FiscalNote Holdings, Inc. Q2 FY2025 earnings call

• Adjusted EBITDA: Delivered $2.8 million in Q2, exceeding guidance, with a 12% margin, up from 4% pro forma in the prior year, driven by cost discipline and operating leverage.
• Balance sheet and free cash flow: Announced refinancing of senior term loan with MGG Investment Group, extending maturity to 2029; cash interest expense will increase slightly but is offset by operational streamlining; on track for positive free cash flow.
• Revenue and growth: Q2 revenue at $23.3 million, above guidance midpoint; reaffirming full year guidance; ARR growth expected in second half of 2025; PolicyNote showing strong engagement with more daily active users than legacy platform, and ongoing product enhancements driving customer confidence.
• Refinancing: Substantial refinancing of senior and subordinated debt completed, providing long-term runway and operating flexibility, closing in mid-August.

In Q2 2025, total revenue was $23.3 million, with subscription revenue accounting for $21.4 million, which was 92% of total revenues. Adjusted EBITDA was $2.8 million, representing an adjusted EBITDA margin of 12%, an increase from 4% in the same period last year. Annual recurring revenue (ARR) was $85.9 million in Q2 2025, down from $93.6 million in 2024 on a pro forma basis, with net revenue retention at 96% for Q2 2025 compared to 98% in the prior year.

• Reaffirming full year 2025 revenue guidance of $94 million to $100 million and adjusted EBITDA guidance of $10 million to $12 million.
• Anticipate ARR growth beginning in the second half of 2025.
• Expect most ARR and net revenue retention metrics to improve by year-end 2025 driven by PolicyNote and customer engagement.

• Operational execution challenges impacting start of the year performance.
• Legacy platform retention issues and public sector instability contributing to ARR and revenue declines.
• Uncertainties related to ongoing federal and NGO market dynamics and their impact on business.

Q: Congrats on progress this year. Talked about returning to ARR growth in second half. How does new logo vs retention/expansion impact ARR growth?

A: Good success with new logo in pipeline, win rates, and ACVs, but biggest difference maker going forward will be improvements in gross and net retention from PolicyNote migration and new offerings.

Q: Additional product enhancements, enterprise features, timeline?

A: Continuing to enhance PolicyNote with core data sets, enterprise features, and incremental innovations; migrations to PolicyNote are ahead of schedule, with work ongoing this year and next.

Q: Doubling multiyear commitments impact revenue growth slope?

A: Increase in multiyears impacts gross retention over time, reducing renewal frequency; product engagement is fundamental to long-term health, but multiyears provide stability to revenue growth by decreasing renewal frequency