8-K: FiscalNote Q2 2025 Results: Revenue Beats, EBITDA Soars

FiscalNote Holdings, Inc. reported second-quarter 2025 financial results, exceeding revenue and adjusted EBITDA guidance while reaffirming full-year forecasts and noting strong PolicyNote adoption.

Summary

• Total revenues for Q2 2025 were $23.3 million, which was above the company's guidance midpoint.
• Adjusted EBITDA for Q2 2025 reached $2.8 million, exceeding the company's guidance.
• Adjusted EBITDA improved by 58% year-over-year, and adjusted EBITDA margins doubled to 12%.
• The company reaffirmed its full-year 2025 guidance for total revenues of $94-$100 million and adjusted EBITDA of $10-$12 million.
• FiscalNote expects a return to Annual Recurring Revenue (ARR) growth in the second half of 2025.
• The sale of TimeBase, the company's Australia subsidiary, was completed in July 2025 for $6.5 million.
• PolicyNote platform adoption and customer engagement are building momentum, with daily usage surpassing the legacy FiscalNote platform.
• New corporate customers for the company's policy information entered into multiyear commitments at more than double the rate seen in Q2 2024.
• Subscription revenue declined by $5.7 million, or 21%, year-over-year to $21.4 million, primarily due to previously announced divestitures.
• On a pro forma basis, excluding divestitures, subscription revenue for Q2 2025 declined by $1.8 million, or approximately 8%.
• Annual Recurring Revenue (ARR) as of June 30, 2025, declined by $23.1 million, or 21%, to $85.9 million on an as-reported basis.
• Pro forma ARR declined by $7.7 million, or approximately 8%, to $85.9 million.
• Quarterly Net Revenue Retention (NRR) was 96%, a decrease of 200 basis points from 98% in Q2 2024.
• Net Loss for Q2 2025 was $(13.3) million, compared to $(12.8) million in Q2 2024, representing a 4% increase in loss.
• Total operating expenses declined by $6.5 million, or 18%, year-over-year to $30.7 million, driven by divestitures, efficiency measures, and product sunsetting.

Sentiment

Score: 7

Explanation: While revenue and ARR declined due to divestitures and market conditions, the company exceeded its own guidance for Q2 revenue and adjusted EBITDA, doubled its EBITDA margin, reaffirmed full-year guidance, and showed strong momentum in its new core product (PolicyNote) with increasing customer engagement and sales metrics for new corporate logos. The strategic divestitures and cost management are positioning the company for future profitable growth and positive free cash flow.

Positives

• Q2 2025 total revenues of $23.3 million were above the company's guidance midpoint.
• Q2 2025 adjusted EBITDA of $2.8 million exceeded the company's guidance.
• Adjusted EBITDA improved by 58% year-over-year, demonstrating strong operational leverage.
• Adjusted EBITDA margins doubled to 12% year-over-year, indicating improved profitability.
• Full Year 2025 guidance for total revenues ($94-$100 million) and adjusted EBITDA ($10-$12 million) was reaffirmed, signaling confidence in future performance.
• The company expects a return to Annual Recurring Revenue (ARR) growth in the second half of 2025.
• PolicyNote adoption and customer engagement are building momentum, with its daily usage surpassing the legacy FiscalNote platform.
• Improvements are noted in inbound sales leads and the overall sales pipeline.
• User engagement metrics on the new PolicyNote platform are higher.
• Key sales metrics for new corporate logos have improved, with new corporate customers entering multiyear commitments at more than double the rate for Q2 2024.
• The successful divestiture of TimeBase for $6.5 million contributes to cash flow and strategic focus.
• Ongoing expense management and efficiency initiatives are leading to improving operating leverage.
• New AI-powered features have been launched for PolicyNote, including a Tariff Tracker, legislative forecasting, alerts, bill discovery, legislative drafting capabilities, and social listening.

Negatives

• Total revenues declined 20% year-over-year from $29.2 million in Q2 2024 to $23.3 million in Q2 2025.
• Subscription revenue declined 21% year-over-year to $21.4 million, primarily due to divestitures.
• Annual Recurring Revenue (ARR) declined 21% year-over-year to $85.9 million; pro forma ARR declined 8%.
• Quarterly Net Revenue Retention (NRR) declined 200 basis points to 96% from 98% in Q2 2024.
• Net Loss increased 4% year-over-year to $(13.3) million from $(12.8) million in Q2 2024.
• The decline in ARR is attributed to previously known execution challenges, customer engagement issues in legacy products, and atypical instability in the US federal sector.
• Cash and cash equivalents decreased from $28.814 million at December 31, 2024, to $34.009 million at June 30, 2025, on the balance sheet (note: the press release summary table showed different numbers, but the balance sheet is the authoritative source).
• Long-term debt, net of current maturities, remains substantial at $110.223 million as of June 30, 2025.

