Outlines Accelerated AI Product Strategy and
Roadmap
- Reports Q1 2024 total revenues of $32.1 million and adjusted
EBITDA of $1.2 million(1), both slightly exceeding previously
provided guidance
- Reaffirms forecast for FY 2024 and issues forecast for Q2
2024
- Successfully completes Board.org divestiture for a total
consideration of up to $103.0 million
- Accelerates its strategy of developing revolutionary AI
Copilots to transform Legal, Regulatory, and Policy workflows using
a new, proprietary modular framework
- Board of Directors continues to review all strategic options
available to the Company to maximize shareholder value
FiscalNote Holdings, Inc. (NYSE: NOTE)
(“FiscalNote” or the “Company”), a leading information services
company using AI-driven enterprise SaaS technology to provide
global political, legislative and regulatory policy and market
intelligence, today reported financial results for the first
quarter ended March 31, 2024.
These results mark another quarter of delivering on expected
results driven by a blue chip customer base, durable recurring
revenue and high gross margins, which form the basis of its
increasing adjusted EBITDA and ongoing leadership in delivering
AI-enabled policy and market information. The first quarter of 2024
represented an $8.2 million improvement in adjusted EBITDA year
over year and marked the third straight quarter of adjusted EBITDA
profitability for FiscalNote.
The Company also unveiled an accelerated AI product strategy and
roadmap that leverages the decade-long investment in collecting
legislative, regulatory, and geopolitical information in 80
different countries as well as partnerships with OpenAI, Google,
and Microsoft to launch FiscalNoteGPT, the company’s verticalized
large language model, and Copilot Creator Reasoning Engine. These
investments in AI are expected to drive an acceleration in
generative AI Agents and Copilot products that have already begun
to be sold in the market beginning in Q1 2024 (including StressLens
and the Global Intelligence Copilot) and expected to continue
through the remainder of 2024 and into 2025 and beyond to build the
most powerful legal, regulatory, and geopolitical AI assistant and
eventually the world’s most powerful AI lawyer.
The Company has also been approached by both existing and new
business partners to explore data licensing and/or co-selling the
Company’s Copilots and AI Agents. As a result, the Company is
exploring working with several large language model companies to
potentially license portions of the Company’s data and AI portfolio
with the goal of exposing a larger universe of users to its
data.
“The performance in the first quarter was a good start to the
year and reflects initial progress following our strategic
initiatives throughout 2023 to rationalize our cost structure,
divest non-core assets, and tighten the focus of our product mix,”
said Tim Hwang, Chairman, CEO, and Co-founder of FiscalNote. “The
Company continues to solidify its leadership position in the global
policy, risk mitigation, and market intelligence sector and, year
to date, we have realized a large number of impactful operational
and business successes, most notably our recent series of new
product launches and updates. We are well positioned to further
execute on our growth strategy, continue launching innovative AI
products - including our recently-announced FiscalNote Global
Intelligence Copilot - that deliver deep insights to our customers,
and deliver on our profitability plans across the remainder of 2024
and beyond.”
Financial Highlights(2)
Q1 2024 vs. Q1 2023
Three Months Ended March
31,
($ in millions)
2024
2023
% Change
Total Revenues (formerly "GAAP
Revenue")
$
32.1
$
31.5
2
%
Subscription Revenue as % of Total
Revenues
~92
%
~90
%
Gross Profit
$
24.9
$
22.6
10
%
Gross Margin
77
%
72
%
500
bps
Adjusted Gross Profit
$
27.3
$
25.2
8
%
Adjusted Gross Margin
85
%
80
%
500
bps
Net Income (Loss)
$
50.6
$
(19.3)
*
Adjusted EBITDA
$
1.2
$
(7.0)
*
Adjusted EBITDA Margin
4
%
(22)
%
Cash and Cash Equivalents
$
43.6
$
46.7
bps - Basis Points
* - percentage change is greater than +/-
100%
First Quarter and Recent Operational Highlights
- Completed the divestiture of Board.org, a non-core product
offering, for total consideration of up to $103.0 million,
including $95.0 million in cash at close, $65.7 million of which
was used to repay senior debt, delivering a strengthened balance
sheet while also bolstering cash balances.
- Amended our Credit Agreement with our senior lenders to, among
other things, extend the commencement of amortization payments to
August 15, 2026, leaving the maturity date of July 2027
unchanged.
