NOTE - Earnings call transcript Q4 2023 | FiscalNote Holdings, Inc.

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Operator

Good morning. My name is Krista, and I'll be your conference operator today. At this time, I would like to welcome everyone to the FiscalNote Fourth Quarter and Full Year 2023 Earnings Conference Call. [Operator Instructions] Thank you. I will now turn the conference to Sara Buda, Vice President of Investor Relations.

You may begin.

Sara Buda

everybody. Hi, FiscalNote the call. investor to Welcome

of we During variety our These of statements are guarantees to risks and make that this statements subject are a not laws. call, business securities forward-looking related federal but may statements to performance future uncertainties. are rather under

in Our reflected from actual statements. materially differ forward-looking results could expectations any

and our in a our important SEC actual results, our discussion could that affect the as well of For as release. factors on refer website the SEC to the factors EDGAR other available material system today's risks, important and filings please risks earnings discussed

our Additionally, Please for these of will to refer non-GAAP be a earnings financial their KPIs tables measures call. most the of conference our in this Investor website financial to the or release measure. reconciliation discussed comparable measures GAAP directly and on portion Relations

I'd With CEO Hwang. Co-Founder, Tim like the FiscalNote's to turn Chairman, that, call and to over

Timothy Hwang

us Thanks, call, joining Sara. On our XXXX. for year Thank review quarter today's we'll you and results full for this morning. fourth

from of base driving invested This also of We divestiture sheet and strong FiscalNote. with earlier and quarter than in balance of in position [indiscernible] on product which expectations commitment for strengthened on our our adjusted transaction, initially a XXXX recent of strategy our the combined QX, our to with achievement fourth the perspective forecast non-core profitability transformational EBITDA X return focused of the underscores quarter capital. our one offer adjusted EBITDA businesses a will

COO, Josh our will to from also Jon President In priorities and hear discuss hearing me, we'll who from addition for XXXX. and Resnik our

a of organizations. funds make macroeconomic AI-enabled some We're platform aggregates and their of you to a organizes complicated on we by changing FiscalNote. and that remind of world sense the constantly help delivering impacts political in on our live and me of regulatory, the information proprietary mission analyze let core customers the First,

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a competitive our investment human in mote enduring strong have We and by intelligence. AI decade-long and underpinned data,

Our AI leadership AI deep and preeminent the most platforms. is portfolio supported recognized by is a world's by

policy on upsell successful subscriptions renew proven that of data durable and government compounding legislation the their and products capabilities streams offering We the help of take economic This XXX, the to success, objectives sets, minimize year passionate or more importantly, minimize and with organizations risk. These expand and in thousands process impact discover, take shifts and and from our organizations impact agencies long-term political have customers after major and rely and recurring FiscalNote customer and about our interpret of and of rely the business of cross-sell customer achieve organizations and ranging to business Fortune forms economic revenue navigate who institutions government public to and day, policies, corporate FiscalNote macroeconomic the to importantly, making day base on actions a more are their business their year model on achieve every enjoy sector actions, customers and our growth. We risk. every political and by which value. customers incremental enhance which objectives

a adjusted momentum compounding strong position. have solid profitability growth, healthy cash line and financial EBITDA top We supported by ongoing

makers. world's value important strategies are company most on capital We focused relentlessly decision growth support goal unique to profitable to our that build durable, compounding allocation a the providing

other operations their directly respective free cash information $XXX and services we pedigree in an services a information customers' to as has within create line data our data, As have with new beyond, we and expect entirely billion and companies, Global, we way position valid information fields. FiscalNote scale. advantage. and category deliver information the continues array margins to this and critical to and Morningstar, such IHS $XXX information recurring competitive deliver FactSet, in of unique revenue our S&P trusted that of million, CoStar leaders Avalara scale space. clear in impacted Further, a vast are The long-term same that business, in innovate $X have other million, flow

a business touch sold moving XX% Today, our our for me let it what the about today's Board.org. of news we and forward. total noncore is on organization means $XXX that Now of represent for division but of This announced including sale in for based million close this million XX% noncore and our total earn-out. on cash ARR, Xx $XX multiple consideration an to recent Xx. almost represents $X market The upfront while revenue divestiture cap million, we of trade and currently XXXX revenue,

securities. other our in total the leadership truly a majority, public HR community insights and valuation. bid behind on company value cash and recurring our the organization. position. context $X.X XXXX underlying is impact $XX.X This on intrinsic the our disconnect the up the $XX of Board.org disconnect XX% for in underscores on of transaction within this and executives, focused capital vast for this million strategy executive fundamentals underscores and underlying peer-to-peer the of We to base is undervalue for in revenue a that desirable divestiture stark positions structured in of special process committee relative let FiscalNote The response acquired approximately including But and between some million conversion real durable revenue resulting its to business platform approximately recent first, and for provide million positive operations, shortly. collaborative convertible businesses marketing, and remaining the make the me expand value. I'll characteristics the

