FiscalNote Reports Second Quarter 2024 Financial Results
Exceeds Previous Forecast and
-
Reports Q2 2024 total revenues of
$29.2 million and adjusted EBITDA of$1.8 million (1), both exceeding previously provided forecast -
Records fourth consecutive quarter of positive adjusted EBITDA,
FiscalNote ’s first year of positive adjusted EBITDA on a trailing LTM basis -
Provides Q3 2024 forecast with total revenues of approximately
$29 million and adjusted EBITDA of approximately$2 million ; continued focus on profitability, raises and tightens full year adjusted EBITDA forecast, with higher expected full year adjusted EBITDA margins - Maintains commitment to invest in new products and product enhancements to drive higher customer engagement, retention rates, revenue growth and operating leverage anticipated in 2025
- Board of Directors continues to review all strategic options available to the Company to maximize shareholder value
These quarterly results mark another quarter of exceeding expected results driven by a blue chip customer base, durable recurring revenue and high gross margins, which form the basis of the Company’s increasing adjusted EBITDA and ongoing leadership in delivering AI-enabled policy and market information. The second quarter of 2024 represented a
“During the second quarter, we continued to execute on our accelerated AI product strategy and roadmap, including a new Copilot launch and a successful and impactful AI Product Day that reached both current and prospective customers as well as stakeholders from the investment community,” said
Financial Highlights(2)
Q2 2024 vs. Q2 2023
[Note - All amounts for the three months ended
|
|
Three Months Ended |
|
|
|
|
|||||
($ in millions) |
|
2024 |
|
|
2023 |
|
|
% Change |
|
||
Total Revenues (formerly "GAAP Revenue") |
|
$ |
29.2 |
|
|
$ |
32.8 |
|
|
(11) |
% |
Subscription Revenue as % of Total Revenues |
|
|
~93 |
% |
|
|
~90 |
% |
|
|
|
Gross Profit |
|
$ |
22.4 |
|
|
$ |
23.4 |
|
|
(4) |
% |
Gross Margin |
|
|
77 |
% |
|
|
71 |
% |
|
600 |
bps |
Adjusted Gross Profit (1) |
|
$ |
24.9 |
|
|
$ |
26.4 |
|
|
(5) |
% |
Adjusted Gross Margin (1) |
|
|
85 |
% |
|
|
80 |
% |
|
500 |
bps |
Net Loss |
|
$ |
(12.8) |
|
|
$ |
(31.0) |
|
|
59 |
% |
Adjusted EBITDA (1) |
|
$ |
1.8 |
|
|
$ |
(4.3) |
|
|
|
* |
Adjusted EBITDA Margin (1) |
|
|
6 |
% |
|
|
(13) |
% |
|
|
|
Cash and Cash Equivalents |
|
$ |
31.3 |
|
|
$ |
38.1 |
|
|
|
|
bps - Basis Points |
|
|
|
|
|
|
|
|
|
|
|
* - percentage change is greater than +/- 100% |
Second Quarter and Recent Operational Highlights
- Showcased the next stage of AI leadership and innovation during the “AI Product Day 2024” event which highlighted the Company’s AI-powered products and accelerated product roadmap and strategy for 2024 and beyond.
- Introduced FiscalNote Copilot for Policy, the second innovative AI Copilot from the Company, designed to enable increased efficiency and impact on policy and legislative workflows for global government affairs professionals.
- Announced a new strategic partnership with Creolytix, integrating the Company’s Dragonfly offering with Creolytix’s platform to empower enterprises with world-class global intelligence in their risk management programs.
- Launched a new strategic partnership which will integrate FiscalNote’s Risk Connector, Dragonfly, and Global Intelligence Copilot products with Empowered Systems’ third-party risk management solution platform.
- Announced a series of new and expanded large customer contract agreements with a wide array of leading global corporate enterprises spanning diversified market sectors.
