FiscalNote Reports Third Quarter 2025 Financial Results
WASHINGTON--( BUSINESS WIRE)--FiscalNote Holdings, Inc. (NYSE: NOTE) (“FiscalNote” or the “Company”), the leading provider of AI-driven policy and regulatory intelligence solutions, today reported financial results for the third quarter ended September 30, 2025.
The Company reported Q3 2025 revenues of $22.4 million, in line with guidance, and adjusted EBITDA (1) of $2.2 million, exceeding guidance. The Company also reported Q3 2025 ARR of $84.8 million (2), growing sequentially on a pro forma basis from $84.7 million (5) in Q2 2025. This demonstrates improved stabilization in the Company’s core business as the Company continues to make progress in its transition and product and operational improvements take root. These results were fueled by increased inbound demand, sustained pipeline strength, strong user engagement on PolicyNote, continued execution on the PolicyNote platform migration, and encouraging gains in key sales metrics for new corporate logos.
Commenting on the quarter results, Josh Resnik, CEO and President of FiscalNote, said, “In the third quarter we demonstrated meaningful progress on our path to durable, profitable growth. We delivered sequential ARR growth on a pro forma basis, primarily driven by improving performance with our corporate clients. With the continued success of PolicyNote, we’re strengthening our unique position as the leader of AI-driven insights and expert analysis on a global-to-local scale for policy and regulatory intelligence, opening new pathways for enhanced client engagement. As always, we remain disciplined in how we deploy our resources, nimble in how we operate, and singularly focused in how we execute on our product-focused strategy in service of building a solid foundation for sustainable growth, expanding profitability, and durable positive free cash flow.”
Third Quarter 2025 Financial Highlights (2)
(Unaudited)
Three Months Ended September 30,
($ in millions)
2025
2024
% Change
Total Revenues
$
22.4
$
29.4
(24
)%
Subscription Revenue as % of Total Revenues
94
%
93
%
100
bps
Gross Profit
$
17.7
$
23.2
(24
)%
Gross Margin
79
%
79
%
-
Adjusted Gross Profit (1)
$
19.4
$
25.4
(24
)%
Adjusted Gross Margin (1)
87
%
86
%
100
bps
Net Loss
$
(24.9)
$
(14.9
)
66
%
Adjusted EBITDA (1)
$
2.2
$
3.4
(37
)%
Adjusted EBITDA Margin (1)
10
%
12
%
200
bps
Cash and Cash Equivalents
$
31.8
$
33.4
bps - Basis Points
Note: All amounts for the three months ended September 30, 2024 include contributions from: (i) TimeBase, divested on July 1, 2025; (ii) Oxford Analytica and Dragonfly Intelligence, both divested on March 31, 2025; and, (iii) Aicel, divested on October 31, 2024.
Third Quarter 2025 and Recent Operational Highlights
Third Quarter 2025 Financial Performance
Revenue (2)
(Unaudited)
Three Months Ended September 30,
($ in millions)
2025
2024
% Change
Subscription revenue
$
21.2
$
27.2
(22
)%
Advisory, advertising, and other revenue
1.2
2.2
(43
)%
Total revenues
$
22.4
$
29.4
(24
)%
For Q3 2025, subscription revenue declined $6.1 million, or 22%, versus prior year, due primarily to the previously announced divestitures.
On a pro forma basis, excluding the impact of the divestitures, subscription revenue for Q3 2025 declined $1.8 million, or approximately 8%, reflecting the trends in ARR and NRR discussed below.
For Q3 2025, advisory, advertising, and other revenue declined $0.9 million, or 43%, versus prior year, due primarily to the discontinuation of certain non-strategic products.
