10-K: FiscalNote Reports Steep Revenue Decline, Goodwill Impairment

FiscalNote Holdings, Inc. reported a 21% drop in total revenues for 2025, alongside a significant net loss and goodwill impairment, raising concerns about its financial stability and ability to meet debt obligations.

Summary

• Total revenues for the year ended December 31, 2025, decreased by 21% to $95.4 million, down from $120.3 million in 2024.
• Subscription revenue, which accounts for approximately 93% of total revenues, declined by 20% to $89.0 million in 2025 from $111.1 million in 2024.
• The decrease in subscription revenue is attributed to the divestiture of non-core businesses (Board.org, Aicel, Oxford Analytica, Dragonfly, TimeBase) and organic business challenges, including customer retention issues and U.S. federal government budget cuts.
• The company reported a GAAP net loss of $65.2 million for 2025, a significant shift from a net income of $9.5 million in 2024.
• Excluding gains on the sale of businesses, the net loss for 2025 was $81.8 million, compared to $62.5 million in 2024.
• Adjusted EBITDA increased slightly to $10.3 million in 2025 from $9.8 million in 2024, with Adjusted EBITDA Margin improving to 11% from 8%.
• Annual Recurring Revenue (ARR) stood at $84.1 million as of December 31, 2025, a decrease from $107.5 million at December 31, 2024.
• Net Revenue Retention (NRR) for Q4 2025 was approximately 96%.
• A non-cash goodwill impairment charge of $12.4 million was recorded for the year ended December 31, 2025, due to a sustained decrease in the company's stock price and changes in internal financial projections.
• The company refinanced a substantial amount of its legacy indebtedness on August 12, 2025, including a new $75.0 million Senior Term Loan and the issuance of $33.3 million in Convertible Debentures.
• As of December 31, 2025, total principal outstanding debt was $136.2 million.
• Cash, cash equivalents, restricted cash, and short-term investments decreased to $26.9 million at December 31, 2025, from $35.3 million at December 31, 2024.
• The company had a negative working capital balance (excluding cash and short-term investments) of $25.8 million at December 31, 2025, and an accumulated deficit of $872.1 million.
• A material weakness in internal controls over financial reporting was identified concerning IT general controls over logical access and change management for ERP and CRM systems.
• The company failed to meet its minimum Annualized Recurring Revenue financial covenant requirement as of January 31, 2026, but received a waiver on March 23, 2026, along with revised covenants and an increased interest rate on its Senior Term Loan.
• An organizational transformation was announced in Q1 2026, including a workforce reduction of approximately 25% to streamline operations and drive cash generation.

Sentiment

Score: 3

Explanation: StockSavvy.ai views this filing as largely negative due to significant revenue decline, a substantial net loss, goodwill impairment, and ongoing liquidity challenges evidenced by negative working capital and a covenant breach. While management is taking steps to streamline operations and address debt, the fundamental financial performance remains weak, and warrants are deeply out-of-the-money.

Positives

• Adjusted EBITDA increased slightly to $10.3 million in 2025 from $9.8 million in 2024, indicating some operational efficiency improvements despite revenue decline.
• Adjusted EBITDA Margin improved to 11% in 2025 from 8% in 2024.
• The company successfully refinanced a substantial amount of its legacy indebtedness, securing a new $75.0 million Senior Term Loan and issuing Convertible Debentures.
• Management is actively pursuing cost-saving measures, including significant headcount reductions and organizational streamlining, to improve profitability and cash flow.
• The launch of the PolicyNote platform in January 2025, with enhanced AI features, is expected to improve customer experience, functionality, engagement, and retention.
• Expansion into political prediction markets and enhancement of agentic API offerings leverage proprietary data and domain expertise for new revenue streams.
• The company received a waiver for failing its minimum ARR covenant as of January 31, 2026, providing temporary relief from potential debt acceleration.

