FiscalNote Holdings, Inc. Q4 and Full Year 2025 Earnings Call Summary

1Key Financial Results and Metrics

Q4 2025 Revenue: $22.2 million, within guidance.

Full Year 2025 Revenue: $95.4 million, down from $120.3 million in 2024.

Annual Recurring Revenue (ARR): $84.1 million at year-end, down from $107.5 million in 2024.

Net Revenue Retention: Approximately 96% for Q4, reflecting customer migration to the new PolicyNote platform.

GAAP Net Loss: $22.9 million for Q4, including a $12.4 million noncash goodwill impairment.

Adjusted EBITDA: $2.5 million for Q4, marking the tenth consecutive positive quarter; full year adjusted EBITDA totaled $10.3 million, with a margin of 10.8%.

Gross Margin: Approximately 78% for the full year, with adjusted gross margin at about 87%.

2Strategic Updates and Business Highlights

Operational Transformation: Significant cost reductions achieved, including a 19% reduction in cash operating expenses and a 25% reduction in workforce year-over-year.

PolicyNote Platform: Successful migration of customers from the legacy platform, with increased engagement metrics (e.g., 250% increase in legislation views).

AI Integration: 100% adoption of AI tools in R&D, leading to faster development cycles and increased productivity.

New Market Opportunities: Expansion into prediction markets and enhanced API offerings to facilitate product-led growth.

3Forward Guidance and Outlook

2026 Revenue Guidance: Expected GAAP revenue between $80 million and $83 million, with adjusted EBITDA projected between $14 million and $16 million.

Q1 2026 Expectations: Revenue forecast of $20 million to $21 million and adjusted EBITDA of approximately $1 million.

Free Cash Flow: Anticipated to be positive by the end of Q1 2027, driven by operational improvements and cost management.

4Challenges and Points of Concern

Revenue Decline: Notable year-over-year revenue drop due to divestitures and strategic shifts, with ARR also declining.

Customer Churn: Some large enterprise customers chose not to migrate to PolicyNote, influenced by budget constraints and timing issues.

Macroeconomic Pressures: Ongoing economic uncertainties affecting client budgets and spending decisions.

Transition Risks: The migration to PolicyNote is still ongoing, and further improvements are needed to fully realize its potential.

5Notable Q&A Insights

Sustainability of Margins: Management indicated that while gross margins are strong, technology improvements may drive further margin expansion.

Customer Migration: Clarification that while the legacy platform migration is complete, additional data sets are still being integrated into PolicyNote.

Enterprise Pipeline Health: Positive signs of recovery in mid-market and public sector segments, with AI capabilities expected to enhance engagement across all customer types.

Prediction Market Strategy: Initial products like tip sheets and fantasy leagues are expected to be quicker to market, with ongoing development in this area. Overall, FiscalNote is navigating a significant transformation with a focus on operational efficiency, AI integration, and new market opportunities, while also addressing challenges related to customer retention and macroeconomic pressures.