WASHINGTON - Monday, November 14, 2022 - FiscalNote Holdings, Inc. (NYSE: NOTE) (the “Company” or "FiscalNote"), a leading Al-driven enterprise SaaS provider of global policy and market intelligence, today announced financial results for the third quarter ended September 30, 2022.
Third Quarter 2022 Financial Highlights
- Revenue increased 34% to $29.1 million, compared to $21.8 million in Q3 2021. Non-GAAP adjusted revenue¹ increased 27% to $29.2 million compared to $22.9 million in the third quarter of 2021.
- Gross profit was $20.3 million representing 70% gross margin, and non-GAAP adjusted gross profit was $23.3 million representing 80% non-GAAP adjusted gross margin.
- GAAP net loss of $109 million. GAAP net loss for the quarter contains several non-cash items associated with the Company's public listing on July 29, 2022 including a $45.2 million loss on extinguishment of debt and a non-cash charge of $32.1 million recognized as interest expense related to the derecognition of beneficial conversion features embedded within the convertible notes that went into equity as part of the Company's public listing and $28.9 million of non-cash charges related to the accounting treatment of stock based compensation related to the Company's transition to a public listing. These charges were partially offset by a non-cash gain of approximately $21.9 million related to the mark-to-market of the public and private warrants liability the Company is required to fair value at each reporting date.
- Adjusted EBITDA¹ loss of $7.4 million.
- Cash and cash equivalents of $78.8 million and approximately $100 million of additional debt capacity.* The Company continues to have sufficient capital resources available to reach profitability, support its current growth plans and pursue M&A opportunities.
Third Quarter 2022 Business Metrics
- Run-Rate Revenue: Run-rate revenue² increased to $121 million as of September 30, 2022 inclusive of businesses acquired in 2022. Organic Run-Rate Revenue³ increased to $120 million in the period, a 14% increase from $105 million as of September 30, 2021 on a pro forma basis.
- Annual Recurring Revenue ("ARR"): ARR² rose to $108 million at September 30, 2022 inclusive of businesses acquired in 2022. Organic ARR³ was $107 million as of September 30, 2022 compared to ARR of $94 million at September 30, 2021, representing a 14% growth rate on a pro forma basis.
- Net Revenue Retention (“NRR”): NRR² was 99%, consistent with prior periods, underscoring the Company's ability to establish and maintain long-term recurring revenue relationships by serving as an essential partner for customers across both the commercial and public sectors.
"Our third quarter results reflect our continued market leadership and growth momentum, fueled by an expanding global customer base, subscription-based recurring revenue model and growing demand for our policy and market intelligence solutions around the world," said Tim Hwang, Chairman, CEO, and Co-founder, FiscalNote. "Every day, we generate critical insights and convert them into actions for the world's most important decision makers. The essential role we play for our commercial and public sector customers is even more urgent today given current economic headwinds, increasing regulations in local, state, federal and global markets, and ongoing geopolitical volatility. Over the past decade, we have solidified our position as the SaaS leader in our sector and a category-creator in the market. As we look ahead, we are excited by our growth opportunities while being responsive to macroeconomic conditions. We will continue to expand our business prudently and responsibly as we create a profitable, enduring growth company."
Third Quarter and Recent Business Highlights
During the quarter, FiscalNote continued to execute successfully on its strategy to lead the market in global policy and market intelligence with several operational achievements, including:
- Entered into new, renewed, or expanded relationships with leading global corporations and a number of leading U.S. and global brand leaders. See separate press release issued today.
- Secured new public sector contract wins, expansions, and renewals of major departments and agencies across executive, legislative, and judicial branches of the U.S. Government.
- Acquired the core operating assets and book of business of DT-Global, a Vienna, Austria subscription-based market intelligence company which provides in-depth expertise and analysis for the Central & Eastern Europe (CEE), Commonwealth of Independent States (CIS), and Middle East-Africa (MEA) geographies. DT Global brings a base of more than 350 global and regional customers - including many belonging to the Fortune 500.
- Amplified its Curate platform for civic intelligence and monitoring services by extending its state and local coverage to include hundreds of state boards across the U.S.
- Secured two prestigious global awards recognizing the Company's SaaS leadership and innovation:
- FiscalNote's Curate platform for civic intelligence and monitoring was declared the winner of the "Best Data Innovation in a SaaS Product" category at the 2022 SaaS Awards. Curate was recognized as the winner due to the platform's superior Natural Language Processing Al and its consistent positive customer feedback.
