KLDiscovery (KLDI) AI Stock Analysis

Compare

15 Followers

Top Page

KLDiscovery

(OTC:KLDI)

Rating:48Neutral

Price Target:―

KLDiscovery's overall stock score of 48 reflects its revenue growth and improved operational margins, which are positive indicators. However, significant financial risks due to high leverage, negative net income, and weak cash flow generation weigh heavily on the score. The technical analysis suggests a bearish trend, and the valuation metrics imply potential overvaluation given the company's financial performance. These factors contribute to a cautious outlook on the stock.

KLDiscovery (KLDI) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$4.35K

Dividend YieldN/A

Average Volume (3M)0.00

Price to Earnings (P/E)―

Beta (1Y)-4.93

Revenue GrowthN/A

EPS GrowthN/A

CountryUS

Employees1,382

SectorTechnology

Sector Strength83

IndustrySoftware - Application

Share Statistics

EPS (TTM)N/A

Shares Outstanding43,516,390

10 Day Avg. Volume0

30 Day Avg. Volume0

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)0.00

Price to Sales (P/S)0.00

P/FCF Ratio0.00

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price TargetN/A

Price Target UpsideN/A

Rating ConsensusN/A

Number of Analyst Covering0

KLDiscovery Business Overview & Revenue Model

Company DescriptionKLDiscovery (KLDI) is a global provider of electronic discovery, information governance, and data recovery solutions. The company operates in the legal and corporate sectors, offering a comprehensive suite of services and software that help organizations manage complex data challenges. KLDiscovery's core offerings include eDiscovery solutions, data recovery, forensic investigation, and managed services, all designed to streamline data management and support legal and regulatory compliance.

How the Company Makes MoneyKLDiscovery makes money primarily through its eDiscovery services and software solutions, which are utilized by law firms, corporations, and government agencies to manage and analyze data for legal and regulatory purposes. Revenue streams include fees for processing and hosting data, managed review services, and software licensing. The company also generates income from its data recovery and forensic investigation services, which involve recovering lost or corrupted data and conducting digital investigations. These services are often used by businesses to safeguard against data loss and support legal inquiries. KLDiscovery's revenue model is bolstered by strategic partnerships with technology providers and a global customer base, allowing it to leverage its expertise and infrastructure to provide tailored solutions across different industries.

KLDiscovery Earnings Call Summary

Earnings Call Date:May 07, 2025

(Q2-2024)

% Change Since: |

Next Earnings Date:Aug 06, 2025

Earnings Call Sentiment Positive

The earnings call highlighted significant revenue growth, especially with the Nebula platform, and strategic initiatives to reduce debt. However, the financial loss and reliance on credit facilities are concerning. Nevertheless, the positive aspects, especially the growth in client base and revenue, slightly outweigh the negatives, indicating an optimistic outlook.

Q2-2024 Updates

Positive Updates

Strong Revenue Performance

KLDiscovery reported total revenue of $79 million for Q2 2024, with legal technology revenue at $72.1 million and data recovery revenue at $6.9 million.

Growth in Legal Technology Clients

The number of legal technology clients increased by 1.4% year-over-year to 6,239, and Nebula clients increased by approximately 3% year-over-year to 1,708.

Nebula Platform Success

Nebula revenue increased by 51% year-over-year, contributing an incremental $8.4 million by expanding its use across legal technology engagements.

Milestone Financial Transaction

A transaction support agreement was made to significantly decrease KLDiscovery's long-term debt, with expected closing in Q3 2024.

Innovative Client Portal

The client portal provides critical case and financial metrics, with plans to introduce automated invoice availability in Q3 2024.

Negative Updates

Negative Financial Metrics

KLDiscovery reported a net loss of $25.3 million for Q2 2024, with EBITDA at negative $0.5 million.

High Debt Levels

The company has $38 million drawn on the revolving credit facility, indicating significant reliance on borrowed funds.

Company Guidance

During the KLDiscovery Q2 2024 earnings call, several key financial metrics and strategic initiatives were discussed. The company reported total revenue of $79 million, with legal technology revenue accounting for $72.1 million and data recovery revenue contributing $6.9 million. Notably, the Nebula platform generated $14.1 million in revenue during Q2 and has shown a 51% year-over-year growth, totaling $28.8 million year-to-date as of June 30, 2024. The number of legal technology clients increased to 6,239, up 1.4% from the previous year, while Nebula clients rose by 3% to 1,708. Despite a net loss of $25.3 million, the company achieved an adjusted EBITDA of $13.3 million. KLDiscovery is finalizing a significant transaction expected to decrease long-term debt and strengthen its financial structure, with the transaction anticipated to close in Q3 2024. The company also highlighted its focus on expanding Nebula's adoption across various sectors, including legal and medical record management, and enhancing client offerings through a client portal and franchise opportunities.

