FiscalNote Q1 2025 Earnings Report

FiscalNote EPS Results

• Actual EPS: -$1.44
• Consensus EPS: -$1.20
• Beat/Miss: Missed by -$0.24
• One Year Ago EPS: N/A

FiscalNote Revenue Results

• Actual Revenue: $27.51 million
• Expected Revenue: $26.43 million
• Beat/Miss: Beat by +$1.09 million
• YoY Revenue Growth: N/A

FiscalNote Announcement Details

• Quarter: Q1 2025
• Date: 5/12/2025
• Time: After Market Closes
• Conference Call Date: Monday, May 12, 2025
• Conference Call Time: 5:00PM ET

FiscalNote (NYSE:NOTE) provides enterprise software and data services designed to help organizations monitor, understand and respond to changes in legislation, regulation, public policy and geopolitical conditions. Its platforms use artificial intelligence, machine learning and data analytics to organize information from government and other public sources, helping customers assess potential risks and opportunities.

The company’s offerings include legislative and regulatory monitoring, policy analysis, stakeholder engagement and advocacy tools. Its products and brands have included FiscalNote, CQ, VoterVoice and Oxford Analytica, serving businesses, government agencies, nonprofit organizations, financial institutions and professional services firms. These solutions are intended to support compliance, government affairs, public affairs, risk management and strategic decision-making.

FiscalNote was founded in 2013 by Tim Hwang, who has served as the company’s chief executive officer. The company became publicly traded on the New York Stock Exchange in 2022 following a business combination with Duddell Street Acquisition Corp. FiscalNote serves customers in the United States and internationally, with its products incorporating information and policy developments from multiple jurisdictions.

FiscalNote Q1 2025 Earnings Call Transcript

Key Takeaways

• The company delivered adjusted EBITDA of $2.8 million in Q1, exceeding guidance and driving margin expansion to 10% from 4% a year ago.
• Senior term loan debt was reduced by $96 million since December 31, 2023, lowering quarterly cash interest expense from $5 million to $2 million.
• Full-year 2025 guidance was reaffirmed, with revenue forecast at $94 million–$100 million and adjusted EBITDA at $10 million–$12 million.
• Annual recurring revenue remained at $88 million (pro forma $94 million in prior year) and net revenue retention was 93% versus 96%, with ARR growth expected in H2 2025.
• Inbound pipeline rose 20% year-over-year and Europe pipeline doubled, fueled by intensifying regulatory complexity and strong traction with the PolicyNote platform.

Presentation

[Operator]

Evening. My name is Pam, and I will be your conference operator today. At this time, I would like to welcome everyone to the FiscalNote Holdings first quarter 2025 Financial Results conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press the pound key. Thank you. With that, I would now like to turn it over to the company to begin the conference.

[Bob Burrows, Head of Investor Relations at FiscalNote Holdings]

Good evening. My name is Bob Burrows, Investor Relations for FiscalNote, and we are pleased you all could join us. The purpose of today's call is to discuss FiscalNote's first quarter 2025 financial results and guidance for both the full year and second quarter of 2025. Joining me with prepared comments are Josh Resnik, CEO and President, and Jon Slabaugh, CFO and Chief Investment Officer. Other members of the senior management team will be available as needed during the Q&A session that will follow these prepared comments. Please note today's press release and related current report on Form 8K are available on the company website. In terms of important housekeeping, please take note of the following. During this call, we may make certain statements related to our business that are forward-looking statements under federal securities laws.

[Bob Burrows, Head of Investor Relations at FiscalNote Holdings]

These statements are not guarantees of future performance, but rather are subject to a variety of risks and uncertainties. Our actual results could differ materially from expectations reflected in any forward-looking statements. For discussion of the material risks and important factors that could affect our actual results, as well as the risks and other important factors discussed in today's earnings release, please refer to our SEC filings, which are available either on our company website or the Securities and Exchange Commission's EDGAR system. Additionally, non-GAAP financial measures will be discussed on this conference call. Please refer to the tables in our earnings release or the updated version of the corporate overview presentation, both of which are available on the Investor Relations portion of our website for a reconciliation of these measures to their most directly comparable GAAP financial measure.

