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What changed in FiscalNote Holdings, Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of FiscalNote Holdings, Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+160 added−142 removedSource: 10-K (2024-03-15) vs 10-K (2023-03-28)

Top changes in FiscalNote Holdings, Inc.'s 2023 10-K

160 paragraphs added · 142 removed · 113 edited across 4 sections

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

2 edited+1 added−1 removed3 unchanged
Biggest changeIn addition, our ability to pay dividends may be limited by covenants of any existing and future outstanding indebtedness we or our subsidiaries incur. Unregistered Sales of Equity Securities. None. Issuer Purchases of Equity Securities.
Biggest changeIn addition, our ability to pay dividends may be limited by covenants of any existing and future outstanding indebtedness we or our subsidiaries incur. Unregistered Sales of Equity Securities. None. Issuer Purchases of Equity Securities. The Company had no transactions regarding purchases of common stock during the quarter ended December 31, 2023.
Holders As of March 13, 2023, there were approximately 451 holders of record of our Class A Common Stock, which amount does not include participants of The Depository Trust Company or beneficial owners holding shares of Class A Common Stock or Public Warrants through nominee names, there were two holders of record of our Class B Common Stock, and there were three holders of record of our Private Warrants.
Holders As of March 1, 2024, there were approximately 347 holders of record of our Class A Common Stock, which amount does not include participants of The Depository Trust Company or beneficial owners holding shares of Class A Common Stock or Public Warrants through nominee names, there were two holders of record of our Class B Common Stock, and there were three holders of record of our Private Warrants.
Removed
The following table provides a summary of the Company’s purchases of its common stock during the fourth quarter of the fiscal year ended December 31, 2022: Period Total number of shares purchased Average price paid per share Total number of shares purchased as part of publicly announced plans or programs Approximate dollar value of shares yet to be purchased under the plans or programs 10/1/2022 - 10/31/2022 559 $ 5.00 - - 11/1/2022 - 11/30/2022 338,304 $ 5.94 - - 12/1/2022 - 12/31/2022 65,709 $ 6.30 - - Total 404,572 $ 6.00 - - Item 6.
Added
The Company does not have any publicly announced plan or programs for share purchases. Item 6. (Reserved) 40

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

1 edited+0 added−0 removed0 unchanged
Biggest changeItem 6. Reserved 38 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 39 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 57 Item 8. Financial Statements and Supplementary Data 58 Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure 108
Biggest changeItem 6. Reserved 40 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 41 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 62 Item 8. Financial Statements and Supplementary Data 63 Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure 107

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

106 edited+45 added−28 removed75 unchanged
Biggest changeThese charges were partially offset by a non-cash gain of approximately $16.1 million related to the mark-to-market of the public and private warrants liability the Company is required to fair value at each reporting date and $7.7 million non-cash gain from the forgiveness of the Company's PPP Loan. 45 The Year Ended December 31, 2022 Compared to the Year Ended December 31, 2021 The following table presents our results of operations for the periods indicated: Year Ended December 31, Change (In thousands) 2022 2021 $ % Revenues: Subscription $ 100,522 $ 74,002 $ 26,520 36 % Advisory, advertising, and other 13,243 8,910 4,333 49 % Total revenues 113,765 82,912 30,853 37 % Operating expenses: (1) Cost of revenues 31,937 21,802 10,135 46 % Research and development 20,736 24,017 (3,281 ) (14 )% Sales and marketing 42,678 29,676 13,002 44 % Editorial 15,956 14,634 1,322 9 % General and administrative 77,801 32,491 45,310 139 % Amortization of intangible assets 10,451 9,359 1,092 12 % Loss on sublease - 1,817 (1,817 ) (100 )% Transaction costs, net 2,395 4,698 (2,303 ) (49 )% Total operating expenses 201,954 138,494 63,460 46 % Operating loss (88,189 ) (55,582 ) (32,607 ) 59 % Interest expense, net 95,741 64,800 30,941 48 % Change in fair value of warrant and derivative liabilities (12,747 ) (3,405 ) (9,342 ) 274 % Gain on PPP loan upon extinguishment (7,667 ) - (7,667 ) NM% Loss on debt extinguishment, net 45,250 - 45,250 NM% Loss contingency 11,700 - 11,700 NM% Other expense, net 1,045 333 712 214 % Net loss before income taxes (221,511 ) (117,310 ) (104,201 ) 89 % Benefit from income taxes (3,254 ) (7,889 ) 4,635 (59 )% Net loss $ (218,257 ) $ (109,421 ) $ (108,836 ) 99 % (1) Amounts include stock-based compensation expenses, as follows: Year Ended December 31, Change 2022 2021 $ % Cost of revenues $ 81 $ 16 $ 65 406 % Research and development 1,007 277 730 264 % Sales and marketing 762 147 615 418 % Editorial 603 89 514 578 % General and administrative 35,594 481 35,113 NM% Revenue: Subscription Revenue Subscription revenue of $100.5 million for the year ended December 31, 2022 increased $26.5 million, or 36%, from $74.0 million for the year ended December 31, 2021.
Biggest changeThese charges were partially offset by a non-cash gain of approximately $16.1 million related to the mark-to-market of the public and private warrants liability the Company is required to fair value at each reporting date and $7.7 million non-cash gain from the forgiveness of the Company's PPP Loan. 48 The Year Ended December 31, 2023 Compared to the Year Ended December 31, 2022 The following table presents our results of operations for the periods indicated: Year Ended December 31, Change (In thousands) 2023 2022 $ % Revenues: Subscription $ 119,082 $ 100,522 $ 18,560 18 % Advisory, advertising, and other 13,563 13,243 320 2 % Total revenues 132,645 113,765 18,880 17 % Operating expenses: (1) Cost of revenues 40,251 31,937 8,314 26 % Research and development 18,186 20,736 (2,550 ) (12 )% Sales and marketing 45,722 42,678 3,044 7 % Editorial 17,869 15,956 1,913 12 % General and administrative 65,550 77,801 (12,251 ) (16 )% Amortization of intangible assets 11,509 10,451 1,058 10 % Impairment of goodwill and intangible assets 32,064 - 32,064 NM% Transaction (gains) costs, net (767 ) 2,395 (3,162 ) (132 )% Total operating expenses 230,384 201,954 28,430 14 % Operating loss (97,739 ) (88,189 ) (9,550 ) 11 % Interest expense, net 29,940 95,741 (65,801 ) (69 )% Change in fair value of financial instruments (15,983 ) (12,747 ) (3,236 ) 25 % Gain on PPP loan upon extinguishment - (7,667 ) 7,667 NM% Loss on debt extinguishment, net - 45,250 (45,250 ) NM% Loss on settlement 3,474 11,700 (8,226 ) (70 )% Other expense, net 68 1,045 (977 ) (93 )% Net loss before income taxes (115,238 ) (221,511 ) 106,273 (48 )% Provision (benefit) from income taxes 223 (3,254 ) 3,477 (107 )% Net loss $ (115,461 ) $ (218,257 ) $ 102,796 (47 )% (1) Amounts include stock-based compensation expenses, as follows: Year Ended December 31, Change 2023 2022 $ % Cost of revenues $ 283 $ 81 $ 202 249 % Research and development 1,384 1,007 377 37 % Sales and marketing 2,057 762 1,295 170 % Editorial 400 603 (203 ) (34 )% General and administrative 22,933 35,594 (12,661 ) (36 )% Revenue: Subscription Revenue Subscription revenue of $119.1 million for the year ended December 31, 2023 increased $18.6 million, or 18%, from $100.5 million for the year ended December 31, 2022. 49 Change for the Year Ended December 31, 2023 vs December 31, 2022 (In thousands) $ % Subscription Revenue change driver: Increase from 2023 Acquisitions $ 6,694 100 % Increase from 2022 Acquisitions 1,229 171 % Impact of 2021 Acquisitions deferred revenue adjustment 1,896 100 % Decrease from discontinued products (480 ) (43 )% Increase from organic business 9,221 9 % Subscription Revenues, net (total change) $ 18,560 18 % During 2021 the Company acquired 10 businesses (including FactSquared that was acquired on December 31, 2020, respectively).
