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 June 30, 2015

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.)

3020 Carrington Mill Blvd., Suite 100

Morrisville, North Carolina 27560

(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 July 31, 2015, 27,812,577 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 JUNE 30, 2015

TABLE OF CONTENTS

		Pages
	PART I. FINANCIAL INFORMATION
ITEM 1.	CONSOLIDATED FINANCIAL STATEMENTS	2
	Consolidated Balance Sheets as of June 30, 2015 (unaudited) and December 31, 2014	2
	Consolidated Statements of Operations and Comprehensive Income (Loss) for the three and six months ended June 30, 2015 and 2014 (unaudited)	3
	Consolidated Statement of Stockholders’ Equity for the six months ended June 30, 2015 (unaudited)	4
	Consolidated Statements of Cash Flows for the six months ended June 30, 2015 and 2014 (unaudited)	5
	Notes to Consolidated Financial Statements (unaudited)	6
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	19
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	25
ITEM 4.	CONTROLS AND PROCEDURES	25
	PART II. OTHER INFORMATION
ITEM 1.	LEGAL PROCEEDINGS	27
ITEM 1A.	RISK FACTORS	27
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	27
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	27
ITEM 4.	MINE SAFETY DISCLOSURES	27
ITEM 5.	OTHER INFORMATION	27
ITEM 6.	EXHIBITS	27
	SIGNATURES	28

1

PART I. FINANCIAL INFORMATION

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS

SciQuest, Inc.

Consolidated Balance Sheets

(in thousands, except per share amounts)

	As of			As of
	June 30,			December 31,
	2015			2014
	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	57,326		$	59,419
Short-term investments		70,421			71,493
Accounts receivable, net		12,042			12,032
Prepaid expenses and other current assets		2,847			2,666
Deferred tax asset		404			400
Total current assets		143,040			146,010
Property and equipment, net		14,598			13,595
Goodwill		62,886			63,779
Intangible assets, net		21,115			23,846
Deferred commissions		5,712			6,094
Deferred tax asset, less current portion		11,779			11,657
Other		298			234
Total assets	$	259,428		$	265,215
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	271		$	375
Accrued liabilities		8,570			10,051
Deferred revenues		53,823			59,751
Total current liabilities		62,664			70,177
Deferred revenues, less current portion		9,373			11,350
Deferred rent, less current portion		1,986			2,027
Commitments and Contingencies
Stockholders' equity:
Common stock, $0.001 par value; 50,000 shares authorized; 27,812 and 27,574    shares issued and outstanding as of June 30, 2015 and December 31, 2014,    respectively		28			28
Additional paid-in capital		208,897			204,065
Accumulated other comprehensive loss		(4,236	)		(3,055	)
Accumulated deficit		(19,284	)		(19,377	)
Total stockholders' equity		185,405			181,661
Total liabilities and stockholders' equity	$	259,428		$	265,215

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

2

SciQuest, Inc.

Consolidated Statements of Operations and Comprehensive Income (Loss)

(in thousands, except per share amounts)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2015			2014			2015			2014
	(unaudited)						(unaudited)
Revenues	$	26,501		$	25,287		$	52,442		$	50,694
Cost of revenues		8,702			7,876			17,030			15,546
Gross profit		17,799			17,411			35,412			35,148
Operating expenses:
Research and development		6,730			7,188			13,802			14,115
Sales and marketing		6,727			6,241			13,733			13,201
General and administrative		3,170			3,333			6,519			6,443
Amortization of intangible assets		734			803			1,469			1,600
Total operating expenses		17,361			17,565			35,523			35,359
Income (loss) from operations		438			(154	)		(111	)		(211	)
Other income (expense):
Interest income		163			52			313			58
Other expense, net		(47	)		(2	)		(235	)		(11	)
Total other income (expense), net		116			50			78			47
Income (loss) before income taxes		554			(104	)		(33	)		(164	)
Income tax (expense) benefit		(172	)		31			126			157
Net income (loss)	$	382		$	(73	)	$	93		$	(7	)
Other comprehensive income (loss):
Foreign currency translation adjustments		462			682			(1,181	)		(75	)
Comprehensive income (loss)	$	844		$	609		$	(1,088	)	$	(82	)
Net income (loss) per share:
Basic	$	0.01		$	(0.00	)	$	0.00		$	(0.00	)
Diluted	$	0.01		$	(0.00	)	$	0.00		$	(0.00	)
Weighted average shares outstanding used in    computing per share amounts:
Basic		27,646			27,423			27,615			25,675
Diluted		27,989			27,423			27,955			25,675

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

3

SciQuest, Inc.

Consolidated Statement of Stockholders’ Equity

(unaudited)

(in thousands)

					Additional		Accumulated Other						Total
	Common Stock				Paid-In		Comprehensive			Accumulated			Stockholders'
	Shares		Amount		Capital		Loss			Deficit			Equity
Balance at December 31, 2014		27,574	$	28	$	204,065	$	(3,055	)	$	(19,377	)	$	181,661
Issuance of stock in connection with stock    option exercises		197		-		1,520		-			-			1,520
Issuance of stock in connection with employee    stock purchase plan		32		-		398		-			-			398
Issuance of stock pursuant to vesting of    restricted stock units		9		-		-		-			-			-
Stock-based compensation		-		-		2,914		-			-			2,914
Foreign currency translation adjustments		-		-		-		(1,181	)		-			(1,181	)
Net income		-		-		-		-			93			93
Balance at June 30, 2015		27,812	$	28	$	208,897	$	(4,236	)	$	(19,284	)	$	185,405

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

4

SciQuest, Inc.

Consolidated Statements of Cash Flows

(in thousands)

	Six Months Ended
	June 30,
	2015			2014
	(unaudited)
Cash flows from operating activities
Net income (loss)	$	93		$	(7	)
Adjustments to reconcile net income (loss) to net cash used in operating    activities:
Depreciation and amortization		5,879			5,120
Stock-based compensation expense		2,914			3,094
Deferred taxes		(126	)		(214	)
Changes in operating assets and liabilities:
Accounts receivable		(33	)		(1,813	)
Prepaid expenses and other current assets		(175	)		476
Deferred commissions and other assets		302			(113	)
Accounts payable		(105	)		931
Accrued liabilities		(1,523	)		(5,971	)
Deferred revenues		(7,813	)		(4,608	)
Deferred rent		(41	)		-
Net cash used in operating activities		(628	)		(3,105	)
Cash flows from investing activities
Addition of capitalized software development costs		(3,257	)		(2,752	)
Purchase of property and equipment		(1,285	)		(1,559	)
Purchase of available-for-sale short-term investments		(72,478	)		(67,710	)
Maturities of available-for-sale short-term investments		73,550			20,480
Net cash used in investing activities		(3,470	)		(51,541	)
Cash flows from financing activities
Proceeds from public offering, net of underwriting discount		-			87,673
Public offering costs		-			(240	)
Proceeds from exercise of common stock options		1,520			351
Proceeds from employee stock purchase plan activity		476			541
Net cash provided by financing activities		1,996			88,325
Effect of exchange rate changes on cash and cash equivalents		9			230
Net (decrease) increase in cash and cash equivalents		(2,093	)		33,909
Cash and cash equivalents at beginning of period		59,419			19,117
Cash and cash equivalents at end of period	$	57,326		$	53,026

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 Morrisville, North Carolina.

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.

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 six months ended June 30, 2015 are not necessarily indicative of the results to be expected for the fiscal year or any future period. The balance sheet at December 31, 2014 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, 2014, which was filed with the Securities and Exchange Commission on February 23, 2015.

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.

6

SciQuest, Inc.

Notes to Consolidated Financial Statements

(unaudited)

(in thousands, except per share amounts)

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 stand-alone 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 stand-alone value to its customers. For arrangements when implementation services do not have stand-alone 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 stand-alone 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.

7

SciQuest, Inc.

Notes to Consolidated Financial Statements

(unaudited)

(in thousands, except per share amounts)

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 income (loss). 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 June 30, 2015 and December 31, 2014. Realized gains and losses are included in other income (expense) based on the specific identification method. There were no realized gains or losses for the three or six months ended June 30, 2015 or 2014. Net unrealized gains and losses on available-for-sale securities are reported as a component of other comprehensive income (loss), net of tax. As of June 30, 2015 and December 31, 2014, 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 June 30, 2015 or December 31, 2014.

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 $295 and $1,100 at June 30, 2015 and December 31, 2014, 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.

8

SciQuest, Inc.

Notes to Consolidated Financial Statements

(unaudited)

(in thousands, except per share amounts)

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 indicate 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 June 30, 2015.

Stock-Based Compensation

Stock-based payments to employees, including grants of employee stock options, are recognized in the consolidated statement of operations and comprehensive income (loss) 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 and a lattice model on the date of grant for performance-based restricted stock units. 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. The expected term for the six months ended June 30, 2015 and 2014, 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. At June 30, 2015 and December 31, 2014, accumulated other comprehensive loss was ($4,236) and ($3,055), respectively, which is predominantly due 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 income (loss).

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. Diluted net income (loss) per share is computed giving effect to all potentially dilutive common stock, including options, restricted stock, and common stock issuable pursuant to the employee share purchase plan. 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					Six Months Ended
	June 30,					June 30,
	2015		2014			2015		2014
Basic:
Net income (loss)	$	382	$	(73	)	$	93	$	(7	)
Weighted average common shares, basic		27,646		27,423			27,615		25,675
Basic net income (loss) per share	$	0.01	$	(0.00	)	$	0.00	$	(0.00	)
Diluted:
Net income (loss)	$	382	$	(73	)	$	93	$	(7	)
Weighted average common shares, basic		27,646		27,423			27,615		25,675
Dilutive effect of:
Options to purchase common stock		300		-			306		-
Nonvested shares of restricted stock		36		-			29		-
Shares of employee stock purchase plan		7		-			5		-
Weighted average common shares, diluted		27,989		27,423			27,955		25,675
Diluted net income (loss) per share	$	0.01	$	(0.00	)	$	0.00	$	(0.00	)

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

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2015		2014		2015		2014
Common stock options		538		423		542		214

For the three and six months ended June 30, 2014, 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 and six months ended June 30, 2014, diluted net loss per share excluded the impact of 362 and 474 outstanding stock options, respectively, 8 and 16 nonvested shares of restricted stock, respectively, and 7 and 12 shares of common stock issuable pursuant to the employee stock purchase plan, respectively.

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.

10

SciQuest, Inc.

Notes to Consolidated Financial Statements

(unaudited)

(in thousands, except per share amounts)

Recent Accounting Pronouncements

In August 2014, the FASB issued new accounting guidance which addresses management’s responsibility to evaluate whether there is substantial doubt about the entity’s ability to continue as a going concern and to provide related footnote disclosures. Management’s evaluation should be based on relevant conditions and events that are known and reasonably knowable at the date that the financial statements are issued. This guidance is effective for the fiscal year ending after December 15, 2016, and for fiscal years and interim periods thereafter. Early adoption is permitted. The Company does not expect to early adopt this guidance and does not believe that the adoption of this guidance will have a material impact on its financial statements.

