Q1 2024 FiscalNote Holdings Inc Earnings Call

Operator: Good morning. My name is Aaron, and I'll be your conference operator for today. At this time, I would like to welcome everyone to the Fiscal Note first quarter 2024 financial results conference call. All lines have been placed on mute to prevent any background noise.

Good morning, My name is Aaron and I'll be your conference operator for today at this time I would like to welcome everyone to the physical note first quarter 'twenty 'twenty four financial results 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.

Operator: Recession, and we'll provide further information on that point, if you do want to get your name in the queue now to ask a question you can press star followed by the number one on your telephone keypad and if you would like to withdraw that question you.

Operator: You can press star followed by the number one once again.

Speaker Change: With that we can now begin today's call I would like to turn it over to the.

Operator: After the speaker's remarks, there will be a question and answer session, and we'll provide further information on that point. If you do want to get your name in the queue now to ask a question, you can press star followed by the number one on your telephone keypad, or if you would like to withdraw that question. You can press star followed by the number one once again. With that, we can now begin today's call. I would like to turn it over to the police.

Bob Burroughs: Good morning. My name is Bob Burroughs.

Bob Burrows: Good morning, My name is Bob Burrows I'm with Western Avenue Advisors, LLC, which was hired in April as an investor relations consultant to the company following Sara Buda.

Bob Burroughs: Sure.

Bob Burroughs: I'm with Western Avenue Advisors LLC, which was hired in April as an investor relations consultant to the company following Sara Buda's recent departure. I look forward to speaking with and being a resource for the company's investors and stakeholders in the days, weeks, and months ahead. Thank you all for joining the call today as we discuss Fiscal Note's first quarter 2024 financial results. With me on today's call with prepared comments are Tim Hwang, Chairman, CEO, and Co-Founder, and Jon Slabaugh, CFO and Chief Investment Officer.

Bob Burroughs: I look forward to speaking to you and being a resource for the company's investor stakeholders in the days weeks and months ahead.

Bob Burroughs: Other members of the senior management team will be available during the Q&A session that will follow. Please note that a slide deck specific to the first quarter of 2024 was prepared and intended as a supplement to the earnings release, as well as the forthcoming prepared comments from management, is available on the company website. In terms of important housekeeping, it is important to mention the following.

Bob Burroughs: Thank you all for joining the call today as we discuss physical notes first quarter of 2024 financial results.

Bob Burroughs: With me on today's call with prepared comments are Jim Walsh, Chairman, CEO, and cofounder and John Slaybaugh, CFO and Chief investment Officer. Other members of the senior management team will be available during the Q&A session that will follow these prepared comments.

Bob Burroughs: Please note a slide deck specific to the first quarter 2024 results and intended as a supplement to the earnings release as well as the forthcoming prepared comments from management is available on the company website.

Bob Burroughs: In terms of important housekeeping and isn't Gordon mentioned the following during this call. We may make certain statements related to our business that are forward looking statements under federal Securities laws. These statements are not guarantees of future performance, but rather are subject to a variety of risks and uncertainties. Our actual results could differ materially from expectations reflected in any forward looking.

Bob Burroughs: During this call, we may make certain statements related to our business that are forward-looking statements under federal securities laws. These statements are not guarantees of future performance but rather are subject to a variety of risks and uncertainties. Our actual results could differ materially from expectations reflected in any forward-looking statement due to a discussion of the material risks and important factors that could affect our actual results, as well as the risks and other important factors discussed in today's earnings release.

Bob Burroughs: Statements.

Bob Burroughs: For a discussion of the material risks and important factors that could affect our actual results as well as the risks and other important factors discussed in today's earnings release.

Bob Burroughs: Please refer to our SEC filings, which are available either on our company website or the Securities and Exchange Commission's EDGAR system. Additionally, non-GAAP financial measures will be discussed on this conference call. Please refer to the tables in our earnings release or the accompanying slide deck for this call, both of which are available on the investor relations portion of our website, for a reconciliation of these measures to their most directly comparable GAAP financial measures.

Bob Burroughs: Please refer to our SEC filings, which are available either on our company web site or the securities and exchange Commission's Edgar system.

Bob Burroughs: Additionally, non-GAAP financial measures will be discussed on this conference call. Please refer to the tables in our earnings release or the accompanying slide deck for this call both of which are available on the Investor Relations portion of our website for a reconciliation of these measures to their most directly comparable GAAP financial measure.

Bob Burroughs: Finally, we use key performance indicators or kpis in evaluating the performance of our business. These include run rate revenue or our annual recurring revenue or <unk> and net retention revenue again, please refer to the earnings release and the accompanying slide deck for this call for definitions of these important metrics with that.

Bob Burroughs: Finally, we use key performance indicators, or KPIs, in evaluating the performance of our business. These include Run Rate Revenue, or RRR, Annual Recurring Revenue, or ARR, and Net Retention Revenue. Again, please refer to the earnings release or the company's slide deck for this call for definitions of these important metrics. And with that, I'd like to turn the call over to Fiscal Notes Chairman, CEO, and Co-Founder Tim Hwang. Tim? Thank you.

Speaker Change: I'd like to turn the call over to physical notes, Chairman CEO and co founder Jim Hong Kim.

Timothy Hwang: Thank you, Bob, for that introduction, and thank you all for joining us this morning. It's great to be with you today to discuss our first quarter 2024 results and provide an update on the state of our overall business. We'll also offer some perspective on our strength and balance sheet position and profitable growth with the recent divestiture of a non-corporate business, as well as elaborate on our product strategy and our commitment to driving strong return on invested capital. I always look forward to these opportunities to connect with our shareholders and share with you the exciting developments of Fiscalnote.

Timothy Hwang: Thank you Bob for that introduction and thank you all for joining us this morning.

Timothy Hwang: Great to be with you today to discuss our first quarter 2024 results to provide an update on the state of our overall business.

Timothy Hwang: We will also offer some perspective on our strength and balance sheet position and profitable growth with the recent divestiture of noncore business as well as elaborate on our product strategy and are committed to driving strong return on invested capital.

Timothy Hwang: I always look forward to these opportunities to connect with our shareholders and share with you an exciting development that just go ahead.

Timothy Hwang: First, let me remind you of some of the core fundamentals of. 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 the impacts on their organization. We are the market-leading AI platform for the regulatory, legislative, policy, and geopolitical intelligence sectors, essentially the Bloomberg Terminal for regulatory, legislative, and strategic risk, drawing upon a deep reservoir of technical expertise, proprietary data, and analytical tools.

Timothy Hwang: First let me remind you of some of the core fundamentals of physical node.

Timothy Hwang: We're on a mission to help our customers make sense of the complicated and constantly changing world. We live in delivering a proprietary AI enabled platform that aggregates and the organisers regulatory political and macroeconomic information and analyze the impact on their organizations. We are the market leading AI platform for the regulatory let's say good policy and geopolitical intelligence.

Timothy Hwang: Essentially the Bloomberg terminal for regulatory legislative and strategic risk drawing upon a deep reservoir of technical expertise proprietary data and analytical tools.

Timothy Hwang: Our proprietary, high-quality, and authoritative data on a range of aspects, including international, federal, state, and local legislation across 80,000 cities, all 50 states, and every major federal regulatory agency, as well as deep profiles of tens of thousands of policymakers, millions of legislative and regulatory bodies, and purpose-built analytical tools monitoring governments around the world that have enabled Fiscalnote to build a market-leading position across thousands of customers. Many of our assets, including CQ, serve essentially as the Dow Jones of the legislative and policy worlds, providing deep domain expertise and proprietary data. CQ, as an example, has been providing Washington with information about congressional votes, budgets, and congressional information since 1945.

Timothy Hwang: Our proprietary high quality and authoritative data on a range of aspects include international Federal state and local legislation across 80000 cities. All 50 States and every nation Federal regulatory agency as well as deep profile of tens of thousands of policymakers millions of let's say the regulatory booths and purpose built analytical tools monitoring governor.

Timothy Hwang: It's around the world have been able to just go out to build a market leading position across thousands of customers.

Timothy Hwang: Many of our assets, including CQ essentially at the Dow Jones Legislative and policy growth, providing deep domain expertise with proprietary data. Thank.

Timothy Hwang: <unk> is an example, hasnt provided Washington with information about congressional budget and congressional information since 1945.

Timothy Hwang: We operate in a large and growing $40 billion addressable market driven by increasing global uncertainty as well as operational and regulatory complexity that impacts almost every organization, from governments and non-profit organizations to large enterprises who operate in a highly regulated global environment. We have a strong and enduring competitive moat underpinned by our decade-long investment in data, AI, and human intelligence. Our broad AI leadership in both generative AI and domain-specific AI is supported by a deep patent portfolio and is recognized by the world's preeminent AI platforms, from OpenAI to Microsoft and Google. We are passionate about our customer success.

Timothy Hwang: We operate in a large and growing $40 billion addressable market driven by increasing global uncertainty as well as operational and regulatory complexity that impact almost every organization from governance and nonprofit organizations to large enterprises, who operate in a highly regulated global environment.

Timothy Hwang: We have a strong and enduring competitive moat underpinned by our decade long investment in data AI human intelligence.

Timothy Hwang: Our broad AI leadership in both generative AI and domain specific AI is supported by a deep patent portfolio and is recognized by the worlds preeminent AI platforms from open AI to Microsoft and Google.

Timothy Hwang: We are passionate about customer success.

Timothy Hwang: Thousands of organizations, ranging from government agencies and public sector organizations to major corporate customers in the Fortune 100, rely on Fiscalnote every day to help interpret the impact of policies, legislation, elections, global conflicts, and macroeconomic shifts on their institutions and, more importantly, to take actions that achieve their business objectives and minimize political, operational, and economic risks. This forms the basis of our durable and long-term growth. We enjoy recurring, compounding revenue streams with customers who renew their subscriptions year after year and have a proven business model of successful up-sell and cross-sell by offering incremental data sets, products, and capabilities that enhance and expand our customer value. Our net dollar retention has stayed in the high 90s on a consistent basis, and our revenue stream is approximately 90% recurring in nature, which provides for a high degree of visibility.

Timothy Hwang: Those are organizations, ranging government agencies and public sector organizations, the major corporate customers in the fortune 100 rely on physical out every day to help interpret the impacted policies legislation elections global conflicts and macroeconomic shifts on their institutions and more importantly to take actions, which achieve their business objectives.

Timothy Hwang: And minimize political operational and economic risk.

Timothy Hwang: This forms the basis of our durable and long term growth.

Timothy Hwang: We enjoy it recurring compounding revenue streams with customers, who renew their subscription year after year and is a proven business model of successful upsell and cross sell by offering incremental datasets product and capabilities that enhance and expand our customer value.

Timothy Hwang: Our net dollar retention has stayed in the high 90 days on the consistent basis and a revenue stream of approximately 90% recurring in nature, which provides for a high degree of visibility.

Timothy Hwang: We have strong financial momentum supported by healthy compounding top-line growth, ongoing adjusted profitability, and a solid cash budget. Our management team has a strong record of innovation and product success that have enabled us to push the bounds of the market and be innovative on behalf of our customers. We have relentlessly focused on capital allocation strategies that support our goal to build a durable, profitable, compounding growth company that provides unique value to the world's most important decision makers. As we scale the business, we expect to deliver long-term free cash flow margins in line with other information services leaders at scale.

Timothy Hwang: We have strong financial momentum supported by healthy compounding topline growth ongoing adjusted EBITDA profitability and a solid cash position.

Timothy Hwang: Our management team has a strong record of innovation and products.

Timothy Hwang: That have enabled us to push the balance of the market and the innovative on behalf of our customers.

Timothy Hwang: Relentlessly focused on capital allocation strategies that support our goal to build a durable profitable.

Timothy Hwang: The company that provides unique value to the world's most important decision makers.

Timothy Hwang: As we scale the business, we expect to deliver long term free cash flow margins in line with other information services leaders at scale.

