
FORM 10-Q Filing Information Registrant Information Details FiscalNote Holdings, Inc.'s identification for the Form 10-Q filing, including incorporation, file number, and NYSE-listed securities Registrant Information Details | Detail | Value | | :--- | :--- | | Filing Type | Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 | | Quarterly Period Ended | June 30, 2025 | | Registrant Name | FISCALNOTE HOLDINGS, INC. | | State of Incorporation | Delaware | | Commission File Number | 001-396972 | | IRS Employer Identification No. | 88-3772307 | | Principal Executive Offices | 1201 Pennsylvania Avenue NW, 6th Floor, Washington, D.C. 20004 | | Registrant's Telephone Number | (202) 793-5300 | | Class A Common Stock Trading Symbol | NOTE (NYSE) | | Warrants Trading Symbol | NOTE.WS (NYSE) | | Filing Compliance (13/15(d)) | Yes | | Interactive Data File Submission | Yes | | Filer Status | Accelerated filer, Smaller reporting company, Emerging growth company | | Class A Common Stock Outstanding (as of Aug 4, 2025) | 163,909,082 shares | | Class B Common Stock Outstanding (as of Aug 4, 2025) | 8,290,921 shares | Table of Contents Cautionary Note Regarding Forward-Looking Statements Advises readers that the report contains forward-looking statements, highlighting factors that could cause actual results to differ materially - Forward-looking statements are identified by terms like 'believes,' 'estimates,' 'anticipates,' 'expects,' and cover future operations, financial condition, liquidity, growth strategies, and market position8 - Key risk factors include concentration of revenues from U.S. government agencies, ability to achieve organic growth, future capital requirements and debt compliance, demand for services, impact of cost reduction initiatives, and risks associated with international operations8 - Other risks involve the ability to introduce new features and maintain data accuracy, reliance on third-party systems, potential technical disruptions or cyberattacks, competitive pressures, compliance with laws (especially AI and data privacy), retention of key personnel, and adverse economic conditions8 PART I. Financial Information Item 1. Financial Statements Presents FiscalNote's unaudited condensed consolidated financial statements, including balance sheets, income statements, cash flows, and detailed notes Condensed Consolidated Balance Sheets Presents the company's financial position, detailing assets, liabilities, and equity at specific reporting dates Balance Sheet Summary (in thousands) | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $34,009 | $28,814 | | Total current assets | $56,672 | $57,187 | | Goodwill | $139,776 | $159,061 | | Total assets | $288,349 | $326,197 | | Liabilities | | | | Total current liabilities | $45,432 | $51,253 | | Long-term debt, net of current maturities | $116,748 | $147,041 | | Total liabilities | $190,535 | $228,366 | | Equity | | | | Total stockholders' equity | $95,095 | $97,831 | | Total liabilities, temporary equity and stockholders' equity | $288,349 | $326,197 | - Total assets decreased by $37.8 million from December 31, 2024, to June 30, 2025, primarily due to a reduction in goodwill and customer relationships13 - Total liabilities decreased by $37.8 million, driven by a significant reduction in long-term debt13 Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) Provides the company's financial performance, including revenues, operating loss, net income (loss), and EPS for the periods Statements of Operations and Comprehensive Income (Loss) Summary (in thousands) | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Total revenues | $23,264 | $29,246 | $50,775 | $61,358 | | Operating loss | $(7,427) | $(7,956) | $(21,189) | $(19,400) | | Net (loss) income | $(13,271) | $(12,764) | $(17,521) | $37,835 | | Basic and Diluted EPS | $(0.08) | $(0.09) | $(0.11) | $0.28 | - Total revenues decreased by 20.5% for the three months ended June 30, 2025, and by 17.2% for the six months ended June 30, 2025, compared to the prior year periods17 - Net loss increased slightly for the three-month period (4.0% YoY) and significantly for the six-month period, moving from a net income of $37.8 million in 2024 to a net loss of $17.5 million in 2025, primarily due to a lower gain on sale of business in 202517 Condensed Consolidated Statements of Changes in Stockholders' Equity (Deficit) Details changes in the company's equity, including common stock, additional paid-in capital, and accumulated deficit Stockholders' Equity (Deficit) Summary (in thousands) | Metric (in thousands) | Balance at December 31, 2024 | Balance at June 30, 2025 | | :--- | :--- | :--- | | Class A Common Stock (Amount) | $15 | $16 | | Additional paid-in capital | $899,929 | $914,362 | | Accumulated deficit | $(806,899) | $(824,420) | | Total stockholders' equity | $97,831 | $95,095 | - Total stockholders' equity decreased by $2.7 million from December 31, 2024, to June 30, 