8-K: FiscalNote Exceeds Expectations with Positive Adjusted EBITDA, Announces Strategic Review

FiscalNote reports strong Q4 and full-year 2024 financial results, exceeding revenue and adjusted EBITDA forecasts, and announces a strategic review to maximize shareholder value.

Summary

• FiscalNote Holdings, Inc. reported its Q4 and full-year 2024 financial results on March 13, 2025.
• The company exceeded both revenue and adjusted EBITDA forecasts for the fourth quarter and full year.
• FiscalNote achieved its first full year of positive adjusted EBITDA, driven by a 1400 basis point year-over-year margin improvement.
• The company recently announced a non-core divestiture expected to close by month-end, which is expected to drive incremental operating efficiencies and increase profitability.
• FY25 guidance reflects a durable core business and further efficiency initiatives, with expectations for adjusted EBITDA margins to double on a pro forma basis.
• The Board of Directors is reviewing all strategic options to maximize shareholder value.
• Q4 2024 total revenues were $29.5 million, and adjusted EBITDA was $3.3 million.
• The company's customer base exceeds 4,000, with durable recurring revenue and high gross margins.
• Q4 2024 adjusted EBITDA improved 10% year-over-year, marking the sixth consecutive quarter of adjusted EBITDA profitability.
• The twelve months of 2024 marked the first full calendar year of reported adjusted EBITDA profitability, an improvement of more than $17 million year over year.
• In February 2025, FiscalNote signed a definitive agreement to divest Oxford Analytica and Dragonfly Intelligence for $40.0 million.
• The company completed the divestiture of its South Korea subsidiary, Aicel Technologies, for $9.6 million.
• Full year 2024 total revenues were $120.3 million, and adjusted EBITDA was $9.8 million.
• The company forecasts full year 2025 total revenues of $94 to $100 million and adjusted EBITDA of $10 to $12 million.
• The company expects Q1 2025 total revenues of $26 to $27 million and adjusted EBITDA of approximately $2 million.

Sentiment

Score: 7

Explanation: The document presents a generally positive outlook, highlighting exceeded expectations and strategic initiatives. However, revenue declines due to divestitures and market uncertainties temper the overall sentiment.

Positives

• The company exceeded revenue and adjusted EBITDA forecasts for both Q4 and full year 2024.
• FiscalNote achieved its first full year of positive adjusted EBITDA.
• Adjusted EBITDA margins are expected to double in FY25.
• The company reduced its senior debt by 44% in 2024.
• The company is streamlining operations and focusing on its core policy business.
• The company launched its new AI-focused PolicyNote platform in January 2025.
• The company is divesting non-core assets to unlock underlying value and improve operating efficiency.
• Gross margin increased 1500 bps to 82% in Q4 2024.
• Net loss decreased 74% to $(13.4) million in Q4 2024.

Negatives

• Total revenues decreased 14% in Q4 2024 compared to the prior year, primarily due to divestitures.
• ARR declined 15% as of December 31, 2024, principally due to the impact of divestitures.
• Net Revenue Retention (NRR) was 98% for the three months ended December 31, 2024, 100 basis points lower than the same period in 2023.
• Subscription revenue decreased $4.0 million, or 13%, versus prior year, due primarily to the impact of the Board.org and Aicel divestitures.

Risks

• The company's ability to close its previously-announced divestitures of Oxford Analytica and Dragonfly Intelligence on the timeline anticipated or at all.
• Concentration of revenues from U.S. government agencies and dependence on winning or renewing U.S. government contracts.
• The company's ability to successfully execute on its strategy to achieve and sustain organic growth through a focus on its core Policy business.
• Future capital requirements and the ability to service repayment obligations and maintain compliance with debt covenants.
• Potential technical disruptions, cyberattacks, security, privacy or data breaches.
• Competition and competitive pressures in the markets in which FiscalNote operates.
• Adverse general economic and market conditions reducing spending on our products and services.

Future Outlook

FiscalNote anticipates continued operating discipline initiatives, driving substantially expanded Adjusted EBITDA margins, which are expected to more than double on a pro forma basis. The company expects its new PolicyNote platform to have an increased benefit to customer engagement and expansion over the course of 2025, leading to improved organic revenue growth in 2026.

Management Comments

• Josh Resnik, CEO and President of FiscalNote, commented, 'With todays announcement, we are continuing to demonstrate expanding Adjusted EBITDA margins, an accelerating path to positive free cash flow, and a strong foundation for long term, durable growth.'
• Jon Slabaugh, FiscalNote CFO, said, 'Our expectations for 2025 reflect the realization of efficiencies resulting from continued operating discipline initiatives, driving substantially expanded Adjusted EBITDA margins which are expected to more than double on a proforma basis.'

Industry Context

FiscalNote operates in the competitive policy and regulatory intelligence market. The company's focus on AI-driven solutions and strategic divestitures aligns with industry trends towards specialization and efficiency. The company's performance is being viewed in the context of broader market volatility and potential impacts from changes in the federal government.

Comparison to Industry Standards

• FiscalNote's adjusted EBITDA margin improvement of 1400 basis points year-over-year is a significant achievement compared to industry peers.
• Companies like Thomson Reuters and Bloomberg also offer policy and regulatory intelligence, but FiscalNote differentiates itself through its AI-driven approach and focus on the policy sector.
• The divestiture of non-core assets mirrors strategies employed by other SaaS companies to streamline operations and improve profitability.
• The company's ARR of $107.0 million places it in a competitive position within the market, but it needs to focus on organic growth to maintain its standing.

Management Changes

Stakeholder Impact

• Shareholders: The strategic review aims to maximize shareholder value.
• Employees: Operational streamlining and business realignment actions may impact workforce.
• Customers: The PolicyNote platform is expected to enhance customer engagement and expansion.
• Creditors: Debt reduction and improved financial performance benefit creditors.

Next Steps

• Close the divestiture of Oxford Analytica and Dragonfly Intelligence by the end of March 2025.
• Continue migrating users to the PolicyNote platform and offering additional enhancements and features.
• Continue to control annual capex while further managing cash interest expense in order to accelerate the path to positive free cash flow.
• The Board of Directors will continue to review the Company's ongoing plans and evaluate all strategic value-maximizing options available to the Company.

Key Dates