Key Performance Indicators (KPIs) (2)(3)(5)
As of September 30,
($ in millions)
2025
2024
% Change
Annual Recurring Revenue (ARR)
$
84.8
$
109.5
(22
)%
Pro Forma ARR (5)
$
84.8
$
92.2
(8
)%
Quarterly Net Revenue Retention (NRR)
98
%
98
%
-
Pro Forma NRR (5)
98
%
98
%
-
As of September 30, 2025, ARR, on an as reported basis, declined $24.7 million, or 22%. On a pro forma basis (5) (excluding the divested businesses Aicel Technologies, Oxford Analytica, Dragonfly Intelligence, and TimeBase) ARR declined $7.4 million, or approximately 8%. This decline is principally due to previously known execution challenges leading into and impacting the first half of the year, customer engagement issues in the Company’s legacy products, and atypical instability in the US federal sector. The Company has been addressing these issues through operational improvements in its private and public sector go-to-market teams and approach, as well as the launch of – and migration of customers to – its new PolicyNote platform. It is now seeing improvement in relevant pipeline and sales metrics in addition to rising strength in customer engagement metrics, which is evidenced by the Company’s sequential improvement in pro forma ARR and NRR, from $84.7 million and 96%, respectively, in Q2 2025 to $84.8 million and 98%, respectively, in Q3 2025. (5)
Operating Expenses (2)
(Unaudited)
Three Months Ended September 30,
($ in millions)
2025
2024
% Change
Cost of revenues, including amortization
$
4.8
$
6.2
(23
)%
Research and development
2.1
3.3
(36
)%
Sales and marketing
6.3
9.1
(31
)%
Editorial
3.2
4.6
(30
)%
General and administrative
13.9
10.6
31
%
Amortization of intangible assets
1.9
2.4
(22
)%
Total operating expenses
$
32.2
$
36.2
(11
)%
In Q3 2025, total operating expenses declined $4.0 million, or 11%, versus prior year, due primarily to the previously announced divestitures, ongoing efficiency measures and operating discipline initiatives, and the elimination of costs associated with sunset products.
On a proforma basis (5), excluding amortization expense, stock-based compensation, the impact of the previously announced divestitures, transaction-related costs, severance, and other non-cash charges, Q3 2025 total operating expenses declined $1.7 million, or 8%.
2025 Financial Guidance
The Company's financial guidance for 2025 incorporates the following considerations:
Full Year 2025
The Company updated its guidance for full year 2025, remaining within its previous guidance range and narrowing the forecast to now expect total revenues of approximately $95 to $96 million and adjusted EBITDA (4)of approximately $10 million; the previous guidance was a range of total revenues of $94 to $100 million and adjusted EBITDA (4) of $10 to $12 million. As noted above, the Company is seeing strength in overall demand and pipeline, as well as strong improvements in key sales metrics (e.g., win rates and contract values) in the corporate sector. This progress is balanced by challenges in the federal public sector over the course of the year and now in Q4 due to the extended federal government shutdown.
Q4 2025
Given the year-to-date performance and the updated guidance, the Company anticipates Q4 2025 total revenues in a range of approximately $22 to $23 million and adjusted EBITDA (4) of ~$2 million.
Strategic Review
The Company’s Board of Directors along with its advisors continue to review the Company’s ongoing plans and evaluate all strategic value-maximizing options available to the Company. There can be no assurance that the strategic review will result in any transaction or other outcome. The Company has not set a timetable for completion of the review and does not intend to disclose developments or provide updates on the progress or status of the review unless and/or until it deems further disclosure is appropriate or required.
Conference Call and Webcast
Company management will host a conference call at 5:00 p.m. EDT today, Thursday, November 6, 2025, to discuss these financial results.
LIVE
REPLAY
Footnotes
About FiscalNote
FiscalNote (NYSE: NOTE) is the leading provider of AI-driven policy and regulatory intelligence solutions. By uniquely combining proprietary AI technology, comprehensive data, and decades of trusted analysis, FiscalNote helps customers efficiently manage political and business risk. Since 2013, FiscalNote has pioneered solutions that deliver critical insights, enabling effective decision-making and giving organizations the competitive edge they need. Home to PolicyNote, CQ, Roll Call, VoterVoice, and many other industry-leading products and brands, FiscalNote serves thousands of customers worldwide with global offices in North America, Europe, and Asia. To learn more about FiscalNote and its suite of solutions, visit fiscalnote.com and follow @FiscalNote.
Safe Harbor Statement
Certain statements in this press release may be considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements generally relate to future events or FiscalNote’s future financial or operating performance. For example, statements regarding FiscalNote’s financial outlook for future periods, expectations regarding profitability, capital resources and anticipated growth in the industry in which FiscalNote operates are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “pro forma,” “may,” “should,” “could,” “might,” “plan,” “possible,” “project,” “strive,” “budget,” “forecast,” “expect,” “intend,” “will,” “estimate,” “anticipate,” “believe,” “predict,” “potential” or “continue,” or the negatives of these terms or variations of them or similar terminology.
Such forward-looking statements are subject to risks, uncertainties, and other important factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements.