[Bob Burrows, Head of Investor Relations at FiscalNote Holdings]

Finally, we use key performance indicators, or KPIs, in evaluating the performance of our business. These include Annual Recurring Revenue, or ARR, and Net Revenue Retention, or NRR. Once again, I refer you to the earnings release or the updated corporate deck for definitions of these important metrics. With that, I'd like to turn the call over to FiscalNote's CEO and President, Josh Resnik. Josh?

[Josh Resnik, CEO and President at FiscalNote Holdings]

Thank you, Bob, for that introduction. Thank you to everyone joining us this evening. I'm pleased to be here to provide key updates on FiscalNote, including our first quarter 2025 financial results and insights on what lies ahead. We're maintaining the disciplined approach we established last quarter, staying focused on managing the business with clarity and rigor. As the business evolves, our core pillars remain unchanged, even as we shift emphasis between them to best support our growth and overall performance. As a reminder, we are guided by three key objectives. One, consistent and rapid expansion of adjusted EBITDA margins. Two, prudent management of debt and a sustained acceleration towards positive free cash flow. Three, building a resilient foundation for profitable, durable growth. Let me walk you through where we stand on each.

[Josh Resnik, CEO and President at FiscalNote Holdings]

First, regarding adjusted EBITDA, we are pleased to report adjusted EBITDA of $2.8 million in the first quarter of this year, exceeding expectations. Our continued focus on streamlining the business, prioritizing initiatives that are primed for sustainable growth, and driving efficiency across the organization is improving operating leverage and driving expanded adjusted EBITDA margins and adjusted EBITDA. Notably, our adjusted EBITDA margin in Q1 was 10% as compared with 4% for the same period one year earlier. These consistent gains reflect our disciplined, steadfast approach, and we expect to consistently grow adjusted EBITDA over time. Second, on managing our debt and accelerating the path to positive free cash flow. Achieving sustainable free cash flow is a top priority, and we are fully committed to reaching that goal consistently and reliably, just as we've done with adjusted EBITDA.

[Josh Resnik, CEO and President at FiscalNote Holdings]

In addition to our operational improvements, we've made deleveraging a central focus, reducing our senior term loans by $96 million since December 31, 2023. As a result, our cash interest expense has declined from $5 million per quarter to $2 million. The combined impact of greater efficiency and significant debt reduction is propelling us rapidly towards positive free cash flow. For the 12 months ending March 31, 2025, as compared with the same period two years earlier, we have improved trailing 12 months free cash flow by more than $70 million. This has been a steady improvement regardless of circumstance, and as a result, positive free cash flow is within reach. The third pillar, growth, is where we're in the midst of a meaningful transition. I'll briefly recap where we've been, explain where we are now, and highlight what that means for where we're going.

[Josh Resnik, CEO and President at FiscalNote Holdings]

As I did last quarter, I'll also provide more context and metrics to show what's driving our outlook and why we remain confident in future growth despite recent challenges. Q1 results tell two stories. We beat revenue expectations for the quarter with $27.5 million. However, as anticipated, we have not yet resumed ARR growth. I want to be clear, we are reaffirming our full-year revenue guidance. As we've said before, the first half of 2025 was expected to be a period of transition. Two months ago, on our 2024 year-end call, I explained that our guidance for full year 2025 reflected a slow start to the year, partly due to execution shortfalls at the end of 2024. It is no surprise to see this reflected in our Q1 ARR. On that same call, I also shared that we had taken swift action and implemented key management changes.

[Josh Resnik, CEO and President at FiscalNote Holdings]

Since then, hands-on leadership has driven real progress, particularly in better pipeline development and operational focus. Pipeline grew notably in Q1 following these changes, and that momentum has accelerated significantly over the past 10 weeks. I'll point to a couple of interesting highlights within that. First, as I noted in March, inbound demand has been strong. In Q1, total inbound pipeline rose 20% compared to the same period last year, driven by intensifying regulatory complexity and strong interest in PolicyNote. Second, we're seeing strong traction in Europe, where targeted investments and management changes helped us double pipeline creation in Q1 compared to the same period in 2024. Of course, that pipeline needs to move through the funnel and convert, and that takes time. These are clear, encouraging signs for the trajectory of the business.

