Q4 2023 FiscalNote Holdings Inc Earnings Call

Operator: Good morning. My name is Krista, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Fiscal Note fourth quarter and full year 2023 earnings conference call. All lines have been placed on mute to prevent any background noise.

Good morning, My name is Krista and I'll be your conference operator today at this time I would like to welcome everyone to the fiscal note fourth quarter and full year 2023 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you like.

Operator: After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question during that time, simply press star followed by the number one on your telephone keypad. And if you'd like to withdraw your question, again, press star one. Thank you. I will now turn the conference over to Sara Buda, Vice President of Investor Relations. Sara, you may begin.

Ask a question during that time simply press star followed by the number one on your telephone keypad and if you'd like to withdraw your question again press Star one. Thank you I will now turn the conference over to Sara Buda, Vice President of Investor Relations. Sir you may begin.

Sara Buda: Hi, everybody. Welcome to the Fiscal Note Investor Call. During this call, we may make statements related to our business that are forward-looking statements under federal securities laws. These statements are not guarantees of future performance but are rather subject to a variety of risks and uncertainties. Our actual results could differ materially from expectations reflected in any forward-looking statement.

Hi, everybody welcome to the fiscal note investor call. During this call. We may make statements related to our business that are forward looking statements under federal Securities laws. These statements are not guarantees of future performance, but rather subject to a variety of risks and uncertainties, our actual results could differ materially from expectations.

As reflected in any forward looking statements for a discussion of the material risks and other important factors that could affect our actual results. Please refer to our SEC filings available on the SEC Edgar system, and our website as well as the risks and other important factors discussed in today's earnings release.

Sara Buda: For a discussion of the material risks and other important factors that could affect our actual results, please refer to our SEC filings available on the SEC EDGAR system and our website, as well as the risks and other important factors discussed in today's earnings release. Additionally, non-GAAP financial measures and other KPIs will be discussed on this conference call. Please refer to the tables in our earnings release and the investor relations portion of our website for a reconciliation of these measures to their most directly comparable GAAP financial measure. With that, I'd like to turn the call over to Fiscal Notes Chairman, CEO, and Co-Founder, Tim Hwang. Thanks, Sara.

Additionally, non-GAAP financial measures and other Kpis will be discussed on this conference call. Please refer to the tables in our earnings release and the Investor Relations portion of our website for a reconciliation of these measures to their most directly comparable GAAP financial measure with that I'd like to turn the call over to physical notes Chairman CEO and co founder.

Paul.

Thanks Sarah.

Tim Hwang: Thank you for joining us this morning. On today's call, we will review our fourth quarter and full year results for 2023. We will also offer some perspective on our strength and balance sheet position with the recent divestiture of one of our non-core businesses, which underscores our focused product strategy and our commitment to driving a strong return on invested capital. This transaction, combined with our achievement of adjusted EBITDA profitability in Q3, one quarter earlier than we had initially forecast, and our beating of adjusted EBITDA expectations in the fourth quarter, form the basis of a transformational 2023 for Fiscalnote In addition to hearing from Jon and me, you'll also hear from our President and COO, Josh Resnik, who will discuss our priorities for 2024. But first, let me remind you of some of the core fundamentals of fiscalnotes.

Thank you for joining us this morning.

On today's call, we will review, our fourth quarter and full year results for 2023.

We will also offer some perspective on our strengthened balance sheet position with the recent divestiture of one of our noncore businesses, which underscores our focused product strategy and our commitment to driving a strong return on invested capital.

This transaction combined with our achievement of adjusted EBITDA profitability in Q3.

One quarter earlier than we had initially forecast and our beat of adjusted EBITDA expectations for the fourth quarter from the base of a transformational 2023 for fiscal note.

In addition to hearing from John and me, you'll also hear from our President and CFO, Josh Rasnick, who will discuss our priorities for 2024.

First let me remind you of some of the core fundamentals of a fiscal note.

Tim Hwang: We're on a mission to help our customers make sense of the complicated and constantly changing world we live in by delivering a proprietary AI-enabled platform that aggregates and organizes regulatory, political, and macroeconomic information and analyzes its impacts on their organization. We are the market-leading AI platform for the regulatory, policy, and geopolitical intelligence sector. Essentially, the Bloomberg Terminal for Regulatory and Public Policy Research.

We're on a mission to help our customers make sense of the complicated and constantly changing royalty limit by delivering our proprietary AI enabled platform that aggregates that organizes regulatory political and macroeconomic information.

Analyze the impacts on the organization.

We are the market, leading AI platform for the regulatory policy and geopolitical intelligence sector, essentially the Bloomberg terminal for regulatory and public policy risk.

Tim Hwang: We operate in a large and growing $40 billion addressable market driven by increasing geopolitical uncertainty and regulatory complexity that impacts almost every organization, from government and non-profit organizations to large enterprises who operate globally in a highly regulated environment. We have a strong and enduring competitive mode underpinned by our decade-long investment in data, AI, and human intelligence. Our AI leadership is supported by a deep patent portfolio and is recognized by the world's most preeminent AI platform. We are passionate about our customer success. Thousands of organizations, ranging from government agencies to public sector organizations.

We operate in a large and growing $40 billion addressable.

Addressable market, driven by increasing geopolitical uncertainty and regulatory complexity that impact almost every organization from government and nonprofit organizations to large enterprises, who operate globally in a highly regulated environment.

We have a strong and enduring competitive boat underpinned by our decade long investment in data AI and human intelligence.

Our AI leadership supported by deep patent portfolio and is recognized by the world's most preeminent AI platforms.

We are passionate about our customer success.

Thousands of organizations ranging from government agencies and public sector organizations.

Tim Hwang: The major corporate customers in the Fortune 100 rely on Fiscalnote every day to help interpret the impact of policies, legislation, and macroeconomic shifts on their institutions and, more importantly, to take actions that achieve their business objectives and minimize political and economic risk. These customers rely on Fiscalnote every day to discover, process, and navigate the impact of government policymaking on their organizations. And more importantly, to take actions that achieve their business objectives and minimize political and economic risk.

A major corporate customers in the fortune 100 rely on physical it everyday to help interpret the impacted policies legislation and macroeconomic shifts on their institutions and more importantly to take actions, which achieved their objectives and minimize political and economic risk.

These customers rely on physical everyday discover process and navigate the impact of government policymaking on the organization and more importantly to take actions, which achieve their business objectives, and minimized political and economic risks.

Tim Hwang: This forms the basis of our durable and long-term growth. We enjoy recurring compounding revenues with customers who renew their subscriptions year after year and have a proven business model of successful upsell and cross-sell by offering incremental data sets, products, and capabilities that enhance and expand our customer value. We have strong financial momentum supported by healthy, compounding top-line growth, ongoing adjustability without profitability, and a solid cash position. We are relentlessly focused on capital allocation strategies that support our goal to build a durable, profitable compound and growth company that provides unique value to the world's most important decision makers. As we scale this business to $250 million, $500 million, and $1 billion in recurring revenue and beyond, we expect to deliver long-term free cash to the margins in line with other information services leaders of scale, in the same way that other information companies such as S&P Global, IHS Markit, FaxSets, Morningstar, CoStar, and Avalara have innovated in their respective information fields.

This forms the base of our durable and long term growth.

We enjoy recurring compounding revenue streams with customers renew their subscriptions year after year and have a proven business model of successful upsell and cross sell by offering incremental datasets products and capabilities that enhance and expand our customer value.

We have strong financial momentum supported by healthy compounding topline growth on <unk>.

Adjusted EBITDA profitability and a solid cash position.

We are relentlessly focused on capital allocation strategies that support our goal to build a durable profitable compounded growth company that provides unique value to the world's most important decision makers.

As we scale this business $250 million 500 million $1 billion in recurring revenue and beyond.

Aspect to deliver long term free cash flow margins in line with other information services leaders of skill.

The same way that other information companies, such as S&P Global IHS Markit Factset Morningstar, Costar and have Alero have innovated in their respective information fields.

Tim Hwang: Fiscalnote continues to deliver mission-critical information that has a direct impact on our customers' operations and creates an entirely new category within the data and information services space. Further, with our AI pedigree and our vast array of validated, trusted data, we are in a unique position and have a clear competitive advantage. Now, let me touch on today's news and what it means for our organization moving forward. Today, we announce the sale of Boards.

<unk> continues to deliver mission critical information that has a direct impact on our customers' operations.

Create an entirely new category within the data and information services space.

Further our AI pedigree and our vast array of validated trusted data we are in a unique position and have a clear competitive advantage.

Now let me touch on today's news what it means for our organization moving forward.

Today, we announced the sale of boards. Edward This is a non core divisions of our business that represented about 10% of our total revenue, but sold for $103 million, including $95 million in upfront cash and an $8 million earn out.

Tim Hwang: This is a non-core division of our business that represents about 10% of our total revenue but sold for $103 million, including $95 million in upfront cash and an $8 million earn out. The total consideration for this non-quartz vestiture represents almost 50% of our recent market cap and 7x revenue multiple based on 2023 ARR, while we currently trade close to 2x. This underscores the stark and real disconnect between the underlying fundamentals of our business and our public valuation.

The total consideration for this non core divestiture represents almost 50% of our recent market cap and seven X revenue multiple based on 2023 <unk>, while we currently trade close to <unk>.

This underscores the stark and real disconnect between the underlying fundamentals of our business and our public valuation.

Tim Hwang: The transaction underscores the underlying value and desirable characteristics of durable, recurring revenue businesses that make up the vast majority, approximately 90% of Fiscalnote's revenue base, and truly how undervalued the remaining company is relative to its intrinsic values. I'll expand on this disconnect in our special committee process shortly, but first, let me provide some context behind the strategy for this recent investment and the resulting positive impact on our capital. Board.org is a peer-to-peer executive community platform focused on structured collaborative insights for executives, responses for marketing, operations, HR, and other leadership positions within the organization.

The transaction underscores the underlying value and desirable characteristics of durable recurring revenue businesses that make up the vast majority <unk>, 90% of fiscal its revenue base and truly undervalued. The remaining company is relative to its intrinsic value.

