FiscalNote(US:NOTE)2023-05-14 02:26Financial Data and Key Metrics Changes - Q1 revenue was $31.5 million, marking a growth of 21% year-over-year and in line with previous guidance [25][44] - Adjusted gross margins were 80% in Q1, reflecting the strength of the SaaS business model [5][30] - Adjusted EBITDA loss was approximately $7 million, with expectations to reach breakeven in Q3 and profitability in Q4 [5][49] Business Line Data and Key Metrics Changes - Subscription revenue, which constitutes 90% of total revenue, was $28.5 million, an increase of 25% year-over-year [38] - Annual recurring revenue (ARR) reached $119 million, representing a pro forma growth of 10% year-over-year [26][46] - Advisory and other revenue was $3.1 million, a slight decline of $200,000 year-over-year [44] Market Data and Key Metrics Changes - The regulatory environment is increasingly complex, with over 84,000 bills introduced in the U.S. legislative session [2] - New EU legislative acts have increased by 13% since 2020, indicating a growing regulatory landscape [28] - The company sees significant growth opportunities in the state and local government market, with approximately 90,000 local governments in the U.S. [31] Company Strategy and Development Direction - The company aims to build a category creator that innovates to turn insights into actions and mitigate risks [3] - Focus on partnerships and M&A to drive growth and enhance product offerings [35][50] - The company is positioned to expand its European market presence, which currently accounts for only 13% of revenue [90] Management's Comments on Operating Environment and Future Outlook - Management highlighted the impact of geopolitical and macroeconomic risks on regulatory changes, which create uncertainty for organizations [18] - The company is confident in achieving adjusted EBITDA profitability in Q4, driven by strong revenue growth and cost management [49][53] - Management emphasized the importance of AI and data in navigating the complex regulatory landscape [37][91] Other Important Information - The company has a cash position of $47.5 million and an additional $94 million of debt capacity [15][47] - Net revenue retention was 96% for the quarter, with a trailing 12-month NRR of 97% [16][39] - The company is focused on operational efficiencies and cost management to support its growth initiatives [48] Q&A Session Summary Question: Expected positive EBITDA in Q4 - Management confirmed the expectation of positive EBITDA of $3 million to $5 million in Q4 [58][59] Question: Strategic account strategy and pipeline - Management noted a tremendous opportunity in strategic accounts and emphasized the focus on leveraging the full portfolio of products [59] Question: Changes in sales cycles or deal sizes - Management indicated no significant changes in sales cycles or deal sizes compared to previous quarters [61][62] Question: Asymmetric upside potential in federal space - Management acknowledged ongoing efforts in the federal space but did not forecast specific upside in the near term [65] Question: Cost savings initiatives and headcount - Management highlighted that headcount accounts for a majority of operating expenses and will be a primary source of efficiency [76]