Q4 2023 KLDiscovery Inc Earnings Call

Operator: Good morning. My name is Brianna, and I will be your conference operator today. I'd like to welcome everyone to the KLDiscovery Q4 2023 Financial Results Conference Call. At this time, all lines have been placed on mute to prevent any background noise.

Good morning, My name is Brianna and I'll be your conference operator today.

Brianna: I'd like to welcome everyone to the KL Discovery Q4, 2023 financial results conference call.

Brianna: At this time all lines have been placed on mute to prevent any background noise.

Operator: As a reminder, this call is being recorded. I will now turn the conference over to Dawn Wilson, Chief Financial Officer. You may begin.

Brianna: As a reminder, this call is being recorded.

Brianna: I'll now turn the conference over to Don Wilson, Chief Financial Officer, you May begin.

Dawn M. Wilson: Thank you, operator. Welcome to KLDiscovery's Q4 and full year 2023 conference call. Today's call contains forward-looking statements within the meaning of the federal securities laws, but these statements are not guarantees of future performance. Actual results may differ materially from these forward-looking statements due to assumptions, risk, and uncertainties that are described in more detail in our earnings press release issued today. The company undertakes no obligation to amend, update, or clarify these forward-looking statements made as of today, unless required by law. During this call, we will also present non-GAAP financial measures such as EBITDA and adjusted EBITDA, which were not prepared in accordance with GAAP.

Don Wilson: Thank you operator, welcome to KL discoveries Q4, and full year 2023 conference call. Today's call contains forward looking statements within the meaning of the federal Securities laws. These statements are not guarantees of future performance actual results may differ materially from these forward looking statements due to assumptions.

None: <unk> risks and uncertainties that are described in more detail in our earnings press release issued yesterday and filings with the SEC.

None: Hey, all discovery undertakes no obligation to amend update or clarify. These forward looking statements made as of today unless required by law.

None: During this call. We will also present non-GAAP financial measures, such as EBITDA and adjusted EBITDA, which were not prepared in accordance with GAAP.

Dawn M. Wilson: Reconciliation of the Non-GAAP Financial Measures to the Most Directly Comparable GAp Measures is 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 provides useful supplemental information to investors regarding our results of operations. Our non-GAAP financial measure should only be considered in addition to, and not in isolation from, or as a substitute for, or superior to, any GAAP measure.

None: Reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures are shown in detail in our press release issued last night.

None: Along with definitions for those terms and a discussion of certain limitations.

None: Management believes that our presentation of non-GAAP financial measures provide useful supplemental information to investors regarding our results of operations. Our non-GAAP financial measures should only be considered in addition to and not in isolation from or as a substitute for or superior to any GAAP measure.

Dawn M. Wilson: 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. Thank you, Dawn, and thank you for joining us today for KLDiscovery's fourth quarter and full year 2023 financial results conference call. My name is Chris Weiler, and I am the CEO and co-founder of KLDiscovery.

None: 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.

Christopher J. Weiler: Thank you Don and thank you for joining us today for KL Discovery's fourth quarter and full year of 2023 financial results Conference call My.

Christopher J. Weiler: My name is Chris Weiler, and I am the CEO and co founder of Cal discovery.

Christopher J. Weiler: I'd like to begin by saying I am so thankful to be working with the amazing KLD team of professionals from around the world. They have made all the success we have seen today possible with their dedication and commitment to excellence. Our team provides unmatched, world-class, 24-7, 365 customer service, coupled with our innovative technology platform delivered through tools such as Nebula, our client portal, and our growing suite of AI tools. This powerful combination of people and technology creates an unbeatable value proposition that is making a difference to our existing clients as well as attracting new clients around the world. While our performance speaks for itself, it bears highlighting that 2023 was a landmark year for KLDiscovery.

Christopher J. Weiler: I'd like to begin by saying I am so thankful to be working with your amazing <unk> team of professionals from around the globe.

Christopher J. Weiler: They have made all the success, we have seen to date possible with their dedication and commitment to excellence. Our team provides unmatched world class 24, seven 365 customer service.

Christopher J. Weiler: Coupled with our innovative technology platform delivered through tools, such as <unk>, our client portal and our growing suite of AI tools.

