“The company added 17 new customers during the quarter.”
As you already know, and since I started covering them in 2005, I have experienced a growing skepticism regarding any information that comes out of SciQuest. Here is the link to my most recent SciQuest posts.
All this being said, when I read their latest news release earlier this month, I decided to reach out to the company through a mutual connection. Specifically, and wanting to provide SciQuest with an opportunity to provide clarity relating to their one line disclosure that they had “added 17 new customers” during the previous quarter, I asked if they could provide the names of these clients. The reason being is that despite my best research, I could only identify 2 potential organizations or institutions that would qualify as new client wins.
It seems like a fairly simple request, that our mutual connection forwarded to the company on the 16th of February.
Having not received a response by the 19th, I followed-up with my contact indicating that I was getting ready to write the post but wanted to at least give SciQuest one last opportunity to respond. The contact sent a second e-mail to SciQuest, copying me. Not long afterwards I received the following reply:
Hello Jon – I guess this intro is long overdue.
Let me take a moment today and respond by email about the following. I want to be as accurate in my response to you. Thanks for your patience!
Marketing Specialist, Public Relations & Analyst Relations
Just as an aside, in addition to requesting more information on the 17 new clients, I also asked for further details regarding a separate announcement about a non-active investor with a greater than 5% stake in the company.
So here we are, the 24th of February and still no real information on the 17 new customers? I do not think that it is a tough question? After all, I am not asking to see the company’s marketing plans or solution source code. I am merely asking them to provide clarification regarding information that they chose to make public. Who are the 17 new clients?
Even if they cannot provide the names, at least indicate what they define as being a new client?
For example, earlier today I received a press release notification from Proxima under the heading “Proxima secures $40m in new contracts and sees significant growth in procurement consultancy services.”
The company then goes on to state:
“Proxima has enjoyed an upsurge in new contracts coming from expansions, extensions and renewals from existing clients as well as new client wins. In the last three months, Proxima has earned new or additional business from a global retailer, a North American-based food product manufacturer, an iconic retail banking brand, a pan-European supermarket chain and a UK based financial service provider.”
This is a great deal more information than a simple one line statement that “The company added 17 new customers during the quarter.”
By the way, I did send an e-mail to Proxima requesting that they provide a percentage breakdown i.e. what percentage are new client wins, what percentage are expansions, extensions and renewals?
In terms of the new clients, I also asked if they could provide more details including the client/company name, and the circumstances surrounding their engagement of Proxima.
The point I am making here is simply this, if you are going to put out information, it should be accessible in terms of verification and significance. If for example, the business being claimed as new is simply a renewal of an existing contract or contracts, while important, it is not an indication that the company is gaining market traction or broader market acceptance.
Conversely, if there is a healthy mix of both renewal contracts as well as new client wins, then you have a company that is demonstrating an ability to both retain existing clients, while actually expanding their base to include new clients.
With the Proxima release, you get at least a basic understanding or insight into what the company is doing. With SciQuest you get well . . . a lack of clarity, that can be construed as being little more than the provision of self-serving information that is geared more towards driving share value as opposed to real client value. Or to put it another way, with the former their focus is on the value they are attempting to deliver to their clients and the market in general. With the latter, it’s all about revenues and stock prices.
So here’s the question . . . where’s Guffman?