delivered to the customer and licenses are recognized over the term of the subscription arrangement, beginning with the later of the start date specified in the subscription agreement, or the date access to the software is provided to the customer, provided all other revenue recognition criteria have been met.

Revenue from sales of certain of the Company’s perpetual software products and related implementation services and maintenance is recognized as a single unit of accounting since VSOE of fair value does not exist for the contractual elements. Accordingly, revenue for all elements in these arrangements is recognized over the contractual maintenance term, which is typically one year.

The Company recognizes revenue from any professional services that are sold separately as the services are performed.

Deferred revenue primarily consists of billings or payments received in advance of revenue recognition from the Company’s software and services described above. For multi-year subscription agreements, the Company generally invoices its customers in annual installments. Accordingly, the deferred revenue balance does not represent the total contract value of these multi-year subscription agreements. The Company’s services, such as implementation, are generally sold in conjunction with subscription agreements. These services are recognized ratably over the remaining term of the subscription agreement once any contingent performance milestones have been satisfied. The portion of deferred revenue that the Company anticipates will be recognized after the succeeding 12-month period is recorded as non-current deferred revenue and the remaining portion is recorded as current deferred revenue.

Cost of Revenues

Cost of revenues primarily consists of costs related to hosting the Company’s subscription software services, compensation and related expenses for implementation services, supplier enablement services, customer support staff and client partners, amortization of capitalized software development costs and allocated fixed asset depreciation and facilities costs. Cost of revenues is expensed as incurred.

Deferred Commissions

The Company capitalizes sales commission costs that are directly related to the execution of its subscription agreements. The commissions are deferred and amortized over the contractual term of the related non-cancelable subscription agreement. The Company believes this is the appropriate method of accounting, as the commission costs are so closely related to the revenues from the subscription agreements that they should be recorded as an asset and charged to expense over the same period that the subscription revenues are recognized. Amortization of deferred commissions is included in sales and marketing expense in the accompanying consolidated statements of operations and comprehensive (loss) income. The deferred commissions are reflected in the accompanying consolidated balance sheets.

Cash and Cash Equivalents

The Company considers all highly liquid debt investments with an original maturity of three months or less at the date of purchase to be cash equivalents. The Company maintains cash balances at financial institutions that may at times exceed federally insured limits. The Company maintains this cash at reputable financial institutions and, as a result, believes credit risk related to its cash is minimal.

Short-Term Investments

Management determines the appropriate classification of investments at the time of purchase and evaluates such determination as of each balance sheet date. The Company’s investments were classified as available-for-sale securities and are stated at fair value at March 31, 2014 and December 31, 2013. Realized gains and losses are included in other (expense) income based on the specific identification method. There were no realized gains or losses for the three months ended March 31, 2014 or 2013. Net unrealized gains and losses on available-for-sale securities are reported as a component of other comprehensive (loss) income, net of tax. As of March 31, 2014 and December 31, 2013, there were no unrealized gains or losses on available-for-sale securities. The Company regularly monitors and evaluates the fair value of its investments to identify other-than-temporary declines in value. Management believes no such declines in value existed at March 31, 2014 or December 31, 2013.

Accounts Receivable

The Company assesses the need for an allowance for doubtful accounts based on estimates of probable credit losses. This assessment is based on several factors including aging of customer accounts, known customer specific risks, historical experience and existing economic conditions. The Company generally does not require collateral for receivable balances. Accounts would be charged against the allowance after all means of collection were exhausted and recovery was considered remote. Based on management’s analysis of its outstanding accounts receivable, the Company recorded an allowance of $421 and $556 at March 31, 2014 and December 31, 2013, respectively.

Property and Equipment

Property and equipment are recorded at cost and depreciated using the straight-line method over their estimated useful lives, which are usually seven years for furniture and three to five years for computer software and equipment. Leasehold improvements are amortized over the shorter of the estimated useful lives of the assets or the remainder of the lease term. Costs for repairs and maintenance are expensed as incurred. Upon retirement or sale, the cost of the disposed assets and the related accumulated depreciation are removed from the accounts, and any resulting gain or loss is credited or charged to operations.

Software Development Costs

The Company incurs certain costs associated with the development of its cloud-based solution, which are accounted for as internal-use software. Certain qualifying costs incurred during the application development phase are capitalized and amortized to expense over the estimated useful life of the related applications, which is generally three years.

Although the Company’s development efforts are primarily focused on its hosted, cloud-based solution, the Company also incurs costs in connection with the development of certain of its software products licensed to customers on a perpetual basis, which are accounted for as costs of software to be sold, leased or otherwise marketed. Under this guidance, capitalization of software development costs begins upon the establishment of technological feasibility (based on a working model approach), subject to net realizable value considerations. To date, the dates between achieving technological feasibility and the general availability of such software have substantially coincided; therefore, software development costs for these products that would qualify for capitalization have been immaterial. Accordingly, the Company has not capitalized any software development costs related to these software products and has charged all such costs to research and development expense.

Goodwill

Goodwill represents the excess of the cost of an acquired entity over the net fair value of the identifiable assets acquired and liabilities assumed. Goodwill is not amortized, but rather is assessed for impairment at least annually. Additionally, the Company would also review the carrying value of goodwill whenever events or changes in circumstances indicated that its carrying amount may not be recoverable. The Company has concluded that it has one reporting unit for purposes of its annual goodwill impairment testing. To assess goodwill impairment, the first step is to identify if a potential impairment exists by comparing the fair value of a reporting unit with its carrying amount, including goodwill. If the fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is not considered to have a potential impairment and the second step of the impairment test is not necessary. The results of our most recent annual assessment did not indicate any impairment of goodwill, and as such the second step of the impairment test was not required. Additionally, we do not believe there have been any triggering events that would result in potential impairment of goodwill as of March 31, 2014.

Stock-Based Compensation

Stock-based payments to employees, including grants of employee stock options, are recognized in the consolidated statement of operations and comprehensive (loss) income based on their fair values. Stock-based compensation costs are measured at the grant date based on the fair value of the award and are recognized as expense on a straight-line basis over the requisite service period, which is the vesting period.

Stock-based compensation costs are based on the fair value of the underlying option calculated using the Black-Scholes option-pricing model on the date of grant for stock options. Determining the appropriate fair value model and related assumptions requires judgment, including estimating stock price volatility, forfeiture rates and expected term. The Company uses the historical volatility of its stock price to calculate the expected volatility. Prior to the second half of 2013, the expected volatility rates were estimated based on the actual volatility of comparable public companies over the expected term. The expected term for the three months ended March 31, 2014 and 2013, represents the average time that options that vest are expected to be outstanding based on the mid-point between the vesting date and the end of the contractual term of the award. The Company has not paid dividends and does not anticipate paying a cash dividend in the foreseeable future and, accordingly, uses an expected dividend yield of zero. The risk-free interest rate is based on the rate of U.S. Treasury securities with maturities consistent with the estimated expected term of the awards.

Foreign Currency and Operations

The reporting currency for all periods presented is the U.S. dollar. The functional currency for the Company’s foreign subsidiaries is generally their local currency. The translation of each subsidiary’s financial statements into U.S. dollars is performed for assets and liabilities using exchange rates in effect at the balance sheet date and for revenue and expense accounts using an average exchange rate during the period. The resulting translation adjustments are recognized in accumulated other comprehensive loss, a separate component of stockholders’ equity. Also included in accumulated other comprehensive loss is the foreign translation loss adjustment of $2,763 and $1,729 at March 31, 2014 and December 31, 2013, respectively, related to the intercompany balance with the Company’s Canadian subsidiary not expected to be settled in the foreseeable future. Realized foreign currency transaction gains and losses are included in other income (expense) in the consolidated statements of operations and comprehensive (loss) income.

Segment Data

The Company manages its operations on a consolidated basis for purposes of assessing performance and making operating decisions. Accordingly, the Company has determined that it has a single reportable segment.

Income (Loss) Per Share

Basic net income (loss) per share is computed by dividing net income (loss) by the weighted-average number of shares of common stock outstanding for the period. Outstanding unvested restricted stock purchased by employees is subject to repurchase by the Company and therefore is not included in the calculation of the weighted-average shares outstanding until vested. Diluted net income per share is computed giving effect to all potentially dilutive common stock, including options and restricted stock. The dilutive effect of outstanding awards is reflected in diluted earnings per share by application of the treasury stock method.

The following summarizes the calculation of basic and diluted net income (loss) per share:

	Three Months Ended March 31,
	2014		2013
Basic:
Net income (loss)	$	66	$	(612	)
Weighted average common shares, basic		23,908		22,564
Basic net income (loss) per share	$	0.00	$	(0.03	)
Diluted:
Net income (loss)	$	66	$	(612	)
Weighted average common shares, basic		23,908		22,564
Dilutive effect of:
Options to purchase common stock		569		—
Nonvested shares of restricted stock		22		—
Weighted average common shares, diluted		24,499		22,564
Diluted net income (loss) per share	$	0.00	$	(0.03	)

The following equity instruments have been excluded from diluted net income (loss) per common share as they would be anti-dilutive.

