Summary
FiscalNote's fourth-quarter revenue rose 9.0% to $34.26 million. Full-year revenue rose 16.6% to $132.64 million. The top line expanded, but the company still reported large losses. The fourth-quarter operating loss widened to $39.93 million. The full-year operating loss also widened, reaching $97.74 million. Fourth-quarter net loss widened to $50.75 million. For the full year, net loss narrowed to $115.46 million, and diluted EPS loss narrowed to $0.88. Operating margin was -116.5% in the fourth quarter, down 53.2 percentage points. For the full year, operating margin was -73.7%, up 3.8 percentage points.
Cash use improved even as GAAP losses stayed heavy. Fourth-quarter operating cash flow was -$3.55 million, up 76.5%. Full-year operating cash flow was -$35.49 million, up 51.1%. Capital expenditures fell to $1.98 million in the fourth quarter, down 21.0%, and to $7.94 million for the full year, down 30.2%. Deferred revenue ended the quarter at $44.40 million, up 21.7%. Remaining performance obligations were $109.15 million, up 2.6%. The cash flow trend and the deferred revenue balance give some support to the view that the business is moving toward better cash generation, but the GAAP loss profile remains severe. The full-year net loss narrowed even as the operating loss widened. That split reflects lower interest expense and a non-cash gain from the change in fair value of financial instruments.
The recurring revenue base continued to grow. ARR was $126.1 million at December 31, 2023, compared with $113.3 million at December 31, 2022. Net revenue retention was 94% for 2023, down from 100% in 2022. ARR excluding the 2022 and 2023 acquisitions was $115.8 million at December 31, 2023, compared with $110.2 million at December 31, 2022. ARR excluding products discontinued in 2023 and the sale of Board.org was $111.2 million, compared with $100.7 million. Subscription revenue accounts for approximately 90% of total revenue, so retention is the most important swing factor for future growth. The company completed the Dragonfly acquisition on January 27, 2023 for up to $25.2 million. It also sold Board.org on March 11, 2024, receiving approximately $91.7 million of cash based on a $95.0 million purchase price. The proceeds repaid $65.7 million of principal on the Senior Term Loan and $7.1 million of prepayment and deferred fees, leaving $18.9 million retained. The company reserved approximately $4.5 million for estimated transaction costs and capital gains taxes.
The filing contains no formal revenue or earnings guidance for the next quarter or the full fiscal year. Management's discussion instead focuses on liquidity, debt covenants, and the Board.org sale. The company amended its Senior Term Loan in connection with that sale, moving the start of principal repayments to August 2026 from August 2025. The 10-K states that cash flow from operations has not been sufficient to fund the operating model and that liquidity depends on conditions beyond the company's control. Volatility in credit markets could hurt access to debt financing. Impairment charges also weighed on reported results. The filing notes non-cash impairment charges for goodwill and other long-lived assets. Those charges do not affect cash flow, but they reflect lower valuations for parts of the business. With NRR at 94% for 2023 and operating losses still large, execution on retention, cost containment, and the debt repayment schedule remains the central risk.
Forecast
No forward guidance in this quarter's filings.
Reported figures
GAAP, from SEC filings| Metric | Q4 FY2023 | Q3 FY2023 | QoQ | Q4 FY2022 | YoY |
|---|---|---|---|---|---|
| Revenue | $34.3M | $34.0M | +0.8% | $31.4M | +9.0% |
| Research & development | $4.0M | $4.5M | -11.5% | $5.3M | -24.2% |
| Sales & marketing | $10.5M | $11.2M | -6.5% | $11.0M | -4.2% |
| General & administrative | $16.7M | $14.4M | +16.1% | $18.3M | -8.4% |
| Total operating expenses | $74.2M | $47.5M | +56.3% | $51.4M | +44.5% |
| Operating income (loss) | -$39.9M | -$13.5M | -196.6% | -$19.9M | -100.5% |
| Operating margin | -116.5% | -39.6% | -77.0 pp | -63.3% | -53.2 pp |
| Net income (loss) | -$50.7M | -$14.5M | -250.8% | -$42.5M | -19.3% |
| Net margin | -148.1% | -42.5% | -105.6 pp | -135.3% | -12.8 pp |
| Diluted EPS | -$0.39 | -$0.11 | -$0.28 | -$0.64 | +$0.25 |
| Net retention rate | 94.0% | 100.0% | -6.0 pp | 100.0% | -6.0 pp |
Risks
The Board formed a Special Committee on November 14, 2023 to evaluate a potential go-private transaction after CEO Tim Hwang expressed interest in a consortium, but no specific proposal has been submitted. The filing states the announcement may have a material adverse impact on the business, operations and financial results and the ability to implement any such transaction.
