FiscalNote Holdings, Inc. Q3 FY2025 earnings call

Key Points - Disciplined approach to managing the business reflected in adjusted EBITDA profitability, balance sheet management, and progress towards free cash flow. - Q3 revenue was $22.4 million (in line with guidance) and adjusted EBITDA was $2.2 million (exceeding guidance), with 10% margin and fifth consecutive quarter of adjusted EBITDA margins at or above 10%. - OpEx decreased by approximately 8% pro forma, with adoption of automation-based approaches for increased productivity. - Stabilized ARR with modest sequential increase, strong inbound demand, corporate new logo sales momentum, and improved win rates among enterprise clients. - Product innovation with PolicyNote enhancements, including AI-powered features, and successful migration of customers to PolicyNote with positive usage metrics.

In Q3 2025, revenue totaled $22.4 million. Subscription revenue was $21.2 million, accounting for 94% of total revenue. On a pro forma basis, annual recurring revenue (ARR) was $84.8 million in Q3 2025 versus $92.2 million in 2024, with a sequential increase of $100,000 from Q2 2025. Net revenue retention in Q3 2025 was 98%, level with the prior year and up 200 basis points over Q2 2025 on a pro forma basis.

Forward-Looking Statements - Updated full year 2025 revenue guidance to $95 million to $96 million and adjusted EBITDA projected to approximately $10 million. - Fourth quarter 2025 total revenues expected $22 million to $23 million and adjusted EBITDA approximately $2 million. Both updated guidance remains within previous ranges.

Risks - Forward-looking statements subject to variety of risks and uncertainties, actual results could differ materially. - Refer to SEC filings for material risks and important factors affecting results. - Volatility in federal sector, including impact from government shutdown, estimated to have an overall impact of $2 million to $3 million for the full year.

Q: Can you give more color on the increase in ACV of deals?

A: The single biggest driver is leveraging global data more, with restructured global data packages extending use cases through the enterprise for larger corporate clients.

Q: Have you seen churn pick up with customer migrations to PolicyNote?

A: No, we haven't seen meaningful migration-related churn; migration to PolicyNote has been positive with good usage metrics and engagement.

Q: Can you speak to timeline for renewed year-over-year ARR growth?

A: We don't guide on ARR, but encouraged by progress, with gross retention and net retention as key levers, and discussion to come on future year-over-year trends.

Q: Can you quantify the impact of the federal government shutdown?

A: Overall impact estimated at somewhere between $2 million and $3 million for the full year, with added impact from the extended shutdown.