just performance and team. our of Strategically, deploying community as Over capital offerings divestiture of AI relatively to the transaction a the thoughtful recurring rigorous underscores nature example over years, our drove division significantly interest is products within marketing reduce since independent It execution revenue, realization strong $XX taking change which broaden of for This that positive well. increased million. cash strategy. another as business. we highlighting us product particularly gross the to on position return expense. and X.Xx management a revenues drove policy, IRR on million, risk our the the to the in an business. our recurring and very sound last core result in to down testament gross digit by just our are the and cash-on-cash is all allowing team providing made straightforward. a transaction debt was overall management double platforms, balance $XX for sector. Operationally, sales, impressive commitment our resources of years reduce business we It makes are XXX% the X margins operational and an the growth network those The acquired the capital divestiture and allocation decision as of adjusted And by the allocation by and smart process EBITDA. On strong with sense approach our accounts, of light operational high and further their our win-win and triple largely under transformed sheet, a strategy portfolio acquired just an not of asset us financially, compounding a X organization, regulatory to runs and Board.org a on our the approximately another course, and it IRR this does We fundamental rationalize to

profitable offerings products sheet optimizing that invest our balance and while the growth enhancing We to that strongest and in our long-term shareholder and strategy the preserving are core to are value. offer

with point, made comment the on the ongoing by in before I committee their plans Board appointment evaluate [indiscernible] proposed continue our review this statement available the strategic we the the a all committee into Board the plans to options private XXXX details and transaction. The our advisers At evaluate November call and company. XXXX, company's and to get of the special to any along for I'll briefly of regarding

for basis. The stock Board.org further. valuation achieved on underscores I've divestiture I As tremendous valued has the said a believe before, our fundamental it

clear adjusted consistent revenue We from We position in recurring have customers. ARR a compounding high drive of our margins. leadership generate sector. XX% gross We AI thousands

that an operating high We operational drives extremely leverage. foundation have

We our fully current align fundamentals, basis. structure we capital And support the aligned strength have strength misaligned EBITDA stock the to with price rerate business. adjusted underlying I of to on to to over are an continues of now the of stock fundamentals value be an our time. expect the view profitable our growth our of our plans. Despite with

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valuation the our strength we reflect As organization. confident do will the I'm fundamental so, of

of over grew revenue milestones. represents total growth grew X% term. then organic year subscription and Now let for approximately turn total discuss our our with grew grew that to From year-on-year. which some a accelerating me revenue, XX% revenue basis, highlights run XXXX financial and a it number us We revenue, an of year-on-year. positive to XX% a revenue XXXX total XXXX long our X% positions transformation was position, of Josh XX% through Subscription On year-on-year.

in XXXX quarter adjusted is And every of achieved range million, our X relentless focused adjusted to compared strong driving than focus quarter gross of $X of million be this and adjusted on transformation improvement previous This year-over-year range. had which profitability achievements the was EBITDA company's remained projected. the adjusted year EBITDA operational million of million Our $X.X earlier positive $X.X fourth the our marks we fourth EBITDA exceeded of on exited XXXX. the with approximately with remarkable. of the quarter X% cornerstone member team $X.X margins we loss milestone. an We in the This goal an FiscalNote structure EBITDA of to adjusted guidance

adjusted we actual a growth for Now and we double-digit EBITDA on executed are positive have enhanced having and growth to a returning to sheet, an balance enter XXXX. as to measurable pivoting plan in XXXX, path

growth. million to shortly. What this for the $XXX that We are revenue X a clear it long-term next the is setting adjusted achieve foundation drive profitable basis. on we place is and will have the goal rate in years a over detail the do run already specifics elements Josh of to to EBITDA organization

XXXX, AI clear our have unparalleled in CoPilots. leadership FiscalNoteGPT, Risk for new Connector our and AI AI products, In sector. including introduced we we First, applications FiscalNote

tens intelligent Our a proprietary risk decade-long ML in that very information is sets management provide and comprehensive AI, applications tools proprietary going and program public use CoPilot and well data CoPilot and NLP, of for policy AI-enabled The our is series leverages investment AI FiscalNote that program assistance professionals. provide cases. and specific defensible of applications data thousands of the reasoning to and with aggregation as as lightweight verticalized

through creating constituent day-to-day quick initial drafting and launch hours outreach constituents Here, copilot with AI will advocacy automate constellation responding copilots program, communications that work or a and to analysis, of customer that we drafting tasks. legislation, to regulatory percentage of doing and regulatory our agents the countless catered the communicate legal include spend applications our customers other reduce so, responses. In legislation, legislation, will that our

risks program capabilities AI chains products Risk a Connector. we incremental and Our for and introduced Risk Risk organization's recurring identify Connector, vectors also as large-scale today, government organization of for to investors, risk which new and enterprise developed Within partners for internally of we pipeline. our In within customers, FiscalNote base solution our intelligence brings of will customer offerings, proprietary anchor to growth Connector And secured the risk we QX, number our driving any we're well core year, provide map an as through revenue power the AI announced we durable organizations. applications relationships and copilot our that a first path complement solutions. as opportunities have other our data proven well. Last our supply materialize.

