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FiscalNote Holdings, Inc. (NOTE)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 delivered $29.5M total revenues and $3.3M adjusted EBITDA, both above prior guidance ($29.0M revenue, $2.5M adjusted EBITDA). Gross margin expanded to 82% and adjusted gross margin to 87% as cost discipline and product portfolio simplification took hold .
  • Non-core divestitures and sunset products reduced year-over-year revenue (Q4 2024: $29.5M vs. $34.3M) but materially improved margins and cut operating expenses by 53% versus Q4 2023; Q4 marked the sixth consecutive quarter of adjusted EBITDA profitability .
  • FY 2025 guidance introduces a leaner profile: revenues $94–$100M and adjusted EBITDA $10–$12M, with Q1 2025 revenues $26–$27M (including ~$3M from Oxford Analytica/Dragonfly pre-close) and adjusted EBITDA ~ $2M; management expects adjusted EBITDA margins to more than double on a pro forma basis and accelerate the path to positive free cash flow .
  • Strategic catalysts: PolicyNote AI platform launched in Jan 2025 (early strong engagement), continued deleveraging (senior term loan expected ~30M reduction with Oxford/Dragonfly, cash interest to ~$2M/quarter), and Board-led strategic review to maximize shareholder value .

What Went Well and What Went Wrong

  • What Went Well

    • Margin expansion: Q4 gross margin 82% (vs. 67% LY) and adjusted gross margin 87% (vs. 83% LY) on operating efficiencies and portfolio focus; adjusted EBITDA margin reached 11% .
    • Profitability momentum: Six consecutive quarters of positive adjusted EBITDA; FY 2024 adjusted EBITDA of $9.8M marked first full year of positive adjusted EBITDA in company history .
    • Product-led strategy: PolicyNote launched (Jan 2025), with strong early engagement and AI feature usage; indications of higher multiyear corporate contracts and improving retention trajectory .

  • What Went Wrong

    • Top-line contraction: Q4 revenues fell 14% YoY on divestitures and discontinuation of non-strategic products; subscription revenue down 13% YoY (ex-divestitures down ~1%) and advisory/other down 24% YoY .
    • ARR softness: Year-end ARR declined to $107M (−15% YoY), pro forma ARR down 2%; Q4 NRR 98% (−100 bps YoY) signaling near-term retention headwinds .
    • Guidance context: FY 2024 revenue guidance was lowered in Nov from ~$121M to ~$120M; Q2 commentary cited macro headwinds and delayed product enhancements impacting retention and ARR growth pacing .

Financial Results

Quarterly trend (sequential comparisons)

MetricQ2 2024Q3 2024Q4 2024
Total Revenues ($USD Millions)$29.246 $29.439 $29.469
Net (Loss) Income ($USD Millions)$(12.764) $(14.935) $(13.383)
EPS (Basic & Diluted) ($USD)$(0.09) $(0.11) $(0.10)
Gross Margin (%)77% 79% 82%
Adjusted EBITDA ($USD Millions)$1.774 $3.444 $3.346
Adjusted EBITDA Margin (%)6.1% 11.7% 11%
Subscription Revenue ($USD Millions)$27.151 $27.238 $27.058
Advisory/Advertising/Other ($USD Millions)$2.095 $2.201 $2.411

Year-over-year (Q4 vs. Q4)

MetricQ4 2023Q4 2024
Total Revenues ($USD Millions)$34.265 $29.469
Gross Margin (%)67% 82%
Adjusted Gross Margin (%)83% 87%
Net (Loss) Income ($USD Millions)$(50.748) $(13.383)
EPS (Basic & Diluted) ($USD)$(0.39) $(0.10)
Adjusted EBITDA ($USD Millions)$2.987 $3.346
Adjusted EBITDA Margin (%)9% 11%

Segment revenue breakdown (Q4)

SegmentQ4 2023 ($M)Q4 2024 ($M)Commentary
Subscription$31.1 $27.1 Decline driven by divestitures; ex-Board.org/Aicel down ~$0.2M (−1%)
Advisory/Advertising/Other$3.2 $2.4 Decline due to discontinuation of non-strategic products; ex-discontinued down ~$0.1M (−4%)
Total$34.3 $29.5 Margin expansion offset top-line contraction

KPIs

KPIQ2 2024Q3 2024Q4 2024
Run-Rate Revenue ($M)$121 $119 N/A
Pro Forma Run-Rate Revenue ($M)$121 $119 N/A
ARR ($M)$109 $109 $107
Pro Forma ARR ($M)$109 $109 $109 (prior year pro forma)
NRR (%)98% 99% 98%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total Revenues ($M)FY 2024~$121 (8/8/2024) ~$120 (11/12/2024) Lowered
Adjusted EBITDA ($M)FY 2024~$8 (8/8/2024) ~$9 (11/12/2024) Raised
Total Revenues ($M)Q4 2024$29.0 (11/12/2024) Actual $29.5 (3/13/2025) Beat guidance
Adjusted EBITDA ($M)Q4 2024$2.5 (11/12/2024) Actual $3.3 (3/13/2025) Beat guidance
Total Revenues ($M)FY 2025N/A$94–$100 (3/13/2025) New
Adjusted EBITDA ($M)FY 2025N/A$10–$12 (3/13/2025) New
Total Revenues ($M)Q1 2025N/A$26–$27; includes ~$3M revenue from Oxford/Dragonfly pre-close (3/13/2025) New
Adjusted EBITDA ($M)Q1 2025N/A~ $2 (3/13/2025) New
Adjusted EBITDA Margin (pro forma)FY 2025N/AManagement expects margins to more than double YoY (pro forma) New