Timothy Hwang: Just as S&P Global, IHS Market, FaxSet, Morningstar, or CoStar at Avalara have innovated in their respective information fields, Fiscalnote is forging a new path for global political, legislative, and regulatory policy and market intelligence by delivering mission-critical information that has a direct impact on our customers' operations. With our established AI pedigree and our vast array of validated, trusted data, we are in a unique position to lead what is an entirely new category within the information service industry.

Timothy Hwang: Adjusted S&P Global IHS, Markit Factset Morningstar Costar Avalere have innovated in their respective information fields physical is forging a new path for global political legislative and regulatory policy and market intelligence by delivering mission critical information that has a direct impact on our customers' operations.

Timothy Hwang: With our established pedigree and our vast array of validated trusted data we are in a unique position to lead what is an entirely new category within the information services industry.

Timothy Hwang: Our competitive advantage to deliver on this outcome.

Timothy Hwang: With that as a backdrop, let me turn to some of our exciting developments that are happening here. We kicked off 2024 with a solid start, delivering total revenues of $32 million, which was slightly above our previously provided guidance and adjusted earnings of just over $1 million, marking an important improvement in profitability versus the prior year and in line with previous guidance. This also marks our third straight quarter of Majesty Without Profitability as a company.

Timothy Hwang: With that as a backdrop, let me turn to some of our exciting developments are happening here in fiscal <unk> kicked off 2024 with a solid start delivering total revenues of $32 million, which was slightly above our previously provided guidance.

Timothy Hwang: EBITDA of just over $1 million, marking an important improvement in profitability versus the prior year and in line with previous guidance. This also marks our third straight quarter of adjusted EBITDA profitability as a company.

Timothy Hwang: These results reflect the hard work and dedication of the entire Fiscalnote team as we continue to execute on our mission to deliver critical insights to the world's most important decision makers. Whether it's a Fortune 100 company navigating complex regulatory landscapes or a government agency seeking to understand the impact of policy changes, Fiscalnote is there, providing the data, tools, and expertise they need to make informed decisions. As we entered this year, we did so as a leaner, more focused organization with a relentless commitment to leveraging our decade-long investment in artificial intelligence.

Timothy Hwang: These results reflect the hard work and dedication of the entire physical and the team as we continue to execute on our mission to deliver critical insights to the world's most important decision makers, whether it's the fortune 100 company navigating complex regulatory landscapes.

Timothy Hwang: The agency seeking to understand the impact of policy changes Chris go ahead that they're providing the data tools and expertise they need to make informed decisions.

Timothy Hwang: As we entered this year, we did so as a leaner more focused organization with a relentless commitment to leveraging our decade long investment in artificial intelligence.

Timothy Hwang: We have launched some new products and are optimizing our go-to-market approaches to maximize the impact of our AI technologies married to our product strategy. This is providing enormous benefits to our customers through enhanced access to our sizable, unique, and curated data sets.

Timothy Hwang: We have launched new products and are optimizing our go to market approaches to maximize the impact of our AI technologies married with our product strategy.

Timothy Hwang: This is providing enormous benefit to our customers through enhanced access to our sizable unique curated data sets and while the rest of the industry is catching up to the power of AI. It's been at the core of what we got just two months since our founding.

Timothy Hwang: And while the rest of the industry is now catching up to the power of AI, it's been at the core of what we do at Fiscalnote since our founding. To our benefit, we also believe the current generation of AI tools will help us unlock faster, easier, and more scalable access to a vast collection of unique data assets. Our proprietary AI capabilities, built on a foundation of vast, high-quality, and trusted data sets and deep domain expertise, continue to strengthen and amplify our leadership position and drive unparalleled value for our customers.

Timothy Hwang: To our benefit we also believe the current generation of AI tools will help us unlock faster easier and more scalable access our vast collection of unique data assets.

Timothy Hwang: Our proprietary AI capabilities built on a foundation of vast high quality at trusted datasets and deep domain expertise continues to strengthen and amplify our leadership position and drive unparalleled value for our customers.

Timothy Hwang: From automating the analysis of complex documents and datasets from our foundation and legal and regulatory to our expansion into macro and microeconomic data, geopolitical information, and operational security to predicting the impact of policy changes and identifying unmaterialized risks in global finance, security, and supply chains, our AI is transforming the way organizations navigate an increasingly uncertain and highly complex world. We believe Fiscalnote's strategy of investing in proprietary content and deep AI workflows will ultimately become the dominant way that customers will come to navigate legislative, regulatory, and political risk in the future. In short, we believe that we are in the right place at the right time.

Timothy Hwang: From automating the analysis of complex documents and datasets from our foundation in legal and regulatory to our expansion into macro and microeconomic data geopolitical information and operational security to predicting the impact of policy changes and identify a materialize risks and global finance security and supply chain.

Timothy Hwang: AI is transforming the way organizations navigate an increasingly uncertain and highly complex world.

Timothy Hwang: So we believe physical net strategy of investing in proprietary content and DDI workflows will ultimately coffee dominant way that customers will come to navigate legislative regulatory and political risks in the future.

Timothy Hwang: In short we believe that we are in the right place at the right time.

Timothy Hwang: In the first quarter, we made significant progress on several fronts. Most notably, we successfully completed the Divestiture Board.org, a strategic move that enabled us to reduce our debt by $65 million and strengthen our cash position by approximately $15 million, two outcomes that positively impacted our balance sheet. This transaction has not only enhanced our financial flexibility but also allows us to focus our resources on our core markets and on offerings where we see the greatest potential for long-term growth and shareholder value creation.

Timothy Hwang: In the first quarter, we made significant progress on several fronts, most notably we successfully completed the divestiture board Dot work, a strategic move that enabled us to reduce our debt by $55 million.

Timothy Hwang: And our cash position by approximately $15 million.

Timothy Hwang: Two outcomes that positively impacted our balance sheet.

Timothy Hwang: This transaction not only enhanced our financial flexibility, but also allows us to focus our resources on our core markets and offerings, where we see the great potential for long term growth and shareholder value creation.

Timothy Hwang: The divestiture is also a reflection of Fiscalnote's focus on strong and expanding product-level margins. As we gain revenue scale against our fixed operating costs, we anticipate realizing substantial incremental compounded growth in adjusted EBITDA. Having achieved adjusted EBITDA profitability in 2023, we now turn to driving sustained growth in the business.

Timothy Hwang: Sure. Its also reflection of physical notes focus on strong and expanding product level margins as we gained revenue scale against our fixed operating costs, we anticipate realizing substantial incremental compounded growth and adjusted EBITDA, having achieved adjusted EBITDA profitability in 2023, we now turn to for driving sustained growth.

Timothy Hwang: <unk>.

Timothy Hwang: I will elaborate on this in two parts. The first is I'm talking in depth about our AI product strategy and the second is discussing our operational improvements which are driving profitable growth.

Timothy Hwang: The first is talking in depth about our AI and product strategy. The second is discussing our operational improvements, which are driving profitable growth. Our Fiscalnote team has done an excellent job, particularly in new green shoot areas of growth, including our European policy business and our security risk businesses, and we expect double-digit growth from both. As these growth areas of our business continue to scale and become a larger proportion of our business... we expect their impact to start pushing up our overall growth rate.

Timothy Hwang: Our physical no team has done an excellent job, particularly new green shoot areas of growth, including our European policy business, and our security risk businesses, and we expect double digit growth from both.

Timothy Hwang: As these growth areas of our business continued to scale and become a larger proportion of our business, we expect their impact to start pushing up our overall growth rates.

Timothy Hwang: So let's spend a few moments talking about AI. Understanding our AI strategy is critical to understanding where we're going and where some of our growth will come from. I'll first talk about where we are, and then I'll focus on where we're going with respect to our product strategy and our investments in AI. As recognized by OpenAI, Google, and Microsoft through our AI partnerships with each of these industry leaders, we are now focused on ensuring that we can expose our AI strategy to as many clients as possible with the goal of driving growth in the future.

Timothy Hwang: So let's spend a few moments talking about AI.

Timothy Hwang: Understanding our AI strategy is critical to understanding where we're going and where some of our growth will come from.

Timothy Hwang: I'll first talk about where we are and then I'll focus on where we're going with respect to our product strategy and our investments in AI as recognized by open AI, Google and Microsoft through our AI partnerships with each of these industry leaders. We are now focused on ensuring that we can surface part of our strategy to as many clients as possible with the goal of driving growth in the future.

Timothy Hwang: Our trusted content and information, married with deep subject matter expertise, a leading AI organization, and access to thousands of existing customers spanning corporate and government agencies, enable Fiscalnote to be at the forefront of generative AI. This represents a compelling opportunity to expose our product and data capabilities to more users through even more use cases. With the goal of providing a deeper dive into AI investments, I'd like to outline three stages of development that have allowed us to embark upon our journey into the current generation of AI.

Timothy Hwang: Our trusted content and information Mary.

Timothy Hwang: Subject matter expertise, a leading AI organization and access to thousands of existing customers spanning corporate and government agencies enable system to get the forefront degenerative AI.

Timothy Hwang: This represents a compelling opportunity to service, our product and data capabilities to more users even more use cases.

Timothy Hwang: With the goal of providing a deeper dive into AI investments.

Timothy Hwang: Line three stages of development that have allowed us to embark upon our journey into the current generation of AI. Some of these stages are technical but I believe they are important to outline in order to understand the foundation, we have created and what it will enable.

Timothy Hwang: Some of these stages are a bit technical, but I believe they're important to outline in order to understand the foundation we have created and what it will enable. For simplicity, I'm going to classify our past 10 years as Stage 1.

Timothy Hwang: For simplicity I'm going to classify our past 10 years at stage one.

Timothy Hwang: Fiscal has spent the past decade aggregating, cleansing, and building a massive repository of legislative, regulatory, and geopolitical information from over 80 different countries. We have spent a considerable amount of resources in developing and maintaining proprietary technology and deep expertise in building a market leader's position in these information fields. We have leveraged a range of technologies, including data ingestion, ETL pipelines, preprocessing, metadata tagging, taxonomy creation, machine translation, data scan creation, etc., and we've pointed and geared these technologies towards our industry verticals. We have built a powerful data ingestion platform.

Timothy Hwang: It's going to spent the past decade, aggregating cleansing and building a massive repository of legislative regulatory and geopolitical information from over 80 different countries.

Timothy Hwang: We have a considerable amount of resources and developing and maintaining proprietary technology and deep expertise in building a market leadership position in these information fields.

Timothy Hwang: We have leveraged our range of technologies, including data ingestion ECL pipelines preprocessing metadata tagging tectonically creation machine translation data scan accretion et cetera.

Timothy Hwang: And to hear the technology towards our industry vertical we have.

Timothy Hwang: Built a powerful data ingestion platform.

Timothy Hwang: We have pioneered a new category, and this market-leading position has enabled us to serve thousands of customers from Fortune 500 companies to government agencies. Our products analyze political and policy trends and provide us with a unique and unparalleled view into understanding the most pressing regulatory, legal, and policy challenges that our clients face every single day. The information services market has been making investments in AI at this stage for years, but now, with generative AI, we'll also see substantial advancements in the use of these technologies, such as AI-assisted coding, to accelerate the acquisition of new information sets and, consequently, an acceleration in the addition of new product lines. Moving to Stage 2.

Timothy Hwang: We have pioneered a new category in this market leading position has enabled us to service thousands of customers from fortune 500 companies the government agencies.

Timothy Hwang: Our products analyzed political and policy trends and provide us with a unique and unparalleled view into understanding the most pressing regulatory legal and policy challenges that our clients face every single day.

Timothy Hwang: The information services market has been making investments in AI at this stage for years, but now with generative AI will also see substantial advancements in the use of new technologies, such as AI assisted coding to accelerate the acquisition of information sets and consequently, an acceleration and the addition of new product lines.