Factors that may impact such forward-looking statements include:
These and other important factors discussed in FiscalNote’s SEC filings, including its most recent reports on Forms 10-K and 10-Q, particularly the "Risk Factors" sections of those reports, could cause actual results to differ materially from those indicated by the forward-looking statements made in this press release. These forward-looking statements are based upon estimates and assumptions that, while considered reasonable by FiscalNote and its management, are inherently uncertain. Nothing in this press release should be regarded as a representation by any person that the forward-looking statements set forth herein will be achieved or that any of the contemplated results of such forward-looking statements will be achieved. You should not place reliance on forward-looking statements, which speak only as of the date they are made. FiscalNote undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.
FiscalNote Holdings, Inc.
Consolidated Statements of Operations and Comprehensive Income (Loss)
(Unaudited)
(in thousands, except shares and per share data)
Three Months Ended September 30,
Nine Months Ended September 30,
2025
2024
2025
2024
Revenues:
Subscription
$
21,182
$
27,238
$
67,794
$
84,015
Advisory, advertising, and other
1,247
2,201
5,410
6,782
Total revenues
22,429
29,439
73,204
90,797
Operating expenses: (1)
Cost of revenues, including amortization
4,774
6,235
16,706
20,342
Research and development
2,081
3,250
7,451
9,935
Sales and marketing
6,262
9,068
20,713
27,484
Editorial
3,247
4,639
11,517
13,752
General and administrative
13,900
10,622
41,576
37,958
Amortization of intangible assets
1,904
2,436
6,169
7,541
Transaction gains, net
-
-
-
(4
)
Total operating expenses
32,168
36,250
104,132
117,008
Operating loss
(9,739
)
(6,811
)
(30,928
)
(26,211
)
Gain on sale of businesses
(1,161
)
-
(16,585
)
(71,599
)
Interest expense, net
3,695
5,585
13,160
18,267
Change in fair value of financial instruments
6,994
3,501
7,900
3,174
Loss on debt extinguishment, net
6,174
-
7,958
-
Other (income) expense, net
(349
)
(341
)
86
(82
)
Net (loss) income before income taxes
(25,092
)
(15,556
)
(43,447
)
24,029
(Benefit) provision from income taxes
(237
)
(621
)
(1,071
)
1,129
Net (loss) income
(24,855
)
(14,935
)
(42,376
)
22,900
Other comprehensive income
667
1,123
1,030
1,062
Total comprehensive (loss) income
$
(24,188
)
$
(13,812
)
$
(41,346
)
$
23,962
Earnings (Loss) per share attributable to common shareholders:
Basic and Diluted
$
(1.73
)
$
(1.33
)
$
(3.20
)
$
2.03
Weighted average shares used in computing earnings (loss) per share attributable to common shareholders:
Basic and Diluted
14,376,802
11,254,174
13,259,124
11,263,344
(1) Amounts include stock-based compensation expenses, as follows:
Three Months Ended
September 30,
Nine Months Ended
September 30,
2025
2024
2025
2024
Cost of revenues
$
44
$
116
$
104
$
324
Research and development
234
454
818
1,138
Sales and marketing
348
486
799
1,182
Editorial
157
200
373
465
General and administrative
2,853
2,925
8,881
10,776
FiscalNote Holdings, Inc.
Consolidated Balance Sheets
(in thousands, except shares, and par value)
(Unaudited)
September 30, 2025
December 31, 2024
Assets
Current assets:
Cash and cash equivalents
$
26,682
$
28,814
Restricted cash
646
640
Short-term investments
4,511
5,796
Accounts receivable, net
9,713
13,465
Costs capitalized to obtain revenue contracts, net
2,416
3,016
Prepaid expenses
2,810
2,548
Other current assets
2,295
2,908
Total current assets
49,073
57,187
Property and equipment, net
4,354
5,051
Capitalized software costs, net
12,604
15,099
Noncurrent costs capitalized to obtain revenue contracts, net
2,567
3,197
Operating lease assets
14,120
15,620
Goodwill
135,363
159,061
Customer relationships, net
31,880
41,717
Database, net
14,594
16,147
Other intangible assets, net
8,538
13,018
Other non-current assets
773
100
Total assets
$
273,866
$
326,197
Liabilities and Stockholders' Equity
Current liabilities:
Current maturities of long-term debt
$
6,344
$
36
Accounts payable and accrued expenses
7,417
8,462
Deferred revenue, current portion
30,826
35,253
Customer deposits
575
1,850
Operating lease liabilities, current portion
3,292
3,386
Other current liabilities
93
2,266
Total current liabilities
48,547
51,253
Long-term debt, net of current maturities
125,160
147,041
Deferred tax liabilities
586
1,934
Deferred revenue, net of current portion
263
222
Operating lease liabilities, net of current portion
20,139
22,490
Public and private warrant liabilities
1,015
2,458
Other non-current liabilities
2,658
2,968
Total liabilities
198,368
228,366
Commitment and contingencies