[Josh Resnik, CEO and President at FiscalNote Holdings]

Moreover, the work we're doing to accelerate product innovation will support conversion and retention over time. To that point, we remain extremely confident in the strength of the new PolicyNote platform and in how our commitment to product-led growth is shaping how we operate. We publicly announced PolicyNote in January. With PolicyNote, we're not simply iterating. We'll be fundamentally transforming the user experience by consolidating our global to local data, proprietary insights, and AI into one powerful platform. The response so far has been exciting, and we're already seeing a clear positive impact on the user experience. As an example, for an initial cohort of highly at-risk customers that we migrated from our legacy platforms, engagement levels have increased significantly. 75% of those accounts are now healthy in light of significantly higher levels of activity, and more than a third are what we consider power users.

[Josh Resnik, CEO and President at FiscalNote Holdings]

Beyond that cohort, I also want to offer a deeper look at how we evaluate usage across all accounts. For instance, we track how frequently customers are using the platform to get the core information they need. One key metric here is search frequency, how often users are actively searching for information. We are seeing results that not only surpass our legacy platforms, but also exceed or meet relevant industry benchmarks. We also look at how effectively the platform moves beyond information and into insights. This includes tracking how customers engage with our AI tools to derive deeper insights. We are seeing strong adoption and very high levels of activity. We closely monitor these and many other metrics in great depth.

[Josh Resnik, CEO and President at FiscalNote Holdings]

While there's a limit to the level of detail I can offer in the context of today's call, I wanted to highlight how we think about engagement and the type of results that we're seeing because these are very promising signals, and these behaviors are critical drivers of long-term retention and renewals. As encouraging as our usage data is, the product-led transformation at FiscalNote extends well beyond the engagement metrics. We've meaningfully accelerated our pace of innovation, consistently rolling out new features and enhancements that improve the user experience and expand the value of the platform. Since launching PolicyNote, we've rolled out numerous additional enhancements and 15 major new features, including an executive orders widget with automated AI-powered insights, intelligent alert management, a bill similarity algorithm, and more.

[Josh Resnik, CEO and President at FiscalNote Holdings]

This is integral to how our product and engineering teams are now operating under new leadership, increasing productivity, re-architecting sprint structures, and implementing and tracking key velocity metrics. This piece of innovation is critical. It demonstrates to customers and prospects that PolicyNote is not only powerful, but it's evolving quickly to meet their needs in the midst of a rapidly changing environment. Here's a clear example. On April 2nd, President Trump announced sweeping tariffs with significant implications for global trade. Organizations of all types and sizes needed a way to assess the ramifications and respond. Just two weeks later, on April 16th, we launched a new Tariff Tracker in PolicyNote, enabling customers to identify, understand, and manage the business impact. That's an exceptionally fast turnaround for a feature of this complexity and importance. Equally important, this level of execution extends beyond product and engineering.

[Josh Resnik, CEO and President at FiscalNote Holdings]

It reflects tighter, more aligned execution across the business. Our go-to-market teams were fully in sync with product, and on the very day we launched the Tariff Tracker, they set nearly 200 meetings and generated close to $1 million in new pipeline, which already is turning into new wins. This is how we will drive growth: consistent, high-velocity product innovation paired with disciplined, high-impact go-to-market execution. We're encouraged by the engagement we're seeing with PolicyNote and, more broadly, by the tangible impact of our accelerated pace of innovation. A strong indicator of customer confidence is the growing volume of multi-year deals. Clients won't commit to multi-year contracts unless they have conviction in the quality of the insights, the strength of the platform, and the credibility of the product roadmap.

[Josh Resnik, CEO and President at FiscalNote Holdings]

In Q1, even in the midst of a volatile economic environment, new corporate customers committed to multi-year agreements for our policy insights at more than double the rate of a year ago as measured by ARR. Mathematically, this will have a direct impact on gross retention and revenue in 2026. Beyond that, it's a clear signal of trust, not just in what we've built today, but in our ability to keep delivering meaningful innovation in the long run. In summary, we continue to excel at the operational discipline that has driven consistent growth in adjusted EBITDA, accelerated our path to positive free cash flow, and laid the groundwork for sustained growth in the future. We're strong where execution has been needed. We've acted decisively, and the improvements are already taking hold.

[Josh Resnik, CEO and President at FiscalNote Holdings]

We're thrilled with the progress with PolicyNote, the rapid acceleration of product innovation, and our success in translating that into real commercial momentum. These are the building blocks of long-term success. We are reaffirming our full-year guidance, even notwithstanding our latest asset sale, because we see clear progress and have strong conviction in our execution. Looking beyond this year, I remain deeply confident in the future we're building at FiscalNote. With that, I'll turn the call over to Jon to take us through our Q1 2025 financial results. Jon?