- Unveiled the integration of new AI enhancements to FiscalNote’s Fireside offering - the leading all-in-one constituent relationship management SaaS platform - to optimize and streamline the management and responsiveness of lawmaker communications and casework.
- Launched the EU Transposition Tracker to enable global customers to monitor and take action on the transposition of critical EU Directives across the various member states.
- Announced the expansion of its award-winning Roll Call media property to now include data from Factba.se - the go-to trusted AI database for historical and current Presidential remarks - as well as the integration of StressLens, a groundbreaking innovation that equips customers with the real-time ability to decode the human element, to provide users with instant, AI-driven analysis of the Presidential candidates during the 2024 election campaign.
- FiscalNote’s Dragonfly offering received Band 1 recognition for global-wide Political Risk in Chambers and Partners’ Crisis and Risk Management Guide 2024 for the third consecutive year - one of only two global intelligence companies to attain the highest level of recognition.
-
Published its third annual corporate Sustainability Overview for fiscal year 2023, “Our Progress Toward a Sustainable Future:
FiscalNote's Sustainability & Social Impact Efforts.”
Commenting on the quarter,
Second Quarter Financial Performance
Revenue (2)
|
|
Three Months Ended |
|
|
|
|||||
($ in millions) |
|
2024 |
|
|
2023 |
|
|
% Change |
||
Subscription revenue |
|
$ |
27.1 |
|
|
$ |
29.5 |
|
|
(8)% |
Advisory, advertising, and other revenue |
|
|
2.1 |
|
|
|
3.4 |
|
|
(38)% |
Total Revenues |
|
$ |
29.2 |
|
|
$ |
32.8 |
|
|
(11)% |
For Q2 2024, subscription revenue declined
For Q2 2024, advisory, advertising, and other revenue decreased
Key Performance Indicators (3)
|
|
As of |
|
|
|
|
||||||
($ in millions) |
|
2024 |
|
|
2023 |
|
|
% Change |
|
|||
Run-Rate Revenue (RRR) |
|
$ |
121 |
|
|
$ |
135 |
|
|
|
(11 |
)% |
Pro Forma RRR* |
|
$ |
121 |
|
|
$ |
121 |
|
|
|
0 |
% |
Annual Recurring Revenue (ARR) |
|
$ |
109 |
|
|
$ |
120 |
|
|
|
(9 |
)% |
Pro Forma ARR* |
|
$ |
109 |
|
|
$ |
107 |
|
|
|
2 |
% |
Net Revenue Retention (NRR) |
|
|
98 |
% |
|
|
98 |
% |
|
|
|
*Pro forma RRR and Pro forma ARR adjusts prior periods for the impact of the divestiture of Board.org.
As of
As of
As of
Operating Expenses (2)
|
|
Three Months Ended |
|
|
|
|
||||||
($ in millions) |
|
2024 |
|
|
2023 |
|
|
% Change |
|
|||
Cost of revenues, including amortization |
|
$ |
6.9 |
|
|
$ |
9.5 |
|
|
|
(28 |
)% |
Research and development |
|
|
3.2 |
|
|
|
4.5 |
|
|
|
(29 |
)% |
Sales and marketing |
|
|
9.0 |
|
|
|
11.7 |
|
|
|
(23 |
)% |
Editorial |
|
|
4.4 |
|
|
|
4.7 |
|
|
|
(6 |
)% |
General and administrative |
|
|
11.3 |
|
|
|
16.2 |
|
|
|
(30 |
)% |
Amortization of intangible assets |
|
|
2.4 |
|
|
|
2.9 |
|
|
|
(17 |
)% |
Other |
|
|
- |
|
|
|
0.3 |
|
|
NM |
|
|
Total operating expenses |
|
$ |
37.2 |
|
|
$ |
49.8 |
|
|
|
(25 |
)% |
NM - Not meaningful |
