What happened
FiscalNote (NOTE 7.49%) soared this week as its stock price was up 45.1% for the week, as of Friday at 2:50 p.m. EDT, according to S&P Global Market Intelligence. It had been up as much as 55% during the week. The penny stock was trading at about $2.22 per share on Friday, down roughly 65% year to date.
The markets were up this week, as the S&P 500 gained 2.9%, the Dow Jones Industrial Average climbed 2.7%, and the Nasdaq Composite increased 2.9% this week.
So what
FiscalNote is a software-as-a-service (SaaS) provider that allows clients to conduct analysis of government policy, regulatory issues, legal matters, and legislation as a way to manage risk and gain market intelligence. It has some 5,000 organizations as clients worldwide.
It has had a pretty good couple of weeks. Last week, it was selected by OpenAI, which runs the ChatGPT platform, as one of its partners -- and the only one in its field. As a partner, it will allow OpenAI to use its data and content on the ChatGPT platform. The stock surged almost 90% on the news, which was released March 23, to $2.56 per share.
Then this week, FiscalNote released its fourth-quarter and year-end earnings, which accounted for most of the 45% jump in share price.
OTC: NOTE
Key Data Points
Revenue increased 29% year over year in the quarter to $31.4 million while the company had a net loss of about $42 million, up from about $21 million a year ago. For the full year, revenue jumped 37% to $114 million, while it had a net loss for the year of $218 million, up from a net loss of $109 million the previous year. The adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) loss for the full year was $24.4 million.
CEO Tim Hwang said in the release:
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 toward profitability.
Now what
FiscalNote made a couple of acquisitions last year, and earlier in 2023, it acquired Dragonfly Eye, a U.K.-based provider of geopolitical data and security intelligence.
FiscalNote expects the recent moves to acquire Dragonfly Eye and partner with OpenAI to boost revenue and help bring it closer to profitability. Its outlook for fiscal 2023 calls for 20% to 24% year-over-year revenue growth and a net adjusted EBITDA loss of $8 million to $6 million. That would be a 71% year-over-year improvement. It expects to see positive adjusted EBITDA growth in the fourth quarter of 2023.
This is definitely a stock to watch, as a strong and growing player in a critical niche with large institutional clients and a low overhead business model, with predictable subscription-based revenue. It's volatile now, but keep an eye on it as it moves toward profitability.
