Executive Summary / Key Takeaways

• FiscalNote is undergoing a strategic transformation, divesting non-core assets and consolidating its offerings around the AI-first PolicyNote platform to drive profitable, sustainable growth.
• The company has demonstrated consistent adjusted EBITDA expansion, achieving its fifth consecutive quarter with margins at or above 10% in Q3 2025, reflecting strong cost discipline and operational efficiency.
• A significant debt refinancing in Q3 2025 extended maturities to 2029 and reduced cash interest expenses, substantially strengthening the balance sheet and accelerating the path to positive free cash flow.
• PolicyNote, launched in January 2025, is showing strong user engagement and driving improvements in new logo sales, average contract values, and multi-year commitments, which are expected to translate into renewed Annual Recurring Revenue (ARR) growth in H2 2025 and GAAP revenue growth in 2026.
• Despite ongoing volatility in the federal sector and a material weakness in internal controls, FiscalNote's focused strategy, technological differentiation, and disciplined execution position it for long-term value creation.

The AI-Driven Core: Reshaping Policy Intelligence

FiscalNote Holdings, Inc. (NYSE:NOTE) stands as a leading provider of artificial intelligence (AI)-driven policy and regulatory intelligence solutions, a market it pioneered since its founding in 2013. The company's core mission is to equip global enterprises, government institutions, trade groups, and non-profits with critical, actionable legal and policy insights in an increasingly complex political, regulatory, and macroeconomic environment. FiscalNote achieves this by uniquely combining proprietary AI technology, comprehensive data, and decades of trusted analysis. Its portfolio includes well-known brands like PolicyNote, CQ, Roll Call, and VoterVoice, serving thousands of customers across North America, Europe, Asia, and Australia.

The company's strategic journey has been marked by significant evolution. Following a business combination in 2022, FiscalNote embarked on a deliberate path of streamlining its operations. This involved divesting non-core assets such as Board.org, Aicel Technologies, Oxford Analytica, Dragonfly, and TimeBase between late 2024 and mid-2025. These divestitures, while impacting reported revenue, were crucial for rationalizing the cost structure and sharpening the company's focus on its core policy business. This strategic contraction is designed to create a leaner, more profitable company, with a clear emphasis on product-led growth.

Technological Edge: PolicyNote and AI Innovation

At the heart of FiscalNote's strategy is its differentiated technology, particularly the AI-first PolicyNote platform, publicly launched in January 2025. PolicyNote is designed to fundamentally transform the user experience by consolidating all of FiscalNote's global-to-local data, proprietary insights, and AI into a single, powerful interface. This platform is foundational for product-led sales and growth, serving as a centerpiece for efficient, scalable innovation.

The tangible benefits of PolicyNote are already evident. The platform leverages advanced AI features, including AI-powered legislative drafting, social listening to identify early policy signals, upgraded reporting, and AI-generated tariff impact reports. More recently, FiscalNote launched Bill Comparison, an AI-driven capability that allows users to instantly redline and compare versions of pending bills, saving hours of manual review and accelerating decision-making. Since its launch, the product team has rolled out more than 35 major enhancements to PolicyNote year-to-date in 2025, including 15 major new features such as an executive orders widget with automated AI-powered insights and intelligent alert management.

These innovations are not merely incremental; they are designed to "leapfrog the competition" by automating more aspects of policy and regulatory workflows. For instance, when President Trump announced sweeping tariffs in April 2025, FiscalNote launched a new tariff tracker in PolicyNote just two weeks later, enabling customers to quickly assess and manage business impact. This rapid turnaround demonstrates the company's accelerated pace of innovation and tight alignment between product and go-to-market teams.

Usage trends on PolicyNote are overwhelmingly positive. The platform has garnered more daily active users than the legacy FiscalNote platform since June 2025, a major milestone. Core engagement metrics like search frequency and AI assistant usage remain strong, surpassing legacy platforms and meeting industry benchmarks. Furthermore, new PolicyNote customers are setting high-value alerts much sooner after account activation, and average customer usage increases by approximately 30% from the midpoint to the end of their first quarter. These behaviors indicate high usage frequency, product stickiness, and deep integration into customer workflows, serving as early indicators of future improvements to gross and net retention. The company is also leveraging Agentic AI in its R&D teams, leading to faster feature launches and higher productivity.