Timothy Hwang: In August of 2023, we announced the creation of Fiscalnote GPT, the first proprietary platform incorporating generative AI and large language modeling capabilities customized for legislative, regulatory, and policy workflows. Fiscalnote GPPT takes public and proprietary legal, regulatory, and policy data, processes it using some of the most powerful large-language models and AI technologies, and applies Fiscalnote's longstanding expertise in AI and data collection, normalizing it in order to provide users with a reliable, trusted, and secure product experience customized to meet the specific needs of the legal, policy, and regulatory domain.

Timothy Hwang: Moving to the stage two in August of 2023, we announced the creation of physical at GPT. The first proprietary platform, incorporating generative AI and large language capabilities customized for legislative regulatory and policy workflows.

Timothy Hwang: This takes.

Timothy Hwang: <unk> public and proprietary legal regulatory and policy data process is it using some of the most powerful large language model and AI technologies and apply six months long standing expertise in AI data collection normalizing it in order to provide users with a reliable trusted and secured product experience.

Timothy Hwang: Nice to meet the specific needs of the legal policy and regulatory domain.

Timothy Hwang: The initial capabilities that Fiscalnote's JPT was built to enable include assisting customers by identifying pressing policy and regulatory concerns, generating new insights and recommendations, summarizing timely and relevant issues, and finding pertinent answers and information from Fiscalnote's proprietary databases, consisting of thousands of trusted internal and external sources, which form the basis of Fiscalnote's award-winning, incisive, and actionable content. Launching this product in 2023 was an important milestone, and it set the stage for our next set of product releases.

Timothy Hwang: The initial capabilities that <unk> has built to enable include assisting customers by identifying pressing policy and regulatory concerns generating new insights and recommendations arising timely and relevant issues and finding pertinent answers. Some information Francisco, that's proprietary databases, consisting of thousands of trusted internal and external source.

Timothy Hwang: Which one basis, a physical its award winning in sizes and actionable content.

Timothy Hwang: Launching this product in 2023 was an important milestone and has set the stage for our next set of product releases.

Timothy Hwang: Critical for our clients is the need for domain-specific AI systems that are based on known and accurate data sources. Also, critical for our clients is a need for concise responses that do not include hallucinations induced by models trained on data assets that could provide misleading or incorrect responses.

Timothy Hwang: Critical for clients is the need for domain specific AI systems.

Timothy Hwang: Unknown and accurate data sources.

Timothy Hwang: Also critical for our clients need for concise responses that do not include hallucinations induced by models train on data assets that could provide misleading or incorrect responses. Despite the many major advances in AI and the use of Llm's. The technology industry. Further domain specific systems are needed to advance the expert use case that our clients required to fund their day to day.

Timothy Hwang: Despite the many major advances in AI and the use of LLMs in the technology industry, further domain-specific systems are needed to advance the expert use cases that our clients require to perform their day-to-day legal and regulatory analysis. Fiscalnote has developed a domain-specific approach to building our Fiscalnote GPT products, and we consequently address the unique complexity that exists in the legal and regulatory world and believe that as we further develop Fiscalnote GPT, this will become a mission-critical service for our customers across the legal, policy, and regulatory industries.

Timothy Hwang: Legal and regulatory analysis.

Timothy Hwang: Cisco has developed with domain specific approach in building, our Cisco with GPT products.

Timothy Hwang: Consequently addressed the unit complex, Lexus and legal and regulatory World I believe that as you further developments, but GBT.

Timothy Hwang: From a mission critical service to our customers across the legal policy and regulatory industry.

Timothy Hwang: In Stage 3, Fiscalote in the first quarter of this year successfully completed the creation of a co-pilot and reasoning platform that leverages the data from Stage 1 and verticalized LLM in Stage 2 to build extensible and repeatable AI agents and co-pilots. As you may know from following other AI industry developments, the ability to deploy agent technology in combination with large language models is fueling significant improvements, especially where deep domain expertise is required.

Timothy Hwang: In stage III physical up in the first quarter of this year successfully completed the creation of a copilot and reasoning platform that leverages the data from stage, one and vertical LLM stage two.

Timothy Hwang: Sensible and repeatable AI agency co pilots.

Timothy Hwang: As such, our new platform enables us to do two things. First, our product teams can rapidly develop AI agents and AI-driven chat interfaces capable of marrying our AI technology, including Fiscal Note GPT, with Fiscal Note's authoritative content and insights to bring significant productivity benefits for the industry. In other words, we created an AI co-pilot and agent creator. This co-pilot creator allows our developers to create AI agents and enables us to leverage our content and information and language models to accelerate our ability to bring generative AI capabilities to our portfolio and markets without the added cost of rebuilding our core infrastructure every time we want to release a new product or address a new AI agent or co-pilot use case.

Timothy Hwang: You may know from following other AI industry development.

Timothy Hwang: We could deploy agent technology in combination with large language models is fueling significant improvements, especially with deep domain expertise is required.

Timothy Hwang: As such our new platform enables us to do two things.

Timothy Hwang: First our product teams can rapidly develop AI agents aig's from chat interfaces capable of marrying our AI technology, including first what GTT with physical authoritative content and insights bring significant productivity benefits for the industry.

Timothy Hwang: In other words, we created an AI co pilot an agent creator.

Timothy Hwang: As copilot freighter allows our developers to create AI agents and it enables us to leverage our content information and language models of selling our ability to bring <unk> AI capabilities to our portfolio and markets without the added cost of rebuilding our core infrastructure every time, we want to release, new products or addressing your agent or copilot use case.

Timothy Hwang: We have consequently updated our product roadmap to accelerate the launch of these new AI co-pilot products, leveraging various parts of our AI co-pilot creator that can launch new products on substantially the same code base. In other words, new AI co-pilots and AI agents will not be contingent on a massive investment in R&D, and we believe this will drive a substantial increase in our ability to launch dozens of domain-specific AI co-pilots. The second thing that our co-pilot creator enables is that because our co-pilot creator relies on authoritative information, we're also able to control substantially for hallucinations and other problems with the generative AI space that cannot be obtained from off-the-shelf AI models such as GPT-4, Anthropic, Mistral, and others.

Timothy Hwang: We are consequently updated our product roadmap to accelerate the launch of these new AI copilot products leveraging various parts of our AI co pilot creator that can launch new products on substantially the same code base.

Timothy Hwang: In other words, new AI copilot, and AI agent will not be contingent on a massive investment in R&D and we believe this will drive a substantial increase in our ability to launch dozens of domain specific AI co pilot.

Timothy Hwang: The second thing that our copilot creator enables that because the copay accretive relies on authoritative information. We're also able to control substantially for hallucinations and other problems with the standard way that cannot be obtained from the off the shelf model such a CVT four anthropic Mitchell and others.

Timothy Hwang: In effect, we've created a reasoning engine in the legislative regulatory category. Our methodology and reasoning engine allows for fact-checking of information and limits the exposure of proprietary company data to third-party large-language models when we leverage them in limited cases, enabling deeper trust in generative AI in our systems. Unlike other platforms in the industry that leverage other people's data and other people's AI models, Fiscalnote has built its own engine for collecting information and its own AI models adapted for the legal, legislative, and regulatory professions.

Timothy Hwang: In fact, we've created a reasoning engine and the legislative regulatory categories.

Timothy Hwang: Our methodology and reasoning engine allows for fact checking of information and limits. The exposure proprietary company data I think the third party large language models, when we leverage them in limited cases, enabling deeper trusted generative AI in our statements.

Timothy Hwang: Unlike other platforms in the industry leverage other people's data and other People's AI models. This is Scott has built its own engine for collecting information and its own AI models adapted for the legal regulatory professions physical Consequently, best position to provide AI leadership, and the legislative regulatory and policy fields.

Timothy Hwang: Fiscalnote is consequently best positioned to provide AI leadership in the legislative, regulatory, and policy fields. Given that we have been in the market since 2013 with our products, given our comprehensive global client base, and given that we made a conscious decision to develop deep expertise in data aggregation, AI modeling, and key areas like summarization and machine translation, we believe that we are in the right place and at the right time to capture the upside that sits in front of us.

Timothy Hwang: Given that we have been in the market since 2013 with our products given our comprehensive global client base and given that we made a conscious decision to develop deep expertise and data aggregation and modeling in key areas like Summarization exchange translation. We believe that we are in the right place at the right time to capture the upside that sits in front of us.

Timothy Hwang: Today and going forward, Fiscalnote will leverage the data from Stage 1, the AI models from Stage 2, and the Copilot and Reasoning Platform as a service from Stage 3 to begin launching a series of AI copilots and agents that collectively will build a powerful legal, regulatory, and geopolitical AI system, and eventually, the world's most powerful AI lawyer. Similarly, we will do the same to support adjacent personas across the span of strategic risk and opportunity.

Timothy Hwang: Today and going forward.

Timothy Hwang: We'll leverage the data from stage one the AI models from stage, two and the co pilot and route given the platform as a service from stage three to begin launched get serious AI copilot <unk> agent that collectively will build a powerful legal regulatory geopolitical AI assistant and eventually the world's most powerful AI lawyer.

Timothy Hwang: Similarly, we will do the same for support adjacent personas across the span of strategic risk and opportunity.

Timothy Hwang: The goal here is to capitalize on our decades of data aggregation and deep domain knowledge and launch dozens of these new point solution AI co-piles in and around the legal, regulatory, and strategic risk industries, thereby radically transforming the work and productivity of our customers. Fiscal Note's new AI co-op house will be revolutionary new AI agents fine-tuned for regulatory and risk management professionals to facilitate their day-to-day work on key paths related to legislation, regulatory compliance, advocacy, constituent communication, and global risk.

Timothy Hwang: The goal here is to capitalize on our decades of data aggregation and deep domain knowledge and launched dozens of these new point solution, AI copilot and in or out in legal regulatory and strategic risk industries, and thereby radically transforming the work and productivity of our customers.

Timothy Hwang: <unk> will be revolutionary new AI agents fine tuning for regulatory and risk management professionals to facilitate their day to day work on key paths related to legislation regulatory compliance advocacy configured communications and global risk.

Timothy Hwang: With this, we are launching what we see as an incredibly powerful generative AI platform that can create and rapidly deploy a series of co-pilots that can expertly perform time-consuming domain-specific tasks, free up substantial amounts of time for our customers, and provide unique and valuable insights that were not possible before. These AI agents are not static, and importantly, will rapidly improve over time as our technology continues to develop and as we deploy our AI-based products and services for our extensive client base.

Timothy Hwang: With this we are launching what we see as an incredibly powerful generative AI platform that can create and rapidly deploy a series of co pilots.

Timothy Hwang: Expertly perform time consuming domain specific tasks.

Timothy Hwang: Free up substantial amounts of time for our customers and provide unique and valuable insights that were not possible before.

Timothy Hwang: These AI agents are not static and importantly will rapidly improve over time as our technology continues to develop and as we deploy our AI based products and services quite extensive client base.

Timothy Hwang: We launched our first AI agent, StressLens, with the real-time ability to quantify the behavioral impact of leading decision-makers and influencers across the financial, regulatory, and government domains. StressLens includes an innovative AI agent capable of detecting changes in tone, cadence, and physical movements, deciphering the intricate language of human emotions and intentions with unparalleled accuracy, while showcasing a groundbreaking leap in technology that will revolutionize the way Stress lenses Leading AI technology can now help us understand whether an executive on an earnings call is uncomfortable with their numbers, whether a policymaker is nervous, or whether there is a heightened level of discomfort or disagreement on a specific topic during a group conversation, such as Western Business Negotiations or Public Speaking Engagements. Stress Lens serves as a trusted ally, providing real-time insights into the underlying emotions driving human interaction.

Timothy Hwang: We launched our first AI agent stress lines with the real time ability to quantify the behavioral impact leading decision makers and influencers across the financial regulatory and government domain.

Timothy Hwang: <unk> lens includes an innovative AI agent capable of detecting changes in tone cadence and physical movements are suffering the intricate language human emotions and the intentions with unparalleled accuracy.