2025, primarily due to the net loss incurred during the period, partially offset by increases in additional paid-in capital from stock issuances19 Condensed Consolidated Statements of Cash Flows Summarizes cash inflows and outflows from operating, investing, and financing activities for the reporting periods Cash Flow Summary (in thousands) | Metric (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(2,895) | $(988) | | Net cash provided by investing activities | $36,795 | $86,951 | | Net cash used in financing activities | $(28,817) | $(71,825) | | Net change in cash, cash equivalents, and restricted cash | $5,199 | $14,027 | | Cash, cash equivalents, and restricted cash, end of period | $34,653 | $31,327 | - Cash used in operating activities increased by $1.9 million in the first six months of 2025 compared to 202421 - Net cash provided by investing activities decreased significantly from $86.9 million in 2024 to $36.8 million in 2025, primarily due to lower cash proceeds from business sales21 - Net cash used in financing activities decreased from $71.8 million in 2024 to $28.8 million in 2025, mainly due to lower principal payments of long-term debt21 Notes to Condensed Consolidated Financial Statements Provides detailed explanations of significant accounting policies, business combinations, revenues, dispositions, and other financial statement items Note 1. Summary of Business and Significant Accounting Policies Describes FiscalNote's AI-driven policy intelligence business, consolidation principles, liquidity, and key accounting policies, including recent debt refinancing impacts - FiscalNote is a leading provider of AI-driven policy and regulatory intelligence solutions, helping customers manage political and business risk23 Liquidity Snapshot (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash, cash equivalents, restricted cash, and short-term investments | $39,200 | $35,300 | | Negative working capital (excluding cash/short-term investments) | $(27,900) | N/A | | Accumulated deficit | $(824,400) | $(806,900) | | Net losses (excluding gain on sale of businesses) (Six Months) | $(32,900) | $(33,800) | - The company has implemented cost-saving measures, improving cash used in operations by approximately $67 million over the past two years28 - A recent debt refinancing (2025 Senior Term Loan) is expected to provide adequate cash and cash flows for the next twelve months, with financial covenants including minimum cash, ARR, adjusted EBITDA, and capital expenditure limitations2930 - Revenues from the U.S. Federal Government accounted for 18% and 17% of total revenues for the six months ended June 30, 2025 and 2024, respectively41 Note 2. Business Combination with DSAC Details the July 2022 reverse recapitalization with DSAC, establishing New FiscalNote and its NYSE listing - Business Combination completed on July 29, 2022, with Old FiscalNote becoming a wholly owned subsidiary of DSAC, which was renamed FiscalNote Holdings, Inc46 - The transaction was accounted for as a reverse recapitalization, with Old FiscalNote as the accounting acquirer, meaning DSAC's net assets were recorded at historical cost with no goodwill or other intangible assets46 - Post-combination, Class A common stock and public warrants began trading on the NYSE under symbols 'NOTE' and 'NOTE.WS'46 Note 3. Revenues Disaggregates revenue by type and geography, detailing contract assets, deferred revenue, and unsatisfied performance obligations Disaggregated Revenue (in thousands) | Revenue Type | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Subscription | $21,380 | $27,151 | $46,612 | $56,777 | | Advisory | $313 | $965 | $1,376 | $2,222 | | Advertising | $500 | $308 | $955 | $822 | | Books | $4 | $33 | $6 | $181 | | Other revenue | $1,067 | $789 | $1,826 | $1,356 | | Total | $23,264 | $29,246 | $50,775 | $61,358 | Revenue by Geographic Location (in thousands) | Region | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | North America | $21,699 | $23,064 | $43,609 | $49,061 | | Europe | $1,255 | $5,382 | $6,552 | $10,651 | | Australia | $310 | $319 | $614 | $622 | | Asia | $- | $481 | $- | $1,024 | | Total | $23,264 | $29,246 | $50,775 | $61,358 | - Deferred revenue decreased from $35.5 million at December 31, 2024, to $33.2 million at June 30, 2025, influenced by business sales and revenue recognition53 - Unsatisfied performance obligations totaled $75.2 million at June 30, 2025, expected to be recognized over the next five years55 Note 4. Dispositions Outlines the company's business sales in 2025 and 2024, including cash proceeds, pre-tax gains, and debt prepayments 2025 Dispositions (Dragonfly and Oxford Analytica) | Detail | Amount (in thousands) | | :--- | :--- | | Sale Date | March 31, 2025 | | Cash Received (net) | $40,000 | | Pre-tax Gain on Disposal | $15,424 | | Term Loans Prepayment | $27,136 | | Related Prepayment & Exit Fees | $1,793 | | Net Proceeds Retained | $11,071 | 