Fiscalnote Holdings Inc ((NOTE)) has held its Q4 earnings call. Read on for the main highlights of the call.
FiscalNote Holdings, Inc. recently held its earnings call, where the sentiment was cautiously optimistic. The company demonstrated strong progress in profitability and debt reduction, with notable improvements in adjusted EBITDA and cash flow from operations. The launch of Policy Note has been well-received, suggesting potential for future growth. However, challenges remain with flat annual recurring revenue (ARR), slightly reduced net revenue retention, and potential market volatility that could impact future growth. Overall, the sentiment reflects notable achievements in operational efficiency.
Significant Improvement in Adjusted EBITDA
FiscalNote Holdings reported an impressive $9.8 million in adjusted EBITDA for 2024, marking a year-over-year improvement of more than $17 million and 1,400 basis points. This significant enhancement underscores the company’s focus on profitability and operational efficiency.
Debt Reduction Achievements
The company successfully reduced its senior debt by more than 60% over the past year. Additionally, a pending divestiture is expected to further decrease the senior term loan by $29 million, highlighting FiscalNote’s commitment to strengthening its financial position.
Launch and Positive Reception of Policy Note
The introduction of Policy Note in January has been met with strong engagement and adoption trends. Customers have provided positive qualitative feedback, emphasizing the platform’s intuitive experience and impactful results, which bodes well for future customer retention and growth.
Improved Cash Flow from Operations
FiscalNote achieved a significant improvement in cash flow from operations, with an increase of more than $30 million in 2024 compared to the previous year. This improvement is a testament to the company’s enhanced financial management and operational strategies.
Achievement of Positive Adjusted EBITDA for Full Year
For the first time in its history, FiscalNote achieved positive adjusted EBITDA for the full year, reaching $9.8 million in 2024. This milestone reflects the company’s successful efforts to enhance profitability and operational performance.
Flat Annual Recurring Revenue
The company’s annual recurring revenue (ARR) stood at $107 million, slightly down from $109 million in 2023 on a pro forma basis. This flat performance indicates challenges in driving revenue growth amid market conditions.
Net Revenue Retention Slightly Lower
Net revenue retention was reported at 98% in Q4 2024, a slight decrease from 99% in the previous year. This minor decline suggests some challenges in maintaining customer retention levels.
Challenges in Revenue Growth
FiscalNote’s total revenue for Q4 2024 was $29.5 million, reflecting a year-over-year decline due to divestitures. Additionally, the typical end-of-year ARR uptick did not occur, indicating hurdles in revenue growth.
Anticipated Market Volatility
The company anticipates market volatility, particularly in the private sector, which could impact corporate buying decisions and timelines in 2025. This expectation highlights potential challenges in navigating the market environment.
Forward-Looking Guidance
Looking ahead to 2025, FiscalNote Holdings provided guidance with several key financial metrics and strategic goals. The company aims for an adjusted EBITDA between $10 million and $12 million, more than doubling the 2024 margins on a pro forma basis. Despite anticipated divestitures, FiscalNote plans to reduce senior debt by over 60% from the previous year and improve cash flow from operations. Total revenue is expected to range between $94 million and $100 million, with a focus on growing ARR in the latter half of the year. The strategy includes managing debt, enhancing operating margins, simplifying the product portfolio, and leveraging the Policy Note platform to drive engagement and retention, setting a foundation for sustained GAAP revenue growth in 2026 and beyond.
In conclusion, FiscalNote Holdings’ earnings call reflects a cautiously optimistic sentiment, with significant achievements in profitability and debt reduction. The launch of Policy Note and improvements in cash flow from operations are promising, though challenges in revenue growth and market volatility remain. The company’s forward-looking guidance outlines strategic goals to enhance financial performance and set the stage for future growth.