[Jon Slabaugh, CFO and CIO at FiscalNote Holdings]

Thank you, Josh. Good evening, and thank you for joining FiscalNote's first quarter 2025 conference call. As Josh mentioned, we're pleased to announce that we exceeded both our revenue and adjusted EBITDA guidance for the quarter. Let me dive into some of the key drivers behind our performance.

[Jon Slabaugh, CFO and CIO at FiscalNote Holdings]

Total revenue for Q1 2025 was $27.5 million, above our forecast of $26 million-$27 million. When compared to the prior year, revenue was $4 million lower, primarily due to the divestiture of Board.org and ASIL in 2024. Subscription revenue remains the cornerstone of our business. It accounted for 92% of our total in-quarter revenue, consistent with our historical trends. Our focus on the core policy business, together with the launch of a migration to PolicyNote, should help maintain these high contributions from subscription revenues going forward. Turning to our key performance metrics, as of Q1 2025, annual recurring revenue is $88 million versus $94 million in 2024 on a pro forma basis after adjusting for the impact of the ASIL, Board.org, Oxford Analytica, and Dragonfly divestitures. As Josh said previously, we expect PolicyNote to have a meaningful positive impact on 2025 as it unfolds.

[Jon Slabaugh, CFO and CIO at FiscalNote Holdings]

We are planning for ARR growth from this level in the second half of 2025. For the first quarter 2025, net revenue retention was 93% versus 96% in the prior year. While a disappointing outcome, it reflects the underperformance at the end of 2024 that we have previously discussed and believe have addressed going forward. We remain focused on improving this important metric over time through continued product innovation. Principal operating expenses in Q1 2025 continued the trend of year-over-year decreases, reflecting the continuing benefits of ongoing efficiency measures initiated in 2023, advanced in 2024, and continuing into 2025. We also realized cost savings following the 2024 divestiture of Board.org and ASIL and anticipate realizing further cost savings in 2025 from the Oxford and Dragonfly divestitures. We also realized additional savings from sunsetting a few additional non-core products.

[Jon Slabaugh, CFO and CIO at FiscalNote Holdings]

Factoring in the impact of those various initiatives, Q1 2025 cost of revenues decreased by $200,000 or 3% versus prior year. R&D decreased by $400,000 or 11%, and sales and marketing decreased by $1.6 million or 18%. As for G&A, while we saw a slight increase of $200,000 or 1%, it's important to point out that approximately $3 million of non-cash M&A-related costs were recorded in G&A during the quarter. Excluding these one-time non-cash items, G&A would have reflected a reduction. Taken together, total Q1 2025 operating expenses fell by $2.3 million or 5% versus the prior year. On a pro forma basis, excluding non-cash charges and the impact of the 2024 divestitures, OPEX decreased by approximately $4 million or 14%.

[Jon Slabaugh, CFO and CIO at FiscalNote Holdings]

Gross margins in Q1 2025 was 75%, 200 basis points lower than prior year on a GAAP basis, primarily due to sunset products in the quarter and higher amortization expenses related to the new PolicyNote platform. Adjusted gross margins improved to 87% in Q1 2025, as compared to 85% in the prior comparable quarter. The GAAP net loss for Q1 2025 was $4.3 million, and not meaningfully comparative to prior year, due in part to the large Board.org gain on sale recognized in Q1 of 2024. Adjusted EBITDA was a positive $2.8 million, higher than the prior year, above our guidance of approximately $2 million in the seventh consecutive quarter of positive performance for this important profitability metric.

[Jon Slabaugh, CFO and CIO at FiscalNote Holdings]

The improvement to adjusted EBITDA, even after the pro forma impact of the divestiture of Board.org and ASIL, is the result of actions we've taken to improve operating efficiency, streamline the product portfolio, and reduce the overall cost structure of the business. In the coming quarters, we will continue to focus on increasing operating leverage and realizing additional efficiencies across the business, while steadily expanding the top line through our product-led revenue strategy that we just initiated this quarter. Cash and cash equivalents, including short-term investments at the end of Q1 2025, were $46.9 million. This is an increase over both prior year and year-end 2024 balances, driven primarily by the influx of cash stemming from seasonality and the Oxford Analytica and Dragonfly divestiture, which closed on March 31.

