FiscalNote Reports Second Quarter 2026 Financial Results
Total Revenue In Line with Guidance; Adjusted EBITDA Slightly Below Guidance; Establishes Q3 2026 Forecast and Revises FY26 Guidance
Company To Host Conference Call Today at 5:00 PM ET
The Company reported Q2 2026 revenues of
The Company continued to strengthen its operating model, reducing its cost base and improving operating leverage, supported by the workforce transformation initiated in March. It continues to execute on its broader operational transformation through AI deployment, changes to team structures, insourcing of third-party spend, and other streamlining initiatives.
FiscalNote also continued to see early adoption in its agentic API product offerings, including new licenses for its PolicyNote MCP APIs with Siemens, a multinational industrial and technology conglomerate, and a globally recognized
Commenting on the quarterly results, Key Compton, CEO and President of FiscalNote, said, “We came in
Second Quarter 2026 Financial Highlights(2)
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(Unaudited) |
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Three Months Ended June 30, |
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($ in millions) |
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2026 |
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2025 |
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% Change |
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Total Revenues |
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$ |
|
19.6 |
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$ |
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23.3 |
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(16 |
) |
% |
Subscription Revenue as % of Total Revenues |
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96 |
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% |
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92 |
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% |
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|
400 |
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bps |
Gross Profit |
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$ |
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15.6 |
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$ |
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18.3 |
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(15 |
) |
% |
Gross Margin |
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80 |
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% |
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|
79 |
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% |
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|
100 |
|
bps |
Adjusted Gross Profit (1) |
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$ |
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17.3 |
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$ |
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20.1 |
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(14 |
) |
% |
Adjusted Gross Margin (1) |
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88 |
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% |
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86 |
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% |
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200 |
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bps |
Net Loss |
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$ |
|
(27.8 |
) |
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$ |
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(13.3 |
) |
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* |
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Adjusted EBITDA (1) |
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$ |
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2.3 |
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$ |
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2.8 |
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(18 |
) |
% |
Adjusted EBITDA Margin (1) |
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12 |
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% |
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12 |
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% |
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- |
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bps |
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Cash and Cash Equivalents |
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$ |
|
20.6 |
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$ |
|
39.2 |
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bps - Basis Points |
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* - percentage change is greater than +/- |
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Note: All amounts for the three months ended June 30, 2025 include contributions from TimeBase, divested on July 1, 2025. |
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Second Quarter 2026 and Recent Operational Highlights
- Appointed Key Compton, a FiscalNote board member since 2021, as President and Chief Executive Officer in June 2026 to lead the Company's return to growth.
-
Improved quarterly net revenue retention to
98% , up from89% (3) in the first quarter, as PolicyNote engagement and post-migration retention continued to outperform the Company's legacy platforms. - Continued to expand relationships within our existing customer base through enterprise upsells and cross-sells, reflecting sustained demand for policy intelligence solutions.
- Launched an expansion of the PolicyNote API to add district matching capability, enabling organizations to power grassroots advocacy at scale with real-time access to federal, state, and local legislative district data..
- Deepened adoption of the PolicyNote API and its native support for the Model Context Protocol (MCP), enabling enterprises to embed FiscalNote’s proprietary legislative and regulatory intelligence directly into their AI agents and internal workflows.
Second Quarter 2026 Financial Performance
Revenue(2)
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(Unaudited) |
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Three Months Ended June 30, |
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($ in millions) |
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2026 |
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2025 |
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% Change |
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Subscription revenue |
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$ |
18.8 |
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$ |
21.4 |
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(12 |
)% |
Advisory, advertising, and other revenue |
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0.8 |
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1.9 |
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(58 |
)% |
Total revenues |
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$ |
19.6 |
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$ |
23.3 |
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(16 |
)% |
For Q2 2026, subscription revenue declined
For Q2 2026, non-subscription revenue declined
Key Performance Indicators (KPIs)(2)(3)(5)
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As of June 30, |
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($ in millions) |
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2026 |
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2025 |
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% Change |
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Annual Recurring Revenue (ARR) |
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$ |
74.9 |
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$ |
85.9 |
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(13 |
)% |
Pro Forma ARR(3)(5) |
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$ |
74.9 |
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$ |
84.7 |
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(12 |
)% |
As of June 30, 2026, ARR declined
The improvement in quarterly NRR reflects strengthening post-migration retention and engagement on PolicyNote relative to the Company's legacy platforms. Broader macroeconomic and geopolitical pressures, together with continued caution in the federal and broader public sector, continued to weigh on portions of the customer base, contributing to elongated sales cycles. The Company expects its trailing retention metrics to improve as recent quarterly trends carry forward.
