FiscalNote's Strategic Turnaround and Path to Sustainable Growth

FiscalNote Holdings Inc. (NYSE: NOTE) has embarked on a transformative journey in 2025, repositioning itself as a leader in AI-driven policy and regulatory intelligence. The company's strategic initiatives, operational discipline, and financial resilience are converging to address long-standing challenges while unlocking new growth opportunities. For investors, the question is no longer whether FiscalNote can survive its recent struggles but whether it can capitalize on its renewed focus to deliver sustainable shareholder value.

Operational Discipline: Streamlining for Profitability

FiscalNote's 2025 turnaround is anchored in a sharp focus on cost management and operational efficiency. The company reduced total operating expenses by 17% year-over-year in Q2 2025, driven by the divestiture of non-core assets like TimeBase (sold to Thomson Reuters for $6.5 million) and the sunsetting of legacy products. These moves, combined with a 28% reduction in cost of revenues and a 29% cut in R&D expenses, contributed to a 58% year-over-year improvement in adjusted EBITDA and a doubling of adjusted EBITDA margins to 12%.

The refinancing of its senior term loan with MGG Investment Group—extending maturity to 2029—has further stabilized FiscalNote's balance sheet. This refinancing, coupled with a $68 million improvement in free cash flow over the trailing twelve months, provides the company with a clear runway to reinvest in high-margin innovations while maintaining financial flexibility.

Product Innovation: AI as a Strategic Differentiator

FiscalNote's PolicyNote platform has emerged as a cornerstone of its growth strategy. In 2025, the company rolled out AI-powered features such as legislative drafting, advanced alerts, and a Tariff Tracker to help clients navigate global trade volatility. These innovations have not only enhanced the platform's value proposition but also driven user engagement: PolicyNote now surpasses legacy platforms in daily active users, with AI features accounting for a significant portion of search activity.

The introduction of AI-powered social listening in August 2025 further solidifies FiscalNote's position as a leader in predictive policy intelligence. By identifying early signals of regulatory shifts, the platform enables clients to act proactively—a critical advantage in an era of rapid geopolitical and legislative changes.

Financial Resilience and ARR Momentum

Despite a 10% decline in advisory and advertising revenue due to product sunsetting, FiscalNote's core business is showing signs of stabilization. The company reported Q2 2025 revenue of $23.3 million, exceeding guidance, and reaffirmed its full-year 2025 revenue outlook of $94–$100 million. While Annual Recurring Revenue (ARR) dipped to $85.9 million in Q2 2025 from $93.6 million in 2024, management attributes this to temporary challenges in federal sector retention and Q1 execution.

The path to ARR growth is now clearer. FiscalNote has seen a doubling of new corporate customers committing to multiyear agreements compared to Q2 2024, and enterprise demand for global data packages is surging. The CEO, Josh Resnick, has emphasized that the migration to PolicyNote is accelerating, with higher average contract values and improved gross retention expected to drive ARR expansion in H2 2025 and beyond.

Investment Implications: A Rebalanced Risk-Reward Profile

FiscalNote's strategic pivot has redefined its risk profile. The company's debt refinancing and operational efficiency gains have reduced leverage concerns, while its AI-driven product roadmap positions it to capture market share in a high-growth sector. For investors, the key risks remain execution-dependent: Can FiscalNote sustain its cost discipline while scaling AI capabilities? Can it retain legacy customers during the platform migration?

However, the company's disciplined approach—prioritizing profitability over short-term revenue growth—suggests a more sustainable path forward. With a cash balance of $39.2 million and a debt maturity profile extending to 2029, FiscalNote has the flexibility to navigate macroeconomic headwinds. The stock's current valuation, trading below its Fair Value estimate, offers an attractive entry point for long-term investors who believe in the company's ability to monetize its AI-driven insights.

Conclusion: A Turnaround with Legs

FiscalNote's 2025 transformation is a testament to the power of strategic clarity. By combining operational rigor, product innovation, and financial discipline, the company is laying the groundwork for a return to ARR growth and improved profitability. While challenges persist, the alignment of its capital structure, customer demand for AI-driven solutions, and a management team focused on long-term value creation make FiscalNote a compelling case study in corporate reinvention.

For investors, the question is no longer whether FiscalNote can survive its recent struggles but whether it can capitalize on its renewed focus to deliver sustainable shareholder value. The answer, based on its current trajectory, appears increasingly affirmative.