I'll expand on this disconnect in our special committee process shortly but first let me provide some context behind the strategy for this recent divestiture and the resulting positive impact on our capital position.

<unk> is a peer to peer executive community platform focused on structured collaborative insights for executives responsible for marketing operations HR and other leadership positions within the organization.

Tim Hwang: We acquired the business in 2021 for a total consideration of approximately $14.3 million, including $10 million in cash and $4.3 million in convertible security. Over the last three years, our management team drove strong growth for the division by providing sales, marketing, and operational resources to further expand their network and broaden their community platform. This is just another example of the impressive performance and execution abilities of the overall team. Strategically, the divestiture made sense, particularly in light of our decision to rationalize our product portfolio and double down on the EA offerings of products that are core to our growth strategy in the policy, regulatory, and operational risk sectors. Operationally, War.org was run largely as an independent business with an organization, which makes the divestiture process relatively straightforward.

We acquired the business in 2021 for total consideration of approximately $14 $3 million, including $10 million in cash and $4 3 million in convertible securities.

Yeah.

Over the last three years, our management team drove strong growth for the division by providing sales marketing and operational resources to grow their network and broadened their community platforms. Highlighting just another example of the impressive performance and execution of those of the overall team.

Strategically the divestiture made sense, particularly in light of our decision to rationalize our product portfolio and double that on the offerings of products that are core to our growth strategy and the policy regulatory and operational risk sector.

Operationally <unk> Org was run largely as an independent business within our organization, which makes the divestiture process relatively straightforward.

Tim Hwang: And of course, financially, it was a win-win as well. We drove a 125% IRR and a 9.5 times cash-on-cash return in just under three years since we acquired the business. It transformed our balance sheet, allowing us to reduce our debt by over $65 million, and reduce our interest expense. It significantly increased our cash position by approximately $15 million.

And of course financially it was a win win as well.

We drove a 125% IRR at nine five times cash on cash return.

Just under three years since we acquired the business.

The transformed our balance sheet, allowing us to reduce our debt by over $65 million.

Our interest expense.

It has significantly increased our cash position by approximately $15 million.

Tim Hwang: This transaction does not change the fundamental nature of our recurring revenue, high gross margins, and positive adjusted EBITDA. On all accounts, this is a very strong transaction for us and underscores our commitment to deploying a rigorous and thoughtful capital allocation strategy. The realization of a triple-digit IRR on an acquired asset as a result of our sound management of compounding recurring revenues is just another testament to the smart capital allocation approach we are taking within the business. We are optimizing our balance sheet to invest in the products and offerings that are core to our strategy and that offer the strongest long-term profitable growth while preserving and enhancing shareholder value. At this point, before I get into the details of 2023 and our plans for 2024, I'll comment briefly on the statement we made in our November call regarding the appointment of a special committee by the board to evaluate any proposal I may submit to pursue a GoPrivate transaction. The board and the committee, along with their advisors, continue to review the company's ongoing plans and evaluate all strategic options available to the company. As I've said before, I believe the stock is dramatically undervalued on a fundamental basis.

This transaction does not change the fundamental nature of our recurring revenue high gross margins and positive adjusted EBITDA.

On all accounts. This is a very strong transaction for us and underscores our commitment to deploying a rigorous and thoughtful capital allocation strategy.

The realization of a triple digit IRR on the acquired assets as a result of our sound management and <unk>.

Compounding recurring revenues is just another testament to the smart capital allocation approach, we're taking within the business.

We are optimizing our balance sheet to invest in the products and offerings that are core to our strategy and then offer the strongest long term profitable growth, while preserving and enhancing shareholder value.

At this point before I get into the details of 2023 and our plans for 2024 I'll comment briefly on the statement. We made in our November call regarding the appointment of a special committee by the board to evaluate any proposal I may submit to pursue a go private transaction.

The board and the committee along with our advisors continue to review the company's ongoing plans and.

Evaluate all strategic options available to the company.

As I've said before I believe the stock is dramatically undervalued on a fundamental basis.

Tim Hwang: The valuation achieved for our Board.org divestiture underscores this further. We have a clear AI leadership position in our sector. We generate compounding recurring revenue, ARR, from thousands of customers. We drive consistent 80% high adjusted gross margin. We have an operational foundation that enables extremely high operating levels.

The valuation achieved for our board to work divestiture underscore this further.

Have a clear leadership position in our sector.

We generate compounding recurring revenue <unk> from thousands of customers.

We drive consistent 80% high adjusted gross margins we.

We have an operational foundation that drops extremely high operating leverage.

Tim Hwang: We are profitable on the trustee of the top base, and we now have an aligned capital structure to support our growth. Despite the underlying strength of our fundamentals.

We are profitable on adjusted EBITDA basis.

And we now have an aligned capital structure to support our growth plans.

Despite the underlying strength of our fundamentals our current stock price continued to be misaligned with our view of the value of our business.

Tim Hwang: Our current stock price continues to be misaligned with our view of the value of our business. I fully expect the stock to re-rate to align with the strength of our fundamentals over time. However, as I've said before, if the public markets do not recognize the value of our fundamentals, we will take action to realize the valuation we deserve and drive the best value for shareholders. Regardless of the outcome, we remain relentlessly committed to executing our strategy.

I fully expect the stock to re rate to align with the strength of our fundamentals over time.

However, as I've said before if the public markets do not recognize the value of our fundamentals, we will take action to realize the valuation that we deserve and drive the best value for shareholders.

Regardless of the outcome, we remain relentlessly committed to executing our strategy.

Tim Hwang: As we do so, I am confident our evaluation will reflect the fundamental strength of the organization. Now, let me run through some highlights of 2023 and then turn it over to Josh to discuss our 2024 transformation plan that positions us for accelerating growth in the long term. From a financial point of view, 2023 was a positive year with a number of milestones. We grew total revenue by 70% year-on-year. Description revenue, which represents approximately 90% of total revenue, grew 18% year-on-year. On an organic basis, our total revenue grew 7%, and our subscription revenue grew 9% year-on-year. Our just-accursed margins remain strong in the 80% range.

We do so I am confident our valuation will reflect the fundamental strength of the organization.

Now let me run through some highlights of 2023, and then turn it over to Josh discussed our 2024 transformation plan that positions us for accelerating growth long term.

From a financial position in 2023 was a positive year with a number of milestones.

We grew total revenue 17% year on year.

Subscription revenue, which represents approximately 90% of total revenue grew 18% year on year.

On an organic basis, our total revenue grew 7%.

Description revenue grew 9% year on year.

Our adjusted gross margins remained strong in the 8% range.

Tim Hwang: We achieved our goal to be adjusted even thought positive one quarter earlier than we had projected. And we exited the year with a fourth quarter adjusted EBITDA of $3 million, which exceeded the company's previous guidance range of approximately $2.5 million and marks an $8.2 million year-over-year improvement compared to an adjusted EBITDA loss of $5.2 million in the fourth quarter of 2022. This transformation of our operational structure is remarkable. This relentless focus on adjusting to job profitability was the cornerstone of 2023, with every member of Fiscalnote's team focused on driving this milestone. Now, as we enter 2024, having executed on a path to positive adjusted EBITDA and an enhanced balance sheet, we are pivoting to growth and have a measurable, actionable plan for returning to double-digit growth in 2025. We are setting a goal for the organization to achieve $250 million of run-rate revenue over the next five years, and to do it on a profitable, adjusted, and even thought basis. Josh will detail the specifics of our plan shortly, but what is clear is that we already have the foundation elements in place to drive this long-term growth.

We achieved our goal to be adjusted EBITDA positive one quarter earlier than we had projected.

And we exited the year with the fourth quarter, adjusted EBITDA of $3 million, which exceeded the company's previous guidance range of approximately $2 5 million at March $8 $2 million year over year improvement compared to an adjusted EBITDA loss of $5 2 million in the fourth quarter of 2022.

This transformation of our operating structure is remarkable.

This relentless focus on adjusted EBITDA profitability was the cornerstone of 223 achievements with every member of physical team focused on driving this milestone.

Now as we enter 2024, having executed on a path to positive adjusted EBITDA and an enhanced balance sheet. We are pivoting to growth and have a measurable actionable plan for returning to double digit growth in 2025.

We're setting a goal for the organization to achieve $250 million of run rate revenue over the next five years and to do it on a profitable adjusted EBITDA basis.

Josh will detail the specifics of our plan shortly.

It is clear is that we already have the foundational elements in place to drive that long term growth.

Tim Hwang: First, we have clear, unparalleled AI leadership in our sector. In 2023, we introduced new applications for our AI products, including FiscalNet GPT, Risk Connector, and FiscalNet Copilot. The FiscalNet AI Copilot Program is a series of AI-enabled applications that provide intelligent assistance for policy and risk management professionals.

We have clear unparalleled AI leadership in our sector.

In 2023, we introduced new applications for our AI products, including fiscal GPT risk connector and physical co pilots.

Our physical AI co pilot program is a series of AI enabled applications that provide intelligent assistance for policy and risk management professionals.

Tim Hwang: The co-pilot program leverages our decade-long investment in AI, ML, and NLP. The Priority and Defensible Reasoning and Data Aggregation Tool, as well as the tens of thousands of proprietary and public verticalized data sets and comprehensive information that Fiscalnote collects to provide lightweight applications with very specific use cases. This year, through the CoPILOT program, we will launch a constellation of AI agents that include quick applications that cater to our individual customer personas that automate the day-to-day work of creating legislation, drafting regulatory and legal analysis, advocacy outreach, and constituent communications or regulatory responses. In doing so, our co-pilots will reduce countless hours that our customers spend drafting legislation, responding to legislation, communicating with constituents, and other tasks. Our co-pilot program will provide incremental growth paths to complement our proven durable base of recurring revenue solutions.

The co pilot program Leverages, our decade long investment in AI ml and MLP.

Terry indefensible reasoning and data aggregation tools as well as the tens of thousands of proprietary and public vertical lines datasets and comprehensive information that fiscal and collect to provide lightweight applications with very specific use cases.

This year.

