Cover Page
Cover Page - shares | 9 Months Ended | |
Sep. 30, 2020 | Nov. 11, 2020 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2020 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2020 | |
Entity Registrant Name | KLDiscovery Inc. | |
Entity Central Index Key | 0001752474 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Small Business | true | |
Entity Interactive Data Current | Yes | |
Entity Current Reporting Status | Yes | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 42,529,017 | |
Entity File Number | 001-38789 | |
Entity Tax Identification Number | 61-1898603 | |
Entity Address, Address Line One | 8201 Greensboro Drive | |
Entity Address, Address Line Two | Suite 300 | |
Entity Address, City or Town | McLean | |
Entity Address, State or Province | VA | |
Entity Address, Postal Zip Code | 22102 | |
City Area Code | 703 | |
Local Phone Number | 288-3380 | |
Entity Incorporation, State or Country Code | DE | |
Document Quarterly Report | true | |
Document Transition Report | false |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Current assets | ||
Cash and cash equivalents | $ 43,838 | $ 43,407 |
Accounts receivable, net of allowance for doubtful accounts of $7,805 and $7,486, respectively | 86,095 | 96,994 |
Prepaid expenses | 10,312 | 7,296 |
Other current assets | 778 | 556 |
Total current assets | 141,023 | 148,253 |
Property and equipment | ||
Accumulated depreciation | (76,780) | (64,682) |
Property and equipment, net | 27,778 | 38,303 |
Intangible assets, net | 114,632 | 130,568 |
Goodwill | 396,310 | 395,171 |
Other assets | 2,611 | 2,617 |
Total assets | 682,354 | 714,912 |
Current liabilities | ||
Current portion of long-term debt, net | 11,106 | 11,689 |
Accounts payable and accrued expense | 35,964 | 31,270 |
Current portion of contingent consideration | 677 | 340 |
Deferred revenue | 4,018 | 4,851 |
Total current liabilities | 51,765 | 48,150 |
Long-term debt, net | 467,163 | 468,932 |
Contingent consideration | 225 | 482 |
Deferred tax liabilities | 6,712 | 6,294 |
Other liabilities | 9,776 | 7,289 |
Total liabilities | 535,641 | 531,147 |
Commitments and contingencies | ||
Stockholders' equity | ||
Common stock $0.0001 par value, shares authorized - 200,000,000 shares authorized as of September 30, 2020 and December 31, 2019; shares issued and outstanding - 42,529,017 as of September 30, 2020 and December 31, 2019 | 4 | 4 |
Preferred Stock $0.0001 par value, 1,000,000 shares authorized, zero issued and outstanding as of September 30, 2020 and December 31, 2019 | ||
Additional paid-in capital | 384,504 | 381,952 |
Accumulated deficit | (245,649) | (205,498) |
Accumulated other comprehensive income | 7,854 | 7,307 |
Total stockholders' equity | 146,713 | 183,765 |
Total liabilities and stockholders' equity | 682,354 | 714,912 |
Computer software and hardware | ||
Property and equipment | ||
Property and equipment, gross | 73,343 | 72,228 |
Leasehold improvements | ||
Property and equipment | ||
Property and equipment, gross | 27,493 | 26,963 |
Furniture, fixtures and other equipment | ||
Property and equipment | ||
Property and equipment, gross | $ 3,722 | $ 3,794 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Statement Of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 7,805 | $ 7,486 |
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 200,000,000 | 200,000,000 |
Common stock, shares issued | 42,529,017 | 42,529,017 |
Common stock, shares outstanding | 42,529,017 | 42,529,017 |