Operating Expenses(2)
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(Unaudited) |
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Three Months Ended June 30, |
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($ in millions) |
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2026 |
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2025 |
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% Change |
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Cost of revenues, including amortization |
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$ |
4.0 |
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|
$ |
4.9 |
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(20 |
)% |
Research and development |
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1.6 |
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2.3 |
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(30 |
)% |
Sales and marketing |
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4.5 |
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6.7 |
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(33 |
)% |
Editorial |
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3.4 |
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3.5 |
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(2 |
)% |
General and administrative |
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9.2 |
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11.4 |
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(19 |
)% |
Amortization of intangible assets |
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1.9 |
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1.9 |
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(2 |
)% |
Goodwill impairment |
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19.1 |
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|
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- |
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* |
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Total operating expenses |
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$ |
43.7 |
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$ |
30.7 |
|
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|
42 |
% |
* - percentage change is greater than +/- |
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Total operating expenses increased
Q2 2026 total operating expenses declined
2026 Financial Guidance
The Company updated its financial forecast for the full year 2026 and issued its forecast for the third quarter of 2026. Both forecasts reflect management’s expectations based on the most recent information available.
Full Year 2026
($ in millions) |
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Current Forecast
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Action |
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Previous Forecast
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Total revenues |
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Updated |
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Adjusted EBITDA(4) |
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Updated |
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The revision to the full year 2026 forecast reflects continued softness in the federal and broader public sector, a cautious private-sector spending environment, and lower non-subscription revenue, partially offset by continued cost discipline and operating efficiencies.
3Q 2026
($ in millions) |
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Initial Forecast
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Total revenues |
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Adjusted EBITDA(4) |
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The Company expects restructuring actions taken in the first half to fully benefit results in the back half, driving a meaningful EBITDA ramp and supporting full-year expectations.
Commenting on the forecast, Jon Slabaugh, FiscalNote CFO, said, “We welcome the arrival of Key Compton and with this we have reset our full year outlook this quarter to reflect the current revenue environment, while continuing to operate from a leaner cost structure that strengthens our operating leverage. Our immediate priorities are maintaining capital discipline as we work to return the Company to growth and reach free cash flow positive.”
Strategic Review
The Company’s Board of Directors along with its advisors, is continuing to review the Company’s ongoing plans and evaluate all strategic value-maximizing options available to the Company, including evaluation of potential further divestitures of non-core assets. 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.
Conference Call and Webcast
Company management will host a conference call at 5:00 p.m. ET today, Monday, August 10, 2026, to discuss these financial results.
LIVE
- To listen to the conference call, please register through the following event weblink: https://events.q4inc.com/attendee/751513076.
Footnotes
| (1) | Non-GAAP measure. See “Non-GAAP Financial Measures” and the reconciliation tables for the definitions and reconciliations of these non-GAAP financial measures to the most closely related GAAP financial measures. |
| (2) | All financial information incorporated within this press release is unaudited. |
| (3) | “Annual Recurring Revenue” and “Net Revenue Retention” are key performance indicators (KPIs). See “Key Performance Indicators” for the definitions and important disclosures related to these measures. |
| (4) | Because of the variability of items impacting net income and the unpredictability of future events, management is unable to reconcile without unreasonable effort the Company's forecasted Adjusted EBITDA or Free Cash Flow to a comparable GAAP measure. The unavailable information could have a significant impact on the non-GAAP measures. |
| (5) | Pro forma subscription revenue, ARR and NRR adjusts the applicable prior period to exclude the contribution of TimeBase which the Company has divested, to the extent that business contributed to consolidated results in such prior period. |
About FiscalNote
FiscalNote (OTC: NOTE), the global leader in AI-driven policy intelligence, delivers its deep expertise in legislative tracking, regulatory analysis, and stakeholder engagement through PolicyNote, its flagship platform. Built to ensure the most complete, real-time view of the policy landscape, PolicyNote delivers synthesized, expert-driven analysis integrated with AI-powered monitoring, fueled by the trusted analysis and reporting of CQ and Roll Call, and the grassroots mobilization power of VoterVoice. From the committee room to the board room, FiscalNote’s PolicyNote Suite ensures every user has the unmatched clarity and speed needed to understand and impact policy.