<unk> pilot program, we will launch a constellation of AI agents that include quick applications cater to our individual customer percentage that automate the day to day work of creating legislation drafting regulatory and legal analysis advocacy outreach and considering communications or regulatory responses.

In doing so our co pilots will reduce countless hours that our customer spend drafting legislation responding to legislation communicated with constituents at other tasks.

Our co pilot program will provide incremental growth pass through complement our proven durable base of recurring revenue solutions.

Within our core offerings, we're also driving new applications for our air products as well.

Last year, we introduced physical risk connector, our internally developed risk intelligence solution for enterprise and government organizations.

Tim Hwang: Within our core offerings, we're also driving new applications for our AI products as well. Last year, we introduced Fiscalnote Risk Connector, our internally developed risk intelligence solution for enterprise and government organizations. Risk Connector brings the power of our proprietary data and AI capabilities to map relationships and identify risks within an organization's supply chain, as well as an organization's customers, investors, partners, and any other vectors through which a risk materializes.

Risk factor brings the power of our proprietary data and AI capabilities to adapt relationships and identify risks within the organization supply chain as well as the organizations customers investors partners and any other vectors through which a risk materialize.

In Q4, we announced that we secured our first anchor customer for risk connector and today, we have a number of large scale opportunities in the pipeline.

Second we have broad and deep proprietary data and intelligence with continued to add new data and intelligence to expand our customer value.

In 2023, we added new geopolitical and security intelligence capabilities through the integration of dragonfly, leading to several successful cross sell opportunities with our enterprise sector.

Tim Hwang: In Q4, we announced that we secured our first anchor customer for Risk Connector, and today we have a number of large-scale opportunities in the pipeline. Second, we have broad and deep proprietary data and intelligence. We continue to add new data and intelligence to expand our customer value. In 2023, we added new geopolitical and security intelligence capabilities through the integration of DragonFly, leading to several successful cross-sale opportunities within our enterprise sector. We have also expanded our EU IT offering, providing stakeholder coverage and data for all 705 members of the European Parliament. Finally, we have a base of thousands of customers that offer tremendous growth opportunities. We continue to enjoy strong relationships with the government, ranging from the DOD to the FBI to the CIA to the Office of the President, with some relationships spanning decades.

We also expanded our <unk> offering providing stakeholder coverage and data for all 705 members of the European Parliament.

Finally, we have a base of thousands of customers that offer tremendous growth opportunities we.

We continue to enjoy strong relationships with the government ranging from the Dod to the FBI the CIA to the opposite president with some relationship spanning decades.

Internationally, we have relationships with public sector organizations throughout the EU and Asia, and leading nongovernmental organizations continue to rely on physical note everyday to advance their agenda is within the political process.

Our enterprise customer base, which continues to be our fastest growing highest in our our customer group offer significant growth opportunities as we introduced new enterprise products with higher HCV and continue to upsell and cross sell. Additionally.

Additionally, our Europe expansion is on track as well with new wins, both in the enterprise sector and public sector.

Tim Hwang: Internationally, we have relationships with public sector organizations throughout the EU and Asia, and leading non-governmental organizations continue to rely on Fiscalnote every day to advance their agendas within the political process. Our enterprise customer base, which continues to be our fastest-growing, highest NRR customer group, offers significant growth opportunities as we introduce new enterprise products with higher ACVs and continue to upsell and cross-sell. Additionally, our European expansion is on track as well, with new wins both in the enterprise sector and the public sector alike. Europe is approximately 15% of our revenue today, a notable increase from a year ago.

Europe is approximately 15% of our revenue today.

It will increase from a year ago and.

And we see significant upside here as well.

As we said before we are at the beginning stages of European expansion and I believe that similar to other large scale information services leaders, we can build a business that can rival the size of our north American business today with just our current products.

In closing at the start of 2023, we told you that we will become profitable on an adjusted EBITDA basis, and we did one quarter earlier than expected.

We told you that we feel confident in our balance sheet and underlying bids and will take steps necessary to bolster that confidence than we did.

We told you that we will continue to lead the market on launching new and innovative legal and regulatory AIG products than we did.

Tim Hwang: And we see significant upside here as well. As we said before, we are at the beginning stages of European expansion, and I believe that, similar to other large-scale information services leaders, we can build a business that can rival the size of our North American business today with just our current products. In closing, at the start of 2023, we told you that we would become profitable on an adjusted EBITDA basis, and we did, one quarter earlier than expected.

We will continue to deliver and exceed expectations through sound management innovative product development and strategic execution.

These are the foundational elements in place today that serve as a platform for our transformation in 2024, and a return to accelerating growth next year and beyond.

We remain committed to building a durable profitable compounding growth company that provides unique value to the world's most important decision makers and scaling this business to $250 million $500 million $1 billion of recurring revenue now let me turn it over to Josh to discuss the specific elements of our growth acceleration plan and our strategy for profitable growth moving forward.

Joshua W. Resnik: We told you that we felt confident in our balance sheet and underlying business and would take steps necessary to bolster that confidence, and we did. We told you that we would continue to lead the market in launching new and innovative legal and regulatory AI products. We will continue to deliver and exceed expectations through sound management, innovative product development, and strategic execution. These are the foundational elements in place today that serve as a platform for our transformation in 2024 and the return to accelerating growth next year and beyond. We remain committed to building a durable, profitable compound and growth company that provides unique value to the world's most important decision makers by scaling this business to $250 million, $500 million, and $1 billion in recurring revenue. Now, let me turn it over to Josh to discuss the specific elements of our growth reacceleration plan and our strategy for profitable growth moving forward. Thank you, Tim. I'm delighted to be here.

Thank you Tim I'm delighted to be here.

From an operating perspective, 2023 was the Europe significant and positive change as we transform the organization and eliminated approximately $25 million in annualized expense and brought the company to adjusted EBITDA profitability.

As Tim mentioned.

Last year considerable management time and attention was placed on this goal.

Every member of our leadership team and our operating teams, we're relentlessly focused on driving cost out of the business.

This impacted every area of our operations.

The manager and every team member with clear on our priority and tackle with incredible tenacity.

And I want to take this moment to thank our teams for their rigor and dedication in making it happen and previewing it one quarter sooner and forecast.

But profitability wasn't just in itself.

All of that work resulted in an efficient operating model that we're building on in order to drive sustained profitable growth for the long term.

Joshua W. Resnik: From an operating perspective, 2023 was a year of significant and positive change as we transformed the organization, eliminated approximately $25 million in annualized expenses, and brought the company to adjusted EBITDA profitability. As Tim mentioned, throughout last year, considerable management time and attention was placed on this goal, as every member of our leadership team and our operating teams were relentlessly focused on driving costs out of the business. This impacted every area of our operation. Every manager and every team member was clear on our priority and tackled it with incredible tenacity.

And as we enter 2024 and even as we continue to operate profitably, we're returning our focus to growth.

We fully expect to achieve $250 million and organic run rate revenue within the next five years.

And we will apply the same relentless focus and determination that we used to deliver adjusted EBITDA profitability.

Driving that level of sustained profitable growth for the future.

In light of that let me tell you how the work we did in 2023 is impacting this year and what it means going forward.

First I will tell you about the transformation of our commercial organization.

Joshua W. Resnik: And I want to take this moment to thank our teams for their rigor and dedication in making it happen, and for doing it one quarter sooner than forecast. But profitability wasn't just an end in itself. All that work resulted in an efficient operating model that we're building on in order to drive sustained profitable growth for the long term and as we enter 2024, and even as we continue to operate profitably. We're returning our focus to growth. We fully expect to achieve $250 million in organic run rate revenue within the next five years.

In 2023, after bringing on our new Chief revenue Officer, Richard Henderson, We made significant changes to our sales operating model, including implementing aggressive performance management measures and adjusting our coverage model.

This has resulted in a leaner more effective sales team that will serve as the foundation for our future growth.

We flushed out Underperformers and had been replacing them with talent that is better evaluated better trained and better positioned to succeed.

Joshua W. Resnik: And we will apply the same relentless focus and determination that we used to deliver adjusted EBITDA profitability to driving that level of sustained profitable growth for the future. In light of that, let me tell you how the work we did in 2023 is impacting this year and what it means going forward. First, I'll tell you about the transformation of our commercial organization. In 2023, after bringing in our new Chief Revenue Officer, Richard Henderson, we made significant changes to our sales operating model, including implementing aggressive performance management measures and adjusting our coverage model. This has resulted in a leaner, more effective sales team that will serve as a foundation for our future growth. We flushed out underperformers and have been replacing them with talent that is better evaluated, better trained, and better positioned to succeed. In addition, late in the year, we made numerous changes to drive specific focus on crossbell and retention.

In addition, late in the year, we made numerous changes to drive a specific focus on cross sell and retention.

Among these changes are adding resources focused on cross sell into our existing account base and.

An increased focus and attention on our largest accounts.

With the scale of large enterprises that we already have relationships with today.

And the breadth of our product offerings, we see a tremendous opportunity here.

Most recently, we also implemented an improved delivery model for customer success and account management related to our global intelligence products.

Leveraging the same model that we deployed elsewhere in the organization around this time last year.

And which resulted in improved retention across the impacts of <unk> portfolio of products, while reducing cost to serve by almost 20%.

We fully expect to realize the same improvements with this new round of changes over the course of 2024, just as we did from the earlier changes in 2023.

Joshua W. Resnik: Among these changes are adding resources focused on cross-selling into our existing account base and increased focus and attention on our largest account. With the scale of large enterprises that we already have relationships with today and the breadth of our product offerings, we see a tremendous opportunity. Most recently, we also implemented an improved delivery model for customer success and account management related to our global intelligence product, leveraging the same model that we deployed elsewhere in the organization around this time last year, and which resulted in improved retention across the impacted portfolio products while reducing cost to serve by almost 20 percent. We fully expect to realize the same improvements with this new round of changes over the course of 2024, just as we did with the earlier changes in 2023. Keep in mind that transforming a team in this way takes time to bear fruit.

Keep in mind transforming a team in this way it takes time to bear fruit.

Collectively these changes are substantial and involve a significant realignment of resources.

Improving the talent profile of the team takes time to have a full impact.

The new cross sell teams will take time to ramp.