	Three Months Ended March 31,
	2014		2013
Common stock options		92		84

For the three months ended March 31, 2013, the Company incurred net losses and, therefore, the effect of the Company’s outstanding stock options, nonvested restricted stock and common stock issuable pursuant to the employee stock purchase plan was not included in the calculation of diluted net loss per share as the effect would be anti-dilutive. For the three months ended March 31, 2013, diluted net loss per share excluded the impact of 335 outstanding stock options, 37 nonvested shares of restricted stock, and 3 shares of common stock issuable pursuant to the employee stock purchase plan.

Income Taxes

Deferred income taxes are provided using tax rates enacted for periods of expected reversal on all temporary differences. Temporary differences relate to differences between the book and tax basis of assets and liabilities, principally intangible assets, property and equipment, deferred subscription revenues, accruals and stock-based compensation. Valuation allowances are established to reduce deferred tax assets to the amount that will more likely than not be realized. To the extent that a determination is made to establish or adjust a valuation allowance, the expense or benefit is recorded in the period in which the determination is made.

Judgment is required in determining the provision for income taxes. Additionally, the income tax provision is based on calculations and assumptions that are subject to examination by many different tax authorities and to changes in tax law and rates in many jurisdictions. The Company would adjust its income tax provision in the period in which it becomes probable that actual results differ from management estimates.

The Company accounts for uncertain tax positions by recognizing and measuring tax benefits taken or expected to be taken on a tax return. A tax benefit from an uncertain position may be recognized only if it is more likely than not that the position is sustainable, based solely on its technical merits and consideration of the relevant taxing authority’s widely understood administrative practices and precedents. If the recognition threshold is met, only the portion of the tax benefit that is more likely than not to be realized upon settlement with a taxing authority is recorded. The tax benefit that is not recorded is considered an unrecognized tax benefit. Interest and penalties related to uncertain tax positions are recognized as a component of income tax expense.

Recent Accounting Pronouncements

In July 2013, the FASB issued a revised accounting standard, which clarifies that an unrecognized tax benefit, or a portion of an unrecognized tax benefit, should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward if such settlement is required or expected in the event the uncertain tax position is disallowed. In situations where a net operating loss carryforward, a similar tax loss, or a tax credit carryforward is not available at the reporting date under the tax law of the applicable jurisdiction or the tax law of the jurisdiction does not require, and the entity does not intend to use, the deferred tax asset for such purpose, the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets. This standard is effective prospectively for fiscal years, and interim periods within those years, beginning after December 15, 2013. Retrospective application is permitted. The Company adopted this guidance on January 1, 2014. The adoption of this guidance did not have a material impact on the Company’s financial position, results of operations, or cash flows.

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Business Combinations - CombineNet (Schedule of Purchase Price Allocation) (Detail) (USD $) In Thousands, unless otherwise specified			1 Months Ended		1 Months Ended		1 Months Ended		1 Months Ended		1 Months Ended
	Mar. 31, 2014	Dec. 31, 2013	Aug. 31, 2013 CombineNet	Aug. 30, 2013 CombineNet	Aug. 31, 2013 CombineNet Covenant Not to Compete	Aug. 30, 2013 CombineNet Covenant Not to Compete	Aug. 31, 2013 CombineNet Trademarks	Aug. 30, 2013 CombineNet Trademarks	Aug. 31, 2013 CombineNet Acquired Technology	Aug. 30, 2013 CombineNet Acquired Technology	Aug. 31, 2013 CombineNet Customer Relationships	Aug. 30, 2013 CombineNet Customer Relationships
Business Acquisition [Line Items]
Accounts receivable				$ 2,679
Prepaid expenses and other current assets				334
Property and equipment				464
Deferred project costs				121
Deferred tax assets				5,323
Other assets				30
Amortizable intangible assets						100		300		4,100		13,000
Goodwill	64,732	65,280		28,908
Accounts payable				(98)
Accrued expenses				(786)
Deferred tax liability				(7,350)
Deferred revenues				(4,440)
Total purchase consideration			$ 42,685
Estimated useful life					2 years		3 years		7 years		15 years

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Cash Equivalents and Short-Term Investments - Cash Equivalents and Short-Term Investments (Detail) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013
Cash equivalents:
Money market accounts, Cost	$ 8,354	$ 5,349
Short-term investments:
Variable rate demand notes, Cost	15,105	15,105
Total, Cost	23,459	20,454
Cash equivalents:
Money market accounts, Fair Market Value	8,354	5,349
Short-term investments:
Variable rate demand notes, Fair Market Value	15,105	15,105
Total, Fair Market Value	$ 23,459	$ 20,454

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Stockholders' Equity - Stock Incentive Plan (Schedule of Shares Outstanding and Available for Grant Under Plan) (Detail) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended	12 Months Ended
	Mar. 31, 2014	Dec. 31, 2013
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock incentive plan, shares authorized for grant	3,500
Number of stock options outstanding under the 2013 Plan	(2,334)	(1,967)
Weighted average exercise price	$ 17.33	$ 15.22
Weighted average term (in years)	8 years 2 months 12 days	8 years
Number of shares remaining for future grants
Shares available for issuance	3,496
Stock Incentive Plans
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock incentive plan, shares authorized for grant	3,500
Number of shares remaining for future grants transferred from Prior Plan	844
Number of stock options outstanding under the 2013 Plan	(780)
Weighted average exercise price	$ 25.05
Weighted average term (in years)	9 years 9 months 18 days
Number of restricted stock units issued under the 2013 Plan	(68)
Number of shares remaining for future grants
Shares available for issuance	3,496

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Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013
Current assets:
Cash and cash equivalents	$ 16,067	$ 19,117
Short-term investments	15,105	15,105
Accounts receivable, net	9,918	12,987
Prepaid expenses and other current assets	2,450	3,268
Deferred tax asset	306	290
Total current assets	43,846	50,767
Property and equipment, net	10,292	10,028
Goodwill	64,732	65,280
Intangible assets, net	27,962	29,490
Deferred commissions	6,245	6,701
Deferred tax asset, less current portion	10,955	10,885
Other	334	294
Total assets	164,366	173,445
Current liabilities:
Accounts payable	348	741
Accrued liabilities	7,220	13,765
Deferred revenues	55,023	57,417
Total current liabilities	62,591	71,923
Deferred revenues, less current portion	12,532	13,343
Commitments and contingencies
Stockholders’ equity:
Common stock, $0.001 par value; 50,000 shares authorized; 23,983 and 23,811 shares issued and outstanding as of March 31, 2014 and December 31, 2013, respectively	24	24
Additional paid-in capital	110,619	108,864
Accumulated other comprehensive loss	(2,158)	(1,401)
Accumulated deficit	(19,242)	(19,308)
Total stockholders’ equity	89,243	88,179
Total liabilities and stockholders’ equity	$ 164,366	$ 173,445

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Property and Equipment - (Narrative) (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Dec. 31, 2013
Property Plant And Equipment [Abstract]
Property and equipment, depreciation	$ 610	$ 474
Capitalized software development costs	1,271	1,079
Net capitalized software development costs	6,066		5,349
Amortization expense related to capitalized software development costs	$ 558	$ 367

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Consolidated Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Cash flows from operating activities
Net income (loss)	$ 66	$ (612)
Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities:
Depreciation and amortization	2,485	1,620
Stock-based compensation expense	1,463	1,562
Deferred taxes	(86)	(636)
Changes in operating assets and liabilities:
Accounts receivable	3,017	4,334
Prepaid expenses and other current assets	805	(665)
Deferred commissions and other assets	418	211
Accounts payable	(392)	(719)
Accrued liabilities	(6,521)	(844)
Deferred revenues	(3,101)	(1,835)
Net cash (used in) provided by operating activities	(1,846)	2,416
Cash flows from investing activities
Addition of capitalized software development costs	(1,308)	(1,079)
Purchase of property and equipment	(174)	(887)
Purchase of available-for-sale short-term investments		(12,425)
Maturities of available-for-sale short-term investments		6,560
Net cash used in investing activities	(1,482)	(7,831)
Cash flows from financing activities
Proceeds from exercise of common stock options	292	340
Net cash provided by financing activities	292	340
Effect of exchange rate changes on cash and cash equivalents	(14)	(10)
Net decrease in cash and cash equivalents	(3,050)	(5,085)
Cash and cash equivalents at beginning of period	19,117	15,606
Cash and cash equivalents at end of period	$ 16,067	$ 10,521

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Stockholders' Equity - Schedule of Assumptions used to Calculate Fair Value of Common Stock Options (Detail)	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Schedule of assumptions used to calculate fair value
Dividend yield	0.00%	0.00%
Expected stock price volatility, minimum	46.11%
Expected stock price volatility, maximum	46.33%
Expected stock price volatility		55.00%
Weighted-average risk-free interest rate, minimum	1.75%
Weighted-average risk-free interest rate, maximum	1.84%
Weighted-average risk-free interest rate		1.10%
Expected life of options (in years)	6 years 3 months	6 years 3 months

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Business Combinations - Spend Radar (Schedule of Purchase Price Consideration) (Detail) (Spend Radar, USD $) In Thousands, unless otherwise specified	1 Months Ended
	Oct. 31, 2012
Spend Radar
Business Acquisition [Line Items]
Cash	$ 8,000
Fair value of common stock	2,087
Total purchase consideration	10,087
Cash acquired	259
Net purchase consideration	$ 9,828

