8-K: FiscalNote Q3 2025: Revenue Meets, EBITDA Exceeds Guidance

FiscalNote Holdings, Inc. reported Q3 2025 financial results, with total revenue meeting guidance and adjusted EBITDA exceeding expectations, alongside sequential pro forma ARR growth.

Summary

• Q3 2025 Total Revenues were $22.4 million, in line with guidance.
• Q3 2025 Adjusted EBITDA reached $2.2 million, exceeding guidance.
• Annual Recurring Revenue (ARR) for Q3 2025 was $84.8 million, showing sequential growth on a pro forma basis from $84.7 million in Q2 2025.
• Net Loss for Q3 2025 increased by 66% year-over-year to $(24.9) million, compared to $(14.9) million in Q3 2024.
• Total Revenues declined 24% year-over-year from $29.4 million in Q3 2024, primarily due to previously announced divestitures.
• Pro forma ARR declined 8% year-over-year, attributed to execution challenges, customer engagement issues in legacy products, and instability in the US federal sector.
• The company completed a balance sheet refinancing in August, enhancing long-term operating flexibility.
• Several AI-powered PolicyNote expansions were launched, including legislative drafting capabilities, social listening, an upgraded reporting suite, tariff impact reports, and Bill Comparison.
• Full-year 2025 guidance was updated, narrowing total revenue expectations to $95-$96 million and adjusted EBITDA to approximately $10 million.
• Q4 2025 is anticipated to have total revenues in the range of $22-$23 million and adjusted EBITDA of approximately $2 million.

Sentiment

Score: 7

Explanation: The company demonstrated strong operational execution by exceeding adjusted EBITDA guidance and meeting revenue targets. Sequential pro forma ARR growth and improved NRR indicate stabilization in the core business, driven by successful AI-powered product launches. However, year-over-year revenue and EBITDA declined, and net loss increased, largely due to divestitures and ongoing challenges in the federal public sector. The balance sheet refinancing provides stability.

Positives

• Q3 2025 Adjusted EBITDA of $2.2 million exceeded the company's guidance.
• Total Revenue of $22.4 million met the company's guidance for Q3 2025.
• Annual Recurring Revenue (ARR) grew sequentially on a pro forma basis to $84.8 million from $84.7 million in Q2 2025, indicating stabilization in the core business.
• Net Revenue Retention (NRR) improved sequentially to 98% in Q3 2025 from 96% in Q2 2025.
• Key customer engagement, pipeline, and sales metrics continue to strengthen, particularly in the corporate sector.
• Successfully launched multiple AI-powered features and expansions for the PolicyNote platform, enhancing product offerings.
• Completed a balance sheet refinancing in August, which secures long-term operating flexibility.
• Total operating expenses declined 11% year-over-year, driven by divestitures, ongoing efficiency measures, and the elimination of costs associated with sunset products.

Negatives

• Total Revenues declined 24% year-over-year to $22.4 million in Q3 2025 from $29.4 million in Q3 2024, primarily due to divestitures.
• Net Loss increased 66% year-over-year to $(24.9) million in Q3 2025 from $(14.9) million in Q3 2024.
• Adjusted EBITDA declined 37% year-over-year to $2.2 million in Q3 2025 from $3.4 million in Q3 2024.
• As-reported Annual Recurring Revenue (ARR) declined 22% year-over-year to $84.8 million from $109.5 million as of September 30, 2024.
• Pro forma ARR declined 8% year-over-year, attributed to previously known execution challenges, customer engagement issues in legacy products, and atypical instability in the US federal sector.
• Challenges in the federal public sector, including an extended federal government shutdown, are expected to impact Q4 2025 results.