High six figure deals, we anticipate from our top accounts will have longer sales cycles.

And with our most recent changes involving a restructuring of customer success and account management, we're trading some near term disruption for long term gain as we build the right foundation for sustainable and profitable growth.

We're confident that these most recent changes will generate a strong return in the form of substantial improvements to gross and net retention over the course of 2024 and beyond.

Second I want to address the improvements we've made with our products by streamlining and simplifying our existing portfolio, creating a room to reinvest capital into the areas of our business that are most likely to drive higher growth.

Joshua W. Resnik: Collectively, these changes are substantial and involve a significant realignment of resources. Improving the talent profile of the team takes time to have a full impact, the new cross-sell teams will take time to ramp up, and the high six-figure deals we anticipate from our top accounts will have longer sales cycles. And with our most recent changes involving the restructuring of customer success and account management, we're trading some near-term disruption for long-term gain as we build the right foundation for sustainable and profitable growth. We're confident that these changes will generate a strong return in the form of substantial improvements to gross and net retention over the course of 2024 and beyond. Second, I want to address the improvements we've made with our products by streamlining and simplifying our existing portfolio, creating room to reinvest capital into the areas of our business that are most likely to drive higher growth.

Over the course of 2023, we took a hard look at the products that align with our long term strategy and decided to focus on those with the greatest potential for profitable growth.

This has enabled us to reallocate our teams our capital and our collective focus to products and platforms that have a more significant long term impact.

And our core products and markets. This has enabled data expansion and enhancements, including the launch of our global policy dashboard, which now provides the most comprehensive directory of global policy data in the market.

Beyond our current core products, we also launched new products, such as risk connector, our AI powered solution to manage operational and supply chain risks.

Joshua W. Resnik: Over the course of 2023, we took a hard look at the products that aligned with our long-term strategy and decided to focus on those with the greatest potential for profitable growth. This has enabled us to reallocate our teams, our capital, and our collective focus to products and platforms that have a more significant long-term impact. In our core products and markets, this has enabled data expansion and enhancement, including the launch of our global policy dashboard, which now provides the most comprehensive directory of global policy data in the market. Beyond our current core products, we have also launched new products, such as Risk Connector, our AI-powered solution to manage operational and supply chain risk. Risk Connector is now in use with large enterprises in financial services and tech, and we look forward to its continued growth.

Risks connector is now in use with large enterprises and financial services and Tech and we look forward to its continued growth.

We also have other innovative new products in the pipeline, including our AI co pilot as well as an exciting and unique AI powered data platform and I look forward to discussing with you at a later date.

Most important though I want to be clear about what this refined product portfolio will mean for fiscal note over time.

Just as I spoke about swapping out underperforming sales reps.

<unk> talent and bringing that talent into a stronger operating ecosystem.

And justice changes like that can create some short term disruption, but will result in long term sustainable and profitable growth.

Joshua W. Resnik: We also have other innovative new products in the pipeline, including our AI co-pilots, as well as an exciting and unique AI-powered data platform that I look forward to discussing with you at a later date. But most important, though, I want to be clear about what this refined product portfolio will mean for Fiscalnote over time. Just as I spoke about swapping out underperforming sales reps, upgrading talent, and bringing that talent into a stronger operating ecosystem. And just as changes like that can create some short-term disruption but will result in long-term, sustainable, and profitable growth. The same is true with our revamped product portfolio. New sales talent takes time to ramp up, and so do new products.

Same is true with our revamped product portfolio.

New sales talent takes time to ramp and 70 new products.

2023, it was about creating greater capacity to bring new products and enhancements to market.

In 2024, we'll see more product launches, even as we see the 2023 launches and enhancements take route and as we invest in their growth.

And in 2025, we'll really see the benefits of all this work as we return to double digit growth.

Our final initiative for 2024 is to further accelerate our product development.

Compliments to changes in our sales organization and expands beyond the specific product initiatives that I just outlined.

We will increase the velocity of our work on new products as well as enhancements to our current portfolio delivering best in class user experiences on top of the scalable platforms with the right speed and flexibility to optimize top line impact and bottom line value.

Joshua W. Resnik: 2023 was about creating greater capacity to bring new products and enhancements to market. In 2024, we'll see more product launches, even as we see the 2023 launches and enhancements take root and as we invest in their growth. And in 2025, we'll really see the benefits of all this work as we return to double-digit growth.

<unk> is the foundation for an enduring and sustainable growth system.

These changes, which began in 2023 and will continue into this year.

Joshua W. Resnik: Our final initiative for 2024 is to further accelerate our product development. This complements the changes in our sales organization and expands beyond the specific product initiatives that I just outlined. We will increase the velocity of our work on new products, as well as enhancements to our current portfolio, delivering best-in-class user experiences on top of scalable platforms with the right speed and flexibility to optimize top-line impact and bottom-line value, serving as the foundation for an enduring and sustainable growth system. These changes, which began in 2023 and will continue into this year, combined with our extensive expertise in AI, will support the ongoing acceleration of our revenue growth In sum, 2023 was a year of cost alignment.

And bind with our extensive expertise in AI.

We will support the ongoing acceleration of our revenue growth.

We'll also ensure that as the growth materializes, we have more capital available to invest in new initiatives and still deliver on an expanding bottomline.

In sum two.

2023 was a year of cost alignment.

In 2024, we're completing our organizational transformation.

Turning our focus to growth.

And building the foundation for double digit growth in 2025 and beyond.

Our priorities are clear and our teams are aligned.

Our same teams, who delivered adjusted EBITDA profitability, one quarter sooner than planned.

Joshua W. Resnik: In 2024, we're completing our organizational transformation, returning our focus to gross and Building the Foundation for Double-Digit Growth in 2025 and Beyond. Our priorities are clear, and our teams are aligned; the same teams who delivered adjusted EBITDA profitability one quarter sooner than planned, who took us from a $25 million adjusted EBITDA loss in 2022 to positive adjusted EVA.DOT in the second half of 2023, will deliver on our growth projections as well. We have a leaner and more effective commercial organization. We have a more focused set of products and markets and have created more capacity for new product launches. We're accelerating the pace of our product development, and we'll leverage our expertise in AI to rapidly bring new AI-centered products and features to market.

Who took us from a $25 million adjusted EBITDA loss in 2022.

Positive adjusted EBITDA in the second half of 2023.

We will deliver on our growth projections as well.

We have a leaner and more effective commercial organization, we have a more focused set of products and markets and created more capacity for new product launches.

We're accelerating the pace of our product development and will leverage our expertise in AI to rapidly bring new AI centered products and features to market.

The result is an efficient product led organization.

<unk> for long term growth.

Now, let me turn it over to John for a review of the financial results and our outlook for 2024.

Thank you Josh let me start off by highlighting some notable achievements over the past few months in 2023 management brought the business to adjusted EBITDA profitability in just two quarters Q4 versus Q1 represented a 31 point margin improvement, resulting in the go forward business will be extremely.

Jon A. Slabaugh: The result is an efficient, product-led organization positioned for long-term growth. Now, let me turn it over to Jon for a review of the financial results and our outlook for 2024. Thank you, Josh.

Jon A. Slabaugh: And let me start off by highlighting some notable achievements over the past few months. In 2023, management brought the business to adjusted EBITDA profitability in just two quarters. Q4 versus Q1 represented a 31-point margin improvement, resulting in a go-forward business with extremely strong operating levels. And Fiscalnote divested a non-core business, resulting in a radically improved balance sheet with lower debt, higher cash, and lower interest expense

Strong operating leverage in.

In fiscal note divested of noncore business, resulting in radically improved balance sheet with lower debt higher cash and lower interest expense overall, I'm delighted with our position today and the growth opportunities as we move forward.

Now, let me run through our Q4 and 2020 results as reported including the Borgata or gives us insurer the impact of certain sunset products and provide a view of the upcoming year I'll start with revenue.

Jon A. Slabaugh: Overall, I'm delighted with our position today and the growth opportunities as we move forward. Now, let me run through our Q4 and 2023 results as reported, including the Board.org divestiture, the impact of certain Fundet products, and provide a view of the upcoming year. I'll start with revenue. Fourth-quarter revenue was $34.3 million, marking 9% growth year-over-year in total and 1% on an organic basis. Full year 2023 revenue was $132.6 million, marking 17% growth year-over-year in total and 7% growth on an organic basis. However, revenue growth for Q4 and for the full year was negatively impacted by underperformance in our non-subscription project-based revenue. Non-subscription revenue, which accounts for about 10% of total revenue, was essentially flat for the full year and declined by about $1 million in Q4, as we pointed out in our last call. Conversely, our recurring subscription revenue, which makes up 90% of our total revenue, remains solid.

Fourth quarter revenue was $34 $3 million, marking 9% growth year over year in total and 1% on an organic basis.

Full year 2023 revenue was $132 6 million margin, 17% growth year over year in total and 7% growth on an organic basis.

Revenue growth for Q4 and for the full year was negatively impacted by underperformance in our non subscription project based revenue non subscription revenue, which accounts for about 10% of total revenue was essentially flat for the full year and declined by about $1 million in Q4, as we pointed out in our last call.

<unk>.

Conversely, our recurring subscription revenue, which makes up 90% of our total revenue remained solid subscription revenue grew 14% in Q4, 7% organically and 18% for the full year, 9% organically, we exited 2023 with run rate revenue of one <unk>.

Third $40 million, Mark and 10% year over year growth in total on an organic basis run rate revenue was $130 million, reflecting 4%.

Jon A. Slabaugh: Subscription revenue grew 14% in Q4, 7% organically, and 18% for the full year, 9% organically. We exited 2023 with run rate revenue of $140 million, marking 10% year-over-year growth in total. On an organic basis, run rate revenue is $130 million, reflecting 4% growth on a pro forma basis. It's defined in a press release.

Pro forma basis as defined in our press release.

We grew our total annual recurring revenue or <unk> to a $126 million as of December 31, an increase of 11% compared to the same period in 2022.

Organic <unk> was $119 million as of year end growth of 6% on a pro forma basis.

We ended the year with annual or net revenue retention of approximately 99% on a quarterly basis.