2024 Dispositions (Board.org & Aicel) | Detail | Board.org (in thousands) | Aicel (in thousands) | | :--- | :--- | :--- | | Sale Date | March 11, 2024 | October 31, 2024 | | Cash Received (net) | $90,905 | $8,500 | | Pre-tax Gain on Disposal | $71,599 | $480 | | Term Loans Prepayment | $65,700 | $5,000 | | Related Prepayment & Exit Fees | $7,068 | $331 | | Net Proceeds Retained | $18,137 | N/A | - The disposed businesses (Oxford Analytica, Dragonfly, Board.org, Aicel) were not deemed significant subsidiaries, and their sales did not constitute a strategic shift, thus not reported as discontinued operations576164 Note 5. Leases Details the company's operating lease commitments for corporate offices, including lease terms and associated costs - The company holds operating leases for corporate offices with non-cancellable terms expiring through 2031, typically ranging from one to six years64 Total Lease Costs (in thousands) | Lease Type | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Operating lease cost | $1,036 | $1,206 | $2,111 | $2,444 | | Variable lease cost | $58 | $56 | $114 | $150 | | Short-term lease cost | $5 | $53 | $45 | $90 | | Total lease costs | $1,099 | $1,315 | $2,270 | $2,684 | - Cash payments for operating lease liabilities were $2.68 million for the six months ended June 30, 2025, a decrease from $2.98 million in the prior year period66 Note 6. Intangible Assets Summarizes finite-lived intangible assets, including customer relationships and developed technology, along with capitalized software costs Intangible Assets (in thousands) | Asset Class | Net Carrying Amount (June 30, 2025) | Net Carrying Amount (December 31, 2024) | Weighted Average Remaining Useful Life (Years) | | :--- | :--- | :--- | :--- | | Customer relationships | $33,407 | $41,717 | 7.4 | | Developed technology | $3,613 | $5,353 | 6.0 | | Databases | $15,112 | $16,147 | 7.4 | | Tradenames | $4,554 | $5,708 | 7.1 | | Expert network | $- | $939 | - | | Patents | $630 | $609 | 17.1 | | Content library | $380 | $409 | 6.4 | | Total | $57,696 | $70,882 | N/A | - Total net carrying amount of finite-lived intangible assets decreased by $13.2 million from December 31, 2024, to June 30, 202567 Capitalized Software Development Costs (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Net Carrying Amount | $12,348 | $15,099 | | Amortization (Six Months) | $4,945 | $3,407 | Note 7. Goodwill Explains goodwill, its impairment testing, and changes in carrying amounts due to dispositions and reporting unit reassessment Goodwill Carrying Amounts (in thousands) | Metric | Amount | | :--- | :--- | | Balance at December 31, 2024 | $159,061 | | Sale of Dragonfly and Oxford Analytica | $(20,236) | | Impact of foreign currency fluctuations | $951 | | Balance at June 30, 2025 | $139,776 | - Goodwill decreased by $19.3 million from December 31, 2024, to June 30, 2025, primarily due to the sale of Dragonfly and Oxford Analytica71 - Effective January 1, 2025, the company operates as a single reporting unit for goodwill assessment, with no impairment identified71 Note 8. Debt Provides a comprehensive overview of the company's debt instruments, including carrying values, interest terms, and recent restructuring efforts Carrying Value of Debt (in thousands) | Debt Instrument | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Prior Senior Term Loan | $61,837 | $88,595 | | GPO Convertible Note | $36,446 | $36,524 | | Amended Legacy Notes | $6,525 | $16,165 | | Dragonfly Seller Convertible Notes | $9,839 | $8,979 | | Era Convertible Note | $5,209 | $- | | PPP loan | $- | $36 | | Total gross debt | $119,856 | $150,299 | | Total Long-term debt (net of current maturities) | $116,748 | $147,041 | - Total gross debt decreased by $30.4 million from December 31, 2024, to June 30, 2025, primarily due to repayments and conversions of the Prior Senior Term Loan and Amended Legacy Notes75 - The Prior Senior Term Loan was retired on August 12, 2025, and replaced with a new $75.0 million 2025 Senior Term Loan maturing in August 2029, with lower annualized cash interest payments89212213 - The GPO Convertible Note was partially redeemed for $27.0 million cash and the remainder exchanged for a new $20.4 million 2025 GPO Note maturing in November 202995212 - The Amended Legacy Notes were retired on August 12, 2025, with a $3.6 million cash payment102212 Note 9. Stockholders' Equity and Temporary Equity Details authorized and outstanding capital stock, dividend policy, and accounting for temporary equity related to convertible notes Authorized and Outstanding Capital Stock (as of June 30, 2025) | Stock Class | Authorized Shares | Issued and Outstanding Shares | | :--- | :--- | :--- | | Class A Common Stock | 1,700,000,000 | 155,049,637 | | Class B Common Stock | 9,000,000 | 8,290,921 | | Preferred Stock | 100,000,000 | 0 | | Temporary Equity (Class A Common Stock) | N/A | 2,596,050 | - The company has not paid any cash dividends