Preferred Stock, per share | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 1,000,000 | 1,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Income Statement [Abstract] | ||||
Revenues | $ 72,301 | $ 78,169 | $ 214,953 | $ 231,527 |
Cost of revenues | 37,738 | 42,018 | 111,472 | 118,937 |
Gross profit | 34,563 | 36,151 | 103,481 | 112,590 |
Operating expenses | ||||
General and administrative | 14,281 | 12,223 | 42,534 | 41,879 |
Research and development | 1,828 | 1,533 | 5,134 | 4,455 |
Sales and marketing | 9,155 | 12,043 | 29,460 | 36,212 |
Depreciation and amortization | 9,234 | 9,525 | 27,135 | 29,243 |
Total operating expenses | 34,498 | 35,324 | 104,263 | 111,789 |
Income (loss) from operations | 65 | 827 | (782) | 801 |
Other expenses | ||||
Other expense | 11 | (9) | 102 | 122 |
Interest expense | 12,371 | 12,034 | 38,303 | 36,487 |
Loss before income taxes | (12,317) | (11,198) | (39,187) | (35,808) |
Income tax provision | 390 | 62 | 964 | 391 |
Net loss | (12,707) | (11,260) | (40,151) | (36,199) |
Other comprehensive income (loss), net of tax | ||||
Foreign currency translation | 2,242 | (2,248) | 547 | (2,293) |
Total other comprehensive income (loss), net of tax | 2,242 | (2,248) | 547 | (2,293) |
Comprehensive loss | $ (10,465) | $ (13,508) | $ (39,604) | $ (38,492) |
Net loss per share - basic and diluted | $ (0.30) | $ (0.26) | $ (0.94) | $ (0.85) |
Weighted average shares outstanding - basic and diluted | 42,529,017 | 42,497,078 | 42,529,017 | 42,390,717 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands | Total | Common stock | Additional Paid-In Capital | Treasury Stock | Accumulated Deficit | Accumulated Other Comprehensive Income (Loss) |
Balance at Dec. 31, 2018 | $ 228,956 | $ 4 | $ 372,316 | $ (2,406) | $ (147,954) | $ 6,996 |
Balance (in shares) at Dec. 31, 2018 | 42,288,870 | |||||
Share-based compensation | 910 | 910 | ||||
Share based compensation (in shares) | 52,150 | |||||
Foreign exchange translation | 810 | 810 | ||||
Net loss | (13,491) | (13,491) | ||||
Balance at Mar. 31, 2019 | 217,185 | $ 4 | 373,226 | (2,406) | (161,445) | 7,806 |
Balance (in shares) at Mar. 31, 2019 | 42,341,020 | |||||
Balance at Dec. 31, 2018 | 228,956 | $ 4 | 372,316 | (2,406) | (147,954) | 6,996 |
Balance (in shares) at Dec. 31, 2018 | 42,288,870 | |||||
Net loss | (36,199) | |||||
Balance at Sep. 30, 2019 | 194,019 | $ 4 | 375,871 | (2,406) | (184,153) | 4,703 |
Balance (in shares) at Sep. 30, 2019 | 42,399,554 | |||||
Balance at Mar. 31, 2019 | 217,185 | $ 4 | 373,226 | (2,406) | (161,445) | 7,806 |
Balance (in shares) at Mar. 31, 2019 | 42,341,020 | |||||
Issuance of common stock | 414 | 414 | ||||
Issuance of common stock (in shares) | 58,534 | |||||
Share-based compensation | 579 | 579 | ||||
Foreign exchange translation | (855) | (855) | ||||
Net loss | (11,448) | (11,448) | ||||
Balance at Jun. 30, 2019 | 205,875 | $ 4 | 374,219 | (2,406) | (172,893) | 6,951 |
Balance (in shares) at Jun. 30, 2019 | 42,399,554 | |||||
Issuance of common stock | 1,241 | 1,241 | ||||
Share-based compensation | 411 | 411 | ||||
Foreign exchange translation | (2,248) | (2,248) | ||||
Net loss | (11,260) | (11,260) | ||||
Balance at Sep. 30, 2019 | 194,019 | $ 4 | 375,871 | $ (2,406) | (184,153) | 4,703 |
Balance (in shares) at Sep. 30, 2019 | 42,399,554 | |||||
Balance at Dec. 31, 2019 | 183,765 | $ 4 | 381,952 | (205,498) | 7,307 | |
Balance (in shares) at Dec. 31, 2019 | 42,529,017 | |||||
