FiscalNote Holdings, Inc. Q3 FY2024 earnings call

• Tim Hwang transitions to Executive Chair, with Josh Resnik stepping into CEO role effective January 1, 2025. - Company has rightsized cost structure, achieving five consecutive quarters of positive adjusted EBITDA. - Divested Board.org and Aicel, and sunset noncore underperforming products. - Focus on product with generative AI, such as Copilots for policy and Global Intelligence. - Optimized commercial organization to increase customer engagement and sales productivity. - Working on improving capital structure through deleveraging and refining product portfolio.

Total revenue for Q3 2024 was $29.4 million. Subscription revenue accounted for 93% of total revenue. Run rate revenue was $119 million, annual recurring revenue (ARR) was $109 million. Q3 2024 adjusted EBITDA was positive $3.4 million. For the full year 2024, adjusted EBITDA was revised to $9 million (up from previous $8 million forecast), and total revenue was lowered to $120 million (down from previous $121 million forecast). Q4 2024 total revenues are expected to be approximately $29 million, with adjusted EBITDA of approximately $2.5 million.

• Full year 2024 adjusted EBITDA raised to $9 million, total revenue lowered to $120 million. - Q4 2024 total revenues expected at ~$29 million, adjusted EBITDA ~$2.5 million. - Board continues to review strategic alternatives to maximize shareholder value.

Q: What is the goal for the capital structure on a net debt-to-EBITDA basis and how to get there?

A: Jon Slabaugh said they are still evaluating the right capital structure, looking to reduce overall cost of capital and service debt with future cash flow, and continue to deleverage.

Q: How is the customer reception for AI copilot programs?

A: Joshua Resnik mentioned Copilot for Global Intelligence has broad uptake with good metrics for upsell/cross-sell, and Copilot for policy provided learnings that inform core product initiatives.

Q: Are gross margin levels sustainable?

A: Jon Slabaugh said yes, due to Board.org divestiture and deemphasizing high-fulfillment-cost advisory/service lines.

Q: What assumptions underpin confidence in return to growth in 2025?

A: Joshua Resnik cited focus on international (global policy data, EU policy analysis) and corporates (large enterprise, mid-market), and improved product experiences to drive retention, cross-sell, upsell.

Q: Color on competitive landscape?

A: Joshua Resnik said focus is on existing data, content, and product improvements to engage existing customers, with promise in new logos but key on improving current core products.