FiscalNote Holdings, Inc. (NOTE) came out with a quarterly loss of $0.12 per share versus the Zacks Consensus Estimate of a loss of $0.10. This compares to loss of $0.12 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of -20%. A quarter ago, it was expected that this company would post a loss of $0.10 per share when it actually produced a loss of $0.10, delivering no surprise.Over the last four quarters, the company has surpassed ...

FiscalNote Holdings (NOTE) Q1 2025 Earnings Call May 12, 2025 05:00 PM ET Company Participants Bob Burrows - Investor RelationsJosh Resnik - President & CEOJon Slabaugh - CFO & CIOJesse Sobelson - VP - Equity Research Conference Call Participants Glenn Mattson - AnalystMike Latimore - Managing Director & Senior Research AnalystZach Cummins - Senior Research Analyst Operator Evening. My name is Pam, and I will be your conference operator today. At this time, I would like to welcome everyone to the FiscalNote ...

Financial Data and Key Metrics Changes - Adjusted EBITDA for Q1 2025 was $2,800,000, exceeding expectations, with an adjusted EBITDA margin of 10%, up from 4% in the same period last year [6][7][28] - Total revenue for Q1 2025 was $27,500,000, above the forecast of $26,000,000 to $27,000,000, but $4,000,000 lower compared to the prior year due to divestitures [22][23] - Annual recurring revenue (ARR) was $88,000,000, down from $94,000,000 in 2024 on a pro forma basis [23][24] - Net revenue retention was 93%, down from 96% in the prior year [24] Business Line Data and Key Metrics Changes - Subscription revenue accounted for 92% of total revenue, consistent with historical trends [22] - Principal operating expenses decreased by $2,300,000 or 5% year-over-year, with significant reductions in R&D and sales and marketing expenses [25][26][27] Market Data and Key Metrics Changes - Inbound pipeline rose 20% compared to the same period last year, driven by regulatory complexity and interest in PolicyNote [12] - Strong traction in Europe, with pipeline creation doubling compared to the same period in 2024 [12] Company Strategy and Development Direction - The company is focused on three key objectives: expanding adjusted EBITDA margins, managing debt, and building a foundation for durable growth [6] - The launch of PolicyNote is expected to have a meaningful positive impact on 2025, with a commitment to product-led growth [13][23] - The company is committed to deleveraging, having reduced its senior term loan by $96,000,000 since December 31, 2023 [8][28] Management's Comments on Operating Environment and Future Outlook - Management reaffirmed full-year revenue guidance despite a slow start to 2025, indicating confidence in future growth [10][21] - The company is encouraged by the engagement with PolicyNote and the positive impact of accelerated product innovation [19][30] Other Important Information - Cash and cash equivalents at the end of Q1 2025 were $46,900,000, an increase driven by divestiture cash inflows [28] - The company plans to further reduce its senior term loan with the sale of its Australian subsidiary, TymeBase [28][46] Q&A Session Summary Question: Sales force and market execution - Management noted that recent changes in management have led to improved execution and stronger pipeline development [32][33] Question: PolicyNote migration timeline - The company expects to migrate all core customers to the new platform by next year, with accelerated migration efforts underway [35][36] Question: Revenue guidance for Q2 - The decline in revenue guidance for Q2 is attributed to revenue recognized from divested businesses in Q1 [41][43] Question: Balance sheet and cash from transactions - The company announced a transaction to sell a division in Australia for approximately $6.5 million, with half expected to reduce debt [46] Question: Strategic options for maximizing shareholder value - The board is continuously considering ways to maximize company value, with potential future divestitures not ruled out [48][51] Question: Pipeline details - The increase in pipeline is primarily from new logos across various sectors, with strong interest noted in Europe [54][56] Question: Health of the federal vertical - The company sees opportunities in the federal sector despite volatility, emphasizing the efficiency gains their products provide [59][60] Question: Advisor from Palantir - The advisor was engaged to focus on federal government opportunities, leveraging AI platforms for federal contracting [61]

Exhibit 99.1 FiscalNote Reports First Quarter 2025 Financial Results First Quarter 2025 Revenue and Adjusted EBITDA Exceed Forecasts, Reflecting Continued Progress on Path to Sustained Growth and Profitability Continues Business Streamlining; Closes Divestiture of Oxford Analytica and Dragonfly Intelligence and Announces Agreement to Sell TimeBase, Enabling Further Strengthening of Balance Sheet Board of Directors Continues to Review All Strategic Options Available to the Company to Maximize Shareholder Val ...