In Q2 2024, operating expenses decreased versus prior year, primarily due to the sale of Board.org, ongoing operating efficiency measures instituted throughout 2023 and 2024, as well as the costs associated with sunset products. On a pro forma basis, excluding amortization expense, stock-based compensation, and the impact of the sale of Board.org, operating expenses decreased approximately
Financial Forecast
Continuing the Company’s focus on profitable growth, the Company has updated its financial forecast for full year 2024 and issued its initial forecast for Q3 2024. In both instances, such forecasts reflect management’s expectations based on the most recent information available. After
Full Year 2024
|
|
|
|
|
|
($ in millions) |
Current Forecast Provided on |
|
Action |
|
Previous Forecast Provided on |
Total Revenues |
Approximately |
|
Revised |
|
|
Adjusted EBITDA (1) (4) |
Approximately |
|
Revised |
|
|
Q3 2024
|
Current Forecast |
($ in millions) |
Provided on |
Total Revenues |
Approximately |
Adjusted EBITDA (1) (4) |
Approximately |
The forecast raises and tightens full year Adjusted EBITDA as the Company continues to focus on reallocating resources towards higher returning sources of revenue and investments in improving retention rates, margins and profitability among our subscription customers. Additionally, the revision to total revenues for the full year reflects the impact to the second half of 2024 from recently experienced lower than expected rates of customer retention driven by a number of factors, including macroeconomic headwinds and delays in the launch of certain product enhancements. While these impacts have temporarily led to slower than expected ARR growth, the Company expects continued investments in product innovation and platform investments focused on improved customer experience to drive higher customer engagement, retention rates and, as a result, revenue growth and improved operating leverage as it progresses through the second half of 2024 and into 2025. The Company expects to accelerate growth rates in 2025 as it re-allocates sales and product resources to high-performing offerings and realizes the benefits of its recent product and organizational initiatives.
Strategic Review
As previously announced, following the formation by the Company’s Board of Directors (the Board) of a Special Committee (the Committee) in
Conference Call, Presentation Supplement, and Webcast Information
The Company management will host a conference call at
LIVE
- By phone
-
Dial for the
U.S. orCanada 1 (800) 715-9871 or for International 1 (646) 307-1963 and enter the conference ID 2431537. - By webcast
- Visit the Investor Relations section of the Company’s website.
REPLAY
-
By phone (available through
Thursday, August 22, 2024 ) -
Dial for the
U.S. orCanada 1 (800) 770-2030 or for International 1 (647) 362-9199 and enter the conference ID 2431537. - By webcast
- Visit the Investor Relations section of the Company’s website.
Footnotes
(1) |
Non-GAAP measure. See “Non-GAAP Financial Measures” and the reconciliation tables for the definitions and reconciliations of these non-GAAP financial measures to the most closely related GAAP financial measures. |
