FiscalNote (NYSE: NOTE) Q3 Results: Company Achieves Adjusted EBITDA Profitability Quicker Than Initially Forecasted

FiscalNote Holdings, Inc. NOTE, an AI-driven policy and global intelligence technology provider, announced its financial results for the third quarter of 2023. The company’s report showcased growth across multiple metrics. Below is a breakdown of key highlights from the report.

Q3 Highlights

Revenue

The company reported a 17% year-over-year increase in revenue, reaching $34 million. This growth aligns with the guidance provided by the company, reflecting consistent performance in a competitive market

Subscription revenue, constituting approximately 89% of FiscalNote's total revenue, witnessed a 15% increase compared to the same period last year. This growth highlights the strength of the company’s recurring revenue model, primarily driven by its advanced AI-enabled solutions in global policy and market intelligence.

Earnings/Profitability

The third quarter marked FiscalNote's first foray into Adjusted EBITDA profitability, quicker than its initial forecast of achieving Adjusted EBITDA profitability by the end of 2023. The company reported non-GAAP adjusted gross profit of $28.4 million, indicating an 83% non-GAAP adjusted gross margin. The company’s GAAP net loss for the quarter was at $14.5 million.

Operational Metrics

FiscalNote reported a 14% increase in run-rate revenue to $138 million and a 7% increase in organic run-rate revenue to $129 million. The company's Annual Recurring Revenue (ARR) also rose by 14% year-on-year to $123 million, indicating a solid and expanding revenue base. Furthermore, Net Revenue Retention (NRR) was reported at approximately 100%, showcasing strong customer retention and satisfaction.

Recent Business Highlights 

The third quarter also saw significant business achievements, including the launch of the FiscalNote Risk Connector, expansion in enterprise customer accounts, and enhancements to FiscalNote EUIT and FiscalNoteGPT platforms. These developments demonstrate FiscalNote's commitment to innovation and customer engagement.

FiscalNote also announced the launch of its AI Co-Pilot Program, an innovative initiative designed to cement its leadership in AI applications for the legal and policy sectors. 

Special Committee

Additionally, the company's Board of Directors initiated a Special Committee to evaluate potential transactions, including a proposal from CEO and Co-Founder Tim Hwang for a go-private transaction. 

Financial Outlook

Looking ahead, FiscalNote projects continued growth. For Q4 2023, the company forecasts GAAP revenue between $34 million and $35 million, alongside an Adjusted EBITDA of approximately $2.5 million. The full-year outlook for 2023 anticipates a GAAP revenue of $132 million to $133 million and an adjusted EBITDA loss of around $8 million. Overall, these projections highlight FiscalNote's confidence in its growth trajectory and operational efficiency. The company's cash and cash equivalents, including short-term investments, totaled $24.4 million, with an additional debt capacity of approximately $94 million, reflecting a flexible financial position for the company.

A New Chapter In Fiscal Intelligence

FiscalNote’s Q3 2023 financial results illustrate a company at an inflection point. Having achieved early Adjusted EBITDA profitability, the company could be poised for faster future growth, backed by demand for its AI-enabled services and strategic initiatives. For investors, FiscalNote may present a blend of innovative AI applications and strategic corporate maneuvers – elements that could define its future in the high-stakes world of AI-driven technology and policy intelligence.

Featured photo by Scott Graham from Unsplash.

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