FiscalNote’s Mixed Earnings Call: Growth Amid Challenges

Fiscalnote Holdings Inc ((NOTE)) has held its Q2 earnings call. Read on for the main highlights of the call.

FiscalNote Holdings Inc.’s recent earnings call painted a mixed picture, with notable achievements in EBITDA margin improvement and strategic refinancing, juxtaposed against challenges in declining annual recurring revenue (ARR) and retention issues with legacy products. Despite these hurdles, the company expressed optimism about future growth, buoyed by strong demand and improvements in new sales pipelines.

Adjusted EBITDA Performance

FiscalNote reported an adjusted EBITDA of $2.8 million in the second quarter, surpassing its guidance and achieving an adjusted EBITDA margin of 12%, a significant improvement from 4% on a pro forma basis in the same period last year. This performance underscores the company’s effective cost management and operational efficiency.

New Capital Partnership and Refinancing

The company announced a substantial refinancing of its senior term loan with MGG Investment Group, extending the facility maturity to 2029. This strategic move is expected to provide FiscalNote with greater financial flexibility and stability, supporting its long-term growth objectives.

Strong Demand and Sales Pipeline

FiscalNote experienced a more than 20% year-over-year increase in inbound leads for its policy products, with the corporate new logo pipeline 45% higher at the end of the second quarter compared to the first quarter. This robust demand indicates a positive trajectory for future sales and revenue growth.

PolicyNote Engagement

PolicyNote, FiscalNote’s newer platform, now boasts more daily active users than its legacy platform, with core engagement metrics reflecting strong performance. This shift highlights the platform’s growing importance and potential as a key driver of the company’s future success.

Decline in Annual Recurring Revenue (ARR)

The company reported an ARR of $85.9 million in the second quarter, a decline of $7.7 million compared to the previous year on a pro forma basis. This decrease highlights the challenges FiscalNote faces in maintaining consistent revenue streams.

Challenges with Legacy Product Retention

FiscalNote encountered significant execution challenges and customer retention issues with its legacy products, contributing to declines in organic ARR and revenue. Addressing these issues is critical for stabilizing and growing the company’s revenue base.

Instability in U.S. Federal Sector

Atypical instability in the U.S. federal sector has impacted FiscalNote’s performance, contributing to revenue declines. This external factor adds complexity to the company’s efforts to stabilize and grow its revenue.

Forward-Looking Guidance

FiscalNote reaffirmed its full-year revenue forecast of $94 million to $100 million and adjusted EBITDA between $10 million to $12 million. For the third quarter of 2025, the company expects revenues in the range of $22 million to $23 million and an adjusted EBITDA of approximately $2 million. The company anticipates ARR growth to resume in the second half of 2025, driven by improvements in product offerings and customer engagement, particularly through the PolicyNote platform.

In summary, FiscalNote Holdings Inc.’s earnings call reflects a company navigating through a complex landscape of achievements and challenges. While there are hurdles to overcome, particularly with legacy product retention and ARR declines, the company’s strategic refinancing and strong sales pipeline offer a promising outlook. Investors and stakeholders will be keenly watching how FiscalNote leverages these opportunities to drive future growth.