have we broad data and intelligence. Second, and deep proprietary

our to the security enterprise data through sector. We integration to continue add Dragonfly, we opportunities to and cross-sell intelligence capabilities added new several of successful intelligence geopolitical customer our XXXX, expand within leading and new value. In

EUIT of European the providing all and offering, members also for XXX expand stakeholder We the data coverage Parliament.

a have tremendous offer we Finally, of thousands growth opportunities. of base that customers

to the their DoD on Office We advance continue decades. Internationally, the Asia and have relationship relationships from nongovernmental FBI to public the CIA within strong day the to continue we rely relationships throughout with the to organizations political process. and every to sector spanning some with the enjoy with organizations EU leading agendas the government, ranging of President FiscalNote the to

ACVs we offers customer opportunities as and and new introduce NRR with continue base, cross-sell. growing, Our which be enterprise enterprise our products continues to to fastest higher customer highest significant growth group upsell

revenue public expansion approximately the upsides a enterprise noble on and XX% with wins sector Europe Additionally, significant year our in well. we a as is both of sector Europe our and ago, as well alike. track see from is new increase today, here

launching before, information services business we've at continue earlier our the that underlying the basis, and you can AI expected. at beginning in with of would regulatory business a current told said expansion, lead and and large-scale size confidence, told that products. In new sheet leaders, to that products and EBITDA to can America that confident adjusted we XXXX, steps would we did our exchanges today of did. on told an and of we and rival closing, than As did. build we we our and the legal We market other become X believe will North business and the that quarter profitable we I necessary We are to we just bolster we European start innovative on you take balance of similar we feel

We will deliver to development and exceed execution. management, innovative through and product sound expectations strategic continue

revenue. We as and this platform company unique committed most serve in a durable, profitable beyond. that have growth next in year provides return to XXXX to value scaling place accelerating growth billion and $XXX to $XXX compounded transformation a today our remain world's million, a makers and business the elements million, the We $X building important decision to that foundational recurring for

our of plan our acceleration and discuss Now moving Josh profitable let forward. to elements over to specific strategy for growth me growth the turn it

Joshua Resnik

$XX here. Thank I'm you, and significant in expense annualized to operating EBITDA approximately be was million we delighted a as brought change an perspective, transform the From Tim. and profitability. company XXXX and to positive organization the adjusted eliminate

tenacity. placed X This profitability year tell team making throughout future. In XXXX As leadership what out it model the efficient EBITDA and going and forward. relentless and their operate Every we drive that the member operating on on focus focus sustained was building goal was me of quarter end profitable management years tackled doing on Tim to and last teams determination just for this drive let itself. we're for member the and our as and considerable priority we to in to dedication X All the that our it in in of an term. take you year, area every our how level relentlessly operations. focused continue of of and And And it that means with million work incredible forecast. But sooner impacting $XXX thank organic our in and order profitability rigor to rate business. attention same happen operating want teams, did I will costs XXXX, optimal that for We every our mentioned, growth adjusted this revenue time even for we're deliver long driving wasn't as our on next moment team to to resulted sustained to in growth returning expect we're an the than manager, the the impacted to as run we in used within is achieve we of growth. fully apply work and enter that, profitably, light we it clear

Revenue future our coverage of changes model, you commercial adjusting Richard operating about and after implementing made new we organization. them will First, bringing the to transformation measures talent I'll a Officer, with for This have better a sales aggressive XXXX, more evaluated, on that model. positioned our management better our succeed. our tell underperformers significant performance Chief to our including and as leaner, flushed better trained, placing sales In serve and growth. We in foundation Henderson, been is out effective that has resulted team

In our on attention on cross-sell resources made Among we specific focused addition, these focus to into base in late increased and and numerous on largest drive year, adding and the crop account our focus changes are changes, accounts. existing retention.

fruit. changes the involving confident we most XXXX net of the foundation long-term that some the profitable We're a team time and top customer bear cross-sell trading cycles. have form And our growth. X-figure takes substantial and improvements the to have year same transforming audience, Collectively, will have a the mind, management, strong retention resources. improved full ramp and these earlier which that new to longer see near-term same this range deals of improvements beyond. We to impacted these the global in time recently, will changes restructuring and team recent for talent customer from generate success we we opportunity from last takes large our implemented realignment significant and realize over profile elsewhere course did for take for enterprises to across and we're new the in and of and sustainable with high we gain our account in involve are the breadth improved we also we organization this related here. this by the cost our just product of resulted delivery scale tremendous the round as we the way reducing while around in account With of to a model will the a to products today, product, right the most model relationships retention of an time changes as for and that XXXX. Keep changes already build intelligence Improving expect teams leveraging management sales serve portfolio success XX%. return deployed impact, a substantial with the Most in of time disruption XXXX, of accounts course recent with to anticipate fully almost of in gross the

improvements business and portfolio, our streamlining to the to we've by of our made want products are our simplifying to higher drive growth. reinvest I address that most capital into likely the creating room with Second, areas existing