Safe Harbor Statement
Certain statements in this press release may be considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements generally relate to future events or FiscalNote’s future financial or operating performance. For example, statements regarding FiscalNote’s financial outlook for future periods, expectations regarding profitability, capital resources and anticipated growth in the industry in which FiscalNote operates are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “pro forma,” “may,” “should,” “could,” “might,” “plan,” “possible,” “project,” “strive,” “budget,” “forecast,” “expect,” “intend,” “will,” “estimate,” “anticipate,” “believe,” “predict,” “potential” or “continue,” or the negatives of these terms or variations of them or similar terminology.
Such forward-looking statements are subject to risks, uncertainties, and other important factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements.
Factors that may impact such forward-looking statements include:
- risk of our creditors enforcing their respective rights to call an event of default based on our Class A Common Stock no longer being listed on NYSE;
- FiscalNote’s ability to successfully execute on its strategy to achieve and sustain organic growth through a focus on its core Policy business, including risks to FiscalNote’s ability to develop, enhance, and integrate its existing platforms, products, and services, bring highly useful, reliable, secure and innovative products, product features and services to market, attract new customers, retain existing customers, expand its products and service offerings with existing customers, expand into geographic markets or identify other opportunities for growth;
- FiscalNote's ability to successfully launch new product and service offerings (e.g. relating to political and policy prediction markets or agentic APIs) or to achieve the expected benefits of such offerings, including new sources of revenue;
- FiscalNote's future capital requirements, as well as its ability to service its repayment obligations and maintain compliance with covenants and restrictions under its existing debt agreements;
- demand for FiscalNote's services and the drivers of that demand;
- the impact of cost reduction initiatives undertaken by FiscalNote;
- risks associated with past and future strategic transactions, including restructuring, divesting or selling our businesses, products or technologies;
- risks associated with international operations, including compliance complexity and costs, increased exposure to fluctuations in currency exchange rates, political, social and economic instability, and supply chain disruptions;
- FiscalNote's ability to introduce new features, integrations, capabilities and enhancements to its products and services, as well as obtain and maintain accurate, comprehensive and reliable data to support its products, and services;
- FiscalNote's reliance on third-party systems and data, its ability to integrate such systems and data with its solutions and its potential inability to continue to support integration;
- FiscalNote’s ability to maintain and improve its methods and technologies, and anticipate new methods or technologies, for data collection, organization, and analysis to support its products and services;
- potential technical disruptions, cyberattacks, security, privacy or data breaches or other technical or security incidents that affect FiscalNote's networks or systems or those of its service providers;
- competition and competitive pressures in the markets in which FiscalNote operates, including larger well-funded companies shifting their existing business models to become more competitive with FiscalNote;
- the risk that general purpose generative AI platforms and agentic AI tools will directly compete with and reduce demand for custom-built SaaS tools and subscription products;
- the risk that a future U.S. government shutdown could negatively affect FiscalNote's ability to enter into or renew public sector subscription contracts and generate advertising and events revenue as anticipated;
- concentration of revenues from U.S. government agencies, changes in the U.S. government spending priorities, dependence on winning or renewing U.S. government contracts, delay, disruption or unavailability of funding on U.S. government contracts, and the U.S. government's right to modify, delay, curtail or terminate contracts;
- FiscalNote's ability to comply with laws and regulations in connection with selling products and services to U.S. and foreign governments and other highly regulated industries;
- FiscalNote's ability to retain or recruit key personnel;
- FiscalNote's ability to adapt its products and services for changes in laws and regulations or public perception, or changes in the enforcement of such laws, relating to artificial intelligence, machine learning, data privacy and government contracts;
- adverse general economic and market conditions reducing spending on our products and services;
- the outcome of any known and unknown litigation and regulatory proceedings;
- FiscalNote's ability to maintain public company-quality internal control over financial reporting;
- FiscalNote's ability to adequately protect and maintain its brands and other intellectual property rights; and
- the possibility any exploration of strategic alternatives does not result in any transaction or other outcome or that any outcome is disruptive to operations and impacts financial performance.
These and other important factors discussed in FiscalNote’s SEC filings, including its most recent reports on Forms 10-K and 10-Q, particularly the "Risk Factors" sections of those reports, could cause actual results to differ materially from those indicated by the forward-looking statements made in this press release. These forward-looking statements are based upon estimates and assumptions that, while considered reasonable by FiscalNote and its management, are inherently uncertain. Nothing in this press release should be regarded as a representation by any person that the forward-looking statements set forth herein will be achieved or that any of the contemplated results of such forward-looking statements will be achieved. You should not place reliance on forward-looking statements, which speak only as of the date they are made. FiscalNote undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.
