Q1 2025 FiscalNote Holdings Inc Earnings Call
Good evening My name is Pam and I will be conference operator today at this time I would like to welcome everyone to the fiscal Noah Holdings incorporated first quarter 'twenty 25 financial results Conference call.
Pam: My name is Pam, and I will be your conference operator today.
Pam: At this time, I would like to welcome everyone to the Fiscal Note Holdings Incorporated first quarter 2025 financial results conference call. All lines have been placed on mute to prevent any background noise.
All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session.
Pam: After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press the pound key. Thank you.
If you would like to ask a question. During this time simply press star followed by the number one on your telephone keypad. If he would like to withdraw your question press the pound key.
Bob Burrows: With that, I would now like to turn it over to the company to begin the conference. Good evening. My name is Bob Burrows, Investor Relations for Fiscal Note, and we are pleased you all could join us.
With that I would now like to turn it over to the company to begin the conference.
Bob Burrows: Good evening My name is Bob Burrows Investor Relations for first one out in your please you all could join US for the purpose of today's call to discuss fiscal notes first quarter 2025 financial results and guidance for both the full year and second quarter of 2025.
Bob Burrows: The purpose of today's call is to discuss Fiscal Note's first quarter 2025 financial results and guidance for both the full year and second quarter of 2025. Joining me with prepared comments are Josh Resnik, CEO and President, and Jon Slabaugh, CFO and Chief Investment Officer. Other members of the senior management team will be available as needed during the Q&A session that will follow these prepared comments.
Speaker Change: Joining me with prepared comments are Josh Resnick, CEO, and President and John Slaybaugh, CFO and Chief investment Officer. Other members of the senior management team will be available as needed during the Q&A session that will follow these prepared comments. Please.
Bob Burrows: Please note, today's press release and related current report on Form 8K are available on the company website. In terms of important housekeeping, please take note of 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 statement.
Speaker Change: Please note today's press release and related current report on form 8-K oar available on the company website.
Speaker Change: In terms of important housekeeping. Please take note of the following.
Speaker Change: During this call we may make certain statements related to our business that are forward looking statements under federal Securities laws.
Speaker Change: 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 statements 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.
Bob Burrows: For 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, please refer to our SEC filings, which are available either on our company website or the Securities and Exchange Commission's EDGAR system.
Speaker Change: In today's earnings release, please refer to our SEC filings, which are available either on our company website or the securities and exchange Commission's Edgar system.
Bob Burrows: Additionally, non-GAAP financial measures will be discussed on this conference call. Please refer to the tables in our earnings release or the updated version of the corporate overview presentation, 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.
Speaker Change: Additionally, non-GAAP financial measures will be discussed on this conference call. Please refer to the tables in our earnings release or the updated version of the corporate overview presentation, 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 Burrows: Finally, we use Key Performance Indicators, or KPIs, in evaluating the performance of our business. These include Annual Recurring Revenue or ARR and Net Revenue Retention or NRRR. Once again, I refer you to the earnings release or the updated corporate deck for definitions of these important metrics.
Speaker Change: Finally, we use key performance indicators or kpis in evaluating the performance of our business.
Speaker Change: These include annual recurring revenue or <unk> and.
Speaker Change: Net revenue retention or an ror once again I refer you to the earnings release or the updated corporate deck for definitions of these important metrics and with that I'd like to turn the call over to physical notes CEO and President Josh Resnick Josh.
Joshua Resnik: And with that, I'd like to turn the call over to Fiscal Notes CEO and President, Josh Resnik. Thank you, Bob, for that introduction. And thank you to everyone joining us this evening. I'm pleased to be here to provide key updates on Fiscal Note, including our first quarter 2025 financial results and insights on what lies ahead. We're maintaining the disciplined approach we established last quarter, staying focused on managing the business with clarity and rigor. As the business evolves, our core pillars remain unchanged. even as we shift emphasis between them to best support our growth and overall performance.
Josh Resnick: Thank you Bob for that introduction and.
Josh Resnick: And thank you to everyone joining us this evening.
Josh Resnick: I'm pleased to be here to provide key updates on physical now, including our first quarter 2025 financial results and insights on what lies ahead.
Josh Resnick: We're maintaining the disciplined approach, we established last quarter staying focused on managing the business with clarity and rigor as.
Josh Resnick: As the business evolves, our core pillars remain unchanged.
Josh Resnick: Even as we shift emphasis between them to best support our growth and overall performance.
Joshua Resnik: As a reminder, we are guided by three key objectives. One. Consistent and rapid expansion of adjusted EBITDA margins. Two. prudent management of debt and a sustained acceleration towards positive free cash flow. And three, building a resilient foundation for profitable, durable growth. Let me walk you through where we stand on each. First, regarding adjusted EBITDA, we are pleased to report adjusted EBITDA of $2.8 million in the first quarter of this year, exceeding expectations. Our continued focus on streamlining the business, prioritizing initiatives that are primed for sustainable growth and driving efficiency across the organization is improving operating leverage and driving expanded adjusted EBITDA margins and adjusted EBITDA.
Josh Resnick: As a reminder, we are guided by three key objectives.
One <unk>.
Josh Resnick: Consistent and rapid expansion of adjusted EBITDA margins.
Josh Resnick: Two.
Josh Resnick: Prudent management of debt and a sustained acceleration towards positive free cash flow.
Josh Resnick: And three.
Building, a resilient foundation for profitable durable growth.
Josh Resnick: Let me walk you through where we stand on each.
Josh Resnick: First regarding adjusted EBITDA. We are pleased to report adjusted EBITDA of $2 $8 million in the first quarter of this year exceeding expectations.
Josh Resnick: Our continued focus on streamlining the business.
Josh Resnick: Prioritizing initiatives that are primed for sustainable growth and driving efficiency across the organization and improving operating leverage and driving expanded adjusted EBITDA margins and adjusted EBITDA.
Joshua Resnik: Notably, our adjusted EBITDA margin in Q1 was 10%, as compared with 4% for the same period one year earlier. These consistent gains reflect our disciplined, steadfast approach and we expect to consistently grow adjusted EBITDA over time. Second, on managing our debt and accelerating the path to positive free cash flow. Achieving sustainable free cash flow is a top priority, and we are fully committed to reaching that goal consistently and reliably, just as we've done with Adjusted EBITDA. In addition to our operational improvements, we've made deleveraging a central focus, reducing our senior term loans by $96 million since December 31, 2023.
Josh Resnick: Notably our adjusted EBITDA margin in Q1 was 10% as compared with 4% for the same period one year earlier.
Josh Resnick: These consistent gains reflect our disciplined steadfast approach and we expect to consistently grow adjusted EBITDA over time.
Josh Resnick: Second on managing our debt and accelerating the path to positive free cash flow.
Josh Resnick: Achieving sustainable free cash flow is a top priority and we are fully committed to reaching that goal consistently and reliably just as we've done with adjusted EBITDA.
Josh Resnick: In addition to our operational improvements we've made deleveraging our central focus reducing our senior term loan by $96 million since December 31 2023.
Joshua Resnik: As a result, our cash interest expense has declined from $5 million per quarter to $2 million. The combined impact of greater efficiency and significant debt reduction is propelling us rapidly towards positive screen cash. for the 12 months ending March 31, 2025, as compared with the same period two years earlier. We have improved trailing 12-month free cash flow by more than $70 million. This has been a steady improvement regardless of circumstance. And as a result, positive free cash flow is within reach.
Josh Resnick: As a result, our cash interest expense has declined from $5 million per quarter to $2 million.
