8-K: FiscalNote Exceeds EBITDA Guidance, Cuts Workforce by 25% Amid AI Push

FiscalNote Holdings, Inc. reported Q4 and full-year 2025 financial results, exceeding Adjusted EBITDA guidance while announcing a 25% workforce reduction and new AI-driven growth initiatives.

Summary

• Q4 2025 total revenues were $22.2 million, in line with guidance, while Adjusted EBITDA reached $2.5 million, exceeding guidance.
• Full Year 2025 total revenues were $95.4 million, with Adjusted EBITDA of $10.3 million, also exceeding guidance.
• The company announced an organizational transformation, including a workforce reduction of approximately 25%, to significantly reduce operating expenses.
• FiscalNote anticipates generating positive Free Cash Flow on a trailing twelve-month basis by the end of Q1 2027.
• New corporate logo bookings increased by 39% year-over-year in Q4 2025, and multi-year contracts among private sector customers grew from 17% to 40% year-over-year.
• All customers have been migrated from the legacy FiscalNote platform to the PolicyNote Platform, which shows stronger usage and retention metrics.
• New growth initiatives include expanding the PolicyNote API with native Model Context Protocol (MCP) support and entering the political prediction market ecosystem.
• Annual Recurring Revenue (ARR) as of December 31, 2025, was $84.1 million, representing a 21% decline year-over-year (as reported) or approximately 9% on a pro forma basis.
• A goodwill impairment charge of $12.4 million was recorded in the fourth quarter of 2025.
• The Board of Directors continues to review all strategic options available to the company to maximize shareholder value.

Sentiment

Score: 4

Explanation: StockSavvy.ai views this as a challenging period for FiscalNote, marked by significant revenue and ARR declines, and a substantial net loss, necessitating a large workforce reduction. While exceeding Adjusted EBITDA guidance and outlining a path to positive free cash flow by Q1 2027 are positive, the underlying business contraction and goodwill impairment suggest a difficult transformation ahead.

Positives

• Q4 2025 Adjusted EBITDA of $2.5 million exceeded company guidance.
• Full Year 2025 Adjusted EBITDA of $10.3 million exceeded proforma guidance of $9.0 million.
• New corporate logo bookings increased by 39% year-over-year in Q4 2025.
• The share of multi-year contracts among private sector customers increased from 17% to 40% year-over-year.
• Completed the migration of all customers from the legacy FiscalNote platform to the PolicyNote Platform, which exhibits stronger usage and retention metrics.
• The organizational transformation, including a workforce reduction, is expected to generate positive Free Cash Flow on a trailing twelve-month basis by the end of Q1 2027.
• Launching two new growth initiatives: expanding the PolicyNote API with native Model Context Protocol (MCP) support and extending capabilities into political prediction markets.
• Initial enterprise customers for the expanded PolicyNote API include Lumen Technologies and ICE Data Services, Inc.

Negatives

• Total Revenues for Q4 2025 declined 25% year-over-year to $22.2 million.
• Total Revenues for Full Year 2025 declined 21% year-over-year to $95.4 million.
• Net Loss for Q4 2025 increased 71% to $(22.9) million from $(13.4) million in Q4 2024.
• Net Loss for Full Year 2025 was $(65.2) million, compared to Net Income of $9.5 million in Full Year 2024.
• Annual Recurring Revenue (ARR) declined 21% year-over-year to $84.1 million (as reported) and 9% pro forma.
• Q4 NRR (pro forma) was 96%, indicating customer churn or contraction.
• A goodwill impairment charge of $12.4 million was recorded in Q4 2025.
• A workforce reduction of approximately 25% is being implemented, indicating significant restructuring and potential disruption.
• Cash and Cash Equivalents decreased to $26.9 million at December 31, 2025, from $35.3 million at December 31, 2024.
• Operating expenses increased 16% in Q4 2025, primarily due to the goodwill impairment charge.
• Anticipates continued volatility in the private sector and continued impact in the public sector (federal government) in 2026.
• Known, higher-than-normal seasonal cancellations are expected in Q1 2026 due to economic headwinds, budget constraints, and prior customer experience on legacy systems.

Risks

• Ability to successfully execute on strategy to achieve and sustain organic growth through a focus on the core Policy business, including developing, enhancing, and integrating existing platforms, products, and services.
• Ability to successfully launch new product and service offerings (e.g., relating to political and policy prediction markets or agentic APIs) or to achieve the expected benefits of such offerings.
• Future capital requirements, as well as the ability to service repayment obligations and maintain compliance with covenants and restrictions under existing debt agreements.
• Risk that the NYSE may delist Class A Common Stock if the company fails to comply with ongoing listing standards, which could trigger an event of default with respect to indebtedness.
• Impact of cost reduction initiatives undertaken by FiscalNote.
• Risks associated with past and future strategic transactions, including restructuring, divesting, or selling businesses, products, or technologies.
• Risks associated with international operations, including compliance complexity and costs, increased exposure to fluctuations in currency exchange rates, political, social, and economic instability, and supply chain disruptions.
• Reliance on third-party systems and data, ability to integrate such systems and data with solutions, and potential inability to continue to support integration.
• Potential technical disruptions, cyberattacks, security, privacy, or data breaches or other technical or security incidents that affect networks or systems.
• Competition and competitive pressures in the markets, including larger well-funded companies shifting their existing business models to become more competitive.
• Risk that general purpose generative AI platforms and agentic AI tools will directly compete with and reduce demand for custom-built SaaS tools and subscription products.
• Risk that a future U.S. government shutdown could negatively affect the ability to enter into or renew public sector subscription contracts and generate advertising and events revenue.
• Concentration of revenues from U.S. government agencies, changes in U.S. government spending priorities, dependence on winning or renewing U.S. government contracts, and the U.S. government's right to modify, delay, curtail, or terminate contracts.
• Ability to comply with laws and regulations in connection with selling products and services to U.S. and foreign governments and other highly regulated industries.
• Ability to retain or recruit key personnel.
• Ability to adapt products and services for changes in laws and regulations or public perception, or changes in the enforcement of such laws, relating to artificial intelligence, machine learning, data privacy, and government contracts.
• Adverse general economic and market conditions reducing spending on products and services.
• Outcome of any known and unknown litigation and regulatory proceedings.
• Ability to maintain public company-quality internal control over financial reporting.
• Ability to adequately protect and maintain brands and other intellectual property rights.
• The possibility any exploration of strategic alternatives does not result in any transaction or other outcome or that any outcome is disruptive to operations and impacts financial performance.