- FiscalNote's Equilibrium ESG platform was declared the winner of the "Best SaaS product for CSR or Sustainability" category at the 2022 SaaS Awards. Equilibrium is an Al-powered platform which helps organizations unify, manage, and benchmark carbon, climate and ESG data across their entire operations and supply chain.
- Expanded its FiscalNote ESG Solutions platform with two key enhancements:
- The addition of the ESG360TM Benchmarking and Risk Intelligence solution that gives companies a holistic view of their ESG performance and perception across operations, suppliers, and competitors.
- A technology integration with Asana (NYSE: ASAN), a leading work management platform into the Equilibrium ESG platform. With this integration, FiscalNote Equilibrium customers and Asana customers gain one-click connection, decarbonization support, ESG disclosure and reporting, and curated ESG reporting playbooks from a single platform.
- Announced significant improvements and upgrades to its industry-leading European Union (EU) regulatory intelligence SaaS platform, EU Issue Tracker (EUIT), as well as a slate of new, tailored services, such as timely briefings on EU policy issues and stakeholder mapping to identify key policymakers and insiders involved in issues with a direct impact on corporations and organizations around the world.
- Published the inaugural overview of FiscalNote's sustainability and social impact efforts for 2021, which details the Company's global sustainability and ESG efforts, and illustrates its commitment to a more sustainable future.
Financial Outlook 2022
FiscalNote provided guidance³ for full year 2022 as follows:
- GAAP revenue of $112 million to $114 million, representing 36% year-over-year growth at the midpoint. The Company has not previously provided GAAP revenue guidance.
- Organic Run-Rate Revenue³ of $122 million to $126 million, indicating growth of approximately 13% year-over-year at the midpoint on a pro forma basis. This new range better reflects a weakened macroeconomic environment and a commitment to capital efficient growth.
- Adjusted EBITDA loss of $24 million to $22 million or approximately $23 million at the midpoint, which is consistent with guidance the Company previously provided.
- In addition, the Company reiterated that it remains on track to achieve positive Adjusted EBITDA in the fourth quarter of 2023⁴, indicating its ongoing focus on profitability.
Additional information regarding the non-GAAP financial measures discussed in this release, including an explanation of these measures and how each is calculated, is included below under the heading "Non-GAAP Financial Measures." A reconciliation of GAAP to non-GAAP financial measures has also been provided in the financial tables included below. Information regarding our key performance indicators is included below under "Key Performance Indicators."
Quarterly Conference Call
FiscalNote will host a conference call today, Monday, November 14, 2022, at 10:00 a.m. Eastern Time (U.S.) to review the Company's financial results for the third quarter ended September 30, 2022. To access this call, dial 1 (888) 660-6510 for the U.S. or Canada, or 1 (929) 203-0882 for callers outside the U.S. or Canada with the conference ID 1271923. A live webcast of the conference call will be accessible from the Investor Relations section of FiscalNote's website at https://investors.fiscalnote.com/, and a recording will be archived and accessible at https://investors.fiscalnote.com/. An audio replay of this conference call will also be available through November 28, 2022, 11:59pm ET, by dialing 1-800-770-2030 for the U.S. or Canada, or 1-647-362-9199 for callers outside the U.S. or Canada, and entering 1271923.
* In connection with FiscalNote’s public listing, we entered into a 5-year senior secured term loan of up to $250 million, including $150 million of committed financing at closing with an additional accordion facility for $100 million, subject to certain conditions.
¹Non-GAAP measure. Please see "Non-GAAP Financial Measures" in this earnings release for definitions and important disclosures regarding these financial measures, including reconciliations to the most directly comparable GAAP measure.
²“Run-Rate Revenue,” “Annual Recurring Revenue” or “ARR” and “Net Revenue Retention”, are key performance indicators (KPIs). Please see "Key Performance Indicators" in this earnings release for the definitions and important disclosures regarding these measures.
³Organic run rate revenue and organic ARR for 2022 include businesses acquired as of December 31, 2021, plus Aicel Technologies (for which a definitive acquisition agreement was signed as of December 31, 2021, with closing conditioned upon FiscalNote’s public listing). Pro forma growth rates are calculated as if the Company owned such businesses at the end of the prior period referenced.
⁴Because of the variability of items impacting net income and unpredictability of future events, management is unable to reconcile without unreasonable effort the Company's forecasted adjusted EBITDA to a comparable GAAP measure.
