FiscalNote Announces Fourth Quarter and Full Year 2022 Financial Results; Provides Outlook for FY 2023
Announces FY 2022 Results With GAAP Revenue at the Top End of Its Guidance Range
Expects Ongoing Revenue Momentum Throughout 2023 and Reiterates Adjusted EBITDA Profitability by the Fourth Quarter of 2023
WASHINGTON, D. C. – Tuesday, March 28, 2023 – FiscalNote Holdings, Inc. (NYSE: NOTE) (“FiscalNote” or the "Company"), a leading AI-driven enterprise SaaS technology provider of global policy and market intelligence, today announced financial results for the fourth quarter and fiscal year ended December 31, 2022.
The Company’s financial results demonstrate FiscalNote’s strong fundamentals with durable, ongoing revenue growth of 37% year-over-year in 2022 driven by its diversified blue chip customer base, strong net retention and expansion of its recurring revenue base, new logo acquisition and accretive strategic M&A that extends the Company’s value to existing and prospective customers in the government and enterprise markets, as well as high gross margins, which form the basis of its expected positive adjusted EBITDA by Q4 2023. The results also demonstrate the Company's leadership in delivering AI-enabled policy and market information that empowers organizations to mitigate risk and navigate their businesses in an increasingly complex global geopolitical and regulatory environment.
Fourth Quarter 2022 Financial Highlights
Fourth Quarter 2022 Operational Metrics
Full Year 2022 Financial Highlights
Full Year 2023 Financial Outlook
FiscalNote provided guidance for full year 2023 as follows:
FiscalNote provided guidance for the first quarter of 2023 as follows:
“Last year was transformational for FiscalNote, and our results show significant momentum across our business. We are proving our model of building an enduring and resilient growth company with compounding subscription revenue growth, strong gross margins and, over time, an impressive free cash flow model. The basis of our strong fundamentals is driven by a combination of organic expansion and strategic, accretive M&A as well as an ongoing operational focus on our drive towards profitability. We are driving new levels of innovation across our business, combining AI and human intelligence to address our customers’ most pressing challenges in this growing market, particularly in light of our customers’ needs to respond to ongoing political and macroeconomic uncertainty. Whether it’s our ongoing AI innovation, new ESG products, or our recent acquisition of Dragonfly, we continue to deliver the data, intelligence,
analysis, and workflows that our customers need to navigate and take action within the large and complex global political and regulatory environment,” said Tim Hwang, Chairman, CEO, and Co-founder, FiscalNote.
“This year, we will build on this momentum and deliver on our profitability goals as we scale our revenue, leverage the investments we’ve made in sales and marketing, drive ongoing efficiencies throughout our organization, and continue to seek strategic partnerships and AI collaborations - such as our new trusted partner role with OpenAI on ChatGPT announced last week - that add continued value for our customers, extend our competitive leadership, and create a more profitable enterprise. All of this positions us well to achieve our long term vision to become an enduring, multi-billion dollar, profitable leader in information services by empowering our customers with mission-critical insights and the tools to turn those insights into action,” Hwang added.
During 2022, FiscalNote continued to execute successfully on its strategy to lead its sector in global policy and market intelligence with several operational and business achievements, including:
Additional information regarding the non-GAAP financial measures discussed in this release, including an explanation of these measures and how each is calculated, is included below under the heading “Non-GAAP Financial Measures.” A reconciliation of GAAP to non-GAAP financial measures has also been provided in the financial tables included below. Information regarding our key performance indicators is included below under “Key Performance Indicators.”
Quarterly Conference Call
FiscalNote will host a conference call today, Tuesday March 28, at 10:00 a.m. Eastern Time (U.S.) to review the Company’s financial results for the fourth quarter and year ended December 31, 2022. To access this call, dial 1 (888) 660-6510 for the U.S. or Canada, or 1 (929) 203-0882 for callers outside the U.S. or Canada with the conference ID 1271923. A live webcast of the conference call will be accessible from the Investor Relations section of FiscalNote’s website at https://investors.fiscalnote.com/, and a recording will be archived and accessible at https://investors.fiscalnote.com/. An audio replay of this conference call will also be available through April 28, 2023, 11:59pm ET, by dialing 1 (800) 770-2030 for the U.S. or Canada, or 1 (647) 362-9199 for callers outside the U.S. or Canada, and entering 1271923.