(2) |
All financial information incorporated within this press release is unaudited. |
(3) |
“Run-Rate Revenue,” “Annual Recurring Revenue,” and “Net Retention Revenue” are key performance indicators (KPIs). See “Key Performance Indicators” for the definitions and important disclosures related to these measures. |
(4) |
Because of the variability of items impacting net income and the unpredictability of future events, management is unable to reconcile without unreasonable effort the Company's forecasted adjusted EBITDA to a comparable GAAP measure. The unavailable information could have a significant impact on the non-GAAP measures. |
About
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
These and other important factors discussed in FiscalNote’s
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (in thousands, except shares and per share data) (Unaudited) |
||||||||||||||||
|
|
Three Months Ended |
|
Six Months Ended |
||||||||||||
|
|
2024 |
|
2023 |
|
2024 |
|
2023 |
||||||||
Revenues: |
|
|
|
|
|
|
|
|
||||||||
Subscription |
|
$ |
27,151 |
|
|
$ |
29,462 |
|
|
$ |
56,777 |
|
|
$ |
57,929 |
|
Advisory, advertising, and other |
|
|
2,095 |
|
|
|
3,380 |
|
|
|
4,581 |
|
|
|
6,442 |
|
Total revenues |
|
|
29,246 |
|
|
|
32,842 |
|
|
|
61,358 |
|
|
|
64,371 |
|
Operating expenses: (1) |
|
|
|
|
|
|
|
|
||||||||
Cost of revenues, including amortization |
|
|
6,863 |
|
|
|
9,485 |
|
|
|
14,107 |
|
|
|
18,422 |
|
Research and development |
|
|
3,205 |
|
|
|
4,510 |
|
|
|
6,685 |
|
|
|
9,630 |
|
Sales and marketing |
|
|
9,001 |
|
|
|
11,689 |
|
|
|
18,416 |
|
|
|
23,987 |
|
Editorial |
|
|
4,453 |
|
|
|
4,752 |
|
|
|
9,113 |
|
|
|
9,017 |
|
General and administrative |
|
|
11,260 |
|
|
|
16,174 |
|
|
|
27,336 |
|
|
|
34,395 |
|
Amortization of intangible assets |
|
|
2,420 |
|
|
|
2,901 |
|
|
|
5,105 |
|
|
|
5,715 |
|
Impairment of goodwill |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
5,837 |
|
Transaction costs (gains), net |
|
|
- |
|
|
|
309 |
|
|
|
(4 |
) |
|
|
1,717 |
|
Total operating expenses |
|
|
37,202 |
|
|
|
49,820 |
|
|
|
80,758 |
|
|
|
108,720 |
|
Operating loss |
|
|
(7,956 |
) |
|
|
(16,978 |
) |
|
|
(19,400 |
) |
|
|
(44,349 |
) |
|
|
|
|
|
|
|
|
|
||||||||
Gain on sale of business |
|
|
- |
|
|
|
- |
|
|
|
(71,599 |
) |
|
|
- |
|
Interest expense, net |
|
|
5,320 |
|
|
|
7,154 |
|
|
|
12,682 |
|
|
|
13,835 |
|
Change in fair value of financial instruments |
|
|
(854 |
) |
|
|
2,987 |
|
|
|
(327 |
) |
|
|
(11,693 |
) |
Loss on settlement |
|
|
- |
|
|
|
3,474 |
|
|
|
- |
|
|
|
3,474 |
|
Other expense (income), net |
|
|
18 |
|
|
|
167 |
|
|
|
259 |
|
|
|
38 |
|
Net (loss) income before income taxes |
|
|
(12,440 |
) |
|
|
(30,760 |
) |
|
|
39,585 |
|
|
|
(50,003 |
) |
Provision from income taxes |
|
|
324 |
|
|
|
213 |
|
|
|
1,750 |
|
|
|
243 |
|
Net (loss) income |
|
|
(12,764 |
) |
|
|
(30,973 |
) |
|
|
37,835 |
|
|
|
(50,246 |
) |
Other comprehensive income (loss) |
|
|
55 |
|
|
|
328 |
|
|
|
(61 |
) |
|
|
(31 |
) |
Total comprehensive (loss) income |
|
$ |
(12,709 |
) |