Christopher J. Weiler: This powerful combination of people and technology creates an unbeatable value proposition. It is making a difference to our existing clients as well as attracting new clients around the world.

Christopher J. Weiler: While our performance speaks for itself the barest highlighting the 2023 was a landmark year for KL discovery.

Christopher J. Weiler: We made tremendous progress executing on our many strategic initiatives, which translated into record financial results. The strategic decisions that we have made and implemented over the past several years have resulted in increased customer satisfaction and usage, as well as excellent financial results with increased revenue and margin. KLD technology is not only driving more client usability, but it is also benefiting margins by providing a platform that reduces the level of human support needed for mundane tasks, freeing up time for our client service team to focus on servicing the strategic needs of our clients.

Christopher J. Weiler: We made tremendous progress executing on our many strategic initiatives, which translated into record financial results with.

Christopher J. Weiler: The strategic decisions that we've made and implemented over the past several years have resulted in increased customer satisfaction and.

Christopher J. Weiler: And usage as well as excellent financial results with increased revenue and margins.

<unk> technology is not only driving more client usability. It is also benefiting margins by providing the platform that reduces the level of people support needed for mundane task.

Christopher J. Weiler: Bringing uptime for our client service team to focus on servicing the strategic needs of our clients.

Christopher J. Weiler: A great example of this is our flagship eDiscovery Platform, Nebula. Nebula brings full EDRM coverage to customers that demand high-performance solutions at every stage of discovery. Nebula continues to attract new customers and is rapidly becoming the preferred solution for many of our existing customers. In addition to experiencing significant growth and adoption amongst our client base, Nebula is also driving financial results and is becoming a significant part of our revenue and profitability. Our record-breaking revenue in 2023 was bolstered by a strong contribution from Nebula, which generated $46.1 million, which includes $14.2 million for Nebula processing services for non-Nebula-hosted engagements. 2023 Nebula revenue is up $17.6 million or 62% compared to 2022. The momentum for Nebula is strong.

Christopher J. Weiler: A great example of this is our flagship E discovery platform Nebula.

<unk> brings full edr M coverage to customers with them.

Christopher J. Weiler: In high performance solutions at every phase of discovery.

Christopher J. Weiler: <unk> continues to capture new customers and is rapidly becoming the preferred solution for many of our existing customers. In addition.

Christopher J. Weiler: Two experiencing a significant growth and adoption amongst our client base.

Christopher J. Weiler: <unk> is also driving financial results and is becoming a significant part of our revenue and profitability.

Record breaking revenue in 2023 was bolstered by a strong contribution from nebula, which generated $46 1 million, which includes $14 2 million for nebula processing services for non nebula hosted engagements.

Christopher J. Weiler: 2023 Nebula revenue was up $17 6 million or 62% compared to 2022 momentum for <unk> is strong <unk> revenue for Q4 was $14 1 million up 74% over Q4 2022 overall.

Christopher J. Weiler: Nebula revenue for Q4 was $14.1 million, up 74% over Q4 2022. Overall, Nebula is now 13% of KLDiscovery's total revenue. The momentum KLD has created within the marketplace is irrefutable. In 2023, we saw an increase in large matters as 52% of legal technology revenue came from matters that generated revenues of $500,000 or more. This is an increase from 47% in 2022.

Christopher J. Weiler: Overall nebula is now 13% of TL Discovery's total revenue.

Christopher J. Weiler: The momentum <unk> created within the marketplace is irrefutable and 2023, we saw an increase in large matters as 52% of legal technology revenue came from matters, which generated revenues of $500000 or more.

Christopher J. Weiler: This is an increase from the 47% in 2022.

Christopher J. Weiler: Our net revenue retention rate for legal technology was 104%. We delivered outstanding results for the full year of 2023, setting all-time company records with our highest revenue of $345.8 million, lowest net loss of $34.8 million, our highest EBITDA of $62.6 million, and highest adjusted EBITDA of $74 million. Overall, the fourth quarter of 2023 was one of our best quarters ever as we delivered solid revenue of $85.8 million, which is an increase of 8% sequentially compared to the third quarter of 2023. Our strong revenue growth is positively impacting the bottom line. These results are no accident.