Business Combination On Closing Date, we consummated the transactions contemplated by the Merger Agreement, by and among Old FiscalNote, DSAC, and Merger Sub. Pursuant to these transactions, Merger Sub merged with and into Old FiscalNote, with Old FiscalNote becoming a wholly owned subsidiary of DSAC.
Business Combination On the Closing Date, we consummated the transactions contemplated by the Merger Agreement, by and among Old FiscalNote, DSAC, and Merger Sub. Pursuant to these transactions, Merger Sub merged with and into Old FiscalNote, with Old FiscalNote becoming a wholly owned subsidiary of DSAC.
Net cash provided by financing activities during the year ended December 31, 2022 primarily consisted of $325.0 million in gross proceeds from the Business Combination (inclusive of (a) the net receipts from $150.0 million proceeds from the issuance of our New Senior Term Loan, (b) $61.0 million from DSAC’s trust, and (c) $114.0 million from the backstop agreement with the sponsor of DSAC), and $4.5 million cash proceeds from the exercise of public warrants, $0.5 million from the exercise of stock options, offset by a total of $48.7 million in transaction costs related to the Business Combination and New Senior Term Loan, $189.0 million in principal repayments of First Out Term Loan, Last Out Term Loan, Fireside Promissory Notes, 8090 FV Subordinated Promissory Note, and the New GPO Note.
Net cash provided by financing activities during the year ended December 31, 2022 primarily consisted of $325.0 million in gross proceeds from the Business Combination (inclusive of (a) the net receipts from $150.0 million proceeds from the issuance of our Senior Term Loan, (b) $61.0 million from DSAC’s trust, and (c) $114.0 million from the backstop agreement with the sponsor of DSAC), and $4.5 million cash proceeds from the exercise of public warrants, $0.5 million from the exercise of stock options, offset by a total of $48.7 million in transaction costs related to the Business Combination and Senior Term Loan, $189.0 million in principal repayments of First Out Term Loan, Last Out Term Loan, Fireside Promissory Notes, 8090 FV Subordinated Promissory Note, and the New GPO Note.
(c) Reflects the non-cash impact of the following for fiscal year 2022: (i) gain of $1,780 from the change in fair value related to the contingent consideration and contingent compensation related to our 2021 and 2022 Acquisitions, (ii) gain of $7,667 related to the partial forgiveness of our PPP Loan during the first quarter of 2022, and (iii) $378 impairment charge recognized in the first quarter of 2022 related to the abandonment of one of our leases upon adoption of ASC 842 on January 1, 2022, respectively.
Reflects the non-cash impact of the following for fiscal year 2022: (i) gain of $1,780 from the change in fair value related to the contingent consideration and contingent compensation related to our 2021 and 2022 Acquisitions, (ii) gain of $7,667 related to the partial forgiveness of our PPP Loan during the first quarter of 2022, and (iii) $378 impairment charge recognized in the first quarter of 2022 related to the abandonment of one of our leases upon adoption of ASC 842 on January 1, 2022, respectively.
The most significant change in our reported financial position and results was an increase in net cash of $65.6 million from gross cash proceeds of $325.0 million, including $114.0 million from the backstop agreement with the sponsor of DSAC, $61.0 million from DSAC’s trust account from its initial public offering, and $150.0 million from the New Senior Term Loan (as defined below).
The most significant change in our reported financial position and results was an increase in net cash of $65.6 million from gross cash proceeds of $325.0 million, including $114.0 million from the backstop agreement with the sponsor of DSAC, $61.0 million from DSAC’s trust account from its initial public offering, and $150.0 million from the Senior Term Loan (as defined below).
If the fair value of the reporting unit is less than its carrying value, that difference represents an impairment. Determining the useful life of an intangible asset also requires judgment. Acquired intangible assets (customer relationships, patents and technologies, and tradenames) are expected to have determinable useful lives. Finite-lived intangible assets are amortized to expense over their estimated lives.
If the fair value of the reporting unit is less than its carrying value, that difference represents an impairment. 59 Determining the useful life of an intangible asset also requires judgment. Acquired intangible assets (customer relationships, patents and technologies, and tradenames) are expected to have determinable useful lives. Finite-lived intangible assets are amortized to expense over their estimated lives.
The New Senior Term Loan contains customary negative covenants related to borrowing, events of default and covenants, including certain non-financial covenants and covenants limiting the Company’s ability to dispose of assets, undergo a change in control, merge with or acquire stock, and make investments, in each case subject to certain exceptions.
The Senior Term Loan contains customary negative covenants related to borrowing, events of default and covenants, including certain non-financial covenants and covenants limiting the Company’s ability to dispose of assets, undergo a change in control, merge with or acquire stock, and make investments, in each case subject to certain exceptions.
The New Senior Credit Facility will mature on July 29, 2027. Beginning on August 15, 2025, 50% of the outstanding principal amount of the Senior Term Loan must be repaid in even amounts on a monthly basis over the remaining 24 months, with the final balance due on July 15, 2027.
The Senior Credit Facility will mature on July 29, 2027. Beginning on August 15, 2025, 50% of the outstanding principal amount of the Senior Term Loan must be repaid in even amounts on a monthly basis over the remaining 24 months, with the final balance due on July 15, 2027.
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.
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 43 occur due to timing of the revenue bookings during the period, cancellations, upgrades, or downgrades and pending renewals.
Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, include those discussed below, in the annual consolidated financial statements and related notes included in Part II, Item 8 of this Form 10-K, and in the sections of this report titled "Cautionary Note Regarding Forward-Looking Statements" and "Risk Factors." Unless the context otherwise requires, references in this Annual Report on Form 10-K to the “Company,” “FiscalNote,” “we,” “us,” or “our” refer to the business of Old FiscalNote, which became the business of New FiscalNote and its subsidiaries following the Closing.
Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those discussed below, in the annual consolidated financial statements and related notes included in Part II, Item 8 of this Form 10-K, and in the sections of this report titled "Cautionary Note Regarding Forward-Looking Statements" and "Risk Factors." Unless the context otherwise requires, references in this Annual Report on Form 10-K to the “Company,” “FiscalNote,” “we,” “us,” or “our” refer to the business of Old FiscalNote, which became the business of New FiscalNote and its subsidiaries following the Closing.