In we growth. course to hard This policy significant has that enabled products directory launch align with have on this focus, most global and and dashboard, the of a market. more provides expansion data including profitable long-term the strategy enhancement our comprehensive enabled platforms our impact. the for our greatest the now capital with our of reallocate that those XXXX, the of policy took decided collective and the focus products teams, global markets, us has and and Over look long-term products the at a which to our data potential in core

current products, as forward our risks. core AI-powered now solution look Connector, to Beyond growth. Risk Connector supply and in and continued have and we enterprises Risk in its new products, is also use large with launched services tech we chain financial manage our operational to

I We be including look though, over important, date. Most our portfolio forward unique discussing as mean platform data will products product also innovative exciting the in other pipeline, AI as time. want have later to I refined for clear this you a what at that about with copilots new and FiscalNote well an AI-powered to

Just profitable our reps, sales underperforming is create upgrading in talent short-term with and product that talent into will revamped justice that operating can growth. changes out but The some bringing and same sustainable as portfolio. ecosystem. true swapping like I long-term disruption, spoke about result And stronger a

take see this as growth. we launches we'll enhancements New market. bring we'll and new see time in In return and creating invest really all to even XXXX and work more XXXX double-digit their to and talent capacity growth. in And about to sales XXXX, we to benefits product route as new takes of enhancements launches we was products as the the greater see XXXX, ramp products.

of to as sales impact top with the just our of final product changes and as changes, system. These extensive this I expertise XXXX platforms the speed for in product bottom and the year, foundation invest also enduring line new combined our began our and We'll support sustainable growth top our we This ensure still delivering available acceleration enhancements initiatives portfolio, continue current into will to have expanding work bottom the an well development. growth on and our on scalable user is will expand value, our in capital serving with optimize in organization revenue as new increase to as and beyond specific in line outlined. experiences which deliver line. more that the Our on growth to velocity complements XXXX for flexibility that products an accelerate materializes, ongoing the right initiatives the best-in-class and will of AI initiative further

In growth transformation, to sum, in year a double-digit foundation was XXXX completing the building we're and beyond. focus alignment. cost XXXX for growth and In returning organizational our our of XXXX,

clear are priorities teams aligned. and Our our are

in who our quarter second will Our X to delivered adjusted took who the profitability deliver same teams than well. positive from loss half a $XX in us on million as projections sooner adjusted adjusted planned, growth EBITDA EBITDA of XXXX XXXX, EBITDA

a have We commercial organization. effective more and leaner

bring of development products have market. and have result product-led AI products an our We product pace to expertise efficient long-term for rapidly set and positioned and created a the more product launches. of organization to markets our is focused growth. The features new for AI-centered accelerating and We're will more capacity new in leverage

of over XXXX. let review our turn outlook for me results a for Now the financial to Jon and it

Jon Slabaugh

past radically forward. as with extremely lower quarters. non-core improved position today a the profitability versus a the highlighting me few months. notable in represented management resulting brought go-forward achievements QX XX-point over In off X sheet cash Overall, we Thank you, balance start strong our a business interest let FiscalNote a and the just Josh. resulting expense. QX growth with move by in adjusted margin opportunities business business, operating improvement XXXX, in higher leverage EBITDA lower some delighted and debt, And divested and with to I'm

for by our Non-subscription basis. year-over-year year growth and products declined by non-subscription upcoming marking out start in about growth QX Full a and reported revenue. our X% last an was sunset and as growth $X XXXX of million, basis. the growth divestiture, results and year-over-year XXXX Now was on of in revenue about on quarter including our call. view and I'll Fourth XX% for through the essentially total Board.org X% the and year, impact organic Revenue run QX, $XXX.X with marking an provide X% total million, the let revenue we me organic QX certain accounts in full year revenue was in which was flat impacted full total million of the underperformance revenue, for negatively pointed XX% in project-based as for year revenue. $XX.X

consistently in subscription recurring NRR for in as we in We total. half. year, and we scale XX% total makes our we Subscription Conversely, NRR exited which the quarterly to revenue XXXX strengthened from grew basis QX, growth rates of expect continue XXX% revenue full same year-end, early to on solid. Longer trend in ARR revenue, of XXXX. We fluctuate ARR, revenue, the to of see period in the revenue as recurring revenue marking on the year X% Organic mid-XXs pro as expand with NRR term, million XX, of ended in million, remains XX% NRR release. our press forma to can rate or a our enterprise organically. on XX% our of basis. We organic quarter-to-quarter, approximately often up net XX% was revenue rate growth XX% start the or X% $XXX On and $XXX compared slightly December X% growth quarterly as XX% million in an rates organically an grew a a retention our forma increase of of $XXX was the run reflecting total above offering. and basis, $XXX defined basis. million, and run X% year annual year-over-year pro second

