SciQuest has won a key contract with the state of Colorado, which could open the doors for similar deals with other states.
The deal represents a big breakthrough for Cary-based SciQuest, which sells e-procurement technology and services to universities, pharmaceutical companies and other customers. It has had a contract with Georgia, but officials have been pushing hard to add more business with other state and local governments.
Final terms of the Colorado contract are still being negotiated, but it could be worth nearly $5 million over five years.
SciQuest CEO Stephen Wiehe declined to comment until all of the agreements with Colorado are signed.
The contract is a "highly visible win in the state and local market, which we believe may act as a catalyst for additional government opportunities for SciQuest," JMP Securities analyst Patrick Walravens wrote in a report to investors.
Walravens also raised his price target on SciQuest stock to $20 from $16.
SciQuest shares, which began trading in September at $9.50, fell 33 cents on Friday to close at $15.28.
Lawyers with SciQuest and the Colorado state purchasing office are in discussions and expect to have a final agreement this month, said Tom Spiker, a Colorado spokesman. "Our intent is to move it through as fast as possible," he added. "It's in the attorneys' hands."
Colorado requested proposals for e-procurement "solutions and services" last year, and initially received 15 bids. An evaluation committee included representatives from eight states: Colorado, Nevada, Oregon, Washington, Idaho, New Jersey, Oklahoma and Utah.
By beating out other bidders, SciQuest could have an advantage in winning business with the other states involved.
The states' reviewers wrote that they were impressed with SciQuest's "comprehensive and robust solution." Details of the Colorado process and proposed contract awarded to SciQuest were made public in a document on the Web site of the state's purchasing office.
SciQuest is seeing steadily increasing demand for its technology, which allows customers to buy goods and services more efficiently online. Other new customers include Wake Forest University, the University of Nebraska and MGM Macau hotel and casino.
SciQuest now has more than 300 customers, and using a network of 30,000 suppliers, helps arrange transactions worth billions of dollars every year.
"Our business is doing very well and we're actively hiring to keep up with continued growth," Wiehe said.
SciQuest now employs about 240 people after adding 30 so far this year. The company has more than two dozen open positions and expects to add another 20 or 30 more by the end of this year.
Last month, SciQuest reported that first-quarter revenue rose to $12.5 million, up 24 percent from a year earlier.