FiscalNote Holdings, Inc. Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited) (in thousands, except shares and per share data) |
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Three Months Ended
|
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Six Months Ended
|
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||||||||||
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
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Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Subscription |
|
$ |
18,800 |
|
|
$ |
21,380 |
|
|
$ |
37,853 |
|
|
$ |
46,612 |
|
Non-subscription |
|
|
781 |
|
|
|
1,884 |
|
|
|
1,753 |
|
|
|
4,163 |
|
Total revenues |
|
|
19,581 |
|
|
|
23,264 |
|
|
|
39,606 |
|
|
|
50,775 |
|
Operating expenses: (1) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cost of revenues, including amortization |
|
|
3,976 |
|
|
|
4,948 |
|
|
|
8,129 |
|
|
|
11,932 |
|
Research and development |
|
|
1,580 |
|
|
|
2,267 |
|
|
|
3,622 |
|
|
|
5,370 |
|
Sales and marketing |
|
|
4,504 |
|
|
|
6,692 |
|
|
|
10,223 |
|
|
|
14,451 |
|
Editorial |
|
|
3,391 |
|
|
|
3,472 |
|
|
|
7,011 |
|
|
|
8,270 |
|
General and administrative |
|
|
9,231 |
|
|
|
11,378 |
|
|
|
18,735 |
|
|
|
27,676 |
|
Amortization of intangible assets |
|
|
1,889 |
|
|
|
1,934 |
|
|
|
3,782 |
|
|
|
4,265 |
|
Impairment of goodwill |
|
|
19,100 |
|
|
|
- |
|
|
|
54,700 |
|
|
|
- |
|
Total operating expenses |
|
|
43,671 |
|
|
|
30,691 |
|
|
|
106,202 |
|
|
|
71,964 |
|
Operating loss |
|
|
(24,090 |
) |
|
|
(7,427 |
) |
|
|
(66,596 |
) |
|
|
(21,189 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Loss (gain) on sale of businesses |
|
|
- |
|
|
|
319 |
|
|
|
- |
|
|
|
(15,424 |
) |
Interest expense, net |
|
|
3,904 |
|
|
|
4,338 |
|
|
|
7,260 |
|
|
|
9,465 |
|
Change in fair value of financial instruments |
|
|
(93 |
) |
|
|
1,577 |
|
|
|
(1,955 |
) |
|
|
906 |
|
Loss on debt extinguishment, net |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1,784 |
|
Other (income) expense, net |
|
|
21 |
|
|
|
405 |
|
|
|
(165 |
) |
|
|
435 |
|
Net loss before income taxes |
|
|
(27,922 |
) |
|
|
(14,066 |
) |
|
|
(71,736 |
) |
|
|
(18,355 |
) |
Benefit from income taxes |
|
|
(88 |
) |
|
|
(795 |
) |
|
|
(289 |
) |
|
|
(834 |
) |
Net loss |
|
|
(27,834 |
) |
|
|
(13,271 |
) |
|
|
(71,447 |
) |
|
|
(17,521 |
) |
Other comprehensive income |
|
|
966 |
|
|
|
50 |
|
|
|
887 |
|
|
|
351 |
|
Total comprehensive loss |
|
$ |
(26,868 |
) |
|
$ |
(13,221 |
) |
|
$ |
(70,560 |
) |
|
$ |
(17,170 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net loss used to compute basic and diluted loss per share |
|
$ |
(27,834 |
) |
|
$ |
(13,271 |
) |
|
$ |
(71,447 |
) |
|
$ |
(17,521 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Loss per share attributable to common shareholders: |
|
|||||||||||||||
Basic and Diluted |
|
$ |
(1.06 |
) |
|
$ |
(1.00 |
) |
|
$ |
(3.22 |
) |
|
$ |
(1.35 |
) |
Weighted average shares used in computing loss per share attributable to common shareholders: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic and Diluted |
|
|
26,145,210 |
|
|
|
13,333,374 |
|
|
|
22,217,096 |
|
|
|
12,972,412 |
|
(1) Amounts include stock-based compensation expenses, as follows: |
|
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|
|
Three Months Ended
|
|
|
Six Months Ended
|
|
||||||||||
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Cost of revenues |
|
$ |
28 |
|
|
$ |
45 |
|
|
$ |
67 |
|
|
$ |
60 |
|
Research and development |
|
|
(113 |
) |
|
|
258 |
|
|
|
63 |
|
|
|
584 |
|
Sales and marketing |
|