Christopher J. Weiler: Our net revenue retention rate for legal technology was 104%.

Christopher J. Weiler: We.

Christopher J. Weiler: <unk> outstanding results for the full year of 2023, setting all time company records with our highest revenue of $345 8 million lowest net loss of $34 8 million, our highest EBITDA of $62 6 million and highest adjusted EBITDA of $74 million.

Christopher J. Weiler: Overall, the fourth quarter of 2023.

Christopher J. Weiler: It was one of our best quarters ever as we delivered solid revenue of $85 8 million, which is an increase of 8% sequentially compared to the third quarter of 2023.

Christopher J. Weiler: Our strong revenue growth is positively impacting the bottom line.

Christopher J. Weiler: These results are no accident, our performance in 2023 as a result of what we believe is a winning strategy being well executed by our global team of professionals.

Christopher J. Weiler: Our performance in 2023 is a result of what we believe is a winning strategy being well executed by our global team of professionals. As a result of our investment in technology, backend infrastructure, optimization of headcount, and real estate footprint, we created a scalable infrastructure with margins that increased as revenue increased. Both our full-year gross margin and adjusted EBITDA margin expanded in 2023. We've known this for years, but the market is finally catching up.

Christopher J. Weiler: As a result of our investment in technology backend infrastructure optimization of head count in our real estate footprint, we created a scalable infrastructure with margins that increased as revenue increased both our full year gross margin and adjusted EBITDA margin expanded in 2023.

Christopher J. Weiler: We've known this for years, but the market is finally catching on nebula is a premier E discovery platform that definitely balances ease of use and powerful functionality to create an unmatched user experience.

Christopher J. Weiler: Nebula is a premier e-discovery platform that deftly balances ease of use and powerful functionality to create an unmatched user experience. Comparing 2023 to 2022, the number of nebulae matters has grown 17 percent, while active data posted is up 32 percent, and active users are up 13 percent.

Christopher J. Weiler: Comparing 2023 to 2022, the number of Nebula matters is growing 17% while active data hosted is up 32% active users are up 13%.

Christopher J. Weiler: While those numbers are.

Christopher J. Weiler: While those growth numbers illustrate Nebula's traction, they are dwarfed by Nebula's impressive financial results. As I mentioned a few minutes ago, Nebula continues to be a massive growth driver for the company with year-over-year revenues of 62%. As proud as we are of Nebula's growth thus far, the best is still yet to come. We continue to invest heavily in Nebula and artificial intelligence that empowers the user experience like never before. Nebula's existing AI machine learning toolkit will soon be greatly enhanced by updated models and improved workflows.

Christopher J. Weiler: While those growth numbers illustrate nebulous traction they are dwarfed by nebulous impressive financial results as I mentioned, a few minutes ago Nebuly continues to be a massive growth driver for the company with year over year revenues up 62%.

Christopher J. Weiler: As proud as we are a nebulous growth thus far the best is still yet to come.

Christopher J. Weiler: We continue to invest heavily in <unk> and artificial intelligence that empowers the user experience like never before.

Christopher J. Weiler: <unk> existing AI machine learning tool kit will soon be.

Christopher J. Weiler: Greatly enhanced by updated models and improve workflows.

Christopher J. Weiler: New AI features are slated for release in 2024 and 2025 to further solidify Nebula as an eDiscovery powerhouse. Many of these product initiatives are the results of years of dedicated AI research that we've been prioritizing since 2019, years before the latest wave of Gen AI hype. Additional 2024 Nebula Roadmap highlights include an entirely new authentication system with support for new single sign-on protocols and additional multi-factor authentication options. Promotions of data from Nebula Processing and ECA to third-party platforms for greater optionality across our network of vendors and partners. Data source connectors and improved handling of chat and business communications data, such as Teams, Slack, and Gchat; re-architected Ingestion Pipeline to dramatically reduce the time from upload to review; and many quality of life improvements on the review and production side of the EDRM in addition to the aforementioned AI enhancements.

Christopher J. Weiler: New AI features are slated for release in 2024, and 2025 to further solidify nebula as an ediscovery powerhouse.