* In connection with its public listing, FiscalNote entered into a 5-year senior secured term loan of up to $250 million, including $150 million of committed financing at closing with an additional uncommitted accordion facility for $100 million, subject to certain conditions.
(1) Non-GAAP measure. Please see "Non-GAAP Financial Measures" in this earnings release for definitions and important disclosures regarding these financial measures, including reconciliations to the most directly comparable GAAP measure.
(2) Please refer to our Current Report on Form 8-K filed on January 27, 2023 for more information.
(3) “Run-Rate Revenue,” “Annual Recurring Revenue” or “ARR”, and “Net Revenue Retention” are key performance indicators (KPIs). Please see "Key Performance Indicators" in this earnings release for the definitions and important disclosures regarding these measures.
(4) Organic run rate revenue for 2022 includes businesses acquired as of December 31, 2021, plus Aicel Technologies (for which a definitive acquisition agreement was signed as of December 31, 2021, with closing conditioned upon FiscalNote’s public listing).
(5) Total run rate revenue includes completed acquisitions but does not include any future acquisitions under consideration.
(6) Because of the variability of items impacting net income and unpredictability of future events, management is unable to reconcile without unreasonable effort the Company's forecasted adjusted EBITDA to a comparable GAAP measure.
About FiscalNote
FiscalNote (NYSE: NOTE) is a leading technology provider of global policy and market intelligence. By uniquely combining AI technology, actionable data, and expert and peer insights, FiscalNote empowers customers to manage policy, address regulatory developments, and mitigate global risk. Since 2013, FiscalNote has pioneered technology that delivers mission-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 approximately 5,000 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.
Contacts:
Media
Nicholas Graham
FiscalNote
press@fiscalnote.com
Investors
Sara Buda
FiscalNote
IR@fiscalnote.com
Forward-Looking Statements
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; 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 occur 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 Balance Sheets
(in thousands, except shares, and par value)
|
| December 31, 2022 |
|
| December 31, 2021 |
| ||
Assets |
|
|
|
|
|
| ||
Current assets: |
|
|
|
|
|
| ||
Cash and cash equivalents |
| $ | 60,388 |
|
| $ | 32,168 |
|
Restricted cash |
|
| 835 |
|
|
| 841 |
|
Accounts receivable, net |
|
| 14,909 |
|
|
| 11,174 |
|
Costs capitalized to obtain revenue contracts, net |
|
| 2,794 |
|
|
| 2,787 |
|
Prepaid expenses |
|
| 4,315 |
|
|
| 1,803 |
|
Other current assets |
|
| 2,764 |
|
|
| 5,525 |
|
Total current assets |
|
| 86,005 |
|
|
| 54,298 |
|
|
|
|
|
|
|
| ||
Property and equipment, net |
|
| 7,325 |
|
|
| 7,509 |
|
Capitalized software costs, net |