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.
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 45 financial measures, which reduces their comparability.
Critical estimates in valuing certain of the intangible assets and goodwill we have acquired are: • future expected cash flows from subscription and content contracts, other customer contracts and acquired developed technologies, and trade names; • historical and expected customer attrition rates and anticipated growth in revenue from acquired customers; • assumptions about the period of time the acquired trade name will continue to be used in our offerings; 54 • discount rates; • uncertain tax positions and tax-related valuation allowances assumed; and • fair value of earnout consideration.
Critical estimates in valuing certain of the intangible assets and goodwill we have acquired are: • future expected cash flows from subscription and content contracts, other customer contracts and acquired developed technologies, and trade names; • historical and expected customer attrition rates and anticipated growth in revenue from acquired customers; • assumptions about the period of time the acquired trade name will continue to be used in our offerings; • discount rates; • uncertain tax positions and tax-related valuation allowances assumed; • fair value of other non-cash consideration; and • fair value of earnout consideration.
Such gross proceeds were offset by $45.2 million transaction costs, which principally consisted of advisory, legal and other professional fees, and were recorded in Additional Paid-in Capital, net of proceeds from the DSAC trust and $3.5 million of debt issuance costs paid out of the proceeds of the New Senior Term Loan on the Closing Date, of which $2.8 was capitalized and $0.7 million included in the loss on debt extinguishment. 39 Cumulative debt repayments, inclusive of accrued but unpaid interest, of $210.7 million were paid in conjunction with the close, which consisted of a $75.3 million repayment of the First Out Term Loan, $61.7 million repayment of the Last Out Term Loan, a $50.0 million payment used to retire the non-converting portion of the Senior Secured Subordinated Promissory Note, a $16.3 million repayment of the 8090 FV Subordinated Promissory Note, and $7.4 million repayment of the 2021 Seller Notes.
Such gross proceeds were offset by $45.2 million transaction costs, which principally consisted of advisory, legal and other professional fees, and were recorded in Additional Paid-in Capital, net of proceeds from the DSAC trust and $3.5 million of debt issuance costs paid out of the proceeds of the Senior Term Loan on the Closing Date, of which $2.8 million was capitalized and $0.7 million included in the loss on debt extinguishment. 41 Cumulative debt repayments, inclusive of accrued but unpaid interest, of $210.7 million were paid in conjunction with the close, which consisted of a $75.3 million repayment of the First Out Term Loan, $61.7 million repayment of the Last Out Term Loan, a $50.0 million payment used to retire the non-converting portion of the Senior Secured Subordinated Promissory Note, a $16.3 million repayment of the 8090 FV Subordinated Promissory Note, and $7.4 million repayment of the 2021 Seller Notes.
In instances where SSP is not directly observable, such as when our company does not sell the services separately, our company determines the SSP using available information, including market conditions and other observable inputs.
In instances where SSP is not 58 directly observable, such as when our company does not sell the services separately, our company determines the SSP using available information, including market conditions and other observable inputs.
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.
Where applicable, 44 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.
Overview FiscalNote is a leading technology provider of global policy and market intelligence. It delivers critical, actionable legal and policy insights in a rapidly evolving political, regulatory and macroeconomic environment. By combining artifical intelligence (AI) technology, other technologies with analytics, workflow tools, and expert peer insights, FiscalNote empowers customers to manage policy, address regulatory developments, and mitigate global risk.
Overview FiscalNote is a leading technology provider of global policy and market intelligence. It delivers critical, actionable legal and policy insights in a rapidly evolving political, regulatory and macroeconomic environment. By combining artificial intelligence (AI) technology, other technologies with analytics, workflow tools, and expert peer insights, FiscalNote empowers customers to manage policy, address regulatory developments, and mitigate global risk.
The New Senior Term Loan is senior to all other debt and has a first priority lien on substantially all of the Company’s assets.
The Senior Term Loan is senior to all other debt and has a first priority lien on substantially all of the Company’s assets.
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. Our calculation of NRR may differ from similarly titled metrics presented by other companies.
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, the timing of renewals, and our ability to retain our customers. Our calculation of NRR may differ from similarly titled metrics presented by other companies.
Net cash used in investing activities in the year ended December 31, 2022 primarily consisted of cash paid of $10.1 million of software development costs and $1.2 million of capital expenditures, offset by $1.1 million cash acquired from the acquisition of Aicel, net of cash paid for the assets acquisition of DT-Global.
Net cash used in investing activities in the year ended December 31, 2022 primarily consisted of cash paid of $10.1 million of software development costs and $1.3 million of capital expenditures, offset by $1.1 million cash acquired from the acquisition of Aicel, net of cash paid for the assets acquisition of DT-Global.
The New Senior Term Loan provides for an uncommitted incremental loan facility totaling $100.0 million available upon notice if the Company meets certain financial growth criteria and other customary requirements (the “New Incremental Term Facility”) (collectively the “New Senior Credit Facility”).
The Senior Term Loan provides for an uncommitted incremental loan facility totaling $100.0 million available upon notice if the Company meets certain financial growth criteria and other customary requirements (the “New Incremental Term Facility”) (collectively the “Senior Credit Facility”).
We perform an incremental borrowing rate analysis on a quarterly basis, or upon execution of any individually material agreement, to ensure that the rates being applied to newly acquired leases are still accurate. 56
We perform an incremental borrowing rate analysis on a quarterly basis, or upon execution of any individually material agreement, to ensure that the rates being applied to newly acquired leases are still accurate. 61
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.
Customers from acquisitions are not included in NRR until they have been part of our consolidated results for 12 months. Accordingly, the 2023 Acquisitions are not included in our NRR for the year ended December 31, 2023 and the 2022 Acquisitions are not included in our NRR for the year ended December 31, 2022.
Cash used in operating activities was driven by a net loss of $218.3 million, which is adjusted for the exclusion of non-cash expenses and other adjustments totaling $162.7 million, primarily including non-cash interest expense of $52.0 million, paid in kind interest of $11.0, loss on debt extinguishment of $45.3 million, stock-based compensation expense of $38.0 million, a gain due to the change in fair value of warrant liabilities of $15.8 million, loss contingency of $11.7 million, and amortization and depreciation of $23.6 million, and the effect of changes in operating assets and liabilities that resulted in cash outflows of $17.1 million.
Cash used in operating activities in the year ended December 31, 2022 was driven by a net loss of $218.3 million, which is adjusted for the exclusion of non-cash expenses and other adjustments totaling $162.7 million, primarily including non-cash interest expense of $52.0 million, paid in kind interest of $11.0, loss on debt extinguishment of $45.3 million, stock-based compensation expense of $38.0 million, a gain due to the change in fair value of warrant liabilities of $15.8 million, loss contingency of $11.7 million, and amortization and depreciation of $23.6 million, and the effect of changes in operating assets and liabilities that resulted in cash outflows of $17.1 million.
Subscription revenues account for approximately 90% of our total revenues for the years ended December 31, 2022 and 2021. 43 Subscription revenue Subscription revenues consist of revenue earned from subscription-based arrangements that provide customers the right to use the Company’s software and products in a cloud-based infrastructure.
