Release Date: August 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- FiscalNote Holdings Inc (NOTE, Financial) has a strong competitive position in a $40 billion addressable market, driven by increasing global uncertainty and regulatory complexity.
- The company enjoys a high degree of revenue visibility with approximately 90% of its revenue being recurring in nature.
- FiscalNote Holdings Inc (NOTE) has maintained a high net dollar retention rate in the high 90s, indicating strong customer loyalty and satisfaction.
- The company has launched several innovative AI-driven products, such as StressLens and Copilot for Global Intelligence, which have been well-received by analysts and customers.
- FiscalNote Holdings Inc (NOTE) has achieved four consecutive quarters of positive adjusted EBITDA, demonstrating improved profitability and operational efficiency.
Negative Points
- Total revenue for Q2 2024 was $29.2 million, which is lower than the prior year period due to the divestiture of Board.org.
- The company has revised its full-year revenue forecast downward to approximately $121 million, reflecting higher rates of customer churn and macroeconomic headwinds.
- FiscalNote Holdings Inc (NOTE) experienced slower decision-making and softness on renewals due to macroeconomic factors.
- The company's GAAP net loss for Q2 2024 was approximately $13 million, although it was an improvement over the prior year period.
- There are concerns about weaker client retention experienced in recent quarters, which has led to slower ARR growth.
Q & A Highlights
Q: Can you elaborate on the factors behind the revenue guidance? Is it mostly churn based on macroeconomic conditions, or is there anything else in play?
A: Josh Resnik, President and COO, explained that macroeconomic factors are indeed impacting revenue, with slower decision-making and softness in renewals. However, the company is focusing on product improvements to enhance customer engagement and retention. Operational strategies, such as customer scoring models, are also being implemented to drive improvements.
Q: Are there any other groups within the company that could logically be independent, and are divestment strategies being considered for such groups?
A: Jon Slabaugh, CFO and CIO, stated that there are no current plans for divestitures. The company believes the valuation of its underlying products is disconnected from the overall market value, and they will continue to explore ways to maximize shareholder value, but nothing is imminent.
Q: How are the leading indicators for bookings in the September-December timeframe, considering the macroeconomic headwinds?
A: Josh Resnik noted that the forecast reflects expected bookings for the second half of the year. Despite some macroeconomic slowness, the company is taking internal steps to address what they can control. They have a healthy new logo pipeline and feel optimistic about the second half.
Q: What is the impact of the macroeconomic environment on customer churn and retention rates?
A: Josh Resnik acknowledged that the macroeconomic environment is contributing to higher customer churn and affecting retention rates. The company is focusing on product innovation and enhancements to improve customer experience and engagement, which should positively impact retention rates.
Q: Can you provide more details on the operational efficiencies and cost-saving initiatives?
A: Jon Slabaugh highlighted that principal operating expenses have decreased year-over-year due to cost-saving initiatives and the impact of the sale of Board.org. The company continues to pursue further incremental operating efficiencies to maintain strong gross margins and improve profitability.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