continue enjoy we profitability strong margins. to Moving efforts, gross to

margin gross XXXX margin GAAP QX adjusting haircut gross deferred for after was and in XX% revenue the non-GAAP amortization. Our XX% was and

a margin For year year-on-year quarter, XXXX, were marketing our margin non-GAAP after million Sales and the XX% XX%. costs full of decrease gross $XX.X of even $XXX,XXX was for addition Dragonfly. is our the approximately and gross the

cost. On we our a basis, marketing year the efficient integrated about be and striving We to full Dragonfly, acquisition of in by sales the throughout are due more $X to which year. million increased acquisition customer

for sales optimize $X related expense of in in marks for noncash noncash R&D Moving stock-based expenses for cost significant marketing, noncash approximately million the million This indication $X.X become due our XXXX, million expenses. noncash million in approximately periods year. reduction the in of effective the to This the about of and about quarter our to a go-to-market a content reduction million of and $X.X efforts. result treatment QX year, of These a is QX G&A to were Dragonfly Included million our includes as good both million forward, decrease year. a the acquisition. $X and $X.X our respectively. for Similar in and and $X.X Editorial our for acquisition. The QX items. for fourth XXXX. compared our and primarily our of team is items was increase QX compensation of and of million notable our QX ability year-on-year accounting QX and and $XX.X approximately sales XXXX $XX.X the million the were $X.X more costs of and G&A. reduction year this year customer $XX.X about reduction primarily $XX efficient an to are $XXX,XXX of in million items to a last versus for in most million expense full expense is visible quarter

ago. million $X.X XXXX. $X.X year from Excluding about noncash items, decrease nonrecurring was a G&A of A of QX in million approximately

was G&A million. year, $XX.X in For the full XXXX

offset full noncash, of savings public Excluding of acquisition actions. the and compensation net year other company increase million, million, by was expenses, reflecting expenses Dragonfly, stock the a G&A $XX.X nonrecurring impact of largely in-year the cost in approximately $X

XXXX The million operating year total. loss was $XX.X for the in full

We of change Our credit as by last our release. EBITDA positive management of the I following growth. which XXXX To net and is to short of million loss related $XXX.X of for GAAP sale Tim, successful exited on this extent laser-focused for adjusted for with our approximately $X profitability EBITDA effect XXXX a adjusted EBITDA the forward loss million, and these $X.X will Board.org in adjusted was going and million, total XXXX the press will full year. to actions $XX.X into was Josh of million $XX on interest driving get reconciled mentioned million. revenue loss The details expense our changes how QX GAAP year is had the relationship. net

are We double-digit increasing ability we EBITDA and quickly as return to to growth confident FiscalNote's margins adjusted rates in do. drive

equivalent $XX.X year million with ended We is of as cash, December which the of XX.

on $XX divestiture cash, forward. about adjustments, transaction impact Now of expense and total moving fees term reduce loan taking by capital our used for approximately to and closing Board.org and million. increased let me After talk proceeds debt were million. were and approximately approximately $XX expenses, interest our million debt the After proceeds cash senior the $XX account the by at the working net related our

$XX.X debt or This by now cash interest $X per expense million million Our approximately term is approximately reduces quarter $X.X million. senior annually.

million, expect we interest would P&L fluctuations. be $X.X and be forward, Moving to our expense $X.X to approximately interest our subject million quarterly approximately cash interest expense

of extend how recognition of brings senior of FiscalNote, me our offer to XXXX the transaction transaction also XXXX. to In payments and strength the overall reaffirms principal our required this until the August impactful value guidance. lenders This and

which you million will $XX.X will million approximately and of EBITDA Board.org approximately in revenue XXXX. shortly, X-K, from $X see our filed XX-K First, be and generated of

revenue approximately earlier, align strategy. million product to that associated current we decision as $X the we mentioned with with have products longer made our no XXXX addition, In sunset

Sunset Excluding Board.org and products.

million. With offering GAAP XXXX. approximately million. following to of million, for metrics $XXX $X Run million been backdrop, a And key of ARR million, of full approximately the and adjusted GAAP million. rate million of initial as XXXX EBITDA $XXX $XXX million run forma $X and of guidance million, approximately approximately $XXX would of subscription loss $XXX pro year to we total $XX.X million. revenue approximately have revenue this were revenue subscription to revenue of consisting of adjusted net $XXX $XXX EBITDA of revenue million million revenue rate Our $XXX $XX of

