AI Expansion And Global Regulation Will Drive Adoption

Key Takeaways

• Accelerated adoption of PolicyNote and AI-driven innovation position FiscalNote for rapid revenue growth and market leadership over legacy rivals.
  
• Operational efficiencies, SaaS scaling, and strategic asset management are set to drive significant margin expansion and strong recurring cash flow.
  
• Rising competition from free AI tools, client concentration risks, weak retention, ongoing unprofitability, and industry consolidation all threaten FiscalNote's long-term revenue and margin stability.

Catalysts

Operates as a technology provider for global policy and market intelligence in North America, Europe, Australia, and Asia.

• Analyst consensus anticipates improved retention and moderate ARR growth from PolicyNote, but the rapid pace of migration and engagement metrics suggest PolicyNote could drive a significant inflection in net revenue retention and double-digit ARR growth as early as late 2025, dramatically accelerating top-line expansion ahead of expectations.
  
• While analysts broadly agree margin expansion will be driven by cost discipline and operational efficiencies, the divestiture of lower-quality, non-core assets combined with operating leverage from SaaS scaling and proprietary AI enhancements points to a step-change in EBITDA margins, potentially exceeding the current 12 percent margin and supporting robust operating cash flow much sooner than projected.
  
• With global regulatory complexity increasing and corporations striving to manage risk across more jurisdictions, FiscalNote's leadership in real-time, AI-enabled policy intelligence uniquely positions it to capture outsized market share from legacy providers, fundamentally raising its revenue ceiling over the long term.
  
• The company's shift to multiyear contracts and rapid innovation-with AI-led features like automated legislative drafting and advanced analytics-locks in long-term recurring revenue streams and could boost the company's valuation multiple as market confidence rises in its durable, high-retention business model.
  
• Recent refinancing extends debt maturities to 2029 and enables aggressive reinvestment in product and strategic M&A, giving FiscalNote the flexibility to quickly scale through organic and inorganic growth, amplify earnings power, and potentially deliver positive free cash flow and rising net margins several quarters ahead of consensus forecasts.

FiscalNote Holdings Future Earnings and Revenue Growth

Assumptions

• This narrative explores a more optimistic perspective on FiscalNote Holdings compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
• The bullish analysts are assuming FiscalNote Holdings's revenue will decrease by 2.0% annually over the next 3 years.
• Even the bullish analysts are not forecasting that FiscalNote Holdings will become profitable in next 3 years. To represent the Analyst Price Target as a Future PE Valuation we will estimate FiscalNote Holdings's profit margin will increase from -41.8% to the average US Professional Services industry of 7.1% in 3 years.
• If FiscalNote Holdings's profit margin were to converge on the industry average, you could expect earnings to reach $7.3 million (and earnings per share of $0.03) by about August 2028, up from $-45.8 million today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 169.5x on those 2028 earnings, up from -2.1x today. This future PE is greater than the current PE for the US Professional Services industry at 26.3x.
• Analysts expect the number of shares outstanding to grow by 7.0% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 9.64%, as per the Simply Wall St company report.

FiscalNote Holdings Future Earnings Per Share Growth

Risks

• The proliferation of advanced AI tools and increasing democratization of open data are likely to reduce dependency on paid policy intelligence platforms such as FiscalNote, which could create downward pressure on revenues over time as free or low-cost alternatives gain traction.
  
• Significant instability in the U.S. federal segment, combined with FiscalNote's heavy reliance on government and enterprise clients, exposes the company to cyclical shocks and public sector budget tightening, potentially leading to lower contract volumes and pressure on future earnings.
  
• Customer churn and weak retention in legacy products, coupled with management's stated challenges in returning ARR and net revenue retention to growth, suggest ongoing pressures on top-line revenue and the risk of elevated customer acquisition costs outpacing lifetime value.
  
• The company remains unprofitable under GAAP and relies on ongoing access to capital markets, and despite recent refinancing, increasing interest expenses and persistent dependence on external funding may reduce net margins and risk further dilutive actions.
  
• Industry-wide commoditization and consolidation in SaaS analytics mean larger, better-capitalized players may outspend or undercut FiscalNote, thus compressing pricing power and margins while forcing higher R&D spend to remain competitive, which could weigh on long-term profitability and earnings growth.

Valuation

• The assumed bullish price target for FiscalNote Holdings is $4.5, which is the highest price target estimate amongst analysts. This valuation is based on what can be assumed as the expectations of FiscalNote Holdings's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
  
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $4.5, and the most bearish reporting a price target of just $1.5.
  
• In order for you to agree with the bullish analysts, you'd need to believe that by 2028, revenues will be $103.2 million, earnings will come to $7.3 million, and it would be trading on a PE ratio of 169.5x, assuming you use a discount rate of 9.6%.
  
• Given the current share price of $0.57, the bullish analyst price target of $4.5 is 87.3% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.