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]

Financial Data and Key Metrics Changes - Adjusted EBITDA for Q2 2025 was $2,800,000, representing an adjusted EBITDA margin of 12%, an increase from 4% on a pro forma basis in the same period last year [5][16] - Total revenue for Q2 2025 was $23,300,000, exceeding the guidance midpoint, but $6,000,000 lower compared to the prior year due to divestitures [21][27] - Annual recurring revenue (ARR) was $85,900,000, down from $93,600,000 in 2024, reflecting a decline of $7,700,000 [23] Business Line Data and Key Metrics Changes - Subscription revenue for Q2 2025 was $21,400,000, a decrease of $5,700,000 primarily due to divestitures, accounting for 92% of total revenues [21][27] - Net revenue retention (NRR) was 96%, down from 98% in the prior year, indicating challenges in customer retention [23] Market Data and Key Metrics Changes - Inbound leads for policy products increased by over 20% year over year, and the corporate new logo pipeline was 45% higher at the end of Q2 compared to Q1 [10] - Corporate win rates improved by 400 basis points from Q1 to Q2, with significant increases in average contract value, particularly with large corporate customers [11] Company Strategy and Development Direction - The company aims for consistent expansion of adjusted EBITDA margin, management of the balance sheet, and building a foundation for profitable growth [5][16] - The transition to the PolicyNote platform is ongoing, with expectations for ARR growth to resume in the second half of 2025 and accelerate further in 2026 [15][27] Management's Comments on Operating Environment and Future Outlook - Management acknowledged execution challenges impacting the start of 2025 but expressed confidence in the trajectory of the pipeline and sales metrics [9][10] - The company is focused on improving gross and net retention through the migration to PolicyNote and enhancements in product offerings [32][47] Other Important Information - A substantial refinancing of the senior term loan was announced, extending maturity to 2029, which is expected to provide operational flexibility [7][18] - Cash and cash equivalents at the end of Q2 2025 were $39,200,000, an increase from the prior year, driven by cash influx from recent divestitures [27] Q&A Session Summary Question: What is the contribution of new logo improvement and NRR improvement to return to ARR growth? - Management noted that while new logo success is important, the biggest difference maker will be improvements in gross and net retention, particularly as more customers migrate to PolicyNote [30][32] Question: Are there plans for additional product enhancements and integration of datasets? - Management confirmed ongoing enhancements to PolicyNote, including core datasets and enterprise features, with migrations ahead of schedule [34][36] Question: How are the federal and NGO verticals behaving? - Management indicated ongoing instability in the federal sector but noted opportunities for their solutions, while NGOs remain active in advocacy [37][40]

Financial Performance & Guidance - FiscalNote reaffirmed its FY2025 revenue guidance of $94 million to $100 million[58] - The company expects adjusted EBITDA for FY2025 to be between $10 million and $12 million[58] - Q2 2025 total revenue reached $233 million, exceeding guidance midpoint[65] - Q2 2025 adjusted EBITDA was $28 million, exceeding guidance[65] - Annual Recurring Revenue (ARR) for Q2 2025 was $859 million[65] Strategic Initiatives & Product Development - FiscalNote is shifting to a product-led growth strategy to improve key performance metrics[73] - The company launched PolicyNote, an AI-driven platform with global data and proprietary insights, in January 2025, and migration is ongoing[38] - Corporate new logo pipeline increased by 20% YoY, and corporate new logo pipeline up +45% vs 1Q25[46] - The company is focused on deleveraging its balance sheet and strengthening its capital structure to fund future growth[73] Market & Customer Dynamics - FiscalNote serves over 3,600 customers[22] - Subscription revenue accounts for 92% of total revenues[23] - The company monitors legislative and regulatory activity in over 100 countries[23]

Financial Performance & Outlook - FiscalNote's total revenues for Q1 2025 were $27.5 million, compared to $32.1 million in Q1 2024[59] - The company's gross profit for Q1 2025 was $20.5 million, with a gross margin of 75%, compared to $24.9 million and 77% respectively in Q1 2024[59] - Adjusted EBITDA for Q1 2025 was $2.8 million, representing a 10% margin, compared to $1.2 million and a 4% margin in Q1 2024[59] - FiscalNote reaffirms its full-year 2025 revenue forecast of $94 million to $100 million and adjusted EBITDA of $10 million to $12 million[68] - The company's annual recurring revenue (ARR) for Q1 2025 was $87.7 million, compared to $109.6 million in Q1 2024[59] Business Strategy & Focus - FiscalNote is transitioning towards product-led growth, focusing on product enhancements and launches to improve user experience and customer retention[48, 50] - The company is optimizing its product portfolio, sunsetting non-core products, and divesting non-core businesses to reduce complexity and drive profitable growth[45] - FiscalNote is leveraging AI technologies, such as Copilots for Policy and Global Intelligence, to enhance its core offerings and provide actionable insights to customers[45] Customer Base & Market - FiscalNote has over 4,100 customers, with 92% of total revenues derived from subscriptions[22] - The company serves over 50 of the Fortune 100 companies and monitors legislative and regulatory activities in over 80 countries[22] - FiscalNote targets customers in the private sector (~52%), public sector (~22%), and non-profit/NGO sector (~26%)[20]

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 [7][8] - 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 [23][24] - Annual recurring revenue (ARR) was $88,000,000, down from $94,000,000 in 2024 on a pro forma basis [24][25] - Net revenue retention was 93%, down from 96% in the prior year [25] Business Line Data and Key Metrics Changes - Subscription revenue accounted for 92% of total revenue, consistent with historical trends [24] - Principal operating expenses decreased by $2,300,000 or 5% year-over-year, with significant reductions in R&D and sales and marketing expenses [26][27] - Gross margins for Q1 2025 were 75%, down 200 basis points from the prior year, while adjusted gross margins improved to 87% [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 PolicyNotes [12] - Strong traction in Europe, with pipeline creation doubling in Q1 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][22] - The launch of PolicyNotes is expected to have a meaningful positive impact on 2025, with a commitment to product-led growth [13][24] - 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 challenges, indicating confidence in execution and progress [22][29] - The company is optimistic about future growth, citing strong demand and engagement metrics [20][22] 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 [28] Q&A Session Summary Question: Sales force and market execution - Management acknowledged previous execution issues and noted improvements in sales force effectiveness and pipeline development [32][33] Question: PolicyNotes migration timeline - Management 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 [42][44] Question: Balance sheet and cash from transactions - The sale of a division in Australia is expected to generate approximately $6.5 million, with half allocated to debt reduction [47] Question: Federal vertical health - Management noted volatility in the federal market but sees opportunities for efficiency and value creation [58][59] Question: New adviser from Palantir - The adviser was engaged to focus on federal government opportunities and provide insights to the commercial teams [60]

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]