Financial Performance - Total revenues for the years ended December 31, 2024 and 2023 were $120.3 million and $132.6 million, respectively, reflecting a year-over-year decline primarily due to the divestiture of Board.org in March 2024[22]. - As of December 31, 2024, the company's annual recurring revenue (ARR) was $107.5 million, with an adjusted ARR of $93.3 million after excluding discontinued products and divested businesses[43]. - The net retention revenue (NRR) for subscription customers was approximately 98% for Q4 2024, indicating strong customer retention[46]. - The company incurred net losses of $62.5 million in 2024 and $115.5 million in 2023, highlighting ongoing challenges in achieving profitability[66]. - Approximately 90% of the company's revenues are subscription-based, making high renewal rates critical for financial stability[67]. - A significant portion of revenue is derived from government contracts, which are subject to unpredictable demand and budgetary cycles[106]. Customer Base and Market Presence - The company serves a diverse customer base, including 40 of the Fortune 100, across more than 40 countries, providing stability and growth opportunities[22][36]. - The company serves a diverse customer base, including 40 of the Fortune 100, indicating a strong market presence[42]. - For the years ended December 31, 2024 and 2023, approximately 21% and 19% of revenues were derived from outside the United States, indicating a growing international presence[85]. Product Development and Innovation - The launch of the new core product, PolicyNote, is expected in January 2025, aimed at improving customer experience and retention through enhanced AI features[29]. - Investments in research and development focus on consolidating product portfolios and enhancing data integration capabilities, with a strong emphasis on AI-driven technology[31][33]. - The company is focused on innovation, having launched new products like PolicyNote and plans to continue enhancing its technology platform[55]. - The company leverages AI-driven analytical solutions to provide clients with insights on legal and regulatory developments, enhancing its service offerings[48]. Competition and Market Risks - The company faces competition from traditional information services and emerging startups, necessitating continuous improvement and innovation in its product offerings[50]. - The introduction of competitors' offerings and fluctuations in customer satisfaction could lead to declines in subscriptions, impacting future revenues[69]. - The company faces intense competition for skilled personnel, particularly in AI and data science, which could hinder its ability to innovate and maintain customer relationships[111]. - The company faces risks associated with international operations, including compliance with foreign laws and potential economic instability in those regions[84]. Operational Challenges - The company has implemented a cost reduction plan in 2023 to align operations and reduce future operating expenses[66]. - The sales cycles for the company's products and services are lengthy and unpredictable, requiring significant time and resources without guaranteed revenue[88]. - The company acknowledges the difficulty in accurately estimating the size of its total addressable market, which could limit future growth rates[89]. - The company must navigate challenges in selling to government entities, including competitive bidding processes and compliance with stringent regulations[105]. Intellectual Property and Compliance - The company owns 47 registered trademarks, 14 patents, and has 373 domain names, indicating a strong intellectual property portfolio[53]. - The company may not be able to adequately protect its intellectual property rights, which could harm its business and financial condition[136]. - The company must comply with various lobbying laws, which could result in penalties if not adhered to[108]. - The company is subject to various legal and regulatory risks that could adversely impact its financial condition and operating results[121]. Financial Management and Capital Structure - As of December 31, 2024, the company had $168.2 million in total indebtedness, with $88.6 million under a senior term loan secured by substantially all assets and $79.6 million unsecured[122]. - The company plans to retire $27.1 million of term loans under the senior term loan in connection with the sale of Oxford Analytica and Dragonfly[123]. - The company incurs increased costs due to public company compliance requirements, which may affect profitability[193]. - The company may need to hire additional accounting staff or engage outside consultants, increasing operating expenses[194]. Cybersecurity and Risk Management - The company has a cybersecurity risk management program led by a Vice President with over 15 years of experience in the field[204]. - The company has faced cybersecurity threats, including malware and computer virus attacks, but these have not materially affected its business strategy or financial condition[208]. - The company's Board has delegated responsibility for oversight of the Enterprise Risk Management program and cybersecurity risk to the Audit Committee[207]. - Cybersecurity threats are constantly evolving, and the company may be vulnerable to data breaches that could harm its reputation and financial condition[170].