In May 2014, the FASB issued new accounting guidance on revenue recognition, which provides for a single five-step model to be applied to all revenue contracts with customers. The new standard also requires additional financial statement disclosures that will enable users to understand the nature, amount, timing and uncertainty of revenue and cash flows relating to customer contracts. Companies have an option to use either a retrospective approach or cumulative effect adjustment approach to implement the standard. This guidance was to be effective for fiscal years and interim periods within those years beginning after December 15, 2017; however, on July 9, 2015 the FASB decided to defer the effective date by one year. Early adoption is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. Pending any further deferral, the Company will adopt this standard in the first quarter of 2018. The Company is currently evaluating the impact that the implementation of this standard will have on its financial statements.

3. Cash Equivalents and Short-Term Investments

The components of cash equivalents and short-term investments at June 30, 2015 and December 31, 2014 are as follows:

	June 30, 2015				December 31, 2014
			Fair Market				Fair Market
	Cost		Value		Cost		Value
Cash Equivalents:
Money market accounts	$	2,242	$	2,242	$	2,130	$	2,130
Commercial paper		48,930		48,930		46,339		46,339
Short-term investments:
Variable rate demand notes		12,980		12,980		14,030		14,030
Commercial paper		57,441		57,441		57,463		57,463
Total	$	121,593	$	121,593	$	119,962	$	119,962

There were no unrealized gains or losses as of June 30, 2015 or December 31, 2014.

4. 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.

11

SciQuest, Inc.

Notes to Consolidated Financial Statements

(unaudited)

(in thousands, except per share amounts)

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

As of June 30, 2015 and December 31, 2014, the Company had cash equivalents of $51,172 and $48,469, respectively, which consist of money market accounts and commercial paper. As of June 30, 2015 and December 31, 2014, the Company had short-term investments of $70,421 and $71,493, respectively, which consist of commercial paper and variable rate demand notes that are invested in corporate and municipal bonds. The variable rate demand notes have final maturities between 2025 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 June 30, 2015 and December 31, 2014, 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 June 30, 2015 are as follows:

	Total		Level 1		Level 2		Level 3
Cash equivalents	$	51,172	$	51,172	$	-	$	-
Short-term investments		70,421		70,421		-		-
Total	$	121,593	$	121,593	$	-	$	-

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

	Total		Level 1		Level 2		Level 3
Cash equivalents	$	48,469	$	48,469	$	-	$	-
Short-term investments		71,493		71,493		-		-
Total	$	119,962	$	119,962	$	-	$	-

5. Property and Equipment

Property and equipment consist of the following as of June 30, 2015 and December 31, 2014:

	June 30,			December 31,
	2015			2014
Furniture and fixtures	$	1,555		$	1,560
Computer software and equipment		29,391			25,039
Leasehold improvements		634			624
Total costs		31,580			27,223
Less accumulated depreciation and amortization		(16,982	)		(13,628	)
Property and equipment, net	$	14,598		$	13,595

Depreciation expense related to property and equipment (excluding capitalized internal-use software) was $687 and $640 for the three months ended June 30, 2015 and 2014, respectively, and was $1,427 and $1,250 for the six months ended June 30, 2015 and 2014, 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 $1,825 and $1,476 during the three months ended June 30, 2015 and 2014, respectively, and $3,128 and $2,747 during the six months ended June 30, 2015 and 2014, respectively. Net capitalized software development costs totaled $9,033 and $7,867 at June 30, 2015 and December 31, 2014, respectively. Amortization expense for the three months ended June 30, 2015 and 2014 related to capitalized software development costs was $1,072 and $673, respectively, and was $1,989 and $1,231 for the six months ended June 30, 2015 and 2014, respectively, which is classified within cost of revenues in the accompanying consolidated statements of operations and comprehensive income (loss).

12

SciQuest, Inc.

Notes to Consolidated Financial Statements

(unaudited)

(in thousands, except per share amounts)

6. Goodwill and Other Intangible Assets

The changes in the carrying amount of goodwill for the six months ended June 30, 2015 were as follows:

Balance at December 31, 2014	$	63,779
Foreign currency translation		(893	)
Balance at June 30, 2015	$	62,886

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 income (loss).

A summary of intangible assets at June 30, 2015 and December 31, 2014 follows:

	June 30, 2015
	Weighted Average
	Amortization	Gross Carrying		Accumulated			Net Carrying
	Period	Amount		Amortization			Amount
Acquired technology	7.0 years	$	19,350	$	(12,477	)	$	6,873
Customer relationships	12.1 years		26,641		(13,391	)		13,250
Covenant not to compete	4.2 years		379		(265	)		114
Acquired trademarks	4.5 years		1,078		(630	)		448
Trademarks	indefinite		430		-			430
Total		$	47,878	$	(26,763	)	$	21,115

	December 31, 2014
	Weighted Average
	Amortization	Gross Carrying		Accumulated			Net Carrying
	Period	Amount		Amortization			Amount
Acquired technology	7.0 years	$	19,578	$	(11,699	)	$	7,879
Customer relationships	12.1 years		26,842		(12,062	)		14,780
Covenant not to compete	4.2 years		380		(212	)		168
Acquired trademarks	4.5 years		1,093		(504	)		589
Trademarks	indefinite		430		-			430
Total		$	48,323	$	(24,477	)	$	23,846

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 income (loss).

Amortization expense of intangible assets was $1,230 and $1,322 for the three months ended June 30, 2015 and 2014, respectively, of which $496 and $519 is recorded in cost of revenues in the accompanying consolidated statements of operations and comprehensive income (loss) for the three months ended June 31, 2015 and 2014, respectively. Amortization expense of intangible assets was $2,462 and $2,639 for the six months ended June 30, 2015 and 2014, respectively, of which $993 and $1,039 is recorded in cost of revenues in the accompanying consolidated statements of operations and comprehensive income (loss) for the six months ended June 30, 2015 and 2014, respectively.

13

SciQuest, Inc.

Notes to Consolidated Financial Statements

(unaudited)

(in thousands, except per share amounts)

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

2015 (remaining six months)	$	2,181
2016		4,044
2017		3,604
2018		3,010
2019		2,530
Thereafter		5,316
	$	20,685

7. 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 June 30, 2015 and December 31, 2014, the Company had $0 outstanding under the revolving credit facility.

8. 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 June 30, 2015 and December 31, 2014, 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, including performance-based 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, including performance-based 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 June 30, 2015, 2,913 shares of common stock were available for issuance under the Plan.

14

SciQuest, Inc.

Notes to Consolidated Financial Statements

(unaudited)

(in thousands, except per share amounts)

The following table summarizes the number of shares outstanding and the number of shares available for future grant under the stock incentive plan at June 30, 2015:

	June 30, 2015
Number of shares reserved under the 2013 Plan		3,500
Number of shares remaining for future grants transferred from Prior Plan		1,004
Number of stock options outstanding under the 2013 Plan		(1,081	)
Weighted average exercise price under the 2013 Plan	$	20.99
Weighted average term (in years)		8.8
Number of restricted stock units issued under the 2013 Plan		(510	)
Number of shares remaining for future grants
SciQuest, Inc. 2013 Stock Incentive Plan		2,913

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 and performance-based restricted stock units to certain employees and non-employee directors. 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. Performance-based restricted stock units differ from restricted stock units in that the number of shares of common stock issuable under performance-based restricted stock units is variable based on over- or under- performance of the Company’s stock price over a specified period of time. Stock-based compensation expense related to these restricted stock units and performance-based restricted stock units is recognized in the consolidated statements of operations and comprehensive income (loss) based on the fair value of these awards. For restricted stock units, the fair value of the awards is the grant date market value of the Company’s common stock. For performance-based restricted stock units, the fair value of the awards is estimated using a lattice model with a volatility assumption based on the vesting period of the awards. Stock-based compensation expense of $331 and $187 was recorded during the three months ended June 30, 2015 and 2014, respectively, and $585 and $331 was recorded during the six months ended June 30, 2015 and 2014, respectively, in connection with these awards. The total unrecognized compensation cost related to these awards is approximately $3,734 at June 30, 2015. This amount is expected to be recognized over a weighted-average period of 3.0 years.

The following summarizes the activity of restricted stock awards for the six months ended June 30, 2015:

				Weighted-
	Number of			Average Grant
	Units			Date Fair Value
Nonvested as of December 31, 2014		83		$	22.20
Issued		295			13.98
Vested		(35	)		22.49
Forfeited		(49	)		16.04
Nonvested as of June 30, 2015		294		$	14.93

15

SciQuest, Inc.

Notes to Consolidated Financial Statements

(unaudited)

(in thousands, except per share amounts)

Stock Options

The Company also issues common stock options. The following summarizes stock option activity for the six months ended June 30, 2015:

						Weighted-		Aggregate
						Average		Intrinsic Value
				Weighted-		Remaining		as of
	Number of			Average		Contractual		June 30,
	Options			Exercise Price		Term (In Years)		2015
Balance outstanding as of December 31, 2014		2,220		$	17.56		7.5	$	2,389
Options granted		458			15.52
Options exercised		(197	)		7.73
Options cancelled		(271	)		20.05
Balance outstanding as of June 30, 2015		2,210		$	17.70		7.4	$	1,380
Vested and expected to vest at June 30, 2015		2,013		$	17.55		7.2	$	1,369
Exercisable as of June 30, 2015		1,223		$	16.43		6.2	$	1,293

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 June 30, 2015 multiplied by the number of shares that would have been received by the option holders had all option holders exercised their options on June 30, 2015. The aggregate intrinsic value of options exercised during the three months ended June 30, 2015 and 2014 was $1,463 and $300, respectively. The aggregate intrinsic value of options exercised during the six months ended June 30, 2015 and 2014 was $1,545 and $1,132, respectively.  

The total unrecognized compensation cost related to outstanding stock options is $8,587 at June 30, 2015. This amount is expected to be recognized over a weighted-average period of 2.7 years.

The following table summarizes information about stock options outstanding and exercisable at June 30, 2015:

	OptionsOutstanding at June 30, 2015						Options Exercisable at June 30, 2015
			Weighted-
			Average
			Remaining
			Contractual Term		Weighted-Average				Weighted-Average
Range of Exercise Price	Number		(In Years)		Exercise Price		Number		Exercise Price
$0.10 - $1.90		8		1.6	$	0.29		8	$	0.29
$2.04 - $8.18		87		4.4		5.67		87		5.67
$11.45 - $17.33		1,445		7.3		15.07		832		14.75
$17.50 - $27.64		529		7.8		24.20		246		24.00
$27.91 - $29.14		141		8.4		28.70		50		28.70
Total		2,210		7.4	$	17.70		1,223	$	16.43

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:

	Six Months Ended
	June 30,
	2015			2014
Estimated dividend yield		0	%		0	%
Expected stock price volatility	44.88 - 46.30		%	46.05 - 46.33		%
Weighted-average risk-free interest rate	1.36 - 1.89		%	1.75 - 1.94		%
Expected life of options (in years)		6.25			6.25

16

SciQuest, Inc.

Notes to Consolidated Financial Statements

(unaudited)

(in thousands, except per share amounts)

Stock-based compensation expense of $1,038 and $1,363 was recorded during the three months ended June 30, 2015 and 2014, respectively, and $2,183 and $2,601 was recorded during the six months ended June 30, 2015 and 2014, respectively, related to the Company’s outstanding stock options. The weighted average grant date fair value per share for stock options granted in the six months ended June 30, 2015 and 2014 was $7.13 and $12.19, respectively. The aggregate fair value of stock options that vested during the six months ended June 30, 2015 and 2014 was $2,335 and $2,741, respectively.