on common stock to date and plans to retain future earnings for business development133 - Temporary equity of $2.7 million represents 2,596,050 Class A Common Stock issued as an inducement for the Third Era Convertible Note, classified as temporary equity due to future redeemability outside the company's control134 Note 10. Earnout Shares and RSUs Describes Earnout Awards contingent on stock price Triggering Events and the accounting for share-based compensation - Up to 19,195,100 additional Class A common shares (Earnout Awards) are contingent on five stock price Triggering Events ($10.50, $12.50, $15.00, $20.00, or $25.00) within a five-year Earnout Period135 - Share-based compensation expense for Earnout Awards was $65 thousand for the six months ended June 30, 2025, and $172 thousand for the six months ended June 30, 2024138 - As of June 30, 2025, no Earnout Shares or RSUs have been issued as no Triggering Events have occurred, and $54 thousand of unrecognized compensation expense remains139 Note 11. Warrant Liabilities Details outstanding warrants, including exercise prices, expiration dates, and accounting treatment as liabilities Warrants Outstanding (as of June 30, 2025) | Warrant Type | Number Outstanding | Exercise Price | Fair Value (in thousands) | | :--- | :--- | :--- | :--- | | Old FiscalNote Warrants | 118,700 | $8.56 | $- | | Amendment No. 1 Warrants | 80,000 | $0.01 | $43 | | Public Warrants | 8,358,964 | $7.32 (per 1.571428 shares) | $828 | | Private Placement Warrants | 7,000,000 | $7.32 (per 1.571428 shares) | $694 | - Public warrants are exercisable for 1.571428 shares of Class A common stock at $7.32 per share and expire on July 29, 2027, or earlier upon redemption142 - Private placement warrants have identical terms to public warrants but are not redeemable by the company as long as held by the DSAC sponsor or permitted transferees144 Note 12. Stock-Based Compensation Outlines the company's stock-based compensation plans, reserved shares, award types, and recognized expenses Stock-Based Compensation Expense (in thousands) | Plan | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | 2022 Long-Term Incentive Plan | $3,864 | $3,463 | $7,118 | $9,239 | | 2022 Employee Stock Purchase Plan (ESPP) | $43 | $94 | $87 | $193 | | 2024 Inducement Plan Grants | $35 | $0 | $69 | $0 | | Acquisition Earnouts | $23 | $41 | $65 | $172 | | Total | $3,965 | $3,598 | $7,339 | $9,604 | - The 2022 Plan had 5,957,860 shares of Class A common stock available for issuance as of June 30, 2025149 - The ESPP allows eligible employees to purchase shares at a discount, with 8,256,500 shares of Class A common stock available for issuance151 Note 13. Earnings (Loss) Per Share Explains the calculation of basic and diluted EPS, including the treatment of anti-dilutive securities during net loss periods Basic and Diluted Earnings Per Share | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net (loss) income used to compute basic and diluted EPS (in thousands) | $(13,271) | $(12,764) | $(17,521) | $37,835 | | Weighted average common stock outstanding (Basic and Diluted) | 160,000,492 | 134,407,109 | 155,668,949 | 132,763,763 | | Earnings Per Share, basic and diluted | $(0.08) | $(0.09) | $(0.11) | $0.28 | - For periods with a net loss (Q2 2024, Q2 2025, H1 2025), basic and diluted EPS are the same because potential common shares would be anti-dilutive158 Anti-Dilutive Securities Excluded from Diluted Loss Per Share (as of June 30, 2025) | Security Type | Number of Shares | | :--- | :--- | | Earnout Awards | 19,195,100 | | Stock options | 33,181 | | Convertible Notes | 11,866,893 | | Restricted stock units | 14,234,282 | | Era Convertible Note | 9,777,469 | | GPO Convertible Note | 7,083,469 | | Dragonfly Seller Convertible Notes | 1,355,930 | | Total anti-dilutive securities | 63,546,324 | Note 14. Provision (Benefit) from Income Taxes Details the company's income tax provision or benefit, effective tax rates, and factors causing deviations from the statutory rate Income Tax Summary (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net (loss) income before income taxes | $(14,066) | $(12,440) | $(18,355) | $39,585 | | (Benefit) provision from income taxes | $(795) | $324 | $(834) | $1,750 | | Effective tax rate | (5.65)% | (2.60)% | (4.54)% | (4.42)% | - The effective tax rate differed from the U.S. statutory rate of 21% primarily due to a valuation allowance on deferred tax assets and the impact of business sales161 - A discrete tax benefit of $281 thousand was recorded for the sale of Dragonfly and Oxford Analytica, and an additional $689 thousand benefit from a tax accounting method change in Q2 2025161 - An uncertain tax position of $832 thousand was reported as of June 30, 2025, related to a deduction for shares distributed for services163 Note 15. Fair Value Measurements and Disclosures Outlines fair value measurements for financial assets and liabilities, categorized by