[Jon Slabaugh, CFO and CIO at FiscalNote Holdings]

In Q1, we continued reducing overall indebtedness and ended the quarter with a senior term loan balance of $62 million versus the year-end 2024 balance of $89 million, a significant reduction and one reflecting our commitment to de-lever the capital structure through a deliberate and targeted campaign to simplify the product mix and focus on our core 4,000 top-tier customers across the globe. The senior term loan will be further reduced by the recently announced sale of our Australian-based subsidiary, TimeBase. Finally, let me provide guidance. We are reaffirming our full-year 2025 revenue forecast in the range of $94 million-$100 million and adjusted EBITDA in the range of $10 million-$12 million. As Josh referenced, we are not making reductions to our guidance as the result of the pending sale of our Australian subsidiary.

[Jon Slabaugh, CFO and CIO at FiscalNote Holdings]

This speaks to the resilience of our streamlined and effective operating model and product-led growth strategies. For continued pacing across the year, we are forecasting second quarter 2025 revenues in the range of $22 million-$24 million and adjusted EBITDA of approximately $2 million. In summary, our business continues to reflect increasing strength and resilience. Our streamlined and disciplined operating plan is focused on innovation that will become increasingly valuable to our customers in navigating today's complex political landscape. As we continue to drive to stabilize the business and return to a path of sustainable growth and customer retention, we are also working to expand operating leverage and therefore adjusted EBITDA, both in absolute dollars and on a margin basis.

[Jon Slabaugh, CFO and CIO at FiscalNote Holdings]

Finally, we continue our efforts to prudently manage our cash by controlling CapEx, reducing cash interest expense, and managing operating expenses, all in pursuit of accelerating the path to positive free cash flow and sustainable growth. 2025 is an important year for this company, and thus far, we are tracking across the board towards reestablishing a clear and definitive path for durable growth and profitability and value creation. That concludes my prepared remarks. I'll turn it over to the operator to begin the question and answer session. Operator.

[Operator]

At this time, I would like to remind everyone, in order to ask a question, press star, then the number one on your telephone keypad. We'll pause for just a moment to compile the Q&A roster. Your first question comes from the line of Glenn Mattson with Ladenburg Thalmann. Please go ahead.

[Glenn Mattson, Managing Director and Senior Technology Analyst at Ladenburg Thalmann]

Yeah, hi, everybody.

[Glenn Mattson, Managing Director and Senior Technology Analyst at Ladenburg Thalmann]

Thanks for taking the question and congrats on the results. I'm just curious about the sales force and the sales function. You mentioned in the back half of 2024, there was some disruption of that process, perhaps due to some cuts in that area. It seems like it's getting back on track now. Can you give us a sense of the go-to-market and how that's evolving over time?

[Josh Resnik, CEO and President at FiscalNote Holdings]

Sure, Glenn. This is Josh. I can address that. The changes that we're talking about towards the end of Q4 were less about reductions that we've made and more really just about execution issues that we saw out of management. We've restructured and replaced management, and what we're seeing now is much better execution, and it's really much better execution throughout the funnel.

[Josh Resnik, CEO and President at FiscalNote Holdings]

In addition to what we're seeing from the inbound, where I mentioned that we've seen increased interest and demand, our outbound is functioning much better. We're building a much stronger pipeline, and we're seeing that connection point, as I mentioned, between the go-to-market teams and the product teams as well. As we're bringing the product along, as we're driving more product innovation, we're turning that innovation into commercial results much more quickly as well. That's really what we're talking about there.

[Glenn Mattson, Managing Director and Senior Technology Analyst at Ladenburg Thalmann]

Great. That's helpful. On PolicyNote, you pointed to a lot of interesting anecdotal evidence around the acceptance and uptake. Can you give us a sense of what sample size we're talking about and just the expectation still of the timeframe for when you hope to have everyone converted over to that platform?

[Josh Resnik, CEO and President at FiscalNote Holdings]

Yeah, sure. Glenn, happy to do that as well.