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Cash Equivalents and Short-Term Investments (Tables)

3 Months Ended

Mar. 31, 2014

Cash Equivalents and Short-Term Investments

The components of cash equivalents and short-term investments at March 31, 2014 and December 31, 2013 are as follows:

	March 31, 2014				December 31, 2013
	Cost		Fair Market Value		Cost		Fair Market Value
Cash equivalents:
Money market accounts	$	8,354	$	8,354	$	5,349	$	5,349
Short-term investments:
Variable rate demand notes		15,105		15,105		15,105		15,105
Total	$	23,459	$	23,459	$	20,454	$	20,454

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Business Combinations - Spend Radar (Schedule of Purchase Price Allocation) (Detail) (USD $) In Thousands, unless otherwise specified			1 Months Ended		1 Months Ended		1 Months Ended		1 Months Ended		1 Months Ended
	Mar. 31, 2014	Dec. 31, 2013	Oct. 31, 2012 Spend Radar	Oct. 01, 2012 Spend Radar	Oct. 31, 2012 Spend Radar Covenant Not to Compete	Oct. 01, 2012 Spend Radar Covenant Not to Compete	Oct. 31, 2012 Spend Radar Trademarks	Oct. 01, 2012 Spend Radar Trademarks	Oct. 31, 2012 Spend Radar Acquired Technology	Oct. 01, 2012 Spend Radar Acquired Technology	Oct. 31, 2012 Spend Radar Customer Relationships	Oct. 01, 2012 Spend Radar Customer Relationships
Business Acquisition [Line Items]
Accounts receivable				$ 634
Prepaid expenses and other current assets				100
Property and equipment				147
Amortizable intangible assets						203		566		2,693		1,338
Goodwill	64,732	65,280		5,682
Accrued expenses				(305)
Deferred revenues				(1,230)
Total purchase consideration			$ 9,828
Estimated useful life					5 years		5 years		7 years		5 years

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Property and Equipment (Tables)

3 Months Ended

Mar. 31, 2014

Property and Equipment

Property and equipment consist of the following as of March 31, 2014 and December 31, 2013:

	March 31, 2014			December 31, 2013
Furniture and fixtures	$	1,281		$	1,284
Computer software and equipment		18,455			17,036
Leasehold improvements		714			715
Total costs		20,450			19,035
Less accumulated depreciation and amortization		(10,158	)		(9,007	)
Property and equipment, net	$	10,292		$	10,028

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Description of Business

3 Months Ended

Mar. 31, 2014

Description of Business

1. Description of Business

SciQuest, Inc. (the Company) provides leading cloud-based business automation solutions for spend management. The Company’s solutions include procurement solutions that automate the source-to-settle process, spend analysis solutions that cleanse and classify spend data to drive and measure cost savings, supplier management solutions that facilitate our customers’ interactions with their suppliers, contract lifecycle management solutions that automate the complete contract lifecycle from contract creation through maintenance and accounts payable solutions that automate the invoice processing and vendor payment processes. The Company’s solutions are designed to meet customer needs to reduce costs, simplify and improve visibility into key business processes, further strategic initiatives, enhance control over spending decisions and improve compliance and risk management. By simplifying and streamlining cumbersome, and often manual, processes and creating a comprehensive view of spending and compliance across the organization, organizations can identify and capitalize on opportunities to reduce costs by gaining control over suppliers, contracts, purchases and payments. The Company is headquartered in Cary, North Carolina.

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Consolidated Balance Sheets (Parenthetical) (USD $) In Thousands, except Per Share data, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	50,000	50,000
Common stock, shares issued	23,983	23,811
Common stock, shares outstanding	23,983	23,811

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Commitments and Contingencies

3 Months Ended

Mar. 31, 2014

Commitments and Contingencies

11. Commitments and Contingencies

Legal Contingencies

From time to time, the Company is subject to legal proceedings and claims that arise in the ordinary course of business. The Company records an accrual for a contingency when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. The Company is not currently subject to any material legal proceedings.

Warranties and Indemnification

The Company’s hosting service is typically warranted to perform in a manner consistent with general industry standards that are reasonably applicable under normal use and circumstances. The Company’s arrangements also include certain provisions for indemnifying customers against liabilities if its products or services infringe a third party’s intellectual property rights. The Company to date has not incurred costs to settle claims or pay awards under these indemnification obligations. The Company accounts for these indemnity obligations as contingencies and records a liability for these obligations when a loss is probable and reasonably estimable. To date, the Company has not incurred any material costs as a result of these indemnifications and has not accrued any liabilities related to the obligations in the accompanying consolidated financial statements.

The Company enters into service level agreements with its on-demand solution customers warranting certain levels of uptime reliability. To date, the Company has not incurred any material costs and has not accrued any liabilities related to such obligations.

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Document and Entity Information	3 Months Ended
	Mar. 31, 2014	Apr. 30, 2014
Document Document And Entity Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2014
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	Q1
Entity Registrant Name	SCIQUEST INC
Entity Central Index Key	0001082526
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		27,433,246

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Subsequent Events

3 Months Ended

Mar. 31, 2014

Subsequent Events

12. Subsequent Event

Public Offering

On April 1, 2014 the Company completed a public offering of 3,000 shares of common stock at an offering price of $26.75 per share. An additional 450 shares of common stock were sold at an offering price of $26.75 per share pursuant to the underwriters’ over-allotment option. The Company received aggregate net proceeds of approximately $87,433, after payment of underwriting discounts and commissions and estimated legal, accounting, and other fees incurred in connection with the offering and the over-allotment option.

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Consolidated Statements of Operations and Comprehensive Loss (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Revenues	$ 25,407	$ 20,665
Cost of revenues	7,670	6,614
Gross profit	17,737	14,051
Operating expenses:
Research and development	6,927	6,542
Sales and marketing	6,960	5,471
General and administrative	3,110	2,895
Amortization of intangible assets	797	454
Total operating expenses	17,794	15,362
Loss from operations	(57)	(1,311)
Other (expense) income:
Interest income	6	20
Other (expense) income, net	(9)	(26)
Total other (expense) income, net	(3)	(6)
Loss before income taxes	(60)	(1,317)
Income tax benefit	126	705
Net income (loss)	66	(612)
Other comprehensive loss:
Foreign currency translation adjustments	(757)	(324)
Comprehensive loss	$ (691)	$ (936)
Net income (loss) per share:
Basic	$ 0.00	$ (0.03)
Diluted	$ 0.00	$ (0.03)
Weighted average shares outstanding used in computing per share amounts:
Basic	23,908	22,564
Diluted	24,499	22,564

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Property and Equipment

3 Months Ended

Mar. 31, 2014

Property and Equipment

6. Property and Equipment

Property and equipment consist of the following as of March 31, 2014 and December 31, 2013:

	March 31, 2014			December 31, 2013
Furniture and fixtures	$	1,281		$	1,284
Computer software and equipment		18,455			17,036
Leasehold improvements		714			715
Total costs		20,450			19,035
Less accumulated depreciation and amortization		(10,158	)		(9,007	)
Property and equipment, net	$	10,292		$	10,028

Depreciation expense related to property and equipment (excluding capitalized internal-use software) was $610 and $474 for the three months ended March 31, 2014 and 2013, respectively.

Computer software and equipment includes capitalized software development costs incurred during development of the Company’s cloud-based solution. The Company capitalized software development costs of $1,271 and $1,079 during the three months ended March 31, 2014 and 2013, respectively. Net capitalized software development costs totaled $6,066 and $5,349 at March 31, 2014 and December 31, 2013, respectively. Amortization expense for the three months ended March 31, 2014 and 2013 related to capitalized software development costs was $558 and $367, respectively, which is classified within cost of revenues in the accompanying consolidated statements of operations and comprehensive (loss) income.

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Fair Value Measurements

3 Months Ended

Mar. 31, 2014

Fair Value Measurements

5. Fair Value Measurements

Under GAAP, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., “the exit price”) in an orderly transaction between market participants at the measurement date. GAAP also establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are obtained from independent sources and can be validated by a third party, whereas unobservable inputs reflect assumptions regarding what a third party would use in pricing an asset or liability. The fair value hierarchy is broken down into three levels based on the reliability of inputs as follows:

— Level 1 – Valuations based on quoted prices in active markets for identical instruments that the Company is able to access. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these products does not entail a significant degree of judgment.

— Level 2 – Valuations based on quoted prices in active markets for instruments that are similar, or quoted prices in markets that are not active for identical or similar instruments, and model-derived valuations in which all significant input and significant value drivers are observable in active markets.

— Level 3 – Valuations based on inputs that are unobservable and significant to the overall fair value measurement.

The financial assets for which the Company performs recurring fair value remeasurements are cash equivalents and short-term investments.

As of March 31, 2014 and December 31, 2013, the Company had cash equivalents of $8,354 and $5,349, respectively, which consist of money market accounts. As of March 31, 2014 and December 31, 2013, the Company had short-term investments of $15,105 and $15,105, respectively, which consist of variable rate demand notes that are invested in corporate and municipal bonds. These variable rate demand notes have final maturities between 2017 and 2042, but are puttable by the Company at any time with seven days notice. These cash equivalents and short-term investments are classified within Level 1 of the fair value hierarchy since they are valued using quoted market prices. As of March 31, 2014 and December 31, 2013, the Company did not have any financial assets or liabilities with observable inputs not quoted on active markets (Level 2), or without observable market values that would require a high level of judgment to determine fair value (Level 3).