|
| 13,946 |
|
|
| 7,480 |
|
Noncurrent costs capitalized to obtain revenue contracts, net |
|
| 3,976 |
|
|
| 2,709 |
|
Operating lease assets |
|
| 21,005 |
|
|
| - |
|
Goodwill |
|
| 194,362 |
|
|
| 188,768 |
|
Customer relationships, net |
|
| 56,348 |
|
|
| 61,644 |
|
Database, net |
|
| 21,020 |
|
|
| 22,357 |
|
Other intangible assets, net |
|
| 28,728 |
|
|
| 33,728 |
|
Other non-current assets |
|
| 442 |
|
|
| - |
|
Total assets |
| $ | 433,157 |
|
| $ | 378,493 |
|
|
|
|
|
|
|
| ||
Liabilities, Temporary Equity and Stockholders' Equity (Deficit) |
|
|
|
|
|
| ||
Current liabilities: |
|
|
|
|
|
| ||
Current maturities of long-term debt |
| $ | 68 |
|
| $ | 13,567 |
|
Accounts payable and accrued expenses |
|
| 13,739 |
|
|
| 15,796 |
|
Deferred revenue, current portion |
|
| 35,569 |
|
|
| 29,569 |
|
Customer deposits |
|
| 3,252 |
|
|
| 3,568 |
|
Contingent liabilities from acquisitions, current portion |
|
| 696 |
|
|
| 1,088 |
|
Operating lease liabilities, current portion |
|
| 6,709 |
|
|
| - |
|
Other current liabilities |
|
| 2,079 |
|
|
| 5,880 |
|
Total current liabilities |
|
| 62,112 |
|
|
| 69,468 |
|
|
|
|
|
|
|
| ||
Long-term debt, net of current maturities |
|
| 161,980 |
|
|
| 299,318 |
|
Convertible notes - related parties |
|
| - |
|
|
| 18,295 |
|
Deferred tax liabilities |
|
| 714 |
|
|
| 3,483 |
|
Deferred revenue, net of current portion |
|
| 918 |
|
|
| 528 |
|
Deferred rent |
|
| - |
|
|
| 8,236 |
|
Contingent liabilities from acquisitions, net of current portion |
|
| 883 |
|
|
| 4,016 |
|
Sublease loss liability, net of current portion |
|
| - |
|
|
| 2,090 |
|
Lease incentive liability, net of current portion |
|
| - |
|
|
| 4,440 |
|
Operating lease liabilities, net of current portion |
|
| 29,110 |
|
|
| - |
|
Warrant liabilities |
|
| 18,892 |
|
|
| - |
|
Other non-current liabilities |
|
| 13,858 |
|
|
| 1,453 |
|
Total liabilities |
|
| 288,467 |
|
|
| 411,327 |
|
Commitment and contingencies (Note 18) |
|
|
|
|
|
| ||
Temporary equity: |
|
|
|
|
|
| ||
Redeemable, convertible preferred stock |
|
| - |
|
|
| 449,211 |
|
Stockholders' equity (deficit): |
|
|
|
|
|
| ||
Class A Common stock ($0.0001 and $0.00001 par value, 1,700,000,000 and 117,592,400 authorized, 123,125,595 and 18,346,466 issued and outstanding at December 31, 2022 and December 31, 2021, respectively) |
|
| 12 |
|
|
| - |
|
Class B Common stock ($0.0001 and zero par value, 9,000,000 and zero authorized, 8,290,921 and zero issued and outstanding at December 31, 2022 and December 31, 2021) |
|
| 1 |
|
|
| - |
|
Additional paid-in capital |
|
| 846,205 |
|
|
| - |
|
Accumulated other comprehensive loss |
|
| (785 | ) |
|
| (631 | ) |
Accumulated deficit |
|
| (700,743 | ) |
|
| (481,414 | ) |
Total stockholders' equity (deficit) |
|
| 144,690 |
|
|
| (482,045 | ) |
Total liabilities, temporary equity and stockholders' equity (deficit) |
| $ | 433,157 |
|
| $ | 378,493 |
|
FISCALNOTE HOLDINGS, INC.