|
$ |
(30,645 |
) |
|
$ |
37,774 |
|
|
$ |
(50,277 |
) |
|
|
|
|
|
|
|
|
|
||||||||
Earnings (Loss) per share attributable to common shareholders: |
|
|
|
|
|
|
|
|
||||||||
Basic and Diluted |
|
$ |
(0.09 |
) |
|
$ |
(0.23 |
) |
|
$ |
0.28 |
|
|
$ |
(0.38 |
) |
Weighted average shares used in computing earnings (loss) per share attributable to common shareholders: |
|
|
|
|
|
|
|
|
||||||||
Basic and Diluted |
|
|
134,407,109 |
|
|
|
134,117,122 |
|
|
|
132,763,763 |
|
|
|
133,601,798 |
|
(1) Amounts include stock-based compensation expenses, as follows: |
||||||||||||||||
|
|
Three Months Ended |
|
Six Months Ended |
||||||||||||
|
|
2024 |
|
2023 |
|
2024 |
|
2023 |
||||||||
Cost of revenues, including amortization |
|
$ |
107 |
|
|
$ |
82 |
|
|
$ |
208 |
|
|
$ |
140 |
|
Research and development |
|
|
374 |
|
|
|
362 |
|
|
|
684 |
|
|
|
752 |
|
Sales and marketing |
|
|
270 |
|
|
|
317 |
|
|
|
696 |
|
|
|
677 |
|
Editorial |
|
|
165 |
|
|
|
106 |
|
|
|
265 |
|
|
|
172 |
|
General and administrative |
|
|
2,613 |
|
|
|
4,615 |
|
|
|
7,851 |
|
|
|
10,247 |
|
Condensed Consolidated Balance Sheets (in thousands, except shares, and par value) |
||||||||
|
|
(Unaudited) |
|
|
||||
|
|
|
|
|
||||
Assets |
|
|
|
|
||||
Current assets: |
|
|
|
|
||||
Cash and cash equivalents |
|
$ |
30,649 |
|
|
$ |
16,451 |
|
Restricted cash |
|
|
678 |
|
|
|
849 |
|
Short-term investments |
|
|
7,055 |
|
|
|
7,134 |
|
Accounts receivable, net |
|
|
13,553 |
|
|
|
16,931 |
|
Costs capitalized to obtain revenue contracts, net |
|
|
3,127 |
|
|
|
3,326 |
|
Prepaid expenses |
|
|
3,198 |
|
|
|
2,593 |
|
Other current assets |
|
|
3,690 |
|
|
|
2,521 |
|
Total current assets |
|
|
61,950 |
|
|
|
49,805 |
|
|
|
|
|
|
||||
Property and equipment, net |
|
|
5,606 |
|
|
|
6,141 |
|
Capitalized software costs, net |
|
|
14,222 |
|
|
|
13,372 |
|
Noncurrent costs capitalized to obtain revenue contracts, net |
|
|
3,490 |
|
|
|
4,257 |
|
Operating lease assets |
|
|
17,495 |
|
|
|
17,782 |
|
|
|
|
164,431 |
|
|
|
187,703 |
|
Customer relationships, net |
|
|
45,241 |
|
|
|
53,917 |
|
Database, net |
|
|
17,720 |
|
|
|
18,838 |
|
Other intangible assets, net |
|
|
15,635 |
|
|
|
18,113 |
|
Other non-current assets |
|
|
475 |
|
|
|
633 |
|
Total assets |
|
$ |
346,265 |
|
|
$ |
370,561 |
|
|
|
|
|
|
||||
Liabilities and Stockholders' Equity |
|
|
|
|
||||
Current liabilities: |
|
|
|
|
||||
Current maturities of long-term debt |
|
$ |
67 |
|
|
$ |
105 |
|
Accounts payable and accrued expenses |
|
|
7,813 |
|
|
|
12,909 |
|
Deferred revenue, current portion |
|
|
43,920 |
|
|
|
43,530 |
|
Customer deposits |
|
|
1,286 |
|
|
|
3,032 |
|
Contingent liabilities from acquisitions, current portion |
|
|
114 |
|
|
|
130 |
|
Operating lease liabilities, current portion |
|
|
3,517 |
|
|
|
3,066 |
|
Other current liabilities |
|
|
4,656 |
|
|
|
2,878 |
|
Total current liabilities |
|
|
61,373 |
|
|
|
65,650 |
|
|
|
|
|
|
||||
Long-term debt, net of current maturities |
|
|
145,825 |
|
|
|
222,310 |
|
Deferred tax liabilities |
|
|
1,542 |
|
|
|
2,178 |
|
Deferred revenue, net of current portion |