hierarchy levels, with valuation assumptions Financial Assets and Liabilities at Fair Value (in thousands, June 30, 2025) | Instrument | Level 1 | Level 2 | Level 3 | Total | | :--- | :--- | :--- | :--- | :--- | | Cash equivalents | $6,418 | $- | $- | $6,418 | | Short-term investments | $- | $4,508 | $- | $4,508 | | Public warrants | $828 | $- | $- | $828 | | Private placement warrants | $- | $694 | $- | $694 | | GPO Convertible Note | $- | $- | $36,446 | $36,446 | | Dragonfly Seller Convertible Notes | $- | $- | $9,839 | $9,839 | | Era Convertible Note | $- | $- | $5,209 | $5,209 | | Guaranteed Return Liability and financial liabilities | $1,895 | $- | $- | $1,895 | - The fair value of public warrants decreased from $1.338 million at December 31, 2024, to $828 thousand at June 30, 2025, resulting in a non-cash gain170 - The fair value of the GPO Convertible Note was $36.446 million at June 30, 2025, valued using a trinomial lattice model with a common stock share price of $0.54 and expected volatility of 50.0%174 Note 16. Commitments and Contingencies States the company's involvement in legal and regulatory proceedings, with no expected material adverse effects on its business or financial condition - The company is involved in various legal and regulatory proceedings, including intellectual property, commercial contract, and employment-related disputes, in the ordinary course of business181 - Legal fees are recognized as incurred, and management assesses loss contingencies based on the likelihood and amount of potential loss181182 - No current litigation or regulatory proceeding is expected to have a material adverse effect on the company's business, results of operations, financial conditions, or cash flows337 Note 17. Subsequent Events Details significant post-period events, including the sale of TimeBase and a major debt refinancing - On July 1, 2025, the company completed the sale of its Australian subsidiary, TimeBase Pty. Ltd., for $6.6 million in cash, using $3.2 million of net proceeds to repay the Prior Senior Term Loan184 - On August 12, 2025, the company retired all outstanding obligations under the Amended Legacy Notes by paying holders $3.6 million in cash185 Debt Refinancing (August 12, 2025) | Action | Details | | :--- | :--- | | 2025 Senior Term Loan | $75.0 million advanced, maturing August 12, 2029. Replaced Prior Senior Term Loan ($62.7 million retired). Secured by first priority lien on assets. Interest at variable rates (reference rate + 7% or SOFR + 8%). Quarterly principal payments starting Sept 30, 2025 | | Convertible Debentures | Initial tranche of $21.0 million principal issued to YA for $18.9 million cash. Second tranche of $12.3 million expected to be issued for $11.1 million net proceeds. Mature February 12, 2027, bear 5% interest (18% on default). Convertible into Class A Common Stock | | 2025 GPO Note | $30.0 million of GPO Convertible Note redeemed for $27.0 million cash. Remaining principal exchanged for new $20.4 million 2025 GPO Note, maturing November 13, 2029. Bears 7.50% interest, payable in cash or Class A Common Stock. Quarterly principal payments of $2.0 million starting April 1, 2026 | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management's perspective on FiscalNote's financial condition, operating results, liquidity, and significant events, including key performance indicators and non-GAAP measures Overview Describes FiscalNote as a leading AI-driven policy and regulatory intelligence provider, delivering critical insights to manage risk - FiscalNote is a leading provider of AI-driven policy and regulatory intelligence solutions, combining AI technology, data, and expert analysis to help customers manage political and business risk209 - The company delivers critical insights through its suite of public policy and issues management products, expert research, and tools for workflow, advocacy, and constituent relationships209 Business Combination Recaps the July 2022 Business Combination with DSAC, accounted for as a reverse recapitalization - The Business Combination with DSAC was completed on July 29, 2022, resulting in FiscalNote Holdings, Inc. (New FiscalNote)210 - The transaction was accounted for as a reverse recapitalization, with Old FiscalNote as the accounting acquirer210 Significant Events Highlights the major debt refinancing completed in August 2025, including new loans and notes, and projected interest payments - The company completed a major debt refinancing on August 5 and 12, 2025, retiring approximately $62.7 million of the Prior Senior Term Loan and replacing it with a new $75.0 million 2025 Senior Term Loan211212 - The refinancing also involved issuing $21.0 million of Debentures, redeeming $30.0 million of the GPO Convertible Note for cash and exchanging the remainder for a new $20.4 million note, and retiring Amended Legacy Notes for $3.6 million cash212 - Post-refinancing, annualized cash interest