Subscription revenues account for approximately 90% of our total revenues for the years ended December 31, 2023 and 2022. Subscription revenue Subscription revenues consist of revenue earned from subscription-based arrangements that provide customers the right to use the Company’s software and products in a cloud-based infrastructure.
In connection with the Business Combination, we recognized (a) $28.9 million of incremental stock-based compensation charges that consisted of $5.0 million related to certain awards that vested as a result of the Business Combination, $6.2 million related to awards issued to our CEO, COO, and CFO pursuant to their respective employment agreements, and $17.7 million related to the Earnout Awards that may be issued to shareholders and equity award holders that for accounting purposes are treated as compensation awards (See Note 15, Earnings (Loss) Per Share, of our consolidated financial statements), (b) $45.3 million of loss on debt extinguishment as a result of repayment of certain of our outstanding debt, as well as the conversion of our convertible debt as part of the Business Combination, and (c) $32.1 million interest charge related to the derecognition of the beneficial conversion feature associated with our converted debt.
In connection with the Business Combination, we recognized (a) $28.9 million of incremental stock-based compensation charges that consisted of $5.0 million related to certain awards that vested as a result of the Business Combination, $6.2 million related to awards issued to our CEO, COO, and CFO pursuant to their respective employment agreements, and $17.7 million related to the Earnout Awards that may be issued to shareholders and equity award holders that for accounting purposes are treated as compensation awards (See Note 15, Earnings (Loss) Per Share, in the Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K), (b) $45.3 million of loss on debt extinguishment as a result of repayment of certain of our outstanding debt, as well as the conversion of our convertible debt as part of the Business Combination, and (c) $32.1 million interest charge related to the derecognition of the beneficial conversion feature associated with our converted debt.
The annual interest of the New Senior Term Loan consists of two components: a cash interest component of (a) the greater of (i) Prime Rate plus 5.0% per annum and (ii) 9.0% payable monthly in cash, and (b) interest payable in kind component 51 of 1.00% per annum, payable in kind monthly.
The annual interest of the Senior Term Loan consists of two components: a cash interest component of (a) the greater of (i) Prime Rate 54 plus 5.0% per annum and (ii) 9.0% payable monthly in cash, and (b) interest payable in kind component of 1.00% per annum, payable in kind monthly.
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.
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 believe these measures are useful for investors for the same reasons. Investors should be aware that these measures are not a substitute for GAAP financial measures or disclosures. Where applicable, we provide reconciliations of these non-GAAP measures to the corresponding most closely related GAAP measure.
Investors should be aware that these measures are not a substitute for GAAP financial measures or disclosures. Where applicable, we provide reconciliations of these non-GAAP measures to the corresponding most closely related GAAP measure.
Results of Operations Discussion of Significant Items Affecting the Consolidated Results for the Years ended December 31, 2022 and 2021 Year Ended December 31, 2022 During the year ended December 31, 2022 the Company recognized several non-cash items associated with the Company's public listing on July 29, 2022 including, a non-cash charge of $45.3 million from the loss on extinguishment of debt, a non-cash charge of $32.1 million recognized as interest expense related to the derecognition of beneficial conversion features embedded within the convertible notes that went into equity as part of the Company's public listing, and $28.9 million of non-cash charges related to the accounting treatment of stock based compensation related to the Company's transition to a public listing.
Year Ended December 31, 2022 During the year ended December 31, 2022 the Company recognized several non-cash items associated with the Company's public listing on July 29, 2022 including, a non-cash charge of $45.3 million from the loss on extinguishment of debt, a non-cash charge of $32.1 million recognized as interest expense related to the derecognition of beneficial conversion features embedded within the convertible notes that went into equity as part of the Company's public listing, and $28.9 million of non-cash charges related to the accounting treatment of stock based compensation related to the Company's transition to a public listing.
Past acquisitions have enabled us to deliver innovative solutions in new categories, such as global risk analysis and environmental, social and governance (“ESG”) automation software, analytics and integration, and new data sets to enhance the functionality of our existing products. Strategic acquisitions will remain a core component of our strategy in the future.
Past acquisitions have enabled us to deliver innovative solutions in new categories, such as global risk analysis, analytics and integration, and new data sets to enhance the functionality of our existing products. Strategic acquisitions will remain a core component of our strategy in the future.
ARR should be viewed independently of revenue as it is an operating metric and is not intended to be a 41 replacement or forecast of revenue. Our calculation of ARR may differ from similarly titled metrics presented by other companies. Our ARR at December 31, 2022 and December 31, 2021, was $113 million and $97 million, respectively.
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. Our ARR at December 31, 2023 and December 31, 2022 was $126.1 million and $113.3 million, respectively.
We are focused on several key growth levers, including cross-selling and upselling opportunities at existing clients, expanding our client base with a focus on enterprise and government customers, expansion into adjacent markets and deepening our offerings for regulated industries or sectors, and continuing to execute on our acquisition strategy (including our recently announced acquisition of Dragonfly (as defined below)).
We continue to invest for future growth. We are focused on several key growth levers, including cross-selling and upselling opportunities at existing clients, expanding our client base with a focus on enterprise and government customers, expansion into adjacent markets and deepening our offerings for regulated industries or sectors, and continuing to execute on our acquisition strategy.
Upon the occurrence of an event of default, in addition to the lenders being able to declare amounts outstanding under the New Senior Term Loan due and payable the lenders can elect to increase the interest rate by 5.0% per annum. See also Note 9, "Debt", to the consolidated financial statements included elsewhere herein.
Upon the occurrence of an event of default, in addition to the lenders being able to declare amounts outstanding under the Senior Term Loan due and payable the lenders can elect to increase the interest rate by 5.0% per annum. See also Note 9, "Debt", in the Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K.
The Company had a negative working capital balance of $37.3 million (excluding cash) at December 31, 2022 and had an accumulated deficit of $700.7 million and $481.4 million as of December 31, 2022 and December 31, 2021, and has incurred net losses of $218.3 million and $109.4 million for the years ended December 31, 2022 and 2021, respectively.
The Company had a negative working capital balance of $40.3 million (excluding cash) at December 31, 2023 and had an accumulated deficit of $816.4 million and $700.7 million as of December 31, 2023 and December 31, 2022, and has incurred net losses of $115.5 million and $218.3 million for the years ended December 31, 2023 and 2022, respectively.
Run-Rate Revenue of the 2022 and 2021 Acquisitions was approximately $47 million and $38 million as of December 31, 2022 and 2021, respectively, including pre-acquisition Run-Rate Revenue performance of the 2022 and 2021 Acquisitions on the basis reported to FiscalNote in connection with such company’s acquisition.
Run-Rate Revenue of the 2022 and 2023 Acquisitions was approximately $12.3 million and $11.0 million as of December 31, 2023 and 2022, respectively, including pre-acquisition Run-Rate Revenue performance of the Acquisitions on the basis reported to FiscalNote in connection with such company’s acquisition.
We believe that of our significant accounting policies, which are described in Note 1, Summary of Business and Significant Accounting Policies to our consolidated financial statements, the following accounting policies and specific estimates involve a greater degree of judgment and complexity.
We believe that of our significant accounting policies, which are described in Note 1, Summary of Business and Significant Accounting Policies in the Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K, the following accounting policies and specific estimates involve a greater degree of judgment and complexity.