Core Viewpoint - FiscalNote Holdings, Inc. (NOTE) has been upgraded to a Zacks Rank 2 (Buy) due to an upward trend in earnings estimates, which is a significant factor influencing stock prices [1][3]. Earnings Estimates and Stock Price Impact - The Zacks rating system emphasizes the importance of changing earnings estimates in determining near-term stock price movements, making it a valuable tool for investors [2][4]. - An increase in earnings estimates typically leads to higher fair value calculations by institutional investors, resulting in stock price movements [4]. Business Outlook - The upgrade in rating for FiscalNote Holdings indicates an improvement in the company's underlying business, suggesting that investors may respond positively by driving the stock price higher [5]. - The Zacks Consensus Estimate for FiscalNote Holdings has increased by 20% over the past three months, reflecting analysts' growing confidence in the company's earnings potential [8]. Zacks Rank System - The Zacks Rank system classifies stocks based on earnings estimate revisions, with a strong historical performance, particularly for Zacks Rank 1 stocks, which have generated an average annual return of +25% since 1988 [7]. - FiscalNote Holdings' upgrade to Zacks Rank 2 places it in the top 20% of Zacks-covered stocks, indicating a strong potential for market-beating returns in the near term [10].

Financial Data and Key Metrics Changes - Total revenue for Q4 2024 was $29.5 million, lower than the prior year period primarily due to the divestiture of Board.org [37] - Annual recurring revenue (ARR) was $107 million in Q4 2024, down from $109 million in 2023 on a pro forma basis [38] - Adjusted EBITDA for 2024 was $9.8 million, a year-over-year improvement of more than $17 million and 1,400 basis points [12][46] - GAAP net loss for Q4 2024 was $13.4 million, significantly lower than the prior year period due to a large non-cash goodwill impairment charge recorded in Q4 2023 [42] - Cash flow from operations improved by more than $30 million in 2024, reaching negative $5.3 million [48] Business Line Data and Key Metrics Changes - Subscription revenue remained flat on a sequential basis, indicating stability in core business operations [37] - Net revenue retention was 98% in Q4 2024, down from 99% in the prior year, reflecting a focus on improving this metric through product innovation [38] Market Data and Key Metrics Changes - The corporate sector saw a significant increase in multiyear contracts, with new logo ARR on multiyear contracts nearly double compared to the previous year [27] - The company anticipates that the launch of the Policy Note platform will positively impact ARR growth in the second half of 2025, contributing to revenue growth in 2026 [38][53] Company Strategy and Development Direction - The company is focused on three pillars: expanding adjusted EBITDA margin, managing debt, and building a foundation for long-term sustainable growth [11] - The divestiture of non-core businesses is part of a strategy to streamline operations and focus on profitable growth areas [16][33] - The launch of the Policy Note platform is expected to enhance customer engagement and retention, driving future revenue growth [24][28] Management Comments on Operating Environment and Future Outlook - Management acknowledged that the typical end-of-year ARR uptick did not materialize at the end of 2024, prompting key management changes to improve execution [21] - The company is monitoring market volatility, particularly in the private sector, which may impact corporate buying decisions [29][53] - Despite potential challenges, management remains confident in the company's long-term growth strategy and the value proposition of its platforms [30][32] Other Important Information - The company reduced its senior debt by more than 60% in the past year, with a commitment to improving its capital structure [16][47] - The forecast for 2025 includes total revenues in the range of $94 million to $100 million and adjusted EBITDA of $10 million to $12 million [54] Q&A Session Summary Question: Adoption and feedback on the new Policy Note platform - Management is not disclosing specific customer adoption numbers but reports high engagement levels and positive feedback on AI features [60][64] Question: Target leverage ratio post-asset sale - The company aims to bring leverage down to a more conventional model, targeting a range of two to three times leverage over the foreseeable future [68] Question: Balance sheet profile after divestments - The anticipated reduction in senior debt will lower cash interest expense to around $2 million per quarter, contributing to long-term financial health [72] Question: Pro forma expectations for upcoming guidance - The Q1 guidance reflects GAAP revenue, with approximately $3 million of revenue from divested businesses not included in subsequent quarters [76]