|
202 |
|
|
|
366 |
|
|
|
398 |
|
|
|
451 |
|
Editorial |
|
|
81 |
|
|
|
150 |
|
|
|
213 |
|
|
|
216 |
|
General and administrative |
|
|
630 |
|
|
|
3,145 |
|
|
|
3,128 |
|
|
|
6,028 |
|
FiscalNote Holdings, Inc. Condensed Consolidated Balance Sheets (Unaudited) (in thousands, except shares, and par value) |
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|
|
June 30, 2026 |
|
|
December 31,
|
|
||
Assets |
|
|
|
|
|
|
||
Current assets: |
|
|
|
|
|
|
||
Cash and cash equivalents |
|
$ |
17,953 |
|
|
$ |
24,319 |
|
Restricted cash |
|
|
635 |
|
|
|
633 |
|
Short-term investments |
|
|
2,001 |
|
|
|
1,995 |
|
Accounts receivable, net |
|
|
7,267 |
|
|
|
11,953 |
|
Costs capitalized to obtain revenue contracts, net |
|
|
1,978 |
|
|
|
2,304 |
|
Prepaid expenses |
|
|
1,900 |
|
|
|
2,456 |
|
Other current assets |
|
|
2,155 |
|
|
|
1,890 |
|
Total current assets |
|
|
33,889 |
|
|
|
45,550 |
|
|
|
|
|
|
|
|
||
Property and equipment, net |
|
|
3,783 |
|
|
|
4,177 |
|
Capitalized software costs, net |
|
|
12,872 |
|
|
|
12,585 |
|
Noncurrent costs capitalized to obtain revenue contracts, net |
|
|
1,956 |
|
|
|
2,479 |
|
Operating lease assets |
|
|
12,641 |
|
|
|
13,646 |
|
Goodwill |
|
|
68,251 |
|
|
|
122,984 |
|
Customer relationships, net |
|
|
28,282 |
|
|
|
30,671 |
|
Database, net |
|
|
13,042 |
|
|
|
14,077 |
|
Other intangible assets, net |
|
|
7,530 |
|
|
|
8,208 |
|
Other non-current assets |
|
|
- |
|
|
|
761 |
|
Total assets |
|
$ |
182,246 |
|
|
$ |
255,138 |
|
|
|
|
|
|
|
|
||
Liabilities and Stockholders' Equity |
|
|
|
|
|
|
||
Current liabilities: |
|
|
|
|
|
|
||
Current maturities of long-term debt |
|
$ |
106,815 |
|
|
$ |
2,813 |
|
Accounts payable and accrued expenses |
|
|
6,832 |
|
|
|
7,257 |
|
Deferred revenue, current portion |
|
|
30,616 |
|
|
|
29,778 |
|
Customer deposits |
|
|
539 |
|
|
|
1,067 |
|
Operating lease liabilities, current portion |
|
|
3,369 |
|
|
|
3,320 |
|
Other current liabilities |
|
|
130 |
|
|
|
191 |
|
Total current liabilities |
|
|
148,301 |
|
|
|
44,426 |
|
|
|
|
|
|
|
|
||
Long-term debt, net of current maturities |
|
|
12,432 |
|
|
|
125,635 |
|
Deferred tax liabilities |
|
|
139 |
|
|
|
476 |
|
Deferred revenue, net of current portion |
|
|
210 |
|
|
|
266 |
|
Operating lease liabilities, net of current portion |
|
|
17,579 |
|
|
|
19,312 |
|
Public and private warrant liabilities |
|
|
599 |
|
|
|
477 |
|
Other non-current liabilities |
|
|
2,712 |
|
|
|
2,595 |
|
Total liabilities |
|
|
181,972 |
|
|
|
193,187 |
|
Commitment and contingencies |
|
|
|
|
|
|
||
Stockholders' equity: |
|
|
|
|
|
|
||
Class A Common stock ( |
|
|
3 |
|
|
|
2 |
|
Class B Common stock ( |
|
|
- |
|
|
|
- |
|
Additional paid-in capital |
|
|
942,787 |
|
|
|
933,905 |
|
Accumulated other comprehensive income |
|
|
1,077 |
|
|
|
190 |
|
Accumulated deficit |
|
|
(943,593 |
) |
|
|
(872,146 |
) |
Total stockholders' equity |
|
|
274 |
|
|
|
61,951 |
|
Total liabilities and stockholders' equity |
|
$ |
182,246 |
|
|
$ |
255,138 |
|
FiscalNote Holdings, Inc. Condensed Consolidated Statements of Cash Flows (Unaudited) (in thousands) |
||||||||
|
||||||||
|
|
Six Months Ended June 30, |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
Operating Activities: |
|
|
|
|
|
|
||
Net loss |
|
$ |
(71,447 |
) |
|
$ |
(17,521 |
) |
Adjustments to reconcile net loss to net cash provided by operating activities: |
|
|
|
|
|
|
||
Depreciation |
|
|
471 |
|
|
|
502 |
|
Amortization of intangible assets and capitalized software development costs |
|
|
7,032 |
|
|
|
9,576 |
|
