SciQuest CEO: CombineNet buy was a good decision

Executives at Cary software firm SciQuest (Nasdaq: SQI) say the $43 million CombineNet deal is already a success.

That’s one takeaway from an earnings call in which CEO Steve Wiehe announced third quarter revenues of $22.5 million, compared to $17.2 million last year. The good news comes from an increased sales staff as well as new high-profile customers such as Federal Express and Syngenta.

But the biggest newsmaker of the quarter? The deal to acquire Pittsburgh-based CombineNet, a company with technology that’s more valuable than how it’s currently being utilized, Wiehe says.

“One of the things that as we looked at CombineNet we thought their pricing and economic model could be optimized, could be done better,” he says. “We think for the amount of savings we generate for those clients, the amount of fees they pay are well out of balance.”

He says talks will be had with customers to make that economic model “more rational.”

Wiehe says he’s been “able to witness first hand” customer enthusiasm for the CombineNet, and he's optimistic that the margins will start to reflect that enthusiasm. CFO Rudy Howard reminds that $26 million in cash was spent on the deal in the quarter.

Operational integration of the company is on track, Wiehe adds.

Another takeaway is that SciQuest’s stated intent to boost its sales force is finally a reality with Doug Keister, the new senior vice president of worldwide sales. Wiehe says the company is on track to have 48 quota-carrying salespeople by year’s end (“We’re virtually there,” says Howard), the largest number it’s had yet.

Lauren Ohnesorge covers technology, biotechnology and Durham County.