FiscalNote Holdings, Inc. (NYSE:NOTE) Q4 2023 Earnings Call Transcript

Page 2 of 2

Josh Resnik: Sure. I can go into some level of detail. I mean the most important is making sure that we have the right focus from those teams in terms of coverage models against our accounts as well as having the right strategies in place for cross-sell and upsell. So — and we — most significant is we put some changes in the earlier part of last year, so around this time last year. As I mentioned, we saw our ability to do greater coverage. It included refining our approach by size of count, automating more for smaller accounts and putting a greater focus on our larger accounts which helped with both the cost basis and, as I said, with our actual retention results. And then, we implemented that across our geopolitical business towards the mid-Q4 of 2023. And so, that’s where we expect to see similar improvements across the board over the course of the rest of the business as this year goes on.

Zach Cummins: Got it. Understood. And just curious, in terms of what you’re hearing from customers in terms of buying patterns, I know it was pretty challenging throughout 2023. Just curious if that has changed a little bit since you’ve turned the page into a new year. And I guess, just a subset of that question. Does the fact that it’s an upcoming election year have any sort of impact in terms of customer or potential customer demand you could see?

Josh Resnik: Sure. So, generally speaking on the macro, I would say buying sentiment is, I would say, has been on the whole better this quarter. Still on conservatism out there, so not fully seeing a return to past patterns yet. But we’re — some people are still wait and see, but we’re optimistic for the year. And then in terms of election and impact on sales cycle, elections and — it’s a massive election year globally and that does drive greater — we see greater engagement with our products, generally speaking, around election coverage. So generally speaking, that can drive demand. And as long as the macro isn’t negatively impacted so that you don’t see budgets tremendously negatively impacted. That can be a help for us from a sales perspective.

Operator: Your next question comes from the line of Mike Albanese from EF Hutton. Please go ahead.

Mike Albanese: Nice job on the quarter. Just a quick one for me. I want to go back to kind of your infrastructure, I guess, cost structure. You’ve done a nice job reducing cost, I think, to the tune of $20 million, $25 million over the last year. I mean, we’re through this, we’re kind of through the cost and then you could take out that you kind of guide market while you were doing these initiatives. Are we kind of through that now? Is there still more low-hanging fruit that you can take out? I know someone asked a question about AI and kind of finding operational efficiency through that. I’m sure that there’s some more cost you can identify and take out. But just as we go back to the original restructuring that you had discussed, is that behind us now? Or is there still more to take out as we look into 2024?

Josh Resnik: Yes, sure, Mike. I would say the bulk of that is behind us. We’re all where we want to be from a cost perspective and a structure perspective. We’re always going to be improving and shifting as an organization as any organization would as we see the opportunity to leverage AI internally to drive more activity and automation over time, too. And so — and we’ll always be finding ways to optimize throughout the organization. But for the most part in terms of where you’re getting at kind of the bulk of those cost initiatives, we’ve worked our way through that and expect to grow from here while staying relatively consistent from a cost perspective.

Mike Albanese: Got it. Great. Okay. And then I guess just a follow-up to that. As we think about looking out into next year in 2025, I think you can get back to double-digit revenue growth. I mean how can we think of the organic growth in your cost structure as you’re adding revenue and cross-selling. I mean just generally, again, what you’re saying that you’ve kind of reached a level that you can really generate the operating leverage from here, but I’m sure there’s some incremental increases as you grow. How can we think about that?

Tim Hwang: Sure, Mike. Adding on to Josh’s comments about cost savings. I think as we think about it, R&D content and G&A expenses are relatively fixed at this point. I think we’ve got a lot of operational leverage out of the cost structure there. There may be opportunities to trim expenses here and there as we move forward. But — and then, we do see some potential improvements in gross margins down the road, but not dramatically. I think that’s good number to keep in your model. And then our sales and marketing costs will increase as we go forward and increase revenue, not dollar for dollar or proportionally, but we will see some increases in the cost to drive that revenue going forward. So, as we’re situated, I think we have a lot of operating leverage on incremental revenue.

Operator: We have no further questions in our queue at this time. I will now turn the call back over to Tim Hwang for closing remarks.

Tim Hwang: Great. Thank you, everybody, for jumping on this call and feel to reach out if you have any additional questions. Thank you so much.

Operator: Thank you so much. This concludes today’s conference call. Thank you for your participation, and you may now disconnect.

Follow Fiscalnote Holdings Inc.

Page 2 of 2