Amortization of deferred costs to obtain revenue contracts |
|
|
1,317 |
|
|
|
1,688 |
|
Impairment of goodwill |
|
|
54,700 |
|
|
|
- |
|
Gain on sale of businesses |
|
|
- |
|
|
|
(15,424 |
) |
Non-cash operating lease expense |
|
|
1,001 |
|
|
|
1,015 |
|
Stock-based compensation |
|
|
3,869 |
|
|
|
7,339 |
|
Bad debt expense |
|
|
40 |
|
|
|
190 |
|
Unrealized (gain) loss on securities |
|
|
2 |
|
|
|
71 |
|
Change in fair value of financial instruments |
|
|
(1,955 |
) |
|
|
906 |
|
Deferred income tax benefit |
|
|
(337 |
) |
|
|
(61 |
) |
Paid-in-kind interest, net |
|
|
563 |
|
|
|
3,739 |
|
Non-cash interest expense |
|
|
693 |
|
|
|
2,011 |
|
Loss on debt extinguishment, net |
|
|
- |
|
|
|
1,784 |
|
Other non-cash |
|
|
14 |
|
|
|
- |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
||
Accounts receivable, net |
|
|
4,659 |
|
|
|
1,622 |
|
Prepaid expenses and other current assets |
|
|
1,017 |
|
|
|
(1,111 |
) |
Costs capitalized to obtain revenue contracts, net |
|
|
(464 |
) |
|
|
(1,177 |
) |
Other non-current assets |
|
|
8 |
|
|
|
42 |
|
Accounts payable and accrued expenses |
|
|
1,133 |
|
|
|
(6 |
) |
Deferred revenue |
|
|
730 |
|
|
|
5,298 |
|
Customer deposits |
|
|
(529 |
) |
|
|
(572 |
) |
Other current liabilities |
|
|
61 |
|
|
|
(1,072 |
) |
Lease liabilities |
|
|
(1,683 |
) |
|
|
(1,541 |
) |
Other non-current liabilities |
|
|
- |
|
|
|
(193 |
) |
Net cash provided by (or used in) operating activities |
|
|
895 |
|
|
|
(2,895 |
) |
|
|
|
|
|
|
|
||
Investing Activities: |
|
|
|
|
|
|
||
Capital expenditures |
|
|
(3,323 |
) |
|
|
(3,474 |
) |
Cash proceeds from the sale of businesses, net |
|
|
- |
|
|
|
40,269 |
|
Net cash (used in) provided by investing activities |
|
|
(3,323 |
) |
|
|
36,795 |
|
|
|
|
|
|
|
|
||
Financing Activities: |
|
|
|
|
|
|
||
Principal payments of long-term debt |
|
|
(3,750 |
) |
|
|
(27,172 |
) |
Payment of deferred financing costs |
|
|
- |
|
|
|
(1,793 |
) |
Proceeds from exercise of stock options and employee stock purchase plan purchases |
|
|
45 |
|
|
|
148 |
|
Net cash used in financing activities |
|
|
(3,705 |
) |
|
|
(28,817 |
) |
|
|
|
|
|
|
|
||
Effects of exchange rates on cash |
|
|
(231 |
) |
|
|
116 |
|
|
|
|
|
|
|
|
||
Net change in cash, cash equivalents, and restricted cash |
|
|
(6,364 |
) |
|
|
5,199 |
|
Cash, cash equivalents, and restricted cash, beginning of period |
|
|
24,952 |
|
|
|
29,454 |
|
Cash, cash equivalents, and restricted cash, end of period |
|
$ |
18,588 |
|
|
$ |
34,653 |
|
|
|
|
|
|
|
|
||
Supplemental Noncash Investing and Financing Activities: |
|
|
|
|
|
|
||
Issuance of common stock for conversion of debt and interest |
|
$ |
6,604 |
|
|
$ |
1,902 |
|
Amounts held in holdback/escrow related to the sale of businesses |
|
$ |
738 |
|
|
$ |
400 |
|
Property and equipment purchases and capitalized software included in accounts payable |
|
$ |
58 |
|
|
$ |
67 |
|
|
|
|
|
|
|
|
||
Supplemental Cash Flow Activities: |
|
|
|
|
|
|
||
Cash paid for interest |
|
$ |
4,596 |
|
|
$ |
4,911 |
|
Cash paid for taxes |
|
$ |
316 |
|
|
$ |
834 |
|
Non-GAAP Financial Measures
In addition to financial measures prepared in accordance with
Adjusted Gross Profit and Adjusted Gross Profit Margin
We define Adjusted Gross Profit as Total revenues minus cost of revenues, including amortization of capitalized software development costs and acquired developed technology, before amortization of intangible assets that are included in costs of revenues. We define Adjusted Gross Profit Margin as Adjusted Gross Profit divided by Total Revenues.