[Josh Resnik, CEO and President at FiscalNote Holdings]

We are working to migrate our core customers over time. We expect to have all of our core customers, the ones who are using us for policy data, insights, etc., on the new platform sometime next year. We're accelerating migration as much as possible now in light of the early results. We plan to be in position to start deprecating, actually, to start deprecating platforms this year for sure, to be in position to deprecate at least one of the larger legacy platforms later this year. We are working on getting those customers on there at scale right now. Like I mentioned, we've been really encouraged by the progress that we're seeing. We've migrated, I mentioned a couple of different cohorts that we've done.

[Josh Resnik, CEO and President at FiscalNote Holdings]

I can't give you exact numbers in terms of number of customers, but we're really confident in the share of customers that we have right now, meaning we're confident that what we see represents a broad enough slate of the types of customers who should be on there, that they're using them at high enough scale where we understand validity of the data and such, and where we're really starting to have an impact on what we can do from both a new logo standpoint and a retention standpoint as well.

[Glenn Mattson, Managing Director and Senior Technology Analyst at Ladenburg Thalmann]

Great, Josh. That's very helpful. Thanks. I'll jump back in the queue.

[Operator]

Thank you. Your next question comes from Jesse Sobelson with D. Boral Capital. Please go ahead.

[Jesse Sobelson, VP of Equity Research at D. Boral Capital]

Hey, guys. Really just want to reiterate this is a great quarter. The reiteration of guidance is really great news here.

[Josh Resnik, CEO and President at FiscalNote Holdings]

We can really see the shift turning, and it sounds like policy notes are really gaining some great traction to help drive this confidence in the second-half ARR rebound. I just wanted to kind of ask on a clarification piece here. On the numbers piece, the revenue guidance for second quarter is $22 million-$24 million, and it's a little bit below Q1 levels. I just wanted to confirm that the primary driver of this sequential decline was the recent transactions that you've done with Dragonfly and Oxford. Is that correct?

[Josh Resnik, CEO and President at FiscalNote Holdings]

Sure. Jon, do you want to address that? Did we have Jon?

[Jon Slabaugh, CFO and CIO at FiscalNote Holdings]

Hi. Jesse, I'm sorry about that. I was having a phone problem. Josh, did you answer the question?

[Josh Resnik, CEO and President at FiscalNote Holdings]

No, Jon, you can go ahead.

[Jon Slabaugh, CFO and CIO at FiscalNote Holdings]

Okay. Thanks for the question, Jesse. It's Jon. You're correct.

[Jon Slabaugh, CFO and CIO at FiscalNote Holdings]

The difference would be solely attributable to the revenue that we recognized in the first quarter from the divested businesses, Dragonfly and Oxford Analytica, and there'll be details breaking out the pro forma and the firings that are coming out later.

[Jesse Sobelson, VP of Equity Research at D. Boral Capital]

Great. Great. Just confirming, it sounds like the business is stabilizing here. Another housekeeping one for me is just when it comes to the balance sheet, there was this additional sale of, I think it's TimeBase. I apologize for the exact name. I don't have it in front of me, but just where exactly are we with the balance sheet today and any anticipated cash that's supposed to come in from transactions and what the debt balance is, just to make sure on a pro forma basis I'm in the right ballpark here?

[Jon Slabaugh, CFO and CIO at FiscalNote Holdings]

Sure.

[Jon Slabaugh, CFO and CIO at FiscalNote Holdings]

From the balance sheet that will be coming out shortly, we did announce a transaction. We entered into a transaction with Thomson Reuters to sell a division operating in Australia. It is a smaller division, and we disclosed the purchase price to be in the neighborhood of $6.5 million, and I would pencil in about half of that going to reduce debt after taxes, fees, and expenses related to the transaction.

[Jesse Sobelson, VP of Equity Research at D. Boral Capital]

Okay. Great. Okay. Great. And then just a bigger picture here. It seems that the board continually reviews some strategic options to maximize shareholder value. I'm just kind of curious if you guys can share any updates on framework and criteria being used to evaluate any outcomes and if there's anything if we're still considering asset sales here or if the product portfolio is where we should expect it to be today. Thank you.

[Jon Slabaugh, CFO and CIO at FiscalNote Holdings]

Josh, you want to answer that?

[Josh Resnik, CEO and President at FiscalNote Holdings]

Yeah. Yeah. I can take that. So yeah, thanks for the question on that, Jesse. I would just say there's not too much we can say about board activity beyond what's been said publicly. I'll just essentially reiterate that the board is, of course, constantly considering ways in which to maximize value of the company. That's really the long and short at the end of the day in terms of what I can say there. In terms of future divestitures, I would say that you've seen a majority of what there is from the portfolio. That's not to say that there wouldn't be future opportunities as well. Again, we'll consider what opportunities there may be down the road as well.

