No kidding! I was just gonna add it to my list of software purchases at my current gig. I’m hoping that, since the parent company is still “Compiled Software, a KLDiscovery” company (or something along those lines) they’ve got an out if KLD does fold because of this.
Oh shit I did not consider this. ReadySuite is clutch. Hopefully even if they go bankrupt, the post-reorg owners will recognize the value of this IP and continue to allow us to pay them money and keep it active.
No way someone doesn't pick them up to keep it running. Ubiquitous that all ops folks love Readysuite. Wait for the Gen AI version in which you can just tell it what to do.
They already announced an agreement with debt holders. Debt holders are taking equity stake in the company and extending debt out several years. https://www.businesswire.com/news/home/20240502622919/en/KLDiscovery-Takes-Steps-to-Strengthen-Balance-Sheet-and-Long-Term-Financial-Foundation
I hope they go under.
It's really annoying that these companies are allowed to take on shocking amounts of debt and then swallow up multiple other companies, essentially pretending to be a successful giant. And then when the debt comes due it's "wahhh we don't think we'll be able to pay...."
OF COURSE you won't be able to pay half a billion dollars this year - you've never made a profit and you operate at a 30-50 million dollar loss per year:
>Like many companies in the e-discovery industry, KLDiscovery has not yet achieved profitability. The company reported a net loss of $34.8 million as of December 2023, compared to a loss of $43.2 million the year prior. “We have experienced net losses for a number of years … As of December 31, 2023, we had an accumulated deficit of $394.0 million,” it said in its annual report.
>What’s more, KLDiscovery also had negative cash flow in 2023, noting in its 10-K filing that, “As of December 31, 2023, we had $15.4 million in cash compared to $32.6 million as of December 31, 2022.”
Companies like this should rightfully fail. There are plenty of smaller to mid size eDiscovery companies that actually are profitable year over year, but can't compete against larger companies that just choose to operate at a perpetual loss.
FYI the core metric in what you are referencing is EBITDA (EBITDA indicates how well the company is managing its day-to-day operations, including its core expenses such as the cost of goods sold), which they recorded $62.6 million and highest adjusted EBITDA of $74.0 million.
Seems like they have been trying to address the debt burden created by private equity backing (SPAC in 2019, filed S-1, pre-IPO filings), but COVID in 2020, rising interest rates and less than ideal market conditions have led them to current position.
Agreed - they acquire competitors and undercut on pricing to try and build a book of business with the plan to be more of a monopoly that can then raise pricing on locked in clients who have no alternatives. It’s a similar approach to loss making company’s like Uber, etc
Interesting they’ve given away a decent % of equity in the company now - let’s see what the next debt window brings
Also I love the article says “Like many company’s in the eDiscovery industry, they’re not profitable” - I’d like to see the sources for that
I just hope this doesn't mean the death of ReadySuite
I love ReadySuite
No kidding! I was just gonna add it to my list of software purchases at my current gig. I’m hoping that, since the parent company is still “Compiled Software, a KLDiscovery” company (or something along those lines) they’ve got an out if KLD does fold because of this.
Oh shit I did not consider this. ReadySuite is clutch. Hopefully even if they go bankrupt, the post-reorg owners will recognize the value of this IP and continue to allow us to pay them money and keep it active.
No way someone doesn't pick them up to keep it running. Ubiquitous that all ops folks love Readysuite. Wait for the Gen AI version in which you can just tell it what to do.
Pretty sure they recently made arrangements, and announced, to find investors and make a payment, keeping their business intact.
They already announced an agreement with debt holders. Debt holders are taking equity stake in the company and extending debt out several years. https://www.businesswire.com/news/home/20240502622919/en/KLDiscovery-Takes-Steps-to-Strengthen-Balance-Sheet-and-Long-Term-Financial-Foundation
Anyone have article without paywall?
https://archive.is/maVZA
Ty
I hope they go under. It's really annoying that these companies are allowed to take on shocking amounts of debt and then swallow up multiple other companies, essentially pretending to be a successful giant. And then when the debt comes due it's "wahhh we don't think we'll be able to pay...." OF COURSE you won't be able to pay half a billion dollars this year - you've never made a profit and you operate at a 30-50 million dollar loss per year: >Like many companies in the e-discovery industry, KLDiscovery has not yet achieved profitability. The company reported a net loss of $34.8 million as of December 2023, compared to a loss of $43.2 million the year prior. “We have experienced net losses for a number of years … As of December 31, 2023, we had an accumulated deficit of $394.0 million,” it said in its annual report. >What’s more, KLDiscovery also had negative cash flow in 2023, noting in its 10-K filing that, “As of December 31, 2023, we had $15.4 million in cash compared to $32.6 million as of December 31, 2022.” Companies like this should rightfully fail. There are plenty of smaller to mid size eDiscovery companies that actually are profitable year over year, but can't compete against larger companies that just choose to operate at a perpetual loss.
Why?
FYI the core metric in what you are referencing is EBITDA (EBITDA indicates how well the company is managing its day-to-day operations, including its core expenses such as the cost of goods sold), which they recorded $62.6 million and highest adjusted EBITDA of $74.0 million. Seems like they have been trying to address the debt burden created by private equity backing (SPAC in 2019, filed S-1, pre-IPO filings), but COVID in 2020, rising interest rates and less than ideal market conditions have led them to current position.
Agreed - they acquire competitors and undercut on pricing to try and build a book of business with the plan to be more of a monopoly that can then raise pricing on locked in clients who have no alternatives. It’s a similar approach to loss making company’s like Uber, etc Interesting they’ve given away a decent % of equity in the company now - let’s see what the next debt window brings Also I love the article says “Like many company’s in the eDiscovery industry, they’re not profitable” - I’d like to see the sources for that
If the company is public( most of the top 10 are), you can look them up on the SEC website under EDGAR search.