10-Q: FiscalNote Holdings Q1 2026: Revenue Declines Amidst Delisting Concerns

FiscalNote Holdings reports a significant revenue decrease in Q1 2026, facing substantial going concern doubts due to its NYSE delisting and ongoing debt obligations.

Summary

• FiscalNote Holdings reported total revenues of $20.0 million for the three months ended March 31, 2026, a decrease of 27.2% compared to $27.5 million in the same period of 2025.
• Subscription revenue, which constitutes over 90% of total revenue, fell by 24.5% to $19.1 million from $25.2 million.
• The company incurred an operating loss of $42.5 million, a significant increase from $13.8 million in the prior year's quarter.
• Net loss for the quarter was $43.6 million, compared to a net loss of $4.3 million in Q1 2025.
• The company's cash, cash equivalents, restricted cash, and short-term investments stood at $26.5 million as of March 31, 2026.
• Significant going concern doubts exist due to the company's NYSE delisting on April 13, 2026, and subsequent events of default on its convertible notes.
• The company is actively pursuing several plans to alleviate these concerns, including renegotiating debt, selling assets, seeking new listings, and equity offerings.
• Goodwill impairment of $35.6 million was recorded in the first quarter of 2026.

Sentiment

Score: 2

Explanation: StockSavvy.ai views this filing as highly negative due to significant revenue declines, widening losses, a substantial goodwill impairment, and severe going concern risks stemming from the NYSE delisting and debt covenant issues.

Positives

• Despite revenue declines, the company managed to reduce its operating expenses in several categories, including cost of revenues, R&D, sales and marketing, editorial, and general and administrative expenses, largely due to business dispositions and workforce reductions.
• Adjusted Gross Profit Margin remained stable at 87% for both Q1 2026 and Q1 2025.
• The company has implemented cost-saving measures and workforce reductions aimed at streamlining operations and improving cash generation.

Negatives

• Total revenues decreased by 27.2% to $20.0 million in Q1 2026 from $27.5 million in Q1 2025.
• Subscription revenue declined by 24.5% to $19.1 million.
• Operating loss widened significantly to $42.5 million from $13.8 million.
• Net loss increased substantially to $43.6 million from $4.3 million.
• The company recorded a goodwill impairment of $35.6 million.
• The company's Class A common stock was delisted from the NYSE on April 13, 2026, triggering events of default on its convertible notes.
• Substantial doubt exists about the company's ability to continue as a going concern.
• The company failed to meet its minimum annualized recurring revenue financial covenant for the 2025 Senior Term Loan in January 2026, though a waiver was obtained.
• Net Revenue Retention (NRR) decreased to 89% in Q1 2026 from 93% in Q1 2025 (excluding the impact of divested businesses).

Risks

• Risk of creditors enforcing their rights to call an event of default based on the Class A Common Stock no longer being listed on NYSE.
• FiscalNote's ability to successfully execute its strategy for organic growth, including developing and integrating platforms, attracting and retaining customers, and expanding product offerings.
• Ability to successfully launch new product and service offerings and achieve expected benefits.
• Future capital requirements and ability to service debt obligations and maintain compliance with debt covenants.
• The delisting of Class A Common Stock from NYSE could trigger an event of default with respect to indebtedness.
• Impact of cost reduction initiatives.
• Risks associated with past and future strategic transactions, including divestitures.
• Risks associated with international operations, including compliance complexity, currency fluctuations, and supply chain disruptions.
• Reliance on third-party systems and data, and the ability to integrate them.
• Potential technical disruptions, cyberattacks, security, privacy or data breaches.
• Competition from larger, well-funded companies and general purpose generative AI platforms.
• Risk that a future U.S. government shutdown could negatively affect contract renewals and revenue.
• Concentration of revenues from U.S. government agencies and dependence on contract renewals.
• Ability to comply with laws and regulations in highly regulated industries.
• Ability to retain or recruit key personnel.
• Ability to adapt products and services for changes in laws and regulations related to AI, 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 intellectual property rights.
• Possibility that exploration of strategic alternatives does not result in a transaction or is disruptive to operations.

Future Outlook

The company is focused on several key growth levers including cross-selling and upselling to existing clients, expanding its client base with a focus on enterprise and government customers, entering adjacent markets like political prediction markets, and enhancing its policy data agentic APIs. These initiatives may require upfront investment in go-to-market strategies and product development. Management expects ongoing operating and capital expenditures to implement its business plan. The company is also evaluating opportunities for divestitures of non-core businesses.