[Jesse Sobelson, VP of Equity Research at D. Boral Capital]

Great. Cool. Thank you for taking my questions.

[Operator]

Your next question comes from Mike Latimore with Northland Capital Markets.

[Operator]

Please go ahead.

[Operator]

Great. Thank you. Yeah, congrats on the great results there. Nice to hear the pipeline's growing here. I guess, can you give a little more detail on what you're seeing in the pipeline? Is that coming from upsells, cross-sells, new logos, any particular verticals? I guess that would be a starting point.

[Josh Resnik, CEO and President at FiscalNote Holdings]

Sure, Mike. Happy to address that. When I'm talking about the increase in pipeline, really what I'm talking about is two different pieces to it. One is inbound pipeline, so new logo, and that would be across sectors, and that's reflecting, I think, a higher focus in light of regulatory complexity as well as interesting PolicyNote. In terms of outbound pipeline, what I'm referring to there is around new logo, and again, it actually cuts across different sectors as well.

[Josh Resnik, CEO and President at FiscalNote Holdings]

It is not just one particular area. We are seeing, as I have mentioned in my remarks, but also we have talked about on previous calls, we are seeing continued high level of interest and demand in Europe in particular. What I am referring to when I am talking about pipeline is really across the board, but mostly focused on new logo.

[Mike Latimore, Managing Director and Senior Research Analyst at Northland Capital Markets]

Got it. Okay. Got it. In terms of just the federal sector, particularly U.S. government, a lot of changes there. It seems like you quickly can also offer new products that enable your customers to understand those changes at the same time. Can you just talk a little bit about the health of the federal vertical here? Yeah, I guess just viewing the health of the federal vertical.

[Josh Resnik, CEO and President at FiscalNote Holdings]

Sure, Mike. Happy to do that.

[Josh Resnik, CEO and President at FiscalNote Holdings]

Yeah, I mean, certainly, as you're alluding to, right, there's volatility in the federal market unlike anything that there's been previously. We've seen some of that volatility. Nothing material for us. Where we have had issues is unrelated to our specific products, just part of some of the shifts within government itself, restaffing, budgets being in question, etc. We do see opportunity in the federal sector as well. Our products do help organizations be more efficient. We estimate that the government saves $10 for every dollar that they spend with us. We actually think there's opportunity to drive more value over time. We also see, again, as you alluded to as well, a need for the type of information and insights that we provide.

[Josh Resnik, CEO and President at FiscalNote Holdings]

Again, especially as there is more and more interest in platforms and AI as a focus to drive efficiency and drive insights and information, we believe that is something that plays to our favor in the long run.

[Mike Latimore, Managing Director and Senior Research Analyst at Northland Capital Markets]

Great. Just last one, I guess kind of on a similar topic. You announced you hired an advisor that came from Palantir. I am just kind of curious, what is he focused on?

[Josh Resnik, CEO and President at FiscalNote Holdings]

Yeah, we actually did engage him to focus on federal government. As someone who has driven significant federal contracting, leveraging AI platforms in the past, we brought him in to provide advice and support for our commercial teams as we think much more about our opportunities in that sector. He has provided our teams with some helpful insights.

[Mike Latimore, Managing Director and Senior Research Analyst at Northland Capital Markets]

Okay. There we go. Congrats again. Thanks a lot.

[Josh Resnik, CEO and President at FiscalNote Holdings]

Thanks, Mike.

[Operator]

Again, if you would like to ask a question, press star, then the number one on your telephone keypad. The next question comes from Zach Cummins with B. Riley Securities. Please go ahead.

[Zach Cummins, Equity Research Analyst at B. Riley Securities]

Hi. Good afternoon. Thanks for taking my questions. Really, Josh, my one question is just focused on your confidence in a lot of this new pipeline continuing to progress and getting across the finish line in terms of new deals. I'm just curious on kind of the typical pace we should be expecting and how you're making those assumptions when making a return to year-over-year ARR growth in the coming quarters.

[Josh Resnik, CEO and President at FiscalNote Holdings]

Sure. Zach, thanks for the question. Yeah. Look, we feel very confident. This is why we're starting to be more transparent about things like pipeline, about things like product engagement, etc.

