Should you sell your FiscalNote stock?
Roth Capital Partners says FiscalNote (FiscalNote Stock Quote, Chart, News, Analysts, Financials OTCBB:NOTE) needs further cost cuts after Q2 results showed revenue stabilization remains early and debt service remains a concern.
In an Aug. 10 update, analyst Richard Baldry maintained his “Neutral” rating and $1.25 target on FiscalNote. He said the target reflects only a modest equity takeover valuation.
“With near-term run-rate AEBITDA appearing unable to sustain its debt service requirements, we believe additional cost cuts appear necessary and expect shares to remain moribund until further actions are taken or growth re-accelerates, which we see few signs of,” Baldry said.
FiscalNote reported Q2 revenue of $19.6-million, in line with Baldry’s forecast but down 16% year-over-year and 2% sequentially. Adjusted EBITDA was $2.3-million, slightly below his $2.5-million estimate.
The company lowered its 2026 revenue guidance to $75-million to $78-million from $80-million to $83-million. It also cut Adjusted EBITDA guidance to $9-million to $11-million from $14-million to $16-million.
Baldry said the weaker outlook points to flat revenue in the near term, though improved retention could help stabilize the business. Net dollar retention improved to 98% in Q2 from 89% in Q1.
He said FiscalNote’s transition to PolicyNote is complete, while its newer API-focused tool is showing early traction. Any proof that revenue has stabilized could improve investor sentiment, given the stock’s weak equity value.
FiscalNote ended Q2 with $20.0-million of cash and $119.8-million of debt. Baldry said the balance sheet remains stressed, though cash on hand should support the company through its turnaround attempt.
The analyst said recent debt covenant breaches could lead to higher interest costs or dilution through forbearance negotiations.
Baldry said FiscalNote’s shares are pricing in a high risk that debt obligations could leave the equity worthless, but he does not view that outcome as inevitable if management makes further cost cuts and retention continues to improve.
He expects FiscalNote to generate Adjusted EBITDA of $10.3-million on revenue of $77.1-million in fiscal 2026, improving to Adjusted EBITDA of $14.0-million on revenue of $77.2-million in fiscal 2027.
-30-
Rod Weatherbie
Writer
Rod Weatherbie is a journalist based in Prince Edward Island. Since 2004, he has written extensively about the Canadian property and casualty insurance landscape. He was also a founder and contributing editor for a Toronto-based arts website and a PEI-based food magazine. His fiction and poetry have been featured in The Fiddlehead, The Antigonish Review, and Juniper.