Summary
FiscalNote reported third quarter 2022 revenue of $29.1 million, up 33.5% from $21.8 million in the prior-year quarter. Year-to-date revenue reached $82.3 million, up 40.8% from $58.5 million. The top line benefited from acquisitions and organic growth, but GAAP profitability moved sharply the other way. The quarter's operating loss was $44.1 million, compared with a $15.3 million operating loss a year earlier. Net loss was $109.0 million, compared with a $28.0 million net loss in the prior-year quarter. Diluted EPS was -$1.63, compared with -$6.34. Operating margin was -151.8%, down from -70.2%. The public listing on July 29, 2022 brought non-cash and one-time charges into the quarter, and non-GAAP adjusted EBITDA loss was $7.4 million.
Operationally, FiscalNote continued to expand its policy and market intelligence platform. Annual recurring revenue was $108 million at September 30, 2022. Organic ARR was $107 million, compared with $94 million at September 30, 2021, a 14% increase on a pro forma basis. Net revenue retention was 99%. The company closed the asset acquisition of DT-Global, which brought more than 350 global and regional customers. It also secured public sector contract wins and renewals across U.S. government branches, expanded Curate's state and local coverage, won two 2022 SaaS Awards, added ESG360 benchmarking and risk intelligence, integrated Equilibrium with Asana, and upgraded its EU Issue Tracker platform.
Guidance for full year 2022 includes an adjusted EBITDA loss of $24 million to $22 million, or approximately $23 million at the midpoint, consistent with prior guidance. FiscalNote reiterated that it remains on track to achieve positive adjusted EBITDA in the fourth quarter of 2023. Management said the outlook reflects a weakened macroeconomic environment and a commitment to capital efficient growth. The company also pointed to an expanding global customer base and a subscription-based recurring revenue model as the base for that growth.
Cash generation remains a pressure point. Operating cash flow was -$56.9 million in the quarter, compared with -$24.1 million in the prior-year quarter. Year-to-date operating cash flow was -$57.5 million, compared with -$24.2 million. Capital expenditures were $8.9 million year to date, up from $3.9 million. Deferred revenue was $39.2 million at September 30, 2022, up from $28.4 million a year earlier. Remaining performance obligations were $89.9 million. The balance sheet and cash flow profile show a company still investing heavily while carrying losses. Management expects significant ongoing operating and capital expenditures. Historically, cash flows from operations have not been sufficient to fund the current operating model. The company may seek additional financing, and volatility in credit markets could affect that ability. Additional equity or debt could dilute existing stockholders or carry unfavorable terms.
Risks include macroeconomic headwinds, increasing regulations, geopolitical volatility, international operations, currency fluctuations, acquisition integration, and public company costs. The company also faces competition and the need to retain key personnel. For the quarter, the revenue growth and KPI expansion were clear, but the GAAP loss widened materially and operating cash flow was negative. The path to positive adjusted EBITDA remains a 2023 event.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q3 FY2022 | Q2 FY2022 | QoQ | Q3 FY2021 | YoY |
|---|---|---|---|---|---|
| Revenue | $29.1M | — | — | — | — |
| Research & development | $5.6M | — | — | — | — |
| Sales & marketing | $11.8M | — | — | — | — |
| General & administrative | $38.9M | $2.1M | +1748.7% | $1.1M | +3535.8% |
| Total operating expenses | $73.2M | — | — | — | — |
| Operating income (loss) | -$44.1M | -$2.1M | -1994.6% | -$1.1M | -4019.5% |
| Operating margin | -151.8% | — | — | — | — |
| Net income (loss) | -$109.0M | -$2.7M | -4001.4% | $2.5M | -4471.3% |
| Net margin | -374.9% | — | — | — | — |
| Diluted EPS | -$1.63 | — | — | — | — |
| Customers | 5,000 | 5,000 | ±0.0% | — | — |
| Net retention rate | 99.0% | — | — | — | — |
Risks
MD&A reports negative working capital of $38.2 million excluding cash at September 30, 2022, an accumulated deficit of $658.2 million, and net losses of $175.7 million for the nine months ended September 30, 2022. Management states historical cash flows from operations have not been sufficient to fund the current operating model and that additional financing may be sought on dilutive or otherwise unfavorable terms.
Interest expense, net rose to $42.9 million for the three months ended September 30, 2022 from $16.3 million in the prior-year quarter, driven in part by a $32.1 million charge related to derecognizing beneficial conversion features on convertible notes. The $150.0 million New Senior Term Loan carries cash interest of the greater of Prime plus 5.0% or 9.0%, plus 1.0% PIK interest, and a $45.3 million loss on debt extinguishment was recognized in the quarter.
Warrant liabilities are re-measured at fair value each reporting period, causing non-cash gains or losses that management expects could be material. The change in fair value was a $21.9 million gain for the three months ended September 30, 2022 and an $18.5 million gain for the nine months ended September 30, 2022, compared with a $9.4 million loss for the prior-year nine-month period.
The company completed nine acquisitions in 2021 and two more in 2022, and strategic acquisitions remain a core component of its growth strategy. Amortization of purchased intangibles reduced operating income by approximately $1.7 million for the three months ended September 30, 2022 and $5.0 million for the nine months ended September 30, 2022, and contingent payment structures introduce future non-cash earnings volatility.
MD&A states that the ultimate extent of the COVID-19 pandemic on operational and financial performance, including long-term revenue growth and profitability, is uncertain and depends on factors such as the duration of the pandemic, resurgences or new variants, and effects on customers, sales cycles, and vendor productivity. A substantial impact on employees, business partners, or customers could harm results of operations.
Following the Business Combination, the company became SEC-registered and NYSE-listed, which may require hiring additional personnel and implementing procedures for public company regulatory requirements. It began incurring additional public company expenses for directors' and officers' liability insurance, director fees, and additional internal and external accounting, legal, and administrative resources.
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 Q3 FY2022 (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.