Timothy Hwang: Showcasing our groundbreaking leap in technology that will revolutionize the way humans interact with machines.

Timothy Hwang: Stress lenses, leading AI technology can now help us understand whether an executive on an earnings call as uncomfortable with their numbers, whether policymakers nervous or whether there is a heightened level of discomfort or disagreement on the specific topic I'll have a good conversation.

Timothy Hwang: Western business negotiations, where public speaking engagements stress lines serves as a trusted ally, providing real time insights into the underlying emotions Robyn human interactions.

Timothy Hwang: As the world marches towards a future where human-AI collaboration becomes ubiquitous, Stress Lens stands at the forefront, spearheading a paradigm shift in how we perceive and interact with technology. Fiscalnote Hldg has filed a patent on this technology and has also begun exploring making the technology available beyond the legislative, regulatory, and risk-based framework to expand the use of stress lens in other AI markets where detecting human emotion is important, such as public relations and media training, witness preparation for litigation, etc.

Timothy Hwang: As the World March towards a future where human AI collaborations because ubiquitous stressed loans stands at the forefront spearheading a paradigm shift in how we perceive and interact with technology.

Timothy Hwang: It's filed a patent on this technology and has also begun exploring making the technology available beyond the legislative regulatory and risk spaces to expand the use of stress lines and other AI markets. We're detecting human emotion are important such as public relations immediate training when its preparation for litigation et cetera.

Timothy Hwang: The second AI agent, our Global Intelligence AI Crew Pilot, was launched last week. The Global Intelligence AI Powered Assistant is designed to help customers assess the shifting global landscape, manage emerging developments, and mitigate risk involved with the world's most pressing geopolitical, macroeconomic, security, and regulatory challenges. Providing macroeconomic and country risk analysis, the Global Intelligence Copilot spans expert content across our geopolitical, macroeconomic, and security and risk portfolio, featuring Oxford Analytica, Frontier View, and Dragonfly.

Timothy Hwang: Second AI agent, our global intelligence AI Copilot was launched last week. The global intelligence AI powered assistant was designed to help customers assess the shifting global landscape manage emerging developments and mitigate risk involved with the world's most pressing geopolitical macroeconomic security and regulatory challenges.

Timothy Hwang: Providing macroeconomic and country risk analysis, the global intelligence copilot stands expert content across our geopolitical macroeconomic security and risk portfolio, featuring Oxford analytics frontier view and dragonfly and enabled subsequent users to ask questions related to a wide range of issues such as <unk>.

Timothy Hwang: It enables fiscal users to ask questions related to a wide range of issues, such as geopolitical market analysis, forecasts on inflation and other key macroeconomic indicators, travel risk and advisory, ongoing military conflicts, emerging risks by country, and views on the policy impacts of a national election.

Timothy Hwang: Geopolitical and market analysis forecasts on inflation and other key macroeconomic indicators travel risks and advisory ongoing military conflicts.

Timothy Hwang: Risk by country and views on the policy impacts of a national election.

Timothy Hwang: We've begun to turn on this AI capability for our existing customers who are purchasing our geopolitical and macroeconomic intelligence products, with an increasing percentage of our users leveraging our AI capabilities each passing week. We expect that these new capabilities will not only drive improved usage but also increase customer retention and growth in those products as well. Using the data from Stage 1, the AI models from Stage 2, and the AI co-pilot creator from stage three.

Timothy Hwang: We have begun to turn on this AI capability for our existing customers, who are purchasing or geopolitical and macroeconomic intelligent products with an increasing percentage of our users leveraging our AI capabilities each passing week.

Timothy Hwang: We expect that these new capabilities will not only drive improved usage, but also increased customer retention and growth in those products as well.

Timothy Hwang: Useful data from stage, one the AI models from stage two.

Timothy Hwang: The AI copilot greater from stage III, we are rapidly bringing to market several AI co pilots with various skills.

Timothy Hwang: We are rapidly bringing several AI co-pilots with various skills to market. Generative AI is creating a substantial step change in opportunity for our customers to automate large portions of their workflows and drive substantial efficiency. Our co-pilot mission through 2024 and into 2025 and beyond encompasses skills such as the ability to sunrise changing legislation regulations for multiple different markets, conduct analysis of changing laws and regulations, create research memos, search existing databases of information, review documents for compliance and risk analysis, and various skills that we plan to bring to market over the next several quarters. Developing these skills from negotiating, market analysis, legislative and regulatory drafting, and compliance and drafting MOMOs, etc.

Timothy Hwang: Generative AIA is creating a substantial step change and opportunity for our customers to automate large portions of the workflows and drive substantial efficiency.

Timothy Hwang: Our copilot vision through 2024 and into 2025 and beyond encompasses skills such as the ability of the sunrise changing legislation regulations for multiple different markets conduct analysis of changing laws and regulations.

Timothy Hwang: Research memos search existing database of information review documents for compliance risk analysis, and various skills that we plan to bring to market over the next several quarters.

Timothy Hwang: Developing these skills from negotiating market analysis lesbian regulatory drafting and compliance drafting memos et cetera will collectively enabled fiscal out to build.

Timothy Hwang: will collectively enable Fiscalnote to build the most powerful legal, regulatory, and geopolitical AI assistant and eventually the world's most powerful AI lawyer. And similarly, we'll do the same to support adjacent percentages across the span of strategic risk and opportunity. We are already in the market with the first of these solutions and expect to see accelerated development, combining our proprietary data information with our AI investments to bring these capabilities to our customers faster.

Timothy Hwang: The most powerful legal regulatory and geopolitical AI assistant and eventually the world's most powerful AI water and similarly, we'll do the same for support adjacent percentage of cross banner strategic risk opportunity.

Timothy Hwang: We are already in market with the first of these solutions and expect to see accelerated development, combining our proprietary data and information with our AI investments bring these capabilities to our customers faster.

Timothy Hwang: From a go-to-market perspective, we are leveraging our substantial customer base of thousands of customers to drive copilot adoption overall and to have a deeper level of workflow integration with our customers. To make our cookpots more accessible and broaden the lower end of our market reach, we're also introducing a product-led growth approach designed to engage individual users regardless of whether or not they are a small business or inside of a large enterprise.

Timothy Hwang: From a go to market perspective, we are leveraging our substantial customer base of thousands of customers to drive copilot adoption overall and sort of a deeper level of workflow integration with our customers.

Timothy Hwang: To make our <unk> more accessible and brought up the lower end of our market reach we are also introducing a product led growth approach designed to engage individual users regardless of whether or not they are a small business or inside of a large enterprise. Our overall goal is to accelerate getting our AI technology.

Timothy Hwang: Our overall goal is to accelerate getting our AI technologies into the hands of our existing and new customers while expanding the use cases for which our products are used. By way of example, there are almost 500,000 elected officials in the United States, from the president to the local city council member, and they all need to understand pending legislation and regulations and could consequently benefit from the use of data and AI in their day-to-day jobs.

Timothy Hwang: And for our existing and new customers, while expanding the use cases for which our products are used.

Timothy Hwang: By way of example, there are almost 500000 elected officials in the United States from the President local City Council member.

Timothy Hwang: Only to understand pending legislation and regulations and could consequently benefit from the use of physical and AI in the day to day jobs.

Timothy Hwang: That segment alone is potentially a $1 billion-a-year recurring revenue opportunity. Most importantly, the early response to our recently launched AI products has been extremely positive, and we continue to see significant potential to expand these offerings in the coming quarters. In short, we are developing and will be accelerating the use of AI co-pilots, leveraging the thousands of existing customers we have, including government clients such as the United States Congress, the White House, and the DOD, as well as our corporate clients, including many of the Fortune 500 and the legal, legislative, regulatory, and policy departments.

Timothy Hwang: That segment alone is potentially a $1 billion a year recurring revenue opportunity.

Timothy Hwang: Most importantly, the early response from our recently launched the IR products has been extremely positive and we continue to see significant potential to expand these offerings in the coming quarters.

Timothy Hwang: In short we are developing and will be accelerated use of AI co pilot leveraging one thousands of existing customers. We have including government clients are getting I think Congress, the white house and the Dod as well as our corporate clients, including fortunate 500, and the legal legislative regulatory and policy departments.

Timothy Hwang: In the long run, our goal is to broaden adoption of our AI-enabled technologies by anyone that is in need of global policy and market intelligence. We believe that, over the long term, all information services companies, from Thomson Reuters to Wolters Kluwer to LexisNexis and others, will need to eliminate and transform their existing cloud-based workflow solutions to adapt to the changing customer demands of leveraging AI agents to query their systems. No longer will it take 15 clicks on a web app to find an answer to a question.

Timothy Hwang: In the long run our goal is to broaden adoption of our AI enabled technologies by anyone that has a need of Golar policy market intelligence.

Timothy Hwang: We believe that over the long term all information services companies from Thomson Reuters Wolters kluwer to less Nexus and others will need to eliminate and transform their existing cloud based workflow solutions to adapt the changing customer demands of leveraging AI agents to query their systems.

Timothy Hwang: No longer will it take 15 clicks on a web app to find an answer to a question people will be able to simply query ask get the result, and leveraging AI agent to generally report will run analysis. This is the future of adjuvant information services.

Timothy Hwang: People will be able to simply ask the question, get the results, and leverage an AI agent to generate a report or run an analysis. This is the future of AI-Driven Information Services. Additionally, we have been approached by both existing and new business partners to explore data licensing and co-selling our co-pilots and AI agents. For instance, we are exploring working with some of the large language modeling companies to potentially license portions of our data with the goal of exposing a large universe of users to our data.

Timothy Hwang: Additionally, we have been approached by both existing and new business partners to explore data licensing and co selling our copilot and the agents.

Timothy Hwang: For instance, we are exploring working with some of the large language model companies to potentially license portions of our data with the goal of exposing a larger universe of users to our data.

Timothy Hwang: Many similar such deals have been struck and announced in the press in recent weeks, and we believe it is a trend we can leverage to expand our market opportunity. In particular, we anticipate that our proprietary data assets will be uniquely valuable for such partnerships, and our ability to help our clients see around the corner on regulatory policy matters will allow us to strike uniquely valuable partnerships. We're also exploring opportunities to leverage our AI agents in various adjacent sectors, ranging from earnings calls, to PR agencies, to investment banks, to provide an ever-expanding universe of uses for AI capabilities.

Timothy Hwang: Many similar such deals have been struck as announced in the press in recent weeks and we believe it is a trend we can leverage to expand our market opportunity.

Timothy Hwang: In particular, we anticipate that our proprietary data assets are uniquely valuable for such partnerships and our ability to help our clients see around the corner on regulatory and policy matters.

Timothy Hwang: The strike uniquely valuable partnerships.

Timothy Hwang: We're also exploring opportunities to leverage our agents with the various adjacent sectors ranging from earnings calls with PR.

Timothy Hwang: PR agencies investment banks to provide an ever expanding universe of usage for AI capabilities I mentioned for instance, the ability to use direct line in the witness preparation process or in preparation for giving public remarks in front of Congress regulatory investigations or the press or anything else of earnings calls for various earnings call transcripts and finished data.

Timothy Hwang: I mentioned, for instance, the ability to use Treflin in the witness preparation process or in preparation for giving public remarks in front of Congress, regulatory investigations, or the press, or in the analysis of earnings calls for various earnings call transcripts and financial data providers.

Timothy Hwang: Providers.

Timothy Hwang: Within the next quarter, we will be showcasing our AI platform at CodePalace at an AI showcase day. We'll be announcing it soon. There, we will further elaborate on the future multi-year roadmap we've established as we build the most powerful legal, regulatory, and geopolitical AI system, and eventually the world's most powerful AI lawyer. And similarly, we'll do the same to support adjacent personas across the span of strategic risk and opportunity.

Timothy Hwang: Within the next quarter, we will be showcasing our AI platform and copilot that an AI showcase day, we will be announcing in the near term. There. We will further elaborate on the future multi year roadmap. We have established as we build the most powerful legal regulatory and geopolitical AI assistant and eventually the world's most powerful AI lawyer and similarly, we'll do the.