Consolidated Statements of Operations and Comprehensive Loss
(in thousands, except shares and per share data)
|
| Three Months Ended December 31, |
|
| Years Ended December 31, |
| ||||||||||
|
| 2022 |
|
| 2021 |
|
| 2022 |
|
| 2021 |
| ||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Subscription |
| $ | 27,336 |
|
| $ | 20,904 |
|
| $ | 100,522 |
|
| $ | 74,002 |
|
Advisory, advertising, and other |
|
| 4,113 |
|
|
| 3,558 |
|
|
| 13,243 |
|
|
| 8,910 |
|
Total revenues |
|
| 31,449 |
|
|
| 24,462 |
|
|
| 113,765 |
|
|
| 82,912 |
|
Operating expenses: (1) |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Cost of revenues |
|
| 8,356 |
|
|
| 7,138 |
|
|
| 31,937 |
|
|
| 21,802 |
|
Research and development |
|
| 5,298 |
|
|
| 6,346 |
|
|
| 20,736 |
|
|
| 24,017 |
|
Sales and marketing |
|
| 10,956 |
|
|
| 8,418 |
|
|
| 42,678 |
|
|
| 29,676 |
|
Editorial |
|
| 4,716 |
|
|
| 3,667 |
|
|
| 15,956 |
|
|
| 14,634 |
|
General and administrative |
|
| 18,266 |
|
|
| 10,292 |
|
|
| 77,801 |
|
|
| 32,491 |
|
Amortization of intangible assets |
|
| 2,633 |
|
|
| 2,708 |
|
|
| 10,451 |
|
|
| 9,359 |
|
Loss on sublease |
|
| - |
|
|
| 455 |
|
|
| - |
|
|
| 1,817 |
|
Transaction costs, net |
|
| 1,138 |
|
|
| 1,713 |
|
|
| 2,395 |
|
|
| 4,698 |
|
Total operating expenses |
|
| 51,363 |
|
|
| 40,737 |
|
|
| 201,954 |
|
|
| 138,494 |
|
Operating loss |
|
| (19,914 | ) |
|
| (16,275 | ) |
|
| (88,189 | ) |
|
| (55,582 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Interest expense, net |
|
| 6,069 |
|
|
| 18,698 |
|
|
| 95,741 |
|
|
| 64,800 |
|
Change in fair value of warrant and derivative liabilities |
|
| 5,777 |
|
|
| (12,811 | ) |
|
| (12,747 | ) |
|
| (3,405 | ) |
Gain on PPP loan upon extinguishment |
|
| - |
|
|
| - |
|
|
| (7,667 | ) |
|
| - |
|
Loss on debt extinguishment, net |
|
| - |
|
|
| - |
|
|
| 45,250 |
|
|
| - |
|
Loss contingency |
|
| 11,700 |
|
|
| - |
|
|
| 11,700 |
|
|
| - |
|
Other expense, net |
|
| (498 | ) |
|
| (51 | ) |
|
| 1,045 |
|
|
| 333 |
|
Net loss before income taxes |
|
| (42,962 | ) |
|
| (22,111 | ) |
|
| (221,511 | ) |
|
| (117,310 | ) |
Benefit from income taxes |
|
| (418 | ) |
|
| (1,152 | ) |
|
| (3,254 | ) |
|
| (7,889 | ) |
Net loss |
|
| (42,544 | ) |
|
| (20,959 | ) |
|
| (218,257 | ) |
|
| (109,421 | ) |
Other comprehensive income (loss) |
|
| 1,623 |
|
|
| (22 | ) |
|
| (154 | ) |
|
| (568 | ) |
Total comprehensive loss |
| $ | (40,921 | ) |
| $ | (20,981 | ) |
| $ | (218,411 | ) |
| $ | (109,989 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Net loss |
| $ | (42,544 | ) |
| $ | (20,959 | ) |
| $ | (218,257 | ) |
| $ | (109,421 | ) |
Deemed contribution (dividend) |
|
| - |
|
|
| 20,739 |
|
|
| (26,570 | ) |
|
| (197,511 | ) |
Net loss used to compute basic and diluted loss per share |
| $ | (42,544 | ) |
| $ | (220 | ) |
| $ | (244,827 | ) |
| $ | (306,932 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Earnings per share attributable to common shareholders: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Basic and Diluted |
| $ | (0.32 | ) |
| $ | (0.01 | ) |
| $ | (3.68 | ) |
| $ | (19.80 | ) |
Weighted average shares used in computing earnings per shares attributable to common shareholders: |
| |||||||||||||||
Basic and Diluted |
|
| 131,086,309 |
|
|
| 18,020,727 |
|
|
| 66,513,704 |
|
|
| 15,503,829 |
|
(1) Amounts include stock-based compensation expenses, as follows: |
| |||||||||||||||
|
| Three Months Ended December 31, |
|
| Years Ended December 31, |
| ||||||||||
|
| 2022 |
|
| 2021 |
|
| 2022 |
|
| 2021 |
| ||||
Cost of revenues |
| $ | 45 |
|
| $ | 7 |
|
| $ | 81 |
|
| $ | 16 |
|
Research and development |
|
| 398 |
|
|
| 61 |
|
|
| 1,007 |
|
|
| 277 |
|
Sales and marketing |
|
| (66 | ) |
|
| 50 |
|
|
| 762 |
|
|
| 147 |
|
Editorial |
|
| 43 |
|
|
| 22 |
|
|
| 603 |
|
|
| 89 |
|
General and administrative |
|
| 6,759 |
|
|
| 323 |
|
|
| 35,594 |
|
|
| 481 |
|
FISCALNOTE HOLDINGS, INC.