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. 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 June 30, 2015, 848 shares of common stock were available for issuance to participating employees under the Purchase Plan. During the three months ended June 30, 2015 and 2014, the Company recognized stock-based compensation expense of $76 and $81, respectively, and recognized $146 and $162 during the six months ended June 30, 2015 and 2014, respectively, related to the Purchase Plan.

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 with the following assumptions used:

	Six Months Ended
	June 30,
	2015			2014
Estimated dividend yield		0	%		0	%
Expected stock price volatility		47.20	%		46.69	%
Weighted-average risk-free interest rate		0.08	%		0.06	%
Expected life of options (in years)		0.5			0.5

9. 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 of (31)% and (381.8)% for the three and six months ended June 30, 2015, respectively, was lower than the federal statutory rate of 34% primarily due to non-deductible expenses, including stock-based compensation. The Company’s effective tax rate of (29.8)% and (95.7)% for the three and six months ended June 30, 2014, respectively, was lower than the federal statutory rate of 34% primarily due to non-deductible expenses, including stock-based compensation.

10. 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

17

SciQuest, Inc.

Notes to Consolidated Financial Statements

(unaudited)

(in thousands, except per share amounts)

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.

11. Subsequent Events

   The Company evaluated subsequent events from July 1, 2015 through August 7, 2015, the date the consolidated financial statements were issued. The Company concluded that no subsequent events have occurred that would require recognition or disclosure in the consolidated financial statements.

18

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.

19

Key Financial Terms and Metrics

We have several key financial terms and metrics. During the six months ended June 30, 2015, 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, 2014, which was filed with the Securities and Exchange Commission on February 23, 2015.

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 six months ended June 30, 2015, 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, 2014, which was filed with the Securities and Exchange Commission on February 23, 2015, 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 June 30,						Six Months Ended June 30,
	2015			2014			2015			2014
	(In thousands)						(In thousands)
Revenues	$	26,501		$	25,287		$	52,442		$	50,694
Costs of revenues (1) (2)		8,702			7,876			17,030			15,546
Gross profit		17,799			17,411			35,412			35,148
Operating expenses: (1)
Research and development		6,730			7,188			13,802			14,115
Sales and marketing		6,727			6,241			13,733			13,201
General and administrative		3,170			3,333			6,519			6,443
Amortization of intangible assets		734			803			1,469			1,600
Total operating expenses		17,361			17,565			35,523			35,359
Income (loss) from operations		438			(154	)		(111	)		(211	)
Interest and other income (expense), net		116			50			78			47
Income (loss) before income taxes		554			(104	)		(33	)		(164	)
Income tax (expense) benefit		(172	)		31			126			157
Net income (loss)	$	382		$	(73	)	$	93		$	(7	)

20

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

	Three Months Ended June 30,				Six Months Ended June 30,
	2015		2014		2015		2014
	(In thousands)				(In thousands)
Cost of revenues	$	217	$	183	$	402	$	346
Research and development	163		201			291		381
Sales and marketing	371		412			741		774
General and administrative	694		835			1,480		1,593
	$	1,445	$	1,631	$	2,914	$	3,094

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

	Three Months Ended June 30,				Six Months Ended June 30,
	2015		2014		2015		2014
	(In thousands)				(In thousands)
Amortization of capitalized software development costs	$	1,072	$	673	$	1,989	$	1,231
Amortization of acquired software		496		519		993		1,039
	$	1,568	$	1,192	$	2,982	$	2,270

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

	Three Months Ended June 30,				Six Months Ended June 30,
	2015		2014		2015		2014
Revenues	100	%	100	%	100	%	100	%
Cost of revenues	33		31		33		30
Gross profit	67		69		67		70
Operating expenses:
Research and development	25		28		26		28
Sales and marketing	25		25		26		26
General and administrative	12		13		12		13
Amortization of intangible assets	3		3		3		3
Total operating expenses	65		69		67		70
Income (loss) from operations	2		0		0		0
Interest and other income, net	0		0		0		0
Income (loss) before income taxes	2		0		0		0
Income tax (expense) benefit	(1)		0		0		0
Net income (loss)	1	%	0	%	0	%	0	%

Three Months Ended June 30, 2015 Compared to Three Months Ended June 30, 2014

Revenues. Revenues for the three months ended June 30, 2015 were $26.5 million, an increase of $1.2 million, or 5%, over revenues of $25.3 million for the three months ended June 30, 2014. 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 June 30, 2014.

Cost of Revenues. Cost of revenues for the three months ended June 30, 2015 was $8.7 million, an increase of $0.8 million, or 10%, over cost of revenues of $7.9 million for the three months ended June 30, 2014. As a percentage of revenues, cost of revenues increased to 33% for the three months ended June 30, 2015 from 31% for the three months ended June 30, 2014. The increase in dollar amount was primarily due to a $0.4 million increase in amortization of capitalized software development costs, a $0.2 million increase in employee-related costs attributable to our additional and existing implementation services, supplier enablement services, customer support and client partner personnel, and a $0.2 million increase in other spend. We had 210 full-time equivalents in our implementation services, supplier enablement services, customer support and client partner organizations at June 30, 2015 compared to 199 full-time equivalents at June 30, 2014.

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Research and Development Expenses. Research and development expensesfor the three months ended June 30, 2015 were $6.7 million, a decrease of $0.5 million, or 7%, from research and development expenses of $7.2 million for the three months endedJune 30, 2014. As a percentage of revenues, research and development expense decreased to 25% forthe three months ended June 30, 2015 from 28% for the three months ended June 30, 2014. The decrease in dollar amount was due primarily to a $0.1 million decrease in employee-related costs attributable to the existing research and development personnel, a $0.1 million decrease in other research and development spend, and a $0.3 million increase in capitalized software development costs. We had 209 full-time equivalents in our research and development organization at June 30, 2015 compared to 222 full-time equivalents at June 30, 2014.

Sales and Marketing Expenses. Sales and marketing expenses for the three months ended June 30, 2015 were $6.7 million, an increase of $0.5 million, or 8%, over sales and marketing expenses of $6.2 million for the three months ended June 30, 2014. As a percentage of revenues, sales and marketing expenses were 25% for both the three months ended June 30, 2015 and 2014. The increase in dollar amount was due primarily to a $0.4 million increase in employee-related costs attributable to our existing sales and marketing personnel and a $0.1 million increase in other sales and marketing spend. We had 102 full-time equivalents in our sales and marketing organization at June 30, 2015 and 2014.

General and Administrative Expenses. General and administrative expenses for the three months ended June 30, 2015 were $3.2 million, a decrease of $0.1 million, or 3%, from general and administrative expenses of $3.3 million for the three months ended June 30, 2014. As a percentage of revenues, general and administrative expenses decreased to 12% for the three months ended June 30, 2015 from 13% for the three months ended June 30, 2014. The decrease in dollar amount was primarily due to a $0.1 million decrease in stock-based compensation expense and a $0.2 million decrease in other general and administrative spend, which was offset by a $0.1 million increase in employee-related costs attributable to our existing general and administrative personnel. We had 27 full-time equivalents in our general and administrative organization at June 30, 2015 and 2014.

Amortization of Intangible Assets. Amortization of intangible assets for the three months ended June 30, 2015 were $0.7 million, a decrease of $0.1 million, or 12%, from amortization of intangible assets of $0.8 million for the three months ended June 30, 2014. As a percentage of revenues, amortization of intangible assets was 3% for both the three months ended June 30, 2015 and 2014.

Income Tax (Expense) Benefit. Income tax expense for the three months ended June 30, 2015 was $(0.2) million compared to income tax benefit of $0.0 million for the three months ended June 30, 2014. The change in income tax (expense) benefit was primarily due to differences in our pre-tax net loss and effective tax rates in each period.  

Six Months Ended June 30, 2015 Compared to Six Months Ended June 30, 2014

Revenues. Revenues for the six months ended June 30, 2015 were $52.4 million, an increase of $1.7 million, or 3%, over revenues of $50.7 million for the six months ended June 30, 2014. The increase in revenues resulted primarily from the recognition of revenue for a full six-month period for the new customers added in, and subsequent to, the six months ended June 30, 2014.

Cost of Revenues. Cost of revenues for the six months ended June 30, 2015 was $17.0 million, an increase of $1.5 million, or 10%, over cost of revenues of $15.5 million for the six months ended June 30, 2014. As a percentage of revenues, cost of revenues increased to 33% for the six months ended June 30, 2014 from 30% from the six months ended June 30, 2014. The increase in dollar amount primarily resulted from a $0.5 million increase in employee-related costs attributable to our additional and existing implementation services, supplier enablement services, customer support and client partner personnel, a $0.8 million increase in amortization of capitalized software development costs, and a $0.2 million increase in other spend. We had 210 full-time equivalents in our implementation services, supplier enablement services, customer support and client partner organizations at June 30, 2015 compared to 199 full-time equivalents at June 30, 2014.

Research and Development Expenses. Research and development expenses for the six months ended June 30, 2015 were $13.8 million, a decrease of $0.3 million, or 2%, from research and development expenses of $14.1 million for the six months ended June 30, 2014. As a percentage of revenues, research and development expense decreased to 26% for the three months ended June 30, 2015 from 28% for the six months ended June 30, 2014. The decrease in dollar amount was primarily due to a $0.5 million increase in capitalized software development costs, which was offset by a $0.1 million increase in employee-related costs attributable to the existing research and development personnel and a $0.1 million increase in other research and development spend. We had 209 full-time equivalents in our research and development organization at June 30, 2015 compared to 222 full-time equivalents at June 30, 2014.

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Sales and Marketing Expenses. Sales and marketing expenses for the six months ended June 30, 2015 were $13.7 million, an increase of $0.5 million, or 4%, over sales and marketing expenses of $13.2 million for the six months ended June 30, 2014. As a percentage of revenues, sales and marketing expenses were 26% for both the six months ended June 30, 2015 and 2014. The increase in dollar amount was due primarily to a $0.7 million increase in employee-related costs attributable to our existing sales and marketing personnel, which was offset by a $0.2 million decrease in other sales and marketing spend. We had 102 full-time equivalents in our sales and marketing organization at June 30, 2015 and 2014.

General and Administrative Expenses. General and administrative expenses for the six months ended June 30, 2015 were $6.5 million, an increase of $0.1 million, or 2%, over general and administrative expenses of $6.4 million for the six months ended June 30, 2014. As a percentage of revenues, general and administrative expenses decreased to 12% for the six months ended June 30, 2015, from 13% for the six months ended June 30, 2014. The increase in dollar amount was primarily due to a $0.3 million increase in employee-related costs attributable primarily to our existing general and administrative personnel, which was offset by a $0.1 million decrease in stock-based compensation expense and a $0.1 million decrease in other general and administrative spend. We had 27 full-time equivalents in our general and administrative organization at June 30, 2015 and 2014.

Amortization of Intangible Assets. Amortization of intangible assets for the six months ended June 30, 2015 were $1.5 million, a decrease of $0.1 million, or 6%, over amortization of intangible assets of $1.6 million for the six months ended June 30, 2014. As a percentage of revenues, amortization of intangible assets was 3% for both the six months ended June 30, 2015 and 2014.

