FiscalNote (NOTE) Q2 Revenue Falls 20%

Core Insights - FiscalNote reported Q2 2025 GAAP revenue of $23.3 million, exceeding analyst consensus of $22.8 million and the company's own guidance midpoint [1][5] - The company experienced a 20.2% year-over-year decline in revenue, primarily due to divestitures and winding down legacy products [2][5] - Adjusted EBITDA increased by 55.6% year-over-year to $2.8 million, driven by improved operational efficiency and reduced operating expenses [2][6] Financial Performance - GAAP EPS was $(0.06), meeting expectations, while adjusted EBITDA reached $2.8 million [1][2] - Subscription revenue was $21.4 million, comprising 92% of total revenue but down 21% year-over-year [5][7] - Annual recurring revenue (ARR) fell to $85.9 million, down 21% from $109.0 million a year earlier, with a pro forma decline of 8% after adjusting for divestitures [7] Business Overview - FiscalNote provides AI-driven software for tracking legislation, regulations, and policy activity, targeting large enterprises, governments, and non-profits [3] - The company's success relies on retaining clients through recurring subscriptions and growing ARR [4] Strategic Focus - The PolicyNote platform is central to the company's strategy, with new features enhancing its capabilities [8] - Corporate customers are signing multi-year contracts at more than double the rate of the previous year, indicating strong interest [9] Operational Developments - The company completed several divestitures, including the sale of TimeBase to Thomson Reuters for $6.5 million, aiming to sharpen operational focus [10] - Total operating expenses declined by 18% year-over-year, contributing to improved profitability metrics [11] Future Guidance - Management reaffirmed full-year 2025 guidance, projecting total revenues of $94 to $100 million and adjusted EBITDA of $10 to $12 million [12] - The company expects ARR to resume growth in the second half of 2025, although no specific targets were disclosed [12] Market Considerations - Investor focus will be on the adoption of PolicyNote and its potential to reverse declines in ARR and net revenue retention [13] - Ongoing macroeconomic volatility, particularly in the US federal sector, poses risks for future sales cycles [13]