FiscalNote(NOTE) - 2025 Q1 - Quarterly Report

Financial Performance - Total revenues for Q1 2025 were $27,511,000, a decrease of 14.9% compared to $32,112,000 in Q1 2024[14] - Subscription revenues decreased to $25,232,000, down 14.8% from $29,626,000 year-over-year[14] - Operating loss for Q1 2025 was $13,762,000, compared to an operating loss of $11,444,000 in Q1 2024[14] - Net loss for Q1 2025 was $4,250,000, a significant decline from a net income of $50,599,000 in Q1 2024[14] - The company reported a comprehensive loss of $3,949,000 for Q1 2025, compared to a comprehensive income of $56,190,000 in Q1 2024[14] - For the three months ended March 31, 2025, the company reported a net loss of $4,250,000 compared to a net income of $50,599,000 for the same period in 2024[19] - Basic earnings per share for Q1 2025 was $(0.03), compared to $0.39 for Q1 2024[14] Cash and Assets - Cash and cash equivalents increased to $41,730,000 as of March 31, 2025, up from $28,814,000 at December 31, 2024[11] - Total assets decreased to $299,685,000 from $326,197,000 at the end of 2024[11] - Long-term debt decreased to $117,949,000 from $147,041,000 at the end of 2024[11] - Total stockholders' equity increased to $98,697,000 from $97,831,000 at the end of 2024[11] - Cash, cash equivalents, and restricted cash at the end of the period were $42,372,000, up from $37,316,000 at the end of Q1 2024[19] Revenue Sources - Revenues derived from the U.S. Federal Government accounted for 18% of total revenues for the three months ended March 31, 2025[44] - North America revenue decreased to $21,910 from $25,997, representing a decline of 15.9% year-over-year[51] Cost Management - The company implemented various cost-saving measures throughout 2024 and 2025 to rationalize its cost structure[27] - The company expects significant ongoing operating and capital expenditures to continue its business plan, including entering new markets and product development[26] Debt and Financing - The company had approximately $10,961,000 of convertible notes maturing on April 15, 2026, raising concerns about compliance with financial covenants[29] - As of March 31, 2025, the total gross debt of the company is $122,033 million, down from $150,299 million as of December 31, 2024, representing a decrease of approximately 18.8%[73] - The Senior Term Loan has a carrying value of $61,680 million as of March 31, 2025, down from $88,595 million at the end of 2024, a reduction of approximately 30.4%[73] - The Prime Rate for the Senior Term Loan was 7.50% as of March 31, 2025[84] Convertible Notes - The Company entered into an Exchange and Settlement Agreement with GPO FN Noteholder LLC, resulting in the cancellation of 5,881,723 shares of Class A Common Stock and the issuance of a subordinated convertible promissory note with an initial principal amount of $46,794[87] - The GPO Convertible Note matures on July 3, 2028, bears interest at 7.50% per annum, and interest for the first year is payable in kind[88] - The Company recognized a non-cash gain of $635 upon the conversion of £547 (approximately $702) of the Dragonfly Convertible Notes into 67,357 shares of common stock[99] - The Company incurred total interest expense related to the GPO Convertible Note of $946 and $921 for the three months ended March 31, 2025 and 2024, respectively[92] Tax and Compliance - The effective tax rate for the three months ended March 31, 2025, was 0.91%, with a tax benefit of $39 on a pre-tax loss of $4,289,000[157] - The Company reported an uncertain tax position of $832 million for the three months ended March 31, 2025, compared to $639 million for the same period in 2024[159] Stock and Equity - The Company has not paid any cash dividends on common stock to date and has no current plans to do so in the foreseeable future[127] - As of March 31, 2025, the Company had 146,352,426 shares of Class A common stock issued and outstanding[123] - The company issued 2,629,506 restricted stock units during the three months ended March 31, 2025, with 11,583,693 shares of Class A common stock available for issuance under the 2022 Plan as of the same date[145] Market Risks - The Company is subject to market risk associated with changing interest rates within its variable rate Senior Term Loan, which is linked to the Prime Rate[294] - A one percentage point increase in the Prime Rate is estimated to raise annual cash interest expense by approximately $0.6 million[295] - The company does not believe inflation has materially impacted its financial condition or cash flows to date, but acknowledges potential future adverse effects from high inflation rates[296]