|
|
210 |
|
|
|
875 |
|
Operating lease liabilities, net of current portion |
|
|
24,845 |
|
|
|
26,162 |
|
Public and private warrant liabilities |
|
|
2,765 |
|
|
|
4,761 |
|
Other non-current liabilities |
|
|
2,813 |
|
|
|
5,166 |
|
Total liabilities |
|
|
239,373 |
|
|
|
327,102 |
|
Commitment and contingencies |
|
|
|
|
||||
Stockholders' equity: |
|
|
|
|
||||
Class A Common stock ( |
|
|
13 |
|
|
|
11 |
|
Class |
|
|
1 |
|
|
|
1 |
|
Additional paid-in capital |
|
|
880,435 |
|
|
|
860,485 |
|
Accumulated other comprehensive income ( loss) |
|
|
5,024 |
|
|
|
(622 |
) |
Accumulated deficit |
|
|
(778,581 |
) |
|
|
(816,416 |
) |
Total stockholders' equity |
|
|
106,892 |
|
|
|
43,459 |
|
Total liabilities and stockholders' equity |
|
$ |
346,265 |
|
|
$ |
370,561 |
|
Condensed Consolidated Statements of Cash Flows (Unaudited) (in thousands) |
||||||||
|
|
Six Months Ended |
||||||
|
|
2024 |
|
2023 |
||||
Operating Activities: |
|
|
|
|
||||
Net income (loss) |
|
$ |
37,835 |
|
|
$ |
(50,246 |
) |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: |
|
|
|
|
||||
Depreciation |
|
|
603 |
|
|
|
671 |
|
Amortization of intangible assets and capitalized software development costs |
|
|
10,040 |
|
|
|
11,373 |
|
Amortization of deferred costs to obtain revenue contracts |
|
|
1,885 |
|
|
|
1,648 |
|
Gain on sale of business |
|
|
(71,599 |
) |
|
|
- |
|
Impairment of goodwill |
|
|
- |
|
|
|
5,837 |
|
Non-cash operating lease expense |
|
|
1,147 |
|
|
|
2,366 |
|
Stock-based compensation |
|
|
9,704 |
|
|
|
11,988 |
|
Loss on settlement |
|
|
- |
|
|
|
3,474 |
|
Other non-cash expenses |
|
|
- |
|
|
|
426 |
|
Bad debt expense |
|
|
243 |
|
|
|
229 |
|
Change in fair value of acquisition contingent consideration |
|
|
(4 |
) |
|
|
(333 |
) |
Unrealized loss on securities |
|
|
80 |
|
|
|
- |
|
Change in fair value of financial instruments |
|
|
(327 |
) |
|
|
(11,693 |
) |
Deferred income taxes |
|
|
(561 |
) |
|
|
214 |
|
Paid-in-kind interest, net |
|
|
3,964 |
|
|
|
2,042 |
|
Non-cash interest expense |
|
|
1,469 |
|
|
|
2,130 |
|
Changes in operating assets and liabilities: |
|
|
|
|
||||
Accounts receivable, net |
|
|
1,939 |
|
|
|
1,644 |
|
Prepaid expenses and other current assets |
|
|
(1,628 |
) |
|
|
2,284 |
|
Costs capitalized to obtain revenue contracts, net |
|
|
(1,479 |
) |
|
|
(1,910 |
) |
Other non-current assets |
|
|
183 |
|
|
|
18 |
|
Accounts payable and accrued expenses |
|
|
(2,662 |
) |
|
|
(4,914 |
) |
Deferred revenue |
|
|
8,974 |
|
|
|
9,595 |
|
Customer deposits |
|
|
(774 |
) |
|
|
(1,233 |
) |
Other current liabilities |
|
|
1,791 |
|
|
|
(797 |
) |
Contingent liabilities from acquisitions, net of current portion |
|
|
(13 |
) |
|
|
(39 |
) |
Operating lease liabilities |
|
|
(1,737 |
) |
|
|
(4,974 |
) |
Other non-current liabilities |
|
|
(61 |
) |
|
|
(6 |
) |
Net cash used in operating activities |
|
|
(988 |
) |
|
|
(20,206 |
) |
|
|
|
|
|
||||
Investing Activities: |
|
|
|
|
||||
Capital expenditures |
|
|
(4,433 |
) |
|
|
(4,086 |
) |
Cash proceeds from the sale of business, net |
|
|
91,384 |
|
|
|
- |
|
