KLDiscovery (KLDI) investor relations material

Executive summary

• Q2 2024 revenue was $79.0 million, down 12.2% year-over-year, with Nebula platform revenue growing 51% year-over-year and accounting for 18% of total revenues.

• Net loss for Q2 2024 was $25.3 million, compared to $4.7 million in Q2 2023, primarily due to increased professional services costs related to debt restructuring.

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

• A transaction support agreement was signed in July 2024 to reduce long-term debt, with Debenture holders agreeing to exchange debt for 96% of new common stock.

• Substantial doubt exists regarding the ability to continue as a going concern due to upcoming debt maturities and insufficient liquidity.

Financial highlights

• Q2 2024 gross profit was $38.7 million (49.0% margin), down from $45.0 million (50.0% margin) in Q2 2023.

• Q2 2024 operating expenses were $45.7 million, up 36% year-over-year due to $11.8 million in professional services for restructuring.

• Cash and cash equivalents stood at $33.8 million as of June 30, 2024.

• $38 million was drawn on the revolving credit facility as of the call date, with $1.4 million remaining available.

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

Outlook and guidance

• The company expects to close a milestone capital restructuring transaction in Q3 2024, significantly reducing long-term debt and interest payments.

• Nebula revenue is expected to accelerate and become a larger share of total revenue over time, with further customization for regulatory and medical records planned for late 2024.

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

• The company anticipates a strengthened balance sheet and focus on growth following the debt reduction transaction.

• Continued focus on growing subscription-based solutions and franchise offerings.