The fair value measurements of the Company’s financial assets at March 31, 2014 are as follows:

	Total		Level 1		Level 2		Level 3
Cash equivalents	$	8,354	$	8,354	$	—	$	—
Short-term investments		15,105		15,105		—		—
Total	$	23,459	$	23,459	$	—	$	—

The fair value measurements of the Company’s financial assets at December 31, 2013 are as follows:

	Total		Level 1		Level 2		Level 3
Cash equivalents	$	5,349	$	5,349	$	—	$	—
Short-term investments		15,105		15,105		—		—
Total	$	20,454	$	20,454	$	—	$	—

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Fair Value Measurements (Tables)

3 Months Ended

Mar. 31, 2014

Fair Value Measurements

The fair value measurements of the Company’s financial assets at March 31, 2014 are as follows:

	Total		Level 1		Level 2		Level 3
Cash equivalents	$	8,354	$	8,354	$	—	$	—
Short-term investments		15,105		15,105		—		—
Total	$	23,459	$	23,459	$	—	$	—

The fair value measurements of the Company’s financial assets at December 31, 2013 are as follows:

	Total		Level 1		Level 2		Level 3
Cash equivalents	$	5,349	$	5,349	$	—	$	—
Short-term investments		15,105		15,105		—		—
Total	$	20,454	$	20,454	$	—	$	—

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Summary of Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2014

Basis of Presentation

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the three months ended March 31, 2014 are not necessarily indicative of the results to be expected for the fiscal year or any future period. The balance sheet at December 31, 2013 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by GAAP for complete financial statements. For further information, refer to the financial statements and footnotes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2013, which was filed with the Securities and Exchange Commission on February 21, 2014.

Principles of Consolidation

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ materially from those estimates.

Revenue Recognition

Revenue Recognition

The Company primarily derives its revenues from subscription fees and related services, permitting customers to access and utilize the Company’s cloud-based business automation solutions for spend management. Customers may also purchase a perpetual license for certain software products. Revenue is recognized when there is persuasive evidence of an arrangement, the service has been provided or delivered to the customer, the collection of the fee is probable and the amount of the fee to be paid by the customer is fixed or determinable. The Company’s arrangements do not contain general rights of return.

Because customers do not have the right to take possession of the Software-as-a-Service (“SaaS”) based software, these arrangements are considered service contracts and are not within the scope of Industry Topic 985, Software. The Company’s contractual agreements generally contain multiple service elements and deliverables, for which we follow the guidance provided in Accounting Standards Codification (“ASC”) 605-25, Revenue Recognition for Multiple-Element Arrangements. These elements include access to the hosted software, implementation or data classification services and, on a limited basis, perpetual licenses for certain software products and related maintenance and support. The Company evaluates each element in a multiple-element arrangement to determine whether it represents a separate unit of accounting. An element constitutes a separate unit of accounting when the delivered item has standalone value and delivery of the undelivered element is probable and within the Company’s control.

For arrangements in which elements do have stand-alone value, the Company allocates revenue to each element in the arrangement based on a selling price hierarchy. The selling price for a deliverable is based on vendor-specific objective evidence of selling price (“VSOE”), if available, third-party evidence of selling price (“TPE”), if VSOE is not available, or estimated selling price (“ESP”) if neither VSOE nor TPE is available. Because the Company has neither VSOE nor TPE for its deliverables, the allocation of revenue is based on ESP.

The Company’s process for determining ESP for its deliverables considers multiple factors that may vary depending upon the facts and circumstances related to each deliverable. Key factors considered in developing ESP related to deliverables include established pricing and approval policies, type and size of customer, number of products purchased, and historical transactions. The Company regularly reviews ESP and maintains internal controls over the establishment and updates of these estimates.

The Company evaluates its SaaS subscription agreements and considers whether the associated services have standalone value to its customers. For arrangements when implementation services do not have standalone value to the customer, licenses and related implementation services are considered a single unit of accounting. Accordingly, the consideration allocated to licenses and services is recognized ratably over the term of the subscription agreement, beginning with the later of the start date specified in the subscription agreement, or the date access to the software is provided to the customer, provided all other revenue recognition criteria have been met. Fees for professional services that are contingent upon future performance are recognized ratably over the remaining subscription term once the performance milestones have been met. Alternatively, when services have standalone value to the customer, licenses and related services are considered separate units of accounting. For separate units of accounting, services are recognized as the services are performed and delivered to the customer and licenses are recognized over the term of the subscription arrangement, beginning with the later of the start date specified in the subscription agreement, or the date access to the software is provided to the customer, provided all other revenue recognition criteria have been met.

Revenue from sales of certain of the Company’s perpetual software products and related implementation services and maintenance is recognized as a single unit of accounting since VSOE of fair value does not exist for the contractual elements. Accordingly, revenue for all elements in these arrangements is recognized over the contractual maintenance term, which is typically one year.

The Company recognizes revenue from any professional services that are sold separately as the services are performed.

Deferred revenue primarily consists of billings or payments received in advance of revenue recognition from the Company’s software and services described above. For multi-year subscription agreements, the Company generally invoices its customers in annual installments. Accordingly, the deferred revenue balance does not represent the total contract value of these multi-year subscription agreements. The Company’s services, such as implementation, are generally sold in conjunction with subscription agreements. These services are recognized ratably over the remaining term of the subscription agreement once any contingent performance milestones have been satisfied. The portion of deferred revenue that the Company anticipates will be recognized after the succeeding 12-month period is recorded as non-current deferred revenue and the remaining portion is recorded as current deferred revenue.

Cost of Revenues

Cost of Revenues

Cost of revenues primarily consists of costs related to hosting the Company’s subscription software services, compensation and related expenses for implementation services, supplier enablement services, customer support staff and client partners, amortization of capitalized software development costs and allocated fixed asset depreciation and facilities costs. Cost of revenues is expensed as incurred.

Deferred Commissions

Deferred Commissions

The Company capitalizes sales commission costs that are directly related to the execution of its subscription agreements. The commissions are deferred and amortized over the contractual term of the related non-cancelable subscription agreement. The Company believes this is the appropriate method of accounting, as the commission costs are so closely related to the revenues from the subscription agreements that they should be recorded as an asset and charged to expense over the same period that the subscription revenues are recognized. Amortization of deferred commissions is included in sales and marketing expense in the accompanying consolidated statements of operations and comprehensive (loss) income. The deferred commissions are reflected in the accompanying consolidated balance sheets.

Cash and Cash Equivalents

Cash and Cash Equivalents

The Company considers all highly liquid debt investments with an original maturity of three months or less at the date of purchase to be cash equivalents. The Company maintains cash balances at financial institutions that may at times exceed federally insured limits. The Company maintains this cash at reputable financial institutions and, as a result, believes credit risk related to its cash is minimal.

Short-Term Investments

Short-Term Investments

Management determines the appropriate classification of investments at the time of purchase and evaluates such determination as of each balance sheet date. The Company’s investments were classified as available-for-sale securities and are stated at fair value at March 31, 2014 and December 31, 2013. Realized gains and losses are included in other (expense) income based on the specific identification method. There were no realized gains or losses for the three months ended March 31, 2014 or 2013. Net unrealized gains and losses on available-for-sale securities are reported as a component of other comprehensive (loss) income, net of tax. As of March 31, 2014 and December 31, 2013, there were no unrealized gains or losses on available-for-sale securities. The Company regularly monitors and evaluates the fair value of its investments to identify other-than-temporary declines in value. Management believes no such declines in value existed at March 31, 2014 or December 31, 2013.

Accounts Receivable

Accounts Receivable

The Company assesses the need for an allowance for doubtful accounts based on estimates of probable credit losses. This assessment is based on several factors including aging of customer accounts, known customer specific risks, historical experience and existing economic conditions. The Company generally does not require collateral for receivable balances. Accounts would be charged against the allowance after all means of collection were exhausted and recovery was considered remote. Based on management’s analysis of its outstanding accounts receivable, the Company recorded an allowance of $421 and $556 at March 31, 2014 and December 31, 2013, respectively.

Property and Equipment

Property and Equipment

Property and equipment are recorded at cost and depreciated using the straight-line method over their estimated useful lives, which are usually seven years for furniture and three to five years for computer software and equipment. Leasehold improvements are amortized over the shorter of the estimated useful lives of the assets or the remainder of the lease term. Costs for repairs and maintenance are expensed as incurred. Upon retirement or sale, the cost of the disposed assets and the related accumulated depreciation are removed from the accounts, and any resulting gain or loss is credited or charged to operations.

Software Development Costs

Software Development Costs

The Company incurs certain costs associated with the development of its cloud-based solution, which are accounted for as internal-use software. Certain qualifying costs incurred during the application development phase are capitalized and amortized to expense over the estimated useful life of the related applications, which is generally three years.