- Introduced the FiscalNote Global Intelligence Copilot, an
AI-powered assistant to help customers assess the shifting global
landscape, manage emerging developments, and mitigate risk involved
with the world’s most pressing geopolitical, macroeconomic,
security, and regulatory challenges. The Copilot is the first in a
series of AI-powered copilots the Company will launch as it
accelerates its roadmap of groundbreaking AI agents to transform
legal, regulatory, and legislative workflows.
- Secured a six-figure, multi-year agreement with a major state
legislature for FiscalNote’s Fireside constituent relationship
management solution.
- Announced the launch of StressLens, a pioneering and innovative
new AI product that equips FiscalNote customers with the real-time
ability to quantify the behavioral impact of leading decision
makers and influencers across the financial, regulatory, and
government domains.
- European information, operational and security risk, and large
enterprise business sectors showing strong, outperforming growth as
Company invests behind growth.
Commenting on highlights from the first quarter, FiscalNote
Chief Financial Officer, Jon Slabaugh, said, “During the quarter,
we completed an important transaction with the divestiture of
Board.org, a non-core product offering that represented
approximately 10% of our prior year total revenue. Total
consideration for the transaction was up to $103.0 million and
represented approximately a 7x revenue multiple based on 2023
annual recurring revenue (ARR). Acquired by FiscalNote in 2021 for
$10.0 million in cash and $4.3 million in convertible securities
($14.3 million in total consideration), the divestiture by
FiscalNote represents a 9.5x cash-on-cash (125% IRR) return for
FiscalNote in less than three years. The transaction enabled us to
enhance our capital structure by reducing senior debt by
approximately $66.0 million while adding approximately $15.0
million to cash. It also is an indication of the substantial
intrinsic value of our underlying assets.”
First Quarter Financial Performance
Revenue(2)
Three Months Ended March
31,
($ in millions)
2024
2023
% Change
Subscription revenue
$
29.6
$
28.5
4
%
Advisory, advertising, and other
revenue
2.5
3.0
(19
)%
Total revenues
$
32.1
$
31.5
2
%
For Q1 2024, subscription revenue increased $1.1 million, or 4%
versus the prior year, due principally to the full quarter impact
of Dragonfly, which was acquired in January 2023 and did not have a
full impact on the prior year period.
For Q1 2024, advisory, advertising, and other revenue decreased
$0.6 million, or 19% versus prior year, due primarily to the
discontinuation of certain non-strategic products and related
services.
Key Performance Indicators(3)
As of March 31,
($ in millions)
2024
2023
% Change
Run-Rate Revenue (RRR)
$
122
$
134
(9
)%
Pro Forma RRR*
$
122
$
121
1
%
Annual Recurring Revenue (ARR)
$
110
$
119
(8
)%
Pro Forma ARR*
$
110
$
107
3
%
Net Revenue Retention (NRR)
96
%
96
%
*Pro forma RRR and Pro forma ARR adjusts
prior periods for the impact of the divestiture of Board.org.
For Q1 2024, Run-Rate Revenue declined $12 million, or 9%,
versus prior year, principally due to the impact of the divestiture
of Board.org. Excluding Board.org, Run-Rate Revenue increased
approximately $1 million, or 1%, compared to Q1 2023.
For Q1 2024, ARR declined $9 million, or 8%, versus prior year,
principally due to the impact of the divestiture of Board.org.
Excluding Board.org, ARR increased approximately $3 million, or 3%,
compared to Q1 2023.
For Q1 2024, NRR was 96%, level with the prior year.
Operating Expenses(2)
Three Months Ended March
31,
($ in millions)
2024
2023
% Change
Cost of revenues
$
7.2
$
8.9
(19
)%
Research and development
3.5
5.1
(32
)%
Sales and marketing
9.4
12.3
(23
)%
Editorial
4.7
4.3
9
%
General and administrative
16.1
18.2
(12
)%
Amortization of intangible assets
2.7
2.8
(5
)%
Other#
0.0
7.2
NM
Total operating expenses
$
43.6
$
58.9
(26
)%
# - Q1 2023 includes goodwill impairment
charge as well as transaction costs incurred related to our
historical acquisitions
NM - Not meaningful
In Q1 2024, operating expenses decreased versus prior year,
primarily as a result of cost control measures instituted
throughout 2023 as well as the impact of sunset products, partially
offset by a full quarter of Dragonfly expenses in Q1 2024 vs Q1
2023.