Risks

• Ability to successfully complete the closing of pending senior and subordinated debt financing transactions as anticipated.
• Concentration of revenues from U.S. government agencies, changes in U.S. government spending priorities, dependence on winning or renewing U.S. government contracts, delay, disruption or unavailability of funding on U.S. government contracts, and the U.S. government's right to modify, delay, curtail or terminate contracts.
• Ability to successfully execute on the strategy to achieve and sustain organic growth through a focus on the core Policy business, including risks to developing, enhancing, and integrating existing platforms, products, and services.
• Ability to bring highly useful, reliable, secure, and innovative products, product features, and services to market.
• Ability to attract new customers, retain existing customers, expand product and service offerings with existing customers, expand into geographic markets, or identify other opportunities for growth.
• Future capital requirements, as well as the ability to service repayment obligations and maintain compliance with covenants and restrictions under existing debt agreements.
• Demand for services and the drivers of that demand.
• The impact of cost reduction initiatives undertaken by the company.
• 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.
• Ability to introduce new features, integrations, capabilities, and enhancements to products and services, as well as obtain and maintain accurate, comprehensive, or reliable data to support products and services.
• Reliance on third-party systems and data, ability to integrate such systems and data with solutions, and potential inability to continue to support integration.
• Ability to maintain and improve methods and technologies, and anticipate new methods or technologies, for data collection, organization, and analysis to support products and services.
• Potential technical disruptions, cyberattacks, security, privacy or data breaches, or other technical or security incidents that affect networks or systems or those of service providers.
• Competition and competitive pressures in the markets in which the company operates, including larger well-funded companies shifting their existing business models to become more competitive.
• 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.
• The outcome of any known and unknown litigation and regulatory proceedings.
• Ability to maintain public company-quality internal control over financial reporting.
• Ability to protect and maintain brands and other intellectual property rights.
• There can be no assurance that the strategic review will result in any transaction or other outcome.

Future Outlook

The company reaffirmed its full year 2025 guidance for total revenues of $94 to $100 million and adjusted EBITDA of $10 to $12 million. It expects a return to Annual Recurring Revenue (ARR) growth in the second half of 2025 and anticipates continued margin expansion. For Q3 2025, the company guides to total revenues of $22 to $23 million and adjusted EBITDA of approximately $2 million.

Management Comments

• "Our performance in the second quarter demonstrates the progress we're making in strengthening our business and positioning FiscalNote for durable, profitable growth."
• "We're seeing encouraging signals in our product and customer metrics, with PolicyNote adoption and engagement building momentum."
• "At the same time, we remain disciplined in how we operate, continuing to streamline the organization and invest in the innovations that matter most to our customers."
• "These efforts are building a solid foundation for sustainable growth, expanding profitability, and durable positive free cash flow."

Industry Context

FiscalNote operates in the dynamic AI-driven policy and regulatory intelligence sector, a market increasingly reliant on advanced technology for risk management and strategic decision-making. The company's emphasis on AI enhancements for its PolicyNote platform and exploration of stablecoin integration for global payments reflects a broader industry trend towards leveraging cutting-edge AI and blockchain technologies to provide more comprehensive and efficient solutions. The acknowledgment of "atypical instability in the US federal sector" and "macroeconomic unpredictability" impacting corporate buying decisions highlights the challenging market conditions, which FiscalNote is addressing through strategic divestitures, operational efficiencies, and a sharpened focus on its core policy business to navigate economic headwinds and maintain competitiveness.

Management Changes

Corporate Governance

Stakeholder Impact

• Shareholders: Potential positive impact from exceeding guidance, reaffirmed full-year outlook, and strategic review aimed at value maximization. Negative impact from continued net loss and ARR decline (though pro forma is less severe).
• Customers: Positive impact from accelerated adoption of the new PolicyNote platform, enhanced AI-powered features (Tariff Tracker, legislative forecasting, drafting, social listening), and improved customer engagement.
• Employees: Potential impact from "workforce changes related to business realignment actions" (severance costs mentioned), indicating possible restructuring or layoffs. Positive for those involved in PolicyNote development and sales.
• Creditors: The mention of "pending senior and subordinated debt financing transactions" and existing significant debt indicates ongoing financial management and potential future debt restructuring or new debt.

Next Steps

• Return to Annual Recurring Revenue (ARR) growth in the second half of 2025.
• Continue margin expansion.
• The Board of Directors and its advisors will continue to review the company's ongoing plans and evaluate all strategic value-maximizing options available to the company.
• Host a conference call on August 7, 2025, at 5:00 PM EDT to discuss financial results.

Key Dates

Recommendation

While FiscalNote demonstrated strong operational improvements, exceeded Q2 guidance, and showed promising momentum with its new PolicyNote platform, the company still faces significant revenue and ARR declines on an as-reported basis, largely due to divestitures and market challenges. The net loss persists, and the company is undergoing a strategic review, which introduces uncertainty. The reaffirmation of full-year guidance and expected return to ARR growth in H2 2025 are positive signals, but the overall financial picture remains mixed, warranting a "Hold" position until clearer signs of sustained organic growth and profitability emerge.

Keywords

AI-driven policy, regulatory intelligence, government affairs, public sector, corporate risk, legislative tracking, PolicyNote, FiscalNote, SaaS, subscription software, legal tech, GovTech, data analytics, compliance