MD&A reports cash, cash equivalents, restricted cash and short-term investments of $24.4 million at December 31, 2023 compared to $61.2 million at December 31, 2022, and negative working capital of $40.3 million excluding cash. The company also had an accumulated deficit of $816.4 million at December 31, 2023 and net losses of $115.5 million and $218.3 million for the years ended December 31, 2023 and 2022.
Operating loss widened to $97.7 million for the year ended December 31, 2023 from $88.2 million for the year ended December 31, 2022, and the fourth-quarter operating loss widened to $39.9 million from $19.9 million in the prior-year quarter. The company had net losses of $115.5 million and $218.3 million for the years ended December 31, 2023 and 2022.
Total principal debt outstanding was $239.9 million at December 31, 2023 compared to $164.3 million at December 31, 2022, including $158.2 million under the Senior Term Loan and $48.6 million under the New GPO Note. MD&A states the ability to maintain minimum cash and fund future cash interest requirements under the senior term loan depends on factors beyond its control.
For the year ended December 31, 2023, the company recognized a non-cash charge of $32.1 million from impairment of goodwill and other long-lived assets. MD&A warns that future sustained depression of the stock price or changes in operating plans or the macroeconomic environment could trigger additional goodwill impairment charges.
Net revenue retention was 94% for the year ended December 31, 2023, down from 100% for the year ended December 31, 2022. Approximately 90% of revenues are subscription-based, and the risk factors note renewal rates may decline or fluctuate due to customer satisfaction, pricing, and economic conditions.
The company issued Era Convertible Notes with aggregate principal of approximately $6.3 million, including $5.5 million in December 2023 and $0.8 million in January 2024, and must issue approximately $3.2 million in Class A Common Stock under an AI Co-Pilot Agreement by June 2024. Additional shares may be required if Era's sale proceeds do not reach $9.6 million, and warrants with a $7.32 exercise price may expire worthless because the December 31, 2023 closing price was $1.14 per share.
Since the beginning of 2021 the company completed 12 acquisitions, including Dragonfly on January 27, 2023 for up to $25.2 million. MD&A states acquisition-related amortization reduced operating income by approximately $13.5 million and $7.1 million during the years ended December 31, 2023 and 2022.
The filing states AI is a significant and potentially growing element of the business and that flawed AI algorithms, insufficient or biased datasets, or controversial AI solutions could expose it to competitive harm, legal liability, and brand or reputational harm. It also notes intense competition for highly skilled AI, machine learning and advanced algorithms talent.
A portion of revenue comes from U.S. and foreign government agencies, and sales to government entities are subject to competitive bidding, FedRAMP certification, budget cycles, audits, and contract terms that can allow early termination. The risk factors state loss or curtailment of government contracts could have a material adverse effect.
The company relies on senior management and key personnel, including co-founders, and competition for highly skilled employees in AI and data science is intense. Cost reduction and restructuring actions could impact employee retention.
On March 11, 2024, the company sold Board.org for a purchase price of $95.0 million, receiving approximately $91.7 million of cash and using $65.7 million to repay Senior Term Loan principal. Board.org contributed subscription revenue of approximately $13.1 million and $10.3 million during the years ended December 31, 2023 and 2022, and had run-rate revenue of approximately $15.2 million at December 31, 2023.
Products rely on data and services from third-party providers and public sources, some of which are competitors. Renewal or renegotiation may result in different rights and restrictions, and provider withdrawal could negatively affect the offerings.
Co-founders hold all Class B Common Stock with 25 votes per share; as of December 31, 2023 Mr. Hwang held approximately 54.0% and Mr. Yao approximately 9.0% of voting power. As a controlled company, it may rely on NYSE exemptions from independent director and committee requirements.
SaaS KPIs
All quarters →Net Revenue Retention
Run-Rate Revenue
ARR
Summary, forecast, risks and KPIs are extracted from FiscalNote Holdings, Inc.'s SEC filings for Q4 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.