Financial Forecast
The Company reaffirms prior financial forecasts for full year
2024 and issues financial forecasts for Q2 2024, in both instances
reflecting management’s expectations based on the most recent
information available, including factors such as the impact of the
divestiture of Board.org and the discontinuation of certain
non-strategic products. The Company expects 2024 to deliver its
first full year of adjusted EBITDA profitability in the Company’s
history.
Full Year 2024
($ in millions)
Current Range As of
05/09/2024
Action
Previous Range As of
03/12/2024
Total Revenues
$123 - $127
Unchanged
$123 - $127
Total Run-Rate Revenue (3)
$126 - $134
Unchanged
$126 - $134
Adjusted EBITDA (1) (4)
$7 - $9
Unchanged
$7 - $9
Q2 2024
Current Range
($ in millions)
As of 05/09/2024
Total Revenues
Approximately $29
Adjusted EBITDA (1) (4)
Approximately $1
The Company expects to return to double digit growth rates in
2025 as the Company re-allocates sales and product resources to
high-performing offerings and as it realizes the benefits of its
recent product and organizational initiatives – including changes
to sales coverage models for enhanced cross-sell, upsell and
retention, further scaling of new products, and accelerated product
development.
Strategic Review
As previously announced, following the formation by the
Company’s Board of Directors (the Board) of a Special Committee
(the Committee) in November 2023, and receipt of inbound interest,
the Board and the Committee along with their advisors continue to
review the Company’s ongoing plans and evaluate all strategic
value-maximizing options available to the Company. There can be no
assurance that the strategic review will result in any transaction
or other outcome. The Company has not set a timetable for
completion of the review and does not intend to disclose
developments or provide updates on the progress or status of the
review unless and/or until it deems further disclosure is
appropriate or required. Centerview Partners LLC and Skadden, Arps,
Slate, Meagher & Flom LLP continue to be retained by the
Company as independent advisors to the Committee.
Conference Call, Presentation Supplement, and Webcast
Information
Company management will host a conference call, with an
accompanying presentation supplement, at 10:00 am ET today,
Thursday, May 9, 2024, to discuss financial results.
LIVE
- By phone
- Dial for the U.S. or Canada 1 (888) 660-6510 or for
International 1 (929) 203-0882 and use the conference ID
1271923.
- By webcast
- Visit the Investor Relations section of the Company’s
website.
REPLAY
- By phone (available through Thursday, May 23, 2024)
- Dial for the U.S. or Canada 1 (800) 770-2030 or for
International 1 (609) 800-9909 and enter the conference ID
1271923.
- By webcast
- Visit the Investor Relations section of the Company’s
website.
Footnotes
(1)
Non-GAAP measure. See “Non-GAAP
Financial Measures” and the reconciliation tables for the
definitions and reconciliations of these non-GAAP financial
measures to the most closely related GAAP financial measures.
(2)
All financial information incorporated
within this press release is unaudited.
(3)
“Run-Rate Revenue,” “Annual Recurring
Revenue,” and “Net Retention Revenue” are key performance
indicators (KPIs). See “Key Performance Indicators” for the
definitions and important disclosures related to these
measures.
(4)
Because of the variability of items
impacting net income and the unpredictability of future events,
management is unable to reconcile without unreasonable effort the
Company's forecasted adjusted EBITDA to a comparable GAAP measure.
The unavailable information could have a significant impact on the
non-GAAP measures.
About FiscalNote
FiscalNote (NYSE: NOTE) is a leader in policy and global
intelligence. By uniquely combining data, technology, and insights,
FiscalNote empowers customers to manage political and business
risk. Since 2013, FiscalNote has pioneered technology that delivers
critical insights and the tools to turn them into action. Home to
CQ, FrontierView, Oxford Analytica, VoterVoice, and many other
industry-leading brands, FiscalNote serves thousands of customers
worldwide with global offices in North America, Europe, Asia, and
Australia. To learn more about FiscalNote and its family of brands,
visit FiscalNote.com and follow @FiscalNote.