Consolidated Statements of Cash Flows
(in thousands)
|
| Years Ended December 31, |
| |||||
|
| 2022 |
|
| 2021 |
| ||
Operating Activities: |
|
|
|
|
|
| ||
Net loss |
| $ | (218,257 | ) |
| $ | (109,421 | ) |
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
|
|
| ||
Depreciation |
|
| 1,238 |
|
|
| 1,177 |
|
Amortization of intangible assets and capitalized software development costs |
|
| 19,545 |
|
|
| 15,203 |
|
Amortization of deferred costs to obtain revenue contracts |
|
| 2,786 |
|
|
| 2,610 |
|
Non-cash operating lease expense |
|
| 6,614 |
|
|
| - |
|
Stock-based compensation |
|
| 38,047 |
|
|
| 1,010 |
|
Non-cash earnout expense |
|
| (238 | ) |
|
| 1,718 |
|
Loss contingency |
|
| 11,700 |
|
|
| - |
|
Bad debt expense |
|
| 142 |
|
|
| 254 |
|
Change in fair value of acquisition contingent consideration |
|
| (2,121 | ) |
|
| 434 |
|
Change in fair value of derivative liabilities |
|
| 3,090 |
|
|
| (3,407 | ) |
Change in fair value of warrant liabilities |
|
| (15,837 | ) |
|
| - |
|
Deferred income tax benefit |
|
| (3,076 | ) |
|
| (6,630 | ) |
Paid-in-kind interest, net |
|
| 10,958 |
|
|
| 37,345 |
|
Other non-cash expenses |
|
| 260 |
|
|
| - |
|
Non-cash interest expense |
|
| 52,044 |
|
|
| 21,692 |
|
Loss on debt extinguishment, net |
|
| 45,250 |
|
|
| - |
|
Loss on sublease |
|
| - |
|
|
| 1,817 |
|
Gain on PPP loan forgiveness |
|
| (7,667 | ) |
|
| - |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
| ||
Accounts receivable, net |
|
| (3,941 | ) |
|
| 1,066 |
|
Prepaid expenses and other current assets |
|
| 422 |
|
|
| (3,598 | ) |
Costs capitalized to obtain revenue contracts, net |
|
| (4,129 | ) |
|
| (4,199 | ) |
Other non-current assets |
|
| (395 | ) |
|
| - |
|
Accounts payable and accrued expenses |
|
| (2,113 | ) |
|
| 3,953 |
|
Deferred revenue |
|
| 4,780 |
|
|
| 2,770 |
|
Customer deposits |
|
| 93 |
|
|
| 1,403 |
|
Other current liabilities |
|
| (1,938 | ) |
|
| 291 |
|
Deferred rent |
|
| - |
|
|
| 266 |
|
Contingent liabilities from acquisitions, net of current portion |
|
| (1,567 | ) |
|
| - |
|
Lease liabilities |
|
| (8,589 | ) |
|
| - |
|
Sublease loss liability, net of current portion |
|
| - |
|
|
| (2,480 | ) |
Lease incentive liability, net of current portion |
|
| - |
|
|
| (528 | ) |
Other non-current liabilities |
|
| 274 |
|
|
| 208 |
|
Net cash used in operating activities |
|
| (72,625 | ) |
|
| (37,046 | ) |
|
|
|
|
|
|
| ||
Investing Activities: |
|
|
|
|
|
| ||
Capital expenditures |
|
| (11,367 | ) |