payments are projected to be approximately $9.0 million, with principal repayments of $1.9 million in year one and $3.8 million thereafter213 Factors Impacting the Comparability of Our Operating Results Discusses the impact of business dispositions, product rationalization, and workforce planning on revenue and operating expenses Impact of Dispositions on Revenue (in thousands) | Business Sold | Sale Date | Gain on Sale (Six Months) | Subscription Revenue Impact (Six Months Ended June 30, 2025) | Non-Subscription Revenue Impact (Six Months Ended June 30, 2025) | | :--- | :--- | :--- | :--- | :--- | | Dragonfly & Oxford Analytica | March 31, 2025 | $15,400 | $(3,500) | $(700) | | Aicel Technologies | October 31, 2024 | $500 | N/A | N/A | | Board.org | March 11, 2024 | $71,500 | N/A | N/A | | Timebase (post-period) | July 1, 2025 | N/A | $(600) | N/A | - Product rationalization led to ceasing sales of certain non-core products, impacting subscription revenue by approximately $0.2 million for the six months ended June 30, 2025217 - Workforce planning actions, business dispositions, and product rationalization reduced full-time equivalent headcount by approximately 17 from the beginning of Q2 2025 through June 30, 2025, leading to reduced operating expenses218 - The company continues to invest in innovative products, customer expansion (enterprise and government), and strategic acquisitions to drive future organic growth219220222 Key Performance Indicators Presents key metrics like Annual Recurring Revenue (ARR) and Net Revenue Retention (NRR), reflecting business performance Annual Recurring Revenue (ARR) (in millions) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total ARR | $85.9 | $107.5 | | ARR (excluding discontinued products and dispositions) | N/A | $93.3 | | ARR (excluding discontinued products and dispositions, June 30, 2024) | N/A | $93.6 | - ARR decreased from $107.5 million at December 31, 2024, to $85.9 million at June 30, 2025, primarily due to the impact of business sales226 Net Revenue Retention (NRR) (excluding dispositions) | Period | NRR | | :--- | :--- | | Three Months Ended June 30, 2025 | 96% | | Three Months Ended June 30, 2024 | 98% | Non-GAAP Financial Measures Provides non-GAAP financial measures, including Adjusted Gross Profit and Adjusted EBITDA, to offer additional insights into performance Adjusted Gross Profit and Margin (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Total revenues | $23,264 | $29,246 | $50,775 | $61,358 | | Gross Profit | $18,316 | $22,383 | $38,843 | $47,251 | | Gross Profit Margin | 79% | 77% | 77% | 77% | | Adjusted Gross Profit | $20,095 | $24,890 | $44,154 | $52,186 | | Adjusted Gross Profit Margin | 86% | 85% | 87% | 85% | EBITDA, Adjusted EBITDA, and Margin (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net (loss) income | $(13,271) | $(12,764) | $(17,521) | $37,835 | | EBITDA | $(5,768) | $(1,894) | $1,188 | $62,910 | | Adjusted EBITDA | $2,801 | $1,774 | $5,582 | $2,991 | | Adjusted EBITDA Margin | 12.0% | 6.1% | 11.0% | 4.9% | - Adjusted Gross Profit Margin improved to 86% for the three months ended June 30, 2025, from 85% in the prior year, and to 87% for the six months ended June 30, 2025, from 85% in the prior year278 - Adjusted EBITDA significantly increased to $2.8 million for the three months ended June 30, 2025, from $1.8 million in the prior year, and to $5.6 million for the six months ended June 30, 2025, from $3.0 million in the prior year, reflecting improved operational performance279 Key Components of Results of Operations Explains the primary drivers of revenue (subscription, advisory, advertising) and the composition of operating expenses - Subscription revenues accounted for approximately 92% and 93% of total revenues for the six months ended June 30, 2025 and 2024, respectively, driven by active licenses, product types, and subscription prices236237 - Advisory revenues are typically non-recurring, contract-based for specific deliverables, while advertising revenues are generated from publications (Roll Call and CQ) in print and digital formats239240 - Operating expenses include cost of revenues (hosting, data center, amortization of developed technology and capitalized software, third-party fees, compensation), research and development (product creation and testing), sales and marketing (staff, commissions, programs), editorial (content acquisition and distribution), and general and administrative (executive, finance, HR, legal, depreciation)241242243244246 - Interest expense, net, includes interest on borrowings, amortization/write-off of debt issuance costs, and derivative instrument interest248 Changes in fair value of financial instruments are marked to market each period249 Results of Operations Analyzes consolidated financial results, including revenue trends, operating loss, and changes in interest expense Consolidated Results (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Total