Cash paid for business acquisitions, net of cash acquired |
|
|
- |
|
|
|
(5,010 |
) |
Net cash provided by (used in) investing activities |
|
|
86,951 |
|
|
|
(9,096 |
) |
|
|
|
|
|
||||
Financing Activities: |
|
|
|
|
||||
Proceeds from long-term debt, net of issuance costs |
|
|
801 |
|
|
|
6,000 |
|
Principal payments of long-term debt |
|
|
(65,754 |
) |
|
|
(53 |
) |
Payment of deferred financing costs |
|
|
(7,068 |
) |
|
|
- |
|
Proceeds from exercise of stock options and ESPP purchases |
|
|
196 |
|
|
|
617 |
|
Net cash (used in) provided by financing activities |
|
|
(71,825 |
) |
|
|
6,564 |
|
|
|
|
|
|
||||
Effects of exchange rates on cash |
|
|
(111 |
) |
|
|
(383 |
) |
|
|
|
|
|
||||
Net change in cash, cash equivalents, and restricted cash |
|
|
14,027 |
|
|
|
(23,121 |
) |
Cash, cash equivalents, and restricted cash, beginning of period |
|
|
17,300 |
|
|
|
61,223 |
|
Cash, cash equivalents, and restricted cash, end of period |
|
$ |
31,327 |
|
|
$ |
38,102 |
|
|
|
|
|
|
||||
Supplemental Noncash Investing and Financing Activities: |
|
|
|
|
||||
Issuance of common stock for conversion of debt |
|
$ |
9,967 |
|
|
$ |
- |
|
Warrants issued in conjunction with long-term debt issuance |
|
$ |
- |
|
|
$ |
178 |
|
Amounts held in escrow related to the sale of Board.org |
|
$ |
285 |
|
|
$ |
- |
|
Property and equipment purchases included in accounts payable |
|
$ |
121 |
|
|
$ |
343 |
|
|
|
|
|
|
||||
Supplemental Cash Flow Activities: |
|
|
|
|
||||
Cash paid for interest |
|
$ |
8,509 |
|
|
$ |
9,924 |
|
Cash paid for taxes |
|
$ |
172 |
|
|
$ |
49 |
|
Non-GAAP Financial Measures
In addition to financial measures prepared in accordance with
Adjusted Gross Profit and Adjusted Gross Profit Margin
We define Adjusted Gross Profit as Total Revenues minus cost of revenues, including amortization of capitalized software development costs and acquired developed technology, before amortization of intangible assets that are included in costs of revenues. We define Adjusted Gross Profit Margin as Adjusted Gross Profit divided by Total 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 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 Total Revenues.
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 income (loss), net income (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 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 |
|
Six Months Ended |
||||||||||||
(In thousands) |
|
2024 |
|
2023 |
|
2024 |
|
2023 |
||||||||
Total revenues |
|
$ |
29,246 |
|
|
$ |
32,842 |
|
|
$ |
61,358 |
|
|
$ |
64,371 |
|
Costs of revenue, including amortization of capitalized software development costs and acquired developed technology |
|
|
(6,863 |
) |
|
|
(9,485 |
) |
|
|
(14,107 |
) |
|
|
(18,422 |
) |
Gross Profit |
|
$ |
22,383 |
|
|
$ |
23,357 |
|
|
$ |
47,251 |
|
|
$ |
45,949 |
|
Gross Profit Margin |
|
|
77 |
% |
|
|
71 |
% |
|
|
77 |
% |
|
|
71 |
% |
Gross Profit |
|
|
22,383 |
|
|
|
23,357 |
|
|
|
47,251 |
|
|
|
45,949 |
|
Amortization of intangible assets |
|
|
2,507 |
|
|
|
3,061 |
|
|
|
4,935 |
|
|
|
5,658 |
|
Adjusted Gross Profit |
|
$ |