[Josh Resnik, CEO and President at FiscalNote Holdings]

We're very confident that we understand what the drivers have been for some of this past underperformance, and we're very confident that we're doing the right things to address those. That goes to things like the go-to-market execution, which we look at data very deeply, and we see that pipeline and see the opportunities that we have against it. We know about the product, and we know that our customers and prospects need this information. They recognize the importance of it to their organization. We see that level of demand out there. Again, that's partly reflected in the inbound that we're seeing as well. We know that the product that we have can really address those needs in a way that's really powerful for the organizations who we're working with.

[Josh Resnik, CEO and President at FiscalNote Holdings]

We see that reflected in the product metrics that we look at and the level of engagement that we see. We feel very confident in terms of what we're doing, the execution against it, and what that means for the long term. We are looking at things like sales cycles, quality of the funnel, etc., as we think about the second half of this year. That is why we're reaffirming guidance, as we feel confident in what we're going to deliver the second half of the year. There are obviously risk points out there that we see as much as anybody else, including economic volatility, etc. We have built that in in terms of how we think about the opportunities here. Like I said, we feel very good about what we're building. Pipeline, certainly, it needs to convert. We got to push it through.

[Josh Resnik, CEO and President at FiscalNote Holdings]

With how we're managing the business, with what we're seeing from an execution standpoint, and with what we're seeing from engagement with our customers, engagement with prospects and the level of demand, we feel very good.

[Zach Cummins, Equity Research Analyst at B. Riley Securities]

Understood. That's helpful. My one follow-up question is around the level of multi-year deals that you're now seeing. I mean, can you give us a little more insight into that? Is that part of the new go-to-market transformation? Do you have a bigger emphasis on trying to secure these multi-year contracts with customers?

[Josh Resnik, CEO and President at FiscalNote Holdings]

Yeah, that's a great question, Zach. We actually, along with the introduction of PolicyNote, felt very solid and confident in the product.

[Josh Resnik, CEO and President at FiscalNote Holdings]

We know that one of the challenges we've had, obviously, has been the product, which translates into being able to speak to customers and prospects about what is your vision, how are you innovating. You need customers to believe not just in what you're doing today, but what you'll be doing tomorrow, 12 months from now, 24 months from now, and so on. With the introduction of PolicyNote and market, we did make it a point of emphasis to start to seek multi-year commitments. That is where we're really pleased to see that payoff and see prospects engaged and sign on to multi-years at the levels that I mentioned. For the new corporate logos being more than double the rate of what we saw a year ago, that's really incredible.

[Josh Resnik, CEO and President at FiscalNote Holdings]

To be clear, it's not driven by aggressive discounting for multi-years or anything like that. It was a point of our strategy to seek the multi-years, but we're not doing anything artificial to achieve it. We're achieving it because of the confidence that prospects have in the fact that they're going to need this data. They're confident that they're going to want to get it from us. They're confident that our product is the one that they want to bet on for multi-year commitments. We feel very good about that and what that says about their confidence in us for the long run.

[Zach Cummins, Equity Research Analyst at B. Riley Securities]

Understood. Thanks for taking my questions and best of luck with the rest of the quarter.

[Josh Resnik, CEO and President at FiscalNote Holdings]

Thank you, Zach.

[Operator]

There are no further questions at this time. Mr. Burrows, I turn the call back over to you for any closing remarks.

[Bob Burrows, Head of Investor Relations at FiscalNote Holdings]

Thank you, Pam. That concludes our call this evening. We appreciate everyone's participation on today's call. With any additional questions, please contact any of us. Again, all materials related to the company's first quarter 2025 financial results are available on the FiscalNote website. We look forward to speaking with all of you again in the future. Goodbye.

[Operator]

This concludes today's conference call. You may now disconnect.

Participants

Executives

• Bob Burrows, Head of Investor Relations
• Josh Resnik, CEO and President
• Jon Slabaugh, CFO and CIO

Analysts

• Glenn Mattson, Managing Director and Senior Technology Analyst at Ladenburg Thalmann
• Jesse Sobelson, VP of Equity Research at D. Boral Capital
• Mike Latimore, Managing Director and Senior Research Analyst at Northland Capital Markets
• Zach Cummins, Equity Research Analyst at B. Riley Securities