Income Tax Benefit. Income tax benefit for the six months ended June 30, 2015 was $0.1 million compared to income tax benefit of $0.2 million for the six months ended June 30, 2014. The change in income tax benefit was due to a difference in our pre-tax net loss and effective tax rates in each period.  

Liquidity

Net Cash Flows from Operating Activities

Net cash used in operating activities was $0.6 million during the six months ended June 30, 2015. Our cash flow from operations is primarily a result of the timing of cash payments from our customers, offset by the timing of our cash expenditures, which are primarily 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 to the historical timing of client payments from second quarter sales, our cash flow from operations is lower in our second quarter as compared to our third and fourth quarters.The cash payments received from customers were approximately $45 million during the six months ended June 30, 2015. The cash expenditures for employee salaries, including incentive payments, were approximately $32 million during the six months ended June 30, 2015.

For the six months ended June 30, 2015, net cash used in operating activities of $0.6 million was primarily the result of $0.1 million of net income plus $2.9 million of stock-based compensation, and $5.9 million of depreciation and amortization, less a $1.5 million decrease in accrued liabilities, a $7.8 million decrease in deferred revenues, and a $0.2 million increase in prepaid expenses and other current assets.

For the six months ended June 30, 2014, net cash used in operating activities of $3.1 million was primarily the result of $3.1 million of stock-based compensation and $5.1 million of depreciation and amortization plus a $0.9 million increase in accounts payable, less a $4.6 million decrease in deferred revenues, a $6.0 million decrease in accrued liabilities, and a $1.8 million increase in accounts receivable.

As of June 30, 2015, we had net operating loss carryforwards of approximately $203.9 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 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 six months ended June 30, 2015, net cash used in investing activities was $3.5 million, consisting of purchases of $72.5 million of short-term investments, various capital expenditures of $1.3 million and capitalization of $3.3 million of software development costs, plus maturities of $73.6 million of short-term investments. In general, our capital expenditures are for our network

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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 six months ended June 30, 2014, net cash used in investing activities was $51.5 million, consisting of net purchases of $47.2 million of short-term investments, various capital expenditures of $1.6 million and capitalization of $2.8 million of software development costs.

Net Cash Flows from Financing Activities

For the three months ended June 30, 2015, net cash provided by financing activities was $2.0 million, consisting of $1.5 million in proceeds from the exercise of common stock options and $0.5 million in proceeds from the employee stock purchase plan.

For the six months ended June 30, 2014, net cash provided by financing activities was $88.3 million, consisting of $87.4 million in proceeds from our public offering, net of underwriting discounts and offering costs, $0.4 million in proceeds from the exercise of common stock options and $0.5 million in proceeds from the employee stock purchase plan.

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 June 30, 2015 and December 31, 2014, we had $0 outstanding.

Off-Balance Sheet Arrangements

As of June 30, 2015, 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 six months ended June 30, 2015, there were no material changes in the contractual and commercial commitments that are discussed 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, 2014, which was filed with the Securities and Exchange Commission on February 23, 2015.

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. Our primary exposure to foreign currencies results from payments made in Canadian dollars for payroll and other expenses relating to our office in Edmonton, Alberta, which represented approximately 10% of our total expenses in the quarter ended June 30, 2015. Although our results of operations could be adversely affected by a decline in the value of the U.S. dollar relative to the Canadian dollar, such a decline would have to be significant in order to have a material impact on our results of operations given our limited exposure to foreign currencies. The majority of our sales contracts are currently denominated in U.S. dollars. Therefore, we have minimal foreign currency exchange risk with respect to our revenue. If we further grow our sales 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 June 30, 2015 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

25

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 June 30, 2015, were effective for the purposes stated above.

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.

26

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, 2014, which was filed with the Securities and Exchange Commission on February 23, 2015.

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

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

Not applicable.

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 Jennifer G. Kaelin, 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 Jennifer G. Kaelin, Chief Financial Officer of SciQuest.
101	Interactive Data Files pursuant to Rule 405 of Regulation S-T (XBRL)

* Filed herewith.

** Furnished herewith.

27

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/    Jennifer G. Kaelin
	Jennifer G. Kaelin
	Chief Financial Officer
	(Principal Financial and Accounting Officer)
	Date: August 7, 2015

28

EX-31.1

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:	August 7, 2015

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Jennifer G. Kaelin, 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/ Jennifer G. Kaelin
	Jennifer G. Kaelin
	Chief Financial Officer (Principal Financial and Accounting Officer)
Date:	August 7, 2015

EX-32.1

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 June 30, 2015, 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: August 7, 2015

/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 June 30, 2015, 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-32.2

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 June 30, 2015, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, Jennifer G. Kaelin, 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: August 7, 2015

/s/ Jennifer G. Kaelin

Jennifer G. Kaelin

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 June 30, 2015, 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.

XML

Debt - (Narrative) (Detail) - USD ($)	6 Months Ended
	Jun. 30, 2015	Dec. 31, 2014	Nov. 02, 2012
Revolving Credit Facility
Line Of Credit Facility [Line Items]
Maximum available borrowing capacity			$ 30,000,000
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			20,000,000
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			$ 10,000,000
Interest rate	BBA LIBOR Daily Floating Rate plus 1.50%,
Debt instrument, basis spread on variable rate	1.50%

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Stockholders' Equity - Schedule of Assumptions used to Calculate Fair Value of Common Stock Options (Detail)	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Schedule of assumptions used to calculate fair value
Estimated dividend yield	0.00%
Stock Options
Schedule of assumptions used to calculate fair value
Estimated dividend yield	0.00%	0.00%
Expected stock price volatility, minimum	44.88%	46.05%
Expected stock price volatility, maximum	46.30%	46.33%
Weighted-average risk-free interest rate, minimum	1.36%	1.75%
Weighted-average risk-free interest rate, maximum	1.89%	1.94%
Expected life of options (in years)	6 years 3 months	6 years 3 months

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Property and Equipment - Property and Equipment (Detail) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Property Plant And Equipment [Line Items]
Total costs	$ 31,580	$ 27,223
Less accumulated depreciation and amortization	(16,982)	(13,628)
Property and equipment, net	14,598	13,595
Furniture and Fixtures
Property Plant And Equipment [Line Items]
Total costs	1,555	1,560
Computer Software and Equipment
Property Plant And Equipment [Line Items]
Total costs	29,391	25,039
Leasehold Improvements
Property Plant And Equipment [Line Items]
Total costs	$ 634	$ 624

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Description of Business - (Narrative) (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	1 Months Ended
	Apr. 30, 2014	Apr. 02, 2014
Organization Consolidation And Presentation Of Financial Statements [Abstract]
Proceeds from public offering, net of underwriting discounts and offering costs, shares	3,000
Offering price, per share		$ 26.75
Public offering, over-allotment shares sold	450
Net proceeds	$ 87,433

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Stockholders' Equity - Schedule of Assumptions used to Calculate Fair Value of Stock Purchase Rights (Detail)	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Schedule of assumptions used to calculate fair value
Estimated dividend yield	0.00%
Employee Stock Purchase Plan
Schedule of assumptions used to calculate fair value
Estimated dividend yield	0.00%	0.00%
Expected stock price volatility	47.20%	46.69%
Weighted-average risk-free interest rate	0.08%	0.06%
Expected life of options (in years)	6 months	6 months

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Stockholders' Equity - Stock Incentive Plan (Schedule of Shares Outstanding and Available for Grant Under Plan) (Detail) - $ / shares	6 Months Ended	12 Months Ended
	Jun. 30, 2015	Dec. 31, 2014
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock incentive plan, shares authorized for grant	3,500,000
Number of stock options outstanding under the 2013 Plan	(2,210,000)	(2,220,000)
Weighted average exercise price under the 2013 Plan	$ 17.70	$ 17.56
Weighted average term (in years)	7 years 4 months 24 days	7 years 6 months
Number of shares remaining for future grants
Shares available for issuance	2,913,000
Stock Incentive Plans
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock incentive plan, shares authorized for grant	3,500,000
Number of shares remaining for future grants transferred from Prior Plan	1,004,000
Number of stock options outstanding under the 2013 Plan	(1,081,000)
Weighted average exercise price under the 2013 Plan	$ 20.99
Weighted average term (in years)	8 years 9 months 18 days
Number of restricted stock units issued under the 2013 Plan	(510,000)
Number of shares remaining for future grants
Shares available for issuance	2,913,000

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Goodwill and Other Intangible Assets - (Narrative) (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Goodwill And Intangible Assets Disclosure [Abstract]
Amortization of intangible assets	$ 1,230	$ 1,322	$ 2,462	$ 2,639
Amortization of intangible assets recorded in cost of revenues	$ 496	$ 519	$ 993	$ 1,039

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Stockholders' Equity - Schedule of Stock Options Outstanding and Exercisable (Detail) - $ / shares shares in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2015	Dec. 31, 2014
Share Based Compensation Shares Authorized Under Stock Option Plans Exercise Price Range [Line Items]
Options Outstanding, Number	2,210
Weighted-Average Remaining Contractual Term (In Years)	7 years 4 months 24 days	7 years 6 months
Options Outstanding, Weighted-Average Exercise Price	$ 17.70
Options Exercisable, Number	1,223
Options Exercisable, Weighted-Average Exercise Price	$ 16.43
$0.10 - $1.90
Share Based Compensation Shares Authorized Under Stock Option Plans Exercise Price Range [Line Items]
Exercise Price Range Lower Limit	0.10
Exercise Price Range Upper Limit	$ 1.90
Options Outstanding, Number	8
Weighted-Average Remaining Contractual Term (In Years)	1 year 7 months 6 days
Options Outstanding, Weighted-Average Exercise Price	$ 0.29
Options Exercisable, Number	8
Options Exercisable, Weighted-Average Exercise Price	$ 0.29
$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	87
Weighted-Average Remaining Contractual Term (In Years)	4 years 4 months 24 days
Options Outstanding, Weighted-Average Exercise Price	$ 5.67
Options Exercisable, Number	87
Options Exercisable, Weighted-Average Exercise Price	$ 5.67
$11.45 - $17.33
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	$ 17.33
Options Outstanding, Number	1,445
Weighted-Average Remaining Contractual Term (In Years)	7 years 3 months 18 days
Options Outstanding, Weighted-Average Exercise Price	$ 15.07
Options Exercisable, Number	832
Options Exercisable, Weighted-Average Exercise Price	$ 14.75
$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	529
Weighted-Average Remaining Contractual Term (In Years)	7 years 9 months 18 days
Options Outstanding, Weighted-Average Exercise Price	$ 24.20
Options Exercisable, Number	246
Options Exercisable, Weighted-Average Exercise Price	$ 24.00
$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	141
Weighted-Average Remaining Contractual Term (In Years)	8 years 4 months 24 days
Options Outstanding, Weighted-Average Exercise Price	$ 28.70
Options Exercisable, Number	50
Options Exercisable, Weighted-Average Exercise Price	$ 28.70

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Cash Equivalents and Short-Term Investments

6 Months Ended

Jun. 30, 2015

Cash And Cash Equivalents [Abstract]

Cash Equivalents and Short-Term Investments

3. Cash Equivalents and Short-Term Investments

The components of cash equivalents and short-term investments at June 30, 2015 and December 31, 2014 are as follows:

	June 30, 2015				December 31, 2014
			Fair Market				Fair Market
	Cost		Value		Cost		Value
Cash Equivalents:
Money market accounts	$	2,242	$	2,242	$	2,130	$	2,130
Commercial paper		48,930		48,930		46,339		46,339
Short-term investments:
Variable rate demand notes		12,980		12,980		14,030		14,030
Commercial paper		57,441		57,441		57,463		57,463
Total	$	121,593	$	121,593	$	119,962	$	119,962

There were no unrealized gains or losses as of June 30, 2015 or December 31, 2014.