Christopher J. Weiler: Many of these product initiatives are the results of years of dedicated AI research that we've been prioritizing since 2019 years before the latest wave of Gen AI hype.

Additional 2024 Nebula roadmap highlights include.

Christopher J. Weiler: Entirely new authentication system with.

Christopher J. Weiler: With support for new single sign on protocols and additional multi factor authentication options.

Christopher J. Weiler: Promotions of data from Nebula processing, and ECA to third party platforms for greater Optionality across our network of vendors and partners.

Christopher J. Weiler: Data source connectors and improve handling of chat and business communications data such as teams black and veatch at.

Christopher J. Weiler: Re architected ingestion pipeline to dramatically reduce the time from upload to review.

Christopher J. Weiler: And many of quality of life improvements on the review and production side of the Edr M. In addition to the aforementioned AI enhancements.

Christopher J. Weiler: As we look ahead, Nebula's reach is only going to continue to expand with it being a state-of-the-art platform that will be the interface for KLDiscovery's many-gen AI initiatives. By the way of background, we have a dedicated AI and data science team since 2019 with over 17,000 hours of R&D invested into KLD's current and future AI offerings. Recent innovations in foundational AI have spurred massive opportunities for technology providers and software platforms like Nebula. We are well positioned to capitalize on these state-of-the-art advancements and package them in ways that drive real results for customers. While others may rush to incorporate large language models in any way possible, our focus is always on practical solutions that deliver quantifiable value.

Christopher J. Weiler: As we look ahead nebulous reach is only going to continue to expand with it being a state of the art platform that would be the interface for Kale discoveries many.

Christopher J. Weiler: <unk> AI initiatives.

By the way of background, we have dedicated AI and data science team since 2019 with over 17000 hours of R&D invested into <unk> current and future AI offerings.

Christopher J. Weiler: Recent innovations and foundational AI has spurred massive opportunity for technology providers and software platforms like nebula.

Christopher J. Weiler: We are well positioned to capitalize our new state of the yard advancements.

Christopher J. Weiler: And product ties them in ways that drive real results for customers.

Christopher J. Weiler: While others May rush to incorporate large language models in any way possible. Our focus is always on practical solutions that deliver quantifiable value.

Christopher J. Weiler: This approach is reflected by not only our key AI MNL initiatives but also our larger Nebula development roadmap, of which AI MNL initiatives are critical parts. While we are very excited about what recent and future AI innovations may bring to the industry, the general consensus is that the adoption of Gen-AI solutions will be conservative. Considerations around cost, scalability, legal ramifications, privacy, and ethical implications must all be carefully weighed by law firms and counsel alike.

Christopher J. Weiler: This approach is reflected by not only our key AI ml initiatives.

Christopher J. Weiler: But also our larger nebula development roadmap of which AI ml initiatives are critical part.

Christopher J. Weiler: While we are very excited what recent and future AI innovations may bring to the industry. The general consensus is that the adoption of Gen AI solutions will be conservative considerations.

Christopher J. Weiler: Considerations around cost scalability legal ramifications privacy.

And ethical implications must all be carefully weighed by law firms and counsel alike rigor.

Christopher J. Weiler: Regardless of what timeline plays out, Nebula and KLDiscovery are poised to be market leaders in software and services, respectively. Moving on, I would be remiss if I didn't talk about KLDiscovery's client portal. I've always seen this tool as a catalyst to evolve the customer experience, and I am bullish as ever about the impact this is having on our clients. With real-time visibility and complete transparency into their portfolio of matters, we believe our clients have an unmatched level of business intelligence with KLDiscovery. In Q4 of 2023, we released our one-of-a-kind alerting feature that proactively informs users of critical data points around budget attainment, work in progress, and sudden changes in matter activity. We've recently enhanced this functionality to include a series of default alerts automatically installed for every client portal user to help take the guesswork and surprises out of eDiscovery.

Christopher J. Weiler: Regardless with timeline plays out nebula in KL discovery are poised to be market leaders in software and services respectfully.

Christopher J. Weiler: Moving on I would be remiss, if I didn't talk about KL discoveries client portal.