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 & Q3)Current Period (Q4)Trend
AI/technology initiativesAI Product Day; Copilot for Policy and Global Intelligence launches; partnerships (Creolytix, Empowered Systems) PolicyNote launched Jan 2025; strong AI feature engagement; higher multiyear contract share in corporate Strengthening product-led growth
Debt deleveragingBoard.org proceeds; debt reduction initiatives Senior term loan at $89M YE 2024; expected ~$30M additional reduction post Oxford/Dragonfly; cash interest to ~$2M/qtr Improving leverage and interest burden
Macro/public sectorRetention impacted by macro headwinds; pacing adjustments Monitoring private-sector volatility; federal changes unlikely to materially impact; potential public-sector upside Cautious but manageable
Product performance/retentionNRR 98% (Q2), 99% (Q3); ARR flat pro forma in Q3 NRR 98%; ARR $107M (pro forma ARR −2% YoY); plan for H2’25 ARR growth Near-term softness, improvement expected
Divestitures/portfolio focusAicel divestiture; non-core sunsets Definitive agreement to divest Oxford Analytica and Dragonfly for $40M; continued streamlining Ongoing simplification

Management Commentary

  • “With today’s announcement, we are continuing to demonstrate expanding Adjusted EBITDA margins, an accelerating path to positive free cash flow, and a strong foundation for long term, durable growth... Looking ahead to 2025... we expect to expand Adjusted EBITDA margins by more than double year over year on a proforma basis... set the stage for accelerating growth in the future.” — Josh Resnik, CEO .
  • “Our expectations for 2025 reflect the realization of efficiencies... driving substantially expanded Adjusted EBITDA margins – which are expected to more than double on a proforma basis... combined with a further reduction in the Company’s debt service costs, will considerably accelerate the Company’s progress towards positive free cash flow.... increased benefit to ARR in the second half of 2025 and lead to improved organic revenue growth in 2026.” — Jon Slabaugh, CFO .
  • “The fourth quarter 2024... marked the sixth consecutive quarter of adjusted EBITDA profitability... first full calendar year of reported adjusted EBITDA profitability in the Company’s history.” — Press release .

Q&A Highlights

  • PolicyNote adoption: Company did not disclose user counts but reported high engagement with AI features (AI assistant, AI alerting), validating value and informing product development; qualitative feedback positive .
  • Leverage target: Management aims to reduce leverage into a 2–3x range over the foreseeable future as EBITDA rises and debt declines (no specific timeline) .
  • Interest expense trajectory: Post Oxford/Dragonfly close, senior term loan reduction of ~$30M expected; cash interest to ~ $2M per quarter; subordinated convertibles to be managed over time .
  • Guidance framing: Q1 2025 guidance includes ~$3M revenue contribution from Oxford/Dragonfly (pre-close); subsequent quarters will not include these businesses .
  • Copilot usage: Broad availability to subscribers; strong usage metrics noted qualitatively; Copilot supports product-led sales/upsell, though specifics not disclosed .

Estimates Context

  • Wall Street consensus from S&P Global for NOTE’s Q4 2024 revenue and EPS was unavailable at the time of analysis due to data access limits; therefore, vs-consensus comparisons cannot be provided. Results did beat company-issued guidance (Q4 revenue $29.5M vs. $29.0M guided; adjusted EBITDA $3.3M vs. $2.5M guided), suggesting upward pressure on near-term profitability expectations despite top-line contraction .
  • Implications: FY 2025 guidance ($94–$100M revenue; $10–$12M adjusted EBITDA) and commentary on doubling adjusted EBITDA margins (pro forma) likely require consensus models to reflect higher margin assumptions and lower revenue base post-divestitures .

Key Takeaways for Investors

  • Mix shift and cost discipline are driving durable margin gains despite divestiture-led revenue declines; Q4 gross margin 82% and adjusted EBITDA margin 11% indicate improving unit economics .
  • Six straight quarters of positive adjusted EBITDA and FY 2024 positive adjusted EBITDA validate the operating model and set up FY 2025 margin expansion (pro forma margins expected to more than double) .
  • Near-term ARR/NRR softness (ARR $107M; NRR 98%) should improve in H2 2025 as PolicyNote deployment scales and multiyear corporate contracts increase; expect GAAP revenue reacceleration in 2026 .
  • Deleveraging remains a key catalyst: anticipated ~$30M senior term loan reduction and cash interest ~ $2M/quarter enhance free cash flow trajectory and equity value potential .
  • Strategic review continues; additional portfolio actions and capital structure optimization could further simplify the story and accelerate profitability .
  • Near-term trading lens: Focus on confirmations of Oxford/Dragonfly close, PolicyNote adoption metrics, and Q1 2025 execution vs. guidance ($26–$27M revenue; ~$2M adjusted EBITDA) .
  • Medium-term thesis: Product-led growth (AI-first PolicyNote), higher multiyear deal mix, and efficient operating structure support a transition from margin repair to top-line growth in 2026, with improved cash generation.