FiscalNote’s Strategic Shift Takes Center Stage Ahead of Q1 2025 Earnings

FiscalNote (NYSE: NOTE) is set to host its Q1 2025 earnings call on May 12, 2025, a critical juncture for the regulatory intelligence firm as it pivots toward core products, deleverages its balance sheet, and navigates macroeconomic headwinds. With its recent operational streamlining and strategic divestitures, the company aims to prove its transition to a leaner, more profitable enterprise. Here’s what investors need to know.

A Year of Restructuring and Resilience

FiscalNote’s 2024 results underscored a deliberate shift away from non-core businesses. While total revenue fell 9% to $120.3 million due to divestitures (including Board.org and Aicel), its subscription-based model—representing 92% of revenue—showed relative strength. The company’s adjusted EBITDA turned decisively positive in 2024, reaching $9.8 million, a dramatic improvement from a $7.5 million loss in 2023. Gross margins also surged to 82% in Q4 2024, reflecting cost-cutting measures such as reduced headcount and sunset of legacy products.

2025: Margins First, Growth Second

The 2025 forecast prioritizes profitability over top-line growth. Revenue is expected to range between $94 million and $100 million, a 17–22% decline from 2024, primarily due to the sale of Oxford Analytica and Dragonfly Intelligence (closed in Q1 2025 for $40 million). However, adjusted EBITDA is projected to grow to $10–12 million, a >100% margin expansion from 2024’s 8%.

The launch of PolicyNote in January 2025 is central to this strategy. By consolidating regulatory intelligence tools into a single AI-powered platform, FiscalNote aims to reduce maintenance costs, boost customer retention, and drive long-term scalability. Early indicators suggest this move is resonating: the platform’s adoption has already streamlined internal operations, with CEO Josh Resnik emphasizing its role in “future-proofing” the business.

Key Risks and Opportunities

• Divestiture Windfalls: Proceeds from recent sales ($49.6 million total) have bolstered cash reserves to $35.3 million (as of late 2024), enabling debt prepayments and balance sheet strengthening.
• Government Contracts: Federal spending delays or shifts could impact public-sector revenue, which accounts for a significant portion of the business.
• Private Sector Caution: Macroeconomic uncertainty may delay enterprise software purchases, though FiscalNote’s focus on high-margin subscription models mitigates some risks.

Conclusion: A Tightrope Walk Toward Profitability

FiscalNote’s 2025 story hinges on execution. The company’s margin expansion—driven by cost discipline, divestiture proceeds, and PolicyNote’s efficiency gains—positions it to achieve free cash flow positivity sooner than anticipated. However, investors must weigh these positives against lingering risks: a 22% revenue decline would mark a significant contraction, and reliance on volatile government contracts remains a concern.

The May 12 earnings call will offer clarity on several fronts:
- Q1 2025 Results: Revenue of $26–27 million (vs. $29.5M in Q4 2024) and adjusted EBITDA of ~$2 million will test management’s guidance.
- PolicyNote Adoption: Metrics on customer retention and cross-selling could validate the platform’s strategic value.
- Balance Sheet Updates: With debt reduced by 44% in 2024, further deleveraging could lower financial risk.

For now, the data paints a company on the right path—but one that must continue walking it. Investors should monitor both margin trends and top-line stability as indicators of whether FiscalNote’s pivot has struck the right balance between growth and profitability.