Financing activities Net cash provided by financing activities in the year ended December 31, 2022 was $111.5 million, compared to $74.3 million for the year ended December 31, 2021.
Financing activities Net cash provided by financing activities in the year ended December 31, 2023 was $12.1 million, compared to $111.5 million for the year ended December 31, 2022.
The increase of $10.1 million, or 46%, was primarily attributable to $5.2 million of increased costs resulting from acquisitions of which $4.1 million related to the growth in our business and $1.1 million represents an increase in amortization expense related to capitalized software development costs and developed technology.
The increase of $8.4 million, or 26%, was primarily attributable to $2.5 million of increased costs resulting from 2023 Acquisition of which $1.9 million related to the growth in our business and $0.6 million represents an increase in amortization expense related to capitalized software development costs and developed technology.
Research and development Research and development expenses include the costs of compensation, including bonuses, stock compensation, benefits and other expenses for employees associated with the creation and testing of the products we offer, related software subscriptions, consulting and contractor fees and allocated overhead.
Research and development Research and development expenses include the costs of compensation, including bonuses, stock compensation, benefits and other expenses for employees associated with the creation and testing of the products we offer, related software subscriptions, consulting and contractor fees and allocated overhead. 46 Sales and marketing Sales and marketing expenses consist primarily of salaries and related expenses, including bonuses, stock compensation, benefits and other expenses for our sales and marketing staff, including commissions, related software subscriptions, consulting fees, marketing programs and allocated overhead.
Research and development Research and development expense was $20.7 million for the year ended December 31, 2022 as compared to $24.0 million for the year ended December 31, 2021.
Research and development Research and development expense was $18.2 million for the year ended December 31, 2023 as compared to $20.7 million for the year ended December 31, 2022.
General and administrative General and administrative expense was $77.8 million for the year ended December 31, 2022 as compared to $32.5 million for the year ended December 31, 2021.
General and administrative General and administrative expense was $65.6 million for the year ended December 31, 2023 as compared to $77.8 million for the year ended December 31, 2022.
Transaction costs, net Transaction costs were $2.4 million for the year ended December 31, 2022, as compared to transaction costs of $4.7 million for the year ended December 31, 2021.
Transaction costs, net Transaction benefits were $0.8 million for the year ended December 31, 2023, as compared to transaction costs of $2.4 million for the year ended December 31, 2022.
Interest expense, net Interest expense was $95.7 million for the year ended December 31, 2022 as compared to $64.8 million for the year ended December 31, 2021.
Interest expense, net Interest expense was $29.9 million for the year ended December 31, 2023 as compared to $95.7 million for the year ended December 31, 2022.
Further, changes in operating plans or adverse changes in the business or in the macroeconomic environment in the future could reduce the underlying cash flows used to estimate fair values and could result in a decline in fair value that would trigger future impairment charges of our reporting units. 55 See Note 8, “Goodwill” to the Consolidated Financial Statements for additional discussion on goodwill.
Further, changes in operating plans or adverse changes in the business or in the macroeconomic environment in the future could reduce the underlying cash flows used to estimate fair values and could result in a decline in fair value that would trigger future impairment charges of our reporting units.
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. 42 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.
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.
Cost of revenues Cost of revenues was $31.9 million for the year ended December 31, 2022, as compared to $21.8 million for the year ended December 31, 2021.
Cost of revenues Cost of revenues was $40.3 million for the year ended December 31, 2023, as compared to $31.9 million for the year ended December 31, 2022.
Our ARR at December 31, 2022 and 2021, excluding 2022 and 2021 Acquisitions, was $73 million and $66 million, respectively. ARR of the Acquisitions, was $40 million and $31 million as of December 31, 2022 and 2021, respectively, including pre-acquisition ARR performance of the 2022 and 2021 Acquisitions on the basis reported to FiscalNote in connection with such company’s acquisition.
Our ARR at December 31, 2023 and 2022, excluding the 2023 and 2022 Acquisitions, was $115.8 million and $110.2 million, respectively. ARR of the 2022 and 2023 Acquisitions was $10.3 million and $9.2 million as of December 31, 2023 and 2022, respectively, including pre-acquisition ARR performance on the basis reported to FiscalNote in connection with such company’s acquisition.
The increase of $45.3 million, or 139%, was primarily attributable to $34.7 million of non-cash stock based compensation expense consisting of (a) $17.7 million associated with the earnout shares issued to employees who held equity ownership in Old FiscalNote through ownership of common stock, vested options, or unvested options on the closing date of the Business Combination (see Note 11, Earnout Shares and RSUs in our consolidated financial statements), (b) $7.0 million associated with the issuance of stock options and RSUs to our CEO, COO, and CFO pursuant to their employment agreements with New FiscalNote, and (c) $10.0 million associated with certain stock options which vested due to the closing of the Business Combination.
The decrease of $12.3 million, or 16%, was primarily attributable to a $16.1 million decrease in non-cash stock based compensation expense recognized in 2022 from the Business Combination consisting of (a) $17.7 million associated with the earnout shares issued to employees who held equity ownership in Old FiscalNote through ownership of common stock, vested options, or unvested options on the closing date of the Business Combination (see Note 11, Earnout Shares and RSUs in the Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K), (b) $7.0 million associated with the issuance of stock options and RSUs to our CEO, COO, and CFO pursuant to their employment agreements with New FiscalNote, and (c) $10.0 million associated with certain stock options which vested due to the closing of the Business Combination combined with a reduction in salary and benefit costs of $2.6 million and $0.4 million of non-cash lease asset impairment charge recognized in 2022.
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: Years Ended December 31, (In thousands) 2022 2021 Subscription revenue $ 100,522 $ 74,002 Deferred revenue adjustment 1,896 2,758 Adjusted subscription revenue 102,418 76,760 Advisory, advertising, and other revenue 13,243 8,910 Adjusted Revenues $ 115,661 $ 85,670 49 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: Years Ended December 31, (In thousands) 2022 2021 Adjusted Revenues $ 115,661 $ 85,670 Costs of revenue (31,937 ) (21,802 ) Amortization of intangible assets 9,094 5,844 Adjusted Gross Profit $ 92,818 $ 69,712 Adjusted Gross Profit Margin 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: Years Ended December 31, (In thousands) 2022 2021 Net loss $ (218,257 ) $ (109,421 ) Benefit from income taxes (3,254 ) (7,889 ) Depreciation and amortization 20,783 16,380 Interest expense, net 95,741 64,800 EBITDA (104,987 ) (36,130 ) Deferred revenue adjustment (a) 1,896 2,758 Stock-based compensation 38,047 1,010 Change in fair value of warrant and derivative liabilities (b) (12,747 ) (3,405 ) Loss on debt extinguishment, net 45,250 - Other non-cash (gains) charges (c) (9,069 ) 3,969 Acquisition related costs (d) 1,181 2,054 Employee severance costs 575 180 Non-capitalizable debt raising costs 403 584 Other infrequent costs (e) 20 1,484 Costs incurred related to the transaction (f) 2,993 1,128 Loss contingency (g) 11,988 - Adjusted EBITDA $ (24,450 ) $ (26,368 ) Adjusted EBITDA Margin (21 )% (31 )% (a) Reflects deferred revenue fair value adjustments arising from the purchase price allocation in connection with the 2021 Acquisitions.