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Stockholders' Equity - Restricted Stock (Narrative) (Detail) - Restricted Stock Units (RSUs) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Unrecognized compensation cost	$ 3,734		$ 3,734
Weighted average period over which unrecognized compensation cost is expected to be recognized			3 years
Stock-based compensation expense	$ 331	$ 187	$ 585	$ 331

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Cash Equivalents and Short-Term Investments - Cash Equivalents and Short-Term Investments (Detail) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Cash equivalents:
Cash equivalents, fair market value	$ 51,172	$ 48,469
Short-term investments:
Short-term investments, fair market value	70,421	71,493
Total, cost	121,593	119,962
Total, Fair Market Value	121,593	119,962
Money market accounts
Cash equivalents:
Cash equivalents, cost	2,242	2,130
Cash equivalents, fair market value	2,242	2,130
Commercial paper
Cash equivalents:
Cash equivalents, cost	48,930	46,339
Cash equivalents, fair market value	48,930	46,339
Variable rate demand notes
Short-term investments:
Short-term investments, cost	12,980	14,030
Short-term investments, fair market value	12,980	14,030
Commercial paper
Short-term investments:
Short-term investments, cost	57,441	57,463
Short-term investments, fair market value	$ 57,441	$ 57,463

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Summary of Significant Accounting Policies - Equity Instruments Excluded From Diluted Net Income (Loss) Per Common Share of Anti-Dilutive (Detail) - shares shares in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Accounting Policies [Abstract]
Common stock options	538	423	542	214

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Stockholders' Equity - Schedule of Restricted Stock Unit Activity (Detail) - 6 months ended Jun. 30, 2015 - Restricted Stock Units (RSUs) - $ / shares shares in Thousands	Total
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Nonvested, Number of Units, Beginning balance	83
Issued, Number of Units	295
Vested, Number of Units	(35)
Forfeited, Number of Units	(49)
Nonvested, Number of Units, Ending balance	294
Nonvested, Weighted-Average Grant Date Fair Value, Beginning balance	$ 22.20
Issued, Weighted-Average Grant Date Fair Value	13.98
Vested, Weighted-Average Grant Date Fair Value	22.49
Forfeited, Weighted-Average Grant Date Fair Value	16.04
Nonvested, Weighted-Average Grant Date Fair Value, Ending balance	$ 14.93

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Cash Equivalents and Short-Term Investments - (Narrative) (Detail) - USD ($)	6 Months Ended	12 Months Ended
	Jun. 30, 2015	Dec. 31, 2014
Cash And Cash Equivalents [Abstract]
Unrealized gains or losses	$ 0	$ 0

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Fair Value Measurements - (Narrative) (Detail) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2015	Dec. 31, 2014
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Cash equivalents	$ 51,172	$ 48,469
Short-term investments	$ 70,421	71,493
Investment maturity date range, start	2025
Investment maturity date range, end	2042
Variable rate demand notes puttable notice period	7 days
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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Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2015

Accounting Policies [Abstract]

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 six months ended June 30, 2015 are not necessarily indicative of the results to be expected for the fiscal year or any future period. The balance sheet at December 31, 2014 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, 2014, which was filed with the Securities and Exchange Commission on February 23, 2015.

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 stand-alone 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 stand-alone value to its customers. For arrangements when implementation services do not have stand-alone 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 stand-alone 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 income (loss). 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 June 30, 2015 and December 31, 2014. Realized gains and losses are included in other income (expense) based on the specific identification method. There were no realized gains or losses for the three or six months ended June 30, 2015 or 2014. Net unrealized gains and losses on available-for-sale securities are reported as a component of other comprehensive income (loss), net of tax. As of June 30, 2015 and December 31, 2014, 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 June 30, 2015 or December 31, 2014.

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 $295 and $1,100 at June 30, 2015 and December 31, 2014, 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 indicate 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 June 30, 2015.

Stock-Based Compensation

Stock-based payments to employees, including grants of employee stock options, are recognized in the consolidated statement of operations and comprehensive income (loss) 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 and a lattice model on the date of grant for performance-based restricted stock units. 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. The expected term for the six months ended June 30, 2015 and 2014, 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. At June 30, 2015 and December 31, 2014, accumulated other comprehensive loss was ($4,236) and ($3,055), respectively, which is predominantly due 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 income (loss).

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. Diluted net income (loss) per share is computed giving effect to all potentially dilutive common stock, including options, restricted stock, and common stock issuable pursuant to the employee share purchase plan. 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					Six Months Ended
	June 30,					June 30,
	2015		2014			2015		2014
Basic:
Net income (loss)	$	382	$	(73	)	$	93	$	(7	)
Weighted average common shares, basic		27,646		27,423			27,615		25,675
Basic net income (loss) per share	$	0.01	$	(0.00	)	$	0.00	$	(0.00	)
Diluted:
Net income (loss)	$	382	$	(73	)	$	93	$	(7	)
Weighted average common shares, basic		27,646		27,423			27,615		25,675
Dilutive effect of:
Options to purchase common stock		300		-			306		-
Nonvested shares of restricted stock		36		-			29		-
Shares of employee stock purchase plan		7		-			5		-
Weighted average common shares, diluted		27,989		27,423			27,955		25,675
Diluted net income (loss) per share	$	0.01	$	(0.00	)	$	0.00	$	(0.00	)

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

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2015		2014		2015		2014
Common stock options		538		423		542		214

For the three and six months ended June 30, 2014, 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 and six months ended June 30, 2014, diluted net loss per share excluded the impact of 362 and 474 outstanding stock options, respectively, 8 and 16 nonvested shares of restricted stock, respectively, and 7 and 12 shares of common stock issuable pursuant to the employee stock purchase plan, respectively.

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 August 2014, the FASB issued new accounting guidance which addresses management’s responsibility to evaluate whether there is substantial doubt about the entity’s ability to continue as a going concern and to provide related footnote disclosures. Management’s evaluation should be based on relevant conditions and events that are known and reasonably knowable at the date that the financial statements are issued. This guidance is effective for the fiscal year ending after December 15, 2016, and for fiscal years and interim periods thereafter. Early adoption is permitted. The Company does not expect to early adopt this guidance and does not believe that the adoption of this guidance will have a material impact on its financial statements.

In May 2014, the FASB issued new accounting guidance on revenue recognition, which provides for a single five-step model to be applied to all revenue contracts with customers. The new standard also requires additional financial statement disclosures that will enable users to understand the nature, amount, timing and uncertainty of revenue and cash flows relating to customer contracts. Companies have an option to use either a retrospective approach or cumulative effect adjustment approach to implement the standard. This guidance was to be effective for fiscal years and interim periods within those years beginning after December 15, 2017; however, on July 9, 2015 the FASB decided to defer the effective date by one year. Early adoption is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. Pending any further deferral, the Company will adopt this standard in the first quarter of 2018. The Company is currently evaluating the impact that the implementation of this standard will have on its financial statements.

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Fair Value Measurements - Fair Value Measurements (Detail) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total assets measured at fair value	$ 121,593	$ 119,962
Level 1
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total assets measured at fair value	121,593	119,962
Level 2
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total assets measured at fair value	0	0
Level 3
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total assets measured at fair value	0	0
Cash Equivalents
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total assets measured at fair value	51,172	48,469
Cash Equivalents | Level 1
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total assets measured at fair value	51,172	48,469
Cash Equivalents | Level 2
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total assets measured at fair value	0	0
Cash Equivalents | Level 3
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total assets measured at fair value	0	0
Short-term Investments
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total assets measured at fair value	70,421	71,493
Short-term Investments | Level 1
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total assets measured at fair value	70,421	71,493
Short-term Investments | Level 2
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total assets measured at fair value	0	0
Short-term Investments | Level 3
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total assets measured at fair value	$ 0	$ 0

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Stockholders' Equity - Preferred Stock (Narrative) (Detail) - $ / shares	Jun. 30, 2015	Dec. 31, 2014
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Preferred stock, shares authorized	5,000,000
Preferred stock, par value	$ 0.001
Preferred stock shares outstanding	0	0
Preferred stock shares issued	0	0
Preferred Stock
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Preferred stock, shares authorized	4,778,000
Series A Redeemable Preferred Stock
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Preferred stock, shares authorized	222,000

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Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Current assets:
Cash and cash equivalents	$ 57,326	$ 59,419
Short-term investments	70,421	71,493
Accounts receivable, net	12,042	12,032
Prepaid expenses and other current assets	2,847	2,666
Deferred tax asset	404	400
Total current assets	143,040	146,010
Property and equipment, net	14,598	13,595
Goodwill	62,886	63,779
Intangible assets, net	21,115	23,846
Deferred commissions	5,712	6,094
Deferred tax asset, less current portion	11,779	11,657
Other	298	234
Total assets	259,428	265,215
Current liabilities:
Accounts payable	271	375
Accrued liabilities	8,570	10,051
Deferred revenues	53,823	59,751
Total current liabilities	62,664	70,177
Deferred revenues, less current portion	9,373	11,350
Deferred rent, less current portion	$ 1,986	$ 2,027
Commitments and Contingencies
Stockholders' equity:
Common stock, $0.001 par value; 50,000 shares authorized; 27,812 and 27,574 shares issued and outstanding as of June 30, 2015 and December 31, 2014, respectively	$ 28	$ 28
Additional paid-in capital	208,897	204,065
Accumulated other comprehensive loss	(4,236)	(3,055)
Accumulated deficit	(19,284)	(19,377)
Total stockholders' equity	185,405	181,661
Total liabilities and stockholders' equity	$ 259,428	$ 265,215

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Stockholders' Equity - Schedule of Stock Option Activity (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2015	Dec. 31, 2014
Share Based Compensation Arrangement By Share Based Payment Award Options Additional Disclosures [Abstract]
Number of Options Outstanding, Beginning	2,220
Options granted	458
Options exercised	(197)
Options cancelled	(271)
Number of Options Outstanding, Ending	2,210	2,220
Number of Options Outstanding, Vested and expected to vest	2,013
Number of Options Outstanding, Exercisable	1,223
Weighted-Average Exercise Price, Beginning	$ 17.56
Weighted-Average Exercise Price, Options granted	15.52
Weighted-Average Exercise Price, Options exercised	7.73
Weighted-Average Exercise Price, Options cancelled	20.05
Weighted-Average Exercise Price, Ending	17.70	$ 17.56
Weighted-Average Exercise Price, Vested and expected to vest	17.55
Weighted-Average Exercise Price, Exercisable	$ 16.43
Weighted-Average Remaining Contractual Term (In Years)	7 years 4 months 24 days	7 years 6 months
Weighted-Average Remaining Contractual Term (In Years), Vested and expected to vest	7 years 2 months 12 days
Weighted-Average Remaining Contractual Term (In Years), Exercisable	6 years 2 months 12 days
Aggregate Intrinsic Value	$ 1,380	$ 2,389
Aggregate Intrinsic Value, Vested and expected to vest	1,369
Aggregate Intrinsic Value, Exercisable	$ 1,293