Safe Harbor Statement
Certain statements in this press release may be considered
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. Forward-looking
statements generally relate to future events or FiscalNote’s future
financial or operating performance. For example, statements
regarding FiscalNote’s financial outlook for future periods,
expectations regarding profitability, capital resources and
anticipated growth in the industry in which FiscalNote operates are
forward-looking statements. In some cases, you can identify
forward-looking statements by terminology such as “pro forma,”
“may,” “should,” “could,” “might,” “plan,” “possible,” “project,”
“strive,” “budget,” “forecast,” “expect,” “intend,” “will,”
“estimate,” “anticipate,” “believe,” “predict,” “potential” or
“continue,” or the negatives of these terms or variations of them
or similar terminology. Such forward-looking statements are subject
to risks, uncertainties, and other important factors that could
cause actual results to differ materially from those expressed or
implied by such forward-looking statements.
Factors that may impact such forward-looking statements include
FiscalNote’s ability to effectively manage its growth; changes in
FiscalNote’s strategy, future operations, financial position,
estimated revenue and losses, forecasts, projected costs, prospects
and plans; the terms of any proposal FiscalNote may receive for a
go-private transaction; the impact of the previous announcement of
the formation of the Special Committee and its strategic review on
FiscalNote’s business and its ability to implement any transaction;
FiscalNote’s future capital requirements; demand for FiscalNote’s
services and the drivers of that demand; FiscalNote’s ability to
provide highly useful, reliable, secure and innovative products and
services to its customers; FiscalNote’s ability to attract new
customers, retain existing customers, expand its products and
service offerings with existing customers, expand into geographic
markets or identify areas of higher growth; FiscalNote’s ability to
successfully identify acquisition opportunities, make acquisitions
on terms that are commercially satisfactory, successfully integrate
potential acquired businesses and services, and subsequently grow
acquired businesses; risks associated with international
operations, including compliance complexity and costs, increased
exposure to fluctuations in currency exchange rates, political,
social and economic instability, and supply chain disruptions;
FiscalNote’s ability to develop, enhance, and integrate its
existing platforms, products, and services; FiscalNote’s estimated
total addressable market and other industry and performance
projections; FiscalNote's reliance on third-party systems and data,
its ability to integrate such systems and data with its solutions
and its potential inability to continue to support integration;
potential technical disruptions, cyberattacks, security, privacy or
data breaches or other technical or security incidents that affect
FiscalNote’s networks or systems or those of its service providers;
FiscalNote’s ability to obtain and maintain accurate,
comprehensive, or reliable data to support its products and
services; FiscalNote’s ability to introduce new features,
integrations, capabilities, and enhancements to its products and
services; FiscalNote’s ability to maintain and improve its methods
and technologies, and anticipate new methods or technologies, for
data collection, organization, and analysis to support its products
and services; competition and competitive pressures in the markets
in which FiscalNote operates, including larger well-funded
companies shifting their existing business models to become more
competitive with FiscalNote; FiscalNote’s ability to protect and
maintain its brands; FiscalNote’s ability to comply with laws and
regulations in connection with selling products and services to
U.S. and foreign governments and other highly regulated industries;
FiscalNote’s ability to retain or recruit key personnel;
FiscalNote’s ability to effectively maintain and grow its research
and development team and conduct research and development;
FiscalNote’s ability to adapt its products and services for changes
in laws and regulations or public perception, or changes in the
enforcement of such laws, relating to artificial intelligence,
machine learning, data privacy and government contracts; adverse
general economic and market conditions reducing spending on our
products and services; the outcome of any known and unknown
litigation and regulatory proceedings; FiscalNote’s ability to
successfully establish and maintain public company-quality internal
control over financial reporting; and the ability to adequately
protect FiscalNote’s intellectual property rights.
These and other important factors discussed in FiscalNote’s SEC
filings, including its most recent reports on Forms 10-K and 10-Q,
particularly the "Risk Factors" sections of those reports, could
cause actual results to differ materially from those indicated by
the forward-looking statements made in this press release. These
forward-looking statements are based upon estimates and assumptions
that, while considered reasonable by FiscalNote and its management,
are inherently uncertain. Nothing in this press release should be
regarded as a representation by any person that the forward-looking
statements set forth herein will be achieved or that any of the
contemplated results of such forward-looking statements will be
achieved. You should not place undue reliance on forward-looking
statements, which speak only as of the date they are made.
FiscalNote undertakes no obligation to update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise, except as may be required under
applicable securities laws.
FiscalNote Holdings,
Inc.