We use Adjusted Gross Profit and Adjusted Gross Profit Margin to understand and evaluate our core operating performance and trends. We believe these metrics are useful measures to us and to our investors to assist in evaluating our core operating performance because they provide consistency and direct comparability with our past financial performance and between fiscal periods, as the metrics eliminate the non-cash effects of amortization of intangible assets that may fluctuate for reasons unrelated to overall operating performance.
Adjusted Gross Profit and Adjusted Gross Profit Margin have limitations as analytical tools, and you should not consider them in isolation, or as a substitute for analysis of our results as reported under GAAP. They should not be considered as replacements for gross profit and gross profit margin, as determined by GAAP, or as measures of our profitability. We compensate for these limitations by relying primarily on our GAAP results and using non-GAAP measures only for supplemental purposes. Adjusted Gross Profit and Adjusted Gross Profit Margin as presented herein are not necessarily comparable to similarly titled measures presented by other companies.
EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin
EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin are non-GAAP financial measures. EBITDA represents earnings before interest expense, income taxes, depreciation and amortization. Adjusted EBITDA reflects further adjustments to EBITDA to exclude certain non-cash items and other items that management believes are not indicative of ongoing operations. We define Adjusted EBITDA Margin as Adjusted EBITDA divided by Total Revenues.
We disclose EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin herein because these non-GAAP measures are key measures used by management to evaluate our business, measure our operating performance and make strategic decisions. We believe that EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin are useful for investors and others in understanding and evaluating our operating results in the same manner as management. EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin are not financial measures calculated in accordance with GAAP and should not be considered as substitutes for net income (loss), net income (loss) before income taxes, or any other operating performance measure calculated in accordance with GAAP. Using these non-GAAP financial measures to analyze our business would have material limitations because the calculations are based on the subjective determination of management regarding the nature and classification of events and circumstances that investors may find significant. In addition, although other companies in our industry may report measures titled EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin or similar measures, such non-GAAP financial measures may be calculated differently from how we calculate non-GAAP financial measures, which reduces their comparability. Because of these limitations, you should consider EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin alongside other financial performance measures, including net income and our other financial results presented in accordance with GAAP.
Adjusted Gross Profit and Adjusted Gross Profit Margin
The following table presents our calculation of Adjusted Gross Profit and Adjusted Gross Profit Margin for the periods presented:
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
||||||||||
(In thousands) |
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Total Revenues |
|
$ |
19,581 |
|
|
$ |
23,264 |
|
|
$ |
39,606 |
|
|
$ |
50,775 |
|
Costs of revenue, including amortization of capitalized software development costs and acquired developed technology |
|
|
(3,976 |
) |
|
|
(4,948 |
) |
|
|
(8,129 |
) |
|
|
(11,932 |
) |
Gross Profit |
|
$ |
15,605 |
|
|
$ |
18,316 |
|
|
$ |
31,477 |
|
|
$ |
38,843 |
|
Gross Profit Margin |
|
|
80 |
% |
|
|
79 |
% |
|
|
79 |
% |
|
|
77 |
% |
Gross Profit |
|
$ |
15,605 |
|
|
$ |
18,316 |
|
|
$ |
31,477 |
|
|
$ |
38,843 |
|
Amortization of intangible assets |
|
|
1,661 |
|
|
|
1,779 |
|
|
|
3,250 |
|
|
|
5,311 |
|
Adjusted Gross Profit |
|
$ |
17,266 |
|
|
$ |
20,095 |
|
|
$ |
34,727 |
|
|
$ |
44,154 |
|
Adjusted Gross Profit Margin |
|
|
88 |
% |
|
|
86 |
% |
|
|
88 |
% |
|
|
87 |
% |
EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin
The following table presents our calculation of EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin for the periods presented:
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
||||||||||
(In thousands) |
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Net loss |
|
$ |
(27,834 |
) |
|
$ |
(13,271 |
) |
|
$ |
(71,447 |
) |
|
$ |
(17,521 |
) |
Benefit from income taxes |
|
|
(88 |
) |
|
|
(795 |
) |
|
|
(289 |
) |
|
|
(834 |
) |
Depreciation and amortization |
|
|
3,784 |
|
|
|
3,960 |
|
|
|
7,503 |
|
|
|
10,078 |
|
Interest expense, net |
|
|
3,904 |
|
|
|
4,338 |
|
|
|
7,260 |
|
|
|
9,465 |
|
EBITDA |
|
|
(20,234 |
) |
|
|
(5,768 |
) |
|
|
(56,973 |
) |
|
|
1,188 |
|
Loss (gain) on sale of business (a) |
|
|
- |
|
|
|
319 |
|
|
|
- |
|
|
|
(15,424 |
) |
Stock-based compensation |
|
|
828 |
|
|
|
3,964 |
|
|
|
3,869 |
|
|
|
7,339 |
|
Change in fair value of financial instruments (b) |
|
|
(93 |
) |
|
|
1,577 |
|
|
|
(1,955 |
) |
|
|
906 |
|
Other non-cash charges (c) |
|
|
19,121 |
|
|
|
662 |
|
|
|
54,544 |
|
|
|
2,801 |
|
Disposal related costs (d) |
|
|
27 |
|
|
|
971 |
|
|
|
245 |
|
|
|
5,945 |
|
Employee severance costs (e) |
|
|
335 |
|
|
|
800 |
|
|
|
929 |
|
|
|
2,144 |
|
CEO severance (f) |
|
|
1,812 |
|
|
|
|
|
|
1,812 |
|
|
|
- |
|
|
Non-capitalizable debt costs |
|
|
533 |
|
|
|
337 |
|
|
|
831 |
|
|
|
744 |
|
Costs incurred related to the Special Committee |
|
|
(3 |
) |
|
|
167 |
|
|
|
45 |
|
|
|
167 |
|
Non-operating income (g) |
|
|
- |
|
|
|
(228 |
) |
|
|
- |
|
|
|
(228 |
) |
Adjusted EBITDA |
|
$ |
2,326 |
|
|
$ |
2,801 |
|
|
$ |
3,347 |
|
|
$ |
5,582 |
|
(a) |
Reflects the gain on disposal of Dragonfly and Oxford Analytica on March 31, 2025. |
| (b) | Reflects the non-cash impact from the mark to market adjustments on our financial instruments. |
| (c) |
Reflects the non-cash impact of the following: (i) gain of |
| (d) | Reflects the costs incurred related to the sale of Oxford Analytica and Dragonfly, in the first quarter of 2025, principally consisting of transaction advisory, accounting, tax, and legal fees. |
| (e) | Severance costs associated with workforce changes related to business realignment actions. |
| (f) | Reflects severance costs incurred related to the resignation of our prior CEO on June 26, 2026. |
| (g) | Reflects non-operating income from the Transition Services Agreement that was entered into with the acquirer of Dragonfly and Oxford Analytica on March 31, 2025. |
Key Performance Indicators
We monitor the following key performance indicators to evaluate growth trends, prepare financial projections, make strategic decisions, and measure the effectiveness of our sales and marketing efforts. Our management team assesses our performance based on these key performance indicators because it believes they reflect the underlying trends of our business and serve as meaningful measures of our ongoing operational performance.
Annual Recurring Revenue (“ARR”)
Over
Net Revenue Retention (“NRR”)
Our NRR, which we use to measure our success in retaining and growing recurring revenue from our existing customers, compares our recognized recurring revenue from a set of customers across comparable periods. We calculate our NRR for a given period as ARR at the end of the period minus ARR contracted from new clients for which there is no historical revenue booked during the period, divided by the beginning ARR for the period. We calculate NRR at our parent account level. Our calculation of NRR for any fiscal period includes the positive recurring revenue impacts of selling additional licenses and services to existing customers and the negative recognized recurring revenue impacts of contraction and attrition among this set of customers. Our NRR may fluctuate as a result of a number of factors, including the level of our revenue base, the level of penetration within our customer base, expansion of products and features, the timing of renewals, and our ability to retain our customers. Our calculation of NRR may differ from similarly titled metrics presented by other companies.
View source version on businesswire.com: https://www.businesswire.com/news/home/20260810391502/en/
Media
Yojin Yoon
FiscalNote
press@fiscalnote.com
Investor Relations
Jon Slabaugh
FiscalNote
ir@fiscalnote.com
Source: FiscalNote