Josh Resnick: The combined impact of greater efficiency and significant debt reduction is propelling us rapidly towards positive free cash flow for.
Josh Resnick: For the 12 months ending March 31, 2025, as compared with the same period two years earlier.
Josh Resnick: Improved trailing 12 month free cash flow by more than $70 million.
Josh Resnick: This has been a steady improvement regardless of circumstance and as a result positive free cash flow is within reach.
Joshua Resnik: The third pillar, growth, is where we're in the midst of a meaningful transition. I'll briefly recap where we've been, explain where we are now, and highlight what that means for where we're going. And as I did last quarter, I'll also provide more context and metrics to show what's driving our outlook and why we remain confident in future growth despite recent challenges. Q1 results tell two stories. We beat revenue expectations for the quarter with $27.5 million. However, as anticipated, we have not yet resumed ARR growth. I want to be clear, we are reaffirming our full year revenue guidance.
Josh Resnick: The third pillar growth is where we are in the midst of a meaningful transition all.
Josh Resnick: I'll briefly recap, where we've been explain where we are now and highlight what that means for where we're going.
Josh Resnick: And as I did last quarter I'll also provide more context on metrics to show, what's driving our outlook and why we remain confident in future growth. Despite recent challenges.
Josh Resnick: Q1 results tell two stores.
Josh Resnick: We beat revenue expectations for the quarter with $27 5 million. However, as anticipated we have not yet resumed air Arco.
Josh Resnick: I want to be clear, we are reaffirming our full year revenue guidance.
Joshua Resnik: As we've said before, the first half of 2025 was expected to be a period of transition. Two months ago, on our 2024 year-end call, I explained that our guidance for full year 2025 reflected a slow start to the year, partly due to execution shortfalls at the end of 2024. So it's no surprise to see this reflected in our Q1 ARR. On that same call, I also shared that we had taken swift action and implemented key management Since then, hands-on leadership has driven real progress, particularly in better pipeline development and operational focus. Pipeline grew notably in Q1 following these changes and that momentum has accelerated significantly over the past 10 weeks.
Josh Resnick: As we've said before the first half of 2025 was expected to be a period of transition.
Josh Resnick: Two months ago on our 2020 for yearend call I explained that our guidance for full year 2025 reflected a slow start to the year, partly due to execution shortfalls at the end of 2024.
Josh Resnick: So it's no surprise to see this reflected in our Q1 <unk>.
Josh Resnick: On that same call I also shared that we had taken swift action and implemented key management changes.
Josh Resnick: Since then <unk>.
Josh Resnick: On leadership has driven real progress, particularly in better pipeline development and operational focus.
Josh Resnick: Pipeline grew notably in Q1, following these changes and that momentum has accelerated significantly over the past 10 weeks.
Joshua Resnik: I'll point to a couple of interesting highlights within that. First, as I noted in March, inbound demand has been strong. In Q1, total inbound pipeline rose 20 percent compared to the same period last year, driven by intensifying regulatory complexity and strong interest in policy. Second, we're seeing strong traction in Europe, where targeted investments and management changes helped us double pipeline creation in Q1 compared to the same period in 2024. Of course, that pipeline needs to move through the funnel and convert, and that takes time. But these are clear, encouraging signs for the trajectory of the business.
Josh Resnick: I'll point to a couple of interesting highlights within that.
Josh Resnick: First as I noted in March inbound demand has been strong.
Josh Resnick: Q1, total inbound pipeline rose, 20% compared to the same period last year, driven by intensifying regulatory complexity and strong interest in policy now.
Second we're seeing strong traction in Europe, where targeted investments and management changes helped us double pipeline creation in Q1 compared to the same period in 2024.
Josh Resnick: Of course, the pipeline needs to move through the funnel and convert and that takes time.
Josh Resnick: But these are clear encouraging signs for the trajectory of the business.
Joshua Resnik: Moreover, the work we're doing to accelerate product innovation will support conversion and retention over time. To that point, we remain extremely confident in the strength of the new PolicyNote platform and in how our commitment to product-led growth is shaping how we operate. to publicly announce policy notes in January. With PolicyNotes, we're not simply iterating, we'll be fundamentally transforming the user experience by consolidating our global to local data, proprietary insights, and AI into one powerful platform. The response so far has been exciting, and we're already seeing a clear, positive impact on the user experience. As an example, for an initial cohort of highly at-risk customers that we migrated from our legacy platforms, engagement levels have increased significantly.
Josh Resnick: Moreover, the work, we're doing to accelerate product innovation.
Josh Resnick: Support conversion and retention over time.
Josh Resnick: To that point, we remain extremely confident in the strength of the new policy No platform and then how our commitment to product led growth is shaping how we operate.
Josh Resnick: We publicly announced policy note in January.
Josh Resnick: With policy note, we're not simply Iterating will be fundamentally transforming the user experience by consolidating our global to local data proprietary insights and AI into one powerful platform.
Josh Resnick: The response, so far has been exciting and we're already seeing a clear positive impact on the user experience.
Josh Resnick: As an example, or an initial cohort of highly at risk customers that migrated from our legacy platforms engagement levels have increased significantly.
Joshua Resnik: Seventy-five percent of those accounts are now healthy in light of significantly higher levels of activity, and more than a third are what we consider power users. Beyond that cohort, I also want to offer a deeper look at how we evaluate usage across all. For instance, we track how frequently customers are using the platform to get the core information. One key metric here is search frequency, how often users are actively searching for information. And we're seeing results that not only surpass our legacy platforms, but also exceed or meet relevant industry benchmarks. We also look at how effectively the platform moves beyond information and into insight.
Josh Resnick: 75% of those accounts are now healthy in light of significantly higher levels of activity and more than a third of what we consider power users.
Josh Resnick: Beyond that cohort I also want to offer a deeper look at how we evaluate usage across all accounts.
Josh Resnick: We track how frequently customers are using the platform to get the core information they need one.
One key metric here is search frequency, how often users are actively searching for information and we're seeing results that not only surpassed our legacy platforms, but also exceed or meet relevant industry benchmarks.
Josh Resnick: We also look at how effectively the platform moves beyond information and insights.
Joshua Resnik: This includes tracking how customers engage with our AI tools to derive deeper insights. And again, we're seeing strong adoption and very high levels of activity. We closely monitor these and many other metrics in great depth. While there's a limit to the level of detail I can offer in the context of today's call, I wanted to highlight how we think about engagement and the type of results that we're seeing, because these are very promising signals, and these behaviors are critical drivers of long-term retention and renewal. as encouraging as our usage data.
Josh Resnick: This includes tracking how customers engage with our AI tools to derive deeper insights and again, we're seeing strong adoption and very high levels of activity.
We closely monitor these and many other metrics and great gaps.
Josh Resnick: While there is a limit to the level of detail I can offer in the context of today's call I wanted to highlight how we think about engagement and the type of results that we're seeing because these are very promising signal and Neath behaviors are critical drivers of long term retention and renewals.
Josh Resnick: It is encouraging as our usage data.
Joshua Resnik: The product-led transformation at Fiscalnote extends well beyond the engagement that We've meaningfully accelerated our pace of innovation. Consistently rolling out new features and enhancements that improve the user experience and expand the value of the platform. Since launching PolicyNote, we've rolled out numerous additional enhancements and 15 major new features, including an executive orders widget with automated AI-powered insights. Intelligent Alert Manager. a Bill Similarity Algorithm, and more. This is integral to how our product and engineering teams are now operating under new leadership. increasing productivity, re-architecting sprint structures, and implementing and tracking key velocity metrics. This pace of innovation is critical.
