FiscalNote Holdings (NOTE): A Turnaround Play on Restructuring and Innovation

Nathaniel StoneMonday, May 12, 2025 7:55 pm ET
11min read

The stock of

FiscalNote Holdings
(NOTE) has fallen sharply this year, with a 37.6% YTD decline as of May 12, 2025, but this drop masks a compelling opportunity. Beneath the volatility lies a company undergoing a strategic transformation—one that could position it for long-term growth. With operational restructuring, product innovation, and a reaffirmed commitment to profitability, FiscalNote is primed to capitalize on its niche in policy analytics. Here’s why this undervalued stock deserves investor attention now.

The Contrarian Case for NOTE: YTD Decline vs. Strategic Momentum

FiscalNote’s stock has been battered by market skepticism, with shares falling from a high of $1.98 in February 2025 to a YTD low of $0.65 by mid-May. Yet, this decline overlooks key catalysts:
- Zacks #2 Buy Rating: Analysts at Zacks Investment Research have upgraded the stock to a Buy rating based on positive earnings estimate revisions, signaling confidence in its ability to outperform the market.
- Adjusted EBITDA Improving: Despite quarterly losses, the company’s focus on cost discipline and core operations is likely narrowing its adjusted EBITDA gap.

Operational Restructuring: Cutting Fat to Fuel Core Growth

FiscalNote has made strategic divestitures to shed non-core assets and sharpen its focus on policy analytics—its crown jewel. By streamlining operations and redirecting resources to high-margin products like PolicyNote, the company aims to:
1. Improve margins: Reducing overhead and eliminating underperforming divisions should boost EBITDA.
2. Accelerate R&D: Freeing up capital to refine PolicyNote’s AI-driven tools, which analyze regulatory trends and legislative shifts in real time.

This pivot is already showing results: the company has beat revenue estimates in four consecutive quarters, even as top-line growth faces headwinds. The Q1 2025 results, though marked by a widened EPS loss due to one-time restructuring costs, saw revenue rise 4.2% above expectations to $27.5M.

Product Innovation: PolicyNote’s Traction in Retention and Deals

PolicyNote, FiscalNote’s flagship platform, is driving multiyear contracts and higher client retention. By providing governments and corporations with predictive insights into policy changes, it reduces the risk of regulatory missteps. Key signs of momentum include:
- Multiyear deals: Long-term contracts with clients like Fortune 500 firms and international governments are boosting recurring revenue.
- High retention rates: Clients are staying on the platform longer, reducing churn and stabilizing cash flows.

While specific PolicyNote revenue figures aren’t yet public, its adoption is a key growth lever for the company’s adjusted EBITDA.

Reaffirmed Guidance: Navigating Near-Term Headwinds

Despite revenue declines year-over-year—Q4 2024 revenue dipped to $29.47M from $34.27M in the prior year—the company has reaffirmed its full-year 2025 guidance. Analysts now project a narrowed annual loss of $0.26 EPS on $96.22M in revenue, reflecting confidence in its restructuring path.

The near-term dip in revenue is partly due to deliberate strategic choices, such as exiting unprofitable markets. Investors should view this as a long-term advantage, not a failure.

Why the Zacks #2 Buy Rating Matters

Zacks’ #2 Buy rating isn’t arbitrary. It reflects:
- Industry tailwinds: FiscalNote’s Technology Services sector ranks in the top 27% of all Zacks industries, historically outperforming peers.
- Estimate revisions: Analysts are incrementally raising their FY2025 revenue forecasts, with consensus now at $96.22M.

Conclusion: A Strategic Entry Point

FiscalNote’s YTD decline has created a rare entry point for investors willing to look past short-term noise. With a Zacks #2 Buy rating, a refocused strategy, and a product (PolicyNote) gaining traction in high-margin markets, the stock could rebound sharply once its restructuring benefits materialize.

The catalysts are clear:
- Margin improvements from cost cuts.
- Revenue stability from multiyear contracts.
- EBITDA positivity as PolicyNote scales.

While near-term volatility remains a risk, the 37.6% YTD drop has priced in much of the bad news. For investors with a 12–18 month horizon, FiscalNote offers a compelling mix of undervaluation and turnaround potential. Now is the time to act.

Note: Always conduct your own research and consult with a financial advisor before making investment decisions.