Negatives

• Total revenues decreased by 21% year-over-year to $95.4 million in 2025.
• Subscription revenue declined by 20% in 2025, partly due to divestitures but also organic customer retention challenges and U.S. federal government cuts.
• The company reported a GAAP net loss of $65.2 million in 2025, a significant deterioration from a net income of $9.5 million in 2024.
• A non-cash goodwill impairment charge of $12.4 million was recorded in 2025, reflecting a decline in the company's valuation.
• Cash and cash equivalents decreased to $26.9 million at December 31, 2025, from $35.3 million at December 31, 2024.
• The company has a negative working capital balance of $25.8 million and an accumulated deficit of $872.1 million, indicating ongoing liquidity challenges.
• Failure to meet the minimum Annualized Recurring Revenue covenant as of January 31, 2026, highlights continued pressure on organic revenue and customer retention.
• The company has a history of net losses since its inception and anticipates operating expenses may grow, making sustained profitability uncertain.
• The effective exercise price of warrants is $87.82 per share, while the Class A Common Stock closing price on December 31, 2025, was $1.47 per share, indicating warrants are significantly out-of-the-money and likely to expire worthless.

Risks

• History of net losses and uncertainty in achieving and maintaining profitability due to evolving market and potential growth in operating expenses.
• Risk of NYSE delisting if the company fails to comply with ongoing listing standards, including minimum bid price and market capitalization requirements, which could trigger debt defaults.
• Significant dependence on U.S. government agency customers, making financial performance vulnerable to changes in spending priorities, contract renewals, and government shutdowns.
• Inability to attract new customers, retain existing ones, expand product offerings, or successfully enter new markets like political prediction markets.
• Failure to keep pace with rapid technological developments, particularly in AI and machine learning, could harm competitiveness.
• Risks associated with strategic transactions, including restructuring, divestitures, and potential disruption to operations or loss of key employees.
• International operations expose the company to risks such as changes in laws, currency fluctuations, political instability, and data privacy regulations.
• A lag in realizing the impact of current sales or cancellations in reported revenues could obscure immediate financial performance.
• Lengthy and unpredictable sales cycles require significant upfront investment without guaranteed returns.
• Estimates of total addressable market may be inaccurate, limiting future growth potential.
• Reliance on third-party data, information, and services, with risks of unfavorable terms, service withdrawal, or intellectual property infringement claims.
• Potential for inaccurate, incomplete, or unreliable data and expert analysis to reduce demand for products and services.
• Inadequate research and development funding or unsuccessful product enhancements could hinder competitiveness.
• Pricing and product bundling strategies may not meet customer expectations or compete effectively with lower-cost alternatives, including general purpose AI platforms.
• Failure to protect and maintain brands could impair customer attraction and retention.
• Exposure to numerous legal and regulatory risks, including lobbying laws, data privacy, and AI regulations, which could result in substantial liability.
• Significant debt ($136.2 million outstanding principal as of Dec 31, 2025) and restrictive covenants, with a risk of default and acceleration if covenants are breached.
• Involvement in legal actions and claims in the ordinary course of business, which could lead to monetary damages or operational limitations.
• Projections and key performance metrics are subject to significant risks, assumptions, and uncertainties, potentially leading to material differences from expectations.
• Goodwill and other long-lived assets represent a significant portion of assets, with a risk of further impairment charges if market capitalization declines or operating performance does not improve.
• Use of open-source software under restrictive licenses could affect the ability to license proprietary code or lead to litigation.
• Inability to adequately obtain, maintain, protect, and enforce proprietary and intellectual property rights.
• Non-compliance with sanctions, anti-corruption, and anti-bribery laws could result in criminal penalties or significant fines.
• Fluctuations in foreign currency exchange rates could adversely impact results of operations.
• Reliance on third-party licensing agreements, with risks of termination or inability to secure new licenses.
• Material weakness in internal controls over financial reporting, increasing the risk of financial misstatements.
• Ineffective risk management processes may lead to unexpected losses.
• The dual-class stock structure gives co-founders significant voting power, limiting the influence of other stockholders.
• Potential for significant dilution from future issuances of Class A Common Stock to satisfy debt obligations (GPO Shares, Debenture Conversion Shares).
• Warrants are significantly out-of-the-money and may expire worthless, providing no cash proceeds to the company.
• Increased costs and management time devoted to compliance as a public company.
• Lack of research or reports by securities analysts could negatively impact stock price and trading volume.
• Authorization to issue preferred stock could adversely affect the voting power or value of Class A Common Stock.
• Exclusive forum provisions in the Charter may limit stockholders' ability to obtain a favorable judicial forum for disputes.

