Q1 2022 KLDiscovery Inc Earnings Call

Ladies and gentlemen, thank you for standing by.

My name is Brent and I will be your conference operator today.

At this time I would like to welcome everyone to the KL Discovery Q1, 2022 financial results conference call.

All lines have been placed on mute to prevent any background noise.

Should you require operator assistance press Star zero, and an operator will come on the line to assist you. Thank you.

Now I'd like to turn the call over to MS. Don Wilson, Chief Financial Officer. Please go ahead.

Thank you operator welcome detailed discoveries Q1 2022 conference call. Today's call contains forward looking statements. These statements are not guarantees of future performance actual results may differ materially from these forward looking statements due to assumptions risks and uncertainties that are described in more detail in our earnings.

Press release issued yesterday and filings with the SEC.

All this debris undertakes no obligation to amend update or clarify. These forward looking statements made as of today. During this call. We will also present non-GAAP financial measures, which were not prepared in accordance with GAAP reconciliation to the most directly comparable GAAP measure to the non-GAAP financial measures discussed on this call, including EBITDA and adjust.

And EBITDA are shown in detail in our press release issued last night, along with definitions for those terms management believes that our presentation of non-GAAP financial measures provide useful supplemental information to investors regarding our results of operations a non-GAAP financial measures should only be considered in addition to and not as a substitute.

Or or superior to any GAAP measure please refer to our press release on how to access the replay of this call I will now turn the call over to our CEO Chris Wildlife.

Yeah.

Thanks, Don and good morning, everyone. Thank you very much for joining <unk> first quarter 2022 financial results Conference call. My name is Chris Wilder and I'm, the CEO and cofounder of <unk> discovery. Thank you all for joining we started 2022 with an outstanding first quarter I am very proud of the global <unk> team.

It continues to consistently deliver excellence by working hard being committed in achieving tremendous results. Despite the challenging macroeconomic and geopolitical environment. We are operating in.

We remain laser focused on what we can control and the results continue to be strong.

We achieved our first highest first quarter revenue.

Our company history with $82 million powered by a 14% increase in legal technology revenue and a 13% increase in nebula revenue in the first quarter of 2022 over the first quarter of 2021, our Q1 revenue was up 9% year over year and now for the fourth quarter in a row, we have exceeded 80 million.

Revenue, demonstrating our consistency, even while operating in difficult times, our EBITDA and adjusted EBITDA for the first quarter of 2022 are slightly down from Q1 of 2021, which is a result of planned investments in research and development and sales and marketing.

Our cash position and liquidity continued to be strong as we ended March of 2022 with $38 million in cash and cash equivalents and we remain undrawn on our $40 million revolving credit facility.

Our <unk> platform continues to gain significant traction in the first quarter of 2022, we increased the number of nebula clients and nebula matters, 31% and 24% respectively compared to the first quarter of 2020 to date active data hosted on the Nebula platform.

Increased 61% since the end of Q1 2021.

We will continue our investment in tune that'd be late in 2022 over the next several years, we expect this powerful platform to gain even more adoption and market share.

We also continued to innovate our legal technology client portal. This is a major initiative that we believe will transform the client experience. This week. We are releasing advanced features that make managing workloads easier and more streamlined for our clients our clients want and the quick and reliable access to important case information and <unk>.

Tricks this release puts that information at their fingertips on demand via dynamic and customizable Visualizations. We will continue to rollout new features throughout 2022 and beyond that will make our client portal a must have for all of our legal technology clients.

Nebula and the client portal demonstrate our technology driven culture of innovation that is ingrained in the KL, the DNA and separates us from the rest of the industry.

Our plans for a capital raise or on hold until market conditions improve until that timing is right. We will continue to focus on growing this great company and delivering outstanding product services and customer support that is unrivaled in the industry.

We are off to a great start in 2022 is the momentum we generated in 2021 continues we have global scale and are proud of our large customer base. Many of which are long time <unk> clients. We have demonstrated that we can deliver strong consistent financial results, while developing and delivering transformational shifts.

And legal technology since our inception in 2005.

I will now turn the call over to our CFO Don Wilson.

Thank you Chris.

As Chris said, the first quarter of 2022 was an excellent quarter and the fourth consecutive quarter of strong revenue revenue in the first quarter of 2022 was $81 9 million up 9% compared to the first quarter of 2021, we achieved our second highest quarter of revenue nearly surpassing our Q4 2000.

'twenty one revenue total.

For the first quarter of 2022 are nebula ecosystem revenue grew 13% to $6 1 million in 2022 versus $5 4 million in the first quarter of 2021.

As Chris mentioned, we are seeing excellent traction from our service offerings.

Constrained by strong growth of manner and customers all of which are great indicators of how nebula. It can be a significant contributor to revenue in the future.

In the first quarter of 2022, we decreased our net loss to $9 6 million. Additionally, as a result of continued planned investments in research and development to support revenue growth of our technology and planned increases in sales and marketing or EBITDA and adjusted EBITDA were down in Q1 'twenty two compare.

Q1 'twenty one.

EBITDA in the first quarter of 2022 was $11 3 million down from Q1, 2021, EBITDA of $15 1 million. Our EBITDA margin was 14% in Q1 2022 compared to 20% in Q1 2021. These are short term trade offs for long term revenue growth.

Q1, 2022, adjusted EBITDA was $14 1 million compared to $15 four in the first quarter of 2021.

Liquidity continues to be strong as our cash and cash equivalents were $38 4 million on March 31, 2022, and we have nothing drawn on our $40 million revolving credit facility.

In closing as we operate in a world of increasing economic and geopolitical uncertainty. We continued to deliver strong results. Our entire team has worked hard to ensure that <unk> delivers results and continues to build upon our outstanding Foundation I would now like to turn the call over to Chris for final comments.

Yes.

Thanks, Paul and I want to thank everyone for joining this morning, and a special thanks to all of the wonderful <unk> global employees.

The one unique fingerprint.

Ladies and gentlemen, thank you for your participation. This concludes today's call you may now disconnect.

Please wait the conference will begin shortly.

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