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: Years Ended December 31, (In thousands) 2023 2022 Subscription revenue $ 119,082 $ 100,522 Deferred revenue adjustment - 1,896 Adjusted subscription revenue 119,082 102,418 Advisory, advertising, and other revenue 13,563 13,243 Adjusted Revenues $ 132,645 $ 115,661 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: Years Ended December 31, (In thousands) 2023 2022 Adjusted Revenues $ 132,645 $ 115,661 Costs of revenue (40,251 ) (31,937 ) Amortization of intangible assets 15,861 9,094 Adjusted Gross Profit $ 108,255 $ 92,818 Adjusted Gross Profit Margin 82 % 80 % 52 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: Years Ended December 31, (In thousands) 2023 2022 Net loss $ (115,461 ) $ (218,257 ) Provision (benefit) from income taxes 223 (3,254 ) Depreciation and amortization 28,718 20,783 Interest expense, net 29,940 95,741 EBITDA (56,580 ) (104,987 ) Deferred revenue adjustment (a) - 1,896 Stock-based compensation 27,057 38,047 Change in fair value of warrant and derivative liabilities (b) (15,983 ) (12,747 ) Loss on debt extinguishment, net - 45,250 Other non-cash (gains) charges (c) 29,522 (9,069 ) Acquisition related costs (d) 1,391 1,181 Employee severance costs (e) 2,039 575 Non-capitalizable debt raising costs 542 403 Other infrequent costs (f) - 20 Costs incurred related to the transaction (g) 415 2,993 Loss contingency (h) 4,091 11,988 Adjusted EBITDA $ (7,506 ) $ (24,450 ) Adjusted EBITDA Margin (6 )% (21 )% (a) Reflects deferred revenue fair value adjustments arising from the purchase price allocation in connection with the 2021 Acquisitions.
Accordingly, the Company recognizes the warrants as liabilities at fair value and adjusts the warrants to fair value at each reporting period. The warrant liabilities are subject to re-measurement at each balance sheet date until exercised, and any change in fair value is recognized in the Company’s consolidated statement of operations.
The warrant liabilities are subject to re-measurement at each balance sheet date until exercised, and any change in fair value is recognized in the Company’s consolidated statement of operations. The fair value of the public warrants is estimated based on the quoted market price of such warrants.
Upon Closing, we began to incur additional public company expenses for, among other things, directors’ and officers’ liability insurance, director fees and additional internal and external accounting, legal and administrative resources.
Upon Closing, we began to incur additional public company expenses for, among other things, directors’ and officers’ liability insurance, director fees and additional internal and external accounting, legal and administrative resources. Factors Impacting the Comparability of Our Operating Results Acquisitions Acquisitions affect the comparability of our financial statements from period to period.
Our Run-Rate Revenue at December 31, 2022 and December 31, 2021, including our 2022 and 2021 Acquisitions, was approximately $127 million and $109 million, respectively. Our Run-Rate Revenue at December 31, 2022 and 2021, excluding the 2022 and 2021 Acquisitions, was approximately $80 million and $71 million, respectively.
Our Run-Rate Revenue at December 31, 2023 and 2022, excluding the 2022 and 2023 Acquisitions, was approximately $127.5 million and $123.6 million, respectively.
Our principal debt outstanding at December 31, 2022 and immediately after the closing of the Business Combination consisted of the following (excluding any debt discounts, as applicable): (In thousands) December 31, 2022 July 29, 2022 New Senior Term Loan $ 150,647 $ 150,000 Convertible Notes 12,219 10,517 Aicel Convertible Note 1,174 1,031 PPP Loan 251 295 Total Principal Outstanding $ 164,291 $ 161,843 New Senior Term Loan In connection with the Closing, FiscalNote entered into a $150.0 million new senior term loan facility (the “New Senior Term Loan”) with Runway Growth Finance Corp., ORIX Growth Capital, LLC, Clover Orochi LLC, and ACM ASOF VIII SaaS FinCo LLC (together the “New Senior Lenders”).
Our principal debt outstanding at December 31, 2023 and December 31, 2022 consisted of the following (excluding any debt discounts and fair value adjustments, as applicable): (In thousands) December 31, 2023 December 31, 2022 Senior Term Loan $ 158,228 $ 150,647 New GPO Note 48,575 - Convertible Notes 14,052 12,219 Dragonfly Convertible Note 12,223 - Era Convertible Note 5,500 - Aicel Convertible Note 1,156 1,174 PPP Loan 144 251 Total Principal Outstanding $ 239,878 $ 164,291 Senior Term Loan In connection with the Closing, FiscalNote entered into a $150.0 million new senior term loan facility (the “Senior Term Loan”) with Runway Growth Finance Corp., ORIX Growth Capital, LLC, Clover Orochi LLC, and ACM ASOF VIII SaaS FinCo LLC (together the “Senior Lenders”).
Certain Non-GAAP Measures We present Adjusted Revenues, Adjusted Gross Profit, Adjusted Gross Profit Margin, EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin which are non-GAAP financial measures. Our management team assesses our performance based on these non-GAAP measures because it believes they reflect the underlying trends and indicators of our business and serve as meaningful indicators of our continuous operational performance.
Our management team assesses our performance based on these non-GAAP measures because it believes they reflect the underlying trends and indicators of our business and serve as meaningful indicators of our continuous operational performance. We believe these measures are useful for investors for the same reasons.
Commitments and Contingencies Our principal commitments consist of obligations under leases for office space. For more information regarding our lease obligations, see Note 5, Leases to the consolidated financial statements included elsewhere herein. For more information regarding our debt service obligations, see Note 9, Debt , to the consolidated financial statements included elsewhere herein.
Commitments and Contingencies Our principal commitments consist of obligations under leases for office space. For more information regarding our lease obligations, see Note 5, Leases in the Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K.
Editorial Editorial expenses consist of salaries and related expenses, including bonuses, stock compensation, benefits and other expenses for the editorial team involved in acquiring, creating, and distributing content and allocated overhead. 44 General and administrative General and administrative expenses are primarily related to our executive offices, finance and accounting, human resources, legal, internal operations and other corporate functions.
General and administrative General and administrative expenses are primarily related to our executive offices, finance and accounting, human resources, legal, internal operations and other corporate functions. These expenses consist of salaries and related expenses, including bonuses, stock compensation, benefits and other expenses, along with professional fees, depreciation and other allocated overhead.
Change in fair value of warrant and derivative liabilities Change in fair value of warrant liabilities was a $12.7 million gain for the year ended December 31, 2022 as compared to a $3.4 million gain for the year ended December 31, 2021.
Change in fair value of financial instruments Change in fair value of financial instruments was a $16.0 million gain for the year ended December 31, 2023 as compared to a $12.7 million gain for the year ended December 31, 2022.