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Consolidated Statements of Cash Flows - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Cash flows from operating activities
Net income (loss)	$ 93	$ (7)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation and amortization	5,879	5,120
Stock-based compensation expense	2,914	3,094
Deferred taxes	(126)	(214)
Changes in operating assets and liabilities:
Accounts receivable	(33)	(1,813)
Prepaid expenses and other current assets	(175)	476
Deferred commissions and other assets	302	(113)
Accounts payable	(105)	931
Accrued liabilities	(1,523)	(5,971)
Deferred revenues	(7,813)	(4,608)
Deferred rent	(41)
Net cash used in operating activities	(628)	(3,105)
Cash flows from investing activities
Addition of capitalized software development costs	(3,257)	(2,752)
Purchase of property and equipment	(1,285)	(1,559)
Purchase of available-for-sale short-term investments	(72,478)	(67,710)
Maturities of available-for-sale short-term investments	73,550	20,480
Net cash used in investing activities	(3,470)	(51,541)
Cash flows from financing activities
Proceeds from public offering, net of underwriting discount		87,673
Public offering costs		(240)
Proceeds from exercise of common stock options	1,520	351
Proceeds from employee stock purchase plan activity	476	541
Net cash provided by financing activities	1,996	88,325
Effect of exchange rate changes on cash and cash equivalents	9	230
Net (decrease) increase in cash and cash equivalents	(2,093)	33,909
Cash and cash equivalents at beginning of period	59,419	19,117
Cash and cash equivalents at end of period	$ 57,326	$ 53,026

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Goodwill and Other Intangible Assets - Carrying Amount of Goodwill (Detail) $ in Thousands	6 Months Ended
	Jun. 30, 2015 USD ($)
Carrying amount of goodwill
Goodwill, beginning balance	$ 63,779
Foreign currency translation	(893)
Goodwill, ending balance	$ 62,886

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Property and Equipment (Tables)

6 Months Ended

Jun. 30, 2015

Property Plant And Equipment [Abstract]

Property and Equipment

Property and equipment consist of the following as of June 30, 2015 and December 31, 2014:

	June 30,			December 31,
	2015			2014
Furniture and fixtures	$	1,555		$	1,560
Computer software and equipment		29,391			25,039
Leasehold improvements		634			624
Total costs		31,580			27,223
Less accumulated depreciation and amortization		(16,982	)		(13,628	)
Property and equipment, net	$	14,598		$	13,595

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Goodwill and Other Intangible Assets - Summary of Intangible Assets (Detail) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2015	Dec. 31, 2014
Indefinite And Finite Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 47,878	$ 48,323
Finite Lived Intangible Accumulated Amortization	(26,763)	(24,477)
Net Carrying Amount	20,685
Net Carrying Amount	21,115	23,846
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	$ 19,350	$ 19,578
Finite Lived Intangible Accumulated Amortization	(12,477)	(11,699)
Net Carrying Amount	$ 6,873	$ 7,879
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	$ 26,641	$ 26,842
Finite Lived Intangible Accumulated Amortization	(13,391)	(12,062)
Net Carrying Amount	$ 13,250	$ 14,780
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	$ 379	$ 380
Finite Lived Intangible Accumulated Amortization	(265)	(212)
Net Carrying Amount	$ 114	$ 168
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	$ 1,078	$ 1,093
Finite Lived Intangible Accumulated Amortization	(630)	(504)
Net Carrying Amount	$ 448	$ 589

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Stockholders' Equity (Tables)

6 Months Ended

Jun. 30, 2015

Equity [Abstract]

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 June 30, 2015:

	June 30, 2015
Number of shares reserved under the 2013 Plan		3,500
Number of shares remaining for future grants transferred from Prior Plan		1,004
Number of stock options outstanding under the 2013 Plan		(1,081	)
Weighted average exercise price under the 2013 Plan	$	20.99
Weighted average term (in years)		8.8
Number of restricted stock units issued under the 2013 Plan		(510	)
Number of shares remaining for future grants
SciQuest, Inc. 2013 Stock Incentive Plan		2,913

Schedule of Restricted Stock Unit Activity

The following summarizes the activity of restricted stock awards for the six months ended June 30, 2015:

				Weighted-
	Number of			Average Grant
	Units			Date Fair Value
Nonvested as of December 31, 2014		83		$	22.20
Issued		295			13.98
Vested		(35	)		22.49
Forfeited		(49	)		16.04
Nonvested as of June 30, 2015		294		$	14.93

Schedule of Stock Option Activity

The Company also issues common stock options. The following summarizes stock option activity for the six months ended June 30, 2015:

						Weighted-		Aggregate
						Average		Intrinsic Value
				Weighted-		Remaining		as of
	Number of			Average		Contractual		June 30,
	Options			Exercise Price		Term (In Years)		2015
Balance outstanding as of December 31, 2014		2,220		$	17.56		7.5	$	2,389
Options granted		458			15.52
Options exercised		(197	)		7.73
Options cancelled		(271	)		20.05
Balance outstanding as of June 30, 2015		2,210		$	17.70		7.4	$	1,380
Vested and expected to vest at June 30, 2015		2,013		$	17.55		7.2	$	1,369
Exercisable as of June 30, 2015		1,223		$	16.43		6.2	$	1,293

Schedule of Stock Options Outstanding and Exercisable

The following table summarizes information about stock options outstanding and exercisable at June 30, 2015:

	OptionsOutstanding at June 30, 2015						Options Exercisable at June 30, 2015
			Weighted-
			Average
			Remaining
			Contractual Term		Weighted-Average				Weighted-Average
Range of Exercise Price	Number		(In Years)		Exercise Price		Number		Exercise Price
$0.10 - $1.90		8		1.6	$	0.29		8	$	0.29
$2.04 - $8.18		87		4.4		5.67		87		5.67
$11.45 - $17.33		1,445		7.3		15.07		832		14.75
$17.50 - $27.64		529		7.8		24.20		246		24.00
$27.91 - $29.14		141		8.4		28.70		50		28.70
Total		2,210		7.4	$	17.70		1,223	$	16.43

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:

	Six Months Ended
	June 30,
	2015			2014
Estimated dividend yield		0	%		0	%
Expected stock price volatility	44.88 - 46.30		%	46.05 - 46.33		%
Weighted-average risk-free interest rate	1.36 - 1.89		%	1.75 - 1.94		%
Expected life of options (in years)		6.25			6.25

Schedule of Assumptions Used to Calculate Fair Value of Stock Purchase Rights

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 with the following assumptions used:

	Six Months Ended
	June 30,
	2015			2014
Estimated dividend yield		0	%		0	%
Expected stock price volatility		47.20	%		46.69	%
Weighted-average risk-free interest rate		0.08	%		0.06	%
Expected life of options (in years)		0.5			0.5

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Description of Business

6 Months Ended

Jun. 30, 2015

Organization Consolidation And Presentation Of Financial Statements [Abstract]

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 Morrisville, North Carolina.

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 Balance Sheets (Parenthetical) - $ / shares	Jun. 30, 2015	Dec. 31, 2014
Statement Of Financial Position [Abstract]
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	50,000,000	50,000,000
Common stock, shares issued	27,812,000	27,812,000
Common stock, shares outstanding	27,574,000	27,574,000

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Subsequent Events

6 Months Ended

Jun. 30, 2015

Subsequent Events [Abstract]

Subsequent Events

11. Subsequent Events

   The Company evaluated subsequent events from July 1, 2015 through August 7, 2015, the date the consolidated financial statements were issued. The Company concluded that no subsequent events have occurred that would require recognition or disclosure in the consolidated financial statements.

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Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2015	Jul. 31, 2015
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2015
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	Q2
Trading Symbol	SQI
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		27,812,577

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Summary of Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2015

Accounting Policies [Abstract]

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 six months ended June 30, 2015 are not necessarily indicative of the results to be expected for the fiscal year or any future period. The balance sheet at December 31, 2014 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, 2014, which was filed with the Securities and Exchange Commission on February 23, 2015.

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 stand-alone 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 stand-alone value to its customers. For arrangements when implementation services do not have stand-alone 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 stand-alone 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 income (loss). 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 June 30, 2015 and December 31, 2014. Realized gains and losses are included in other income (expense) based on the specific identification method. There were no realized gains or losses for the three or six months ended June 30, 2015 or 2014. Net unrealized gains and losses on available-for-sale securities are reported as a component of other comprehensive income (loss), net of tax. As of June 30, 2015 and December 31, 2014, 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 June 30, 2015 or December 31, 2014.

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 $295 and $1,100 at June 30, 2015 and December 31, 2014, 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 indicate 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 June 30, 2015.

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 income (loss) 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 and a lattice model on the date of grant for performance-based restricted stock units. 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. The expected term for the six months ended June 30, 2015 and 2014, 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. At June 30, 2015 and December 31, 2014, accumulated other comprehensive loss was ($4,236) and ($3,055), respectively, which is predominantly due 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 income (loss).

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. Diluted net income (loss) per share is computed giving effect to all potentially dilutive common stock, including options, restricted stock, and common stock issuable pursuant to the employee share purchase plan. 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					Six Months Ended
	June 30,					June 30,
	2015		2014			2015		2014
Basic:
Net income (loss)	$	382	$	(73	)	$	93	$	(7	)
Weighted average common shares, basic		27,646		27,423			27,615		25,675
Basic net income (loss) per share	$	0.01	$	(0.00	)	$	0.00	$	(0.00	)
Diluted:
Net income (loss)	$	382	$	(73	)	$	93	$	(7	)
Weighted average common shares, basic		27,646		27,423			27,615		25,675
Dilutive effect of:
Options to purchase common stock		300		-			306		-
Nonvested shares of restricted stock		36		-			29		-
Shares of employee stock purchase plan		7		-			5		-
Weighted average common shares, diluted		27,989		27,423			27,955		25,675
Diluted net income (loss) per share	$	0.01	$	(0.00	)	$	0.00	$	(0.00	)

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

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2015		2014		2015		2014
Common stock options		538		423		542		214

For the three and six months ended June 30, 2014, 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 and six months ended June 30, 2014, diluted net loss per share excluded the impact of 362 and 474 outstanding stock options, respectively, 8 and 16 nonvested shares of restricted stock, respectively, and 7 and 12 shares of common stock issuable pursuant to the employee stock purchase plan, respectively.

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 August 2014, the FASB issued new accounting guidance which addresses management’s responsibility to evaluate whether there is substantial doubt about the entity’s ability to continue as a going concern and to provide related footnote disclosures. Management’s evaluation should be based on relevant conditions and events that are known and reasonably knowable at the date that the financial statements are issued. This guidance is effective for the fiscal year ending after December 15, 2016, and for fiscal years and interim periods thereafter. Early adoption is permitted. The Company does not expect to early adopt this guidance and does not believe that the adoption of this guidance will have a material impact on its financial statements.

