Summary
FiscalNote Holdings reported first quarter 2023 revenue of $31.5 million, up 21% from the prior-year quarter. The company said the result was consistent with the guidance range it previously provided. Subscription revenue makes up about 90% of total revenue. Non-GAAP adjusted gross profit was $25.2 million, an 80% adjusted gross margin. Adjusted EBITDA loss was $7.0 million. The quarter included higher seasonal public company costs. Management said the results support its path to approximately break-even adjusted EBITDA in the third quarter of 2023 and positive adjusted EBITDA in the fourth quarter of 2023.
Operational metrics showed growth in recurring revenue. Run-rate revenue increased, including businesses acquired in 2022 and 2023. Annual recurring revenue reached $119 million, up 19% year over year and 10% on a pro forma basis. Organic ARR was about $112 million, compared with $102 million at March 31, 2022, a 9% pro forma increase. Net revenue retention was about 96%. Adjusted NRR was about 98% after adjusting for the anticipated expiration of a legacy, non-core content licensing relationship. The company added several public sector customers, including the UK Cabinet Office, the European Parliament, the European Council, the French Ministry of Foreign Affairs, NATO, the African Union, and the German Embassy in the U.S. It also secured agreements with the Georgia Legislature and DeKalb County Board of Commissioners. FiscalNote was selected as an inaugural launch partner for OpenAI's ChatGPT Plug-in. It acquired Dragonfly Eye Ltd. in January 2023, appointed Richard Henderson as chief revenue officer, formed a partnership with Peraton, integrated Oxford Analytica Daily Brief with Bloomberg, joined Databricks' data marketplace as a launch partner, and secured four new patents, bringing its global intellectual property portfolio to 17 patents.
GAAP profitability remained under pressure. Operating loss widened to $27.4 million. Net loss narrowed to $19.3 million. Diluted loss per share narrowed to $0.14. Operating margin was negative 86.8%, down from the prior-year quarter. Operating cash flow was negative $12.8 million, down from the prior-year quarter. Capital expenditures were $1.9 million, down from the prior-year quarter. Deferred revenue was $49.9 million, up from the prior-year quarter. Remaining performance obligations were $111.2 million. The quarter included a non-cash goodwill impairment in the ESG reporting unit and higher public company costs. The company remains unprofitable on a GAAP basis and continues to use cash in operations.
Guidance for the second quarter of 2023 calls for GAAP revenue of $32 million to $34 million, representing 18% to 25% year-over-year growth, and an adjusted EBITDA loss of $4.5 million to $3.5 million. For the full year 2023, FiscalNote reiterated GAAP revenue guidance of $136 million to $141 million, representing 20% to 24% year-over-year growth. It also reiterated total run-rate revenue guidance of $148 million to $155 million, representing 17% to 22% growth over the prior year and 10% to 16% organic growth. Full year adjusted EBITDA loss is expected to be $8 million to $6 million, an improvement of approximately 71% year over year. The company expects approximately break-even adjusted EBITDA in the third quarter of 2023 and positive adjusted EBITDA starting in the fourth quarter of 2023. It has implemented efficiency programs that are expected to benefit adjusted EBITDA starting in the second quarter.