KLDiscovery Financial Statement Overview

Summary

KLDiscovery is experiencing revenue growth and improving operational margins, signaling progress in its business model. However, financial risks are evident with high leverage, deteriorating equity, and persistent net losses. Cash flow generation is weak, highlighting challenges in supporting growth with internal funds. The company needs to focus on improving profitability and strengthening its balance sheet to enhance financial health.

Income Statement

Positive

KLDiscovery's revenue has shown a consistent growth trajectory, rising from $289.5M in 2020 to $345.8M in 2023. The gross profit margin improved to 50.3% in 2023, indicating efficient cost management. However, the company is still facing challenges with profitability, as reflected by a negative net income in recent years, although the margin has been narrowing. The EBIT and EBITDA margins have also improved, suggesting enhanced operational efficiency.

Balance Sheet

Negative

The balance sheet reveals a high debt-to-equity ratio, significantly increasing from 3.4 in 2020 to 137.8 in 2023, indicating high leverage. Stockholders' equity has deteriorated, posing a risk to financial stability. The equity ratio has drastically declined, suggesting a heavy reliance on debt financing. Return on Equity remains negative due to persistent net losses.

Cash Flow

Neutral

Operating cash flow has decreased over the years, signaling potential challenges in generating cash from core operations. Free cash flow remains negative, although the margin has slightly improved. The ratio of operating cash flow to net income is low, indicating limited cash conversion efficiency, while free cash flow to net income is weak.

Breakdown	Dec 2023	Dec 2022	Dec 2021	Dec 2020	Dec 2019
Income Statement
Total Revenue	345.80M	317.43M	320.48M	289.55M	312.05M
Gross Profit	173.89M	151.98M	156.52M	141.81M	151.21M
EBITDA	62.61M	46.12M	27.43M	49.43M	45.49M
Net Income	-34.81M	-43.17M	-60.54M	-49.93M	-54.01M
Balance Sheet
Total Assets	605.59M	619.44M	636.40M	679.75M	714.91M
Cash, Cash Equivalents and Short-Term Investments	15.35M	32.63M	46.47M	51.20M	43.41M
Total Debt	560.62M	545.72M	510.71M	483.55M	480.62M
Total Liabilities	601.53M	585.75M	558.55M	537.52M	531.15M
Stockholders Equity	4.07M	33.69M	77.85M	142.22M	183.76M
Cash Flow
Free Cash Flow	-9.29M	-8.24M	-2.39M	28.84M	-21.57M
Operating Cash Flow	5.03M	7.95M	10.10M	39.78M	-8.30M
Investing Cash Flow	-17.34M	-16.19M	-12.49M	-14.06M	-15.22M
Financing Cash Flow	-5.28M	-4.98M	-1.76M	-18.59M	43.49M

KLDiscovery Technical Analysis

Technical Analysis Sentiment

Negative

Last Price0.02

Price Trends

50DMA

0.02

Positive

100DMA

0.02

Positive

200DMA

0.03

Negative

Market Momentum

MACD

>-0.01

Negative

RSI

38.21

Neutral

STOCH

28.57

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For KLDI, the sentiment is Negative. The current price of 0.02 is equal to the 20-day moving average (MA) of 0.02, above the 50-day MA of 0.02, and below the 200-day MA of 0.03, indicating a neutral trend. The MACD of >-0.01 indicates Negative momentum. The RSI at 38.21 is Neutral, neither overbought nor oversold. The STOCH value of 28.57 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for KLDI.

KLDiscovery Peers Comparison

Overall Rating

UnderperformOutperform

Sector (61)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
Sector *	61 Neutral	$35.62B	7.50	-10.94%	1.87%	8.86%	-10.27%
FRGE	58 Neutral	$260.47M	―	-28.14%	―	14.78%	21.87%
BMBL	50 Neutral	$670.87M	―	-75.71%	―	-5.06%	-2318.18%
KLDI	48 Neutral	$4.35K	―	-855.99%	―	―	―
NUKK	―	$41.02M	0.29		―	―	―
CXAI	47 Neutral	$18.93M	―	-89.23%	―	-15.10%	74.63%
MYSE	―	$8.78M	―	-62.70%	―	―	―

* Technology Sector Average

Performance Comparison

KLDI

KLDiscovery

0.02

-0.07

-77.78%

NUKK

Nukkleus

4.33

1.97

83.47%

FRGE

Forge Global Holdings

18.82

-4.13

-18.00%

CXAI

CXApp

0.78

-1.33

-63.03%

BMBL

Bumble

6.29

-0.30

-4.55%

MYSE

Myseum

2.03

0.78

62.40%

Glossary

BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Jan 15, 2025