Christopher J. Weiler: I've always seen this tool as a catalyst to evolve the customer experience.

Christopher J. Weiler: And I am bullish as ever about the impact this is having on our clients with real time visibility and complete transparency into their portfolio of matters.

Christopher J. Weiler: We believe our clients have an unmatched level of business intelligence with KL discovery in Q4 of 2023, we released our one of a kind alerting feature that proactively informs users of critical data points around budget attainment work in progress and sudden changes of matter activity.

Christopher J. Weiler: We've recently enhanced functionality to include a series of default alerts.

Christopher J. Weiler: Automatically install for every client portal user to help take the guesswork and surprises out of Ediscovery.

Christopher J. Weiler: Another inflection point for KLDiscovery occurred in Q4 of 2023 when we acquired Senza, an established global ALSP from India serving clients in the U.S. and U.K. with scalability, cost-effective, and reliable managed legal services built on best-in-class technology, offering deep operational expertise, rigorous quality control, and robust client service. This acquisition immediately gives us a mature Indian operation to expand our best-in-class This combination also allows us to expand contract management solutions by blending consulting, advisory, project management, hosting, and legal AI with lawyers in the loop.

Christopher J. Weiler: Another inflection point for Cal discovery occurred in Q4 of 2023, when we acquired sensor and established global AOSP from India, serving clients in the U S and UK with scalability cost effective and reliable manage legal services built on best in class technology offering deep.

Christopher J. Weiler: <unk> operational expertise rigorous.

Christopher J. Weiler: The rigorous quality control and robust client service. This acquisition immediately gives us a mature India operation to expand our best in class solutions, including our secure managed document review and cyber incident response offerings.

Christopher J. Weiler: This combination also allows us to expand contract management solutions by blending consulting advisory project management hosting and legal AI with lawyers and the loop.

Christopher J. Weiler: We believe this toehold in India affords us countless opportunities to drive business results while also enhancing top and bottom line financial performance. Lastly, I'd like to provide an update on our one-of-a-kind eDiscovery franchising program. We are proud to announce that we are now approved in all 50 states to offer eDiscovery franchise opportunities.

Christopher J. Weiler: We believe this toehold in India affords us countless opportunities to drive business results, while also enhancing top and bottom line financial performance.

Christopher J. Weiler: Lastly, I'd like to provide an update on our one of a kind E discovery franchising program.

Christopher J. Weiler: We're proud to announce that we are now approved in all 50 states to offer ediscovery franchise opportunities.

Christopher J. Weiler: As a reminder, KLDiscovery's Franchise Program leverages the company's proven e-discovery business model, global footprint, around-the-clock client support, and full technology stack to create a point of entry for legal technology entrepreneurs and adjacent businesses across the country to establish an e-discovery business. With this program now available nationwide, we are seeing tremendous interest in our quickly booking appointments for our upcoming Multi-City Franchise Road I continue to be amazed at how KLD continues to operate at an extremely high level despite challenging market conditions. Our results are remarkable and a true testament to our team and their dedication to excellence. Their real excitement lies in looking ahead.

Christopher J. Weiler: As a reminder, Gail discoveries franchise program Leverages, the Companys proven Ediscovery business model global footprint around the clock client support and full technology stack to create a point of entry for legal technology entrepreneurs and adjacent businesses across the country to establish an E discovery business.

Christopher J. Weiler: With this program now available nationwide, we're seeing tremendous interest and are quickly booking appointments for our upcoming multi city franchise roadshow that we plan to conduct later this year.

Christopher J. Weiler: I continue to be amazed at how <unk> continues to operate in an extremely high level despite challenging market conditions.

While our results were remarkable and a true testament to our team and their dedication to excellence.

The real excitement lies in looking ahead.

Christopher J. Weiler: We have proven our ability to execute in our strategy positions for continued success. Our technology is already best in class, and we believe it's only going to get better. Our franchise program is no longer geographically constrained in the U.S. and provides tremendous potential for net new revenue opportunities. We are now operating in India, creating a wealth of possibilities not previously available to us. I am more optimistic now than ever about our direction and the possibilities before us. With our great team, loyal customers, purpose-built technology, and a sound strategic vision, the wind is truly at our backs as we head into 2024 and beyond. I will now turn the call over to our CFO, Dawn Wilson. Thank you, Chris.