In May 2014, the FASB issued new accounting guidance on revenue recognition, which provides for a single five-step model to be applied to all revenue contracts with customers. The new standard also requires additional financial statement disclosures that will enable users to understand the nature, amount, timing and uncertainty of revenue and cash flows relating to customer contracts. Companies have an option to use either a retrospective approach or cumulative effect adjustment approach to implement the standard. This guidance was to be effective for fiscal years and interim periods within those years beginning after December 15, 2017; however, on July 9, 2015 the FASB decided to defer the effective date by one year. Early adoption is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. Pending any further deferral, the Company will adopt this standard in the first quarter of 2018. The Company is currently evaluating the impact that the implementation of this standard will have on its financial statements.

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Consolidated Statements of Operations and Comprehensive Income (Loss) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Income Statement [Abstract]
Revenues	$ 26,501	$ 25,287	$ 52,442	$ 50,694
Cost of revenues	8,702	7,876	17,030	15,546
Gross profit	17,799	17,411	35,412	35,148
Operating expenses:
Research and development	6,730	7,188	13,802	14,115
Sales and marketing	6,727	6,241	13,733	13,201
General and administrative	3,170	3,333	6,519	6,443
Amortization of intangible assets	734	803	1,469	1,600
Total operating expenses	17,361	17,565	35,523	35,359
Income (loss) from operations	438	(154)	(111)	(211)
Other income (expense):
Interest income	163	52	313	58
Other expense, net	(47)	(2)	(235)	(11)
Total other income (expense), net	116	50	78	47
Income (loss) before income taxes	554	(104)	(33)	(164)
Income tax (expense) benefit	(172)	31	126	157
Net income (loss)	382	(73)	93	(7)
Other comprehensive income (loss):
Foreign currency translation adjustments	462	682	(1,181)	(75)
Comprehensive income (loss)	$ 844	$ 609	$ (1,088)	$ (82)
Net income (loss) per share:
Basic	$ 0.01	$ 0.00	$ 0.00	$ 0.00
Diluted	$ 0.01	$ 0.00	$ 0.00	$ 0.00
Weighted average shares outstanding used in computing per share amounts:
Basic	27,646	27,423	27,615	25,675
Diluted	27,989	27,423	27,955	25,675

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Goodwill and Other Intangible Assets

6 Months Ended

Jun. 30, 2015

Goodwill And Intangible Assets Disclosure [Abstract]

Goodwill and Other Intangible Assets

6. Goodwill and Other Intangible Assets

The changes in the carrying amount of goodwill for the six months ended June 30, 2015 were as follows:

Balance at December 31, 2014	$	63,779
Foreign currency translation		(893	)
Balance at June 30, 2015	$	62,886

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 income (loss).

A summary of intangible assets at June 30, 2015 and December 31, 2014 follows:

	June 30, 2015
	Weighted Average
	Amortization	Gross Carrying		Accumulated			Net Carrying
	Period	Amount		Amortization			Amount
Acquired technology	7.0 years	$	19,350	$	(12,477	)	$	6,873
Customer relationships	12.1 years		26,641		(13,391	)		13,250
Covenant not to compete	4.2 years		379		(265	)		114
Acquired trademarks	4.5 years		1,078		(630	)		448
Trademarks	indefinite		430		-			430
Total		$	47,878	$	(26,763	)	$	21,115

	December 31, 2014
	Weighted Average
	Amortization	Gross Carrying		Accumulated			Net Carrying
	Period	Amount		Amortization			Amount
Acquired technology	7.0 years	$	19,578	$	(11,699	)	$	7,879
Customer relationships	12.1 years		26,842		(12,062	)		14,780
Covenant not to compete	4.2 years		380		(212	)		168
Acquired trademarks	4.5 years		1,093		(504	)		589
Trademarks	indefinite		430		-			430
Total		$	48,323	$	(24,477	)	$	23,846

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 income (loss).

Amortization expense of intangible assets was $1,230 and $1,322 for the three months ended June 30, 2015 and 2014, respectively, of which $496 and $519 is recorded in cost of revenues in the accompanying consolidated statements of operations and comprehensive income (loss) for the three months ended June 31, 2015 and 2014, respectively. Amortization expense of intangible assets was $2,462 and $2,639 for the six months ended June 30, 2015 and 2014, respectively, of which $993 and $1,039 is recorded in cost of revenues in the accompanying consolidated statements of operations and comprehensive income (loss) for the six months ended June 30, 2015 and 2014, respectively.

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

2015 (remaining six months)	$	2,181
2016		4,044
2017		3,604
2018		3,010
2019		2,530
Thereafter		5,316
	$	20,685

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Property and Equipment

6 Months Ended

Jun. 30, 2015

Property Plant And Equipment [Abstract]

Property and Equipment

5. Property and Equipment

Property and equipment consist of the following as of June 30, 2015 and December 31, 2014:

	June 30,			December 31,
	2015			2014
Furniture and fixtures	$	1,555		$	1,560
Computer software and equipment		29,391			25,039
Leasehold improvements		634			624
Total costs		31,580			27,223
Less accumulated depreciation and amortization		(16,982	)		(13,628	)
Property and equipment, net	$	14,598		$	13,595

Depreciation expense related to property and equipment (excluding capitalized internal-use software) was $687 and $640 for the three months ended June 30, 2015 and 2014, respectively, and was $1,427 and $1,250 for the six months ended June 30, 2015 and 2014, 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 $1,825 and $1,476 during the three months ended June 30, 2015 and 2014, respectively, and $3,128 and $2,747 during the six months ended June 30, 2015 and 2014, respectively. Net capitalized software development costs totaled $9,033 and $7,867 at June 30, 2015 and December 31, 2014, respectively. Amortization expense for the three months ended June 30, 2015 and 2014 related to capitalized software development costs was $1,072 and $673, respectively, and was $1,989 and $1,231 for the six months ended June 30, 2015 and 2014, respectively, which is classified within cost of revenues in the accompanying consolidated statements of operations and comprehensive income (loss).

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Goodwill and Other Intangible Assets (Tables)

6 Months Ended

Jun. 30, 2015

Goodwill And Intangible Assets Disclosure [Abstract]

Carrying Amount of Goodwill

The changes in the carrying amount of goodwill for the six months ended June 30, 2015 were as follows:

Balance at December 31, 2014	$	63,779
Foreign currency translation		(893	)
Balance at June 30, 2015	$	62,886

Summary of Intangible Assets

A summary of intangible assets at June 30, 2015 and December 31, 2014 follows:

	June 30, 2015
	Weighted Average
	Amortization	Gross Carrying		Accumulated			Net Carrying
	Period	Amount		Amortization			Amount
Acquired technology	7.0 years	$	19,350	$	(12,477	)	$	6,873
Customer relationships	12.1 years		26,641		(13,391	)		13,250
Covenant not to compete	4.2 years		379		(265	)		114
Acquired trademarks	4.5 years		1,078		(630	)		448
Trademarks	indefinite		430		-			430
Total		$	47,878	$	(26,763	)	$	21,115

	December 31, 2014
	Weighted Average
	Amortization	Gross Carrying		Accumulated			Net Carrying
	Period	Amount		Amortization			Amount
Acquired technology	7.0 years	$	19,578	$	(11,699	)	$	7,879
Customer relationships	12.1 years		26,842		(12,062	)		14,780
Covenant not to compete	4.2 years		380		(212	)		168
Acquired trademarks	4.5 years		1,093		(504	)		589
Trademarks	indefinite		430		-			430
Total		$	48,323	$	(24,477	)	$	23,846

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:

2015 (remaining six months)	$	2,181
2016		4,044
2017		3,604
2018		3,010
2019		2,530
Thereafter		5,316
	$	20,685

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Summary of Significant Accounting Policies (Tables)

6 Months Ended

Jun. 30, 2015

Accounting Policies [Abstract]

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

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

	Three Months Ended					Six Months Ended
	June 30,					June 30,
	2015		2014			2015		2014
Basic:
Net income (loss)	$	382	$	(73	)	$	93	$	(7	)
Weighted average common shares, basic		27,646		27,423			27,615		25,675
Basic net income (loss) per share	$	0.01	$	(0.00	)	$	0.00	$	(0.00	)
Diluted:
Net income (loss)	$	382	$	(73	)	$	93	$	(7	)
Weighted average common shares, basic		27,646		27,423			27,615		25,675
Dilutive effect of:
Options to purchase common stock		300		-			306		-
Nonvested shares of restricted stock		36		-			29		-
Shares of employee stock purchase plan		7		-			5		-
Weighted average common shares, diluted		27,989		27,423			27,955		25,675
Diluted net income (loss) per share	$	0.01	$	(0.00	)	$	0.00	$	(0.00	)

Equity Instruments Excluded From Diluted Net Income (Loss) Per Common Share of Anti-Dilutive

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

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2015		2014		2015		2014
Common stock options		538		423		542		214

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Income Taxes

6 Months Ended

Jun. 30, 2015

Income Tax Disclosure [Abstract]

Income Taxes

9. 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 of (31)% and (381.8)% for the three and six months ended June 30, 2015, respectively, was lower than the federal statutory rate of 34% primarily due to non-deductible expenses, including stock-based compensation. The Company’s effective tax rate of (29.8)% and (95.7)% for the three and six months ended June 30, 2014, respectively, was lower than the federal statutory rate of 34% primarily due to non-deductible expenses, including stock-based compensation.

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Debt

6 Months Ended

Jun. 30, 2015

Debt Disclosure [Abstract]

Debt

7. 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 June 30, 2015 and December 31, 2014, the Company had $0 outstanding under the revolving credit facility.

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Stockholders' Equity

6 Months Ended

Jun. 30, 2015

Equity [Abstract]

Stockholders' Equity

8. 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 June 30, 2015 and December 31, 2014, 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, including performance-based 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, including performance-based 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 June 30, 2015, 2,913 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 June 30, 2015:

	June 30, 2015
Number of shares reserved under the 2013 Plan		3,500
Number of shares remaining for future grants transferred from Prior Plan		1,004
Number of stock options outstanding under the 2013 Plan		(1,081	)
Weighted average exercise price under the 2013 Plan	$	20.99
Weighted average term (in years)		8.8
Number of restricted stock units issued under the 2013 Plan		(510	)
Number of shares remaining for future grants
SciQuest, Inc. 2013 Stock Incentive Plan		2,913

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 and performance-based restricted stock units to certain employees and non-employee directors. 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. Performance-based restricted stock units differ from restricted stock units in that the number of shares of common stock issuable under performance-based restricted stock units is variable based on over- or under- performance of the Company’s stock price over a specified period of time. Stock-based compensation expense related to these restricted stock units and performance-based restricted stock units is recognized in the consolidated statements of operations and comprehensive income (loss) based on the fair value of these awards. For restricted stock units, the fair value of the awards is the grant date market value of the Company’s common stock. For performance-based restricted stock units, the fair value of the awards is estimated using a lattice model with a volatility assumption based on the vesting period of the awards. Stock-based compensation expense of $331 and $187 was recorded during the three months ended June 30, 2015 and 2014, respectively, and $585 and $331 was recorded during the six months ended June 30, 2015 and 2014, respectively, in connection with these awards. The total unrecognized compensation cost related to these awards is approximately $3,734 at June 30, 2015. This amount is expected to be recognized over a weighted-average period of 3.0 years.

