Exceeds Previous Forecast and Reports Fourth Consecutive Quarter of Positive Adjusted EBITDA While Implementing Accelerated AI Product Strategy and Roadmap 

• Reports Q2 2024 total revenues of $29.2 million and adjusted EBITDA of $1.8 million(1), both exceeding previously provided forecast
• Records fourth consecutive quarter of positive adjusted EBITDA, FiscalNote’s first year of positive adjusted EBITDA on a trailing LTM basis
• Provides Q3 2024 forecast with total revenues of approximately $29 million and adjusted EBITDA of approximately $2 million; continued focus on profitability, raises and tightens full year adjusted EBITDA forecast, with higher expected full year adjusted EBITDA margins
• Maintains commitment to invest in new products and product enhancements to drive higher customer engagement, retention rates, revenue growth and operating leverage anticipated in 2025
• Board of Directors continues to review all strategic options available to the Company to maximize shareholder value

WASHINGTON: FiscalNote Holdings, Inc. (NYSE: NOTE) (“FiscalNote” or the “Company”), a leading information services company using AI-driven enterprise SaaS technology to provide global political, legislative and regulatory policy and market intelligence, today reported financial results for the second quarter ended June 30, 2024.

These quarterly results mark another quarter of exceeding expected results driven by a blue chip customer base, durable recurring revenue and high gross margins, which form the basis of the Company’s increasing adjusted EBITDA and ongoing leadership in delivering AI-enabled policy and market information. The second quarter of 2024 represented a $6.1 million improvement in adjusted EBITDA year over year and marked the fourth straight quarter of adjusted EBITDA profitability for FiscalNote – its first year of positive adjusted EBITDA on a trailing LTM basis. The enhanced adjusted EBITDA profitability and the improved cash position from the previous quarter divestiture of Board.org position the Company strongly for investment and growth in the future.

“During the second quarter, we continued to execute on our accelerated AI product strategy and roadmap, including a new Copilot launch and a successful and impactful AI Product Day that reached both current and prospective customers as well as stakeholders from the investment community,” said Tim Hwang, Chairman, CEO, and Co-founder of FiscalNote. “We continue to assess avenues to leverage our market leading political, legislative, and regulatory policy data sets for the benefit of our global customers while we pursue our long term growth strategy of increased market share and improving revenue growth and sustained profitability.”

Financial Highlights(2)

Q2 2024 vs. Q2 2023

[Note - All amounts for the three months ended June 30, 2023 include contributions from the Board.org business, which the Company divested on March 11, 2024.]

Second Quarter and Recent Operational Highlights

• Showcased the next stage of AI leadership and innovation during the “AI Product Day 2024” event which highlighted the Company’s AI-powered products and accelerated product roadmap and strategy for 2024 and beyond.
• Introduced FiscalNote Copilot for Policy, the second innovative AI Copilot from the Company, designed to enable increased efficiency and impact on policy and legislative workflows for global government affairs professionals.
• Announced a new strategic partnership with Creolytix, integrating the Company’s Dragonfly offering with Creolytix’s platform to empower enterprises with world-class global intelligence in their risk management programs.
• Launched a new strategic partnership which will integrate FiscalNote’s Risk Connector, Dragonfly, and Global Intelligence Copilot products with Empowered Systems’ third-party risk management solution platform.
• Announced a series of new and expanded large customer contract agreements with a wide array of leading global corporate enterprises spanning diversified market sectors.
• Unveiled the integration of new AI enhancements to FiscalNote’s Fireside offering - the leading all-in-one constituent relationship management SaaS platform - to optimize and streamline the management and responsiveness of lawmaker communications and casework.
• Launched the EU Transposition Tracker to enable global customers to monitor and take action on the transposition of critical EU Directives across the various member states.
• Announced the expansion of its award-winning Roll Call media property to now include data from Factba.se - the go-to trusted AI database for historical and current Presidential remarks - as well as the integration of StressLens, a groundbreaking innovation that equips customers with the real-time ability to decode the human element, to provide users with instant, AI-driven analysis of the Presidential candidates during the 2024 election campaign.
• FiscalNote’s Dragonfly offering received Band 1 recognition for global-wide Political Risk in Chambers and Partners’ Crisis and Risk Management Guide 2024 for the third consecutive year - one of only two global intelligence companies to attain the highest level of recognition.
• Published its third annual corporate Sustainability Overview for fiscal year 2023, “Our Progress Toward a Sustainable Future: FiscalNote's Sustainability & Social Impact Efforts.”