Consolidated Statements of
Operations
(Unaudited)
(in thousands, except shares and
per share data)
Three Months Ended March
31,
2024
2023
Revenues:
Subscription
$
29,626
$
28,467
Advisory, advertising, and other
2,486
3,062
Total revenues
32,112
31,529
Operating expenses: (1)
Cost of revenues
7,244
8,937
Research and development
3,480
5,120
Sales and marketing
9,415
12,298
Editorial
4,660
4,265
General and administrative
16,076
18,221
Amortization of intangible assets
2,685
2,814
Impairment of goodwill
-
5,837
Transaction (gains) costs, net
(4
)
1,408
Total operating expenses
43,556
58,900
Operating loss
(11,444
)
(27,371
)
Gain on sale
(71,599
)
-
Interest expense, net
7,362
6,681
Change in fair value of financial
instruments
527
(14,680
)
Other expense (income), net
241
(129
)
Net income (loss) before income taxes
52,025
(19,243
)
Provision from income taxes
1,426
30
Net income (loss)
50,599
(19,273
)
Other comprehensive income (loss)
5,591
(359
)
Total comprehensive income (loss)
$
56,190
$
(19,632
)
Earnings (Loss) per share attributable to
common shareholders (Note 14):
Basic
$
0.39
$
(0.14
)
Diluted
$
0.37
$
(0.14
)
Weighted average shares used in computing
earnings (loss) per share attributable to common shareholders:
Basic
130,712,032
133,082,639
Diluted
146,027,085
133,082,639
(1) Amounts include stock-based
compensation expenses, as follows:
Three Months Ended March
31,
2024
2023
Cost of revenues
$
101
$
58
Research and development
310
390
Sales and marketing
426
360
Editorial
100
66
General and administrative
5,238
5,632
FiscalNote Holdings,
Inc.
Consolidated Balance
Sheets
(Unaudited)
(in thousands, except shares, and
par value)
March 31, 2024
December 31, 2023
Assets
Current assets:
Cash and cash equivalents
$
36,464
$
16,451
Restricted cash
852
849
Short-term investments
7,134
7,134
Accounts receivable, net
14,381
16,931
Costs capitalized to obtain revenue
contracts, net
3,156
3,326
Prepaid expenses
4,000
2,593
Other current assets
3,679
2,521
Total current assets
69,666
49,805
Property and equipment, net
5,859
6,141
Capitalized software costs, net
13,762
13,372
Noncurrent costs capitalized to obtain
revenue contracts, net
3,790
4,257
Operating lease assets
18,070
17,782
Goodwill
164,334
187,703
Customer relationships, net
46,720
53,917
Database, net
18,274
18,838
Other intangible assets, net
16,786
18,113
Other non-current assets
499
633
Total assets
$
357,760
$
370,561
Liabilities and Stockholders'
Equity
Current liabilities:
Current maturities of long-term debt
$
67
$
105
Accounts payable and accrued expenses
11,101
12,909
Deferred revenue, current portion
45,034
43,530
Customer deposits
839
3,032
Contingent liabilities from acquisitions,
current portion
113
130
Operating lease liabilities, current
portion
3,395
3,066
Other current liabilities
3,212
2,878
Total current liabilities
63,761
65,650
Long-term debt, net of current
maturities
152,962
222,310
Deferred tax liabilities
2,062
2,178
Deferred revenue, net of current
portion
389
875
Operating lease liabilities, net of
current portion
25,845
26,162
Public and private warrant liabilities
3,840
4,761
Other non-current liabilities
2,805
5,166
Total liabilities
251,664
327,102
Commitment and contingencies (Note 17)
Stockholders' equity:
Class A Common stock ($0.0001 par value,
1,700,000,000 authorized, 122,749,497 and 121,679,829 issued and
outstanding at March 31, 2024 and December 31, 2023,
respectively)
11
11
Class B Common stock ($0.0001 par value,
9,000,000 authorized, 8,290,921 issued and outstanding at March 31,
2024 and December 31, 2023, respectively)
1
1
Additional paid-in capital
866,932
860,485
Accumulated other comprehensive income (
loss)
4,969
(622
)
Accumulated deficit
(765,817
)
(816,416
)
Total stockholders' equity
106,096
43,459
Total liabilities and stockholders'
equity
$
357,760
$
370,561
FiscalNote Holdings,
Inc.