Josh Resnick: The product led transformation at <unk>.
Josh Resnick: <unk> well beyond the engagement metrics.
Josh Resnick: We have meaningfully accelerated our pace of innovation.
Josh Resnick: Consistently rolling out new features and enhancements that improve the user experience and expand the value of the platform.
Josh Resnick: Since launching policy now we've rolled out numerous additional enhancements and 15 major new features including an executive orders widget with automated AI powered insights Intel.
Josh Resnick: Intelligent alert management.
Josh Resnick: Bill similarity algorithm and more.
Josh Resnick: This is integral to how our product and engineering teams are now operating under new leadership.
Josh Resnick: Increasing productivity re architected sprint structures, and implementing and tracking key velocity metrics.
Josh Resnick: This pace of innovation is critical.
Joshua Resnik: It demonstrates to customers and prospects that PolicyNote is not only powerful, but it's evolving quickly to meet their needs in the midst of a rapidly changing environment. Here's a clear example. On April 2nd, President Trump announced sweeping tariffs with significant implications for global trade. Organizations of all types and sizes needed a way to assess the ramifications and respond. Just two weeks later, on April 16th, we launched a new tariff tracker in PolicyNote, enabling customers to identify, understand, and manage the business impact. That's an exceptionally fast turnaround for a feature of this complexity and importance. Equally important, this level of execution extends beyond product and engineering.
Josh Resnick: Demonstrates to customers and prospects that policy note is not only powerful but it's evolving quickly to meet their needs in the midst of a rapidly changing environment.
Josh Resnick: Here's a clear example.
Josh Resnick: On April 2nd President Trump announced sweeping tariffs with significant implications for global trade.
Josh Resnick: Organizations of all types and sizes needed a way to assess the ramifications and response is.
Josh Resnick: Two weeks later on April 16, we launched a new tariff tracker and policy note.
Josh Resnick: Enabling customers to identify understand and manage the business impact.
Josh Resnick: That's an exceptionally fast turnaround for a feature of this complexity and importance.
Josh Resnick: Equally important this level of execution extends beyond product and engineering it reflects tighter more aligned execution across the business.
Joshua Resnik: It reflects tighter, more aligned execution across the business. Our go-to-market teams were fully in sync with product, and on the very day we launched the tariff tracker, they set nearly 200 meetings and generated close to a million dollars in new pipelines, which already is turning into new wins. This is how we will drive growth. Consistent, high-velocity product innovation paired with disciplined, high-impact, go-to-market execution. We're encouraged by the engagement we're seeing with PolicyNote and, more broadly, by the tangible impact of our accelerated pace of innovation. A strong indicator of customer confidence is the growing volume of multi-year Clients won't commit to multi-year contracts unless they have conviction in the quality of the insights, the strength of the platform, and the credibility of the product roadmap.
Josh Resnick: Our go to market teams were fully in sync with product and on the very day, we launched the tariff tracker, Hey, set nearly 200 meetings and generated close to $1 million and new pipeline, which already is turning into new wins.
Josh Resnick: This is how we will drive growth in <unk>.
Josh Resnick: <unk> high velocity product innovation paired with disciplined high impact go to market execution.
Josh Resnick: We're encouraged by the engagement, we're seeing with policy now and more broadly by the tangible impact of our accelerated pace of innovation.
Josh Resnick: A strong indicator of customer confidence is the growing volume of multiyear deals.
Josh Resnick: Clients won't commit to multiyear contracts unless they have conviction and the quality of the insights.
Josh Resnick: Strength of the platform and the credibility of the product roadmap.
Joshua Resnik: in Q1, even in the midst of a volatile economic environment. New corporate customers committed to multi-year agreements for our policy insights at more than double the rate of a year ago, as measured by ARR. Mathematically, this will have a direct impact on gross retention and revenue in 2026. Beyond that, it's a clear signal of trust, not just in what we've built today, but in our ability to keep delivering meaningful innovation in the long run.
Josh Resnick: In Q1, even in the midst of a volatile economic environment.
Josh Resnick: New corporate customers committed to multiyear agreements for our policy insight at more than double the rate of a year ago as measured by <unk>.
Josh Resnick: Mathematically this will have a direct impact on gross retention and revenue in 2026.
Josh Resnick: Beyond that it's a clear signal of trust not just in what we've built today.
And our ability to keep delivering meaningful innovation in the long run.
Joshua Resnik: In summary, we continue to excel at the operational discipline that has driven consistent growth in adjusted EBITDA. accelerated our path to positive free cash flow and laid the groundwork for sustained growth in the future. Where stronger execution has been needed, we've acted decisively, and the improvements are already taking hold. We're thrilled with the progress with PolicyNote, the rapid acceleration of product innovation, and our success in translating that into real commercial momentum. These are the building blocks of long-term success. We are reaffirming our full-year guidance, even notwithstanding our latest asset sale, because we see clear progress and have strong conviction in our execution.
Josh Resnick: In summary, we continue to excel at the operational discipline that has driven consistent growth in adjusted EBITDA.
Josh Resnick: Salaries, and our path to positive free cash flow and laid the groundwork for sustained growth in the future.
Josh Resnick: We're stronger execution has been needed we've acted decisively and the improvements are already taking hold.
Josh Resnick: We're thrilled with the progress with policy now the rapid acceleration of product innovation and our success in translating that into real commercial momentum.
Josh Resnick: These are the building blocks of long term success.
Josh Resnick: We are reaffirming our full year guidance, even notwithstanding our latest asset sale.
Josh Resnick: We see clear progress and have strong conviction in our execution.
Joshua Resnik: Looking beyond this year, I remain deeply confident in the future we're building at Fiscalnote.
Josh Resnick: Looking beyond this year I remain deeply confident in the future we're building at fiscal now.
Jon Slabaugh: With that, I'll turn the call over to Jon to take us through our Q1 2025 financial results. Jon. Thank you, Josh. Good evening. Thank you for joining Fiscal Note's first quarter 2025 conference call. As Josh mentioned, we're pleased to announce that we exceeded both our revenue and adjusted EBITDA guidance for the quarter. Let me dive into some of the key drivers behind our performance. Total revenue for Q1 2025 was $27.5 million, above our forecast of $26 to $27 million. When compared to the prior year, revenue was $4 million lower, primarily due to the divestiture of Board.org and ASIL in 2024.
Josh Resnick: With that I will turn the call over to John to take us through our Q1 2025 financial results John.
John Slaybaugh: Thank you Josh good evening and thank you for joining physical notes first quarter 2025 conference call as Josh mentioned, we're pleased to announce that we exceeded both our revenue and adjusted EBITDA guidance for the quarter, Let me dive into some of the key drivers behind our performance.
John Slaybaugh: Total revenue for Q1, 2025 was $27 $5 million above our forecast of 26% to $27 million when compared to the prior year revenue was $4 million lower primarily due to the divestiture of board Dot Org in April in 2024.
Jon Slabaugh: Subscription revenue remains the cornerstone of our business. It accounted for 92 percent of our total in-quarter revenue, consistent with our historical trends. Our focus on the core policy business, together with the launch of the Migration to Policy Note, should help maintain these high contributions from subscription revenues going forward. Turning to our key performance metrics, as of Q1 2025, annual recurring revenue is $88 million versus $94 million in 2024 on a pro forma basis after adjusting for the impact of the ASIL, Board.org, Oxford Analytica, and Dragonfly divestiture. As Josh said previously, we expect PolicyNote to have a meaningful, positive impact on 2025 as it unfolds.