We biting guidance. QX are also

$XX and of $X EBITDA We quarter. approximately expect million million revenues QX the adjusted of for approximately

of expenses This the seasonal during the and EBITDA growth for products organization strategy release, for offerings by guidance of potential then in and we Board.org our our transformation. the removal sold core product and do enterprise. go-to-market perspective, regulatory throughout for X, and products accounts. strong alignment QX margins. pulling offer business invest QX January align year and reflects a and Board.org execution within Board.org cross-sell the the we in to multiple upside. From that that are as focus adjusted the of As on send fundamental a guidance and example our sales the was In XX. XXXX in year. marketed as a to long-term strategic approximately on some closed months on QX The not buyers a year in our as set opportunities X and transaction and transformational greatest to we optimizing summary, year We're different that said all of reoccur was we escalating made that upsell, a reflects made full to win-win our growth sense subsequent the as decision is forecast revenue in transaction it the we is From long-term upside it but profitability a March position. for if short- levers product and and quarters

and perspective, return independent within essentially corporate generated Board.org other missions an business upsell From an invested As operates business as a on development cross-sell fiscal group and our capital, no largely such, demonstrating with M&A or it mode. From an of the there's our products perspective, very offerings. execution. strong power organizational

to importantly, positions and model next improve position. our balance Finally, and have the I'm FiscalNote operational capabilities capital a sheet significantly perspective. us moving perhaps opportunity the true accelerating go-to-market our now operational year debt delighted with most cash for outcome. ongoing growth reduce that We the gave from forward. It leverage and

With that, we questions. for Operator? up now call the will open

Operator

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

Mike Latimore

where -- right. if Thanks do you right? about think Board.org assuming strong and stays NRR if some that why? much. it's that of sales, you number on you very kind are valuation the All so for Or results think year, the about Congrats and Yes. As the around been? EBITDA change you expect in NRR the

Joshua Resnik

the year. of is This NRR over course rate We thanks. expect to the Josh. improve Mike, do

business we over starting earlier we expect second that We've see and of a half. up across year. pick should about course core you the lot to really improvements expansive our cross-sell put So got opportunity in changes start in the talked the that place see to of the

Mike Latimore

of kind it account sales then have And where it. will focus, just the fruition. been little be talk to your in terms strategic of how Got cycles growth sounds I kind you the can in a like important initiative sales also segment? that of stands the bookings for pipeline, bit strategic account mean, about trending, coming

Joshua Resnik

thing. sure Yes,

definitely been we to a tremendous on we with focus know larger drive larger that for cycles, we analysis year. over excited is team green we're doing our largest that to -- see have. to bear efforts on about have and know our this our fruit accounts. and our focused we this we've And were lot about of space expect of that growth XXXX, strategic the pressures space year. sales seen to We see impacted really the But accounts. accounts. relationships. speaking, on macro that and There's account-by-account upsell increase Generally a So number course of you we've through there that especially white a full talked really cross-sell a pipeline opportunity there the

Mike Latimore

Is just going pricing kind a just the behind that? Great. of And last marketing And us you revenue remind much strategy. perspective? then effort focus How that the of to a there? one copilot from kind big on put on and dynamics are

Joshua Resnik

Yes.

new of a with content a and the go-to-market So strategy copilot going data to large strategy strategy and more a are aligned existing leverage us packaging able lot terms that of being in for to AI that's quite it companies we the how have today. into is market

so copilot from And of of of as us series out market. we the of launch over a next the you'll go really and into couple these weeks kind hear course the

the and legislative data respect that regulatory market that our then packaging stuff all tools to that with we're on coming the working automation basis. workflow imagine an just and to But with we're accelerated then, of we're how course,

few have weeks. next we more we'll come the some as out in So information

Operator

next Richard the Baldry question of from line MKM. Roth comes Your from

Richard Baldry

your as you'd left-oriented stand-alone wondering, are reviews, through other any be considering go see that there strategic products more you upsell of that a divesting. Sort cross-sell,

Timothy Hwang

it's Hi, Rich, Tim.

individual other products for divestiture evaluating presently aren't now. right We

portfolio someone it plans. where continue but sense a but to by We no monitor no asset to have saw plans the was situation who were and kind strategic we the us, value to made do of in this. This approached

Richard Baldry

it stepped up you talk now pursue on to about the And a near-term acquisitions way willingness with can Okay. then been, tuck-in has go-forward sheet the balance continue to own your maybe basis. or

Timothy Hwang

sellers. smaller of maintaining has us be been lot development work, acquisition engage and team in will timing and kind opportunities and strategic at depend of that corporate effectively active spend execution with discussions the number price with for our as we'll of would business kind of lines ability stock execution a core the really our prospective those standpoint. of hard The an Absolutely. The targets acquisition on dialogues time tuck-ins, including marketplace, in the we valuations of a evaluating to the on partnership things, side of refocus the

Richard Baldry

internally also sell and think of AI it people, to leverage to guys, you bring side? do ways of what editorial it's in get term, Are other can there the it of I do but long intermediate for or long [indiscernible] sort lot term terms you specifically cost it a think can understand better leverage has kind an you on important it to And you term? Okay. ability in-house help to cost you

Joshua Resnik

This is I address that. Josh. can Sure.