|
| (5,570 | ) |
Cash paid for business acquisitions, net of cash acquired |
|
| 1,125 |
|
|
| (43,626 | ) |
Net cash used in investing activities |
|
| (10,242 | ) |
|
| (49,196 | ) |
|
|
|
|
|
|
| ||
Financing Activities: |
|
|
|
|
|
| ||
Proceeds from Business Combination |
|
| 175,000 |
|
|
| - |
|
Issuance costs of common stock |
|
| (45,242 | ) |
|
| - |
|
Proceeds from long-term debt, net of issuance costs |
|
| 166,014 |
|
|
| 61,165 |
|
Principal payments of long-term debt |
|
| (189,105 | ) |
|
| - |
|
Proceeds from exercise of public warrants |
|
| 4,498 |
|
|
| - |
|
Proceeds from exercise of stock options |
|
| 453 |
|
|
| 516 |
|
Repurchase of common stock |
|
| (88 | ) |
|
| - |
|
Net proceeds from issuance of preferred stock |
|
|
|
|
| 12,626 |
| |
Net cash provided by financing activities |
|
| 111,530 |
|
|
| 74,307 |
|
|
|
|
|
|
|
| ||
Effects of exchange rates on cash |
|
| (449 | ) |
|
| (76 | ) |
|
|
|
|
|
|
| ||
Net change in cash, cash equivalents, and restricted cash |
|
| 28,214 |
|
|
| (12,011 | ) |
Cash, cash equivalents, and restricted cash, beginning of period |
|
| 33,009 |
|
|
| 45,020 |
|
Cash, cash equivalents, and restricted cash, end of period |
| $ | 61,223 |
|
| $ | 33,009 |
|
Non-GAAP Financial Measures
In addition to financial measures prepared in accordance with 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 Revenue
Adjusted revenue represents revenue adjusted to include amounts that would have been recognized if deferred revenue was not adjusted to fair value in connection with acquisition accounting. Adjusted revenue is presented because we use this measure to evaluate performance of our business against prior periods and believe it is useful for investors as an indicator of the underlying performance of our business. Adjusted revenue is not a recognized term under U.S. GAAP. Adjusted revenue does not represent revenues, as that term is defined under GAAP, and should not be considered as an alternative to revenues as an indicator of our operating performance. Adjusted revenue as presented herein is not necessarily comparable to similarly titled measures presented by other companies.
Adjusted Gross Profit and Adjusted Gross Profit Margin
We define Adjusted Gross Profit as Adjusted 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 Adjusted 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 and deferred revenue, which are non-cash impacts 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 Adjusted Revenue.