The following summarizes the activity of restricted stock awards for the six months ended June 30, 2015:

				Weighted-
	Number of			Average Grant
	Units			Date Fair Value
Nonvested as of December 31, 2014		83		$	22.20
Issued		295			13.98
Vested		(35	)		22.49
Forfeited		(49	)		16.04
Nonvested as of June 30, 2015		294		$	14.93

Stock Options

The Company also issues common stock options. The following summarizes stock option activity for the six months ended June 30, 2015:

						Weighted-		Aggregate
						Average		Intrinsic Value
				Weighted-		Remaining		as of
	Number of			Average		Contractual		June 30,
	Options			Exercise Price		Term (In Years)		2015
Balance outstanding as of December 31, 2014		2,220		$	17.56		7.5	$	2,389
Options granted		458			15.52
Options exercised		(197	)		7.73
Options cancelled		(271	)		20.05
Balance outstanding as of June 30, 2015		2,210		$	17.70		7.4	$	1,380
Vested and expected to vest at June 30, 2015		2,013		$	17.55		7.2	$	1,369
Exercisable as of June 30, 2015		1,223		$	16.43		6.2	$	1,293

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 June 30, 2015 multiplied by the number of shares that would have been received by the option holders had all option holders exercised their options on June 30, 2015. The aggregate intrinsic value of options exercised during the three months ended June 30, 2015 and 2014 was $1,463 and $300, respectively. The aggregate intrinsic value of options exercised during the six months ended June 30, 2015 and 2014 was $1,545 and $1,132, respectively.  

The total unrecognized compensation cost related to outstanding stock options is $8,587 at June 30, 2015. This amount is expected to be recognized over a weighted-average period of 2.7 years.

The following table summarizes information about stock options outstanding and exercisable at June 30, 2015:

	OptionsOutstanding at June 30, 2015						Options Exercisable at June 30, 2015
			Weighted-
			Average
			Remaining
			Contractual Term		Weighted-Average				Weighted-Average
Range of Exercise Price	Number		(In Years)		Exercise Price		Number		Exercise Price
$0.10 - $1.90		8		1.6	$	0.29		8	$	0.29
$2.04 - $8.18		87		4.4		5.67		87		5.67
$11.45 - $17.33		1,445		7.3		15.07		832		14.75
$17.50 - $27.64		529		7.8		24.20		246		24.00
$27.91 - $29.14		141		8.4		28.70		50		28.70
Total		2,210		7.4	$	17.70		1,223	$	16.43

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:

	Six Months Ended
	June 30,
	2015			2014
Estimated dividend yield		0	%		0	%
Expected stock price volatility	44.88 - 46.30		%	46.05 - 46.33		%
Weighted-average risk-free interest rate	1.36 - 1.89		%	1.75 - 1.94		%
Expected life of options (in years)		6.25			6.25

Stock-based compensation expense of $1,038 and $1,363 was recorded during the three months ended June 30, 2015 and 2014, respectively, and $2,183 and $2,601 was recorded during the six months ended June 30, 2015 and 2014, respectively, related to the Company’s outstanding stock options. The weighted average grant date fair value per share for stock options granted in the six months ended June 30, 2015 and 2014 was $7.13 and $12.19, respectively. The aggregate fair value of stock options that vested during the six months ended June 30, 2015 and 2014 was $2,335 and $2,741, respectively.

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. 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 June 30, 2015, 848 shares of common stock were available for issuance to participating employees under the Purchase Plan. During the three months ended June 30, 2015 and 2014, the Company recognized stock-based compensation expense of $76 and $81, respectively, and recognized $146 and $162 during the six months ended June 30, 2015 and 2014, respectively, related to the Purchase Plan.

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 with the following assumptions used:

	Six Months Ended
	June 30,
	2015			2014
Estimated dividend yield		0	%		0	%
Expected stock price volatility		47.20	%		46.69	%
Weighted-average risk-free interest rate		0.08	%		0.06	%
Expected life of options (in years)		0.5			0.5

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Commitments and Contingencies

6 Months Ended

Jun. 30, 2015

Commitments And Contingencies Disclosure [Abstract]

Commitments and Contingencies

10. 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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Property and Equipment - (Narrative) (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014	Dec. 31, 2014
Property Plant And Equipment [Abstract]
Property and equipment, depreciation	$ 687	$ 640	$ 1,427	$ 1,250
Capitalized software development costs	1,825	1,476	3,128	2,747
Net capitalized software development costs	9,033		9,033		$ 7,867
Amortization expense related to capitalized software development costs	$ 1,072	$ 673	$ 1,989	$ 1,231

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Income Taxes - (Narrative) (Detail)	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Income Tax Disclosure [Abstract]
Effective tax rate	(31.00%)	(29.80%)	(381.80%)	(95.70%)
Federal statutory rate	34.00%	34.00%	34.00%	34.00%

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Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2015

Fair Value Disclosures [Abstract]

Fair Value Measurements

The fair value measurements of the Company’s financial assets at June 30, 2015 are as follows:

	Total		Level 1		Level 2		Level 3
Cash equivalents	$	51,172	$	51,172	$	-	$	-
Short-term investments		70,421		70,421		-		-
Total	$	121,593	$	121,593	$	-	$	-

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

	Total		Level 1		Level 2		Level 3
Cash equivalents	$	48,469	$	48,469	$	-	$	-
Short-term investments		71,493		71,493		-		-
Total	$	119,962	$	119,962	$	-	$	-

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Summary of Significant Accounting Policies - (Narrative) (Detail) shares in Thousands	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2015 USD ($) shares	Jun. 30, 2014 USD ($) shares	Jun. 30, 2015 USD ($) Segment shares	Jun. 30, 2014 USD ($) shares	Dec. 31, 2014 USD ($)
Accounting Policies [Line Items]
Realized gains or losses on available-for-sale securities	$ 0	$ 0	$ 0	$ 0
Unrealized gains or losses			0		$ 0
Other than temporary declines in investment value			0		0
Allowance for outstanding accounts receivable	295,000		$ 295,000		1,100,000
Dividend yield			0.00%
Accumulated other comprehensive loss	$ (4,236,000)		$ (4,236,000)		$ (3,055,000)
Number of reporting segments | Segment			1
Antidilutive Securities Excluded from Computation of Earnings Per Share | shares	538	423	542	214
Stock Purchase Plan
Accounting Policies [Line Items]
Antidilutive Securities Excluded from Computation of Earnings Per Share | shares		7		12
Stock Options
Accounting Policies [Line Items]
Antidilutive Securities Excluded from Computation of Earnings Per Share | shares		362		474
Restricted Stock
Accounting Policies [Line Items]
Antidilutive Securities Excluded from Computation of Earnings Per Share | shares		8		16
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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Stockholders' Equity - Employee Stock Purchase Plan (Narrative) (Detail) - USD ($) shares in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Shares available for issuance	2,913		2,913
Employee Stock Purchase Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock-based compensation expense	$ 76,000	$ 81,000	$ 146,000	$ 162,000
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			85.00%
Shares available for issuance	848		848
Employee stock purchase plan, maximum annual contribution	$ 25,000		$ 25,000

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Stockholders' Equity - Stock Incentive Plan (Narrative) (Detail) - Jun. 30, 2015	shares
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	2,913,000
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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Consolidated Statement of Stockholders' Equity - 6 months ended Jun. 30, 2015 - USD ($) shares in Thousands, $ in Thousands	Total	Common Stock	Additional Paid In Capital	Accumulated Other Comprehensive Loss	Accumulated Deficit
Balance at Dec. 31, 2014	$ 181,661	$ 28	$ 204,065	$ (3,055)	$ (19,377)
Balance, shares at Dec. 31, 2014		27,574
Issuance of stock in connection with stock option exercises	$ 1,520		1,520
Issuance of stock in connection with stock option exercises, shares	197	197
Issuance of stock in connection with employee stock purchase plan	$ 398		398
Issuance of stock in connection with employee stock purchase plan, shares		32
Issuance of stock pursuant to vesting of restricted stock units, shares		9
Stock-based compensation	2,914		2,914
Foreign currency translation adjustments	(1,181)			(1,181)
Net income	93				93
Balance at Jun. 30, 2015	$ 185,405	$ 28	$ 208,897	$ (4,236)	$ (19,284)
Balance, shares at Jun. 30, 2015		27,812

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Fair Value Measurements

6 Months Ended

Jun. 30, 2015

Fair Value Disclosures [Abstract]

Fair Value Measurements

4. 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 June 30, 2015 and December 31, 2014, the Company had cash equivalents of $51,172 and $48,469, respectively, which consist of money market accounts and commercial paper. As of June 30, 2015 and December 31, 2014, the Company had short-term investments of $70,421 and $71,493, respectively, which consist of commercial paper and variable rate demand notes that are invested in corporate and municipal bonds. The variable rate demand notes have final maturities between 2025 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 June 30, 2015 and December 31, 2014, 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 June 30, 2015 are as follows:

	Total		Level 1		Level 2		Level 3
Cash equivalents	$	51,172	$	51,172	$	-	$	-
Short-term investments		70,421		70,421		-		-
Total	$	121,593	$	121,593	$	-	$	-

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

	Total		Level 1		Level 2		Level 3
Cash equivalents	$	48,469	$	48,469	$	-	$	-
Short-term investments		71,493		71,493		-		-
Total	$	119,962	$	119,962	$	-	$	-

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Summary of Significant Accounting Policies - Calculation of Basic and Diluted Net Income (Loss) Per Share (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Basic:
Net income (loss)	$ 382	$ (73)	$ 93	$ (7)
Weighted average common shares, basic	27,646	27,423	27,615	25,675
Basic net income (loss) per share	$ 0.01	$ 0.00	$ 0.00	$ 0.00
Diluted:
Net income (loss)	$ 382	$ (73)	$ 93	$ (7)
Weighted average common shares, basic	27,646	27,423	27,615	25,675
Dilutive effect of:
Weighted average common shares, diluted	27,989	27,423	27,955	25,675
Diluted net income (loss) per share	$ 0.01	$ 0.00	$ 0.00	$ 0.00
Stock Purchase Plan
Dilutive effect of:
Options to purchase stock	7		5
Stock Options
Dilutive effect of:
Options to purchase stock	300		306
Restricted Stock
Dilutive effect of:
Options to purchase stock	36		29

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Goodwill and Other Intangible Assets - Future Amortization Expense Related to Intangible Assets (Detail) $ in Thousands	Jun. 30, 2015 USD ($)
Finite Lived Intangible Assets Future Amortization Expense [Abstract]
2015 (remaining six months)	$ 2,181
2016	4,044
2017	3,604
2018	3,010
2019	2,530
Thereafter	5,316
Net Carrying Amount	$ 20,685

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Cash Equivalents and Short-Term Investments (Tables)

6 Months Ended

Jun. 30, 2015

Cash And Cash Equivalents [Abstract]

Cash Equivalents and Short-Term Investments

The components of cash equivalents and short-term investments at June 30, 2015 and December 31, 2014 are as follows:

	June 30, 2015				December 31, 2014
			Fair Market				Fair Market
	Cost		Value		Cost		Value
Cash Equivalents:
Money market accounts	$	2,242	$	2,242	$	2,130	$	2,130
Commercial paper		48,930		48,930		46,339		46,339
Short-term investments:
Variable rate demand notes		12,980		12,980		14,030		14,030
Commercial paper		57,441		57,441		57,463		57,463
Total	$	121,593	$	121,593	$	119,962	$	119,962