So yes, deploying teams internal we're some time for absolutely We've AI for actually we now. how leverage across been it looking at tooling.

time. of about and why going we forward very We feel reason we over get continue even growth. get good our efficiencies as out more base part And to the efficiencies of cost it, accelerate to expect that's just

Richard Baldry

small about quarter, sort And some direction the where you think bit break the down or go a should nonrecurring that's term X of long ones, term revenues current the in last near talking little trending. but you're come of center

Timothy Hwang

revenue, an That's did just like XX% the whatnot. of case, of the right and and we feels traction at mostly out the on end of seasonality enterprise planning clients depending impact on with it year, had special could and this we our going the kind forward, about up which where projects Historically, or how to we defer see last scenario year. gain engage number that been and it's but fluctuate want for it's how use down finished

Richard Baldry

stepping see accelerating anything that or of internally growth, confidence metrics can't sales sort you when you actually that Last there maybe give of that for concrete duration us. like up or you're rebound sort are maybe, tenure to that that cohort Just ARPU of number pipeline more analysis, think we sort about the the makes seeing?

Timothy Hwang

sales board. down as there's ton account-by-account track sure. at Yes, account that mean, of to I pipelines. look where across products look across And our is for I and a internally doing expansion. for example, we the really strategic doing metrics we're to we're mentioned, we regard as and white various green we accounts an space that our the look that And with space at our levels,

as we have is lot pipeline logo a the the deep are look quickest. in look and new retention as There's for the going to where at move understand for the we upsell. business both teams day. we So That's that every and to doing where well opportunity that, best cross-sell, needle what at the very the

Richard Baldry

Great. in lot divestiture. the dials And looks congrats on it It a moves the company. like of

Operator

D.A. comes of question next Kessinger from Your line from the Davidson. Rudy

Rudy Kessinger

these first I'll talking X just realignments, I guys, have sale, a a that great a enterprise business and the help on and about focus ago of more changes bit on the strategic changes very on guess some my months congrats balance you, these of go-to-market I started piece on had know return about here. sheet now. and

and an what the and second this levels to result not higher we of so your next first year? And of really year are you productivity expect Should when year, growth? this half effect start of have until changes to part do greater that? sales Just in thoughts on and expect that

Timothy Hwang

Sure, Rudy. Yes.

expand we've organization. implementing them time, we're them take and full changes the So seeing been over across and root then

across coverage management retention. made parts remarks, as to reduced some as of our success in I across my business. we So mentioned in form and of customer serve example, saw changes certain functions well were success in improvements the to one We cost account the as

through various sales right and organization but we're now so the that the time make rest we well expanding the also to progress as given cycles that make throughout and of it been the as that a the stagegating can the change business. We've And that taking management both possible trying for like. to and also model sure

others reflect route in and in you the so start growth And XXXX. the year of year changes over heading second then this half course, see and really those of take to and should course

Rudy Kessinger

I've X for then questions Okay. Jon, you. got

performance, slightly kind Firstly, just of of line the process, in your results company's top generally below feedback terms revenue in since quarterly the line to guidance.

more of where conservative the so year terms QX it's is philosophy guide we guidance year, to there And for guide similar this about anything full be being guide, you're Or trying your think think in cetera? when and conversion, the the close rates the of how we past? et roughly been should to in in pipeline

Jon Slabaugh

point and certainly We roll kind first of have the in more towards the in news. year It's details we where report can and consensus we'll the top like quarter, fully first a same trend as be to that. felt we And we're exceed lot you confident of and hopefully visibility give as you this an the kind observing second well. And and later robust we to quarter quarter. out end meet to of a range, to tried question, we the good guidance guidance closer and we And provide year At look, of next opportunity the with in this have and third. quarter good Rudy. update more

Rudy Kessinger

capital guidance, flow, past to flow some in math seem, half boost CapEx. $X working year the low free double high digits just Okay. the digits with potentially accurate? you've the cash but And said giving business cash after second cash not interest, net lastly, in probably million I get But like $X in million midpoint, it million no earn free know It I $X.X then at $X changes should positive and that cash there. roughly on assuming a EBITDA single bookings in you million seems the you're this stronger Is would to flow. believe

Jon Slabaugh

right think lower, probably number. right little $X a million to that's good $XX but around potentially million a is to bit I

expense about interest our of divestiture. cash and a the you really Board.org think hasn't result changed If our CapEx as

defines to positive, through we year. that adjusted maybe fund and So the EBITDA sheet free But progress being EBITDA, to our certainly revenue balance progressively insights it on increase XX an and that we'll of be standpoint neighborhood from kind And capacity XX towards have in of in And how was that fixed charges that the as to of on cash of we'll we described continue XX. you for year. the pacing kind XX, to expect track somewhere as the give more the on the in we cash -- it. flow depending as we you kind