Although the Company’s development efforts are primarily focused on its hosted, cloud-based solution, the Company also incurs costs in connection with the development of certain of its software products licensed to customers on a perpetual basis, which are accounted for as costs of software to be sold, leased or otherwise marketed. Under this guidance, capitalization of software development costs begins upon the establishment of technological feasibility (based on a working model approach), subject to net realizable value considerations. To date, the dates between achieving technological feasibility and the general availability of such software have substantially coincided; therefore, software development costs for these products that would qualify for capitalization have been immaterial. Accordingly, the Company has not capitalized any software development costs related to these software products and has charged all such costs to research and development expense.

Goodwill

Goodwill

Goodwill represents the excess of the cost of an acquired entity over the net fair value of the identifiable assets acquired and liabilities assumed. Goodwill is not amortized, but rather is assessed for impairment at least annually. Additionally, the Company would also review the carrying value of goodwill whenever events or changes in circumstances indicated that its carrying amount may not be recoverable. The Company has concluded that it has one reporting unit for purposes of its annual goodwill impairment testing. To assess goodwill impairment, the first step is to identify if a potential impairment exists by comparing the fair value of a reporting unit with its carrying amount, including goodwill. If the fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is not considered to have a potential impairment and the second step of the impairment test is not necessary. The results of our most recent annual assessment did not indicate any impairment of goodwill, and as such the second step of the impairment test was not required. Additionally, we do not believe there have been any triggering events that would result in potential impairment of goodwill as of March 31, 2014.

Stock-Based Compensation

Stock-Based Compensation

Stock-based payments to employees, including grants of employee stock options, are recognized in the consolidated statement of operations and comprehensive (loss) income based on their fair values. Stock-based compensation costs are measured at the grant date based on the fair value of the award and are recognized as expense on a straight-line basis over the requisite service period, which is the vesting period.

Stock-based compensation costs are based on the fair value of the underlying option calculated using the Black-Scholes option-pricing model on the date of grant for stock options. Determining the appropriate fair value model and related assumptions requires judgment, including estimating stock price volatility, forfeiture rates and expected term. The Company uses the historical volatility of its stock price to calculate the expected volatility. Prior to the second half of 2013, the expected volatility rates were estimated based on the actual volatility of comparable public companies over the expected term. The expected term for the three months ended March 31, 2014 and 2013, represents the average time that options that vest are expected to be outstanding based on the mid-point between the vesting date and the end of the contractual term of the award. The Company has not paid dividends and does not anticipate paying a cash dividend in the foreseeable future and, accordingly, uses an expected dividend yield of zero. The risk-free interest rate is based on the rate of U.S. Treasury securities with maturities consistent with the estimated expected term of the awards.

Foreign Currency and Operations

Foreign Currency and Operations

The reporting currency for all periods presented is the U.S. dollar. The functional currency for the Company’s foreign subsidiaries is generally their local currency. The translation of each subsidiary’s financial statements into U.S. dollars is performed for assets and liabilities using exchange rates in effect at the balance sheet date and for revenue and expense accounts using an average exchange rate during the period. The resulting translation adjustments are recognized in accumulated other comprehensive loss, a separate component of stockholders’ equity. Also included in accumulated other comprehensive loss is the foreign translation loss adjustment of $2,763 and $1,729 at March 31, 2014 and December 31, 2013, respectively, related to the intercompany balance with the Company’s Canadian subsidiary not expected to be settled in the foreseeable future. Realized foreign currency transaction gains and losses are included in other income (expense) in the consolidated statements of operations and comprehensive (loss) income.

Segment Data

Segment Data

The Company manages its operations on a consolidated basis for purposes of assessing performance and making operating decisions. Accordingly, the Company has determined that it has a single reportable segment.

Income (Loss) Per Share

Income (Loss) Per Share

Basic net income (loss) per share is computed by dividing net income (loss) by the weighted-average number of shares of common stock outstanding for the period. Outstanding unvested restricted stock purchased by employees is subject to repurchase by the Company and therefore is not included in the calculation of the weighted-average shares outstanding until vested. Diluted net income per share is computed giving effect to all potentially dilutive common stock, including options and restricted stock. The dilutive effect of outstanding awards is reflected in diluted earnings per share by application of the treasury stock method.

The following summarizes the calculation of basic and diluted net income (loss) per share:

	Three Months Ended March 31,
	2014		2013
Basic:
Net income (loss)	$	66	$	(612	)
Weighted average common shares, basic		23,908		22,564
Basic net income (loss) per share	$	0.00	$	(0.03	)
Diluted:
Net income (loss)	$	66	$	(612	)
Weighted average common shares, basic		23,908		22,564
Dilutive effect of:
Options to purchase common stock		569		—
Nonvested shares of restricted stock		22		—
Weighted average common shares, diluted		24,499		22,564
Diluted net income (loss) per share	$	0.00	$	(0.03	)

The following equity instruments have been excluded from diluted net income (loss) per common share as they would be anti-dilutive.

	Three Months Ended March 31,
	2014		2013
Common stock options		92		84

For the three months ended March 31, 2013, the Company incurred net losses and, therefore, the effect of the Company’s outstanding stock options, nonvested restricted stock and common stock issuable pursuant to the employee stock purchase plan was not included in the calculation of diluted net loss per share as the effect would be anti-dilutive. For the three months ended March 31, 2013, diluted net loss per share excluded the impact of 335 outstanding stock options, 37 nonvested shares of restricted stock, and 3 shares of common stock issuable pursuant to the employee stock purchase plan.

Income Taxes

Income Taxes

Deferred income taxes are provided using tax rates enacted for periods of expected reversal on all temporary differences. Temporary differences relate to differences between the book and tax basis of assets and liabilities, principally intangible assets, property and equipment, deferred subscription revenues, accruals and stock-based compensation. Valuation allowances are established to reduce deferred tax assets to the amount that will more likely than not be realized. To the extent that a determination is made to establish or adjust a valuation allowance, the expense or benefit is recorded in the period in which the determination is made.

Judgment is required in determining the provision for income taxes. Additionally, the income tax provision is based on calculations and assumptions that are subject to examination by many different tax authorities and to changes in tax law and rates in many jurisdictions. The Company would adjust its income tax provision in the period in which it becomes probable that actual results differ from management estimates.

The Company accounts for uncertain tax positions by recognizing and measuring tax benefits taken or expected to be taken on a tax return. A tax benefit from an uncertain position may be recognized only if it is more likely than not that the position is sustainable, based solely on its technical merits and consideration of the relevant taxing authority’s widely understood administrative practices and precedents. If the recognition threshold is met, only the portion of the tax benefit that is more likely than not to be realized upon settlement with a taxing authority is recorded. The tax benefit that is not recorded is considered an unrecognized tax benefit. Interest and penalties related to uncertain tax positions are recognized as a component of income tax expense.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

In July 2013, the FASB issued a revised accounting standard, which clarifies that an unrecognized tax benefit, or a portion of an unrecognized tax benefit, should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward if such settlement is required or expected in the event the uncertain tax position is disallowed. In situations where a net operating loss carryforward, a similar tax loss, or a tax credit carryforward is not available at the reporting date under the tax law of the applicable jurisdiction or the tax law of the jurisdiction does not require, and the entity does not intend to use, the deferred tax asset for such purpose, the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets. This standard is effective prospectively for fiscal years, and interim periods within those years, beginning after December 15, 2013. Retrospective application is permitted. The Company adopted this guidance on January 1, 2014. The adoption of this guidance did not have a material impact on the Company’s financial position, results of operations, or cash flows.

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Stockholders' Equity

3 Months Ended

Mar. 31, 2014

Stockholders' Equity

9. Stockholders’ Equity

Preferred Stock

The Company is authorized to issue up to 5,000 shares of $0.001 par value preferred stock, of which 222 shares are designated as Series A redeemable preferred stock. The Company’s Board of Directors has the authority to issue up to 4,778 shares of preferred stock in one or more series and to fix the designations, rights, preferences and privileges and any qualifications, limitations or restrictions of the shares of each such series of preferred stock, including dividend rights and rates, conversion rights, voting rights, terms of redemption including price and sinking fund provisions, liquidation preferences and number of shares constituting any series or the designation of that series. As of March 31, 2014 and December 31, 2013, no shares of preferred stock were issued or outstanding.

Stock Incentive Plan

The Company’s 2013 Stock Incentive Plan (the “Plan”) allows the Company to grant common stock options, stock appreciation rights, restricted stock units and restricted stock awards to employees, board members and others who contribute materially to the success of the Company. The Company reserved 3,500 shares of its common stock for issuance under the Plan. Additionally, per the terms of the Plan, shares of common stock previously reserved for issuance under the 2004 Stock Incentive Plan (the “Prior Plan”) as well as shares reserved for outstanding awards under the Prior Plan for which the awards are canceled, forfeited, repurchased or otherwise result in common stock not being issued will be added to the number of shares available for issuance under the Plan. Restricted stock units and restricted stock awards that are granted shall count towards the total number of shares reserved for issuance under the Plan as 1.65 shares. As of March 31, 2014, 3,496 shares of common stock were available for issuance under the Plan.