Risks

• A protracted 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 government spending priorities, dependence on winning or renewing government contracts, and the government's right to modify, delay, curtail, or terminate contracts.
• The ability to successfully execute the strategy to achieve and sustain organic growth through a focus on the core Policy business, including developing, enhancing, and integrating platforms, attracting new customers, and expanding offerings.
• 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, currency exchange rate fluctuations, political/social/economic instability, and supply chain disruptions.
• The ability to introduce new features, integrations, capabilities, and enhancements to products and services, and to obtain and maintain accurate, comprehensive, or reliable data.
• Reliance on third-party systems and data, and the ability to integrate and continue to support such integrations.
• The ability to maintain and improve methods and technologies for data collection, organization, and analysis.
• Potential technical disruptions, cyberattacks, security, privacy, or data breaches affecting networks or systems.
• Competition and competitive pressures in the markets, including from larger well-funded companies.
• The 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.
• The ability to retain or recruit key personnel.
• The ability to adapt products and services for changes in laws and regulations or public perception related 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.
• The ability to maintain public company-quality internal control over financial reporting.
• The ability to protect and maintain brands and other intellectual property rights.

Future Outlook

The company updated its full-year 2025 guidance, narrowing the total revenue forecast to approximately $95-$96 million (from a previous range of $94-$100 million) and adjusted EBITDA to approximately $10 million (from $10-$12 million). For Q4 2025, the company anticipates total revenues in a range of approximately $22-$23 million and adjusted EBITDA of approximately $2 million. This outlook balances observed strength in overall demand and pipeline, particularly in the corporate sector, with ongoing challenges in the federal public sector, including an extended government shutdown.

Management Comments

• "In the third quarter we demonstrated meaningful progress on our path to durable, profitable growth."
• "We delivered sequential ARR growth on a pro forma basis, primarily driven by improving performance with our corporate clients."
• "With the continued success of PolicyNote, we're strengthening our unique position as the leader of AI-driven insights and expert analysis on a global-to-local scale for policy and regulatory intelligence, opening new pathways for enhanced client engagement."
• "As always, we remain disciplined in how we deploy our resources, nimble in how we operate, and singularly focused in how we execute on our product-focused strategy in service of building a solid foundation for sustainable growth, expanding profitability, and durable positive free cash flow."

Industry Context

FiscalNote operates in the dynamic and evolving market of AI-driven policy and regulatory intelligence solutions. The company's strategic focus on its PolicyNote platform and the continuous launch of AI-powered features (such as legislative drafting, social listening, and tariff impact reports) aligns with the broader industry trend of leveraging artificial intelligence to provide deeper insights and automation for managing political and business risks. Despite macroeconomic unpredictability impacting corporate buying decisions and instability in the US federal sector, the sequential ARR growth and strengthening sales metrics suggest that the company's product-led strategy is gaining traction and resonating with customers in a competitive landscape.

Stakeholder Impact

• Shareholders: Potential for increased value from the ongoing strategic review, improved operational performance, and product-led growth, but also face risks from continued net losses and federal sector instability.
• Customers: Benefit from enhanced product offerings through new AI-powered PolicyNote features, potentially leading to better engagement and value.
• Employees: Workforce changes related to business realignment actions have resulted in severance costs.
• Creditors: The completed balance sheet realignment provides long-term operating flexibility and addresses debt obligations.

Next Steps

• Company management will host a conference call on November 6, 2025, at 5:00 PM ET to discuss these financial results.
• The Board of Directors, along with its advisors, will continue to review the company's ongoing plans and evaluate all strategic value-maximizing options.
• Continued execution on the product-led growth strategy, including the PolicyNote platform migration, is expected.

Key Dates

Recommendation

While FiscalNote demonstrated strong operational execution by exceeding adjusted EBITDA guidance and achieving sequential pro forma ARR growth, indicating core business stabilization and product success, the company still faces significant year-over-year revenue declines and an increasing net loss. The ongoing strategic review and challenges in the federal public sector introduce uncertainty. The positive sequential trends and product innovation are encouraging, but the overall financial picture suggests a 'hold' position until there is clearer evidence of sustained profitability and stronger year-over-year growth in core metrics, beyond the impact of divestitures.

Keywords

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