For investors, this technological differentiation is a critical competitive moat. It enables FiscalNote to offer superior efficiency and insights, fostering stronger customer loyalty and potentially higher average contract values (ACVs). The company's ability to rapidly innovate and integrate AI positions it to capture a greater share of wallet in the growing market for AI-driven policy and governance tools, which some sources predict could see a compound annual growth rate (CAGR) of over 40%.

Competitive Landscape and Strategic Positioning

FiscalNote operates in a competitive landscape dominated by established players in legal, regulatory, and business intelligence, such as RELX Group (RELX) (LexisNexis), Thomson Reuters (TRI), and Wolters Kluwer (WTKWY). These giants possess extensive data resources, established brand loyalty, and significant scale. However, FiscalNote differentiates itself through its specialized focus on public policy and advocacy tools, offering more tailored AI applications for government and non-profit clients.

While larger competitors may offer broader legal databases, FiscalNote's unique value proposition lies in its AI for real-time policy insights and workflow automation for advocacy, where it aims to lead in user-friendly interfaces and adaptability for emerging issues. The company's strategy as an agile innovator for mid-sized clients, non-profits, and trade groups contrasts with the comprehensive suites offered by its larger rivals.

Financially, FiscalNote's growth trajectory in revenue from AI services appears promising, with potential for efficient cash flow. However, it trails the historically robust profitability and R&D backing of larger competitors, who benefit from economies of scale. FiscalNote's proprietary AI technology, network effects from its user base, and specialized focus on public policy tools serve as primary competitive advantages, enhancing workflow efficiency and customer loyalty. This helps FiscalNote differentiate against competitors whose broader tools may be less specialized for policy analysis.

Despite its strengths, FiscalNote faces vulnerabilities due to its smaller scale, which can lead to higher costs and lower margins compared to its larger rivals. This could impact its ability to compete in large-scale contracts and hinder R&D investment. However, high barriers to entry in the legal data industry, such as access to proprietary datasets, regulatory expertise, and AI development costs, protect FiscalNote's position and support its financial performance.

Financial Performance and Liquidity Transformation

FiscalNote's financial performance in 2025 reflects a company in the midst of a significant transformation, prioritizing profitability and balance sheet health. In the third quarter of 2025, total revenue was $22.4 million, in line with guidance, but a $7 million decrease from Q3 2024, primarily due to the divestiture of non-core businesses. Subscription revenue, the cornerstone of the business, was $21.2 million in Q3 2025, a $6 million decrease year-over-year, largely due to divestitures. On a pro forma basis, excluding divestitures, Q3 2025 subscription revenue was $1.8 million lower than the prior year, reflecting the ongoing transition to PolicyNote and challenges in customer retention, exacerbated by federal government cuts.

Despite revenue headwinds, FiscalNote has demonstrated remarkable progress in profitability. Adjusted EBITDA for Q3 2025 was $2.2 million, exceeding guidance and translating to a 10% margin. This marks the fifth consecutive quarter of adjusted EBITDA margins at or above 10%, a testament to the company's disciplined cost management, sharper prioritization of core growth initiatives, and improving operating leverage. For the full year 2024, FiscalNote achieved $9.8 million in adjusted EBITDA, an improvement of over $17 million and 1,400 basis points year-over-year, marking the first full year of positive adjusted EBITDA in the company's history. On a pro forma basis, excluding non-cash and other non-recurring charges and the impact of 2024 divestitures, operating expenses decreased by approximately 8% in Q3 2025.