Christopher J. Weiler: We have proven our ability to execute in our strategy positions us for continued success.

Christopher J. Weiler: Technology is already best in class and we believe it is only going to get better our franchise program is no longer geographically constrained in the U S and provides tremendous potential for net new revenue opportunities.

Christopher J. Weiler: We are now operating in India, bringing a wealth of possibilities not previously available to us.

Christopher J. Weiler: I am more optimistic now than ever before about our direction and the possibilities before us with our great team loyal customers purpose built technology and a sound strategic vision. The wind is truly at our backs as we head into 2024 and beyond I will now turn the call over to our CFO.

Christopher J. Weiler: Don Wilson.

Don Wilson: Thank you, Chris we achieved excellent financial results in the fourth quarter and full year of 2023 for the full year of 2023, we had our highest revenue lowest net loss highest EBITDA and adjusted EBITDA, while improving gross margin and adjusted EBITDA margins compared to 2022.

Dawn M. Wilson: We achieved excellent financial results in the fourth quarter and full year of 2023. For the full year of 2023, we had our highest revenue, lowest net loss, highest EBITDA, and adjusted EBITDA, while improving gross margins and adjusted EBITDA margins compared to the year before. Revenue in the fourth quarter of 2023 was $85.8 million, which is on par with $85.8 million in the fourth quarter of 2022. For the full year 2023, revenue was $345.8 million compared to $317.4 million in 2022, a 9% increase. Legal technology revenue for the full year increased to $312.5 million from $282.5 million. $8 million in 2022, an 11% increase year-over-year. Our growth in legal technology revenue is due to increased Nebula growth, increased number of customers, increased number of matters, and increased revenue from complex matters. Our comprehensive product offering, technology-enabled service offerings, and reputation as a trusted partner to our clients enable us to handle matters of great size and complexity.

Don Wilson: Revenue in the fourth quarter of 2023 was $85 8 million, which is on par with $85 8 million in the fourth quarter of 2022.

Don Wilson: For the full year 2023 revenue was $345 8 million compared to $317 4 million in 2022, 9% increase legal technology revenue for the full year increased to $312 5 million from 282 point.

Don Wilson: $8 million in 2022.

11% increase year over year.

Don Wilson: Our growth in legal technology revenue is due to increased nebula growth increased number of customers increased number of matters and increased revenue from complex matters, our comprehensive product offering technology enabled service offerings and reputation as a trusted partner to our clients enable us to capture matters a lot.

Don Wilson: <unk> size and complexity during the years ended December 31, 2023, and 2022, 52% and 47% respectively of legal technology revenue was produced by matters that generated revenue greater than 500000.

Dawn M. Wilson: During the years ended December 31, 2023, and 2022, 52% and 47%, respectively, of legal technology revenue was produced by matters that generated revenue greater than $500,000, and 79% and 77%, respectively, of our legal technology revenues were generated by matters greater than $100,000. Additionally, we saw an increase in our legal technology net revenue retention rate to 104% for 2023 versus 94% for 2022, indicating continued growth from our existing long-tenured Nebula continues to drive legal technology revenue growth, delivering revenue of $46.1 million. That's inclusive of $14.2 million for Nebula processing services for non-Nebula hosted engagements for 2020, with year-over-year revenues up 62% and Q4-23 revenues up 72% as compared to Q4-2022. Nebula revenues are currently 13% of our total revenues.

Don Wilson: 79% and 77% respectively of our legal technology revenues were generated by matters greater than 100000.

Don Wilson: Additionally, we saw an increase in our legal technology net revenue retention rate to 104% for 2023 versus 94% for 2022, indicating continued growth from our existing long tenured customer base.

Don Wilson: <unk> continues to drive legal technology revenue growth delivering revenue of $46 1 million, that's inclusive of $14 2 million for Nebula processing services for non nebula hosted engagements for 2023 with year over year revenues up 62% in Q4 23 revenues up seven.

Don Wilson: <unk>, 2% as compared to Q4 2022.