John Slaybaugh: Revenue remains the cornerstone of our business.
John Slaybaugh: Accounted for 92% of our total in quarter revenue consistent with our historical trends.
John Slaybaugh: Our focus on the core policy business together with the launch of the migration to policymakers should help maintain these high contributions from subscription revenues going forward.
John Slaybaugh: Turning to our key performance metrics as of Q1 2025 annual recurring revenue was $88 million versus $94 million in 2024 on a pro forma basis after adjusting for the impact.
John Slaybaugh: Awesome or downward, Oxford analytics dragonfly divestitures as Josh said previously we expect policy to have a meaningful positive impact on 2025 as it unfolds.
Jon Slabaugh: We are planning for AR growth from this level in the second half of 2025. For the first quarter of 2025, net revenue retention was 93% versus 96% in the prior year. While a disappointing outcome, it reflects the underperformance at the end of 2024 that we have previously discussed and believe have addressed going forward. We remain focused on improving this important metric over time through continued product innovation. Principal operating expenses in Q1 2025 continued the trend of year-over-year decreases, reflecting the continuing benefits of ongoing efficiency measures initiated in 2023, advanced in 2024, and continuing into 2025.
John Slaybaugh: We are planning for growth from this level in the second half of 2025.
John Slaybaugh: For the first quarter 2025, net revenue retention was 93% versus 96% in the prior year, while a disappointing outcome. It reflects the underperformance of the end of 2020 floor that we have previously discussed and believe has address going forward.
John Slaybaugh: We remain focused on improving this important metric over time through continued product innovation.
John Slaybaugh: Principal operating expenses in Q1, 2025 continued the trend of year over year decreases reflecting the continuing benefits of ongoing efficiency measures initiated in 2023 advanced in 2024 and continuing into 2025.
Jon Slabaugh: We also realized cost savings following the 2024 divestiture of Board.org and ASIL, and anticipate realizing further cost savings in 2025 from the Oxford and Dragonflight divestiture. We also realized additional savings from sunsetting a few additional non-core products. Factoring in the impact of those various initiatives, Q1 2025 cost of revenues decreased by $200,000 or 3% versus prior year. R&D decreased by $400,000 or 11%. And sales and marketing decreased by $1.6 million or 18%. As for G&A, while we saw a slight increase of $200,000 or 1%, it's important to point out that approximately $3 million of non-cash M&A related costs were recorded in G&A during the quarter.
John Slaybaugh: Realized cost savings following the 2020 for divestiture of Borgata organism.
John Slaybaugh: Anticipate realizing further cost savings in 2025.
John Slaybaugh: From the Oxford and Dragonfly divestitures, we also realized additional savings from sunsetting, a few additional non core products.
John Slaybaugh: Factoring in the impact of those various initiatives Q1, 2025 cost of revenues decreased by $200000 or 3% versus prior year.
John Slaybaugh: R&D decreased by $400000 or 11% and sales and marketing decreased by $1 6 million or 18%.
John Slaybaugh: As for G&A, while we saw a slight increase of $200000 or 1%. It's important to point out that approximately $3 million of noncash M&A related costs were recorded in G&A during the quarter. Excluding these one time noncash items G&A would have reflected a reduction.
Jon Slabaugh: Excluding these one-time non-cash items, G&A would have reflected a reduction. Taken together, total Q1 2025 operating expenses fell by $2.3 million, or 5% versus the prior year. On a pro forma basis, excluding non-cash charges and the impact of the 2024 divestitures, OPEX decreased by approximately $4 million, or 14%. Gross margins in Q1 2025 was 75%, 200 basis points lower than prior year on a gap basis, primarily due to sunset products in the quarter and higher amortization expenses related to the new policy note platform. Adjusted gross margins improved to 87% in Q1 2025 as compared to 85% in the prior comparable quarter.
John Slaybaugh: Taken together total Q1, 2025 operating expenses fell by $2 3 million or 5% versus the prior year on a pro forma basis, excluding noncash charges and the impact of the 2024 divestitures opex decreased by approximately $4 million or 14%.
Gross margins in Q1, 2025 was 75% 200 basis points lower than prior year on a GAAP basis, primarily due to sunset products in the quarter and higher amortization expenses related to the new policy node platform adjust.
John Slaybaugh: Adjusted gross margins improved to 87% in Q1, 2025 as compared to 85% in the prior comparable quarter.
Jon Slabaugh: The gap net loss for Q1 2025 was $4.3 million and not meaningfully comparative to prior year due in part to the large board.org gain on sale recognizing Q1 of 2024. Adjusted EBITDA was a positive $2.8 million, higher than the prior year, above our guidance of approximately $2 million in the seventh consecutive quarter of positive performance for this important profitability metric. The improvement to adjusted EBITDA, even after the pro forma impact of the divestiture of Board.org and ASIL, is the result of actions we've taken to improve operating efficiency. streamline the product portfolio and reduce the overall cost structure of the business.
John Slaybaugh: The GAAP net loss for Q1, 2025 was $4 $3 million.
John Slaybaugh: Not meaningfully comparisons to prior year due in part to the large board dot or gain on sale recognized in Q1 of 2024.
John Slaybaugh: Adjusted EBITDA was a positive $2 $8 million higher than the prior year above our guidance of approximately $2 million and the seventh consecutive quarter of positive performance for this important profitability metrics.
John Slaybaugh: The improvement to adjusted EBITDA, even after the pro forma impact of the divestiture of board Dot organism is the result of actions we've taken to improve operating efficiency streamline the product portfolio and reduce the overall cost structure of the business.
Jon Slabaugh: In the coming quarters, we will continue to focus on increasing operating leverage and realizing additional efficiencies across the business while steadily expanding the top line to our product-led revenue strategy that we just initiated this quarter. Cash and cash equivalents, including short-term investments at the end of Q1 2025 were $46.9 million. This is an increase over both prior year and year-end 2024 balances driven primarily to the influx of cash stemming from seasonality and the Oxford Analytica and Dragonfly divestiture, which closed on March 31st. In Q1, we continued reducing overall indebtedness and ended the quarter with a senior term loan balance of $62 million versus the year-end 2024 balance of $89 million, a significant reduction in one reflecting our commitment to de-lever the capital through a deliberate and targeted campaign to simplify the product mix and focus on our core 4,000 top-tier customers across the globe.
John Slaybaugh: The coming quarters, we will continue to focus on increasing operating leverage and realizing additional efficiencies across the business while steadily expanding the top line to a product led revenue strategy, where we just initiated this quarter.
John Slaybaugh: Cash and cash equivalents, including short term investments at the end of Q1 2025 were $46 $9 million.
John Slaybaugh: This is an increase over both prior year and year end 2024 balances driven primarily to the influx of cash stemming from seasonality in the Oxford analytic and dragonfly divestiture, which closed on March 31.
John Slaybaugh: In Q1, we continued reducing overall indebtedness and ended the quarter with a senior term loan balance of $62 million.
John Slaybaugh: Versus the year end 2020 for balance of $89 million.
John Slaybaugh: A significant reduction in one reflecting our commitment to delever the capital structure through a deliberate and targeted campaign to simplify the product mix and focus on our core 4000 top tier customers across the globe.
Jon Slabaugh: The senior term loan will be further reduced by the recently announced sale of our Australian-based subsidiary, TideBase.
John Slaybaugh: On your term loan will be further reduced by the recently announced sale of our Australian based subsidiary tied base.
