Q2 2023 KLDiscovery Inc Earnings Call

Thank you for standing by my name is Enrique and I'll be your conference operator today at this time I would like to welcome everybody to the KL Discovery Q2, 'twenty change <unk> financial results Conference call all participants have been placed.

On mute to prevent any background noise.

I would like now to turn the call over to Don Wilson CFO . Please go ahead.

Thank you operator welcome to KL discoveries Q2, 2023 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 yet.

Sturdy and filings with the SEC KL discovery undertakes no obligation to amend update or clarify. These forward looking statements made as of today unless required by law.

This call. We will also present non-GAAP financial measures, such as EBITDA and adjusted EBITDA, which were not prepared in accordance with GAAP reconciliation to the most directly comparable GAAP measure to the non-GAAP financial measures are shown in detail in our press release issued last night, along with definitions for those terms and a discussion of certain limitations.

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 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 Weiler.

Thanks, Don Thanks for joining us today for Kale Discovery's second quarter two.

2023 financial results Conference call. My name is Chris Weiler, and I am the CEO and co founder of scale discovery.

Our strong momentum continues as we.

Had yet another outstanding quarter of financial results.

Q2 2023.

K L D team delivered amazing results.

I'm incredibly proud to lead and be surrounded by an incredible team of professionals.

From around the globe that have an amazing commitment to delivering excellent products and services to our global client base.

Our $24 seven 365 client service when combined with innovative tools, such as client portal and our Nebuly ecosystem are changing the way our clients can manage their data the legal matters, resulting in increased revenue and improved proving profitability. The combination is creating a clear unmatched competitive advantages.

Vantage for K L D.

In the first half of 2023, we generated a record $181 million of revenue in the second quarter, we delivered $90 million of revenue, which is 20% increase compared to the second quarter of 2022.

Our strong revenue momentum is also reflected in our bottom line.

Our net loss by 58% in the second quarter of 2023 compared to the second quarter of 2022 EBITDA for the same period increased 91%, while adjusted EBITDA increased 63%.

As we move into the second half of 2023, it's hard for me to contain my excitement about the business our momentum which began at our fourth quarter of 2022 has carried through the first half of this year and is a reflection of our successful execution of our strategic initiatives.

I believe our strong performance is proof positive that K L. D is evolving the client experience and creating practical real world solutions that not only create incredible value for our clients, but help them gain greater levels of control efficiency and quality.

Our team's commitment to kill these strategic vision as further evidence.

With the increasing numbers of high value engagements, such as regulatory investigations and cyber incident response.

The nebula ecosystem has solidified itself as a platform of choice for our clients client adoption is growing at a tremendous rate than we currently use nebula processing for virtually every legal technology engagement worldwide.

The nebulizer ecosystems already expansive library of technology enabled solutions will continue to grow as we pave the way for additional cutting edge AI that will put even more automation and efficiency in our clients hands.

Client portal is another solution, we developed to disrupt the status quo of client engagement. We have spent years, creating a highly integrated back office, including our one of our client business process automation.

What form that was custom built for E discovery and our clients are now reaping. The rewards. We believe client portal is the only offering available that gives users the level of real instant real time visibility into their portfolio of matters and then it will only get better over time.

As you May recall, we also launched our first of a kind franchise program. In Q2, we are quickly working to complete the registration process and all key states and expect to ramp up marketing efforts. In Q3. This program is an exciting and innovative opportunity for revenue and EBITDA growth. It has garnered significant industry interest will qualify.

Entrepreneurs and existing business owners.

Across the board, we remain incredibly bullish on where <unk> is heading with all of our proprietary technology and are excited to execute our strategic and engineering roadmaps to bring more innovation and a differentiated client experience in the market. We're in prime position to capitalize on the favorable industry tailwind.

By expanding data volumes and increased regulatory scrutiny and believe we are well equipped to continue forging our own path forward backed by the strength of our fully integrated back office, one of a kind technology and 24 by seven by 365 customer service I will now turn the call over to our CFO John Wilson.

Thank you Chris.

Q2, 2023 with another outstanding quarter, as we continue to deliver strong financial results.

We have 90 plus million in revenue each of the last two quarters and 20 plus million in adjusted EBITDA in the last three quarters, our second quarter 2023 revenue of $90 million was the second highest revenue quarter in our history with Q1 of 2023 being the highest revenue was up 20%.

Compared to the $75 2 million of revenue in the second quarter of 2022.

Nebula generated $10 9 million of revenue in the second quarter of 2023 up 40% compared to the second quarter of 2022.

Continued efforts to increase our bottom line are reflected in our improved net loss EBITDA and adjusted EBITDA results. Our Q2 2023 net loss of $4 7 million was up 58% improvement from the Q2 2022 net loss of $11 2 million Q2 2023 EBITDA.

$18 5 million compared to Q2, 2022, EBITDA of $9 7 million, a 91% increase as I mentioned earlier, we posted our third consecutive quarter of adjusted EBITDA over $20 million with Q2 2023, adjusted EBITDA of $20 1 million compared to Q2.

In 2022, adjusted EBITDA of $12 1 million and <unk>.

Increase of 63% year over year.

Liquidity remains strong as our cash and cash equivalents were 21 million on June 32023, and we have nothing drawn on our $40 million revolving credit facility.

In closing, we were very happy with our strong financial results and the great job our colleagues at K L. D. Do every day, we will continue to be diligent agile and build upon our strong foundation and momentum I will now turn the call over to Chris for final comments Chris.

Thank you dawn and thanks, everyone for joining our call. This morning and have a great rest of the summer.

This.

Our conference call you may now disconnect.

Very well said Donaldson.

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