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]

Analyst and Seeking Alpha Disclosures - The analyst has no stock, option, or derivative positions in any mentioned companies and no plans to initiate such positions within the next 72 hours [1] - The article expresses the analyst's own opinions and is not receiving compensation other than from Seeking Alpha [1] - The analyst has no business relationship with any company whose stock is mentioned in the article [1] - Seeking Alpha's disclosure states that past performance is no guarantee of future results and no investment recommendations are being given [2] - Seeking Alpha is not a licensed securities dealer, broker, or US investment adviser or investment bank [2] - Seeking Alpha's analysts are third-party authors who may not be licensed or certified by any institute or regulatory body [2]

Core Viewpoint - FiscalNote Holdings, Inc. reported a quarterly loss of $0.11 per share, slightly worse than the Zacks Consensus Estimate of a loss of $0.10, indicating a 10% earnings surprise [1] - The company generated revenues of $29.44 million for the quarter ended September 2024, surpassing the Zacks Consensus Estimate by 1.47%, but down from $34.01 million a year ago [2] Financial Performance - The company has surpassed consensus EPS estimates two times over the last four quarters [2] - FiscalNote Holdings, Inc. shares have declined approximately 18% since the beginning of the year, contrasting with the S&P 500's gain of 25.8% [3] Future Outlook - The company's earnings outlook will be crucial for stock performance, with current consensus EPS estimates at -$0.11 for the coming quarter and $0.07 for the current fiscal year on revenues of $30.63 million and $121.02 million, respectively [7] - The estimate revisions trend for FiscalNote Holdings, Inc. is mixed, resulting in a Zacks Rank 3 (Hold), suggesting shares are expected to perform in line with the market in the near future [6] Industry Context - The Technology Services industry, to which FiscalNote belongs, is currently in the top 26% of over 250 Zacks industries, indicating a favorable outlook compared to the bottom 50% [8] - Another company in the same industry, Skillsoft Corp., is expected to report a quarterly loss of $3.01 per share, with revenues projected to be $129.76 million, down 6.6% from the previous year [9]

Financial Performance - Total revenues for the three months ended September 2024 were $29,439,000, a decrease of 13.5% compared to $34,009,000 for the same period in 2023[8] - Subscription revenues decreased to $27,238,000 from $30,057,000, reflecting a decline of 9.3% year-over-year[8] - Operating loss for the three months ended September 2024 was $(6,811,000), an improvement from $(13,461,000) in the same quarter of 2023[8] - Net loss for the three months ended September 2024 was $(14,935,000), compared to $(14,467,000) for the same period in 2023[8] - The company reported a comprehensive loss of $(13,812,000) for the three months ended September 2024, compared to $(15,473,000) in the same quarter of 2023[8] - The company reported a net loss of $14.9 million for Q3 2024, an increase in loss of $468,000 or 3.2% compared to a net loss of $14.4 million in Q3 2023[201] Expenses - Research and development expenses for the three months ended September 2024 were $3,250,000, down from $4,540,000, a decrease of 28.3%[8] - General and administrative expenses decreased to $10,622,000 from $14,418,000, a reduction of 26.4% year-over-year[8] - Interest expense for the three months ended September 2024 was $5,585,000, down from $8,018,000, a decrease of 30.1%[8] - Total operating expenses for Q3 2024 were $36.3 million, a decrease of $11.2 million or 23.5% from $47.5 million in Q3 2023[201] Equity and Stock - As of September 30, 2023, total stockholders' equity stands at $83,569,000, a decrease from $140,434,000 at March 31, 2023[10] - The weighted average shares used in computing earnings per share increased to 135,050,093 from 128,832,502 year-over-year[8] - The balance of common stock shares decreased to 128,895,749 as of September 30, 2023, from 133,866,990 at March 31, 2023[10] - The Company has authorized the issuance of 1,809,000,000 shares, including Class A common stock, Class B common stock, and preferred stock[98] - As of September 30, 2024, the Company had 132,584,083 shares of Class A common stock issued and outstanding[99] Cash and Debt - Cash, cash equivalents, and restricted cash totaled $26.4 million at the end of the period, up from $17.3 million at the end of September 2023[11] - The company had a negative working capital balance of $45.8 million (excluding cash and short-term investments) as of September 30, 2024[16] - As of September 30, 2024, the total gross debt of the company is $155,886, down from $225,513 as of December 31, 2023, indicating a reduction of approximately 30.8%[64] - The company incurred cash interest of $11,165 for the nine months ended September 30, 2024, compared to $15,341 for the same period in 2023, reflecting a decrease of approximately 27.5%[71] Revenue Sources - Revenue from the U.S. Federal Government accounted for 17% of total revenue for the nine months ended September 30, 2024, up from 15% in the same period of 2023[27] - Approximately 90% of total revenues were subscription-based for the nine months ended September 30, 2024[183] - Annual Recurring Revenue (ARR) as of September 30, 2024, was $109.5 million, down from $126.1 million at December 31, 2023[173] - Run-Rate Revenue at September 30, 2024, was approximately $119.4 million, compared to $139.7 million at December 31, 2023[174] - Net Revenue Retention (NRR) was 99% for the three months ended September 30, 2024, down from 100% in the same period of 2023[175] Acquisitions and Sales - The Company completed the sale of Board.org for a total value of up to $103 million, recording a gain on sale of business of $71.6 million during the three months ended March 31, 2024[162] - The acquisition of Dragonfly Eye Limited was completed for a total consideration of $25.236 million, including $5.6 million in cash, 1,885,149 shares of Class A Common Stock, and $11.1 million in subordinated convertible promissory notes[47][48] - The company raised approximately $18.1 million in net cash proceeds from the sale of Board.org, which was retained for operating matters[16] Future Outlook - The company anticipates continued focus on organic growth and market expansion strategies moving forward[5] - The company expects significant ongoing operating and capital expenditures to continue implementing its business plan, including entering new markets and product development[16] - The company is assessing opportunities to acquire complementary businesses to expand its market presence[169] - The company has observed slower client decision-making and softer renewal rates, impacting ARR growth and expected revenue for the coming fiscal year[168] Stock-Based Compensation - Stock-based compensation expense for the quarter ending June 30, 2024, amounted to $4,181,000[10] - The company recognized stock-based compensation expenses of $3,853 and $5,709 for the three months ended September 30, 2024 and 2023, respectively, and $13,092 and $15,772 for the nine months ended September 30, 2024 and 2023, respectively[119] - The company recognized $17,712 of share-based compensation expense for vested Earnout Awards upon closing, with additional expenses of $106 and $278 for the three and nine months ended September 30, 2024, respectively[107] Impairments and Losses - The company incurred an impairment charge of $5.837 million for goodwill in its ESG reporting unit during the first quarter of 2023[62] - The company recognized an impairment of goodwill during the three months ended March 31, 2023, with no additional impairments identified for the periods ended September 30, 2024 and 2023[146]

FiscalNote Holdings, Inc. (NOTE) came out with a quarterly loss of $0.09 per share versus the Zacks Consensus Estimate of a loss of $0.13. This compares to loss of $0.23 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of 30.77%. A quarter ago, it was expected that this company would post a loss of $0.17 per share when it actually produced a loss of $0.12, delivering a surprise of 29.41%. Over the last four quarters, the company ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2024 FISCALNOTE HOLDINGS, INC. (Exact Name of Registrant as Specified in its Charter) (State or other jurisdiction of incorporation or organization) Delaware 001-396972 88-3772307 (Commission File Number) (I.R.S. Employer Identification No.) 1201 Pennsylvania Avenue NW, ...