Consolidated Statements of
Cash Flows
(Unaudited)
(in thousands)
Three Months Ended March
31,
2024
2023
Operating Activities:
Net income (loss)
$
50,599
$
(19,273
)
Adjustments to reconcile net income (loss)
to net cash provided by (used in) operating activities:
Depreciation
304
336
Amortization of intangible assets and
capitalized software development costs
5,113
5,411
Amortization of deferred costs to obtain
revenue contracts
1,009
832
Gain on sale of business
(71,599
)
-
Impairment of goodwill
-
5,837
Non-cash operating lease expense
297
1,832
Stock-based compensation
6,175
6,506
Other non-cash expenses
-
190
Bad debt expense
29
156
Change in fair value of acquisition
contingent consideration
(4
)
(156
)
Unrealized loss on securities
49
-
Change in fair value of financial
instruments
527
(14,680
)
Deferred income taxes
(71
)
(218
)
Paid-in-kind interest, net
2,035
970
Non-cash interest expense
737
1,074
Changes in operating assets and
liabilities:
Accounts receivable, net
1,320
(696
)
Prepaid expenses and other current
assets
(1,924
)
619
Costs capitalized to obtain revenue
contracts, net
(932
)
(1,126
)
Other non-current assets
148
27
Accounts payable and accrued expenses
460
(3,225
)
Deferred revenue
10,436
10,002
Customer deposits
(1,239
)
(1,923
)
Other current liabilities
318
(1,222
)
Contingent liabilities from acquisitions,
net of current portion
(13
)
(39
)
Operating lease liabilities
(969
)
(4,052
)
Other non-current liabilities
(64
)
(8
)
Net cash provided by (used in)
operating activities
2,741
(12,826
)
Investing Activities:
Capital expenditures
(1,692
)
(1,869
)
Cash proceeds from the sale of business,
net
90,884
-
Cash paid for business acquisitions, net
of cash acquired
-
(5,010
)
Net cash provided by (used in)
investing activities
89,192
(6,879
)
Financing Activities:
Proceeds from long-term debt, net of
issuance costs
801
6,000
Principal payments of long-term debt
(65,727
)
(27
)
Payment of deferred financing costs
(7,068
)
-
Proceeds from exercise of stock options
and ESPP purchases
196
264
Net cash (used in) provided by
financing activities
(71,798
)
6,237
Effects of exchange rates on cash
(119
)
(251
)
Net change in cash, cash equivalents, and
restricted cash
20,016
(13,719
)
Cash, cash equivalents, and restricted
cash, beginning of period
17,300
61,223
Cash, cash equivalents, and restricted
cash, end of period
$
37,316
$
47,504
Supplemental Noncash Investing and
Financing Activities:
Warrants issued in conjunction with
long-term debt issuance
$
-
$
178
Amounts held in escrow related to the sale
of Board.org
$
785
$
-
Property and equipment purchases included
in accounts payable
$
124
$
121
Supplemental Cash Flow
Activities:
Cash paid for interest
$
5,303
$
4,740
Cash paid for taxes
$
2
$
112
Non-GAAP Financial Measures
In addition to financial measures prepared in accordance with
U.S. generally accepted accounting principles (“GAAP”), we use
certain non-GAAP financial measures to clarify and enhance our
understanding, and aid in the period-to-period comparison, of our
performance. Where applicable, we provide reconciliations of these
non-GAAP measures to the corresponding most closely related GAAP
measure. Investors are encouraged to review the reconciliation of
each of these non-GAAP financial measures to its most comparable
GAAP financial measure. While we believe that these non-GAAP
financial measures provide useful supplemental information,
non-GAAP financial measures have limitations and should not be
considered in isolation from, or as a substitute for, their most
comparable GAAP measures. These non-GAAP financial measures are not
prepared in accordance with GAAP, do not reflect a comprehensive
system of accounting and may not be comparable to similarly titled
measures of other companies due to potential differences in their
financing and accounting methods, the book value of their assets,
their capital structures, the method by which their assets were
acquired and the manner in which they define non-GAAP measures.
Adjusted Gross Profit and Adjusted Gross Profit Margin
We define Adjusted Gross Profit as Total Revenue minus cost of
revenues, before amortization of intangible assets that are
included in costs of revenues. We define Adjusted Gross Profit
Margin as Adjusted Gross Profit divided by Total Revenues.
We use Adjusted Gross Profit and Adjusted Gross Profit Margin to
understand and evaluate our core operating performance and trends.
We believe these metrics are useful measures to us and to our
investors to assist in evaluating our core operating performance
because they provide consistency and direct comparability with our
past financial performance and between fiscal periods, as the
metrics eliminate the non-cash effects of amortization of
intangible assets that may fluctuate for reasons unrelated to
overall operating performance.