Timothy Hwang: Same to support adjacent percentage across the span of strategic risk and opportunity.

Timothy Hwang: Having spent the last 10 years training, gathering, and building data for our vertical, we are accelerating the use of these tools to bring new value for our customers. We are incredibly excited about the future of automation and autonomy and believe Fiscalnote is leading the way for an AI-driven future for our customers across all the numerous sectors we cover.

Timothy Hwang: <unk> spent the last 10 years and training gathering and building data for our vertical we are accelerating the use of these tools to bring new value for our customers.

Timothy Hwang: We are incredibly excited about the future of automation and autonomy and believe fiscal is leading the way for an adjuvant future for our customers across all of the numerous sectors recover.

Timothy Hwang: We expect a combination of improved operating performance, which I'll further elaborate on, reallocation of our resources post-board title investiture, and the launch of our new AI co-pilot to return the company to a run rate revenue growth of low to mid-teens as we've enjoyed in prior years. Having elaborated on our AI growth strategy, let me now turn to our operational improvements. Our focus on upsell and cross-sell initiatives is ongoing.

Timothy Hwang: We would expect a combination of improved operating performance, which I will further elaborate on reallocation of our resources postpone divestiture and the launch of our new AI co pilot.

Timothy Hwang: Turn the company to a run rate revenue growth of low to mid teens as you have enjoyed prior years.

Timothy Hwang: Happening elaborated on our AI growth strategy, let me now turn to our operational improvements.

Timothy Hwang: Our focus on upsell and cross sell initiatives is ongoing.

Timothy Hwang: By aligning our teams and leveraging our AI prowess, we've enhanced the effectiveness of these strategies, driving higher contract values and deepening our relationships with key accounts. We've also made key updates to our CRM and other software tools to better support these efforts, giving our sales and customer success teams the visibility and insights they need to identify and capitalize on growth opportunities. We continue to add new data and intelligence to expand our customer value.

Timothy Hwang: By aligning our teams and leveraging our AI prowess, even enhance the effectiveness of these strategies, which drive higher contract values and deepen our relationships with key accounts.

Timothy Hwang: We've also made key updates to our CRM and other software tools to better support these efforts, giving our sales and customer success teams to visibility insights they need to identify and capitalize on growth opportunities.

Timothy Hwang: We will continue to add new data and intelligence to expand our customer value in.

Timothy Hwang: In the past several quarters, we have added new geopolitical and security intelligence capabilities through the integration of DragonFly. We have also expanded our EU IT offering, providing stakeholder coverage and data for all 705 members of the European Parliament. And finally, we expanded our global policy and analysis coverage to over 80 countries, most recently to include China's national-level and provincial-level legislative and regulatory policy development, positioning Fiscalnote as one of the only providers of Chinese national and provincial regulatory and policy intelligence.

Timothy Hwang: In the past several quarters, we added new geopolitical and security intelligence capabilities the integration of dragonfly.

Timothy Hwang: We also expanded our <unk>.

Timothy Hwang: Offering providing stakeholder coverage and data for all 705 members of the European Parliament and finally, we expanded our global policy and analysis coverage to over 80 countries. Most recently to include China's national level and provincial level legislative and regulatory policy developments positioning physical I was one of the only providers.

Timothy Hwang: Of Chinese national and provincial regulatory and policy intelligence.

Timothy Hwang: Our European business now constitutes 15% of our revenues, and our European policy business, security intelligence platforms, and risk businesses remain some of the fastest growing in our overall product portfolio, growing north of 20% a year. We continue to explore doubling down in areas of accelerated growth to drive overall growth in the business. Our large enterprise business also continues to grow, with many excellent new customers added in the last quarter. As we have doubled down and more heavily invested in larger, more strategic accounts for our line sales team to go after, we expect bookings growth to accelerate in the second half of the year to align with traditional seasonality and software buying cycles.

Timothy Hwang: Our European business now constitutes 15% of our revenues and our European policy business and security intelligence platforms and risk businesses remains some of the fastest growing in our overall product portfolio growing north of 20% a year.

Timothy Hwang: Continue to explore doubling down in areas of accelerated growth to drive overall growth in the business.

Timothy Hwang: Our large enterprise business also continues to grow with meaningful new customers added in the last quarter.

Timothy Hwang: <unk> doubled down and more heavily invested in larger more strategic accounts for our line sales people to go after we expect bookings growth to accelerate in the second half of the year to align with traditional seasonality and softer buying cycles. So.

Timothy Hwang: To that end, we're streamlining and simplifying our sales process, positioning Fiscalnote as a unified provider of geopolitical, market, and intelligence solutions. By bundling our offerings in this way, we believe it can drive higher customer retention and more durable revenue streams. This is allowing us to bring together our various data sets, analytical tools, and workflow solutions into cohesive packages aligned to the key use cases and pain points for our customers. It's about making it easier for them to access the full value of our overall platform and building deeper, more strategic relationships over time. As we look ahead, our path to reaching and maintaining low to mid-teens compounded annual growth for 2025 and beyond remains clear.

Timothy Hwang: To that end, we're streamlining and simplifying our sales process positioning thats gone out of the unified provider of geopolitical and market intelligence solutions.

Timothy Hwang: Bundling our offerings in this way, we believe it can drive higher customer retention and more durable revenue streams.

Timothy Hwang: This is allowing us to bring together, our various datasets analytical tools and workflow solutions into cohesive packages aligned to the key use cases and pain points of our customers.

Timothy Hwang: That makes it easier for them to access the full value of our overall platform and building deeper more strategic relationships over time.

Timothy Hwang: As we look ahead, our path to reaching and maintaining low to mid teens compounded annual growth for 2025 and beyond remains clear.

Timothy Hwang: We're committed to executing a long-term growth strategy, which centers on deepening and widening our penetration across core customers with our core offerings. This means continuing to innovate and expand our portfolio of AI-powered solutions while also investing in sales and marketing to drive new logo acquisition and expand our presence in key markets like Europe, where we have a still nascent foothold but see significant uptick potential.

Timothy Hwang: We're committed to executing our long term growth strategy, which centers on deepening and widening our penetration across core customers about core offerings.

Timothy Hwang: This means continuing to innovate and expand our portfolio of AI powered solutions, while also investing in sales and marketing to drive new logo acquisition and expand our presence in key markets like Europe, where we have it's still nascent foothold, but see significant untapped potential.

Timothy Hwang: Lab pushed the industry to combine cloud software and international information. We pushed the market to include point solutions like advocacy software bundled with legislative information. We pushed the market to include a larger and larger amount of information from countries around the world.

Timothy Hwang: Just want to push the industry to combined cloud software and international information, we pushed the market to include point solutions like advocacy software bundled with legislative information, we push the market to include a larger and larger amount of information from countries around the world, we have been pushing and leading product innovation for years, and we will continue to do so in the future on the AI front.

Timothy Hwang: We have been pushing and leading product innovation for years, and we will continue to do so in the future on the AI front. On the strategic front, I want to briefly touch on the ongoing review process. Our recent divestiture unlocked significant value, and our board will consequently continue to evaluate all such strategic opportunities, given the continued view that our overall business remains undervalued in this market. The Board.org transaction delivered a tremendous return on our initial investment and is a testament to the significant value of but one component of our overall business.

Timothy Hwang: On the strategic front I want to briefly touch on the ongoing review process.

Timothy Hwang: Our recent divestiture unlocks significant value and our board will consequently continue to evaluate all such strategic opportunities given the continued view that our overall business remains undervalued in this market.

Timothy Hwang: The board Dot or transaction delivered a tremendous return on our initial investment and is a testament to the significant value, but one component of our overall business.

Timothy Hwang: The transaction also demonstrates our disciplined approach to M&A and our ability to create value through strategic acquisitions encompassing both purchases and divestitures. We remain laser-focused on driving shareholder value by building a durable and profitable business for the long term, but the Board will also continue to evaluate all options to realize value for our shareholders. We have a clear AI leadership position in our industry, and it generates consistent recurring revenues from a premier base of global customers.

Timothy Hwang: The transaction also demonstrates our disciplined approach to M&A and our ability to create value through both strategic acquisitions encompassing both purchases of divestitures.

Timothy Hwang: We remain laser focused on driving shareholder value by building, a durable and profitable business for the long term, but the board will also continue to evaluate all options to realize value for our shareholders.

Timothy Hwang: We have a clear leadership position in our industry and it generates consistent recurring revenues from our Premier base of global customers, our business drives consistent 80% adjusted gross margins and at the operational Foundation with high operating leverage.

Timothy Hwang: Our business drives consistent 80% adjusted gross margins and has an operational foundation with high operating leverage. We have been profitable on an adjusted EBITDA basis for three quarters now, and our go-forward focus remains equally weighted on driving both bottom-line profitability and top-line growth. In closing, I'm incredibly proud of what the Fiscalnote team has accomplished, not just in the first quarter, but over the past year. We've emerged as a leaner, more agile organization with a strengthened foundation for long-term sustainable growth.

Timothy Hwang: We have been profitable on an adjusted EBITDA basis for three quarters now and our go forward focus remains equally weighted on driving both bottomline profitability and topline growth.

Timothy Hwang: In closing I'm incredibly proud of what the <unk> team has accomplished not just in the first quarter, but over the past year.

Timothy Hwang: We've emerged as a leaner more agile organization with a strengthened foundation for long term durable growth our.

Timothy Hwang: Our investments in AI, our focus on operational excellence, and our commitment to customer success have positioned us to capitalize on the vast opportunities ahead. I believe that the new AI-driven future will mean that the old way of analyzing legislative, regulatory, and geopolitical risk will become obsolete and will drive enormous opportunities for fiscal. As we move through 2024, we view it as the first step in a multi-year journey to earning our place in the history books and becoming a dominant player in our industry.

Timothy Hwang: Our investments in AI, our focus on operational excellence and our commitment to customer success are positioned us to capitalize on the vast opportunities ahead.

Timothy Hwang: I believe that the new Azure in future will mean that the old way of analyzing legislative regulatory and geopolitical risks will become obsolete and will drive enormous opportunities for fiscal note.

Timothy Hwang: As we move through 2024, we viewed as the first step in a multiyear journey to earning our place in the history books and become a dominant player in our industry.

Timothy Hwang: Our strategy is simple. Deep and wide penetration across our core customer base with our core offerings, translating into higher revenues and accelerating adjusted EBITDA margins as we realize incremental operating leverage. It's a powerful formula, and one that I believe will create significant value for all of our stakeholders in the years ahead. With that, I'll turn it over to Jon Slabaugh, our CFO, for a detailed review of our numbers. Jon? Thank you.

Timothy Hwang: Strategy is simple deep and wide penetration across our core customer base with our core offerings translating into higher revenues and accelerating adjusted EBITDA margins as we realized incremental operating leverage it's a powerful formula and one that I believe will create significant value for all of our stakeholders in the years ahead.

Jon A. Slabaugh: With that I'll turn it over to John Slaybaugh, our CFO for a detailed review of our numbers John Thank.

Jon A. Slabaugh: Thank you, Tim. My comments this morning will be brief, so let me jump right in and walk through the numbers for Q1 2024, starting with the income statement. Looking at revenues, total revenue for Q1 2024 was $32.1 million, slightly higher than the prior year period. Subscription revenue during the quarter accounted for 92% of revenue, in line with the company's historical trend.

Jon A. Slabaugh: Thank you Tim My comments. This morning will be brief so let me jump right in and walk through the numbers for Q1 2024, starting with the income statement looking at revenues total revenue for Q1, 2024 was $32 1 million slightly higher than the prior year period subscription revenue during the quarter.

Jon A. Slabaugh: And for 92% of revenue.

Jon A. Slabaugh: In line with the company's historical trends.