Temporary equity (no Class A Common Stock issued and outstanding at September 30, 2025)
-
-
Stockholders' equity:
Class A Common stock ($0.0001 par value, 1,700,000,000 authorized, 14,011,577 and 11,899,532 issued and outstanding at September 30, 2025 and December 31, 2024, respectively)
1
1
Class B Common stock ($0.0001 par value, 9,000,000 authorized, 690,909 issued and outstanding at September 30, 2025 and December 31, 2024, respectively)
-
-
Additional paid-in capital
924,524
899,943
Accumulated other comprehensive income (loss)
248
4,786
Accumulated deficit
(849,275
)
(806,899
)
Total stockholders' equity
75,498
97,831
Total liabilities, temporary equity and stockholders' equity
$
273,866
$
326,197
FiscalNote Holdings, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
(in thousands)
For the Nine Months Ended September 30,
2025
2024
Operating Activities:
Net (loss) income
$
(42,376
)
$
22,900
Adjustments to reconcile net (loss) income to net cash used in operating activities:
Depreciation
790
905
Amortization of intangible assets and capitalized software development costs
13,251
14,699
Amortization of deferred costs to obtain revenue contracts
2,471
2,795
Gain on sale of businesses
(16,585
)
(71,599
)
Non-cash operating lease expense
1,470
1,567
Stock-based compensation
10,975
13,885
Other non-cash expenses
-
4
Bad debt expense
316
201
Change in fair value of acquisition contingent consideration
-
(4
)
Unrealized loss on securities
67
95
Change in fair value of financial instruments
7,900
3,174
Deferred income taxes
(1,288
)
(838
)
Paid-in-kind interest, net
4,201
5,995
Non-cash interest expense
2,602
2,244
Loss on debt extinguishment, net
7,958
-
Changes in operating assets and liabilities:
Accounts receivable, net
1,072
4,149
Prepaid expenses and other current assets
(1,384
)
(1,429
)
Costs capitalized to obtain revenue contracts, net
(1,742
)
(2,155
)
Other non-current assets
(7
)
163
Accounts payable and accrued expenses
(74
)
(3,047
)
Deferred revenue
3,510
4,796
Customer deposits
(772
)
(928
)
Other current liabilities
(999
)
1,082
Contingent liabilities from acquisitions, net of current portion
-
(13
)
Operating lease liabilities
(2,327
)
(2,538
)
Other non-current liabilities
(193
)
(53
)
Net cash used in operating activities
(11,164
)
(3,950
)
Investing Activities:
Capital expenditures
(5,561
)
(6,875
)
Cash proceeds from the sale of businesses, net
46,913
91,384
Net cash provided by investing activities
41,352
84,509
Financing Activities:
Proceeds from long-term debt, net of issuance costs
100,985
801
Principal payments of long-term debt
(128,353
)
(65,781
)
Payment of deferred financing costs
(5,273
)
(7,068
)
Proceeds from exercise of stock options and employee stock purchase plan purchases
275
474
Net cash used in financing activities
(32,366
)
(71,574
)
Effects of exchange rates on cash
52
86
Net change in cash, cash equivalents, and restricted cash
(2,126
)
9,071
Cash, cash equivalents, and restricted cash, beginning of period
29,454
17,300
Cash, cash equivalents, and restricted cash, end of period
$
27,328
$
26,371
Supplemental Noncash Investing and Financing Activities:
Issuance of common stock for conversion of debt and interest
$
1,902
$
10,934
Amounts held in escrow related to the sale of businesses
$
738
$
285
Property and equipment purchases in accounts payable
$
67
$
74
Supplemental Cash Flow Activities:
Cash paid for interest
$
7,360
$
11,723
Cash paid for taxes
$
999
$
277
Non-GAAP Financial Measures
In addition to financial measures prepared in accordance with U.S. generally accepted accounting principles (“GAAP”), we use certain non-GAAP financial measures to clarify and enhance our understanding, and aid in the period-to-period comparison, of our performance. Where applicable, we provide reconciliations of these non-GAAP measures to the corresponding most closely related GAAP measure. Investors are encouraged to review the reconciliation of each of these non-GAAP financial measures to its most comparable GAAP financial measure. While we believe that these non-GAAP financial measures provide useful supplemental information, non-GAAP financial measures have limitations and should not be considered in isolation from, or as a substitute for, their most comparable GAAP measures. These non-GAAP financial measures are not prepared in accordance with GAAP, do not reflect a comprehensive system of accounting and may not be comparable to similarly titled measures of other companies due to potential differences in their financing and accounting methods, the book value of their assets, their capital structures, the method by which their assets were acquired and the manner in which they define non-GAAP measures.
