FiscalNote Reports First Quarter 2024 Financial Results

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

WASHINGTON–(BUSINESS WIRE)–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

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⁾

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⁾

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⁾

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

Q2 2024

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

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.

Contacts

Media
Nicholas Graham

FiscalNote

press@fiscalnote.com

Investor Relations
FiscalNote

IR@fiscalnote.com

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