Rudy Kessinger

very Okay. Congrats like tail here. looks a good again, it

Operator

comes line from of B. Cummins Series. Zach question from next the Riley Your

Zach Cummins

out I the a of teams. that again can that But Josh, rest I bit sale you are with changes far made specific that rolling deeper you dig talk into about, I your mean, to of and little to you the the in along that how terms the some a success the retention and dig team very into on of Congrats customer little Board.org. of deeper to wanted bit you changes teams. made successful

Joshua Resnik

our we Sure. having terms against important in and right well that mean those I accounts as detail. some models upsell. of place cross-sell focus the right from strategies the can making I as into is for the sure coverage have most teams of level go in

we most we is part around last the significant so earlier and year. this put of -- changes year, So last -- some time in

focus size said, of saw accounts results. And retention then and, greater I which smaller our It greater As our more mentioned, with our across implemented on putting basis for business towards actual of count, helped both as geopolitical approach that XXXX. refining I and our accounts ability cost our do the coverage. larger included with we to we by automating a the mid-QX

course the the on. year this where to as business of similar over see we goes across of board And that's the rest improvements so expect the

Zach Cummins

Understood. terms Got from curious, hearing of buying customers just challenging I was XXXX. in And it of what know it. terms you're patterns, in pretty throughout

little customer subset turned I year. you the demand impact upcoming any year new you've customer if or page could changed that that just a Does And curious Just see? fact of guess, of a question. an since have that bit a of in has election into the terms sort potential it's

Joshua Resnik

Sure.

I are some elections on patterns speaking some whole buying fully sentiment So been But wait seeing a on Still out would not conservatism to is, quarter. I there, has the the yet. generally so this would better we're say still people say, past return -- macro, and we're speaking, in around terms that see drive election a year. And year impact and engagement -- for then cycle, see, it's massive greater the election does but coverage. we globally optimistic and generally and election on greater of with our -- sales products,

demand. So as the generally budgets you And speaking, so a long help that for can That that perspective. impacted. can be negatively a macro drive impacted negatively as don't from see sales tremendously isn't us

Operator

question of Albanese next Your Hutton. from comes EF Mike from the line

Michael Albanese

the on Nice quarter. job

for structure. I go to one to back a of Just I quick kind your cost guess, want infrastructure, me.

we out. and someone more that. mean, kind can discussed, we're cost, the now? look we're fruit we as the job year. XXXX? guided that out is I last original a to while reducing low-hanging of we think, nice identify take now? operational But through initiatives. efficiency take us $XX more market could of I over done through the out? through is $XX you there Is just kind more asked know had to cost and tune and behind take doing you there's a finding that that take to these I of of through the go some Are you You've question kind to kind there Or can you that still that million as about back then you sure cost were that of AI you million, the this, out that I'm restructuring still into

Joshua Resnik

the where behind internally as structure is to to AI more always the be organization organization and that would a a cost opportunity time, we certainly and drive leverage automation over us. any an we and of too. perspective would say I from perspective. as Mike. sure, productivity see We're Yes, going bulk want be to We're to largely improving shifting

finding you're perspective. And our cost to in so to we've But the -- those at of optimize organization. getting we'll consistent terms for here and part be initiatives, kind the ways of a most staying and of worked while grow cost that the bulk from always way relatively where throughout from through expect

Michael Albanese

Great. it. Got

Okay. I And a follow-up then that. just to guess

As cross-selling. I as adding how can in next revenue XXXX, think growth. your I we into back get organic about I in of cost mean think as incremental looking think you grow. the and to can year we can double-digit you mean structure you're out just revenue a what but How reached you're think increases generally, I that generate operating sure level there's the about really here, you've from we leverage you some that? kind of get saying that can I'm growth

Timothy Hwang

savings. Adding Sure, Josh's on cost about Mike. comments to

I are R&D expenses it, think point. about as we at and this G&A think content fixed relatively

road, expenses forward. improvements cost got lot we've but be here of to down dramatically. structure operational not and opportunities in -- and trim There potential we there. may do then see there some out we a think leverage the the I move of as gross margins But

to good I revenue we some cost we sales that not to dollar model. go increase marketing and or will number proportionally, increases then and forward the will keep forward. your for see think in our increase that's but And as dollar revenue, drive costs in going

revenue. situated, we we're have I lot leverage a operating think on incremental as So of

Operator

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

Timothy Hwang

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

Operator

participation, for disconnect. you today's conference your you This concludes call. may and now Thank

FiscalNote (NOTE) 12 Mar 242023 Q4 Earnings call transcript