Commenting on the quarter, FiscalNote Chief Financial Officer, Jon Slabaugh, said, “Our second quarter results exceeded our forecast, as we continued to both invest in our product strategy and extract operating efficiencies. Looking ahead, for the full year 2024 we raised and tightened our profitability forecast, reflecting the realization of continued operational efficiencies. At the same time, our results reflect the impact of our focus and reallocation of capital to higher returning products and customer segments to improve margins and profitability. To that end, we continue to make investments in new products and product enhancements, including those featured in our June AI Product Day, which we expect to drive higher customer engagement, retention rates, and revenue growth in 2025 and beyond.”

Second Quarter Financial Performance

Revenue(2)

For Q2 2024, subscription revenue declined $2.4 million, or 8%, versus prior year, due primarily to the impact of the Board.org sale. Excluding the impact of Board.org, subscription revenue increased by $0.8 million, or 3%.

For Q2 2024, advisory, advertising, and other revenue decreased $1.3 million, or 38%, versus prior year, due primarily to the discontinuation of certain non-strategic products and related services. Excluding the impact of Board.org, advisory, advertising, and other revenue decreased $1.0 million, or 31%.

Key Performance Indicators(3)

*Pro forma RRR and Pro forma ARR adjusts prior periods for the impact of the divestiture of Board.org.

As of June 30, 2024, RRR declined $14 million, or 10%, versus prior year, principally due to the impact of the divestiture of Board.org. Excluding Board.org, RRR is flat compared to June 30, 2023.

As of June 30, 2024, ARR declined $11 million, or 9%, versus prior year, principally due to the impact of the divestiture of Board.org. Excluding Board.org, ARR increased approximately $2 million, or 2%, compared to June 30, 2023.

As of June 30, 2024, NRR was 98%, level with the prior year six month period as of June 30, 2023.

Operating Expenses(2)

In Q2 2024, operating expenses decreased versus prior year, primarily due to the sale of Board.org, ongoing operating efficiency measures instituted throughout 2023 and 2024, as well as the costs associated with sunset products. On a pro forma basis, excluding amortization expense, stock-based compensation, and the impact of the sale of Board.org, operating expenses decreased approximately $6 million, or 16%.

Financial Forecast

Continuing the Company’s focus on profitable growth, the Company has updated its financial forecast for full year 2024 and issued its initial forecast for Q3 2024. In both instances, such forecasts reflect management’s expectations based on the most recent information available. After FiscalNote marked the fourth straight quarter of adjusted EBITDA profitability, marking FiscalNote’s first year of positive adjusted EBITDA results on a trailing LTM basis, the Company expects 2024 to deliver its first full calendar year of adjusted EBITDA profitability in the Company’s history.

Full Year 2024

Q3 2024

The forecast raises and tightens full year Adjusted EBITDA as the Company continues to focus on reallocating resources towards higher returning sources of revenue and investments in improving retention rates, margins and profitability among our subscription customers. Additionally, the revision to total revenues for the full year reflects the impact to the second half of 2024 from recently experienced lower than expected rates of customer retention driven by a number of factors, including macroeconomic headwinds and delays in the launch of certain product enhancements. While these impacts have temporarily led to slower than expected ARR growth, the Company expects continued investments in product innovation and platform investments focused on improved customer experience to drive higher customer engagement, retention rates and, as a result, revenue growth and improved operating leverage as it progresses through the second half of 2024 and into 2025. The Company expects to accelerate growth rates in 2025 as it re-allocates sales and product resources to high-performing offerings and realizes the benefits of its recent product and organizational initiatives.

Strategic Review

As previously announced, following the formation by the Company’s Board of Directors (the Board) of a Special Committee (the Committee) in November 2023, and receipt of inbound interest, the Board and the Committee along with their advisors continue to review the Company’s ongoing plans and evaluate all strategic value-maximizing options available to the Company. There can be no assurance that the strategic review will result in any transaction or other outcome. The Company has not set a timetable for completion of the review and does not intend to disclose developments or provide updates on the progress or status of the review unless and/or until it deems further disclosure is appropriate or required. Centerview Partners LLC and Skadden, Arps, Slate, Meagher & Flom LLP continue to be retained by the Company as independent advisors to the Committee.

Conference Call, Presentation Supplement, and Webcast Information

The Company management will host a conference call at 5:00 pm ET today, Thursday, August 8, 2024, to discuss these financial results.

LIVE

• By phone
• Dial for the U.S. or Canada 1 (800) 715-9871 or for International 1 (646) 307-1963 and enter the conference ID 2431537.
• By webcast
• Visit the Investor Relations section of the Company’s website.

REPLAY

• By phone (available through Thursday, August 22, 2024)
• Dial for the U.S. or Canada 1 (800) 770-2030 or for International 1 (647) 362-9199 and enter the conference ID 2431537.
• By webcast
• Visit the Investor Relations section of the Company’s website.