Summary
FiscalNote reported second quarter revenue of $32.8 million, up 20.9% from the prior-year quarter, and year-to-date revenue of $64.4 million, up 20.9%. Subscription revenue made up roughly 90% of the total. Profitability on a GAAP basis stayed negative. The operating loss was $17.0 million for the quarter, and the loss widened from the prior-year quarter. Year to date, the operating loss was $44.3 million, and the loss widened. Net loss was $31.0 million for the quarter, and the loss narrowed from $38.4 million in the prior-year quarter. Year-to-date net loss was $50.2 million, and the loss narrowed from the prior-year period. Diluted loss per share was $0.23 for the quarter, compared with a loss of $2.57 in the prior-year quarter. Year-to-date diluted loss per share was $0.38, and the loss narrowed. Operating margin was -51.7%, down 8.5 percentage points from the prior-year quarter.
Cash generation stayed negative. Operating cash flow was -$7.4 million for the quarter, up from -$8.1 million in the prior-year quarter. Year-to-date operating cash flow was -$20.2 million, down from -$18.3 million. Capital expenditures were $2.2 million for the quarter, down 43.3% year over year, and $4.1 million year to date, down 32.4%. Deferred revenue was $50.0 million at June 30, 2023, up 17.0% from a year earlier. Remaining performance obligations were $103.3 million. The release noted approximately $94 million of additional debt capacity, and the company said it does not need additional capital raises to execute its plan.
The non-GAAP picture showed some progress. Adjusted EBITDA loss was $4.3 million, and adjusted gross profit was $26.4 million, an 80% adjusted gross margin. Annual recurring revenue was $120.2 million at June 30, 2023, up from $113.3 million at December 31, 2022. Excluding the 2022 and 2023 acquisitions, ARR was $110.3 million at June 30, 2023 and $103.5 million at June 30, 2022. Net revenue retention was 98%, compared with 99% a year earlier. Product news included FiscalNoteGPT, the FiscalNote Risk Connector, a Microsoft Bing plugin, a Databricks data marketplace partnership, and VoterVoice SmartCheck. FiscalNote said its global intellectual property portfolio reached 17 patents and that it joined the Russell 3000 Index.
Guidance points to adjusted EBITDA profitability sooner than previously expected. For the third quarter of 2023, management guided to adjusted EBITDA of positive $0.2 million to $1.0 million, up from its prior expectation of roughly break-even, and said the quarter should bring a year-on-year improvement of between $7.6 million and $8.4 million in adjusted EBITDA profitability compared to the third quarter of 2022. Guidance for full-year 2023 calls for an adjusted EBITDA loss of $(8) million to $(6) million, an improvement of approximately 71% year over year, and management pointed to a fourth-quarter 2023 adjusted EBITDA margin of 7% to 12%. The company also said it expects adjusted EBITDA and free cash flow margins in line with other information services companies over the long term.
Risks sit on execution and the balance sheet. The New Senior Term Loan carries a minimum cash balance requirement, a minimum annual recurring revenue requirement, and a capital expenditure limitation. At June 30, 2023, annual recurring revenue was marginally below the minimum requirement, and the lenders waived their rights upon default on August 3, 2023, retroactive to that date. Starting with the third quarter of 2023, the company is subject to an adjusted EBITDA requirement under the loan. The facility matures on July 29, 2027, and cash interest runs at the greater of Prime Rate plus 5.0% or 9.0%, plus 1.00% paid in kind. Other risks include acquisition integration, competition, macroeconomic conditions, and reliance on third-party systems and data. Management said cash on hand, proceeds from expected product sales, and available borrowings should cover operating expenses and capital expenditures for at least the next twelve months.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2023 | Q1 FY2023 | QoQ | Q2 FY2022 | YoY |
|---|---|---|---|---|---|
| Revenue | $32.8M | $31.5M | +4.2% | — | — |
| Research & development | $4.5M | $5.1M | -11.9% | — | — |
| Sales & marketing | $11.7M | $12.3M | -5.0% | — | — |
| General & administrative | $16.2M | $18.2M | -11.2% | $2.1M | +667.8% |
| Total operating expenses | $49.8M | $58.9M | -15.4% | — | — |
| Operating income (loss) | -$17.0M | -$27.4M | +38.0% | -$2.1M | -705.9% |
| Operating margin | -51.7% | -86.8% | +35.1 pp | — | — |
| Net income (loss) | -$31.0M | -$19.3M | -60.7% | -$2.7M | -1065.4% |
| Net margin | -94.3% | -61.1% | -33.2 pp | — | — |
| Diluted EPS | -$0.23 | -$0.14 | -$0.09 | — | — |
| Customers | 9,000 | 5,000 | +80.0% | 5,000 | +80.0% |
| Net retention rate | 98.0% | 96.0% | +2.0 pp | — | — |
Risks
At June 30, 2023, the Company had a negative working capital balance of $46.7 million excluding cash, an accumulated deficit of $751.2 million, and cash, cash equivalents, and restricted cash of $38.1 million compared to $61.2 million at December 31, 2022. Operating cash flow was negative $20.21 million for the six months ended June 30, 2023, down 10.1% versus the prior-year year-to-date period.
The Company's annual recurring revenue was marginally below the minimum annual recurring revenue covenant at June 30, 2023, and the New Senior Term Loan lenders waived their rights upon default retroactive to that date. Beginning with the third quarter of 2023, the Company is subject to an adjusted EBITDA requirement under the amended credit agreement.
Operating loss widened to $16.98 million in FY2023 Q2 from $11.74 million in FY2022 Q2, and operating margin declined to negative 51.7% from negative 43.2%. General and administrative expense increased 61% in the quarter, driven by $4.2 million of incremental non-cash stock-based compensation and $1.2 million of incremental public company costs.
A non-cash goodwill impairment charge of $5.8 million was recognized during 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 business or macroeconomic conditions could trigger additional impairment charges.
Acquisitions, including Dragonfly in January 2023, affect comparability and have increased non-cash amortization expense, which reduced operating income by approximately $2.4 million and $0.9 million during the three months ended June 30, 2023 and 2022, respectively. The Company continues to evaluate acquisitions as a core strategy, creating integration and purchase accounting risk.
Net revenue retention was 98% for the three months ended June 30, 2023 compared with 99% for the three months ended June 30, 2022. Approximately 90% of revenues are subscription based, making retention of existing subscription customers a key driver of future revenue and cash flows.
SaaS KPIs
All quarters →Adjusted EBITDA Margin
Adjusted EBITDA
Adjusted Gross Profit
Annual Recurring Revenue (ARR)
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 Q2 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.