Jon A. Slabaugh: Digging deeper into revenue, with respect to our key performance metrics, we experienced some comparison challenges this quarter due to the divestiture of Board.org. In Q1'24, run rate revenue was $122 million, and annual recurring revenue was $110 million, on a pro forma basis, adjusting for the impact of the Board.org divestment. Both metrics for Q1-24 were higher than the prior year period.

Jon A. Slabaugh: Digging deeper into revenue with respect to our key performance metrics.

Jon A. Slabaugh: Periods. Some comparison challenges this quarter due to the divestiture of board Dot Org in.

Jon A. Slabaugh: In Q1, 24 run rate revenue was $122 million in annual recurring revenue was $110 million.

Jon A. Slabaugh: On a pro forma basis adjusting for the impact of the board Dot Org divestiture, both metrics for Q1, 'twenty four were higher than the prior year period.

Jon A. Slabaugh: And in Q1'24, net revenue retention was 96%, a similar level to the prior year. Overall, revenue performance in the quarter reflects increases from organic growth and acquisitions during the prior 12 months, offset by decreases resulting from both dispositions and product discontinuations. Turning to expenses, principal operating expenses in Q1 2024 decreased versus the prior year. Specifically, the cost of revenue decreased by approximately $2 million, or 19%, and R&D decreased by approximately $2 million, or 32%. Sales and marketing decreased by approximately $3 million, or 23%.

Jon A. Slabaugh: And in Q1, 'twenty four net revenue retention was 96% a similar level to the prior year.

Jon A. Slabaugh: Overall revenue performance in the quarter reflects increases from organic growth and acquisitions during the prior 12 months offset by decreases resulting from both dispositions and product discontinuation.

Jon A. Slabaugh: Turning to expenses principal operating expenses in Q1 2024.

Jon A. Slabaugh: Decreased versus the prior year, specifically the cost of revenue decreased by approximately $2 million or 19% R&D decreased by approximately $2 million or 32%.

Jon A. Slabaugh: Sales and marketing decreased by approximately $3 million or 23% G&A decreased by approximately $2 million or 12%.

Speaker Change: Speaking the reductions in operating expenses, principally reflect cost control measures instituted across 2023 as well as the impact of the sale of Borgata was in sunset products.

Jon A. Slabaugh: The G&A decreased by approximately $2 million, or 12%. Generally speaking, the reductions in operating expenses principally reflect cost control measures instituted in 2023, as well as the impact of the sale of Board.org and Sunset Products. Looking at our profitability during the quarter, let's start above the line. Gross margins remain strong in the quarter, with Q1 2024 coming in at 77% on a gap basis and 85% on an adjusted basis, both increases over the prior year period. These improvements primarily reflect the impact of Sunset products and improved efficiencies.

Jon A. Slabaugh: Looking at our profitability during the quarter, let's start above the line.

Jon A. Slabaugh: Gross margins remained strong in the quarter.

Jon A. Slabaugh: Q1, 2024 coming in at 77% on a GAAP basis, and 85% on an adjusted basis.

Jon A. Slabaugh: With the increases over the prior year period. Please.

Jon A. Slabaugh: These improvements were primarily reflecting the impacts of sunset products and improved efficiencies, we continue to pursue incremental efficiencies in our operations.

Jon A. Slabaugh: We continue to pursue incremental efficiencies in our operation. Transitioning to below the line, gap net income for Q1 2024 was $50 million, an increase of over $68 million and reflecting a substantial positive impact of the gain on the sale of Board.org during the period. EBITDA for Q1 2024 was $65 million, an increase versus the prior year and primarily reflecting the impact of the gain from the sale of board.org, adjusting for non-cash and other non-recurring or one-time buy-in, primarily the gain from the sale of BoughtMore.org.

Jon A. Slabaugh: <unk> to below the line GAAP net income for Q1, 2024 was $50 million, an increase of over $68 million and reflecting a substantial positive impact of the gain on the sale of more dot org during the period.

Jon A. Slabaugh: EBITDA for Q1, 2024 was $65 million.

Jon A. Slabaugh: We have increased versus the prior year, primarily reflecting the impact of the gain from the sale of board Dot org adjusting for noncash and other nonrecurring or onetime items, primarily the gain of the sale of buckboard Dot Org adjusted EBITDA was over $1 million, a significant improvement year over year.

Jon A. Slabaugh: Adjusted EBITDA was over $1 million, a significant improvement year over year and, importantly, the third consecutive quarter of positive performance for this key profitability metric. Turning to the balance sheet, at quarter end, we had cash and cash equivalents of $44 million. Unknown Executive, Zachary Cummins, Joshua Resnik, Timothy Hwang, Michael Albanese, Zachary, Period in cash also reflects the ongoing initiatives to control spending across the company and prudently allocate capital to investments in the business with the potential for high growth and positive return characteristics.

Jon A. Slabaugh: And importantly, the third consecutive quarter of positive performance for this key profitability metrics.

Jon A. Slabaugh: Turning to the balance sheet at quarter end, we had cash and cash equivalents of $44 million.

Jon A. Slabaugh: Sequentially higher than year end, 'twenty, three and slightly lower than the prior year period.

Jon A. Slabaugh: As we reported recently and divestiture of board Dot Org enabled us to materially improve our capital structure with the addition of $15 million to cash.

Jon A. Slabaugh: Period end casual also reflects the ongoing initiatives controlled spending across the company.

Jon A. Slabaugh: <unk> allocate capital to investments in the business for the potential for high growth and positive return characteristics.

Jon A. Slabaugh: We have sufficient cash resources to fund our operations, and we do not see any immediate or intermediate need for additional capital. At quarter end, our total debt stood at $177 million, significantly lower sequentially than the level recorded at year-end 2023.

Jon A. Slabaugh: We have sufficient cash resources to fund our operations and we do not see any immediate or intermediate need for additional capital at quarter end, our total debt stood at $177 million significantly lower sequentially.

Jon A. Slabaugh: Level recorded at year end 2023. This amount includes $93 million related to our senior term loan after giving effect of our $66 million principal.

Jon A. Slabaugh: This amount includes $93 million related to our senior term loan after taking into account our $66 million principal repayment made during the quarter following the sale of Board.org. Simultaneously to that, we also amended our credit agreement with our senior lenders to, among other things, extend principal amortization payments for an additional 12 months, now beginning in August of 2026, and continue to manage our debt service levels balanced by ongoing investments in CapEx and OpEx.

Jon A. Slabaugh: Principal repayments made during the quarter following the sale of board Dot Org.

Jon A. Slabaugh: Simultaneous to that we also amended our credit agreement with our senior lenders to among other things extend principal amortization payments for an additional 12 months now I'll beginning in August of 2026.

Jon A. Slabaugh: To manage our debt service levels balanced by our ongoing investments in Capex and Opex.

Jon A. Slabaugh: Turning to guidance, today we have reaffirmed our full year forecast for total revenues of $123 to $127 million, total run rate revenue of $126 to $134 million, and adjusted EBITDA of $7 to $9 million. We also today provided the following forecast for Q2 2024. Total revenues of approximately $29 million and adjusted EBITDA of approximately $1 million.

Jon A. Slabaugh: Turning to guidance today, we reaffirmed our full year forecast for total revenues 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: We also today provided the following forecast for Q2 2024.

Jon A. Slabaugh: Total revenues of approximately $29 million and adjusted EBITDA of approximately $1 million.

Jon A. Slabaugh: As a reminder, forecasts for both the quarter and full year reflect the impact of the Board.org divestiture, among other considerations. In summary, the overall performance of Q1 2024 was as expected. Our forecast for the second quarter indicates a slight bias towards the second half of the year in terms of our full-year ranges, in line with prior year seasonality. As we've stated previously, 2024 is a year of transformation and a bridge to revenue and margin expansion beginning in 2025 and leading eventually to our long-term run rate revenue target. The business remains strong. We continue to execute our operational efficiency initiatives in concert with our product strategy, all in pursuit of further strengthening our established position as a critical partner to our expansive global customer base.

Jon A. Slabaugh: As a reminder, forecast for both the quarter and full year reflect the impact of the board Dot Org divestiture among other considerations in summary, the overall performance of Q1 2024 was as expected our forecast for the second quarter indicates a slight bias towards the second half of the year in terms of our full year.

Jon A. Slabaugh: Rangers in line with prior year seasonality.

Jon A. Slabaugh: As we've stated previously 2024 is a year of transformation and a bridge to revenue and margin expansion beginning in 2025, and leading eventually to a long term run rate revenue targets.

Jon A. Slabaugh: The business remains strong we continue to execute our operational efficiency initiatives in concert with our product strategy. All in pursuit of further strengthening our established position as a critical partner to our expansive global customer base that concludes my prepared remarks, I will turn it over to the operator to begin the question and answers.

Operator: That concludes my prepared remarks. I'll turn it over to the operator to begin the question and answer session. Operator? Thank you. Ladies and gentlemen, at this time, if you would like to ask a question, remember it is Star followed by the number one on your touchtone keypad. Our first question for today comes from the line of Tim.

Operator: Session operator.

Tim: Thank you.

Operator: Ladies and gentlemen, at this time, if you would like to ask a question, remember, it is star followed by the number one on your touchtone keypad. Our first question for today comes from the line of Tim Moore with E. F. Hutton. Your line is live. Hi, everyone.

Speaker Change: Ladies and gentlemen at this time, if you would like to ask a question remember it is star followed by the number one on your Touchtone keypad.

Operator: Our first question for today comes from the line of Tim Moore with E S. Hudson.

Tim Moore: Your line is live.

Jesse Wilson: Hi, everyone. This is Jesse so Wilson on for Mark.

Tim Moore: Nice to see.

Tim Moore: So every quarter.

Tim Moore: See you guys disclose these annualized kpis, but would you be able to disclose the revenue contribution from board Dot org in the two months that it was part of your business last quarter as well as the cadence of the $13 1 million last year.

Tim Moore: So investors can calculate the organic revenue growth achieved and what is embedded into our guidance.

unknown: George S.E., those will be disclosed when we file the Q. There will be a bridge.

Tim Moore: George I think those will be disclosed when we file the Q there'll be a bridge.

Tim Moore: Okay, great. Thanks, taking my question.

Speaker Change: Thank you Matt.

unknown: Okay.

Operator: Our next question comes from the line of Matt VanVliet with BTIG. Your line is live.

Speaker Change: Our next question comes from the line of Matt Van Vliet with <unk>. Your line is live.

unknown: Yeah, good morning. Thanks for taking the question. Tim, you outlined a number of new initiatives, obviously mostly around AI and a number of these co-pilots, but how are you balancing the go-to-market approach internally of, you know, sort of more and more products and recently a somewhat reduced total force at the company and just sort of how you can keep everyone focused on selling the appropriate products in this current headcount?

Matthew David VanVliet: Hey, good morning, Thanks for taking the question.

unknown: Tim you outlined a number of new initiatives obviously.

unknown: Lay around AI and a number of these co pilots, but how.

unknown: Are you balancing the go to market approach.

unknown: Turn away of sort of more and more products.

unknown: And recently somewhat reduced.

unknown: Total force.

unknown: Company, and just sort of how you can keep everyone focused in selling the appropriate products.

unknown: <unk> current.

unknown: Joan.

Timothy Hwang: Yeah, well, why don't I start, and then I can have Josh kind of jump in afterwards as well. I think that from our perspective, what we view generative AI as... We're going product by product at the moment in deciding which product lines will need to have generative AI components embedded in their solutions to really deliver on the service versus which solutions we need to essentially serve essentially as a cross-sell or up-sell.

Tim: Yes, well why don't I start and then I can have Josh kind of jump in afterwards as well.

Timothy Hwang: I think that from our perspective, we view generative AI is essential to.

Timothy Hwang: Delivering for our customers on ongoing basis and so.

Timothy Hwang: We eventually expect that all of our customers will be using some form of generative AI, whether it's incremental to our existing products or embedded in our existing products and so we're going product by product at the moment and deciding which product lines will need to have generative AI components embedded in their solutions to really deliver.