Risks remain. Net revenue retention was 96%, down from 101% in the prior-year period. Adjusted NRR was 98% after the legacy content licensing expiration. The company relies on acquisitions to supplement growth, and integration and purchase accounting can affect comparability. It carries debt with financial covenants, including a minimum cash balance, a minimum annual recurring revenue requirement, and a capital expenditure limitation. Beginning with the third quarter of 2023, it will also be subject to an adjusted EBITDA requirement. The company says it has sufficient capital to support its current growth plans, path to adjusted EBITDA profitability, and M&A opportunities, and does not require additional capital raises to achieve its plan. It also cites approximately $94 million of additional debt capacity. Macroeconomic conditions, competition, reliance on third-party data, and evolving regulation of artificial intelligence and data privacy could affect demand and costs. The company has incurred losses and negative cash flows from operations since inception.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q1 FY2023 | Q4 FY2022 | QoQ | Q1 FY2022 | YoY |
|---|---|---|---|---|---|
| Revenue | $31.5M | $31.4M | +0.3% | — | — |
| Research & development | $5.1M | $5.3M | -3.4% | — | — |
| Sales & marketing | $12.3M | $11.0M | +12.2% | — | — |
| General & administrative | $18.2M | $18.3M | -0.2% | $1.9M | +848.1% |
| Total operating expenses | $58.9M | $51.4M | +14.7% | — | — |
| Operating income (loss) | -$27.4M | -$19.9M | -37.4% | -$1.9M | -1324.2% |
| Operating margin | -86.8% | -63.3% | -23.5 pp | — | — |
| Net income (loss) | -$19.3M | -$42.5M | +54.7% | $7.2M | -366.4% |
| Net margin | -61.1% | -135.3% | +74.2 pp | — | — |
| Diluted EPS | -$0.14 | -$0.64 | +$0.50 | — | — |
| Customers | 5,000 | — | — | — | — |
| Net retention rate | 96.0% | 100.0% | -4.0 pp | — | — |
Risks
The company had cash, cash equivalents, and restricted cash of $47.5 million at March 31, 2023 compared to $61.2 million at December 31, 2022, a negative working capital balance of $42.1 million excluding cash, and an accumulated deficit of $720.2 million. Operating cash flow was negative $12.8 million for the quarter, down $2.6 million from the prior-year quarter, and management may seek additional financing that could be dilutive or on unfavorable terms.
The New Senior Term Loan has financial covenants including a minimum cash balance of $15.0 million, a minimum annual recurring revenue requirement, and a capital expenditure limitation, and beginning with the third quarter of 2023 the company will also be subject to an adjusted EBITDA requirement. An event of default could allow lenders to accelerate amounts outstanding and increase the interest rate by 5.0% per annum.
A non-cash goodwill impairment charge of $5.8 million was recognized in the first quarter of 2023 for the ESG reporting unit due to a decline in the company's stock price and market capitalization and underperformance versus internal projections. Future sustained depression of the stock price or adverse changes in the business or macroeconomic environment could trigger additional impairment charges.
Net revenue retention was 96% for the three months ended March 31, 2023 compared to 101% for the three months ended March 31, 2022, indicating contraction or attrition among existing customers. The company's growth depends on retaining and expanding recurring revenue from its customer base.
Warrant liabilities and other financial instruments are remeasured to fair value each reporting period, and the company expects to recognize non-cash gains or losses on the warrants each reporting period that could be material. The change in fair value of financial instruments was a $14.7 million gain for the three months ended March 31, 2023 compared to a $1.3 million loss for the three months ended March 31, 2022.
Acquisitions, including Dragonfly for up to $25.2 million in January 2023, affect comparability and have resulted in significant non-cash amortization expense that reduced operating income by approximately $2.2 million in the first quarter of 2023. The company plans to continue pursuing strategic acquisitions, which may require upfront costs and integration efforts.
Total principal debt outstanding was $182.1 million at March 31, 2023 compared to $164.3 million at December 31, 2022, with the New Senior Term Loan senior to all other debt and collateralized by substantially all assets. Interest expense was $6.7 million for the three months ended March 31, 2023.
The company incurred $168 of legal costs during the first quarter of 2023 related to a proposed term sheet with GPO FN Noteholder LLC. The outcome of this matter could result in additional costs or liabilities.
SaaS KPIs
All quarters →Adjusted EBITDA Margin
Adjusted EBITDA
Adjusted Gross Profit
Net Revenue Retention
Run-Rate Revenue
Adjusted Gross Profit Margin
Total customers
Organic ARR
Organic Run-Rate Revenue
Summary, forecast, risks and KPIs are extracted from FiscalNote Holdings, Inc.'s SEC filings for Q1 FY2023 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 2, 2026.