Jon Slabaugh: Finally, let me provide guidance. We are reaffirming our full year 2025 revenue forecast in the range of $94 to $100 million, and adjusted EBITDA in the range of $10 to $12 million. As Josh referenced, we are not making reductions to our guidance as the result of the pending sale of our Australian subsidiary. This speaks to the resilience of our streamlined and effective operating model and product-led growth strategy. And for continued pacing across the year, we are forecasting second quarter 2025 revenues in the range of $22 to $24 million and adjusted EBITDA of approximately $2 million.
John Slaybaugh: Finally, let me provide guidance we are reaffirming our full year 2025 revenue forecast in the range of $94 million to $100 million.
John Slaybaugh: And adjusted EBITDA in the range of $10 million to $12 million as Josh referenced.
John Slaybaugh: We're not making reductions to our guidance is the result of the pending sale of our Australian subsidiary.
John Slaybaugh: This speaks to the resilience of our streamlined and effective operating model and product led growth strategy.
And for continued pacing across the year, we are forecasting second quarter 2025 revenues in the range of $22 million to $24 million.
John Slaybaugh: And adjusted EBITDA of approximately $2 million.
Jon Slabaugh: In summary, our business continues to reflect increasing strength and resilience. Our streamlined and disciplined operating plan is focused on innovation that will become increasingly valuable to our customers in navigating today's complex political landscape. As we continue to drive to stabilize the business and return to a path of sustainable growth and customer retention, we're also working to expand operating leverage and therefore adjust the EBITDA, both in absolute dollars and on a margin basis. Finally, we continue our efforts to prudently manage our cash by controlling CAPEX, reducing cash interest expense, and managing operating expenses. all in pursuit of accelerating the path to positive free cash flow and sustainable growth.
John Slaybaugh: In summary, our business continues to reflect increasing strength and resilience.
John Slaybaugh: Our streamline and disciplined operating plan is focused on innovation, there will become increasingly valuable to our customers.
John Slaybaugh: NAV gating today's complex political landscape.
John Slaybaugh: As we continue to drive to stabilize the business return to a path of sustainable growth and customer retention. We are also working to expand the operating leverage and therefore adjusted EBITDA, both in absolute dollars and on a margin basis.
John Slaybaugh: Finally, we continue our efforts to prudently manage our cash by controlling capex, reducing cash interest expense and managing operating expenses.
John Slaybaugh: All in pursuit of accelerating the path to positive free cash flow.
John Slaybaugh: Sustainable growth.
Jon Slabaugh: 2025 is an important year for this company, and thus far, we are tracking across the board towards reestablishing a clear and definitive path for durable growth and profitability and value creation.
John Slaybaugh: 2025 is an important year for this company and thus far we are tracking across the board towards reestablishing, a clear and definitive payout for durable growth and profitability and value creation.
Jon Slabaugh: That concludes my prepared remarks.
John Slaybaugh: That concludes my prepared remarks, I will turn it over to the operator to begin the question and answer session operator.
Pam: I'll turn it over to the operator to begin the question and answer session. Operator. At this time, I would like to remind everyone in order to ask a question, press star, then the number one on your telephone keypad. We'll pause for just a moment to compile the Q&A roster.
Speaker Change: At this time I would like to remind everyone in order to ask a question Brett Star then the number one on your telephone keypad with pause for just a moment to compile the Q&A roster.
John Slaybaugh: Okay.
Glenn Mattson: Your first question comes from the line of Glenn Mattson with Leidenberg-Thalmann. Please go ahead. Yeah, hi everybody. Thanks for taking the question and congrats on the results. So I'm just curious about the, just the sales force and the sales function. You mentioned in the back half of 24, there was some disruption to that process, perhaps due to some cuts in that area. It seems like it's getting back on track now.
Speaker Change: Your first question comes from the line of Glenn Mattson with Ladenburg Thalmann. Please go ahead.
Glenn Mattson: Yes, hi, everybody. Thanks for taking my question and congrats on the results.
Speaker Change:
Speaker Change: So I was just curious about the.
Speaker Change: Just the sales force and the sales function you mentioned in the back half of 'twenty four there was some.
Speaker Change: Disruption of that process, perhaps due to some cuts in that area.
Speaker Change: It seems like it's getting back on track now can you just give us a sense of the go to market and how that's evolving over time.
Joshua Resnik: Can you just give us a sense of the go-to-market and how that's evolving over time? Sure, Glenn. This is Josh. I can address that.
Speaker Change: Sure.
Speaker Change: This is Josh I can address that so yes, the changes that we're talking about.
Joshua Resnik: So, yeah, the changes that we're talking about in towards the end of Q4 were less about reductions that we've made and more really just about execution issues that we saw out of management. So, we've restructured and replaced management and what we're seeing now is much better execution and it's really much better execution throughout the funnel. So, in addition to what we're seeing from the inbound, where I mentioned that we've seen increased interest and demand, our outbound is functioning much better. We're building much stronger pipeline and we're seeing that connection point, as I mentioned, between the go-to-market teams and the product teams as well.
Speaker Change: Towards the end of Q4 were less about reductions that we've made and more really just about execution issues that we saw out of management.
Speaker Change: We've restructured and replace management and what we're seeing now is much better execution.
Speaker Change: And it's really much better execution.
Speaker Change: Throughout the funnel. So in addition to what we're seeing from the inbound where I mentioned that we've seen increased interest in demand. Our outbound is functioning much better we are building a much stronger pipeline.
Speaker Change: And we're seeing that connection point as I mentioned.
Speaker Change: Between the.
Speaker Change: The go to market teams and the product teams as well so as we're bringing the product along as we're driving more product innovation or turning that innovation into commercial results much more quickly as well. So that's really what we're talking about there.
Glenn Mattson: So, as we're bringing the product along, as we're driving more product innovation, we're turning that innovation into commercial results much more quickly as well. So, that's really what we're talking about there. Great. That's helpful.
Speaker Change: Great Thats helpful.
Joshua Resnik: And on policy note, you pointed to a lot of interesting anecdotal evidence around the acceptance and uptake. Can you give us a sense of, you know, what sample size you're talking about and just the expectations still of the timeframe for when you hope to have everyone converted over to that platform? Yeah, sure. Glenn happened to do that as well. So, we are working to migrate our core customers over time. We expect to have all of our core customers, the ones who are using us for policy, data insights, et cetera, on the new platform sometime next year.
Speaker Change: I know you pointed to a lot of interesting anecdotal evidence around.
Speaker Change: Acceptance and uptake can you give us a sense of.
Speaker Change: What sample size, we are talking about and just the expectations still over the timeframe for when you hope to have everyone converted over to that platform.
Speaker Change: Yes sure Glenn.
Speaker Change: Glenn Havent do that as well so.
Speaker Change: We are working to migrate our.
Speaker Change: Our core customers over time, we expect to have all of our core customers are the ones who are using us for policy data insights cetera on the new platform sometime next year, we're accelerating migration as much as possible now.
Joshua Resnik: We're accelerating migration as much as possible now in light of the early results. We plan to be in position to start deprecating platforms this year for sure to be in position to deprecate at least one of the larger legacy platforms later this year. So, we're working on getting those customers on there at scale right now. And like I mentioned, we've been really encouraged by the progress that we're seeing. We've migrated. So, I mentioned a couple different cohorts that we've done. I can't give you exact numbers in terms of number of customers, but we're really confident in the share of that we have right now, meaning we're confident that what we see represents a broad enough slate of the types of customers who should be on there that they're using them at high enough scale where we understand validity of the data and such, and where we're really starting to have an impact on what we can do from both a new logo standpoint and a retention standpoint as well.
