Summary
FiscalNote closed fiscal 2022 with fourth-quarter revenue of $31.45 million, up 28.6% from $24.46 million in the prior-year quarter. Full-year revenue reached $113.76 million, up 37.2% from $82.91 million. That full-year total sat within the previously provided guidance range of $112 million to $114 million. Management framed the year around compounding revenue growth, acquisition integration and preparation for public-company operations. The customer base now exceeds 5,000 worldwide. Annual recurring revenue at December 31, 2022 was approximately $113 million, about 14% higher year over year and inclusive of businesses acquired in 2022. Net revenue retention was 100%, compared with 94% for 2021. ARR excluding acquisitions was $73 million, versus $66 million a year earlier, and acquired ARR was $40 million versus $31 million.
Profitability remained the central problem. Fourth-quarter operating loss widened to -$19.91 million from -$16.28 million, yet operating margin improved to -63.3% from -66.5%, a gain of 3.2 percentage points. For the full year, operating loss widened to -$88.19 million from -$55.58 million, and operating margin fell to -77.5% from -67.0%, a decline of 10.5 percentage points. Net loss widened to -$42.54 million in the quarter from -$20.96 million. Full-year net loss widened to -$218.26 million from -$109.42 million. Diluted loss per share for the full year narrowed to $3.68 from $19.80. Non-cash charges tied to the business combination, including a loss on debt extinguishment and a loss contingency, weighed on reported results even as revenue scaled.
Cash generation and capital spending told a similar story. Fourth-quarter operating cash flow was -$15.13 million, compared with -$12.87 million in the prior-year quarter, a decline of 17.6%. Full-year operating cash flow was -$72.62 million, down 96.0% from -$37.05 million. Capital expenditures were $2.51 million in the fourth quarter, up 53.0% from $1.64 million. For the full year, capital expenditures were $11.37 million, up 104.1% from $5.57 million. Deferred revenue was $36.49 million at December 31, 2022, up 21.2% from $30.10 million at December 31, 2021. Remaining performance obligations stood at $106.37 million at December 31, 2022. The company keeps investing in product, infrastructure and acquisitions while cash use stays heavy.
Guidance points to another year of strong top-line growth but no near-term GAAP profitability target. For full fiscal year 2023, FiscalNote guided revenue to $136 million to $141 million, an approximate increase of 20% to 24% based on expected 2022 full-year results and inclusive of Dragonfly Eye. The company reiterated its expectation to reach positive Adjusted EBITDA in the fourth quarter of 2023. That target is non-GAAP and depends on turning revenue growth into better operating leverage. FiscalNote plans to report comprehensive fourth-quarter and full-year 2022 results and provide more 2023 outlook details on March 28, 2023.
The quarter leaves a mixed picture. Revenue growth is strong, retention is stable, and acquisitions have added scale. At the same time, operating losses and net losses widened, and operating cash flow declined year over year. The 10-K states that management expects significant ongoing operating and capital expenditures to support new markets, future acquisitions and product development. The company also faces financial covenants under its senior term loan, and final 2022 results remain subject to audit. The 2023 plan assumes continued demand from enterprises and public sector organizations dealing with geopolitical uncertainty and regulation. Execution on cost discipline and acquisition integration will determine whether the path to positive Adjusted EBITDA in the fourth quarter of 2023 stays on track.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q4 FY2022 | Q3 FY2022 | QoQ | Q4 FY2021 | YoY |
|---|---|---|---|---|---|
| Revenue | $31.4M | $29.1M | +8.2% | — | — |
| Research & development | $5.3M | $5.6M | -5.9% | — | — |
| Sales & marketing | $11.0M | $11.8M | -7.4% | — | — |
| General & administrative | $18.3M | $38.9M | -53.1% | $2.6M | +606.9% |
| Total operating expenses | $51.4M | $73.2M | -29.8% | — | — |
| Operating income (loss) | -$19.9M | -$44.1M | +54.9% | -$2.6M | -670.7% |
| Operating margin | -63.3% | -151.8% | +88.5 pp | — | — |
| Net income (loss) | -$42.5M | -$109.0M | +61.0% | -$11.6M | -266.4% |
| Net margin | -135.3% | -374.9% | +239.7 pp | — | — |
| Diluted EPS | -$0.64 | -$1.63 | +$0.99 | — | — |
| Net retention rate | 100.0% | 99.0% | +1.0 pp | — | — |
Risks
FiscalNote reported a net loss of $218.3 million for FY2022, widened from $109.4 million for FY2021, and operating cash flow used in operating activities increased to $72.6 million from $37.0 million. The company had negative working capital of $37.3 million excluding cash and an accumulated deficit of $700.7 million as of December 31, 2022, and may need additional financing.