The following table summarizes the number of shares outstanding and the number of shares available for future grant under the stock incentive plan at March 31, 2014:

	March 31, 2014
Number of shares reserved under the 2013 Plan		3,500
Number of shares remaining for future grants transferred from Prior Plan		844
Number of stock options outstanding under the 2013 Plan		(780	)
Weighted average exercise price	$	25.05
Weighted average term (in years)		9.8
Number of restricted stock units issued under the 2013 Plan		(68	)
Number of shares remaining for future grants
SciQuest, Inc. 2013 Stock Incentive Plan		3,496

The Company’s Board of Directors approves the terms of stock options granted. Individual option grants generally become exercisable ratably over a period of four years from the grant date. The contractual term of the options is approximately ten years from the date of grant.

The Company recognizes compensation expense associated with restricted stock and common stock options based on the grant-date fair value of the award on a straight-line basis over the requisite service period of the individual grantees, which generally equals the vesting period.

Restricted Stock

The Company issues restricted stock units to certain employees and non-employee directors. Restricted stock units differ from restricted stock awards in that restricted stock units represent the right to receive shares of common stock once such shares are vested and issuable in accordance with the terms of the restricted stock units. Once issued, such shares are not subject to further restrictions. Stock-based compensation expense related to these restricted stock units is recognized in the consolidated statements of operations and comprehensive (loss) income based on the fair value of these awards, which is the grant date market value of the Company’s common stock. Stock-based compensation expense of $144 and $128 was recorded during the three months ended March 31, 2014 and 2013, respectively, in connection with these restricted stock units. The total unrecognized compensation cost related to these awards is approximately $1,436 at March 31, 2014. This amount is expected to be recognized over a weighted-average period of 3.5 years.

The following summarizes the activity of restricted stock units for the three months ended March 31, 2014:

	Number ofShares			Weighted-Average GrantDate Fair Value
Nonvested as of December 31, 2013		49		$	18.02
Issued		41			25.01
Vested		(9	)		16.30
Nonvested as of March 31, 2014		81		$	21.78

Additionally, the Company previously issued restricted shares of its common stock to certain employees under the Prior Plan. These awards are recognized in the consolidated statements of operations and comprehensive (loss) income based on their fair values. Stock-based compensation expense of $11 was recorded during the three months ended March 31, 2013 in connection with these restricted stock awards.

Stock Options

The Company also issues common stock options. The following summarizes stock option activity for the three months ended March 31, 2014:

	Number of Options			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (In Years)		Aggregate Intrinsic Value as of March 31, 2014
Balance outstanding as of December 31, 2013		1,967		$	15.22		8.0	$	26,168
Options granted		431			26.05
Options exercised		(40	)		7.56
Options canceled		(24	)		16.35
Balance outstanding as of March 31, 2014		2,334		$	17.33		8.2	$	22,918
Vested and expected to vest at March 31, 2014		2,054		$	16.82		8.1	$	22,132
Exercisable as of March 31, 2014		930		$	11.72		6.9	$	14,235

The aggregate intrinsic value in the table above represents the difference between the exercise price of the underlying awards and the estimated fair value of the Company’s common stock at March 31, 2014 multiplied by the number of shares that would have been received by the option holders had all option holders exercised their options on March 31, 2014. The aggregate intrinsic value of options exercised during the three months ended March 31, 2014 and 2013 was $831 and $1,098, respectively.

The total unrecognized compensation cost related to outstanding stock options is $14,373 at March 31, 2014. This amount is expected to be recognized over a weighted-average period of 3.1 years.

The following table summarizes information about stock options outstanding and exercisable at March 31, 2014:

	Options Outstanding at March 31, 2014						Options Exercisable at March 31, 2014
Range of Exercise Price	Number		Weighted- Average Remaining Contractual Term (In Years)		Weighted- Average Exercise Price		Number		Weighted- Average Exercise Price
$0.08 –$0.14		29		1.1	$	0.09		29	$	0.09
$0.14 –$1.90		3		4.5		1.34		3		1.34
$2.04 –$8.18		224		5.7		3.66		224		3.65
$11.45 –$17.41		1,194		7.8		14.87		642		14.53
$17.50 –$27.64		709		9.5		23.76		28		22.66
$27.91 –$29.14		175		9.9		28.71		4		28.68
Total		2,334		8.2	$	17.33		930	$	11.72

The fair value of common stock options for employees and non-employees is estimated on the date of grant using the Black-Scholes option-pricing model with the following assumptions used:

	Three Months Ended March 31,
	2014			2013
Estimated dividend yield		0	%		0	%
Expected stock price volatility		46.11 - 46.33	%		55.00	%
Weighted-average risk-free interest rate		1.75 - 1.84	%		1.1	%
Expected life of options (in years)		6.25			6.25

Stock-based compensation expense of $1,238 and $789 was recorded during the three months ended March 31, 2014 and 2013, respectively, related to the Company’s outstanding stock options. The weighted average grant date fair value per share for stock options granted in the three months ended March 31, 2014 and 2013 was $12.20 and $8.62, respectively. The aggregate fair value of stock options that vested during the three months ended March 31, 2014 and 2013 was $971 and $796, respectively.

As discussed in Note 3, the Company recognized stock-based compensation expense of $313 in the accompanying consolidated statement of operations and comprehensive (loss) income during the three months ended March 31, 2013 related to the earn-out arrangement associated with the Spend Radar acquisition. In addition, the Company recognized stock-based compensation of $244 in the accompanying consolidated statement of operations and comprehensive (loss) income during the three months ended March 31, 2013 related to the earn-out arrangement with certain former shareholders of AECsoft.

Employee Stock Purchase Plan

The Company adopted an Employee Stock Purchase Plan (the “Purchase Plan”) effective June 1, 2012. Eligible employees can contribute up to 10% of their gross earnings for each pay period, up to a maximum of $25 for any calendar year. The initial offering period that commenced on June 1, 2012 was a period of 12 months, and thereafter six month offering periods begin on December 1 and June 1 of each year. During the offering period eligible employees may elect to purchase shares of the Company’s common stock according to the terms of the offering. The per share purchase price is equal to the lesser of 85% of the fair market value of the Company’s common stock on the offering date or 85% of the fair market value of the Company’s common stock on the purchase date. The fair value of stock purchase rights granted under the Purchase Plan is estimated on the date of grant using the Black-Scholes option-pricing model. As of March 31, 2014, 943 shares of common stock were available for issuance to participating employees under the Purchase Plan. During the three months ended March 31, 2014 and 2013, the Company recognized stock-based compensation expense of $81 and $77 related to the Purchase Plan.

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Stockholders' Equity - Employee Stock Purchase Plan (Narrative) (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Shares available for issuance	3,496
Employee Stock
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock-based compensation expense	$ 81	$ 77
Employee stock purchase plan, maximum contribution rate	10.00%	10.00%
Employee stock purchase plan, percentage of per share purchase price, lesser of fair market value on offering date or purchase date	Lesser of 85%	Lesser of 85%
Shares available for issuance	943
Employee stock purchase plan, maximum annual contribution	25	25

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Goodwill and Other Intangible Assets

3 Months Ended

Mar. 31, 2014

Goodwill and Other Intangible Assets

7. Goodwill and Other Intangible Assets

The Company acquired goodwill and certain identifiable intangible assets as part of the acquisitions in August 2013, October 2012, August 2012 and January 2011 and the going private transaction in July 2004.

The changes in the carrying amount of goodwill for the three months ended March 31, 2014 were as follows:

Balance at December 31, 2013	$	65,280
Foreign currency translation		(548	)
Balance at March 31, 2014	$	64,732

As the functional currency of the Company’s Canadian subsidiary, where certain of the Company’s goodwill is recorded, is its local currency, there are related foreign currency translation adjustments. The foreign currency is translated into U.S. dollars using the exchange rate in effect at period end, with any adjustment included in other comprehensive (loss) income.

A summary of intangible assets at March 31, 2014 and December 31, 2013 follows:

	March 31, 2014
	Weighted Average Amortization Period		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Acquired technology		7.0 years	$	19,749	$	(10,471	)	$	9,278
Customer relationships		12.1 years		26,993		(9,781	)		17,212
Covenant not to compete		4.2 years		381		(133	)		248
Acquired trademarks		4.5 years		1,104		(310	)		794
Trademarks		indefinite		430		—			430
Total			$	48,657	$	(20,695	)	$	27,962

	December 31, 2013
	Weighted Average Amortization Period		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Acquired technology		7.0 years	$	19,889	$	(10,070	)	$	9,819
Customer relationships		12.1 years		27,117		(9,013	)		18,104
Covenant not to compete		4.2 years		382		(112	)		270
Acquired trademarks		4.5 years		1,113		(246	)		867
Trademarks		indefinite		430		—			430
Total			$	48,931	$	(19,441	)	$	29,490

As the functional currency of the Company’s Canadian subsidiary, where certain intangible assets are recorded, is its local currency, there are related foreign currency translation adjustments. The foreign currency is translated into U.S. dollars using the exchange rate in effect at period end, with any adjustment included in other comprehensive (loss) income.

Amortization expense of intangible assets was $1,317 and $779 for the three months ended March 31, 2014 and 2013, respectively, of which $520 and $325 is recorded in cost of revenues in the accompanying consolidated statements of operations and comprehensive (loss) income for the three months ended March 31, 2014 and 2013, respectively.