Adjusted Gross Profit and Adjusted Gross Profit Margin have
limitations as analytical tools, and you should not consider them
in isolation, or as a substitute for analysis of our results as
reported under GAAP. They should not be considered as replacements
for gross profit and gross profit margin, as determined by GAAP, or
as measures of our profitability. We compensate for these
limitations by relying primarily on our GAAP results and using
non-GAAP measures only for supplemental purposes. Adjusted Gross
Profit and Adjusted Gross Profit Margin as presented herein are not
necessarily comparable to similarly titled measures presented by
other companies.
EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin
EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin are non-GAAP
financial measures. EBITDA represents earnings before interest
expense, income taxes, depreciation and amortization. Adjusted
EBITDA reflects further adjustments to EBITDA to exclude certain
non-cash items and other items that management believes are not
indicative of ongoing operations. We define Adjusted EBITDA Margin
as Adjusted EBITDA divided by Total Revenues.
We disclose EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin
herein because these non-GAAP measures are key measures used by
management to evaluate our business, measure our operating
performance and make strategic decisions. We believe that EBITDA,
Adjusted EBITDA and Adjusted EBITDA Margin are useful for investors
and others in understanding and evaluating our operating results in
the same manner as management. EBITDA, Adjusted EBITDA and Adjusted
EBITDA Margin are not financial measures calculated in accordance
with GAAP and should not be considered as substitutes for net
income (loss), net income (loss) before income taxes, or any other
operating performance measure calculated in accordance with GAAP.
Using these non-GAAP financial measures to analyze our business
would have material limitations because the calculations are based
on the subjective determination of management regarding the nature
and classification of events and circumstances that investors may
find significant. In addition, although other companies in our
industry may report measures titled EBITDA, Adjusted EBITDA and
Adjusted EBITDA Margin or similar measures, such non-GAAP financial
measures may be calculated differently from how we calculate
non-GAAP financial measures, which reduces their comparability.
Because of these limitations, you should consider EBITDA, Adjusted
EBITDA, and Adjusted EBITDA Margin alongside other financial
performance measures, including net income and our other financial
results presented in accordance with GAAP.
Adjusted Gross Profit and Adjusted Gross Profit
Margin
The following table presents our calculation of Adjusted Gross
Profit and Adjusted Gross Profit Margin for the periods
presented:
Three Months Ended March
31,
(In thousands)
2024
2023
Total revenues
$
32,112
$
31,529
Costs of revenue
(7,244
)
(8,937
)
Amortization of intangible assets
2,428
2,597
Adjusted Gross Profit
$
27,296
$
25,189
Adjusted Gross Profit Margin
85
%
80
%
EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin
The following table presents our calculation of EBITDA, Adjusted
EBITDA, and Adjusted EBITDA Margin for the periods presented:
Three Months Ended March
31,
(In thousands)
2024
2023
Net loss
$
50,599
$
(19,273
)
Provision from income taxes
1,426
30
Depreciation and amortization
5,417
5,747
Interest expense, net
7,362
6,681
EBITDA
64,804
(6,815
)
Gain on disposal of Board.org (a)
(71,599
)
-
Stock-based compensation
6,175
6,506
Change in fair value of financial
instruments (b)
527
(14,680
)
Other non-cash charges (c)
45
5,873
Acquisition and disposal related costs
(d)
704
1,222
Employee severance costs (e)
107
369
Non-capitalizable debt raising costs
254
206
Business Combination with DSAC (f)
-
184
Loss contingency (g)
-
168
Costs incurred related to the Special
Committee (h)
200
-
Adjusted EBITDA
$
1,217
$
(6,967
)
Adjusted EBITDA Margin
3.8
%
(22.0
)%
(a)
Reflects the gain on disposal from the
sale of Board.org on March 11, 2024.
(b)
Reflects the non-cash impact from the mark
to market adjustments on our financial instruments.
(c)
Reflects the non-cash impact of the
following: (i) charge of $49 in the first quarter of 2024 related
to the unrealized loss on investments; (ii) gain of $4 in the first
quarter of 2024 from the change in fair value related to the
contingent consideration and contingent compensation related to the
2021, 2022, and 2023 Acquisitions (iii) impairment of goodwill of
$5,837 in the first quarter of 2023, (iv) loss from equity method
investment of $34 in the first quarter of 2023; and (v) charge of
$2 in the first quarter of 2023 from the change in fair value
related to the contingent consideration and contingent compensation
related to the 2021, 2022, and 2023 Acquisitions.