The decrease of $3.3 million, or 14%, was primarily attributable to a decrease of $6.8 million primarily related to compensation and benefits as the majority of personnel related costs in 2022 were capitalized for the redevelopment of our SaaS policy and stakeholder management platform included in capitalized software development costs, offset by $0.7 million incremental share-based compensation triggered by the Business Combination, and an increase of $2.0 million of research and development costs incurred by our 2022 and 2021 Acquisitions. 47 Sales and marketing Sales and marketing expense was $42.7 million for the year ended December 31, 2022 as compared to $29.7 million for the year ended December 31, 2021.
The decrease of $2.5 million, or 12%, was primarily attributable to a decrease of $3.2 million primarily related to capitalized compensation and benefits associated with the redevelopment of our SaaS policy and stakeholder management platform included in capitalized software development costs combined with an emphasis on cost rationalization and containment, offset by $0.4 million of incremental share-based compensation, and an increase of $0.5 million of research and development costs from our 2023 Acquisition. 50 Sales and marketing Sales and marketing expense was $45.7 million for the year ended December 31, 2023 as compared to $42.7 million for the year ended December 31, 2022.
Management expects that significant on-going operating and capital expenditures will be necessary to continue to implement the Company’s business plan of entering new markets, future acquisitions, and infrastructure and product development. Historically the Company’s cash flows from operations have not been sufficient to fund its current operating model.
Management expects that on-going operating and capital expenditures may be necessary to continue to implement the Company’s business plan of entering new markets, future acquisitions, and infrastructure and product development.
Cash used in operating activities in 2021 was driven by a net loss of $109.4 million, which is adjusted for the exclusion of non-cash expenses and other adjustments totaling $73.2 million, primarily including non-cash interest expense of $21.7 million, paid in kind interest of $37.3 million, stock-based compensation expense of $1.0 million, a gain due to the change in fair value of derivative liabilities of $3.4 million, change in deferred income taxes of $6.6 million, and amortization and depreciation of $17.8 million, and the effect of changes in operating assets and liabilities that resulted in cash outflows of $0.8 million.
Cash used in operating activities in 2023 was driven by a net loss of $115.5 million, which is adjusted for the exclusion of non-cash expenses and other adjustments totaling $90.1 million, primarily including impairment of goodwill and other long-lived assets of $32.1 million, non-cash and paid-in kind interest expense of $10.0 million, stock-based compensation expense of $27.1 million, loss on settlement with GPO of $3.5 million, a gain due to the change in fair value of financial instruments of $16.0 million, amortization and depreciation of $32.3 million, and other non-cash expenses of $1.1 million and the effect of changes in operating assets and liabilities that resulted in cash outflows of $10.2 million.
The increase of $4.3 million, or 49%, was primarily due to $2.2 million of incremental revenue from our 2021 Acquisitions, as well as an increase of other one-time revenue of $2.1 million.
The increase of $0.4 million, or 2%, was primarily due to $1.8 million of incremental revenue from our Acquisitions, as well as a decrease in advertising revenue of $1.1 million resulting from the phasing out of an advertising customer and a decrease of other one-time revenue of $0.4 million.
Off-Balance Sheet Arrangements During the periods presented, we did not engage in any off-balance sheet financing activities or other arrangements that have or are reasonably likely to have a current or future material effect on our financial condition or results of operations. 53 Recently Issued Accounting Pronouncements For information regarding new accounting pronouncements, and the impact of these pronouncements on our consolidated financial statements, if any, refer to Note 1, Summary of Business and Significant Accounting Policies to our consolidated financial statements.
Off-Balance Sheet Arrangements During the periods presented, we did not engage in any off-balance sheet financing activities or other arrangements that have or are reasonably likely to have a current or future material effect on our financial condition or results of operations.
As a result, the residual growth rate could be adversely impacted by a sustained deceleration in category growth or an increased competitive environment.
The residual growth rate is dependent on overall market growth rates, the competitive environment, inflation, and business activities that impact market share. As a result, the residual growth rate could be adversely impacted by a sustained deceleration in category growth or an increased competitive environment.
Cash used by operating activities can be impacted by factors such as new acquisitions, timing of cash receipts from customers, vendor payment terms, and timing of payments to vendors. Investing activities Net cash used in investing activities in the year ended December 31, 2022 was $10.2 million compared to $49.2 million in the year ended December 31, 2021.
Cash used by operating activities can be impacted by factors such as new acquisitions, timing of cash receipts from customers, vendor payment terms, and timing of payments to vendors.
As a result of the 2022 and 2021 Acquisitions, we have, and will continue to incur, significant non-cash amortization expense related to the amortization of purchased intangibles, which have reduced our operating income by approximately $7.1 million and $4.2 million during the years ended December 31, 2022 and 2021, respectively.
As a result of our acquisitions since 2021, we have, and will continue to incur, significant non-cash amortization expense related to the amortization of purchased intangibles, which have reduced our operating income by approximately $13.5 million and $7.1 million during the years ended December 31, 2023 and 2022, respectively. 42 Product rationalization From time to time, management reviews the Company’s existing products and services based on their financial profile and other strategic factors.
Cash used in operating activities in the year ended December 31, 2022 was $72.6 million, an increase of $35.6 million compared to the year ended December 31, 2021.
Cash used in operating activities in the year ended December 31, 2023 was $35.5 million, a decrease of $37.1 million compared to the year ended December 31, 2022.
At December 31, 2022, the Company’s cash and cash equivalents was $60.4 million compared to $32.2 million at December 31, 2021.
At December 31, 2023, the Company’s cash, cash equivalents, restricted cash, and short-term investments was $24.4 million compared to $61.2 million at December 31, 2022.
NRR was 100% and 94% for the years ended December 31, 2022 and 2021, respectively. 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.
Our quarterly NRR for the last eight quarters follows: For the Quarters Ended March 31, June 30, September 30, December 31, March 31, June 30, September 30, December 31, 2022 2022 2022 2022 2023 2023 2023 2023 Net Revenue Retention 98 % 99 % 99 % 100 % 96 % 98 % 100 % 99 % 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.
The decrease of $2.3 million is primarily due to $3.9 million decrease in contingent compensation and earnout liabilities related to our acquisitions of Equilibrium, Forge, and FrontierView and the reversing of previously recognized earnout liabilities related to our Predata acquisitions and $0.3 million related to transaction costs for acquired businesses, offset by $1.8 million increase in non-capitalized costs related to the Business Combination.
The change of $3.2 million is primarily due to $2.5 million decrease in non-capitalized costs related to the Business Combination and $0.9 million decrease of contingent consideration expense related to the reversing of previously recognized earnout liabilities related to our FrontierView acquisition.
In connection with such a review in 2020 and 2021, management decided to cease selling certain non-core subscription products representing subscription revenue of approximately $1.1 million and $2.1 million during the years ended December 31, 2022 and 2021, respectively. We continue to invest for future growth.
In connection with such reviews, management decided to cease actively selling and therefore sunset certain non-core products, representing, in aggregate: • subscription revenue of approximately $1.0 million and $1.3 million during the years ended December 31, 2023 and 2022; and • Non-subscription advisory revenue of approximately $3.0 million and $3.2 million during the years ended December 31, 2023 and 2022.
Sales and marketing Sales and marketing expenses consist primarily of salaries and related expenses, including bonuses, stock compensation, benefits and other expenses for our sales and marketing staff, including commissions, related software subscriptions, consulting fees, marketing programs and allocated overhead. Marketing programs consist of advertising, events, corporate communications, brand building and product marketing activities.