Adjusted Gross Profit and Adjusted Gross Profit Margin
We define Adjusted Gross Profit as Total revenues minus cost of revenues, including amortization of capitalized software development costs and acquired developed technology, before amortization of intangible assets that are included in costs of revenues. We define Adjusted Gross Profit Margin as Adjusted Gross Profit divided by Total Revenues.
We use Adjusted Gross Profit and Adjusted Gross Profit Margin to understand and evaluate our core operating performance and trends. We believe these metrics are useful measures to us and to our investors to assist in evaluating our core operating performance because they provide consistency and direct comparability with our past financial performance and between fiscal periods, as the metrics eliminate the non-cash effects of amortization of intangible assets that may fluctuate for reasons unrelated to overall operating performance.
Adjusted Gross Profit and Adjusted Gross Profit Margin have limitations as analytical tools, and you should not consider them in isolation, or as a substitute for analysis of our results as reported under GAAP. They should not be considered as replacements for gross profit and gross profit margin, as determined by GAAP, or as measures of our profitability. We compensate for these limitations by relying primarily on our GAAP results and using non-GAAP measures only for supplemental purposes. Adjusted Gross Profit and Adjusted Gross Profit Margin as presented herein are not necessarily comparable to similarly titled measures presented by other companies.
EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin
EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin are non-GAAP financial measures. EBITDA represents earnings before interest expense, income taxes, depreciation and amortization. Adjusted EBITDA reflects further adjustments to EBITDA to exclude certain non-cash items and other items that management believes are not indicative of ongoing operations. We define Adjusted EBITDA Margin as Adjusted EBITDA divided by Total Revenues.
We disclose EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin herein because these non-GAAP measures are key measures used by management to evaluate our business, measure our operating performance and make strategic decisions. We believe that EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin are useful for investors and others in understanding and evaluating our operating results in the same manner as management. EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin are not financial measures calculated in accordance with GAAP and should not be considered as substitutes for net income (loss), net income (loss) before income taxes, or any other operating performance measure calculated in accordance with GAAP. Using these non-GAAP financial measures to analyze our business would have material limitations because the calculations are based on the subjective determination of management regarding the nature and classification of events and circumstances that investors may find significant. In addition, although other companies in our industry may report measures titled EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin or similar measures, such non-GAAP financial measures may be calculated differently from how we calculate non-GAAP financial measures, which reduces their comparability. Because of these limitations, you should consider EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin alongside other financial performance measures, including net income and our other financial results presented in accordance with GAAP.
Adjusted Gross Profit and Adjusted Gross Profit Margin
The following table presents our calculation of Adjusted Gross Profit and Adjusted Gross Profit Margin for the periods presented:
Three Months Ended September 30,
Nine Months Ended September 30,
(In thousands)
2025
2024
2025
2024
Total revenues
$
22,429
$
29,439
$
73,204
$
90,797
Costs of revenues, including amortization of capitalized software development costs and acquired developed technology
(4,774
)
(6,235
)
(16,706
)
(20,342
)
Gross Profit
$
17,655
$
23,204
$
56,498
$
70,455
Gross Profit Margin
79
%
79
%
77
%
78
%
Gross Profit
17,655
23,204
56,498
70,455
Amortization of intangible assets
1,770
2,224
7,081
7,159
Adjusted Gross Profit
$
19,425
$
25,428
$
63,579
$
77,614
Adjusted Gross Profit Margin
87
%
86
%
87
%
85
%
EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin
The following table presents our calculation of EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin for the periods presented:
Three Months Ended September 30,
Nine Months Ended September 30,
(In thousands)
2025
2024
2025
2024
Net (loss) income
$
(24,855
)
$
(14,935
)
$
(42,376
)
$
22,900
Income tax (benefit) provision
(237
)
(621
)
(1,071
)
1,129
Depreciation and amortization
3,962
4,961
14,040
15,604
Interest expense, net
3,695
5,585
13,160
18,267
EBITDA
(17,435
)
(5,010
)
(16,247
)
57,900
Gain on sale of businesses (a)
(1,161
)
-
(16,585
)
(71,599
)
Stock-based compensation
3,636
4,181
10,975
13,885
Change in fair value of financial instruments (b)
6,994
3,501
7,900
3,174
Other non-cash charges (c)
6,016
17
8,817
93
Disposal related costs (d)
1,423
40
7,368
1,138
Employee severance costs (e)
211
437
2,355
635
Non-capitalizable debt costs
2,506
49
3,250
527
Costs incurred related to the Special Committee (f)
171
229
338
682
Non-operating income (g)
(181
)
-
(409
)
-
Adjusted EBITDA
$
2,180
$
3,444
$
7,762
$
6,435
Adjusted EBITDA Margin
9.7
%
11.7
%
10.6
%
7.1
%
(a)
Reflects the gain on disposal from the sale of TimeBase on July 1, 2025, Dragonfly and Oxford Analytica on March 31, 2025, and the gain on sale of Board.org on March 11, 2024.