FiscalNote (NYSE: NOTE) is a leading technology provider of global policy and market intelligence. By uniquely combining AI technology, actionable data, and expert and peer insights, FiscalNote empowers customers to manage policy, address regulatory developments, and mitigate global risk. Since 2013, FiscalNote has pioneered technology that delivers mission-critical insights and the tools to turn them into action. Home to CQ, Equilibrium, FrontierView, Oxford Analytica, VoterVoice, and many other industry-leading brands, FiscalNote serves more than 5,000 customers worldwide with global offices in North America, Europe, Asia, and Australia. To learn more about FiscalNote and its family of brands, visit FiscalNote.com and follow @FiscalNote.
Certain statements in this press release may be considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements generally relate to future events or FiscalNote’s future financial or operating performance. For example, statements regarding FiscalNote’s financial outlook for future periods, expectations regarding profitability, capital resources and anticipated growth in the industry in which FiscalNote operates are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “pro forma,” “may,” “should,” “could,” “might,” “plan,” “possible,” “project,” “strive,” “budget,” “forecast,” “expect,” “intend,” “will,” “estimate,” “anticipate,” “believe,” “predict,” “potential” or “continue,” or the negatives of these terms or variations of them or similar terminology. Such forward-looking statements are subject to risks, uncertainties, and other important factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements.
Factors that may impact such forward-looking statements include, but are not limited to FiscalNote’s ability to effectively manage its growth; changes in FiscalNote’s strategy, future operations, financial position, estimated revenue and losses, forecasts, projected costs, prospects and plans; FiscalNote’s future capital requirements; demand for FiscalNote’s services and the drivers of that demand; FiscalNote’s ability to provide highly useful, reliable, secure and innovative products and services to its customers; FiscalNote’s ability to attract new customers, retain existing customers, expand its products and service offerings with existing customers, expand into geographic markets or identify areas of higher growth; risks associated with international operations, including compliance complexity and costs, increased exposure to fluctuations in currency exchange rates, political, social and economic instability, and supply chain disruptions; FiscalNote’s ability to develop, enhance, and integrate its existing platforms, products, and services; FiscalNote’s ability to successfully identify acquisition opportunities, make acquisitions on terms that are commercially satisfactory, successfully integrate potential acquired businesses and services, and subsequently grow acquired businesses; FiscalNote’s estimated total addressable market and other industry and performance projections; FiscalNote’s reliance on third-party systems that it does not control to integrate with its systems and its potential inability to continue to support integration; potential technical disruptions, cyberattacks, security, privacy or data breaches or other technical or security incidents that affect FiscalNote’s networks or systems or those of its service providers; FiscalNote’s ability to obtain and maintain accurate, comprehensive, or reliable data to support its products and services; FiscalNote’s ability to introduce new features, integrations, capabilities, and enhancements to its products and services; FiscalNote’s ability to maintain and improve its methods and technologies, and anticipate new methods or technologies, for data collection, organization, and analysis to support its products and services; competition and competitive pressures in the markets in which FiscalNote operates; larger well-funded companies shifting their existing business models to become more competitive with FiscalNote; FiscalNote’s ability to protect and maintain its brands; FiscalNote’s ability to comply with laws and regulations in connection with selling products and services to U.S. and foreign governments and other highly regulated industries; FiscalNote’s ability to retain or recruit key personnel; FiscalNote’s ability to effectively maintain and grow its research and development team and conduct research and development; FiscalNote’s ability to adapt its products and services for changes in laws and regulations or public perception, or changes in the enforcement of such laws, relating to artificial intelligence, machine learning, data privacy and government contracts; the impact of the COVID-19 pandemic and other similar disruptions in the future; adverse general economic and market conditions reducing spending on our products and services; the outcome of any known and unknown litigation and regulatory proceedings; FiscalNote’s ability to successfully establish and maintain public company-quality internal control over financial reporting; intense competition and competitive pressures from other companies worldwide in the industries in which the combined company will operate; and the ability to adequately protect FiscalNote’s intellectual property rights.
These and other important factors discussed under the caption "Risk Factors" in FiscalNote’s Current Report on Form 8-K filed with the SEC on August 2, 2022 and other filings with the SEC could cause actual results to differ materially from those indicated by the forward-looking statements made in this press release. These forward-looking statements are based upon estimates and assumptions that, while considered reasonable by FiscalNote and its management, are inherently uncertain. Nothing in this press release should be regarded as a representation by any person that the forward-looking statements set forth herein will be achieved or that any of the contemplated results of such forward-looking statements will be achieved. You should not place undue reliance on forward-looking statements, which speak only as of the date they are made. FiscalNote undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.