Marketing programs consist of advertising, events, corporate communications, brand building and product marketing activities. Editorial Editorial expenses consist of salaries and related expenses, including bonuses, stock compensation, benefits and other expenses for the editorial team involved in acquiring, creating, and distributing content and allocated overhead.
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.
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. Our Run-Rate Revenue at December 31, 2023 and December 31, 2022 was approximately $139.7 million and $126.7 million, respectively.
(f) Includes non-capitalizable transaction costs associated with the Business Combination. (g) Reflects (i) $11,700 non-cash loss contingency recognized related to the previously disclosed term sheet we entered into with GPO FN Noteholder LLC and (ii) $288 of legal costs incurred related to the proposed term sheet with GPO FN Noteholder LLC.
(h) Reflects (i) $3,474 non-cash loss contingency charge related to the settlement with GPO FN Noteholder LLC recorded in the second quarter of 2023 and $11,700 non-cash loss contingency recognized related to the previously disclosed term sheet we entered into with GPO FN Noteholder LLC recorded in the fourth quarter of December 31, 2022 and (ii) accounting and legal costs incurred associated with the settlement with GPO FN Noteholder LLC totaling $617 in 2023 and $288 in 2022.
Certain other amounts that appear below may not sum due to rounding. This discussion may contain forward-looking statements based upon current expectations that involve risks and uncertainties.
For this reason, percentage amounts may vary from those obtained by performing the same calculations using the figures in our consolidated financial statements included elsewhere herein. Certain other amounts that appear below may not sum due to rounding. This discussion may contain forward-looking statements based upon current expectations that involve risks and uncertainties.
We regularly review the deferred tax assets for recoverability based on historical taxable income, projected future taxable income, the expected timing of the reversals of existing temporary differences and tax planning strategies. Our judgment regarding future profitability may change due to many factors, including future market conditions and the ability to successfully execute its business plans and/or tax planning strategies.
We regularly review the deferred tax assets for recoverability based on historical taxable income, projected future taxable income, the expected timing of the 60 reversals of existing temporary differences and tax planning strategies.
The increase of $9.3 million primarily represents a $16.5 million gain that was recorded as a result of the fair value adjustment of the warrant liabilities that were assumed in connection with the Business Combination, and a $7.1 million loss resulting from the fair value adjustment of the derivative liabilities that were settled upon conversion of the associated convertible notes.
The increase of $3.3 million primarily represents a $4.8 million gain resulting from the fair value adjustment of the derivative liabilities associated with convertible notes partially offset by a $1.5 million loss that was recorded as a result of the fair value adjustment of the warrant liabilities that were assumed in connection with the Business Combination. 51 Income tax provision (benefit) Income tax provision was $0.2 million for the year ended December 31, 2023 as compared to an income tax benefit of $3.3 million for the year ended December 31, 2022.
Revenue by Geography The below tables present our revenues split by geographic region for the periods presented: Year Ended December 31, Change (In thousands) 2022 2021 $ % North America $ 98,951 $ 74,040 $ 24,911 34 % Europe 10,072 7,601 2,471 33 % Australia 1,122 784 338 43 % Asia 3,620 487 3,133 643 % Total revenues $ 113,765 82,912 $ 30,853 37 % Revenues by geography are determined based on the region of the FiscalNote contracting entity, which may be different than the region of the customer.
Revenue by Geography The below tables present our revenues split by geographic region for the periods presented: Year Ended December 31, Change (In thousands) 2023 2022 $ % North America $ 107,108 $ 98,951 $ 8,157 8 % Europe 19,749 10,072 9,677 96 % Australia 1,193 1,122 71 6 % Asia 4,595 3,620 975 27 % Total revenues $ 132,645 113,765 $ 18,880 17 % Revenues by geography are determined based on the region of the FiscalNote contracting entity, which may be different than the region of the customer.
The residual growth rate utilized in our fair value estimates is consistent with the reporting unit operating plans and approximates expected long-term market growth rates. The residual growth rate is dependent on overall market growth rates, the competitive environment, inflation, and business activities that impact market share.
The residual growth rate represents the expected rate at which the reporting units are expected to grow beyond the shorter-term business planning period. The residual growth rate utilized in our fair value estimates is consistent with the reporting unit operating plans and approximates expected long-term market growth rates.
Our discount rate may be impacted by adverse changes in the macroeconomic environment, volatility in the equity and debt markets or other country specific factors.
Our discount rate may be impacted by adverse changes in the macroeconomic environment, volatility in the equity and debt markets or other country specific factors. Recoverability of asset groups are measured by a comparison of the carrying amount of an asset group to future undiscounted net cash flows expected to be generated by the asset group.
Should there be a change in the ability to recover deferred tax assets, the tax provision would increase or decrease in the period in which the assessment is changed.
Our judgment regarding future profitability may change due to many factors, including future market conditions and the ability to successfully execute its business plans and/or tax planning strategies. Should there be a change in the ability to recover deferred tax assets, the tax provision would increase or decrease in the period in which the assessment is changed.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeAs of December 31, 2022, we had outstanding borrowings on our New Senior Term Loan of $150.6 million that bears interest at a floating rate based on the Prime Rate plus an applicable margin. At December 31, 2022 the interest on our New Senior Term Loan was 12.50% (which subsequently increased to 12.75% effective February 16, 2023).
Biggest changeAs of December 31, 2023, we had outstanding borrowings on our Senior Term Loan of $158.2 million that bears interest at a floating rate based on the Prime Rate plus an applicable margin. At December 31, 2023 the interest on our Senior Term Loan was 13.50%.
Inflation Risk Although we do not believe inflation has had a material impact on our financial condition, results of operations or cash flows to date, a high rate of inflation in the future may have an adverse effect on our business. 57
Inflation Risk Although we do not believe inflation has had a material impact on our financial condition, results of operations or cash flows to date, a high rate of inflation in the future may have an adverse effect on our business. 62
Total revenue during the year ended December 31, 2022, was negatively impacted by approximately 2.0% compared to the year ended December 31, 2021. Interest Rate Risk We are subject to market risk associated with changing interest rates within our variable rate New Senior Term Loan. Our exposure to changes in interest rates is associated with the Prime Rate.
Total revenue during the year ended December 31, 2023, was negatively impacted by approximately 2.0% compared to the year ended December 31, 2022. Interest Rate Risk We are subject to market risk associated with changing interest rates within our variable rate Senior Term Loan. Our exposure to changes in interest rates is associated with the Prime Rate.
Assuming no change in the outstanding borrowings on our New Senior Term Loan, we estimate that a one percentage point increase in the Prime Rate would increase our annual cash interest expense by approximately $1.5 million based on an annual basis.
Assuming no change in the outstanding borrowings on our Senior Term Loan, we estimate that a one percentage point increase in the Prime Rate would increase our annual cash interest expense by approximately $1.6 million on an annual basis.
Added
See Note 19, Subsequent Events in the Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K for a discussion of the changes that Amendment No 4 to the Senior Term Loan will make to the outstanding balance and interest of the Senior Term Loan.

Other NOTE 10-K year-over-year comparisons