Jon A. Slabaugh: We grew our total annual recurring revenue, or ARR, to $126 million as of December 31st, an increase of 11% compared to the same period in 2022. Organic ARR was $119 million as of year-end, a growth of 6% on a pro forma basis. We ended the year with NRR, or Net Revenue Retention, of approximately 99% on a quarterly basis. NRR rates can fluctuate slightly from quarter to quarter, and we often see quarterly NRR rates start in the mid-90s early in the year and strengthen in the second half.

Overall rates can fluctuate slightly from quarter to quarter, we often see quarterly <unk> start in the mid Ninety's early in the year and strengthen in the second half and longer term, we expect <unk> to trend consistently above 100% as we continue to scale and extend our enterprise offering.

Moving to profitability metrics, we continue to enjoy strong gross margins. Our Q4 GAAP gross margin was 67% and non-GAAP gross margin was 83% after adjusting for the deferred revenue haircut in 2022 and amortization for the full year 2023, our gross margin was.

Jon A. Slabaugh: In the longer term, we expect NRR to trend consistently above 100% as we continue to scale and expand our enterprise offering. Moving to profitability metrics, we continue to enjoy strong gross margin. Our Q4 GAAP gross margin was 67%, and our non-GAAP gross margin was 83% after adjusting for the deferred revenue haircut in 2022 and amortization. For the full year 2023, our gross margin was 70%, and our non-GAAP gross margin was 82%. Sales and marketing costs were $10.5 million for the quarter, a decrease of approximately $400,000 year-on-year, even after the addition of Dragonfly.

70% or nine non-GAAP gross margin was 82%.

Sales and marketing costs were $10 $5 million for the quarter, a decrease of approximately $400000 year on year, even after the addition dragonfly.

We are striving to be more efficient more customer acquisition cost on a full year basis sales and marketing increased by about $3 million due to the acquisition of dragonfly, which we integrated throughout the year moving forward, our Q4 sales and marketing expense is a good indication of our ability to optimize our data.

Jon A. Slabaugh: We are striving to be more efficient in our customer acquisition costs. On a four-year basis, sales and marketing increased by about $3 million due to the acquisition of Dragonfly, which we integrated throughout the year. Moving forward, our Q4 sales and marketing expense is a good indication of our ability to optimize our go-to-market model and become more efficient and effective in our customer acquisition. R&D expenses were $4 million for the fourth quarter and $18.2 million for the year.

<unk> model and become more efficient and effective in our customer acquisition.

R&D expenses were $4 million for the fourth quarter with $18 2 million for the year.

Year on year reduction of about $1 $3 million in Q4, and a reduction of $2 $6 million for the year.

This is due to our cost reduction efforts editorial content costs were approximately $4 $3 million for the quarter and approximately $18 million for the year.

Jon A. Slabaugh: A year-on-year reduction of about $1.3 million in Q4 and a reduction of $2.6 million for the year. This is due to our cost-reduction effort. Editorial content costs were approximately $4.3 million for the quarter and approximately $18 million for the year.

Similar to sales and marketing this marks a decrease of about $400000 in Q4 versus last year and an increase of about $2 million for the full year, primarily as a result of our dragonfly acquisition.

Jon A. Slabaugh: Similar to sales and marketing, this marks a decrease of about $400,000 in Q4 versus last year and an increase of about $2 million for the full year, primarily as a result of our Dragonfly acquisition. The most notable expense reduction is visible in our G&A. G&A expense for Q4 was $16.7 million compared to $18.3 million in Q4 of 2022. However, included in both periods are significant non-cash items. This includes approximately $8.3 and $7.1 million of non-cash items in Q4 of 2023 and 2022, respectively. These non-cash items primarily relate to the accounting treatment of non-cash stock-based compensation expenses.

The most notable expense reduction is variable G&A G&A expense for Q4 was $16 7 million compared to $18 3 million in Q4 of 2022.

Included in both periods, our significant noncash items. This includes approximately $8 three and $7 1 million of noncash items in Q4 of 2023 and 2022, respectively. These non cash items, primarily related to the accounting treatment of noncash stock based compensation expenses.

Excluding noncash nonrecurring items G&A was approximately $8 $4 million in Q4 of 2023, a decrease of about $2 8 million from a year ago for the full year G&A in 2023 was $65 6 million.

Jon A. Slabaugh: Excluding non-cash, non-recurring items, G&A was approximately $8.4 million in Q4 of 2023, a decrease of about $2.8 million from a year ago. For the full year, G&A in 2023 was $65.6 million. Excluding thought compensation and other non-cash, non-recurring expenses, G&A was $40.9 million, a net increase of approximately $1 million, largely reflecting the impact of the full-year public company expenses in the acquisition of Dragonfly, offset by in-year cost-savings actions. The operating loss for the full year 2023 was $97.7 million in total.

<unk> got compensation and other non cash non recurring expenses G&A was $40 9 million of.

Net increase of approximately $1 million.

Largely reflecting the impact over full year of public company expenses and the acquisition of dragonfly offset by in year cost savings actions.

The operating loss for the full year 2023 was $97 7 million in total.

Our total interest expense for 2023 was approximately $30 million I will get into the details of how this will change going forward. Following the successful sale of board Dot org and related changes to our credit relationship.

Jon A. Slabaugh: Our total interest expense for 2023 was approximately $30 million. I will get into the details of how this will change going forward following the successful sale of Board.org and related changes to our credit relationship. The GAAP net loss for 2023 was $115.5 million, which is reconciled to our adjusted EBITDA loss of $7.5 million for the full year and our press release. We exited 2023 with a Q4 gap net loss of $50.7 million and adjusted EBITDA profitability of $3 million. As mentioned by Josh and Tim, management was laser focused on driving positive adjusted EBITDA last year, to the extent these actions had a short-term effect on revenue growth. We're confident in Fiscalnote's ability to return to double-digit growth rates quickly and drive increasing adjusted EBITDA margins as we do. We ended the year with $24.4 million in cash and cash equivalents as of December 31st.

The GAAP net loss for 2023 was $115 5 million, which is reconciled to our adjusted EBITDA loss of $7 $5 million for the full year in our press release.

We exited 2023 with Q4, GAAP net loss of $57 million and adjusted EBITDA profitability of $3 million as mentioned by Josh into management.

Management was laser focused on driving positive adjusted EBITDA last year.

To the extent these actions had a short term effect on revenue growth.

And physical notes ability to return to double digit grocers quickly and drive increasing adjusted EBITDA margins as we do.

We ended the year with $24 4 million in cash and cash equivalents as of December 31.

Now, let me talk about the board Dot Org divestiture and the impact on our cash debt and interest expense moving forward.

Jon A. Slabaugh: Now let me talk about the Board.org divestiture and the impact on our cash, debt, and interest expense moving forward. After working capital adjustments, the total proceeds of the transaction at closing were approximately $92 million.

After working capital adjustments.

Total proceeds of the transaction at closing were approximately $92 million.

After taking account for related fees and expenses.

Proceeds were used to reduce our senior term loan debt by approximately $66 million and increase our cash by approximately $15 million.

Jon A. Slabaugh: After taking account for related fees and expenses, net proceeds were used to reduce our senior term loan debt by approximately $66 million and increase our cash by approximately $15 million. Our senior term debt is now $92.7 million, which reduces cash interest expense by approximately $2.2 million per quarter or approximately $9 million annually. Moving forward, we expect our quarterly cash interest expense to be approximately $3.2 million and our P&L interest expense to be approximately $4.5 million, subject to interest rate fluctuations. In recognition of this impactful transaction and how the transaction reaffirms the overall value and strength of Fiscalnote, our senior lenders have also offered to extend the required principal payments until August of 2026. This brings me to our 2024 guide. First, as you will see from our 10-K and 8-K, which will be filed shortly, Board.org generated approximately $13.6 million of revenue and approximately $5 million of EBITDA in 2023.

Our senior term debt <unk> nine.

$2 $7 million, which reduces cash interest expense by approximately $2 $2 million per quarter or approximately $9 million annually moving forward, we expect our quarterly cash interest expense to be approximately $3 2 million.

And our P&L interest expense to be approximately $4 $5 million subject to interest rate fluctuations.

In recognition of this impactful transaction and how the transaction reaffirms the overall value and strength of physical node. Our senior lenders also offering to extend the required principal payments until August of 2026.

This brings me to our 2020 for guidance.

First you will see from our 10-K, and 8-K, which will be filed shortly <unk> generated a proximately $13 $6 million of revenue and approximately $5 million of EBITDA in 2023.

In addition, as we mentioned earlier, we have made the decision to sunset approximately $4 million of 2023 revenue associated with products that no longer align with our product strategy.

Excluding <unk> and Sunset products, our pro forma 2023 key metrics would have been GAAP revenue of approximately $115 million consisting of subscription revenue of approximately $105 million and non subscription revenue of approximately $10 million run rate.

Jon A. Slabaugh: In addition, as we mentioned earlier, we have made the decision to sunset approximately $4 million of 2023 revenue associated with products that no longer align with our current product strategy. Excluding Board.org and Sunset Products, our Proforma 2023 key metrics would have been Gap revenue of approximately $115 million, consisting of subscription revenue of approximately $105 million and non-subscription revenue of approximately $10 million, and run rate revenue of approximately $121 million. ARR of approximately $111 million and an adjusted EBITDA loss of $12.5 million.

Revenue of approximately $121 million.

<unk> of approximately $111 million and adjusted EBITDA loss of $12 $5 million.

With this as a backdrop, we are offering the following initial full year guidance for 2024.

GAAP revenue of $123 million to $127 million total run rate revenue of $126 million to $134 million.

And adjusted EBITDA of $7 million to $9 million.

Jon A. Slabaugh: With this as a backdrop, we are offering the following initial full-year guidance for 2024. Gap revenue of $123-$127 million, total run rate revenue of $126-$134 million, and adjusted EBITDA of $7 to $9 million. We are also providing Q1 guidance. We expect Q1 revenue of approximately $31 million and adjusted EBITDA of approximately $1 million for the quarter. As we said in the release, our Q1 adjusted EBITDA guidance reflects some seasonal expenses in Q1 that do not reoccur in subsequent quarters during the year. Additionally, the guidance reflects the removal of products that we sunset as of January 1st.