Management Comments

• Management believes that key performance indicators like ARR and NRR reflect underlying business trends and serve as meaningful indicators of continuous operational performance.
• Management is focused on streamlining operations and driving cash generation in the core business through AI deployment, insourcing, headcount reductions, and other cost savings initiatives.
• Management will continue evaluating additional rationalization opportunities to reduce business complexity and operating expenses.
• Management believes its cost-saving measures provide flexibility to fund future operations and a path toward generating positive cash flows.

Industry Context

StockSavvy.ai notes that FiscalNote's performance is occurring in a challenging economic environment where companies are scrutinizing spending on policy and regulatory intelligence. The increasing adoption of AI by competitors and the potential for AI platforms to disrupt custom SaaS tools present both opportunities and threats for FiscalNote's business model.

Comparison to Industry Standards

• FiscalNote's Net Revenue Retention (NRR) of 89% in Q1 2026 is a key metric for subscription-based businesses. While a strong retention rate, it has seen a slight decrease from 93% in the prior year's quarter (excluding divested businesses). Industry benchmarks for NRR can vary significantly by sector, but generally, companies strive for NRR above 100% to indicate growth from existing customers.
• The company's Adjusted EBITDA Margin of 5.1% in Q1 2026 is lower than the 10.1% reported in Q1 2025. Profitability margins in the data and analytics sector can range widely, with mature, profitable companies often exhibiting higher margins. However, companies in growth phases, especially those investing heavily in technology like AI, may show lower current margins.
• The significant revenue decline of 27.2% in Q1 2026 is a concern. Competitors in the regulatory technology space, such as Quorum or FiscalNote's own CQ and Roll Call brands (which are part of FiscalNote), are also navigating market shifts. Companies like Cision or Meltwater, which operate in related PR and media intelligence spaces, often focus on recurring revenue models and customer retention as key indicators of success.

Legal Proceedings

• The company is not currently a party to any litigation or regulatory proceeding that it expects to have a material adverse effect on its business, results of operations, financial conditions or cash flows.

Related Party Transactions

• The Company received sublease income from Nitra, a company where its Co-Founder and Executive Chairman is also a board member. Income received was approximately $35,000 in Q1 2026 and $27,000 in Q1 2025.

Stakeholder Impact

• Shareholders: Potential for significant dilution if equity offerings are pursued; ongoing concern about the company's going concern status and share price due to NYSE delisting.
• Creditors/Lenders: Increased risk of default and potential immediate repayment demands on the 2025 Senior Term Loan due to cross-default provisions triggered by the delisting and forbearance agreement expirations.
• Employees: Impacted by workforce reductions and cost-saving measures; uncertainty related to the company's financial stability.
• Suppliers: Potential for payment delays or disruptions if the company's financial situation deteriorates further.
• Customers: While the core business is subscription-based, customer retention challenges and potential service disruptions due to financial instability could impact them.

Next Steps

• Renegotiating or amending existing debt obligations.
• Pursuing the sale of assets or business units.
• Pursuing opportunities to list its Common Stock on other tiers or exchanges.
• Conducting one or more equity offerings to raise additional capital.
• Continuing to evaluate additional rationalization opportunities to reduce complexity and operating expenses.
• Investing in building innovative products, attracting new customers, and expanding leadership in the legal and regulatory information market.
• Evaluating investment and commercial partnership opportunities in complementary businesses.
• Potentially divesting non-core business lines or products.

Key Dates

Recommendation

The company is facing severe financial distress, evidenced by significant revenue declines, widening losses, a substantial goodwill impairment, and critical going concern issues. The recent NYSE delisting has triggered debt defaults, creating an immediate liquidity crisis. While management is pursuing several strategic options, the path to recovery is highly uncertain and fraught with significant execution risk. The potential for further dilution from equity raises and the immediate threat of debt acceleration make this a high-risk investment.

Keywords

FiscalNote Holdings, SEC Filing, 10-Q, Quarterly Report, Financial Results, Revenue Decline, Operating Loss, Net Loss, Going Concern, NYSE Delisting, Debt Obligations, Goodwill Impairment, Policy Intelligence, AI