The Company estimates the following amortization expense related to its intangible assets for the years ended December 31:

2014 (remaining nine months)	$	3,802
2015		4,633
2016		4,211
2017		3,756
2018		3,147
Thereafter		7,983
	$	27,532

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Debt

3 Months Ended

Mar. 31, 2014

Debt

8. Debt

On November 2, 2012, the Company established a $30,000 revolving credit facility which will be available for use until November 2, 2015. The revolving credit facility will be used for general corporate purposes. The facility consists of a $20,000 securities secured revolving credit facility and a $10,000 receivables secured revolving credit facility. The securities secured revolving credit facility and the receivables secured revolving credit facility bear interest equal to the BBA LIBOR Daily Floating Rate plus 0.75% and the BBA LIBOR Daily Floating Rate plus 1.50%, respectively. In addition, the Company pays a quarterly fee equal to 0.10% on any unused funds under the facility. As collateral for extension of credit under the facility, the Company and a domestic subsidiary granted security interests in substantially all of their assets, and the Company pledged the stock of a domestic subsidiary and 66% of the shares of one of its foreign subsidiaries. As of March 31, 2014 and December 31, 2013, the Company had $0 outstanding under the revolving credit facility.

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Income Taxes

3 Months Ended

Mar. 31, 2014

Income Taxes

10. Income Taxes

The Company computes its provision for income taxes by applying the estimated annual effective tax rate, adjusted for any material items. The Company’s effective tax rate for the three months ended March 31, 2014 was (210.0)%, which was lower than the federal statutory rate of 34% primarily due to research and development credits generated, non-deductible expenses, including stock-based compensation and stock-based compensation associated with the earn-out arrangement. The Company’s effective tax rate for the three months ended March 31, 2013 was (53.5)%, which was lower than the federal statutory rate of 34% primarily due to research and development credits generated, non-deductible expenses, including stock-based compensation and stock-based compensation associated with the earn-out arrangement.

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Business Combinations - Spend Radar - (Narrative) (Detail) (Spend Radar, USD $) In Thousands, unless otherwise specified	1 Months Ended			3 Months Ended
	Feb. 28, 2014	Apr. 30, 2013	Oct. 31, 2012	Mar. 31, 2013	Jan. 31, 2014	Apr. 29, 2013	Oct. 01, 2012
Business Acquisition [Line Items]
Cash			$ 8,000
Fair value of common stock, shares			113
Fair value of common stock			2,087
Cash potentially payable under earn-out arrangement							6,000
Common stock shares potentially issuable under earn-out arrangement							85
Earn-out compensation paid					3,600	2,400
Common stock shares issued under earn-out arrangement	51	34
Compensation expense recognized related to earn-out arrangement				1,200
Stock-based compensation expense related to earn-out arrangement				$ 313
Customer Relationships
Business Acquisition [Line Items]
Estimated useful life			5 years

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Stockholders' Equity - Preferred Stock (Narrative) (Detail) (USD $) In Thousands, except Per Share data, unless otherwise specified	Mar. 31, 2014	Mar. 31, 2013
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Preferred stock, shares authorized	5,000
Preferred stock, par value	$ 0.001
Preferred stock shares outstanding	0	0
Preferred stock shares issued	0	0
Series A Redeemable Preferred Stock
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Preferred stock, shares authorized	222
Preferred Stock
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Preferred stock, shares authorized	4,778

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Business Combinations (Tables)

3 Months Ended

Mar. 31, 2014

CombineNet

Schedule of Purchase Price Consideration

The purchase consideration consisted of the following:

Cash	$	26,634
Fair value of common stock		17,093
Total purchase consideration		43,727
Cash acquired		1,042
Net purchase consideration	$	42,685

Schedule of Purchase Price Allocation

The allocation of the purchase price as of the acquisition date was as follows:

	EstimatedUseful Life		EstimatedFair Value
Accounts receivable			$	2,679
Prepaid expenses and other current assets				334
Property and equipment				464
Deferred project costs				121
Deferred tax assets				5,323
Other assets				30
Covenant not to compete		2 years		100
Trademarks		3 years		300
Acquired technology		7 years		4,100
Customer relationships		15 years		13,000
Goodwill				28,908
Accounts payable				(98	)
Accrued expenses				(786	)
Deferred tax liability				(7,350	)
Deferred revenues				(4,440	)
Total purchase consideration			$	42,685

Schedule of Unaudited Pro Forma Information

The following unaudited pro forma information is not intended to be indicative of future operating results.

	Three Months EndedMarch 31, 2013
Pro forma revenue	$	24,053
Pro forma net loss	$	(750	)
Pro forma net loss per share, basic	$	(0.03	)
Pro forma net loss per share, diluted	$	(0.03	)

Spend Radar

Schedule of Purchase Price Consideration

The purchase consideration consisted of the following:

Cash	$	8,000
Fair value of common stock		2,087
Total purchase consideration		10,087
Cash acquired		259
Net purchase consideration	$	9,828

Schedule of Purchase Price Allocation

The allocation of the purchase price as of the acquisition date was as follows:

	Estimated Useful Life		Estimated Fair Value
Accounts receivable			$	634
Prepaid expenses and other current assets				100
Property and equipment				147
Covenant not to compete		5 years		203
Trademarks		5 years		566
Acquired technology		7 years		2,693
Customer relationships		5 years		1,338
Goodwill				5,682
Accrued expenses				(305	)
Deferred revenues				(1,230	)
Total purchase consideration			$	9,828

Upside Software

Schedule of Purchase Price Allocation

The allocation of the purchase price as of the acquisition date was as follows:

	Estimated Useful Life		Estimated Fair Value
Accounts receivable			$	2,096
Prepaid expenses and other current assets				230
Property and equipment				478
Covenant not to compete		5 years		30
Trademarks		5 years		263
Acquired technology		7 years		4,064
Customer relationships		10 years		3,594
Goodwill				15,927
Accrued expenses				(530	)
Deferred revenues				(3,705	)
Total purchase consideration			$	22,447

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Stockholders' Equity (Tables)

3 Months Ended

Mar. 31, 2014

Schedule of Number of Shares Outstanding and Number of Shares Available for Future Grant

The following table summarizes the number of shares outstanding and the number of shares available for future grant under the stock incentive plan at March 31, 2014:

	March 31, 2014
Number of shares reserved under the 2013 Plan		3,500
Number of shares remaining for future grants transferred from Prior Plan		844
Number of stock options outstanding under the 2013 Plan		(780	)
Weighted average exercise price	$	25.05
Weighted average term (in years)		9.8
Number of restricted stock units issued under the 2013 Plan		(68	)
Number of shares remaining for future grants
SciQuest, Inc. 2013 Stock Incentive Plan		3,496

Schedule of Restricted Stock Unit Activity

The following summarizes the activity of restricted stock units for the three months ended March 31, 2014:

	Number ofShares			Weighted-Average GrantDate Fair Value
Nonvested as of December 31, 2013		49		$	18.02
Issued		41			25.01
Vested		(9	)		16.30
Nonvested as of March 31, 2014		81		$	21.78

Schedule of Stock Option Activity

The Company also issues common stock options. The following summarizes stock option activity for the three months ended March 31, 2014:

	Number of Options			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (In Years)		Aggregate Intrinsic Value as of March 31, 2014
Balance outstanding as of December 31, 2013		1,967		$	15.22		8.0	$	26,168
Options granted		431			26.05
Options exercised		(40	)		7.56
Options canceled		(24	)		16.35
Balance outstanding as of March 31, 2014		2,334		$	17.33		8.2	$	22,918
Vested and expected to vest at March 31, 2014		2,054		$	16.82		8.1	$	22,132
Exercisable as of March 31, 2014		930		$	11.72		6.9	$	14,235

Schedule of Stock Options Outstanding and Exercisable

The following table summarizes information about stock options outstanding and exercisable at March 31, 2014:

	Options Outstanding at March 31, 2014						Options Exercisable at March 31, 2014
Range of Exercise Price	Number		Weighted- Average Remaining Contractual Term (In Years)		Weighted- Average Exercise Price		Number		Weighted- Average Exercise Price
$0.08 –$0.14		29		1.1	$	0.09		29	$	0.09
$0.14 –$1.90		3		4.5		1.34		3		1.34
$2.04 –$8.18		224		5.7		3.66		224		3.65
$11.45 –$17.41		1,194		7.8		14.87		642		14.53
$17.50 –$27.64		709		9.5		23.76		28		22.66
$27.91 –$29.14		175		9.9		28.71		4		28.68
Total		2,334		8.2	$	17.33		930	$	11.72

Schedule of Assumptions used to Calculate Fair Value of Common Stock Options

The fair value of common stock options for employees and non-employees is estimated on the date of grant using the Black-Scholes option-pricing model with the following assumptions used:

	Three Months Ended March 31,
	2014			2013
Estimated dividend yield		0	%		0	%
Expected stock price volatility		46.11 - 46.33	%		55.00	%
Weighted-average risk-free interest rate		1.75 - 1.84	%		1.1	%
Expected life of options (in years)		6.25			6.25

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Goodwill and Other Intangible Assets - Future Amortization Expense Related to Intangible Assets (Detail) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014
Finite Lived Intangible Assets Future Amortization Expense [Abstract]
2014 (remaining nine months)	$ 3,802
2015	4,633
2016	4,211
2017	3,756
2018	3,147
Thereafter	7,983
Total	$ 27,532

