FiscalNote Holdings, Inc. Q1 FY2026 earnings call

Josh Resnick mentioned the company is more profitable than a year ago, on path to positive free cash flow, entering new markets. Completed migration of customers off legacy platform to PolicyNote. Focus on agentic workflows and leveraging proprietary data in PolicyNote. Launched expanded PolicyNote API with MCP support and district matching functionality. Entered strategic partnership with Goodwill Studios for political prediction content. John Slabaugh discussed financial results, cost discipline, headcount reduction, and future priorities like driving adoption of PolicyNote platform and expanding data delivery through APIs.

Q1 2026 total revenue was $20 million, within guidance range. Subscription revenue represents 95% of total revenue. ARR was $75.7 million. Net revenue retention was 89% for the quarter. Adjusted EBITDA for Q1 was $1 million. Cost of revenues, R&D, sales and marketing, editorial, and G&A expenses all decreased year over year.

Reaffirm full-year revenue guidance of $80 to $83 million and adjusted EBITDA guidance of $14 to $16 million. Expect adjusted EBITDA margin to improve from Q1's 5.1% in subsequent quarters. Q2 2026 expected revenue between $19.5 and $20.5 million and adjusted EBITDA of approximately $2.5 million. Expect trailing 12-month positive free cash flow by end of Q1 2027 and to remain positive thereafter.

Noncompliance event with subordinate convertible note holders due to delisting, which led to classifying debt as current. Impact of attrition of large customers on net retention. Uncertainty regarding resolution of debt and its impact on the company.

Q: Sort of a technical question on the balance sheet, but the long-term debt moved up to the current side. I think that has something to do with the delisting thing. If you moved over to the OTC, you know, does that satisfy the listing requirement codicils or, you know, can you walk us through sort of where you're at on the discussions with the debt holders?

A: Sure, Rich. It's John, and thank you for the question. So the movement off in the New York Stock Exchange did create a noncompliance event with certain subordinate convertible note holders. We have since entered into arrangements with them that gives us time to kind of come up with a longer-term solution. But because that's not finalized, we have to classify all the debt in the – It's current, but we are, as I said, working towards a amenable solution to all of our creditors, and we'll report out when the time comes when we have kind of a path forward.

Q: And we talk about the net retention number came down in the quarter. If you talk about sort of early trends in the Q2, know if there's any changes to that uh or improvements to that that you've seen A: sure we spoke about um kind of the attrition of a couple of large customers and those had a disproportionate effect on the calculation of net retention in the first quarter um the first quarter is a quarter where we have a fair amount of renewal and um it that that had an impact we um You know, fully, you know, can't report on the second quarter yet, but it would be, you know, we feel good about that being in line with historical levels and where it needs to be in order for us to affirm our guidance for the year.

Q: I guess last for me, the guidance for Q2 would either be, you know, down half a million or up sequentially half a million, and the difference on sentiment would be pretty marked. You're talking about what the key factors are to determine whether we've set a floor or whether we could start climbing or we don't know if we set a floor yet on the revenues.

A: You know, we have a lot of visibility into the revenue for the remainder of the year because of the nature of the recurring revenue contracts. We have certainly a lot of initiatives in place to stabilize and secure revenue. And Josh talked about a couple of the new initiatives, particularly around APIs and ultimately around the prediction markets as well. But most importantly, the migration of customers to the policy note platform is a stabilizing event for our customer base and should have very positive impact on net retention, gross and net retention. So going forward, it's hard to say exactly when we hit the last kind of dollar decline, but we feel good about numbers moving up sequentially across the course of the year.

Q: Hey, Rich. Hey, Josh. I was just going to add just also you can be thinking about the API initiative that we have. We are seeing good, strong demand for the APIs, both at an enterprise level and from a product-led growth perspective in terms of sign-ups. We're just getting straight to the website. So that's something that we're looking at to help support that growth going forward as well.

A: Got it. Thanks for answering our questions.