Josh: On the service versus which solutions, we need to essentially sort of essentially the cross sell or upsell, but it's important to remember that it's all the same thing right. We're using the same data. We are developing these AI models on top of the same data that our customers are already subscribing to and trying to deliver incremental value.

Timothy Hwang: But it's important to remember that it's all the same thing, right? We're using the same data. We're developing these AI models on top of the same data that our customers are already subscribing to and trying to deliver incremental value, you know, from these solutions. So just to give you one example.

Timothy Hwang: From these solutions right. So just to go give you. One example.

Timothy Hwang: You might have one customer who subscribes to all of our legislative information, trying to understand legislative data around the country and around the world. You know, currently, what they're doing is they're exporting that information into an Excel spreadsheet and then manually, you know, creating these reports and whatnot internally. So the ability to add one-click report generation, for instance, is a tremendous value add for our existing customers. Now, whether we package that as a part of our existing solution or upsell that, I think they're sort of more tactical decisions, but obviously, we see it as a transition point from our existing product lines. But, Josh, I don't know if there's anything else you want to add on your end.

Timothy Hwang: You might have one customer who subscribes to all of our or legislative information trying to understand legislative data around the country around the world.

Timothy Hwang: Currently what Theyre doing is theyre exporting that information into an excel spreadsheet and then manually creating these reports and whatnot internally. So the ability to add one quick report generation for instance is a tremendous value add for our existing customers now whether we package that as a part of our existing solution or upsell that I think they're sort of.

Timothy Hwang: A more tactical decisions, but obviously, we see it as a transition point from our existing product lines.

Speaker Change: But josh on or if there's anything else you want you want to add on your end.

Timothy Hwang: Okay.

Joshua W. Resnik: Sure, Tim. Yeah, Matt, I can just add a little more to it. So, holistically, one way to think about it is that we've spent a lot of time refining our product portfolio overall, making sure that we're investing in the right products that are going to drive sustained and profitable growth. And as we layer in new product offerings, then we've created more room to be doing that because of that past refinement of the portfolio.

Josh: Sure Ken Yes, Matt I can just add a little more to it. So holistically one way to think about it is we've spent a lot of time refining our product portfolio overall, making sure that we're investing in the right products that are going to drive.

Joshua W. Resnik: Sustained and profitable growth and as we layer in new product offerings.

Joshua W. Resnik: Created ourselves more room to be doing that because of that past refinement of the portfolio.

Joshua W. Resnik: In addition, on the last call, I talked a lot about improvements that we've made over the past year in our commercial organization. As a result, we've been able to drive greater performance and productivity as we've restructured the teams and made other changes. So, that gives us greater capacity to do more, even as we've reduced our operating expenses over time. In addition, we're very focused now on the transformation of our overall product portfolio and shifting more to product-led growth, as Tim talked about. And that creates the opportunity to launch newer products, be it co-pilots, AI agents, or other products into the portfolio and be more efficient in terms of how we drive that go-to-market going forward.

Speaker Change: In addition on the last call I talked a lot about improvements that we've made over the past year to our commercial organization. So we've been able to drive greater performance and productivity.

Joshua W. Resnik: We've restructured the teams and made other changes so that gives us greater capacity to do more even as we reduced our operating expenses over time.

Joshua W. Resnik: In addition.

Joshua W. Resnik: We're very focused now on transformation of our overall product portfolio and shifting more to product led growth as Tim talked about and that creates the opportunity to be launching.

Joshua W. Resnik: Newer products there'll be co pilots AI agents or other products into the portfolio and be more efficient in terms of how we drive that go to market going forward.

Timothy Hwang: Okay, that was helpful. And then, you know, have you explored the opportunity to, given the advancements you've made around AI, and I think you're definitely on the leading edge here relative to a lot of other companies, but looking to go as more of a partner model, maybe even an embedded type of channel in larger technology stacks where you're powering a lot of the co-pilot features but aren't required to do all of the direct selling? What kind of opportunities do you think might be out there for that, and maybe what's holding you back from pursuing those?

Speaker Change: Okay helpful and then.

Joshua W. Resnik: Have you explored the opportunity to.

Timothy Hwang: Given given the advancements you've made around AI and I think you are definitely on the leading edge here relative to a lot of other companies, but looking to grow as more of a partner model, maybe even a embedded type of channel.

Timothy Hwang: In larger technology stacks, where you're powering.

Timothy Hwang: Out of the copilot features but arent required to do all of the direct selling.

Timothy Hwang: What kind of opportunities do you think might be out there for that and maybe what's holding you back from pursuing those.

Timothy Hwang: Yeah, so I mentioned in the comments that, you know, we've been approached by and have approached a number of players in the market essentially doing exactly that strategy. And so, you know, maybe I can sort of lay out two or three different types of partners that we're speaking to at the moment, one including existing and kind of new and upcoming large language modeling companies that have cut, you know, data licensing or similar deals, you know, in terms of embedding some of the solutions into their existing language models and the like.

Speaker Change: Yes, I mentioned in the comments that we have been approached and have approached a.

Timothy Hwang: A number of players in the market essentially doing exactly that strategy and so.

Timothy Hwang: Maybe I can sort of lay out two or three different types of partners that were speaking to at the moment.

Timothy Hwang: <unk>, including existing and kind.

Timothy Hwang: Kind of new and upcoming large language model companies that have cut data licensing or <unk>.

Timothy Hwang: Similar deals in terms of Mb.

Timothy Hwang: Embedding some of the solutions into their existing.

Timothy Hwang: Second, I would say these are sort of service companies. So these are companies that are going out there that are implementing generative AI within enterprises today that can leverage Fiscalnote's number of solutions that are out there. And then third, I would say, are sort of point solution companies or other information services providers that may want to leverage different parts of our technology stack to enhance their existing product offerings. We mentioned Stress Lens and earnings call transcript providers or PR agencies that are using our technologies for media training and others. So we're taking a fairly wide view here in terms of looking at embedding our solutions into other technology partners overall.

Timothy Hwang: Language models and the like.

Timothy Hwang: Second I would say are sort of service companies. These are companies are going out there that are implementing generative AI within enterprises today that can leverage physical number of solutions that are out there and then third I would say are sort of point solution companies.

Timothy Hwang: Our other information services providers that may want to leverage different parts of our technology stack.

Timothy Hwang: To enhance their existing product offerings. So we mentioned strep lens in earnings call transcript providers or PR agencies that are using our technologies for.

Timothy Hwang: Immediate training and others. So we're taking a fairly wide view here in terms of looking at embedding our solutions into other technology partners overall.

Jon A. Slabaugh: Okay, very helpful. And maybe one more, Jon, if I can, obviously, the sale of board.org is giving you a little bit more capital and flexibility, but, you know, the talk of this kind of creating a co-pilot creator that should accelerate product development, how is that impacting the kind of puts and takes around the M&A strategy as you look ahead over the next several years? Is there still a need to sort of buy into various markets? Or do you feel like you have the technology now that you can quickly get to market with new demand that's in the market?

Speaker Change: Okay very helpful and maybe one more if I can.

Jon A. Slabaugh: The sale of board Dot Org is giving you a little bit more capital and flexibility but.

Jon A. Slabaugh: Talk of this kind of.

Jon A. Slabaugh: Creating a copilot creator that should accelerate product development, how is that impacting kind of the puts and takes around the M&A strategy. As you look ahead over the next several years.

Jon A. Slabaugh: Is there still a need to sort of buy into various markets or do you feel like you have the technology now that you can.

Jon A. Slabaugh: Quickly get to market with new demand that's in the market.

Jon A. Slabaugh: Sure, Matt. I think that as we think about the M&A strategy, we've slowed down, but primarily that's had to do with those focusing on continuing to integrate the existing acquisitions or the previous acquisitions we made and continuing to drive opportunities there. But the market has a lot of consolidation opportunities for us to continue to integrate additional data sets that will be added to our overall value proposition down the road.

Jon: Sure, Matt I think that as we think about the M&A strategy, we've slowed down, but primarily that had to do with those.

Jon A. Slabaugh: Focusing on continuing to integrate the existing acquisitions of the previous acquisitions, we made in continuing to drive opportunities there, but the market has a lot of consolidation opportunities for us to continue to integrate additional datasets that will be additive to our overall value proposition down the road.

Jon A. Slabaugh: We're just kind of waiting for.

Jon A. Slabaugh: We're going to be looking at value relative to our own valuation right now.

Jon A. Slabaugh: And liquidity you're balancing.

Jon A. Slabaugh: And we're just going to be waiting for, you know, we're going to be looking at value relative to our own valuation right now and, you know, liquidity and balancing. Organic growth versus inorganic growth, but it's not, I think we will still continue to do acquisitions when the time is right.

Jon A. Slabaugh: Organic growth versus inorganic growth, but it's not I think we still will continue to do acquisition.

Jon A. Slabaugh: When the time is right.

Speaker Change: Okay. Thank you.

Speaker Change: Thanks for your questions.

Operator: Ladies and gentlemen, once again, if you do want to ask a question today, remember it's star followed by the number one on your touchtone telephone. Our next question is from the line of Zach Cummins with B Riley Securities. Your line is live.

Jon A. Slabaugh: Ladies and gentlemen, once again, if you do want to ask a question today remember at Star followed by the number one on your Touchtone telephone. Our next question is from the line of Zach Cummins with B Riley Securities. Your line is live.

unknown: Thanks. Good morning.

Zachary Cummins: Thanks, Good morning, Thanks for taking my questions.

unknown: Thanks for taking my questions. Tim, I really wanted to ask, Ram, what's giving you the confidence that we could see an acceleration in overall bookings in the second half of this year? Obviously, you've made a lot of changes in terms of the operational team. Just curious about what you're seeing in terms of pipelines and maybe just incremental conversations with larger enterprises on that side.

Zachary Cummins: Tim I really wanted to ask.

unknown: What's giving you the confidence that we can.

unknown: Could see an acceleration in overall bookings in the second half of this year, obviously, you've made a lot of changes in terms of the operational team.

unknown: Just curious of what Youre seeing in terms of pipelines and maybe just incremental conversations with.

unknown: Larger enterprises on that side.

Timothy Hwang: Yeah, I mean, we track our pipelines quite closely throughout the years, and so from our perspective, we are seeing the pipeline that we need to sort of, you know, see the acceleration that we want, particularly on the enterprise front. But I think, in combination with that, a lot of the changes that Joshua talked about, including, you know, the sales force realignments that we did last year, that are placing a lot more of a heavy focus on large enterprises, that, combined with the product enhancements and the bundling that we're talking about today, should drive the acceleration that we're looking for.

Ram: Yes, so I think that we track our pipeline is quite closely throughout the years.

Timothy Hwang: And so from our perspective, we are seeing.

Timothy Hwang: The pipeline that we need to sort of see the acceleration that we want particularly on the enterprise front, but I think in combination with that a lot of the changes that Josh talked about including.

Timothy Hwang: The sales force realignment that we did.

Timothy Hwang: Last year that are placing a lot more of a heavy focus on large enterprises that combined with.

Timothy Hwang: The product enhancements and the bundling that we're talking about today.

Timothy Hwang: Should drive the acceleration that were looking for it but in addition to that of course, there is a number of different initiatives inside the company that I laid out in the earnings call that we also see potential upside there as well so.

Timothy Hwang: But in addition to that, of course, there's a number of different initiatives inside the company that I laid out in the earnings call that we also sort of see potential upside there as well. So I guess, you know, Josh, do you want to kind of jump in here as well with some additional commentary? Sure.

Timothy Hwang: Josh do you want to kind of jump in here as well with them.

Joshua W. Resnik: Sure, Tim. Yeah, I mean, I'll just echo what Tim just said.

Timothy Hwang: Commentary.

Josh: Sure Tim Yes.

Josh: Just to Echo what Tim just said, we're seeing success, where we put in place. These go to market and commercial changes throughout the organization. So as we see them take root and we're seeing.