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 loss, net 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 Revenues
The following table presents our calculation of Adjusted Revenues for the periods presented, and a reconciliation of this measure to our GAAP revenues for the same periods:
|
| Three Months Ended December 31, |
|
| Years Ended December 31, |
| ||||||||||
(In thousands) |
| 2022 |
|
| 2021 |
|
| 2022 |
|
| 2021 |
| ||||
Subscription revenue |
| $ | 27,336 |
|
| $ | 20,904 |
|
| $ | 100,522 |
|
| $ | 74,002 |
|
Deferred revenue adjustment |
|
| 43 |
|
|
| 1,225 |
|
|
| 1,896 |
|
|
| 2,758 |
|
Adjusted subscription revenue |
|
| 27,379 |
|
|
| 22,129 |
|
|
| 102,418 |
|
|
| 76,760 |
|
Advisory, advertising, and other revenue |
|
| 4,113 |
|
|
| 3,558 |
|
|
| 13,243 |
|
|
| 8,910 |
|
Adjusted Revenues |
| $ | 31,492 |
|
| $ | 25,687 |
|
| $ | 115,661 |
|
| $ | 85,670 |
|
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 December 31, |
|
| Years Ended December 31, |
| ||||||||||
(In thousands) |
| 2022 |
|
| 2021 |
|
| 2022 |
|
| 2021 |
| ||||
Adjusted Revenues |
| $ | 31,492 |
|
| $ | 25,687 |
|
| $ | 115,661 |
|
| $ | 85,670 |
|
Costs of revenue |
|
| (8,356 | ) |
|
| (7,138 | ) |
|
| (31,937 | ) |
|
| (21,802 | ) |
Amortization of intangible assets |
|
| 2,430 |
|
|
| 1,767 |
|
|
| 9,094 |
|
|
| 5,844 |
|
Adjusted Gross Profit |
| $ | 25,566 |
|
| $ | 20,316 |
|
| $ | 92,818 |
|
| $ | 69,712 |
|
Adjusted Gross Profit Margin |
|
| 81 | % |
|
| 79 | % |
|
| 80 | % |
|
| 81 | % |
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 December 31, |
|
| Years Ended December 31, |
| ||||||||||
(In thousands) |
| 2022 |
|
| 2021 |
|
| 2022 |
|
| 2021 |
| ||||
Net loss |
| $ | (42,544 | ) |
| $ | (20,959 | ) |
| $ | (218,257 | ) |
| $ | (109,421 | ) |
Benefit from income taxes |
|
| (418 | ) |
|
| (1,152 | ) |
|
| (3,254 | ) |
|
| (7,889 | ) |
Depreciation and amortization |
|
| 5,409 |
|
|
| 4,782 |
|
|
| 20,783 |
|
|
| 16,380 |
|
Interest expense, net |
|
| 6,069 |
|
|
| 18,698 |
|
|
| 95,741 |
|
|
| 64,800 |
|
EBITDA |
|
| (31,484 | ) |
|
| 1,369 |
|
|
| (104,987 | ) |
|
| (36,130 | ) |
Deferred revenue adjustment (a) |
|
| 43 |
|
|
| 1,225 |
|
|
| 1,896 |
|
|
| 2,758 |
|
Stock-based compensation |
|
| 7,179 |
|
|
| 463 |
|
|
| 38,047 |
|
|
| 1,010 |
|
Change in fair value of warrant and derivative liabilities (b) |
|
| 5,778 |
|
|
| (12,811 | ) |
|
| (12,747 | ) |
|
| (3,405 | ) |
Loss on debt extinguishment, net |
|
| - |
|
|
| - |
|
|
| 45,250 |
|
|
| - |
|
Other non-cash (gains) charges (c) |
|
| 217 |
|
|
| 1,562 |
|
|
| (9,069 | ) |
|
| 3,969 |
|
Acquisition related costs (d) |
|
| 178 |
|
|
| 367 |
|
|
| 1,181 |
|
|
| 2,054 |
|
Employee severance costs |
|
| 426 |
|
|
| 120 |
|
|
| 575 |
|
|
| 180 |
|
Non-capitalizable debt raising costs |
|
| - |
|
|
| - |
|
|
| 403 |
|
|
| 584 |
|
Other infrequent costs (e) |
|
| - |
|
|
| 29 |
|
|
| 20 |
|
|
| 1,484 |
|
Costs incurred related to the transaction (f) |
|
| 743 |
|
|
| 239 |
|
|
| 2,993 |
|
|
| 1,128 |
|
Loss contingency (g) |
|
| 11,702 |
|
|
| - |
|
|
| 11,988 |
|
|
| - |
|
Adjusted EBITDA |
| $ | (5,218 | ) |
| $ | (7,437 | ) |
| $ | (24,450 | ) |
| $ | (26,368 | ) |
Adjusted EBITDA Margin |
|
| (17 | )% |
|
| (29 | )% |
|
| (21 | )% |
|
| (31 | )% |
Key Performance Indicators
We also 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. 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 Acquisitions are not included in our NRR for the year ended December 31, 2022 and the 2021 Acquisitions are not included in our NRR for the year ended December 31, 2021. 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.