revenues | $23,264 | $29,246 | $50,775 | $61,358 | | Operating loss | $(7,427) | $(7,956) | $(21,189) | $(19,400) | | Net (loss) income | $(13,271) | $(12,764) | $(17,521) | $37,835 | | Interest expense, net | $4,338 | $5,320 | $9,465 | $12,682 | | Change in fair value of financial instruments | $1,577 (loss) | $(854) (gain) | $906 (loss) | $(327) (gain) | - Subscription revenue decreased by 21% for the three months and 17.9% for the six months ended June 30, 2025, primarily due to the sale of businesses (Dragonfly and Oxford Analytica) and customer retention challenges255257 - Europe revenues decreased significantly by 76.7% for the three months and 38.5% for the six months ended June 30, 2025, mainly due to the sales of Dragonfly and Oxford Analytica260 - Operating expenses decreased across most categories (Cost of revenues, R&D, Sales & Marketing, Editorial, Amortization of intangibles) due to dispositions and workforce planning actions, while General and administrative expenses saw a slight increase261262263264265266267268269270271 - Interest expense, net, decreased by $1.0 million for the three months and $3.2 million for the six months ended June 30, 2025, primarily due to the repayment of the Prior Senior Term Loan272273 Liquidity and Capital Resources Assesses the company's cash position, working capital, debt, and ability to fund future operations and meet obligations - Cash used in operations improved by approximately $67 million when comparing the twelve months ended June 30, 2025, to the twelve months ended June 30, 2023283 Liquidity and Debt Overview (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash, cash equivalents, restricted cash, and short-term investments | $39,200 | $35,300 | | Negative working capital (excluding cash/short-term investments) | $(27,900) | N/A | | Accumulated deficit | $(824,400) | $(806,900) | | Total Principal plus PIK Outstanding Debt | $138,135 | $168,260 | - The recent debt refinancing (2025 Senior Term Loan, Debentures, 2025 GPO Note) is expected to provide flexibility to fund future operations and achieve positive cash flows285 - The 2025 Senior Term Loan includes four financial covenants: minimum cash balance, minimum ARR, minimum adjusted EBITDA, and capital expenditure limitation, which the company expects to maintain compliance with290 - Capital expenditures were $3.5 million for the six months ended June 30, 2025, down from $4.4 million in the prior year, primarily for capitalized software costs and property and equipment309 Cash Flow Summary Summarizes cash flows from operating, investing, and financing activities, highlighting key changes and drivers Cash Flow Summary (in thousands) | Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(2,895) | $(988) | | Net cash provided by investing activities | $36,795 | $86,951 | | Net cash used in financing activities | $(28,817) | $(71,825) | | Net change in cash and cash equivalents | $5,199 | $14,027 | - Cash used in operating activities increased by $1.9 million in H1 2025, driven by a net loss of $17.5 million, partially offset by non-cash expenses and changes in working capital312 - Net cash provided by investing activities decreased by $50.2 million in H1 2025, primarily due to lower cash proceeds from business sales ($40.3 million in 2025 vs. $91.4 million in 2024)314 - Net cash used in financing activities decreased by $43.0 million in H1 2025, mainly due to lower principal payments of long-term debt and deferred financing costs315 Commitments and Contingencies Identifies the company's primary commitments, including lease obligations and debt service - The company's primary commitments include obligations under office space leases and debt service obligations316 Off-Balance Sheet Arrangements Confirms the absence of material off-balance sheet financing activities or arrangements during the reporting periods - The company did not engage in any off-balance sheet financing activities or arrangements with a material effect on its financial condition or results of operations during the periods presented317 Recently Issued Accounting Pronouncements and Tax Reform Discusses the evaluation of new accounting standards and tax legislation for their potential impact on disclosures - The company is evaluating the impact of ASU 2023-09 (Income Taxes) and ASU 2024-03 (Income Statement—Reporting Comprehensive Income) on its disclosures4445 - U.S. legislation, 'An Act to Provide for Reconciliation Pursuant to Title II of H. Con. Res. 14,' signed on July 4, 2025, extended key provisions of the 2017 Tax Cuts and Jobs Act and introduced targeted changes, which the company is currently evaluating for impact164320 Critical Accounting Estimates and Policies Notes the use of significant estimates in financial statements and the absence of material changes in critical accounting policies - The preparation of financial statements requires significant estimates and assumptions that