Joshua W. Resnik: We're seeing success where we've put in place these go-to-market and commercial changes throughout the organization. So, as we see them take root, we're seeing the benefits play out in different areas. And so, as I mentioned on the last call, where we have seen some of those that have been in place for some time, we put some more recently in place in Q4 last year that we have confidence will bear out in the second half of this year.

Joshua W. Resnik: The benefits play out in different areas and so as I mentioned on the last call.

Joshua W. Resnik: Where we have seen some of those that are in place for some time, we put some more recently in place in Q4 last year that we have confidence will bear out in the second half of this year. So we're we look very deepen the metrics, we're seeing that progress start to take place.

Joshua W. Resnik: So, when we look very deep in the metrics, we're seeing that progress start to take place. And then, just generally speaking, we're seeing good movement in terms of ACBs and the direction we want to see that go as well. And so, those, to us, are really good indicators of where we see the business heading in the second half of this year.

Joshua W. Resnik: And then we're seeing.

Joshua W. Resnik: Just generally speaking.

Joshua W. Resnik: Seeing good movement in terms of ACB in the direction, we want to see that go as well and so those to US are really good indicators of where we see the business heading in the second half of this year.

unknown: And my one follow-up question is just really around the adoption of your new AI products. I really appreciate the deep dive into all the new solutions that you're rolling out in the market. But outside of some large partners, it seems like... There's a great opportunity just to upsell some of these products to your existing enterprise base. So I'm just curious how you're thinking about monetization, whether it be from within that base or continuing to broaden outside of that.

Speaker Change: Understood and my one follow up is just really around adoption of your new AI products really appreciate the deep dive into all the new solutions that youre rolling out into the market but.

unknown: Outside of some large partner and it seems like there is a great opportunity to upsell. Some of these products to your existing enterprise base. So I'm just curious if how youre thinking about.

unknown: Monetization, whether it be from within that base are continuing to broaden outside of that.

Timothy Hwang: Yeah, so I think it just depends on the product line and what problems we're solving for customers. So, you know, we launched, for instance, our geopolitical co-pilot last week. And the expectation is that, you know, the rollout of the geopolitical co-pilot will be to existing customers first. And we do see that as being a tremendous value driver, not just in terms of driving new sales from a competitive perspective but also driving better retention rates.

Speaker Change: Yes, so I think it just depends on the product line and what problems that we're solving for customers. So we launched for instance, or geopolitical.

Timothy Hwang: Co pilot in the last week.

Timothy Hwang: And the expectation is that.

Timothy Hwang: The rollout of the geopolitical co pilot will be to existing customers first and we do see that as being a tremendous.

Timothy Hwang: Value driver not just in terms of driving new sales from a competitive perspective, but also driving better retention rates.

Timothy Hwang: That being said, I think, you know, when you look at other co-pilots like Stress Lens or our up and coming kind of product roadmap, which we'll probably talk about at our AI product day in the next couple of weeks, you know, we're taking, you know, in certain cases, choices to create incremental modules to kind of find those upsell opportunities. So we're sort of taking it out product by product based on figuring out if this is a retention play or not. Is this a new sales play? Is this an upsell and cross-sell play? And then trying to figure out the best pricing go-to-market model from that.

Timothy Hwang: That being said I think when you look at other copilot like stress lens or our up and coming kind of product roadmap, which we'll talk about probably at our AI product day in the next couple weeks.

Timothy Hwang: We're taking.

Timothy Hwang: Certain cases choices to create incremental modules to kind of find those upsell opportunities. So we're sort of taking on a product by product base and figuring out is this a retention play.

Timothy Hwang: Sales play is as an upsell and cross sell play and then trying to figure out the best pricing and go to market model from that.

unknown: Got it. Well, thanks for taking my questions and best of luck with the rest of the quarter. Thank you for your questions. Our next question comes from the line of Rudy Kessinger with DA Davidson. Your line is live.

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

Rudy Grayson Kessinger: Thank you for your questions.

Operator: Thank you for your questions. Our next question comes from the line of Rudy Kessinger with DA Davidson. Your line is live. Hey guys, this is Andres with Rudy. Good quarter overall. I just had a quick question.

unknown: Can you say it one more time? The line broke up a little bit, so I'm just asking about the total customer count, the subscription clients that were down 300, around 300. Just asking about how much of that came from the divestiture and how much was for something else, and if you could touch on that a little bit. Okay, I think that really relates to the board.org divestiture and the customers that were passed off to the buyer there. And we'll provide more details on that, like I said, in the queue when it gets filed.

Rudy Grayson Kessinger: Our next.

unknown: Question comes from the line of Rudy Kessinger with D. A Davidson your line is live.

Speaker Change: Hey, guys. This is <unk> for Rudy.

Speaker Change: Good quarter overall I just had a quick question.

unknown: Regarding the total subscription clients that were down three.

unknown: 300, each if you have any commentary about it.

unknown: Much of that came from the divestiture and how much was organic.

unknown: Yeah.

unknown: Can you can you say it one more time line broke up a little bit.

Speaker Change: To make sure I understood the question.

unknown: Yeah.

unknown: Yes, I'm, just asking about the federal customer gondola.

unknown: Christian clients at wireless down 300, Colorado, and 300, <unk> asking about how much of that came from that investor and how much was for something I was wondering if you could touch a little bit on that.

Speaker Change: Okay I think.

unknown: That really relates to the board Dot Org divestiture.

unknown: Were passed off to the buyer there and we will provide more details in that like I said in the.

unknown: In the Q when it gets filed.

Speaker Change: Okay. Thanks.

unknown: Okay.

Operator: Thank you for your question. Ladies and gentlemen, final call. If you do want to ask a question today, remember it's star one on your phone. We have another question from the line of Michael Latimore with Northland Capital Market. Your line is live.

Speaker Change: Thank you for your question and ladies and gentlemen final call. If you do want to ask a question say Remmert star one on your phone we have another question from the line of Mike Latimore with Northland capital market.

Michael James Latimore: Line is live.

unknown: Hi, this is Vijay Devar on behalf of Michael Latimore. So I believe you have briefly commented upon the strategic review that you prepared remarks, but if you could elaborate a little bit more on the types of options that you are considering to realize shareholder value. And at the same time, you have quantified the synergies that a strategist might consider.

Operator: Yeah, Hi, this is Vijay <unk> for Mike Latimore.

unknown: So I believe you have briefly touched upon the strategic review.

unknown: Our prepared remarks, but if you could.

unknown: And elaborate a little bit more on the types of options that you're considering to realize shareholder value.

unknown: And.

unknown: At the same time quantified the synergies that.

unknown: Our strategy might consider.

Timothy Hwang: Yeah, no, I appreciate the question. You know, at this time, we're not commenting further on the strategic review. I think the only thing that I would say is that, you know, we just divested an asset for seven times LTM ARR. And we've said pretty much consistently in every earnings call that we believe that the company is dramatically undervalued relative to peer comps, relative to transaction multiples that are going on currently in the marketplace, you know, relative to almost every major measure. And so our board sees that. I think we all see that. And we're prepared to, obviously, continue to review all options that are available to us to try and drive value for our shareholders. Mm-hmm. Okay.

Speaker Change: Yes, no I appreciate the question at this time, we're not commenting further on the strategic review.

unknown: Okay, great. And maybe I can sneak in a couple of other questions as well.

Timothy Hwang: I think the only thing that I would say is.

unknown: That we just divested in asset four seven times there are.

unknown: <unk> IRR and we said pretty much consistently in every earnings call that we believe that the company is dramatically undervalued relative to peer comps relative to.

unknown: Transaction multiples that are going on currently in the marketplace.

unknown: Relative to almost every every major measure and so our board sees that I think I think we all see that.

unknown: We're prepared to obviously continue to review all options that are available to us to try and drive value for our shareholders.

unknown: Okay, great and.

Speaker Change: Maybe I can sneak in a couple of other questions.

unknown: On the fifth cycles for new logos.

unknown: On the sales cycles for new logos, do you see them shrinking with co-pilots? And as well as, how do you come up with a sales cycle for the government versus enterprise? At CMW versus UPSYS, any kind of characterization of the sales cycle here will be helpful.

unknown: <unk>.

unknown: <unk> strength with co pilots and.

unknown: As well as the holiday sales.

unknown: The government process.

unknown: At the same time.

unknown: Lessons upset.

unknown: Kind of any characterization of upfront in the sales cycle.

unknown: Hum.

unknown: Yeah.

Joshua W. Resnik: Sorry, I just want to make sure. This is Josh. I just want to make sure I understood the question. This is a question about what we expect sales cycles to be for co-pilots, is that right?

unknown: Yeah.

unknown: Sorry, I just wanted to make sure. This is Jeff I just want to make sure I understood. The question. That's a good question about what we expect sales cycles to be for co pilots is that right.

unknown: Yes, at the same time, between the government and enterprise and new over the upsets, so any characterization around all these areas.

Speaker Change: Yes at the same time between the government and enterprise.

unknown: So any type of calculation.

unknown: These factors.

unknown: Factors.

Joshua W. Resnik: Sure, so generally speaking, in regards to co-pilots, as Tim mentioned, that's more of a product-led growth model, so you would see different sales cycles there than you would typically expect in something that might be a sales-led growth model and specifically focused on, say, enterprise and government. So you would expect to see, generally speaking, shorter sales cycles. The nature of those would depend on, you know, the kind of each product, the nature of the audience, and the type of engagement that you seek, but typically, for those, you'd see a model where someone has the opportunity to essentially try, you know, engage with the product in some way before they actually purchase it, and so it's a different kind of sales process and generally a more compressed sales cycle that you would expect to see. And I think the second part of the question related to the breakdown of sales cycles between government and enterprise. We typically don't break down the metrics to that degree.

unknown: Sure.

unknown: Generally so generally speaking.

Joshua W. Resnik: In regards to co pilot.

Joshua W. Resnik: Tim mentioned Thats more of a product led growth model. So you would see.

Joshua W. Resnik: Different sales cycles, there than you would typically expect in something that might be a sales led growth model and specifically focused on state enterprise and government. So you would expect to see.

Joshua W. Resnik: Generally speaking shorter sales cycles, the nature of those would depend on kind of each product in nature of the audience and the type of engagement that you seek but typically those you'd see a model where someone has the opportunity to essentially try and engage.

Joshua W. Resnik: Engaged with the product in some way before the <unk>.

Joshua W. Resnik: Actually purchase and different nature of sales process and generally a more compressed sales cycle that you would expect to see.

Joshua W. Resnik: And I think the second part of the question related to breakdown of sales cycle between government and enterprise, we typically don't breakdown the metrics to that degree.

unknown: Okay, yeah, that should be helpful for me. Thank you.

Speaker Change: Okay. That's really helpful. Thank you.

Operator: Thank you for your questions. Ladies and gentlemen, that will conclude our question and answer session here for today. I would like to turn it over back to Mr. Hwang for any closing comments.

unknown: Thank you for your questions, ladies and gentlemen that will conclude our question and answer session here for today I would like to turn it over back to Mr. Hong for any closing comments.

Timothy Hwang: Great. Thank you everybody for joining the call. As mentioned, we have an upcoming AI product day and some additional materials online for people to take a look at. So, appreciate everybody jumping on. And if there are any additional questions, feel free to reach out. Thank you very much.

Hwang: Great. Thank you everybody for joining the call as mentioned, we have an upcoming AI product day in some additional materials online for people take a look at so I appreciate everybody jumping on and if there are any additional questions feel free to reach out. Thank you very much.

Operator: Thank you, and ladies and gentlemen, that will conclude today's Fiscal Note First Quarter 2024 Financial Resorts Confidence Call. Have a great day.

Speaker Change: Thank you and ladies and gentlemen that will conclude today's fiscal first quarter of 2024 financial results conference call have a great day.

Operator: Talk to you later.

Operator: [music].

Operator: Sure.

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Operator: Yeah.

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