8-K: FiscalNote to Sell Australian Subsidiary TimeBase for $6.5 Million, Reaffirms 2025 Guidance

FiscalNote Holdings, Inc. has announced an agreement to sell its Australian subsidiary, TimeBase Pty. Ltd., to Thomson Reuters for $6.5 million in cash, with the proceeds aimed at debt reduction.

Summary

• FiscalNote Holdings, Inc. has agreed to sell its Australian subsidiary, TimeBase Pty. Ltd., to Thomson Reuters for $6.5 million in cash.
• The sale is subject to customary closing conditions, including clearance from Australian competition authorities.
• Net proceeds from the sale will be used to retire approximately $3.2 million in debt under the company's credit agreement and to pay associated fees.
• FiscalNote has also entered into an amendment to its credit agreement with its lenders, Runway Growth Finance Corp.
• The amendment consents to the sale of TimeBase and releases TimeBase as a guarantor under the credit agreement upon receipt of the $3.2 million payment.
• The credit agreement amendment will also modify FiscalNote's minimum ARR requirements and permitted add-backs to adjusted EBITDA to reflect the sale of TimeBase.
• FiscalNote reaffirms its full year 2025 financial forecast, projecting total revenues of $94-$100 million and adjusted EBITDA of $10-$12 million.
• TimeBase represented approximately $1.3 million of FiscalNote's $120.3 million total GAAP revenue for the 12-month period ended December 31, 2024.

Sentiment

Score: 7

Explanation: The sentiment is moderately positive. The company is selling a non-core asset to reduce debt and streamline operations, and reaffirms its financial guidance. However, the sale will result in a reduction in revenue.

Positives

• The sale of TimeBase will allow FiscalNote to streamline its operations and focus on its core business.
• Debt reduction will improve the company's capital structure.
• FiscalNote reaffirms its FY 2025 guidance, indicating confidence in its core business.
• The company expects to accelerate performance in the second half of the year due to investments in its core policy offering.

Negatives

• The sale of TimeBase will reduce FiscalNote's total revenue, as TimeBase contributed $1.3 million to the company's revenue for the 12-month period ended December 31, 2024.

Risks

• The sale is subject to customary closing conditions, including antitrust clearance in Australia, which may not be obtained.
• Failure to make the TimeBase Required Payment on the TimeBase Sale Closing Date in accordance with the terms of the TimeBase Release Letter shall constitute an immediate Event of Default not capable of cure.
• The company's ability to achieve its reaffirmed FY 2025 guidance is subject to various risks and uncertainties, as detailed in its SEC filings.

Future Outlook

FiscalNote reaffirms its full year 2025 financial forecast, projecting total revenues of $94-$100 million and adjusted EBITDA of $10-$12 million. The company expects to accelerate performance in the second half of the year, driven by investments in its core policy offering.

Management Comments

• Josh Resnik, FiscalNote's CEO & President, said, 'This divestiture is another clear step in sharpening our strategic focus, improving our capital structure, and accelerating our path to positive free cash flow.'
• He added, 'We are executing with discipline and streamlining operations while investing in the products and capabilities that matter most to our thousands of customers around the world.'
• He also stated, 'With a more focused portfolio and a strengthened balance sheet, we're building a durable foundation for long term, sustainable growth.'

Industry Context

Thomson Reuters' acquisition of TimeBase, a provider of Australian legislative information, aligns with their strategy of expanding their content and technology offerings for professionals in legal, tax, accounting, compliance, government, and media sectors. This acquisition strengthens Thomson Reuters' presence in the Australian market and enhances their ability to provide comprehensive solutions to their customers.

Comparison to Industry Standards

• Comparable companies in the policy and regulatory intelligence space include Bloomberg Government, CQ Roll Call (owned by FiscalNote), and LexisNexis.
• The sale of TimeBase to Thomson Reuters is similar to other acquisitions in the information services industry, where larger companies acquire smaller, specialized firms to expand their product offerings and geographic reach.
• FiscalNote's reaffirmed revenue guidance of $94-$100 million and adjusted EBITDA of $10-$12 million for 2025 places it in a competitive position within its industry, although specific comparisons would require detailed financial analysis of its peers.

Stakeholder Impact

• Shareholders: The sale is expected to improve the company's financial position and streamline operations, potentially increasing shareholder value.
• Employees: The sale of TimeBase may impact employees of that subsidiary.
• Customers: FiscalNote will continue to serve customers in the Australia market through its separate PolicyNote platform and related solutions.
• Creditors: The debt reduction will improve the company's creditworthiness.

Next Steps

• The transaction is expected to close promptly following the receipt of antitrust clearance in Australia and other customary closing conditions.
• FiscalNote will use net proceeds from this transaction to further pay down the existing balance of its senior term loan.
• Agent must register financing change statements on the Australian Personal Property Securities Register (or equivalent in any other relevant jurisdiction) to end all registrations relating to the security interests released by this letter, including those registered by the Agent against FiscalNote, Inc. and Released Grantor on the Australian Personal Property Securities Register with Registration Numbers 202311280063147, 202312010020502, and 202312010022218.

Key Dates

Keywords

FiscalNote, TimeBase, Thomson Reuters, Divestiture, Debt Reduction, ARR, EBITDA, Financial Guidance, PolicyNote, Credit Agreement