could materially impact reported amounts321 - There were no significant material changes in critical accounting policies or estimates during the six months ended June 30, 2025, compared to those disclosed in the Annual Report on Form 10-K for 2024322323 Item 3. Quantitative and Qualitative Disclosures About Market Risks Discusses the company's exposure to foreign currency, interest rate, and inflation risks, and their potential financial impact - The company is exposed to foreign currency exchange risk, primarily from fluctuations in the Euro, British Pound Sterling, and Australian Dollar, which impacted total revenue by approximately 1.0% for the three and six months ended June 30, 2025325326 - Interest rate risk is associated with the variable rate Prior Senior Term Loan (now 2025 Senior Term Loan), with a hypothetical one percentage point increase in the Prime Rate estimated to increase annual cash interest expense by approximately $0.6 million327328329 - Inflation has not had a material impact to date, but a high rate in the future could adversely affect the business330 Item 4. Controls and Procedures Reports on the effectiveness of disclosure controls and internal control over financial reporting, with no material changes - Management, with CEO and CFO participation, concluded that disclosure controls and procedures were effective as of June 30, 2025, providing reasonable assurance for timely and accurate reporting331332333 - No material changes in internal control over financial reporting occurred during the quarter ended June 30, 2025334 - Management acknowledges that controls and procedures provide only reasonable assurance and involve judgment in balancing benefits and costs335 Part II. OTHER INFORMATION Item 1. Legal Proceedings States that no current legal or regulatory proceedings are expected to materially adversely affect the company's business - The company is not currently involved in any litigation or regulatory proceedings expected to materially adversely affect its business, results of operations, financial conditions, or cash flows337 Item 1A. Risk Factors Highlights the risk of potential dilution of Class A Common Stock due to future sales of a substantial number of shares - Sales of a substantial number of Class A Common Stock into the public market, or the perception of such sales, could cause the market price to decline and make it difficult for stockholders to sell shares339340341 - The issuance of Third ERA Convertible Note Underlying Shares, Third ERA Convertible Note Fee Shares, Third ERA Convertible Note Additional Shares, Broker Shares, GPO Shares, and Debenture Conversion Shares may cause significant dilution to existing stockholders342343344345 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds Confirms no unregistered sales of equity securities or common stock repurchases during the quarter - No unregistered sales of equity securities occurred during the three months ended June 30, 2025, beyond those reported on Form 8-K347 - The company did not repurchase any shares of its common stock during the three months ended June 30, 2025348 Item 3. Defaults upon Senior Securities States that there were no defaults upon senior securities during the reporting period - There were no defaults upon senior securities350 Item 4. Mine Safety Disclosures Indicates that mine safety disclosures are not applicable to the company's operations - Mine safety disclosures are not applicable to the company351 Item 5. Other Information Provides additional information on the 2025 Senior Term Loan, a director's departure, and Rule 10b5-1 trading plans - The company closed on the 2025 Senior Term Loan on August 12, 2025, receiving $72.9 million in net proceeds, used to retire prior debt obligations and for general corporate purposes352 - Michael J. Callahan resigned from the Board of Directors, effective August 27, 2025, to focus on other professional commitments354 - Certain officers and the Executive Chair adopted Rule 10b5-1 trading arrangements on May 15, 2025, primarily for 'sell-to-cover' transactions to satisfy tax withholding obligations on equity awards355358 Item 6. Exhibits Lists all exhibits filed with the Form 10-Q, including key legal and financial documents - The exhibits include key legal and financial documents such as the Agreement and Plan of Merger, Certificate of Incorporation, Bylaws, Warrant Agreement, and recent financing agreements (e.g., Financing Agreement, Securities Purchase Agreement, Redemption and Exchange Agreement)361 - Many exhibits are incorporated by reference from previous SEC filings, indicating continuity and accessibility of historical documents361 SIGNATURES Signatures Contains the official signatures of the CEO and CFO, certifying the report's filing on behalf of FiscalNote Holdings, Inc - The report is duly signed by Josh Resnik, Chief Executive Officer, and Jon Slabaugh, Chief Financial Officer, on August 15, 2025364366