Speaker Change: Now in light of the early results, we plan to be in position to start deprecating at least.
Speaker Change: To start deprecating platforms. This year for sure to be in position to deprecate at least one of the larger legacy platforms. Later this year. So we're working on.
Speaker Change: Getting those customers on there.
Speaker Change: At scale.
Speaker Change: Right now.
Speaker Change: And like I mentioned, we've been really encouraged by the progress that we're seeing we've migrated so I mentioned a couple of different cohorts that we've done I can't give you exact numbers in terms of number of customers, but were really confident in the share of customers that we have right now, meaning we're confident that what we see represents.
Speaker Change: Broadened up slate of the types of customers, who should be on there.
Speaker Change: They are using them at high enough scale, where we understand validity of the data.
Speaker Change: And where we're really starting to have an impact on what we can do from.
Speaker Change: Both are new logos standpoint, and a retention standpoint as well.
Glenn Mattson: Great, Josh, that's very helpful. Thanks.
Speaker Change: Great. That's very helpful. Thanks, I'll jump back in the queue. Thank you.
Glenn Mattson: I'll jump back in the queue.
Speaker Change: Yeah.
Jesse Sobelson: Your next question comes from Jesse Sobelson with Deep Borrow Capital. Please go ahead. Hey, guys. I really just want to reiterate this is a great quarter. The reiteration of guidance is really great news here. We can really see the ship turning and it sounds like policy notes really gaining some great traction to help drive this confidence in the second half ARR rebound.
Speaker Change: Your next question comes from Jesse Olson with deep borrow capital. Please go ahead.
Jesse Olson: Really just want to reiterate this is a great quarter reiteration of guidance is really great news here.
Jesse Olson: We can really see the ship turning and it sounds like policy Thats really gaining some great traction to help drive this confidence in the second half rebound.
Jon Slabaugh: I just wanted to kind of ask on a clarification piece here on the numbers piece, you know, the revenue guidance for second quarter is $22 to $24 million and it's a little bit below Q1 levels. I just wanted to confirm that the primary driver of this sequential decline was the recent transactions that you've done with Dragonfly and Oxford. Is that correct? Sure. Jon, do you want to address that? Do we have Jon? All right. Jesse, I'm sorry about that. I was having a phone problem. Josh, did you answer the question? No, Jon, you can go ahead.
Speaker Change: I just wanted to kind of ask kind of a clarification piece here on the numbers piece the revenue guidance for second quarter is 22% to $24 million and so a little bit below Q1 levels I just wanted to confirm that the primary driver of this sequential decline was.
Jesse Olson: The recent transactions that you've done with dragonfly, an Oxford is that correct.
Jesse Olson: Okay.
John Slaybaugh: Sure John do you want to address that.
Jesse Olson: Yeah.
Jesse Olson: Do we have China.
Okay.
Jesse Olson: Alright.
Jesse Olson: Jesse I'm, sorry about that.
Jesse Olson: Phone problem.
Jesse Olson: Josh you answered the question.
Jesse Olson: No John you can go ahead.
Jon Slabaugh: Okay. Thanks for the question, Jesse. It's Jon. You're correct. The difference would be solely attributable to the revenue that we recognized in the first quarter from the divested businesses Dragonfly and Oxford. And there'll be details breaking out the pro forma and the filings that are coming out later. Great. Yeah, just confirming it sounds like the business is stabilizing here.
Jesse Olson: Okay.
Jesse Olson: Thanks for the question Jesse it's John.
Jesse Olson: Youre correct.
Jesse Olson: The difference would be solely attributable to the revenue we recognized in the first quarter from the divested businesses dragonfly at Oxford and there'll be details breaking out the pro forma in the filings that are coming out later.
Speaker Change: Great great.
Speaker Change: Just to confirm it sounds like the business is.
Stabilizing here another housekeeping one from me is just when it comes to the balance sheet. There was this additional sale of I think it's time policy.
Jesse Sobelson: Another housekeeping one for me is just when it comes to the balance sheet, there was this additional sale of I think it's a time policy. I apologize for the exact name. I don't have it in front of me. But just where exactly are we with the balance sheet today and any anticipated cash that's supposed to come in from transactions and what the debt balance is just to make sure on a ballpark here? Sure, so from the balance sheet that will be coming out shortly, we did announce a transaction. We entered into a transaction with Thomson Reuters to sell a division operating in Australia.
Speaker Change: I apologize for the exact name I don't have in front of me, but just.
Speaker Change: Where exactly are we with the balance sheet today and any anticipated cash that's supposed to come in from transactions and what the debt balances just to make sure on a pro forma basis.
Speaker Change: Right ballpark here.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: <unk>.
Speaker Change: Sure. So for me from a balance sheet that will be coming out.
Speaker Change: Shortly we did announce.
Speaker Change: The transaction, we entered into a transaction with.
Speaker Change: Thomson Reuters to sell a division operating in Australia. It is.
Jon Slabaugh: It is a smaller division and we disclosed the purchase price to be in the neighborhood of $6.5 million. I would pencil in about half of that going to reduce debt after taxes, fees, and expenses related to the transaction. Okay, great.
Speaker Change: A smaller division and.
Speaker Change: Can you disclose the purchase price to be in the neighborhood of $6 $5 million and.
Speaker Change: I would pencil in about half of that going to reduce.
Speaker Change: That after taxes fees and expenses related to the transaction.
Speaker Change: Okay great.
Joshua Resnik: And then just a bigger picture here, you know, it seems that the board, you know, continually reviews some strategic options to maximize shareholder value. I'm just kind of curious if you guys can share any updates on framework criteria being used to evaluate any outcomes and, you know, if there's anything, if we're still considering asset sales here or if the product portfolios is where we should expect it to be today. Thank you. Josh, you want to answer that? Yeah. Yeah, I can take that. So yeah, thanks for the question on that, Jesse. I would just say there's not too much we can say about board activity beyond what's been said publicly.
Speaker Change: Okay, Great and then just a bigger picture here.
Speaker Change: It seems that the board continually reviews, some strategic options to maximize shareholder value I'm just kind of curious if you guys can share any updates on framework criteria are being used to evaluate any outcomes and.
Speaker Change: If there's if there's anything.
Speaker Change: If we're still considering asset sales here or if.
Speaker Change: The product portfolios is where we should expect it to be okay. Thank you.
Speaker Change: Yes sure.
Speaker Change: Yes, yes, I can take that too.
Jesse Olson: Yes. Thanks for the question on on that Jesse I would just say there you know it was not so much we can say about board activity beyond whats been said publicly so I'll just essentially reiterating.
Joshua Resnik: So I'll just essentially reiterate that the board is, of course, constantly considering ways in which to maximize value of the company. So, that's really the long and short of it at the end of the day in terms of what I can say there. In terms of future divestitures, I would say that you've seen a majority of what there is from the portfolio. That's not to say that there wouldn't be future opportunities as well. And again, we'll consider what opportunities there may be down the road as well.
Speaker Change: Reiterate that.
Speaker Change: The board is of course.
Speaker Change: Im constantly considering ways in which to maximize value of the company.
And.
Speaker Change: So that's really the long and short hit at the end of the day in terms of.
Speaker Change: What I can say there in terms of future divestitures.
Speaker Change: I would say that.
Speaker Change: You've seen them the majority of what there is from the portfolio.
Speaker Change: To say that there wouldn't be future opportunities as well and again, we will consider.