Financial Data and Key Metrics Changes - Total revenue for Q4 2024 was $29.5 million, lower than the prior year period primarily due to the divestiture of Board.org [37] - Annual recurring revenue (ARR) was $107 million in Q4 2024, down from $109 million in 2023 on a pro forma basis [38] - Adjusted EBITDA for 2024 was $9.8 million, a year-over-year improvement of more than $17 million and 1,400 basis points [12][46] - GAAP net loss for Q4 2024 was $13.4 million, significantly lower than the prior year period due to a large non-cash goodwill impairment charge recorded in Q4 2023 [42] Business Line Data and Key Metrics Changes - Subscription revenue remained flat on a sequential basis, indicating stability in core business operations [37] - Net revenue retention was 98% in Q4 2024, down from 99% in the prior year, reflecting a focus on improving this metric through product innovation [38] Market Data and Key Metrics Changes - The company has a diverse base of over 4,000 customers across various industries, indicating a broad market presence [32] - The share of new logo ARR on multiyear contracts in the corporate sector is almost double compared to a year ago, demonstrating increased market confidence [27] Company Strategy and Development Direction - The company is focused on three pillars: expanding adjusted EBITDA margin, managing debt, and building a foundation for long-term sustainable growth [11] - The launch of the Policy Note platform is expected to drive customer engagement and retention, with a focus on product-led sales and growth [23][24] - The company plans to simplify its product portfolio and reduce organizational complexity to enhance operational efficiency [14] Management's Comments on Operating Environment and Future Outlook - Management acknowledged that the typical end-of-year ARR uptick did not materialize at the end of 2024, prompting key management changes to improve execution [21] - The company anticipates a return to ARR growth in the second half of 2025, which should support GAAP revenue growth in 2026 and beyond [22] - Management is monitoring market volatility, particularly in the private sector, and does not expect significant negative impacts from changes in federal government spending [29][30] Other Important Information - Cash flow from operations improved significantly by more than $30 million in 2024, indicating progress towards positive operating cash flow [48] - The company reduced its senior debt by more than 60% over the past year, demonstrating a commitment to improving its capital structure [16][47] Q&A Session Summary Question: Adoption and feedback on the new Policy Note platform - Management is not disclosing specific customer adoption numbers but reports high engagement levels and positive feedback on AI features [60][64] Question: Target leverage ratio post-asset sale - The company aims to bring leverage down to a more conventional range of two to three times relative to EBITDA over the next few years [68] Question: Balance sheet profile after divestments - The anticipated reduction in senior debt will lower cash interest expense to around $2 million per quarter, contributing to long-term financial health [72] Question: Pro forma expectations for upcoming guidance - The Q1 guidance reflects GAAP revenue, with approximately $3 million of revenue from divested businesses not included in subsequent quarters [76]

Group 1: Financial Performance - FiscalNote Holdings, Inc. reported a quarterly loss of $0.10 per share, consistent with the Zacks Consensus Estimate, compared to a loss of $0.23 per share a year ago [1] - The company posted revenues of $29.47 million for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 1.57%, but down from $34.27 million year-over-year [2] - The current consensus EPS estimate for the upcoming quarter is -$0.11 on revenues of $29.34 million, and for the current fiscal year, it is -$0.38 on revenues of $123.79 million [7] Group 2: Market Performance - FiscalNote Holdings, Inc. shares have lost about 2.8% since the beginning of the year, while the S&P 500 has declined by 4.8% [3] - The company has outperformed the market so far this year, raising questions about its future stock performance [4] Group 3: Earnings Outlook - The sustainability of the stock's price movement will depend on management's commentary during the earnings call [3] - The estimate revisions trend for FiscalNote Holdings, Inc. is mixed, resulting in a Zacks Rank 3 (Hold) for the stock, indicating expected performance in line with the market [6] Group 4: Industry Context - The Technology Services industry, to which FiscalNote Holdings, Inc. belongs, is currently in the top 30% of over 250 Zacks industries, suggesting a favorable outlook [8]