(b)
Reflects the non-cash impact from the mark to market adjustments on our financial instruments.
(c)
Reflects the non-cash impact of the following: (i) charge of $40 in the first quarter of 2025, charge of $30 in the second quarter of 2025, and a charge of $9 in the third quarter of 2025 related to the unrealized loss on investments; (ii) charge of $315 for fees satisfied with Common Stock of the Company during the first quarter of 2025; (iii) charge of $1,784 from the loss on debt extinguishment during the first quarter of 2025 and a charge of $6,174 in the third quarter of 2025 from the loss on debt extinguishment; (iv) charge of $632 in the second quarter of 2025 and a gain of $167 in the third quarter of 2025 related to foreign currency translation losses, principally arising from converting a GBP denominated convertible note into USD, (v) non-cash charge of $49 in the first quarter of 2024, charge of $31 in the second quarter of 2024, and a charge of $17 in the third quarter of 2024 related to the unrealized loss on investments; and (vi) gain of $4 in the first quarter of 2024 from the change in fair value related to the contingent consideration and contingent compensation related to the 2021, 2022, and 2023 Acquisitions.
(d)
Reflects the costs incurred related to the sale of TimeBase on July 1, 2025, Oxford Analytica and Dragonfly on March 31, 2025 and Board.org in March 11, 2024, principally consisting of transaction advisory, accounting, tax, and legal fees.
(e)
Severance costs associated with workforce changes related to business realignment actions.
(f)
Reflects costs incurred related to the Special Committee.
(g)
Reflects non-operating income from the Transition Services Agreement that was entered into with the acquirer of Dragonfly and Oxford Analytica on March 31, 2025.
We monitor the following key performance indicators to evaluate growth trends, prepare financial projections, make strategic decisions, and measure the effectiveness of our sales and marketing efforts. Our management team assesses our performance based on these key performance indicators because it believes they reflect the underlying trends of our business and serve as meaningful measures of our ongoing operational performance.
Annual Recurring Revenue (“ARR”)
Over 90% of our revenues are subscription based, which leads to high revenue predictability. We use ARR as a measure of our revenue trend and an indicator of our future revenue opportunity from existing recurring subscription customer contracts. We calculate ARR on a parent account level by annualizing the contracted subscription revenue, and our total ARR as of the end of a period is the aggregate thereof. ARR is not adjusted for the impact of any known or projected future customer cancellations, upgrades or downgrades, or price increases or decreases. The amount of actual revenue that we recognize over any 12-month period is likely to differ from ARR at the beginning of that period, sometimes significantly. This may occur due to timing of the revenue bookings during the period, cancellations, upgrades, or downgrades and pending renewals. ARR should be viewed independently of revenue as it is an operating metric and is not intended to be a replacement or forecast of revenue. Our calculation of ARR may differ from similarly titled metrics presented by other companies.
Net Revenue Retention (“NRR”)
Our NRR, which we use to measure our success in retaining and growing recurring revenue from our existing customers, compares our recognized recurring revenue from a set of customers across comparable periods. We calculate our NRR for a given period as ARR at the end of the period minus ARR contracted from new clients for which there is no historical revenue booked during the period, divided by the beginning ARR for the period. We calculate NRR at our parent account level. Our calculation of NRR for any fiscal period includes the positive recurring revenue impacts of selling additional licenses and services to existing customers and the negative recognized recurring revenue impacts of contraction and attrition among this set of customers. Our NRR may fluctuate as a result of a number of factors, including the level of our revenue base, the level of penetration within our customer base, expansion of products and features, the timing of renewals, and our ability to retain our customers. Our calculation of NRR may differ from similarly titled metrics presented by other companies.