Liquidity and capital structure have been a central focus. The company shored up its balance sheet in Q3 2025 through a substantial debt refinancing, extending maturities by four years to 2029. On August 12, 2025, FiscalNote closed a new $75 million senior term loan, receiving net proceeds of $72.9 million. This new loan replaced the Prior Senior Term Loan, which was retired with a cash payment of approximately $62.7 million. The refinancing also involved restructuring subordinated convertible notes, reducing their balance and eliminating most annual paid-in-kind (PIK) interest. As a result, annualized cash interest payments are expected to be approximately $9 million based on current SOFR rates, with quarterly principal repayments starting at $0.5 million and increasing to $0.9 million.

The company's cash and cash equivalents, including short-term investments, stood at $31.8 million at September 30, 2025. While FiscalNote had a negative working capital balance of $31.3 million (excluding cash and short-term investments) and an accumulated deficit of $849.3 million as of September 30, 2025, the management believes the recent actions provide the flexibility to fund future operations and accelerate the path to positive cash flows. Cash flow from operations improved significantly, from negative $35.49 million in 2023 to negative $5.3 million in 2024, indicating a clear trend towards positive operating cash flow.

Outlook, Guidance, and Risks

FiscalNote's outlook for 2025 reflects a period of continued transition and building momentum. The company has narrowed its full-year 2025 revenue guidance to a range of $95 million to $96 million, with adjusted EBITDA projected to be approximately $10 million. This updated guidance remains within previous ranges and accounts for strong core business performance alongside specific impacts from disruptions in the federal sector. For Q4 2025, the company expects total revenues of $22 million to $23 million and adjusted EBITDA of approximately $2 million.

Management anticipates Annual Recurring Revenue (ARR) growth to resume in the second half of 2025, driven by the adoption of PolicyNote and improved sales execution. This is expected to translate into more substantial GAAP revenue growth in 2026 and beyond. The company is seeing strong inbound demand, with corporate new logo sales showing continued momentum and win rates among enterprise clients improving by 400 basis points quarter-over-quarter in Q3 2025, and 500 basis points year-to-date across all corporate segments. Average contract values have trended meaningfully upward, particularly for global data packages, and corporate multiyear contracts now account for approximately 50% of new logo ARR, up from about 20% in early 2024. This increase in multi-year commitments is a strong indicator of customer confidence and is expected to directly impact gross retention improvements in 2026.

However, FiscalNote faces several risks. The company has disclosed substantial doubt about its ability to continue as a going concern within one year from the November 10, 2025 filing date, citing potential non-compliance with financial covenants under the 2025 Senior Term Loan. Non-compliance could lead to lenders declaring outstanding amounts due and payable, which the company would be unable to satisfy.

The protracted U.S. government shutdown has negatively impacted revenues, profitability, and cash flows, with an estimated full-year impact of $2 million to $3 million. This volatility in the federal sector, including potential non-renewal or cancellation of public sector contracts, remains a concern. Furthermore, FiscalNote identified a material weakness in internal control over financial reporting in Q3 2025, related to the independent review and approval of manual journal entries. While management believes this did not result in misstatements, remediation efforts are ongoing. Future equity issuance could lead to substantial dilution, and additional debt could impose significant operational restrictions.

Conclusion

FiscalNote Holdings, Inc. is in the midst of a profound transformation, strategically shedding non-core assets and doubling down on its AI-powered policy intelligence platform, PolicyNote. This pivot, coupled with rigorous cost discipline, has yielded consistent adjusted EBITDA profitability, marking a significant operational turnaround. The recent debt refinancing has substantially de-risked the balance sheet, providing the necessary runway to execute its product-led growth strategy.

The core investment thesis hinges on the successful adoption and expansion of PolicyNote, which is already demonstrating strong user engagement and driving higher-value, multi-year contracts. FiscalNote's technological leadership in AI-driven policy insights provides a critical competitive advantage against larger, more generalized rivals. While challenges such as federal sector volatility and internal control weaknesses persist, the company's focused strategic initiatives and disciplined execution, particularly in leveraging AI for workflow automation and global data packages, position it for renewed ARR growth in the near term and sustained GAAP revenue growth in 2026. For investors, FiscalNote represents a compelling opportunity to participate in a company actively reshaping its future through innovation and financial prudence, with clear indicators pointing towards long-term value creation.