Cellular revenues are currently 13% of our total revenues, we have a strong track record of growing our client base and we believe our ability to increase the number of clients utilizing nebula is an important indicator of our market penetration our business growth and our future opportunities the number of nebula clients increased to 1006.

Dawn M. Wilson: We have a strong track record of growing our client base, and we believe our ability to increase the number of clients utilizing Nebula is an important indicator of our market penetration, our business growth, and our future opportunities. The number of Nebula clients increased to 1,673 versus 1,593 as of December 31, 2023, and 2022, respectively. Additionally, as Chris discussed, we have seen tremendous growth in key Nebula utilization metrics, including number of users, number of matters, and active data hosted as Nebula continues to gain traction. Additionally, our strategy to focus on managing costs while still investing in our technology continues to deliver positive results. Net loss improved 19% for the full year of 23 compared to 22, as net loss was reduced from $43.2 million to $34.8 million.

Don Wilson: <unk> hundred 73 versus 1593 as of December 31, 2023, and 2022, respectively.

Don Wilson: Additionally, as Chris discussed we have seen tremendous growth in key nebula utilization metrics, including number of users number of matters inactive data hosted as <unk> continues to gain traction our.

Don Wilson: Our strategy to focus on managing costs, while still investing in our technology continues to deliver positive results net loss improved 19% for the full year of 23 compared to 22 as net loss was reduced from $43 2 million to $34 8 million.

Dawn M. Wilson: In the fourth quarter of 2023, the net loss was $14.3 million compared to $5 million in Q4 2022. EBITDA and adjusted EBITDA results also saw significant gains for the full year of 2023, up 41% and 27%, respectively, compared to 2022. Q4 2023 EBITDA was $12 million compared to Q4 2022 EBITDA of $18.3 million. Q4 2023 adjusted EBITDA was $17.2 million compared to Q4 2022 adjusted EBITDA of $20.4. Additionally, our gross margin improved significantly. This improvement in margin comes from years of investment in technology and improvements in back-end infrastructure, optimization of headcount, and real estate. Our liquidity includes our cash and cash equivalents, which were $15.4 million on December 31, 2023, and we had nothing drawn on our $40 million revolving credit facility as of December 31, 2023. As of today, we have $15 million drawn on the revolving credit facility.

Don Wilson: In the fourth quarter 2023, net loss was $14 3 million compared to $5 million in Q4 2022.

Don Wilson: EBITDA and adjusted EBITDA results also saw significant gains for the full year of 2023.

Don Wilson: 41% and 27% respectively compared to 2022.

Don Wilson: Q4, 2023, EBITDA was $12 million compared to Q4 2022 EBITDA of $18 3 million Q4, 23, adjusted EBITDA was $17 2 million compared to Q4 'twenty to adjusted EBITDA of $24 million.

Additionally, our gross margin improved significantly this improvement in margin comes from years of investment in technology and improvements in backend infrastructure optimization of head count and real estate. Our liquidity includes our cash and cash equivalents, which were $15 4 million on December 31, 2023, and we had nothing drawn.

Don Wilson: On our $40 million revolving credit facility as of December 31, 2023 as of today, we have $15 million drawn on the revolving credit facility.

Christopher J. Weiler: In closing, we are very happy with our strong financial results for the fourth quarter and full year of 2023, as our team at KLD continues to perform and do a great job every day. As always, 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. Thank you, Dawn. I just wanted to thank everyone for their time this morning and again thank the KLD global family for all that you do every day. You're amazing, and I'm really proud of the efforts that you all have made and the accomplishments of 2023. This will conclude today's conference call. Thank you for joining us. You may now disconnect.

None: In closing we are very happy with our strong financial results for the fourth quarter and the full year of 2023 as our team Mackenzie continues to perform and does a great job everyday as always we will continue to be diligent agile and build upon our strong foundation and momentum.

None: I'll now turn the call over to Chris for final comments.

Christopher J. Weiler: Thank you Don I just wanted to thank everyone for their time this morning and again, thank the <unk> global family for all that you do every day you are amazing and.

Christopher J. Weiler: Really proud of the efforts that you did and the accomplishments of 2023.

None: This will conclude today's conference call. Thank you for joining US you may now disconnect.

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