Financial Performance - FiscalNote reported total revenues of $29.5 million for Q4 2024, a decrease of 14% from $34.3 million in Q4 2023[4] - Adjusted EBITDA for Q4 2024 was $3.3 million, representing a 10% year-over-year improvement and marking the sixth consecutive quarter of profitability[4] - The company achieved its first full year of positive adjusted EBITDA in 2024, with an improvement of over $17 million year-over-year[4] - Annual Recurring Revenue (ARR) declined to $107.0 million, a decrease of 15% compared to $126.0 million in 2023, primarily due to divestitures[12] - FiscalNote's gross margin improved to 82% in Q4 2024, up from 67% in Q4 2023, reflecting a 1500 basis points increase[7] - The company expects total revenues for FY 2025 to be between $94 million and $100 million, with adjusted EBITDA projected between $10 million and $12 million[18] - Total revenues for Q4 2024 were $29.469 million, a decrease of 14% compared to $34.265 million in Q4 2023[33] - Subscription revenues decreased to $27.058 million in Q4 2024 from $31.096 million in Q4 2023, representing a decline of 13%[33] - Net loss for Q4 2024 was $13.383 million, compared to a net loss of $50.748 million in Q4 2023, indicating a reduction in losses[33] - The company reported a total comprehensive loss of $14.744 million for Q4 2024, compared to a loss of $49.548 million in Q4 2023[33] - Basic and diluted loss per share for Q4 2024 was $0.10, an improvement from a loss of $0.39 per share in Q4 2023[33] - Net income for the year ended December 31, 2024, was $9,517,000, a significant improvement from a net loss of $115,461,000 in 2023[37] - Adjusted Gross Profit for the twelve months ended December 31, 2024, was $103,330,000, compared to $108,255,000 in 2023, reflecting a decrease of 4.5%[45] - Adjusted Gross Profit Margin improved to 86% for the year ended December 31, 2024, up from 82% in 2023[45] - Adjusted EBITDA for the twelve months ended December 31, 2024, was $9,781 thousand, a significant improvement from an adjusted EBITDA of $(7,506) thousand in 2023[46] - The Adjusted EBITDA Margin increased to 8% for the twelve months ended December 31, 2024, compared to a margin of (6)% in 2023[46] Operating Expenses and Efficiency - Operating expenses decreased by 53% year-over-year to $35.2 million in Q4 2024, primarily due to divestitures and efficiency measures[14] - The company’s total operating expenses for Q4 2024 were $35.199 million, down from $74.194 million in Q4 2023[33] - Research and development expenses decreased to $2.893 million in Q4 2024 from $4.016 million in Q4 2023, a reduction of 28%[33] Strategic Initiatives - The new AI-focused PolicyNote platform was launched in January 2025, aimed at enhancing customer engagement and retention[10] - The company plans to continue streamlining operations and reducing debt service costs to accelerate its path to positive free cash flow[21] - FiscalNote is currently reviewing strategic options to maximize value, with no set timetable for completion[22] - The company continues to focus on organic growth through its core Policy business and aims to enhance its existing platforms and services[29] - The company is actively pursuing market expansion and strategic acquisitions to enhance its operational performance and revenue growth[49] Assets and Liabilities - Total current assets increased to $57,187,000 from $49,805,000, a growth of 14.5% year-over-year[35] - Total liabilities decreased to $228,366,000 from $327,102,000, a reduction of 30.2% year-over-year[35] - Cash and cash equivalents at the end of the period increased to $29,454,000 from $17,300,000, representing a growth of 70.1%[37] - Long-term debt, net of current maturities, decreased to $131,172,000 from $222,310,000, a decline of 41.0%[35] - Total assets decreased to $326,197,000 from $370,561,000, a reduction of 12.0% year-over-year[35] Gains and Losses - The company reported a gain on the sale of businesses amounting to $72,017,000 in 2024[37] - The company incurred $72,017 thousand in gains from the sale of businesses during the twelve months ended December 31, 2024[46] - Costs related to acquisitions and disposals amounted to $1,599 thousand for the twelve months ended December 31, 2024[46] - The company reported a non-cash loss contingency charge of $3,474 thousand related to a settlement recorded in the second quarter of 2023[53] Revenue Predictability - Approximately 90% of the company's revenues are subscription-based, indicating high revenue predictability and stability[50] - The company calculates its Annual Recurring Revenue (ARR) based on contracted subscription revenue, which serves as a leading indicator of future revenue opportunities[50] - Net Revenue Retention (NRR) is used to measure the success in retaining and growing recurring revenue, with calculations excluding new clients for the first 12 months post-acquisition[51]