Future Outlook

The company expects to return to positive revenue growth rates over time by executing a product-led growth strategy, optimizing its sales organization, and leveraging AI-enhanced features in its PolicyNote platform. It plans to expand into political prediction markets and enhance agentic API offerings. Management anticipates increasing productivity and reducing costs through AI automation in business development workflows. The company also expects to have adequate cash and cash flows to support operations for at least the next twelve months, contingent on cost-saving measures and potential future divestitures. However, the company acknowledges that projections are subject to significant uncertainties and actual results may differ materially.

Management Comments

• Josh Resnik, President and CEO, assumed the CEO role effective January 1, 2025.
• Management believes the PolicyNote product and related data will provide opportunities to capitalize on third-party usage, such as expansion into political prediction markets and agentic APIs.
• Management believes the company can return to positive revenue growth rates over time as it executes on its product-led growth strategy and continues to optimize its sales organization.
• Management believes that its existing properties are suitable and adequate for current needs and will continue to assess facilities requirements as the business grows.
• Management believes the plan to alleviate substantial doubt about the company's ability to continue as a going concern will be effective, following cost-saving measures and the debt amendment.

Industry Context

StockSavvy.ai notes that FiscalNote operates in a rapidly evolving market driven by advancements in artificial intelligence, machine learning, and natural language processing. The increasing complexity and volume of global policy and regulatory data create a growing demand for efficient, AI-driven solutions. While this presents opportunities for companies like FiscalNote to offer structured insights and workflow tools, it also introduces significant competition from larger, well-funded traditional information services companies (e.g., Thomson Reuters, Bloomberg, S&P, LexisNexis) and emerging general-purpose AI platforms (e.g., Claude, ChatGPT) that could directly compete or reduce demand for custom-built SaaS tools. The company's strategy to expand into political prediction markets and agentic APIs aligns with the trend of democratizing analytical capabilities in law and policy, allowing organizations to integrate trusted data into their internal systems.

Comparison to Industry Standards

• FiscalNote's reported Net Revenue Retention (NRR) of 96% for Q4 2025 is generally considered healthy, though it has fluctuated (e.g., 93% in Q1 2025) and is below the 98-99% seen in some prior quarters, suggesting ongoing customer retention challenges compared to top-tier SaaS companies that often boast NRR above 100-120% due to strong upsell capabilities.
• The company's Adjusted EBITDA Margin of 11% in 2025, while an improvement from 8% in 2024, remains relatively low compared to more mature, profitable SaaS and information services companies that typically achieve margins in the 20-40% range or higher.
• The significant goodwill impairment of $12.4 million in 2025, following a sustained decline in stock price, indicates a re-evaluation of acquired assets' value, which is a common industry challenge for companies that have grown through numerous acquisitions, but the magnitude suggests underperformance relative to initial acquisition expectations.
• The dual-class stock structure, with Class B shares carrying 25 votes per share, is a governance model seen in some tech companies (e.g., Google, Meta) to maintain founder control, but it deviates from standard one-share, one-vote principles common in many public companies and can be viewed negatively by governance advocates.
• The company's reliance on U.S. government contracts and exposure to government shutdowns is a specific risk factor that differentiates it from purely commercial SaaS providers, making its revenue streams more susceptible to political and budgetary cycles, similar to other government contractors.