We are also providing Q1 guidance, we expect Q1 revenues of approximately $31 million.

And adjusted EBITDA of approximately $1 million for the quarter as we said in the release our Q1 adjusted EBITDA guidance reflects some seasonal expenses in Q1 do not reoccur in subsequent quarters during the year.

The guidance reflects the removal of products that we send settles in January one.

Q1, and full year as soon as approximately two months of Borgata was as.

As we close the transaction on March 11th.

124 is a year of transformation. This forecast provides ample opportunities for upside throughout the year as we focus on fundamental execution and pulling multiple levers for short and long term revenue growth and escalating margins in summary, the business is in a strong position we are optimizing our organization.

Jon A. Slabaugh: But Q1 in the full year includes approximately two months of Board.org as we close the transaction on March 11. 2024 is a year of transformation. This forecast provides ample opportunities for upside throughout the year as we focus on fundamental execution and pulling multiple levers for short and long-term revenue growth and escalating margins. In summary, the business is in a strong position. We are optimizing our organization for long-term growth and profitability, and our Board.org transaction was a win-win on all accounts. From a product alignment perspective, it made sense as we made the decision to align our product strategy and invest in products that are strategic to our core regulatory and policy options and that offer the greatest potential for upsell, cross-sell, and transformational upside. From a sales and go-to-market perspective, Board.org was marketed and sold to a different set of buyers within the enterprise. As such, there's essentially no cross-sell or up-sell with our other products on offer. From an organizational perspective, Board.org largely operates as an independent business group within Fiscalnote.

For long term growth and profitability.

Our board Dot Org transaction was a win win on all accounts.

Product alignment perspective, again, as we made the decision to align our product strategy and invest in products that are strategic to our core regulatory and policy offerings and then also the greatest potential for upsell cross sell and transformational upsides from.

From a sales and go to market perspective, <unk> was marketed and sold to a different set of buyers within the enterprise as such there is essentially no cross sell or upsell with our other products and offerings from an organizational perspective more data or largely operated as an independent business group within physical node from a M&A person.

That is generating very strong returns on invested capital demonstrating the power of our corporate development initiatives and business execution.

Finally, and perhaps most importantly from a balance sheet perspective, adjacency opportunities significantly reduce our debt.

Our cash position I'm delighted with the outcome. We now have the capital structure go to market capabilities and operational model. The physicians fiscal note for accelerating growth next year and ongoing operational leverage moving forward with that we will now open up the call for questions operator.

Jon A. Slabaugh: From an M&A perspective, it generated a very strong return on invested capital, demonstrating the power of our corporate development initiatives in business execution. Finally, and perhaps most importantly from a balance sheet perspective, it gave us the opportunity to significantly reduce our debt and improve our cash position. I'm delighted with the outcome.

Or if you would like to ask a question. Please press star followed by the number one on your telephone keypad.

Operator: We now have the capital structure, go-to-market capabilities, and operational model that positions Fiscalnote for accelerating growth next year and ongoing operational leverage moving forward. With that, we will now open up the call to questions. Operator.

Your first question comes from the line of Mike Latimore from Northland Capital markets. Please go ahead.

Alright, yeah. Good morning, thanks very much.

Operator: If you would like to ask a question, please press star followed by the number one on your telephone keypad. Your first question comes from the line of Mike Latimore from Northland Capital Markets. Please go ahead. All right. Yeah. Good morning.

Congrats on the strong EBIT results on that evaluation here on the board Dot Org say Alex Grant.

As you think about.

Joshua W. Resnik: Thanks very much. Congratulations on the strong EBITDA results and the evaluation here on the board.org page. Um, as you think about... Think about NRR for the year. Are you assuming that NRR kind of stays where it's been, or do you expect some change in that number, and if so, why? Hey, Mike. Thanks. This is Josh.

Thanks can you think about an IRR for the year are you are you assuming that NR kind of stays.

Where it's been or.

Or do you expect some change in that number and if so why.

Okay.

Hey, Mike. Thanks. This is Josh we do expect our rates to improve over the course of the year. So you should see improvement starting in the second half.

Joshua W. Resnik: We do expect NRR rates to improve over the course of the year, so you should see improvements starting in the second half. We've got expansive cross-sell opportunities across our core business, and expect to see a lot of the changes that we talked about earlier that we put in place really start to take root over the course of the year.

We've got expansive cross sell opportunity across our core business and expect to see a lot of the changes that we.

<unk> talked about earlier that we put in place really starting to take root over the course of the year.

Joshua W. Resnik: And then it sounds like also important for growth will be your strategic account initiative coming to fruition. I mean, can you talk a little bit about kind of where that stands in terms of just the sales focus? The pipeline, you know how bookings have been trending, failed cycles in the kind of strategic account segment. Yeah, sure thing.

Got it and then it sounds like also important for growth will be.

Your strategic account initiatives coming to fruition and then can you talk a little bit about.

Kind of where that stands in terms of just the sales focus.

The pipeline how bookings have been trending sales.

Sales cycles kind of strategic account segment.

Yes sure thing so we definitely have some focus on strategic accounts generally speaking, we see a tremendous opportunity.

Joshua W. Resnik: So we definitely have been focused on strategic accounts. Generally speaking, we see a tremendous opportunity to increase revenue through cross-sell and up-sell to our largest relationships. We know we've seen that with a number of our larger accounts, and our team is really focused on doing full account-by-account analysis for white space and green space to really drive that growth this year. And we're excited about the pipeline that we have. There's been, over the course of 2023, as you know, macro pressures that we've talked about that impacted sales cycles, especially on the larger accounts. But we expect to see a lot of our efforts bear fruit there this year. Great

The increase.

Through cross sell and upsell to our largest relationships we know we've seen that.

With a number of our larger accounts and.

Our team is really focused on.

Doing full account by account analysis for white space and Green space to really drive that growth this year.

We're excited about the pipeline that we have there has been over the course of 2023 as you know there were macro pressures that we've talked about that impacted sales cycles, especially on the larger accounts.

But we expect to see a lot of our efforts bear fruit there this year.

Great and then just last one on the on the call.

Joshua W. Resnik: And just last one on the co-pilot strategy: how much kind of effort are you going to put behind that? You know, is that a big focus from a marketing perspective? And just to remind us about the kind of... Pricing and Revenue Dynamics. Yeah, so, the co-pilot strategy for us is quite a large strategy in terms of, you know, being able to leverage the existing data and content that we have and packaging it into a new go-to-market strategy that's more aligned with how a lot of AI companies are going to market today.

Pilot strategy.

Kind of effort or are you going to put behind that is that a big focus from a marketing perspective.

Just to remind us on me.

Got it.

Pricing and revenue dynamics there.

Yeah. So.

The copilot strategy for us is quite a large strategy in terms of being able to leverage the existing data and content that we have and packaging it into a.

And you go to market strategy that is more aligned with.

Had a lot of AI companies are going to market today and so.

Joshua W. Resnik: And so, you know, you'll kind of hear from us over the course of the next couple of weeks as we go out and really launch a series of these co-pilots into the market. But, Just imagine all the stuff that we're working on with respect to our legislative and regulatory data and, of course, how we're packaging that and then the workflow automation tools that we're coming to market with on an accelerated basis. So we'll have some more information as we come out in the next week. Okay, great. Thank you. Your next question comes from the line of Richard Baldry from Roth MKM. Please go ahead.

You'll hear from us over the course, the next couple weeks as we go out and really launch a series of these co pilot.

Into the market, but <unk>.

Imagine all stuff that we're working on with respect to our legislative and regulatory data and then of course, how we're packaging that and then the workflow automation tools that were coming to market with an accelerated basis. So we will have some more information as we come out in the next couple weeks.

Okay great.

Your next question comes from the line of Richard Baldry from Roth MK Anne. Please go ahead.

Jon A. Slabaugh: Thanks. I'm sort of wondering, as you go through your strategic reviews, are there any other products that seem more standalone, less, you know, oriented to cross-sell and up-sell that you'd be considering divesting? Hi, Rich. It's Jon.

Thanks wondering as you go through your strategic reviews are there any other products that seem more standalone less oriented to cross sell up sell that you'd be considering divesting.

Yeah.

Hi, rich its John.

Jon A. Slabaugh: We aren't presently evaluating other individual products for divestiture right now. We, you know, continue to monitor the portfolio but have no plans to do so. This was a kind of a situation where we were approached by someone who saw strategic value in the asset, and it made sense to us. There's no plan.

We are presently evaluating other individual products for divestiture right now.

To monitor the portfolio, but have no plans to do this this is a kind of a situation where we were approached by some of you saw strategic value in the asset and it made sense to us.

No plans.

Jon A. Slabaugh: And then, with the balance sheet stepped up the way it has been, talk about your own willingness now to continue to pursue maybe tuck-in acquisitions on a go forward or near term basis. Absolutely. The corporate development team has been hard at work maintaining, you know, active dialogues and discussions with acquisition targets that would be strategic tuck-ins, kind of on the smaller side for our core lines of business. And as we refocus, we'll spend a lot of time evaluating those opportunities from an acquisition and partnership standpoint. The execution really, you know, the timing of the execution will depend on a number of things, including the kind of valuations in the marketplace, our stock price, and the ability of us to engage effectively with prospective sellers.

Okay, and then with the balance sheet stepped up.

The way it has been as you talk about your own willingness now to continue to pursue maybe tuck in acquisitions.

On a go forward.

Near term basis.

Absolutely the corporate development team has been hard at work maintaining active dialogues and discussions with acquisition targets that would be strategic tuck ins.

Smaller side for our.

Core lines of business and as we refocus will spend a lot of time evaluating those opportunities on an acquisition and partnership standpoint.

The execution really.

Timing of the execution will depend on a number of things, including the kind of valuations in the marketplace, our stock price and the ability of us to engage effectively with.

Prospective sellers.