24,890 |
|
|
$ |
26,418 |
|
|
$ |
52,186 |
|
|
$ |
51,607 |
|
Adjusted Gross Profit Margin |
|
|
85 |
% |
|
|
80 |
% |
|
|
85 |
% |
|
|
80 |
% |
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 |
|
Six Months Ended |
||||||||||||
(In thousands) |
|
2024 |
|
2023 |
|
2024 |
|
2023 |
||||||||
Net loss |
|
$ |
(12,764 |
) |
|
$ |
(30,973 |
) |
|
$ |
37,835 |
|
|
$ |
(50,246 |
) |
Provision from income taxes |
|
|
324 |
|
|
|
213 |
|
|
|
1,750 |
|
|
|
243 |
|
Depreciation and amortization |
|
|
5,226 |
|
|
|
6,297 |
|
|
|
10,643 |
|
|
|
12,044 |
|
Interest expense, net |
|
|
5,320 |
|
|
|
7,154 |
|
|
|
12,682 |
|
|
|
13,835 |
|
EBITDA |
|
|
(1,894 |
) |
|
|
(17,309 |
) |
|
|
62,910 |
|
|
|
(24,124 |
) |
Gain on sale of business (a) |
|
|
- |
|
|
|
- |
|
|
|
(71,599 |
) |
|
|
- |
|
Stock-based compensation |
|
|
3,529 |
|
|
|
5,482 |
|
|
|
9,704 |
|
|
|
11,988 |
|
Change in fair value of financial instruments (b) |
|
|
(854 |
) |
|
|
2,987 |
|
|
|
(327 |
) |
|
|
(11,693 |
) |
Other non-cash charges (c) |
|
|
31 |
|
|
|
58 |
|
|
|
76 |
|
|
|
5,931 |
|
Acquisition and disposal related costs (d) |
|
|
394 |
|
|
|
157 |
|
|
|
1,098 |
|
|
|
1,379 |
|
Employee severance costs (e) |
|
|
91 |
|
|
|
381 |
|
|
|
198 |
|
|
|
750 |
|
Non-capitalizable debt raising costs |
|
|
224 |
|
|
|
110 |
|
|
|
478 |
|
|
|
316 |
|
Business Combination with DSAC (f) |
|
|
- |
|
|
|
150 |
|
|
|
- |
|
|
|
334 |
|
Loss contingency (g) |
|
|
- |
|
|
|
3,722 |
|
|
|
- |
|
|
|
3,890 |
|
Costs incurred related to the Special Committee (h) |
|
|
253 |
|
|
|
- |
|
|
|
453 |
|
|
|
- |
|
Adjusted EBITDA |
|
$ |
1,774 |
|
|
$ |
(4,262 |
) |
|
$ |
2,991 |
|
|
$ |
(11,229 |
) |
Adjusted EBITDA Margin |
|
|
6.1 |
% |
|
|
(13.0 |
)% |
|
|
4.9 |
% |
|
|
(17.4 |
)% |
(a) |
Reflects the gain on disposal from the sale of Board.org on |
(b) |
Reflects the non-cash impact from the mark to market adjustments on our financial instruments. |
(c) |
Reflects the non-cash impact of the following: (i) charge of |
(d) |
In 2024 reflects the costs incurred related to the sale of Board.org, principally consisting of accounting, tax, and legal fees. In 2023 reflects the costs incurred to identify, consider, and complete business combination transactions consisting of advisory, legal, and other professional and consulting costs. |
(e) |
Severance costs associated with workforce changes related to business realignment actions. |
(f) |
Includes non-capitalizable transaction costs incurred within one year of the Business Combination with DSAC. |
(g) |
Reflects (i) |
(h) |
Reflects costs incurred related to the Special Committee. |
Key Performance Indicators
We 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 of our business and serve as meaningful measures of our ongoing 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 instructive 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 and 2023 Acquisitions are not included in our NRR for the three months ended
View source version on businesswire.com: https://www.businesswire.com/news/home/20240808256841/en/
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