FiscalNote Holdings, Inc. Q1 FY2025 earnings call

• Adjusted EBITDA was $2.8 million in Q1, with a margin of 10% compared to 4% in the same period last year. - Reduced senior term loan by $96 million since December 2023, lowering cash interest expense. - Revenue beat expectations at $27.5 million, but ARR growth not resumed yet. - Pipeline grew notably in Q1, with inbound demand strong and Europe seeing double pipeline creation. - PolicyNote platform migration showing positive engagement, with some customers moving to it and new features rolled out rapidly, like the tariff tracker launched two weeks after Trump's tariffs. - Focus on product-led growth and multi-year deals, with new corporate customers committing to multi-year agreements at double the rate of a year ago.

Total revenue for Q1 2025 was $27.5 million, exceeding the forecast of $26 million to $27 million. Subscription revenue accounted for 92% of total in-quarter revenue. Annual recurring revenue (ARR) was $88 million pro forma after adjusting for divestitures, down from $94 million in 2024. Net revenue retention was 93% in Q1 2025 compared to 96% in the prior year. Principal operating expenses continued to decrease year-over-year due to efficiency measures, with cost of revenues, R&D, sales and marketing all seeing reductions.

• Reaffirmed full-year 2025 revenue guidance in the range of $94 million to $100 million and adjusted EBITDA in the range of $10 million to $12 million. - Forecasted second quarter 2025 revenues in the range of $22 million to $24 million and adjusted EBITDA of approximately $2 million.

• Market volatility and economic uncertainties could affect actual results differing from forward-looking statements. - Execution challenges in the past that required management changes, though improvements are being seen.

Q: Glenn Mattson asked about the sales force and go-to-market evolution.

A: Josh Resnik said there were execution issues at the end of 2024, but management was restructured, leading to better execution throughout the funnel with improved inbound and outbound pipeline and better connection between go-to-market and product teams.

Q: Glenn Mattson asked about PolicyNote sample size and migration timeline.

A: Josh Resnik said they expect all core policy data insight customers on the new platform by next year, plan to deprecate legacy platforms this year, and have seen positive progress with migrated cohorts.

Q: Jesse Sobelson asked about the balance sheet and Board activity.

A: Jon Slabaugh said the sale of the Australian subsidiary TimeBase will reduce debt, and Josh Resnik said the Board is constantly considering value-maximizing options with most portfolio divestitures done but future opportunities possible.

Q: Mike Latimore asked about pipeline details.

A: Josh Resnik said pipeline growth includes inbound and outbound new logo opportunities across sectors, with high interest in Europe.

Q: Mike Latimore asked about the federal vertical.

A: Josh Resnik said while there's volatility in the federal market, they see opportunity as their products help organizations be efficient and they're leveraging AI for insights.

Q: Zach Cummins asked about pipeline progression and multi-year deals.

A: Josh Resnik said they're confident in pipeline conversion with good execution, and they're emphasizing multi-year deals due to confidence in PolicyNote's long-term value, seeing multi-year commitments at double the prior year's rate.