Good evening. My name is Tamika, and I will be your conference operator today. At this time, I would like to welcome everyone to the FiscalNote Holdings, Inc. Third Quarter 2025 Financial Results Conference Call. [Operator Instructions] With that, I will now turn the call over to the company to begin. Please go ahead.

Good evening. My name is Bob Burrows, Investor Relations for FiscalNote, and we are pleased you all could join us. The purpose of today's call is to discuss FiscalNote's third quarter 2025 financial results and guidance for both the fourth quarter and full year of 2025. Joining me with prepared comments are Josh Resnik, CEO and President; and Jon Slabaugh, CFO and Chief Investment Officer. Other members of the senior management team will be available as needed during the Q&A session that will follow these prepared comments. Please note today's press release, related current report on Form 8-K and updated version of the corporate overview presentation can all be found on the Investor Relations portion of the company website. In terms of important housekeeping, please take note of the following. During this call, we may make certain statements related to our business that are forward-looking statements under federal securities laws. These statements are not guarantees of future performance, but rather are subject to a variety of risks and uncertainties. Our actual results could differ materially from expectations reflected in any forward-looking statements. For a discussion of the material risks and important factors that could affect our actual results as well as the risks and other important factors discussed in today's earnings release, please refer to our SEC filings, which are available either on our company website or the Securities and Exchange Commission's EDGAR system. Additionally, non-GAAP financial measures will be discussed on this conference call. Please refer to the tables in our earnings release or the updated version of the corporate overview presentation for a reconciliation of these measures to the most directly comparable GAAP financial measure. And finally, we use key performance indicators or KPIs in evaluating the performance of our business. These include annual recurring revenue or ARR, and net revenue retention, or NRR. And with that, I'd like to turn the call now over to FiscalNote's CEO and President, Josh Resnik. Josh?

Thank you, Bob, and thanks to everyone for joining us today. I'm glad to be here to discuss FiscalNote's third quarter 2025 results and to share an update on the progress we've made on our strategic objectives. We've been clear and consistent as to our priorities. Put simply, we continue to take a disciplined, focused approach to managing the business, and you see that reflected in our adjusted EBITDA profitability as well as our management of the balance sheet and progress towards free cash flow. This, in turn, enables us to build a durable foundation for long-term profitable growth. In Q3, revenue totaled $22.4 million, in line with guidance, and adjusted EBITDA was $2.2 million, exceeding guidance. This translates to a margin of 10% and represents the fifth consecutive quarter of adjusted EBITDA margins at or above 10%, reflecting the ongoing benefits of our cost discipline, sharper prioritization of core growth initiatives and improving operating leverage. On a pro forma basis, excluding noncash and other nonrecurring charges and the impact of the 2024 divestitures, OpEx decreased by approximately 8%, reflecting continued cost discipline and operating efficiency. On this front, we're adopting additional automation-based approaches to certain aspects of our operations, which should drive higher productivity across the enterprise and yield incremental improvements to our overall profile over time. During the quarter, we also shored up our balance sheet with maturities extended out by 4 years, thus strengthening our capital structure and providing long-term flexibility to execute on our strategy. I'll turn to growth and commercial momentum now. This quarter, we stabilized ARR with a modest quarter-to-quarter increase on a pro forma basis. This signals an initial stabilization of the core business and underscores that the strategic actions we're taking are starting to produce tangible results. Most importantly, it reflects early…

Thank you, Josh. Good evening, and thank you for joining us. In the third quarter, FiscalNote successfully met its previous guidance for both total revenue and adjusted EBITDA. As a result, we're updating our full year revenue guidance to a range of $95 million to $96 million with adjusted EBITDA projected to be approximately $10 million. Both figures remain within our previously established ranges. This updated guidance reflects the strong performance observed in our core business while also accounting for the specific impacts of our public sector business due to unusual disruptions in the federal sector. Overall, operationally, the business is showing resilience and indications of stabilization in the core policy products. Underlying our operations, we also secured our capital structure in a way that affords us the runway and flexibility necessary to execute on our product-led strategy. On that note, FiscalNote previously had several convertible notes on its balance sheet, all subordinate to our senior term loan. These notes carried significant payment and maturity obligations starting in 2025 and continuing into 2026 and 2027, preventing the company from refinancing its senior debt. The August transactions replaced and/or amended these convertible notes, reducing their balance and eliminating most of our annual PIK interest. These transactions enabled FiscalNote to refinance its senior term loan and collectively, the transactions allow us to better manage our capital structure and provide a stronger foundation for our product-led growth strategy moving forward. The new debt stack can be found in both the revised corporate overview presentation issued today in conjunction with our earnings release and in the Form 10-Q. With that as a backdrop, let me dive into some of the key drivers behind our third quarter financial results. Total revenue for Q3 2025 was $22.4 million, above the midpoint of our forecast of $21…

[Operator Instructions] Your first question is from the line of Mike Latimore with Northland Capital Markets.