Jon A. Slabaugh: Okay, and a lot of people spend a lot of time talking about, you know, AI and being able to sell it to other people, but I also think it's important to kind of understand what it can do internally in terms of cost or cost leverage, sort of intermediate term, long term. Specifically for you guys, do you think it has the ability to help you on the editorial side? Or the other ways you can bring it in-house to get you better leverage long-term? Thanks. Sure, this is Josh.

Okay.

And a lot of people spend a lot of time time on AI and now sell it to other people, but I also think it's important to kind of understand what it can do internally in terms of costs or cost leverage sort of intermediate term long term.

Specifically for you guys do you think it has an ability to help you on the editorial side or the other ways you can bring it in house to get you better leverage long term. Thanks.

Sure. This is Josh I can address that so yeah, we're absolutely looking at how we leverage AI for internal tooling, we've been deploying it across teams for some time now we continue to get efficiencies out of it and expect to get more efficiencies over time.

Joshua W. Resnik: I can address that. So yeah, we're absolutely looking at how we leverage AI for internal tooling. We've actually been deploying it across teams for some time now.

Joshua W. Resnik: We continue to get efficiencies out of it and expect to get more efficiencies over time. And that's just part of the reason why we feel very good about our cost base going forward, even as we accelerate growth. And two last small ones, but you talk about where you think the direction of the non-recurring revenues should go, sort of near-term or long-term. That's, you know, come down a little bit in the current quarter, sort of break some trending. That's mostly seasonality, and we did see projects kind of defer at the end of last year, which had an impact on how we finished out the year. Historically, it's been about 10% of revenue, and that feels like the right number going forward, but it could fluctuate up or down just depending on where we gain traction and how our enterprise clients want to engage with us on a special use case, you know, for scenario planning and whatnot.

Just part of the reason why we feel very good about our cost base going forward, even as we accelerate growth.

And two last small ones, but you talked about where you think the direction of the nonrecurring revenues should go sort of near term and long term that's come down a little bit in the current quarter center break some trending.

That's mostly seasonality and we did see projects kind of defer at the end of last year, which had an impact on how we finish out the year.

Historically, it's been about 10% of the revenue and that feels like the right number going forward, but it could fluctuate up or down just depending on.

We gained traction in.

Our enterprise clients want to engage with us and.

Special use case.

For scenario planning and whatnot.

Yeah.

Joshua W. Resnik: Last for me would be, when you think about the rebound to accelerating growth, are there metrics internally that maybe we can't see, like ARPU or cohort analysis? sales tenure durations for a number stepping up that give you that confidence, or that the pipeline you're actually seeing, just anything that sort of makes that more concrete for us. Thanks.

Last one maybe.

When you think about the rebound to accelerating growth are there metrics internally that maybe we can't see like <unk> cohort analysis.

Sales 10 year durations for a number of stepping up that they give you that confidence or is it. The pipeline you are actually seeing just anything that sort of makes that more concrete for us. Thanks.

Joshua W. Resnik: Yeah, sure. I mean, there are a ton of metrics that we look at internally as we track across our products and our various sales pipelines. And we look down to account levels, you know, as I mentioned, for example, with regard to our strategic accounts, that we're doing an account-by-account look at where the white space and green space is for expansion. And we're really doing that across the board.

Yes, sure I mean, there is.

A ton of metrics that we look at internally as we track across our products and our various sales pipelines and we.

We look down to account level as I mentioned for example, with regard to our strategic accounts that we were doing an account by account look at where the white space in green spaces for expansion and we're really doing that across the board. So if we look at that both for new logo as well as for retention and cross sell upsell. So there's there's a lot that we look at very deep in the <unk>.

Joshua W. Resnik: So we look at that both for the new logo, as well as for retention and cross-sell and upsell. So there's a lot that we look at very deep in the business to understand where the pipeline's going and where we have the best opportunity to move the needle the quickest. So that's what the teams are doing every day.

To understand.

Sure.

Where the pipeline is going and where we have the best opportunity to move the needle the quickest. So that's what that's what the teams are doing every day.

Joshua W. Resnik: Great, thanks, and congrats on the divestiture. Looks like it moved a lot of dials in the company. Thanks. Your next question comes from the line of Rudy Kissinger from D.A. Davidson.

Great. Thanks, and congrats on the divestiture it looks like it moves a lot of dialogue in the company.

Yeah.

Your next question comes from the line of Rudy Kissinger from D. A Davidson. Please go ahead.

Operator: Please go ahead. Hey, thanks for taking my questions. I'll have my congratulations on the sale. It's a very great return on that business and helps cleanse the balance sheet a bit here. I guess just on some of these go-to-market changes and realignments. I know you guys first started talking about these changes, more of a focus on strategic and enterprise, about six months ago now. When do you expect the changes to really start to have an effect and result in greater sales productivity and higher levels of growth? Should we expect that? First part of this year, second half of this year, not until next year? Just what are your thoughts on that? Sure, Rudy.

Hey, Thanks for taking my questions.

I'll add my congrats on the sale of very great return on that business in the subsequent to the balance sheet. This year.

I guess just on some of these go to market changes and realignments I know you had you guys. It first started talking about these changes and more focus on strategic and enterprise.

About six months ago now and so.

When do you expect the changes really to start to have an effect.

And result in greater sales productivity and higher levels of growth should we expect that.

First part of this year's second half of this year and that until next year, just what are your thoughts on that.

Sure Rudy yes, so we've been implementing changes over time.

Joshua W. Resnik: Yeah, so we've been implementing changes over time, and we're seeing them take root and then expand across the full organization. So one example, as I mentioned in my remarks, were some changes we made to coverage across our customer success and account management functions across certain parts of the business. We saw success in the form of reduced cost to serve as well as improvements in retention.

And we're seeing them take route and then expand them across the whole organization. So one example, as I mentioned in my remarks were some changes we made to coverage across our customer success and account management functions across certain parts of the business. We saw success in the form of reduced cost to serve as well as improvements in <unk>.

Tension and so we're now taking that model and expanding that through the rest of the business. We've been stage gating. It both to make sure that we can make the right progress, but also for change management throughout the organization and also trying to time that as well as possible given various sales cycles and the like and so you should start to see those changes and others.

Joshua W. Resnik: And so we're now taking that model and expanding that through the rest of the business. We've been stage-gated it both to make sure that we can make the right progress but also for change management throughout the organization and also trying to time that as well as possible given the various sales cycles and the like. And so you should start to see those changes and others take root over the course of the year and really reflect in second half growth this year and then, of course, into 2025. Okay, Jon. I've got two questions for you.

Take root over the course of the year and really reflect in second half growth. This year and then heading of course and at 2025.

Okay, Jonathan I've got two questions for you firstly.

Jon A. Slabaugh: Firstly, you know, the company's results just in terms of top-line performance, generally since the D-SPAC process, have been kind of in line to slightly below your quarterly revenue guidance. And so when we think about the Q1 guide, the four-year guide for this year, should we think of your guidance philosophy being roughly similar to how it's been in the past? Or is there anything in the guide where you're trying to be more conservative in terms of close rates and pipeline conversion, etc.? It's a good question, Rudy, and, you know, look, we were aware of the same trend as well, and we tried to set guidance this year where we felt like we could meet and exceed consensus and be closer to the top end of the range and hopefully have an opportunity to update you later in the year with good news. We are, you know, certainly fully confident in the first quarter.

The company's results just in terms of top line performance generally.

Since the <unk> spec process.

It kind of in line to slightly below your quarterly revenue guidance and so when we think about the Q1 guide to full year guidance for this year.

Should we think of your guidance philosophy being roughly similar to how it's been in the past or is there anything.

And the guide where you are trying to be more conservative in terms of close rates and pipeline conversion et cetera.

It's a good question Rudy.

Yes.

We observed the same trend as well and we tried to set guidance. This year, where we felt like we can meet and exceed consensus.

Be closer to the top end of the range and hopefully have an opportunity to update you later in the year with good news.

We certainly fully confident.

Jon A. Slabaugh: At this point in the quarter, we have a lot of visibility into that. We'll provide more, you know, kind of more robust details as we roll out next quarter and report the first quarter and give you kind of guidance toward the second and third. Okay, and then just lastly, on pre-cash flow, I know you're not giving cash flow guidance, but $8 million EBITDA at the midpoint, nine and a half million cash interest, I believe you've said in the past four to eight million capex. It would seem, you know, assuming no changes in net working capital and potentially with some stronger bookings in the second half, you get a positive boost there. But it seems like the business this year should burn probably high single digits to low double digits in pre-cash flow. Is that math roughly accurate?

First quarter at this point in the quarter, we have a lot of visibility to that.

We will provide more.

Kind of more robust details as we rollout.

Next quarter and report first quarter and give you guidance for the second and third.

Okay, and then just lastly.

On free cash flow.

Cash flow guidance, but $8 million EBITDA at the midpoint.

$9 5 million cash interest I believe you said in the past four to 8 million Capex. It team assuming no changes in networking capital.

Essentially with some stronger bookings in the second half do you get a positive boost there, but it seems like the business. This year should burn probably high single digits to low double digits in free cash flow is that math roughly accurate.

Jon A. Slabaugh: I think that's potentially a little bit low, but right around 9 to 12 million dollars is probably a good number if you think about our cash interest expense and our CapEx really hasn't changed as a result of the Board.org defestiture. So our fixed charges in that capacity will be somewhere in the neighborhood of kind of 18 to 20, maybe 18 to 21. But depending on how we track from an EBITDA standpoint, that kind of defines the burn, as you described it, and we certainly have the cash on the balance sheet to fund that for the year. And as we expect to continue to progressively increase revenue and adjusted EBITDA, we'll be pacing towards being free cash flow positive, and we'll give you more insights on that as we progress through the year. Okay, that's it for me. Thanks again, and congrats again on what looks like a very good sale here. Thanks, Rudy.

I think thats right to potentially a little bit low but right around.

$9 million to $12 million is probably a good number if you think about our our cash interest expense and our Capex really hasnt changed and as a result of the board Dot Org divestiture.

Our fixed fixed charges and that capacity will be somewhere in the neighborhood, there's kind of a.

18 to 23, 8% to 21, depending on how we track from an EBITDA standpoint.

