Earnings conference calls between senior company executives and Wall Street analysts who track those firms can often trigger interesting give-and-take. Such was the case Wednesday as SciQuest (Nasdaq: SQI) Chairman and Chief Executive Officer Stephen Wiehe dealt with a variety of questions, two of which focused on up-and-down results and whether SciQuest faced increasing competition.

Wiehe, who led SciQuest back to the public markets with an IPO in 2011, was asked about the “volatility” in its results is “the biggest frustration that I hear from investors.”

Wiehe replied “elephant hunting” big deals in the fields of electronic fulfillment is a major reason earnings are “lumpy,” but says more products may smooth out future results. (The full earnings report is available at SciQuest’s website.)

Here’s the coversation as provided in a transcript at financial news website SeekingAlpha:

“[F]irst off, I think that’s a fair observation of the business,” Wiehe responded to Patrick Walravens of JMP Securities.  

“Our bookings have been lumpy historically, and we’ve always been open with our investors even from the time at the IPO. Our business has been very much about large ticket deals, elephant hunting. And elephant hunting can be a little feast and famine, and that’s where we suffered from. As a result of that and that’s something that we, as a company, been very aware of, and we’ve been actively looking to investing to mitigate that risk. We’ve been through our acquisition, as well as through our internal development.

“We have been building more point solutions, and so we are able to take a mixture of big deals and small deals to market in a hope of trying to flatten out some of that lumpiness. Last quarter is a great example of that. We had great predictability in terms of the small deals. 

“In fact, we had a highest number ever in terms of small transactions where we hit an air pocket was the big deals. This quarter, we’re back with bigger transactions and the smaller transactions. So back to specifically your question what are we doing to eliminate this problem or to try to settle it down.

“We’re continuing to invest in more point solutions, as I talked about our Total Supplier Manager product and our sourcing product. We believe having more and more point solutions will give us an ability to have a more balanced portfolio and to make us less susceptible to kind of the lumpiness that we’ve seen.

“So back to your question or your comment, Pat, it’s a fair observation, but it is something that we’re aware of. And I think that we, as a company, are looking to try to do the best we can to solve that problem.”

More Competition?

Richard Davis of Canaccord Genuity then asked Wehie about whether the company was facing increasing competition. He said that in his assessment the answer was no.

Wiehe concurred then brought up the “lumpy” issue again. 

“Our lumpiness has not been competitive related. In fact, of the deals that it slipped in Q1, we’ve closed a preponderance of them in Q2. There’s still a couple out there,” he explained.

“They are not competitive, it is again it’s going to the internal approval processes.”

The entire transcript can be read online.