Future Outlook

FiscalNote projects full-year 2026 total revenues between $80 million and $83 million and Adjusted EBITDA between $14 million and $16 million. The company anticipates achieving positive Free Cash Flow on a trailing twelve-month basis by the end of Q1 2027 and remaining Free Cash Flow positive thereafter, driven by a 25% workforce reduction and continued operational discipline, alongside strategic investments in AI and new market opportunities.

Management Comments

• "Our priority is to drive FiscalNote toward consistent positive Free Cash Flow while reshaping the company to capture the next generation of growth opportunities. We are strengthening a more profitable core, positioning our policy intelligence as infrastructure for AI-driven consumption, and extending our capabilities into rapidly developing markets such as prediction ecosystems. This transformation is building a more durable and strategically positioned FiscalNote for the future." Josh Resnik, CEO and President.
• "As we move into 2026, we remain focused on operating leverage, platform adoption, and disciplined financial execution. Our expectations for 2026 reflect the anticipated impact of our workforce transformation initiatives, through which we plan to drive dramatic reductions in our cost base through enterprise-wide deployment of AI tools, changes in personnel, and continued operational discipline." Jon Slabaugh, CFO.
• "Combined with the structural cost actions we executed throughout 2025 — including divestitures, platform consolidation, and AI adoption — we expect to drive substantially expanded Adjusted EBITDA margins year over year." Jon Slabaugh, CFO.
• "Based upon the cost actions taken and planned, achieving the revenue guidance and controlled capital expenditures, we plan to achieve positive Free Cash Flow on a trailing 12 month basis by the end of the first quarter of 2027 and to remain Free Cash Flow positive thereafter." Jon Slabaugh, CFO.

Industry Context

StockSavvy.ai notes that FiscalNote's aggressive pivot towards AI automation, including a significant workforce reduction and expansion into agentic AI-driven data consumption and political prediction markets, reflects a broader industry trend where traditional data and intelligence providers are leveraging advanced AI to create new revenue streams and enhance efficiency. The focus on embedding policy intelligence as "critical infrastructure for automated policy analysis" positions FiscalNote to capitalize on the growing demand for specialized AI models and data in highly regulated sectors, potentially differentiating itself from general-purpose AI platforms.

Comparison to Industry Standards

• The company's move into political prediction markets, leveraging proprietary datasets and domain expertise, aligns with emerging trends in data monetization, similar to how some financial data providers explore alternative data sources for market forecasting.
• The integration of PolicyNote API with Model Context Protocol (MCP) for enterprise workflows, with initial customers like Lumen Technologies and ICE Data Services, Inc., indicates a strategy to become a foundational data layer, comparable to how leading financial data terminals or regulatory compliance platforms offer API access for institutional clients.

Corporate Governance

Stakeholder Impact

• Shareholders: Potential for increased shareholder value through strategic review and future Free Cash Flow generation, but also risks from declining revenues, net losses, and potential NYSE delisting.
• Employees: Approximately 25% workforce reduction will significantly impact employees through layoffs and organizational restructuring.
• Customers: Migration to the PolicyNote platform aims to improve user experience; new AI features and API expansion could enhance value for enterprise customers, but macroeconomic volatility and legacy system issues have led to cancellations.
• Creditors: Risks related to the company's ability to service repayment obligations and maintain compliance with debt covenants are highlighted.

Next Steps

• Execute workforce transformation initiative, including an approximately 25% reduction in headcount.
• Continue investment in PolicyNote to achieve feature parity, enhance functionality, and expand content offered within the platform.
• Continue divestiture of non-core products.
• Drive toward consistent positive Free Cash Flow, aiming for positive Free Cash Flow on a trailing twelve-month basis by the end of Q1 2027.
• Expand PolicyNote API and introduce native Model Context Protocol (MCP) support to embed data into enterprise workflows and AI-driven decision systems.
• Extend capabilities into the rapidly emerging political prediction market ecosystem.
• The Board of Directors will continue to review all strategic options available to the company to maximize shareholder value.

Key Dates

Recommendation

While FiscalNote is taking aggressive steps to cut costs, streamline operations, and pivot towards AI-driven growth, the significant declines in revenue and ARR, coupled with a substantial net loss and a 25% workforce reduction, indicate a challenging business environment. The path to positive free cash flow by Q1 2027 is a positive long-term goal, but the immediate financial performance and ongoing strategic review introduce considerable uncertainty. A 'Hold' recommendation allows investors to observe the execution of the transformation and the outcome of the strategic review before making further investment decisions.

Keywords

FiscalNote, NOTE, AI, policy intelligence, regulatory intelligence, financial results, Q4 2025, full year 2025, Adjusted EBITDA, revenue, workforce reduction, Free Cash Flow, PolicyNote, API, Model Context Protocol, political prediction markets, strategic review, corporate governance, SEC filing, 8-K