KLDiscovery (KLDI) investor relations material

Executive summary

• Q2 2024 revenue was $79 million, down 12% year-over-year, with legal technology at $72.1 million and data recovery at $6.9 million.

• Nebula platform revenue surged 51% year-over-year to $14.1 million, with client base up 3% to 1,708.

• Net loss for Q2 2024 was $25.3 million, compared to $4.7 million in Q2 2023, mainly due to higher restructuring costs.

• Entered a transaction support agreement in July 2024 to reduce long-term debt and interest payments, exchanging debt for 96% of new common stock.

• Substantial doubt exists about the ability to continue as a going concern due to debt maturities and liquidity constraints.

Financial highlights

• Q2 2024 gross profit was $38.7 million (49% margin), down from $45 million (50% margin) in Q2 2023.

• Adjusted EBITDA for Q2 2024 was $13.3 million, down from $20.1 million in Q2 2023; EBITDA was negative $0.5 million.

• Cash and cash equivalents stood at $33.8 million as of June 30, 2024; $38 million drawn on revolving credit facility.

• Net cash used in operating activities was $11 million for the first half of 2024.

• Total debt was $594.4 million as of June 30, 2024.

Outlook and guidance

• Anticipates closing the capital restructuring transaction in Q3 2024 to strengthen the financial position and support growth.

• Nebula revenue is expected to accelerate and become a larger share of total revenue.

• Plans to expand Nebula into regulatory legal engagements and medical record management, with further product development underway.

• Expects to enhance client portal functionality and aggressively market franchise offering.

• General and administrative expenses as a percentage of revenue are expected to decline over time, excluding transaction costs.