Speaker Change: What opportunities there may be down the road as well.
Jesse Sobelson: Great. Thank you for taking my questions.
Speaker Change: Great.
Speaker Change: Thank you for taking my questions.
Mike Latimore: Your next question comes from Mike Latimore with Northland Capital Markets. Please go ahead. Great, thank you. Yeah, congrats on the great results there. Uh, nice to hear the pipeline's growing here. I guess, can you give a little more detail on what you're seeing in the pipeline?
Speaker Change: Your next question comes from Mike Latimore with Northland Capital markets. Please go ahead.
Speaker Change: Great. Thank you.
Speaker Change: Congrats on the great results there.
Speaker Change: Nice to hear the pipeline's growing here I guess can you give a little more detail on what youre seeing in the pipeline is that.
Joshua Resnik: You know, is that coming from upsells, cross-sells, new logos, any particular verticals, um, and is it, um, yeah, I guess that would be the starting point. Sure, Mike. Happy to address that. So, when I'm talking about the increase in pipeline, really what I'm talking about is two different pieces to it. So, one is inbound pipeline, so new logo, and that would be across sectors, and that's reflecting, I think, a higher focus in light of regulatory complexity, as well as interesting policy note. And then, in terms of outbound pipeline, again, what I'm referring to there is around new logo.
Speaker Change: Coming from Upsells Cross sells new logos any particular vertical.
Speaker Change: And is it.
Speaker Change: Yes, I guess that would be a starting point.
Speaker Change: Sure Mike.
Speaker Change: Happy to address that so when I am talking about the increasing pipeline.
Speaker Change: Really what I'm talking about is.
Speaker Change: Two different pieces to it one is inbound pipelines so new logo.
Speaker Change: And that would be across sectors and thats, reflecting.
Speaker Change: Higher focus and lighter regulatory complexity as well as existing policy now.
Speaker Change: Then.
Speaker Change: In terms of outbound pipeline again, what I'm, referring to there is around new logo and again.
Joshua Resnik: And again, it actually cuts across different sectors as well. So, it's not just one particular area. We are seeing, as I've mentioned in my remarks, but also we've talked about in previous calls, we are seeing a continued high level of interest and demand in Europe in particular. But what I'm referring to when I'm talking about pipeline is really across the board, but mostly focused on new logo. Got it. Okay, good.
Speaker Change: It actually cuts across different sectors as well so it's not just one particular area. We are seeing as I've mentioned.
Speaker Change: In my remarks, but I will say that we've talked about in previous calls we are seeing.
Speaker Change: <unk> high level of interest and demand in Europe in particular.
Speaker Change: But what I'm, referring to when I'm talking about pipeline is really across the board, but most of the folks on new logo.
Speaker Change: Got it okay.
Joshua Resnik: And then in terms of the, just the, you know, federal sector, particularly U.S. government, A lot of changes there. It seems like you quickly can, you know, also offer new products that enable your customers to understand those changes at the same time. But can you just talk a little bit about, you know, the health of the federal vertical here and Yeah, I guess just in view of the health of the federal bird border. Sure, Mike, happy to do that. So, yeah, I mean, certainly, as you're alluding to, right, there's volatility in the federal market, unlike, you know, unlike anything that there's been previously.
Speaker Change: And then in terms of the just the federal sector failure U S government.
Speaker Change: Yeah, a lot of changes there it seems like you quickly can.
Speaker Change: Also offer new products.
Speaker Change: Enable your customers to understand those changes at the same time, but can you just can you just talk a little bit about.
Speaker Change: The health of the federal vertical here and.
Speaker Change: Yes.
Speaker Change: Now for the federal vertical.
Speaker Change: Sure Mike happy to do that so yeah, I mean, certainly as youre alluding to write this volatility in the federal market. Unlike unlike anything that has been previously.
Joshua Resnik: We've had, we've seen some of that volatility, nothing material for us, where we have had issues, unrelated to our specific products, just part of some of the shifts within government itself, restaffing, budgets being in question, et cetera. There's been, we do see opportunity in the federal sector as well. You know, our products do help organizations be more efficient, so we estimate that, you know, the government saves $10 for every dollar that they spend with us, so we actually think there's opportunity to drive more value over time. And then we also see, you know, again, as you alluded to as well, a need for the type of information and insights that we provide, and again, especially as there's more and more interest in platforms and AI as a focus to drive efficiency and drive insights and information, we believe that's something that plays to our favor in the long run.
Speaker Change: We've had we've seen some of that volatility nothing material for us, where we have had issues and unrelated to our specific products just part of.
Speaker Change: Some of the shifts within government itself.
Speaker Change: Staffing budgets being in question et cetera.
There is.
Speaker Change: Ben.
Speaker Change: We do see opportunity.
Speaker Change: In the federal sector as well our products do help organizations be more efficient so we estimate that the.
Speaker Change: The government saved $10 $3 that they spend with us. So we actually think there is opportunity.
Speaker Change: To drive more value over time.
Speaker Change: And then we also see again yielded too as well.
Speaker Change: Need for the type of information and insights that we provide and again, especially as there's more and more interest in.
Speaker Change: Platforms.
Speaker Change: AI is a focus to drive efficiency and drive insights and information we believe that's something that.
Speaker Change: Plays to our favor in the long run.
Joshua Resnik: Great. And just last one, I guess, kind of on a similar topic. You announced you hired an advisor that came from Palantir. I'm just kind of curious, you know, what is he focused on? So, yeah, we actually did engage him to focus on federal government. So, you know, as someone who has driven significant federal contracting, leveraging AI platforms in the past, we brought him in to provide advice and support for our commercial teams as we think much more about our opportunities in that space. So, and he provided our teams with some helpful insights. There you go.
Speaker Change: Great.
Speaker Change: Last one I guess kind of on a similar topic, you announced that you hired in <unk>.
Speaker Change: Advisor.
Speaker Change: It came from talented or I'm, just kind of curious what you're focused on.
Speaker Change: So, yes, we actually did engage him.
Speaker Change: <unk> focus on federal government, so as someone who has driven significant federal contracting leveraging AI platforms in the past we brought him in to provide advice and support for our commercial teams as we think much more about our opportunities in that sector.
Speaker Change: So and he has provided our teams with some helpful insights.
Speaker Change: Hey, guys.
Mike Latimore: Congrats again. Thanks. Thanks a lot. Thanks.
Speaker Change: Again, congrats again, thanks, Thanks, a lot thanks.
Speaker Change: Thanks, Mike.
Zach Cummins: Again, if you would like to ask a question, press star, then the number 1 on your telephone keypad. The next question comes from Zach Cummins with B. Reilly Securities. Please go ahead. Hi, good afternoon. Thanks for taking my questions. Really, Josh, my one question is just focused on your confidence and A lot of this new pipeline continuing to progress and getting across the finish line in terms of new deals. I'm just curious on kind of the typical pace we should be expecting and how you're making those assumptions when making a return to year-over-year ARR growth in the coming quarters.
Speaker Change: Dan if he would like to ask a question press Star then the number one on your telephone keypad.
Speaker Change: The next question comes from Zach Cummins with B Riley Securities. Please go ahead.
Zach Cummins: Yes, hi, good afternoon. Thanks for taking my questions really Josh My one question is just focused on your confidence in.
Speaker Change: A lot of this new pipeline contains congrats in getting across the finish line in terms of new deals and just curious on kind of the typical pay so we should be expecting in Europe.
Speaker Change: Making on those students when making a return to.
