What's Happening
Title: Why FiscalNote's Shares Skyrocketed anImpressive 45.1% This Week
FiscalNote (NOTE), the software-as-a-service (SaaS) provider, experienced a significant surge this week, with its stock price climbing 45.1% as of Friday at 2:50 p.m. EDT, according to S&P Global Market Intelligence. The stock saw its highest point at a 55% increase during this period. As of Friday, the penny stock was trading at approximately $2.22 per share, marking a decrease of roughly 65% year-to-date.
The overall market also displayed positive trends, with the S&P 500 gaining 2.9%, the Dow Jones Industrial Average climbing 2.7%, and the Nasdaq Composite increasing by 2.9% for the week.
So What
Serving around 5,000 organizations worldwide, FiscalNote offers clients the ability to analyze government policy, regulatory issues, legal matters, and legislation. This allows them to manage risk and gain market intelligence.
The company has enjoyed a successful fortnight. Last week, FiscalNote was chosen by OpenAI, the creator of ChatGPT, as a partner, and the only one in its field. In its role as partner, FiscalNote will allow OpenAI to utilize its data and content on the ChatGPT platform. Following this news, the stock surged by nearly 90%—reaching $2.56 per share on March 23—before settling down a bit.
This week, FiscalNote released its fourth-quarter and year-end earnings. These figures contributed to the 45% jump in the share price. FiscalNote's Q4 revenue grew by 29% year-over-year, reaching $31.4 million. The company reported a net loss of approximately $42 million, an increase from about $21 million the year before. For the full year, revenue saw a 37% increase to $114 million, while the net loss was $218 million, more than double the previous year's loss of $109 million. The adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) loss for the full year was $24.4 million.
CEO Tim Hwang celebrated the company's accomplishments, stating:
Last year was transformative 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's strategic focus in the past year included several acquisitions and partnerships. Early this year, FiscalNote acquired Dragonfly Eye, a U.K.-based provider of geopolitical data and security intelligence. FiscalNote also expects these recent moves to boost revenue and contribute to the company's progress towards profitability.
Looking forward, FiscalNote has set revenue growth expectations of 20% to 24% for fiscal 2023, along with a net adjusted EBITDA loss of $8 million to $6 million. This would represent a 71% year-over-year improvement, with the expectation of seeing positive adjusted EBITDA growth in the fourth quarter of 2023.
This stock presents an intriguing opportunity for investors. As a strong and growing player in a critical niche with large institutional clients and a low overhead business model, FiscalNote relies on predictable subscription-based revenue. Although turbulent at present, it's advisable to keep a close eye on FiscalNote as it moves towards profitability.
In light of FiscalNote's impressive earnings report and strategic acquisitions, some investors may be considering investing in the company's stock, given its potential for profitability in the future. To making informed investment decisions, it's essential to closely analyze the company's financial data and market trends in the field of finance.
Given that FiscalNote has been incurring significant losses but showing signs of improvement, prospective investors should carefully consider the risks and rewards associated with investing in this stock, and possibly consult with a financial advisor for personalized guidance.