FiscalNote, a leading provider of global policy and market intelligence, has emerged as a trailblazer in the information services industry, leveraging its decade-long investment in data, AI, and domain expertise to deliver mission-critical insights to its diverse customer base. With a robust financial profile, a strong competitive moat, and a visionary AI strategy, FiscalNote is poised to capitalize on the vast opportunities in the $40 billion addressable market it serves.
Financials
FiscalNote reported annual revenue of $132,645,000 in its latest fiscal year, with a net loss of $115,461,000. The company's annual operating cash flow was -$35,494,000, and its annual free cash flow was -$43,432,000. These financial results reflect the company's strategic investments in growth, product development, and the integration of recent acquisitions.
In the first quarter of 2024, FiscalNote generated total revenues of $32,112,000, a slight increase from the prior-year period. Subscription revenue, which accounted for 92% of total revenue, grew to $29,626,000, up from $28,467,000 in the same quarter last year. The company's adjusted EBITDA for the quarter was $1,217,000, a significant improvement from the -$6,967,000 reported in the first quarter of 2023.
Business Overview
FiscalNote is on a mission to help its customers navigate the complex and ever-changing regulatory, legislative, and geopolitical landscape. The company's proprietary AI-enabled platform aggregates and organizes vast amounts of data, providing its clients with actionable insights and tools to manage policy, address regulatory developments, and mitigate global risk.
The company's comprehensive data assets, which span international, federal, state, and local legislation across 80,000 cities, as well as deep profiles of policymakers and regulatory bodies, have established FiscalNote as the market leader in the regulatory, legislative, and policy intelligence sectors. The company's flagship products, such as CQ, serve as the "Dow Jones of the legislative and policy worlds," delivering authoritative information and analysis to a diverse customer base that includes government agencies, public sector organizations, and Fortune 100 companies.
FiscalNote's Competitive Advantage and Growth Strategies
FiscalNote's competitive advantage is underpinned by its decade-long investment in data, AI, and domain expertise. The company's broad AI leadership, recognized by industry leaders such as OpenAI, Google, and Microsoft, has enabled it to develop innovative solutions that empower customers to navigate the increasingly complex regulatory and policy landscape.
The company's growth strategies are centered on deepening and widening its penetration across core customers with its core offerings, while also investing in sales and marketing to drive new logo acquisition and expand its presence in key markets, such as Europe, where it sees significant untapped potential. FiscalNote's recent divestiture of its Board.org business has strengthened its balance sheet and provided additional resources to invest in its AI-powered product roadmap.
AI-Driven Innovation and Product Roadmap
FiscalNote's AI strategy is a key driver of its future growth. The company has developed a multi-stage approach to leveraging AI, starting with its decade-long investment in data aggregation and domain expertise, followed by the launch of FiscalNoteGPT, its proprietary platform that incorporates generative AI and large language model capabilities tailored for legislative, regulatory, and policy workflows.
The company's latest innovation is the creation of an AI Copilot Creator, which enables FiscalNote to rapidly develop AI agents and AI-driven chat interfaces that marry its AI technology with its authoritative content and insights. This platform is expected to accelerate the launch of new AI Copilot products, leveraging the company's proprietary data and AI models to provide customers with unparalleled productivity and insights.
FiscalNote's AI-powered product roadmap includes the launch of its StressLens and Global Intelligence AI Copilots, which leverage the company's data and AI capabilities to help customers assess shifting global landscapes, manage emerging developments, and mitigate risks. The company plans to continue expanding its AI-driven offerings, with the goal of building the "world's most powerful AI lawyer" and supporting adjacent personas across the span of strategic risk and opportunity.
Geographic and Revenue Diversification
FiscalNote's revenue is generated across multiple geographic regions, with North America accounting for the majority of its business. In the first quarter of 2024, the company reported that North America contributed $25,997,000, or 81%, of total revenue, while Europe contributed $5,269,000, or 16%, and the Asia-Pacific region contributed $846,000, or 3%.
The company's revenue is also diversified across its subscription and advisory/advertising/other business lines. In the first quarter of 2024, subscription revenue accounted for $29,626,000, or 92%, of total revenue, while advisory, advertising, and other revenue contributed $2,486,000, or 8%.
Liquidity
As of March 31, 2024, FiscalNote had cash and cash equivalents of $44,500,000, a significant improvement from the $24,400,000 reported at the end of 2023. This increase was primarily driven by the $90,884,000 in net cash proceeds from the sale of the Board.org business, which also enabled the company to reduce its total debt to $176,836,000 from $239,878,000 at the end of 2023.
FiscalNote's capital structure is supported by a $150,000,000 senior credit facility, which was recently amended to extend the commencement of amortization payments and modify certain financial covenants. The company's liquidity position and debt profile provide it with the financial flexibility to execute on its growth strategies and AI-driven product roadmap.
Outlook
For the full year 2024, FiscalNote has reaffirmed its guidance for total revenues of $123,000,000 to $127,000,000 and adjusted EBITDA of $7,000,000 to $9,000,000. For the second quarter of 2024, the company expects total revenues of approximately $29,000,000 and adjusted EBITDA of approximately $1,000,000.
The company's management team is confident in its ability to deliver low- to mid-teens compounded annual growth for 2025 and beyond, driven by the continued execution of its long-term growth strategy, the launch of its AI-powered solutions, and the ongoing optimization of its go-to-market approach.
Risks and Challenges
While FiscalNote's growth prospects are promising, the company faces several risks and challenges, including the potential for increased competition from larger, well-funded companies shifting their business models to compete more directly with FiscalNote's offerings, the ability to successfully integrate and capitalize on recent acquisitions, and the potential for changes in laws and regulations related to artificial intelligence, machine learning, and data privacy.
Additionally, the company's reliance on a limited number of large customers and its exposure to geographic concentration risks, particularly in North America and Europe, could impact its financial performance if these markets experience economic or political volatility.
Conclusion
FiscalNote's position as a leader in the policy and global intelligence market, coupled with its visionary AI strategy, positions the company for long-term success. By leveraging its decade-long investment in data, AI, and domain expertise, FiscalNote is poised to transform the way organizations navigate the complex regulatory and policy landscape, delivering mission-critical insights and driving significant value for its customers and shareholders.