Good to see the ARR, NRR improvement here. Nice to see. Josh, on the -- I think you said that ACV of deals or ACV overall is getting bigger. Can you give a little more color on that? Is it more users at current customers, more usage across the customer base or some solid cross-sells like global data?

Sure, Mike. Thanks for the question. The single biggest driver behind the higher ACVs really is leveraging global data more. We've done some work to restructure our global data packages, and I think have done a very good job bringing those to market. That, in turn, extends use cases through the enterprise, which makes it prime for our larger corporate clients, so the larger enterprise and extending down through to mid-market. So we see a lot of potential for that going forward as well.

Got you. Okay. And then you've been migrating customers to policy node. Sometimes when companies do those kind of migrations, they see churn pick up. It seems like you haven't seen any change materially in churn with these migrations. Is that fair?

Yes, that's correct. We haven't really seen any meaningful migration-related churn. We've had a very positive experience moving customers on to PolicyNote, both in terms of how the migration itself has gone, but also as we've mentioned, with the usage metrics and engagement that we see once customers are on there.

Got it. And then I think you highlighted new logo bookings were good again. I just wanted to clarify that you said that. And then was that trajectory as expected or any different from what you were thinking?

So Mike, yes, that's correct. So we did see continued improvement in new logo bookings for corporates in particular, where we do expect to see continued improvements in advancements over time. What we've seen has been success on win rates, success on the higher ACVs and success in continuing to sign new customers to multiyear commitments. And again, we think that's a factor of better execution that we've seen, better offerings that we have, both in terms of policy note, specifically the global data packages and the like. We believe that we're delivering significant value to these customers and can continue to drive improvements in ACVs over time.

Got it. And then just one question on kind of operating efficiency. I think you mentioned that there might be opportunity for more automation within the business over time. I guess, can you just provide a little more detail on that and maybe the magnitude of the effect there?

Sure, Mike. I'd be happy to do that. So what I'm referring to there are areas where we're really starting to see some tangible success in different areas of the business, leveraging automation in different ways. And so for example, we've been doing a better job of taking advantage of opportunities with using Agentic AI and our coding with our R&D teams. And we've seen that reflected in tangible success with new features that we've been able to launch much more quickly, leveraging Agentic AI than what we would have been able to do without. And that's an example where I expect to see much higher productivity, which will enable us to drive more advanced features for our customers more quickly, which should help improve productivity and top line. And again, with our -- the way we're operating the business, our expanding margins, more and more of those top line dollars will flow right to the bottom line. There are also other areas of the business where we're leveraging more automation and actually driving internal efficiencies, being able to accomplish more with less. And I expect we'll see both flavors of improvements continue over time. It will be a real focus of ours for 2026. So no tangible discussion around that until we get to talking about 2026 numbers at a later point, but it's something that we're really starting to see some uptake and opportunity there.

[Operator Instructions] Your next question is from Zach Cummins with B. Riley Securities.

This is Ethan Widell calling in for Zach Cummins. To start, it sounds like good news with ARR stabilizing. Can you maybe speak a little bit to your expectations with regard to a time line for renewed year-over-year ARR growth?

Thanks for the question, Ethan. So we don't guide on ARR. So we're not providing specific guidance there. And again, as we -- at a later point as we talk about 2026, we'll start to talk specifically about what that looks like. What I'll say is that, generally speaking, we're encouraged by the progress that we're seeing in the business. We've talked a lot about the transformation that we've made operationally, the transformation that we've seen through PolicyNote, and we're encouraged by this early traction and stabilization that we're seeing now. The single biggest lever for us in the long term is going to be -- will be around gross retention and net retention. And again, as we've said, part of the foundation for those improvements in gross retention will come through PolicyNote, the better product, the higher engagement, better experience, et cetera, as well as what we're able to do with multiyears from a new logo standpoint. And we're going to keep pushing on the new logo improvements as well. And -- but again, when we're talking about kind of what you can expect on a year-over-year basis in the future and so on, that will be a discussion at a later point.

Understood. I appreciate that color. And then with regard to the federal government shutdown, can you maybe quantify the impact that you're seeing there? And when you speak to volatility in the federal space, is that primarily from the shutdown? Or are there other elements at play there?

Yes. In regards to federal government, we've talked about this throughout the year as we've been seeing the developments in federal. And we've talked previously about the fact that just through the efficiency efforts within federal, limitations on spending and the like that we were seeing some friction and impact. to that segment of our business over the course of the year. We're now seeing some added impact through the extended shutdown. The extent of that impact is not perfectly clear because, again, the kind of the length of shutdown is still remaining unclear. I would say, though, for the full year, you could estimate the overall impact at somewhere between $2 million and $3 million.

There are no further questions. Mr. Burrows, I'll turn the call back over to you for closing remarks.

Thank you, Tamika. That concludes our call this evening, and we appreciate everyone's participation and look forward to speaking with all of you again in the future. Good night.

This concludes today's conference call. You may now disconnect.