Speaker Change: Year over year AOR growth in the coming quarters.
Joshua Resnik: Sure, Zach, thanks for the question. Yeah, look, we feel very confident, you know, and this is why we're starting to be more transparent about things like pipeline, about things like product engagement, etc. We're very confident that we understand what the drivers have been for some of the past underperformance, and we're very confident that we're doing the right things to address those. So, that goes to things like the go-to-market execution, which we look at data very deeply, and we see that pipeline and see the opportunities that we have against it. We know about the product, and we know that our customers and prospects need this information.
Speaker Change: Sure. It's Derek Thanks for the question, Yes look we feel very confident and this is why we are starting to be more transparent about things like pipeline about things like product engagement et cetera, we're very confident that we understand what the drivers have been for some of those.
Speaker Change: Under performance and we're very confident that we're doing the right things to address that so that goes to things like the go to market execution, which.
Speaker Change: We look at data very deeply and we think that pipeline and see the opportunities that we have against it we know about the product and we know that.
Speaker Change: Our customers and prospects need this information.
Joshua Resnik: They recognize the importance of it to their organization. So, we see that level of demand out there, and again, that's partly reflected in the inbound that we're seeing as well. And we know that the product that we have can really address those needs in a way that's really powerful for the organizations who we're working with. And we see that reflected in the product metrics that we look at, and the level of engagement that we see. So, we feel very confident in terms of what we're doing, the execution against it, and what that means for the long term.
Speaker Change: They recognize the importance of it to their organization. So we see that level of demand out there and again, that's partly reflected in the inbound that we are seeing as well.
Speaker Change: And we know that the product that would have Kent.
Speaker Change: Can't really address those needs in a way that's really powerful city organizations, who are working with and we see that reflected in the product metrics that we look at and the level of engagement that we see so we feel very confident in terms of what we're doing the execution against it and what that means.
Joshua Resnik: And then we're looking at things like sales cycles, quality of the funnel, et cetera, as we think about the second half of this year. And again, that's why we're reaffirming guidance is we feel confident in what we're going to deliver the second half of the year. There's obviously risk points out there that we see as much as anybody else, including economic volatility, et cetera. But we've built that in, in terms of how we think about the opportunities here. And, you know, like I said, we feel very good about what we're building and pipeline, you know, certainly it needs to convert.
Speaker Change: For the long term and then we're looking at things like sales cycles.
Speaker Change: The quality of the funnel et cetera, as we think about the second half of this year.
Speaker Change: And again, that's why we're reaffirming guidance is we feel confident in what we're going to deliver the second half of the year. There is obviously risk points out there that we see as much as anybody else, including economic volatility et cetera, but we built that in in terms of how we think about the opportunities here and.
Speaker Change: Yes, like I said, we feel very good about what we're building in.
Pipeline.
Certainly it needs to convert.
Zach Cummins: We gotta push it through. But with how we're managing the business with what we're seeing from an execution standpoint, and with what we're seeing from engagement with our customers, engagement with prospects and the level of demand, we feel very good. Understood. That's helpful.
Speaker Change: Got to push it through but with.
Speaker Change: How we're managing the business with what we're seeing from an execution standpoint, and with what we're seeing from.
Speaker Change: Engagement with our customers engagement with prospects in the level of demand we feel very good.
Speaker Change: Understood that's helpful.
Joshua Resnik: And just my one follow up question is around the level of multi-year deals that you're now seeing. I mean, can you give us a little more insight into that? And is that part of the new go to market transformation? Do you have a bigger emphasis on trying to secure these multi-year contracts with customers? So yeah, that's a great question, Zach. So we actually, along with the introduction of PolicyNote, we felt very solid and confident in the product. We know that one of the challenges we've had, obviously, has been the product, which translates into being able to speak to customers and prospects about what is your vision, how are you innovating?
Speaker Change: Just my one follow up question is around the level of multi year deals that youre now seeing I mean can you can you give us a little more insight into that.
Speaker Change: Is that part of the new go to market transformation do you have a bigger emphasis I'm trying to secure these multiyear contracts with customers.
Speaker Change: So yes, that's a great question Zach so we actually.
Speaker Change: Along with the introduction of policy.
Speaker Change: We felt very.
Speaker Change: Solid and confident in the product.
No that one of the challenges we've had obviously has been a product which translates into.
Speaker Change: Being able to speak to customers and prospects about what is your vision, how you're innovating you need customers to believe in us and what youre doing today, but what you'll be doing tomorrow 12 months from now 24 months from now and so on and so with the introduction of policies and markets. We did make it a point of emphasis to start to see multiyear.
Joshua Resnik: You need customers to believe not just in what you're doing today, but what you'll be doing tomorrow, 12 months from now, 24 months from now, and so on. And so with the introduction of PolicyNote in market, we did make it a point of emphasis to start to seek multi-year commitments. And that's where we're really pleased to see that payoff and see prospects engage and sign on to multi-years at the levels that I mentioned. So for the new corporate logos being more than double the rate of what we saw a year ago. That's really incredible. And so to be clear, it's not driven by aggressive discounting for multi-years or anything like that.
Speaker Change: Our commitments and that's where we're really pleased to see that pay off and see prospects engage and sign on to multi years at the levels that I mentioned, so for the new corporate logos being more than double the rate of what we saw a year ago, that's really incredible and so to be clear, it's not driven by.
Speaker Change: Youre aggressive discounting for multi years or anything like that so.
Joshua Resnik: So it was a point of our strategy to seek the multi-years, but we're not doing anything artificial to achieve it. We're achieving it because of the confidence that prospects have in the fact that they're gonna need this data. They're confident that they're gonna wanna get it from us. They're confident that our product is the one that they wanna bet on for multi-year commitments. So we feel very good about that and what that says about their confidence in us for the long run. Understood.
As a point of our strategy to seek the multi years, but we're not doing anything artificial to achieve it.
Speaker Change: Shaving it because.
Speaker Change: The confidence that prospects halved in the fact that theyre going to need this data there.
Speaker Change: <unk> debt.
Speaker Change: They're going to want to get it from us they are confident that our product is the one that they want to bet on for multiyear commitments. So we feel very good about that and what that says about their confidence in us for the long run.
Speaker Change: Sure.
Zach Cummins: Well, thanks for taking my questions and best of luck with the rest of the quarter. Thank you, Zach.
Speaker Change: Understood well, thanks for taking my questions and best of luck with the rest of the quarter.
Speaker Change: Thank you Zack.
Pam: There are no further questions at this time.
Speaker Change: There are no further questions at this time, Mr. Burrows I turn the call back over to you for any closing remarks.
Bob Burrows: Mr. Burrows, I turn the call back over to you for any closing remarks. Thank you, Pam.
Speaker Change: Thank you Pam that concludes our call. This evening, we appreciate everyone's participation on today's call with any additional questions. Please contact any of US again, all materials related to the company's first quarter 2025 financial results are available on the physical note website. We look forward to speaking with all of you again in the future Goodbye.
Bob Burrows: That concludes our call this evening. We appreciate everyone's participation on today's call. With any additional questions, please contact any of us. Again, all materials related to the company's first quarter 2025 financial results are available on the Fiscalnote website.
Bob Burrows: We look forward to speaking with all of you again in the future. Goodbye.
Pam: This concludes today's conference call. You may now disconnect.
Speaker Change: This concludes today's conference call you may now disconnect.
Speaker Change: [music].
Speaker Change: Yes.
Speaker Change: [music].
Speaker Change: Okay.
Speaker Change: [music].