The New Senior Term Loan contains financial covenants including a minimum cash balance of $15.0 million and an annual recurring revenue requirement, and Amendment No. 1 adds a capital expenditure limitation and an adjusted EBITDA requirement. An event of default allows lenders to increase the interest rate by 5.0% per annum.
Growth strategy relies on acquisitions, with nine acquisitions completed in 2021 and two in 2022, and a recently announced acquisition of Dragonfly. Risks include integration difficulties, unanticipated costs, dilution, debt, and failure to realize expected benefits.
A significant portion of revenue comes from U.S. and foreign government agencies. Sales to government entities are subject to FedRAMP certification, budget cycles, government shutdowns, DOJ and GSA False Claims Act investigations, and potential debarment from future government contracting.
Approximately 90% of revenues are subscription-based, and maintaining high renewal rates is critical. Customers can generally cancel with notice, and declines in renewals or customer spending could materially reduce revenue.
Future sustained depression of the stock price may trigger a reassessment of goodwill and future impairment charges. As of October 1, 2022, fair value of reporting units exceeded carrying values by more than 50%, but adverse changes in cash flow projections or discount rates could lead to impairment.
Success depends on AI, machine learning, and advanced algorithms. Competition for highly skilled AI and data science employees is intense, and larger companies with more resources pursue such talent aggressively, which could hinder innovation if FiscalNote cannot attract or retain them.
AI algorithms may be flawed and datasets may be insufficient, poor quality, or biased. Deficient recommendations, forecasts, or analyses could lead to competitive harm, legal liability, and brand or reputational harm.
Products rely on data from third-party providers and public sources. If data is not current, accurate, comprehensive, or reliable, or if providers withdraw services, customer renewals and reputation could suffer.
Larger and more well-funded companies such as Bloomberg, Thomson Reuters, RELX, MSCI, Gartner, and S&P may enter the market with greater resources and brand recognition, potentially reducing demand or pricing power.
The typical sales cycle is lengthy, unpredictable, and often requires pre-purchase evaluation and due diligence. FiscalNote invests substantial time and resources without assurance that efforts will produce sales.
Operations in the U.K., Belgium, Australia, and Korea subject FiscalNote to additional risks. Revenues outside the United States were approximately 13% and 11% for FY2022 and FY2021, and international operations face regulatory, tax, currency, GDPR, and anti-corruption risks.
Co-Founders hold all Class B common stock with 25 votes per share. As of December 31, 2022, Mr. Hwang held approximately 53.8% of voting power and Mr. Yao approximately 8.9%, and the company is a controlled company under NYSE rules, limiting certain corporate governance protections.
Assisting customers in legislative and governmental relations matters may be deemed lobbying. Failure to register or comply with lobbying laws could subject FiscalNote, its employees, officers, and directors to civil or criminal penalties.
Volatility in credit markets may adversely affect the ability to obtain debt financing, and general economic conditions could reduce customer spending. The company may seek additional financing, which could result in dilution or unfavorable terms.
The effective exercise price of the warrants is $7.32 per share, while the closing price of Class A common stock on December 31, 2022 was $6.33. The warrants may expire worthless, and the company may receive no proceeds from their exercise.
SaaS KPIs
All quarters →Annual Recurring Revenue (ARR)
Net Revenue Retention
Run-Rate Revenue
Total customers
Summary, forecast, risks and KPIs are extracted from FiscalNote Holdings, Inc.'s SEC filings for Q4 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.