That kind of defines where as you described it and we certainly have the cash on the balance sheet to fund that for the year and as we expect to continue to progressively increase revenue and adjusted EBITDA will be pacing towards.

Got it.

Free cash flow positive and we will give you more insights on that as we progress through the year.

Okay. That's it from me, Thanks, again, and congrats again on what looks like a very good sale here.

Thanks Rudy.

Operator: If you would like to ask a question, please press star 1 on your telephone keypad. Your next question comes from the line of Zach Cummins from B. Reilly Securities. Please go ahead. Hi, good morning.

If you'd like to ask a question. Please press star one on your telephone Keypad. Your next question comes from the line of Zach Cummins from B Riley Securities. Please go ahead.

Yes, hi, good morning, Thanks for taking my questions and congrats again on the very successful sale of board Dot Org.

Joshua W. Resnik: Thanks for taking my questions. And congrats, again, on the very successful sale of board.org. Josh, I wanted to dig a little bit deeper into some of the changes that you made to your customer success and retention teams there. I mean, can you talk about, maybe, a little bit deeper into the changes that you made with that specific team and how far along you are in terms of rolling that out to the rest of the team? Sure, I can go into some level of detail.

Josh I wanted to dig a little bit deeper into some of the changes that you made to your customer success and retention teams. There I mean can you talk about.

Maybe dig a little bit deeper into the changes that you made was that specific team and how far along you are in terms of rolling that out to the rest of the teams.

Sure I can go into some level of detail I mean, the most important is making sure that we have the right focus from those teams in terms of.

Joshua W. Resnik: I mean, the most important thing is making sure that we have the right focus from those teams in terms of coverage models against our accounts, as well as having the right strategies in place for cross-sell and up-sell. And most significant is that we put some changes in place in the earlier part of last year, so around this time last year, as I mentioned, we saw our ability to do greater coverage. It included refining our approach by size of account, automating more for smaller accounts, and putting a greater focus on our larger accounts, which helped with both the cost basis and, as I said, with our actual retention results. And then we implemented that across our geopolitical business towards the mid-Q4 of 2023, and so that's where we expect to see similar improvements across the board over the course of the rest of the business as this year goes Got it, understood.

Coverage models against our accounts as well as having the right strategies in place for cross sell and upsell. So.

And we most significant is we put some changes in the earlier part of last year. So around this time last year as I mentioned, we saw our ability to do greater coverage included refining our approach by size of account.

Automating more for smaller accounts and putting a greater focus on our larger accounts, which helped with both the cost basis and as I said with our actual retention results.

And then we implemented that across our geopolitical business towards.

The mid Q4 of 2023, and so that's where we expect to see similar improvements across the board over the course of the rest of the business as this year goes on.

Joshua W. Resnik: And just curious, in terms of what you're hearing from customers and in terms of buying patterns, I know it's pretty challenging throughout 2023. Just curious if that has changed a little bit since you've turned the page on a new year. And it's just a subset of that question.

Got it understood.

Just curious in terms of what Youre hearing from customers in terms of buying patterns I know it was pretty challenging throughout 2023, just curious if that has changed.

<unk> a little bit since you've turned the page into a new year ends.

Just a subset of that question.

Joshua W. Resnik: Does the fact that it's an upcoming election year have any sort of impact in terms of customer or potential customer demand you can see? Sure. So generally speaking on the macro, I would say buying sentiment has been, I would say, better this quarter. Still some conservatism out there, so not fully seeing a return to past patterns yet. But we're, you know, some people are still waiting to see, but we're optimistic for the year. And then, in terms of elections and impact on sales cycle, you know, elections and, you know, it's a massive election year globally, and that does drive greater interest.

Does the fact that it's an upcoming election year, having any sort of impact in terms of customer potential customer demand and you can see.

Sure. So generally speaking on the macro I would say.

Buying sentiment is I would say it's been.

On the whole better this quarter.

Still some conservatism out there so not fully seeing a return to past patterns yet.

But we're.

Some people are still wait and see but we're optimistic.

For the year.

And then in terms of election impact on sales cycle.

Elections and.

It's a massive election year globally.

And that does drive greater interest, we see greater engagement with our products generally speaking around election coverage. So generally speaking that can drive demand and as long as the macro isn't negatively impacted so that you don't see budgets tremendously negatively impacted that can be a help for us from a sales perspective.

Joshua W. Resnik: We see greater engagement with our products, generally speaking, around election coverage. So, generally speaking, that can drive demand. And as long as the macro isn't negatively impacted so that, you know, you don't see budgets tremendously negatively impacted, that can be a help for us from a sales perspective. Well, thanks for taking my questions and best of luck with the rest of the quarter. Thanks so much. Your next question comes from the line of Mike Albanese from EF Hutton. Please go ahead. Hey, good morning, guys. Thanks for taking my question and nice job on the quarter. Just a quick one for me.

Got it well thanks for taking my questions and best of luck with the rest of the quarter.

Thanks, so much.

Your next question comes from the line of Mike <unk> from E. F. Hutton. Please go ahead.

Yeah, Hey, good morning, guys. Thanks for taking my question and nice job on the quarter. Just a quick one for me I want to go back to.

Joshua W. Resnik: I want to go back to kind of your infrastructure, I guess, cost structure. You've done a nice job reducing costs, I think, to the tune of $20-25 million over the last year. I mean, are we kind of through the cost that you could take out that you kind of guided to the market while you were doing these initiatives? Are we kind of through that now? Is there still more low-hanging fruit that you can take out?

Kind of your infrastructure I guess cost structure.

You've done a nice job of reducing costs I think to the tune of 2000 $25 million over the last year.

I mean are we through this we're kind of through the <unk>.

The cost.

And then you can take out that you've kind of guided to the market. While you were doing these initiatives are we kind of through that now is there still more low hanging fruit that you can.

Joshua W. Resnik: I know that someone asked a question about AI and kind of finding operational efficiencies through that. I'm sure that there are some more costs that you can identify and take out. But just as we go back to the original restructuring that you discussed, is that behind us now, or is there still more to take out as we look into 2024? Yeah, sure, Mike.

Take out I know someone asked a question about AI and kind of finding operational efficiencies through that I'm sure that there is some.

More cost that you can identify and take out but just as we go back to you.

The original restructuring that you had discussed or is that behind us now.

Or is there still more to take out as we're looking at 2024.

Joshua W. Resnik: I would say the bulk of that is behind us. We're largely where we want to be from a cost perspective and a structure perspective. You know, we're always going to be improving and, you know, shifting as an organization, as any organization would. We certainly see the opportunity to leverage AI internally to drive more productivity and automation over time, too. And so, and we'll, you know, always be finding ways to optimize throughout the organization. But for the most part, in terms of where you're getting at, kind of the bulk of those cost initiatives, we've worked our way through that, and we expect to grow from here while staying relatively consistent from a cost. Got it. Great.

Sure Mike I would say the bulk of that is behind us were largely where we want to be from a cost perspective.

Our structure perspective.

We're always going to be.

Improving shifting as an organization as any organization would we certainly see the opportunity to leverage AI internally to drive more productivity and automation over time too and so.

And we will always be finding ways to optimize throughout the organization, but for the most part in terms of where you're getting that kind of the bulk of those cost initiatives. We've worked our way through that and expect to.

So from here well.

Jon A. Slabaugh: Okay, and then I guess just a follow-up to that, as we think about, you know, looking out into next year in 2025, do you think you can get back to double-digit revenue growth? I mean, how can we think of, you know, the organic growth in your cost structure as you're adding revenue and cross-selling? I mean, not just, you know, generally, I get what you're saying, that you've kind of reached a level where you can really generate operating leverage from here, but I'm sure there are some incremental increases as you grow. How should we think about that? Sure, Mike.

Staying relatively consistent from a cost perspective.

Got it great. Okay, and then I guess, just a follow up to that as we think about looking out into next year. In 2025, I think you can get back to double digit revenue growth I mean, how can we think of.

The organic growth in your cost structure as you are adding revenue and cross selling I mean.

Yes, generally I guess, what youre, saying that you've kind of reached a level that you can really generate the operating leverage from here, but I'm sure. There's some incremental increases as you grow how can we think about that.

Sure, Mike, adding onto <unk> comments about cost savings I think as we think about R&D.

Jon A. Slabaugh: Adding to Josh's comments about cost savings, I think as we think about it, R&D content and G&A expenses are relatively fixed at this point. I think we've got a lot of operational leverage out of the cost structure there. There may be opportunities to trim expenses here and there as we move forward. And then we do see some potential for improvement and gross margins down the road, but not dramatically. I think that's a good number to keep in your model. And then our sales and marketing costs will increase as we go forward and increase revenue, not dollar for dollar or proportionally, but we will see some increases in the cost to drive that revenue going forward. So as we're situated, I think we have a lot of operating leverage on incremental revenue.

R&D content and G&A expenses are.

Relatively fixed at this point I think we've got a lot of operational leverage out of the cost structure. There there may be opportunities to.

Trim expenses here and there as we move forward, but.

And then we do see some potential.

Improvements in gross margins down the road, but not dramatically I think thats a good number to keep in your model and then R. R.

Sales and marketing costs will.

Increase.

As we go forward and increase revenue.

Dollar for dollar or proportionally, but.

We will see some some increases in the cost to drive that revenue going forward.

We will see some some increases in the cost to drive that revenue going forward.

As we're situated I think.

We have a lot of operating leverage.

On incremental on the incremental revenue.

Jon A. Slabaugh: Got it. Okay, thank you very much. We have no further questions in our queue at this time. I will now turn the call back over to Tim Hwang for closing remarks. Great, thank you everybody for joining this call, and feel free to reach out if you have any additional questions. Thank you so much. This concludes today's conference call. Thank you for your participation, and you may now disconnect. Thank you for watching.

Yeah.

Got it okay. Thank you very much.

And we have no further questions in our queue. At this time I will now turn the call back over to Tim Guang for closing remarks, great. Thank you everybody for jumped on this call and feel free to reach out if you have any additional questions. Thank you so much.

This concludes today's conference call. Thank you for your participation and you may now disconnect.

Yes.

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Yeah.

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