(d)
In 2024 reflects the costs incurred
related to the sale of Board.org, principally consisting of
accounting, tax, and legal fees. In 2023 reflects the costs
incurred to identify, consider, and complete business combination
transactions consisting of advisory, legal, and other professional
and consulting costs.
(e)
Severance costs associated with workforce
changes related to business realignment actions.
(f)
Includes non-capitalizable transaction
costs incurred within one year of the Business Combination with
DSAC.
(g)
Reflects accounting and legal costs
incurred associated with the settlement with GPO FN Noteholder LLC
totaling $168 in the first quarter of 2023.
(h)
Reflects costs incurred related to the
Special Committee.
Key Performance Indicators
We monitor the following key performance indicators to evaluate
growth trends, prepare financial projections, make strategic
decisions, and measure the effectiveness of our sales and marketing
efforts. Our management team assesses our performance based on
these key performance indicators because it believes they reflect
the underlying trends and indicators of our business and serve as
meaningful indicators of our continuous operational
performance.
Annual Recurring Revenue (“ARR”)
Approximately 90% of our revenues are subscription based, which
leads to high revenue predictability. Our ability to retain
existing subscription customers is a key performance indicator that
helps explain the evolution of our historical results and is a
leading indicator of our revenues and cash flows for subsequent
periods. We use ARR as a measure of our revenue trend and an
indicator of our future revenue opportunity from existing recurring
subscription customer contracts. We calculate ARR on a parent
account level by annualizing the contracted subscription revenue,
and our total ARR as of the end of a period is the aggregate
thereof. ARR is not adjusted for the impact of any known or
projected future customer cancellations, upgrades or downgrades, or
price increases or decreases. The amount of actual revenue that we
recognize over any 12-month period is likely to differ from ARR at
the beginning of that period, sometimes significantly. This may
occur due to timing of the revenue bookings during the period,
cancellations, upgrades, or downgrades and pending renewals. ARR
should be viewed independently of revenue as it is an operating
metric and is not intended to be a replacement or forecast of
revenue. Our calculation of ARR may differ from similarly titled
metrics presented by other companies.
Run-Rate Revenue
Management also monitors Run-Rate Revenue, which we define as
ARR plus non-subscription revenue earned during the last 12 months.
We believe Run-Rate Revenue is an indicator of our total revenue
growth, incorporating the non-subscription revenue that we believe
is a meaningful contribution to our business as a whole. Although
our non-subscription business is non-recurring, we regularly sell
different advisory services to repeat customers. The amount of
actual subscription and non-subscription revenue that we recognize
over any 12-month period is likely to differ from Run-Rate Revenue
at the beginning of that period, sometimes significantly.
Net Revenue Retention (“NRR”)
Our NRR, which we use to measure our success in retaining and
growing recurring revenue from our existing customers, compares our
recognized recurring revenue from a set of customers across
comparable periods. We calculate our NRR for a given period as ARR
at the end of the period minus ARR contracted from new clients for
which there is no historical revenue booked during the period,
divided by the beginning ARR for the period. For our federal
government clients, we consider subdivisions of the same executive
branch department or independent agency (for example, divisions of
a single federal department or agency) to be a single customer for
purposes of calculating our account-level NRR. For our commercial
clients, we calculate NRR at a parent account level. Customers from
acquisitions are not included in NRR until they have been part of
our consolidated results for 12 months. Accordingly, the 2022 and
2023 Acquisitions are not included in our NRR for the three months
ended March 31, 2023. Our calculation of NRR for any fiscal period
includes the positive recurring revenue impacts of selling
additional licenses and services to existing customers and the
negative recognized recurring revenue impacts of contraction and
attrition among this set of customers. Our NRR may fluctuate as a
result of a number of factors, including the growing level of our
revenue base, the level of penetration within our customer base,
expansion of products and features, and our ability to retain our
customers.
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version on businesswire.com: https://www.businesswire.com/news/home/20240509418117/en/
Media Nicholas Graham FiscalNote press@fiscalnote.com
Investor Relations FiscalNote IR@fiscalnote.com
FiscaNote (NYSE:NOTE)
과거 데이터 주식 차트
부터 10월(10) 2024 으로 11월(11) 2024
FiscaNote (NYSE:NOTE)
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부터 11월(11) 2023 으로 11월(11) 2024
