FiscalNote Holdings, Inc. Q4 FY2024 earnings call

• Three pillars of transformation: consistently expanding adjusted EBITDA margin, managing debt and accelerating to positive free cash flow, and building foundation for long-term profitable growth.
• In 2024, adjusted EBITDA was $9.8 million, a significant improvement. Principal operating expenses in Q4 2024 decreased year-over-year. Cost of revenues, R&D, sales and marketing, and G&A all saw decreases. Cash flow from operations in 2024 was a $30 million improvement from 2023.
• Launched Policy Note in January 2025, seeing strong engagement and positive adoption trends. Corporate clients are committing to multiyear agreements, with new logo ARR on multiyear contracts in the policy business in Q1 2025 almost double that of a year ago.

For the fourth quarter of 2024, total revenue was $29.5 million. Full-year 2024 total revenues were $120.3 million. Annual recurring revenue (ARR) in Q4 2024 pro forma was $107 million. Adjusted EBITDA for 2024 was $9.8 million, a year-over-year improvement of over $17 million and 1,400 basis points. Subscription revenue remains the cornerstone of the business. Net revenue retention in Q4 2024 was 98% versus 99% in the prior year.

• 2025 guidance: total revenues in the range of $94 million to $100 million, adjusted EBITDA in the range of $10 million to $12 million. Q1 2025 total revenues expected to be in the range of $26 million to $27 million, adjusted EBITDA approximately $2 million.
• Expect Policy Note to have a meaningful positive impact on ARR as 2025 unfolds, with ARR growth in the second half of 2025 translating to GAAP revenue growth in 2026.
• Forecast considers market volatility in private and public sectors but currently does not anticipate material impact on the business.

• Market volatility in the private sector, where macroeconomic unpredictability may impact corporate buying decisions and timelines.
• Volatility in the public sector due to changes in the federal government, although the company's platforms deliver essential data and insights that remain valuable despite such changes.

Q: On the new Policy Note platform, how many existing customers have begun to adopt it since January launch and what's the initial feedback?

A: Not disclosing exact number of customers using vs other platforms, but seeing high engagement, including high activity on accounts using it, engagement with AI features like AI assistant and alerts, and positive qualitative feedback with users highlighting intuitive experience and tangible impact.

Q: Going forward, what's the target leverage ratio and how quickly to get there?

A: Thinking about bringing leverage down in absolute amount and relative to EBITDA, planning to bring it into a two to three times leverage range over the foreseeable future but can't give specific targets.

Q: What's the profile of the balance sheet after divestments of Oxford Analytica and Dragonfly close?

A: Anticipated to pay down senior debt by around $30 million, which will bring cash interest expense down to around $2 million per quarter, with subordinated convertible notes still to be managed.

Q: What percent of global intelligence customers are using the Copilot?

A: Feature is available to all subscribers, but no specific metric disclosed; qualitatively, there's been good usage with accounts engaging with it in terms of share, breadth, and frequency.

Q: How were upsells and cross-sells in the quarter for the Copilot?

A: Copilot has been helpful in enabling customers to discover new content and products, acting as a channel for product-led sales, but no specific metrics disclosed.