Earnings call transcript: FiscalNote Q2 2025 revenue tops forecasts

FiscalNote Holdings Inc. reported mixed Q2 2025 results, with revenue of $23.3 million surpassing expectations but EPS missing forecasts at -$0.08, leading to a 2.47% after-hours stock decline. Despite a decline in Annual Recurring Revenue (ARR) to $85.9 million and a significant debt burden, the company highlighted improved adjusted EBITDA margins of 12%, a 17% reduction in operating expenses, and the successful launch of its PolicyNote platform. Management reaffirmed full-year 2025 guidance, projecting revenue between $94 million and $100 million and adjusted EBITDA of $10 million to $12 million, anticipating ARR growth to resume in the second half of 2025, further bolstered by a recent senior debt refinancing extending maturity to 2029.

Analysis

FiscalNote Holdings Inc. (NOTE) presented a mixed financial picture for Q2 2025, beating revenue expectations with $23.3 million versus a $22.83 million forecast, but missing on earnings per share at -$0.08 against a -$0.06 consensus. This EPS shortfall triggered a 2.47% decline in the stock's after-hours trading. Despite the earnings miss, the company demonstrated significant operational discipline, reducing operating expenses by 17% year-over-year and expanding its adjusted EBITDA margin to 12% from 4% in the prior year. A critical concern remains the decline in Annual Recurring Revenue (ARR), which fell to $85.9 million from $93.6 million, attributed to execution challenges and retention issues with legacy products. However, management is banking on its new PolicyNote platform to reverse this trend, citing that its daily active users have already surpassed the legacy platform and that leading indicators like a 45% quarter-over-quarter increase in the new logo pipeline and a doubling in multiyear contract signings are positive. The company's balance sheet risk has been partially mitigated by a recent debt refinancing that extends maturity to 2029, providing a longer runway to execute its turnaround. Management's confidence is reflected in its reaffirmed full-year 2025 guidance for revenue of $94-100 million and adjusted EBITDA of $10-12 million, with the expectation that ARR growth will resume in the second half of 2025.

Key Decisions for Investors

• Investors should treat FiscalNote as a high-risk, high-reward turnaround play, weighing the significant operational improvements and expanded EBITDA margins against the recent EPS miss and ongoing stock volatility.
• The primary focus should be on the trajectory of Annual Recurring Revenue (ARR); a return to positive ARR growth in the second half of 2025, as guided by management, is the most critical catalyst for validating the company's strategy centered on the new PolicyNote platform.
• Monitor leading indicators such as new logo win rates and the pace of multiyear contract signings, as sustained momentum in these areas would provide early evidence that the company is successfully addressing its core retention challenges.
• While the recent debt refinancing to 2029 provides crucial breathing room, the company's significant debt burden remains a key risk factor that must be considered alongside competitive pressures and instability in its federal markets.