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Cash Equivalents and Short-Term Investments - (Narrative) (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended	12 Months Ended
	Mar. 31, 2014	Dec. 31, 2013
Cash And Cash Equivalents [Line Items]
Unrealized gains or losses	$ 0	$ 0

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Consolidated Statement of Stockholders' Equity (USD $) In Thousands	Total	Common Stock	Additional Paid-In Capital	Accumulated Other Comprehensive Loss	Accumulated Deficit
Balance at Dec. 31, 2013	$ 88,179	$ 24	$ 108,864	$ (1,401)	$ (19,308)
Balance, shares at Dec. 31, 2013		23,811
Issuance of stock in connection with stock option exercises	292		292
Issuance of stock in connection with stock option exercises, shares	40	40
Issuance of stock in connection with business acquisition
Issuance of stock in connection with business acquisitions, shares		132
Stock-based compensation	1,463		1,463
Foreign currency translation adjustments	(757)			(757)
Net income	66				66
Balance at Mar. 31, 2014	$ 89,243	$ 24	$ 110,619	$ (2,158)	$ (19,242)
Balance, shares at Mar. 31, 2014		23,983

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Cash Equivalents and Short-Term Investments

3 Months Ended

Mar. 31, 2014

Cash Equivalents and Short-Term Investments

4. Cash Equivalents and Short-Term Investments

The components of cash equivalents and short-term investments at March 31, 2014 and December 31, 2013 are as follows:

	March 31, 2014				December 31, 2013
	Cost		Fair Market Value		Cost		Fair Market Value
Cash equivalents:
Money market accounts	$	8,354	$	8,354	$	5,349	$	5,349
Short-term investments:
Variable rate demand notes		15,105		15,105		15,105		15,105
Total	$	23,459	$	23,459	$	20,454	$	20,454

There were no unrealized gains or losses as of March 31, 2014 or December 31, 2013.

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Stockholders' Equity - Schedule of Stock Options Outstanding and Exercisable (Detail) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended	12 Months Ended
	Mar. 31, 2014	Dec. 31, 2013
Share Based Compensation Shares Authorized Under Stock Option Plans Exercise Price Range [Line Items]
Options Outstanding, Number	2,334
Weighted-Average Remaining Contractual Term (In Years)	8 years 2 months 12 days	8 years
Options Outstanding, Weighted-Average Exercise Price	$ 17.33
Options Exercisable, Number	930
Options Exercisable, Weighted-Average Exercise Price	$ 11.72
$0.08 - $0.14
Share Based Compensation Shares Authorized Under Stock Option Plans Exercise Price Range [Line Items]
Exercise Price Range Lower Limit	$ 0.08
Exercise Price Range Upper Limit	$ 0.14
Options Outstanding, Number	29
Weighted-Average Remaining Contractual Term (In Years)	1 year 1 month 6 days
Options Outstanding, Weighted-Average Exercise Price	$ 0.09
Options Exercisable, Number	29
Options Exercisable, Weighted-Average Exercise Price	$ 0.09
$0.14 - $1.90
Share Based Compensation Shares Authorized Under Stock Option Plans Exercise Price Range [Line Items]
Exercise Price Range Lower Limit	$ 0.14
Exercise Price Range Upper Limit	$ 1.90
Options Outstanding, Number	3
Weighted-Average Remaining Contractual Term (In Years)	4 years 6 months
Options Outstanding, Weighted-Average Exercise Price	$ 1.34
Options Exercisable, Number	3
Options Exercisable, Weighted-Average Exercise Price	$ 1.34
$2.04 - $8.18
Share Based Compensation Shares Authorized Under Stock Option Plans Exercise Price Range [Line Items]
Exercise Price Range Lower Limit	$ 2.04
Exercise Price Range Upper Limit	$ 8.18
Options Outstanding, Number	224
Weighted-Average Remaining Contractual Term (In Years)	5 years 8 months 12 days
Options Outstanding, Weighted-Average Exercise Price	$ 3.66
Options Exercisable, Number	224
Options Exercisable, Weighted-Average Exercise Price	$ 3.65
$11.45 - $17.41
Share Based Compensation Shares Authorized Under Stock Option Plans Exercise Price Range [Line Items]
Exercise Price Range Lower Limit	$ 11.45
Exercise Price Range Upper Limit	$ 17.41
Options Outstanding, Number	1,194
Weighted-Average Remaining Contractual Term (In Years)	7 years 9 months 18 days
Options Outstanding, Weighted-Average Exercise Price	$ 14.87
Options Exercisable, Number	642
Options Exercisable, Weighted-Average Exercise Price	$ 14.53
$17.50 - $27.64
Share Based Compensation Shares Authorized Under Stock Option Plans Exercise Price Range [Line Items]
Exercise Price Range Lower Limit	$ 17.50
Exercise Price Range Upper Limit	$ 27.64
Options Outstanding, Number	709
Weighted-Average Remaining Contractual Term (In Years)	9 years 6 months
Options Outstanding, Weighted-Average Exercise Price	$ 23.76
Options Exercisable, Number	28
Options Exercisable, Weighted-Average Exercise Price	$ 22.66
$27.91 - $29.14
Share Based Compensation Shares Authorized Under Stock Option Plans Exercise Price Range [Line Items]
Exercise Price Range Lower Limit	$ 27.91
Exercise Price Range Upper Limit	$ 29.14
Options Outstanding, Number	175
Weighted-Average Remaining Contractual Term (In Years)	9 years 10 months 24 days
Options Outstanding, Weighted-Average Exercise Price	$ 28.71
Options Exercisable, Number	4
Options Exercisable, Weighted-Average Exercise Price	$ 28.68

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Summary of Significant Accounting Policies - (Narrative) (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		12 Months Ended
	Mar. 31, 2014 Segment	Mar. 31, 2013	Dec. 31, 2013
Accounting Policies [Line Items]
Realized gains or losses on available-for-sale securities	$ 0	$ 0
Unrealized gains or losses	0		0
Other than temporary declines in investment value	0		0
Allowance for outstanding accounts receivable	421		556
Impairment of goodwill	0
Dividend yield	0.00%	0.00%
Foreign translation adjustment	$ 2,763		$ 1,729
Number of reporting segments	1
Stock Purchase Plan
Accounting Policies [Line Items]
Antidilutive Securities Excluded from Computation of Earnings Per Share		3
Stock Options
Accounting Policies [Line Items]
Antidilutive Securities Excluded from Computation of Earnings Per Share		335
Restricted Stock
Accounting Policies [Line Items]
Antidilutive Securities Excluded from Computation of Earnings Per Share		37
Furniture
Accounting Policies [Line Items]
Estimated useful life	7 years
Computer Software and Equipment | Minimum
Accounting Policies [Line Items]
Estimated useful life	3 years
Computer Software and Equipment | Maximum
Accounting Policies [Line Items]
Estimated useful life	5 years
Software Development Costs
Accounting Policies [Line Items]
Estimated useful life	3 years

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Business Combinations - Upside Software (Schedule of Purchase Price Allocation) (Detail) (USD $) In Thousands, unless otherwise specified			1 Months Ended		1 Months Ended		1 Months Ended		1 Months Ended		1 Months Ended
	Mar. 31, 2014	Dec. 31, 2013	Aug. 31, 2012 Upside Software	Aug. 01, 2012 Upside Software	Aug. 31, 2012 Upside Software Covenant Not to Compete	Aug. 01, 2012 Upside Software Covenant Not to Compete	Aug. 31, 2012 Upside Software Trademarks	Aug. 01, 2012 Upside Software Trademarks	Aug. 31, 2012 Upside Software Acquired Technology	Aug. 01, 2012 Upside Software Acquired Technology	Aug. 31, 2012 Upside Software Customer Relationships	Aug. 01, 2012 Upside Software Customer Relationships
Business Acquisition [Line Items]
Accounts receivable				$ 2,096
Prepaid expenses and other current assets				230
Property and equipment				478
Amortizable intangible assets						30		263		4,064		3,594
Goodwill	64,732	65,280		15,927
Accrued expenses				(530)
Deferred revenues				(3,705)
Total purchase consideration			$ 22,447
Estimated useful life					5 years		5 years		7 years		10 years

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Summary of Significant Accounting Policies (Tables)

3 Months Ended

Mar. 31, 2014

Calculation of Basic and Diluted Net Income (Loss) Per Share

The following summarizes the calculation of basic and diluted net income (loss) per share:

	Three Months Ended March 31,
	2014		2013
Basic:
Net income (loss)	$	66	$	(612	)
Weighted average common shares, basic		23,908		22,564
Basic net income (loss) per share	$	0.00	$	(0.03	)
Diluted:
Net income (loss)	$	66	$	(612	)
Weighted average common shares, basic		23,908		22,564
Dilutive effect of:
Options to purchase common stock		569		—
Nonvested shares of restricted stock		22		—
Weighted average common shares, diluted		24,499		22,564
Diluted net income (loss) per share	$	0.00	$	(0.03	)

Anti-Dilutive Equity Instruments Excluded from Diluted Net Income (Loss) Per Share

The following equity instruments have been excluded from diluted net income (loss) per common share as they would be anti-dilutive.

	Three Months Ended March 31,
	2014		2013
Common stock options		92		84