Q3 2022 KLDiscovery Inc Earnings Call

A discussion of certain limitations.

Management believes that our presentation of non-GAAP financial measures provides useful supplemental information to investors regarding our results of operations. Our non-GAAP financial measures should only be considered in addition to and not as a substitute for 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 Wheeler.

Thank you Dawn and welcome to <unk> third quarter 2022 financial results.

Conference call. My name is Chris Wilder, and I am the CEO and cofounder of <unk> discovery. Thank you all for joining.

In the face of stiff winds coming from severe macroeconomic conditions geopolitical uncertainty in it.

That aggressively fighting inflation with rising interest rates. The <unk> team is hard at work implementing operating efficiencies in our business, while still investing in the future.

We are consistently creating new features on our offerings and identifying ways to improve our world class client experience, which differentiates us from other service organizations in the industry.

We continue to execute our strategic plan to strengthen the company and believe we will be well positioned to capitalize on our investments in our growth when the external factors the world has been battling EES.

We achieved $74 5 million of revenue in the third quarter, which is down from <unk>.

The third quarter of 2021, but in line with our second quarter of this year consistent with our strategy to drive future growth. We continued to invest in the business given the stable nature of our business and despite our current net loss. We are very comfortable continuing to balance responsible investment while still delivering positive EBITDA and.

Adjusted EBITDA.

Our existing customers and potential new clients I speak with.

Are impressed with nebula all of the key nebula utilization metrics, we monitor to up year over year. We are also getting very positive feedback for our client portal. Our client portal continues to evolve as we develop new features that we believe will drive adoption and increase the value. It brings to all of our legal technology.

Yes.

For example in October we released functionality that give our users access in real time to critical financial metrics on demand.

Advanced visualization tools allow clients to group these data points by service type and soon by entity.

And time period, providing unmatched level of control and flexibility.

We will continue to focus on strengthening <unk> and being the best that we can be under difficult economic times I'm very proud to be leading this great team that delivers excellence everyday by keeping their heads down and working hard I will now turn the call over to our CFO Don Wilson.

Thank you, Chris as Chris said, despite the macroeconomic headwinds, which continued to adversely impact our revenue levels. We continue to make tremendous progress on implementing strategic initiatives that we believe are making <unk>, even stronger revenue in the third quarter of 2022 with $74 5 million down eight.

1% compared to the third quarter of 2021 are nebula revenues decreased 8% to $6 5 million in the third quarter of 2002 versus $7 1 million in the third quarter of 2021.

<unk> increased 5% for the year to date period as compared to 21.

We continue to gain momentum with more nebulous customers on matters.

Utilization metrics such as active users data hosted and repository are up significantly in the third quarter of 2022 versus the third quarter of 2021.

Always we are actively looking for operating efficiencies to reduce costs.

Consolidated office space capitalizing on our success in operating remotely we've been streamlining operations throughout the organization, which has allowed us to eliminate some redundant wells.

For data recovery, we optimized our personnel and expanded our sales strategy to target global companies and technology partners as we seek larger contracts with stronger margins in that business.

We continue to make investments to strengthen our product and service offerings as we responsibly trade on short term costs for what we expect will be a long term revenue growth. Our Q3 2022 net loss of $17 4 million improved from our Q3 net loss of $29 5 million in 2021.

Which included an impairment charge that did not recur in 2022.

Q3, 2022, EBITDA was $5 1 million compared to Q3, 'twenty, one EBITDA of $14 7 million. While Q3 2022, adjusted EBITDA was $11 3 million compared to Q3, 'twenty, one adjusted EBITDA of $16 8 million.

Our net loss EBITDA and adjusted EBITDA reflect the lower revenues, resulting from the challenging environment.

Also the investment in research and development and sales and marketing year over year that should contribute to higher revenues in future years. Likewise, our net loss and EBITDA includes lease vacating and severance cost to implement efficiencies that will contribute positively to future results.

We are excited about the investments we've made to contribute positively to our future.

Liquidity is strong as our cash and cash equivalents were $32 9 million on September 32022, and we have nothing drawn on our $40 million revolving credit facility.

2022 has proven to be a year that will be defined by a challenging macro environment.

There is a fair amount of uncertainty for the rest of 2002 and into 'twenty. Three therefore, we are continuing not to provide guidance for the rest of 'twenty two or 'twenty three we remain agile and continue to invest in the future and strengthen the company, while being fully committed to delivering outstanding products and services that drive solid results.

I'd like to turn the call over to Chris for final comments.

Thank you Don and thank you for joining our call today, we will continue to work hard and.

Focus on balancing the expense management and all of our very awesome relation strategic plans as we go into future, but thank you for your time today.

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

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