Management Changes

Corporate Governance

Legal Proceedings

• The company is not currently a party to any litigation or regulatory proceeding that is expected to have a material adverse effect on its business, results of operations, financial conditions, or cash flows.
• The company is subject to differing, and sometimes conflicting, laws and regulations in various jurisdictions, and non-compliance could lead to substantial liability.
• The company assists customers in legislative and governmental relations matters, which may be deemed lobbying efforts, potentially requiring registration under federal, state, local, or foreign laws, with non-compliance risking civil or criminal penalties.

Related Party Transactions

• In September 2024, the company entered into a sublease agreement with Nitra, which was amended in July 2025 to include additional space. The company's Co-Founder and Executive Chairman is also a board member at Nitra. Sublease income from Nitra was approximately $122,000 in 2025 and $46,000 in 2024.

Stakeholder Impact

• Shareholders: Face significant dilution risk from future equity issuances to satisfy debt, and the dual-class structure limits their voting influence. The stock price is significantly below warrant exercise prices, indicating potential loss for warrant holders. The ongoing net losses and goodwill impairment negatively impact shareholder value.
• Employees: Subject to significant workforce reductions (approximately 25% announced in Q1 2026) as part of cost-saving initiatives, which could impact morale and retention. Key personnel are critical to success, and competition for skilled employees (especially in AI) is intense.
• Customers: May experience improved product functionality and user experience with the launch of PolicyNote and enhanced AI features. However, customer retention challenges and potential impacts from government spending cuts could affect service continuity or quality.
• Creditors: The company's substantial debt and recent covenant breach (though waived) indicate elevated credit risk. The refinancing and mandatory prepayments aim to manage obligations, but ongoing financial performance is critical for debt servicing.
• Suppliers: The company's financial health and cost-cutting measures could impact relationships and payment terms with suppliers.

Next Steps

• Continue organizational streamlining, including further headcount reductions and offshoring, to drive cash generation in the core business.
• Consolidate, replatform, and upgrade the core Policy product offering, culminating in the launch of PolicyNote.
• Leverage proprietary data sets and policy domain expertise to launch products and services across multiple layers of the prediction markets ecosystem.
• Rapidly enhance and productize agentic APIs with self-service access and native support for the Model Context Protocol (MCP).
• Focus on product-led growth strategy and sales optimization to improve customer retention and create upsell opportunities.
• Continue to invest in improvements to products and services, including AI and machine learning capabilities.
• Remediate the identified material weakness in internal controls over financial reporting.
• Monitor developments regarding the company's market capitalization and operating performance for potential future goodwill impairment assessments.
• Make quarterly installment payments of $2.0 million on the 2025 GPO Convertible Note starting April 1, 2026.
• Make a mandatory prepayment of $20.0 million on the 2025 Senior Term Loan no later than March 31, 2027.

Key Dates

Recommendation

The filing reveals a company in significant financial distress, marked by a substantial 21% revenue decline, a GAAP net loss of $65.2 million, and a $12.4 million goodwill impairment in 2025. Liquidity is a major concern, with negative working capital and a recent breach of debt covenants, necessitating a waiver and revised terms. While management is implementing cost-cutting measures, including a 25% workforce reduction, and pursuing strategic shifts into AI and prediction markets, these initiatives are long-term and carry execution risk. The stock price of $1.47 is drastically below the warrant exercise price of $87.82, indicating a high probability of warrants expiring worthless and reflecting severe market skepticism. The material weakness in internal controls further compounds operational risks. Given the deteriorating financial performance, high debt load, and significant uncertainties, a seasoned investor would likely recommend a strong sell.

Keywords

PolicyNote, AI, regulatory analysis, legislative tracking, corporate governance, dual-class stock, debt refinancing, goodwill impairment, SEC filing, financial performance, risk management, capital structure, subscription revenue, SaaS, public policy intelligence, warrants, internal controls, workforce reduction, divestitures, prediction markets