New CEO, Delisting, and an AI Tilt: FiscalNote's Q2 2026 Pivot
A First Quarter at the Helm: Stabilization Over Growth
Key Compton, stepping in as CEO roughly 30 days before the call, framed this as a period of observation and course correction. The headline numbers underline the challenge: revenue of $19.6 million came in at the low end of guidance and down 16% year-over-year, while adjusted EBITDA of $2.3 million missed the midpoint by $200K. Yet the quarter also showed early signs of the stabilization the company is chasing. “These results reflect a notable reduction in client churn attributable to our platform consolidation and retention efforts, which are beginning to take effect.” — Key Compton, CEO · 2026-08-10 Net revenue retention improved to 98% from 89% in Q1, and ARR contraction slowed to $800K quarter-over-quarter. Subscription revenue fell 12% year-over-year, but gross margin improved to 80% GAAP (88% adjusted), reflecting continued cost discipline. The company’s sharp cost actions—a net reduction of 27 FTEs and adjusted operating expenses down 12%—helped push adjusted EBITDA margin to 11.9%, roughly flat with a year ago.
The AI Tilt: Data as a Moat
Compton spent much of his prepared remarks on why AI is a tailwind for, not a threat to, the business. His core argument: the company’s proprietary corpus of legislation, regulation, and policy intelligence cannot be replicated by general-purpose AI models.
He cited a concrete win—a major global technology company that had built its own policy data tool by scraping public data ultimately chose FiscalNote’s PolicyNote MCP APIs after an extended head-to-head trial. This is a direct validation of the company’s AgenTiC AI strategy, which aims to embed their trusted data directly into customers' AI workflows. The company is building on its Agentic Enterprise footprint, positioning itself as the verification and coverage layer that general-purpose systems lack. He also noted that demand for professional services around AI adoption is growing, and the shift toward Reasoning models makes accurate, well-structured policy data more critical, not less. Compton emphasized the depth of coverage—example: tracking all federal appropriations bills and $7 trillion of budget through every markup—as the kind of proprietary insight that AI models cannot generate independently. The pivot toward API and MCP access is a strategic bet that their data will be the underlying layer for others' AI reasoning, even if it cannibalizes some traditional dashboards. “The most advanced deployments may replace or evolve our daily use software dashboards, but most uses will augment what we already provide today.” — Key Compton, CEO · 2026-08-10What AI cannot do is anticipate legislation that has not yet been written.
Capital Structure: Delisting, Forbearance, and a Strategic Review
The company’s capital structure is now front and center. Following the NYSE delisting, management is working with lenders under short-term forbearance agreements. CFO Jon Slabaugh said, “We have engaged an external adviser to help us develop and evaluate alternatives. These discussions have been constructive, stabilizing and strengthening our capital structure remains among our highest priorities.” — Jon Slabaugh, CFO · 2026-08-10 The Q2 GAAP net loss of $27.8 million includes a $19.1 million noncash goodwill impairment, underscoring the pressure. The reduced full-year guidance—revenue of $75–78 million and adjusted EBITDA of $9–11 million—reflects continued softness in the federal sector and a cautious private sector. For Q3, the company expects revenue of $19–20 million and adjusted EBITDA of $3.5 million, implying further margin expansion as restructuring benefits flow through. Prior calls repeatedly emphasized PolicyNote-driven retention and multi-year deals as the path to growth. In November 2025, then-CEO Josh Resnik said, “The single biggest driver behind the higher ACVs really is leveraging global data more.” — Joshua Resnik, CEO · 2025-11-07 That remains the core thesis, but the immediate priority has shifted from growth to financial stability.
What This Means for Investors
The contrast between the bullish AI narrative and the reality of a shrinking business is stark. The company is cutting costs, navigating a delisting, and lowering guidance, yet simultaneously positioning itself to win in an AI-driven world. The NRR improvement and the new API channel win are encouraging, but they are not yet translating to the top line. The near-term trajectory hinges on two things: executing the capital-structure fix (e.g., relisting options or forbearance extension) and converting the AI/API momentum into meaningful ARR growth. The prior management team had been confident about returning to ARR growth by the second half of 2025, a promise that clearly did not materialize. “The difference really will come from our retention and expansion.” — Joshua W. Resnik, Chief Executive Officer · 2025-08-09 Compton inherits a business with strong assets and a real strategic pivot, but the market will need proof that stabilization is real and durable. The next few quarters will be telling—both on the balance sheet and in whether AI-led demand can finally reverse the revenue slide.