Share-based compensation | 825 | 825 | ||||
Foreign exchange translation | (4,428) | (4,428) | ||||
Net loss | (12,526) | (12,526) | ||||
Balance at Mar. 31, 2020 | 167,636 | $ 4 | 382,777 | (218,024) | 2,879 | |
Balance (in shares) at Mar. 31, 2020 | 42,529,017 | |||||
Balance at Dec. 31, 2019 | 183,765 | $ 4 | 381,952 | (205,498) | 7,307 | |
Balance (in shares) at Dec. 31, 2019 | 42,529,017 | |||||
Net loss | (40,151) | |||||
Balance at Sep. 30, 2020 | 146,713 | $ 4 | 384,504 | (245,649) | 7,854 | |
Balance (in shares) at Sep. 30, 2020 | 42,529,017 | |||||
Balance at Mar. 31, 2020 | 167,636 | $ 4 | 382,777 | (218,024) | 2,879 | |
Balance (in shares) at Mar. 31, 2020 | 42,529,017 | |||||
Share-based compensation | 814 | 814 | ||||
Foreign exchange translation | 2,733 | 2,733 | ||||
Net loss | (14,918) | (14,918) | ||||
Balance at Jun. 30, 2020 | 156,265 | $ 4 | 383,591 | (232,942) | 5,612 | |
Balance (in shares) at Jun. 30, 2020 | 42,529,017 | |||||
Share-based compensation | 913 | 913 | ||||
Foreign exchange translation | 2,242 | 2,242 | ||||
Net loss | (12,707) | (12,707) | ||||
Balance at Sep. 30, 2020 | $ 146,713 | $ 4 | $ 384,504 | $ (245,649) | $ 7,854 | |
Balance (in shares) at Sep. 30, 2020 | 42,529,017 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Operating activities | ||
Net loss | $ (40,151) | $ (36,199) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 36,063 | 37,614 |
Non-cash interest | 14,360 | 3,597 |
Stock-based compensation | 2,552 | 1,900 |
Provision for losses on accounts receivable | 3,059 | 1,846 |
Deferred income taxes (refunds) | 418 | (221) |
Change in fair value of contingent consideration | 80 | |
Changes in operating assets and liabilities: | ||
Accounts receivable | 8,365 | (13,780) |
Prepaid expenses and other assets | (3,338) | (3,386) |
Accounts payable and accrued expenses | 4,734 | (2,511) |
Deferred revenue | (835) | (820) |
Net cash provided by (used in) operating activities | 25,307 | (11,960) |
Investing activities | ||
Acquisitions, net of cash acquired | (3,124) | (650) |
Purchases of property and equipment | (8,377) | (9,288) |
Net cash used in investing activities | (11,501) | (9,938) |
Financing activities | ||
Revolving credit facility - draws | 29,000 | 41,500 |
Revolving credit facility - repayments | (29,000) | (24,500) |
Payments for capital lease obligations | (688) | (453) |
Issuance of common stock | 414 | |
Payments on long-term debt | (12,750) | (12,750) |
Net cash (used in) provided by financing activities | (13,438) | 4,211 |
Effect of foreign exchange rates | 63 | (142) |
Net increase (decrease) in cash | 431 | (17,829) |
Cash at beginning of period | 43,407 | 23,439 |
Cash at end of period | 43,838 | 5,610 |
Supplemental disclosure: | ||
Cash paid for interest | 24,857 | 29,770 |
Income taxes (refunds) paid, net of refunds | (311) | 325 |
Significant non-cash investing and financing activities | ||
Purchases of property and equipment in accounts payable and accrued expenses on the consolidated balance sheets | $ 21 | $ 222 |
Organization, Business and Summ
Organization, Business and Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2020 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Organization, business and summary of significant accounting policies | Note 1 – Organization, business and summary of significant accounting policies Organization KLDiscovery Inc. (the “Company”) provides technology-based litigation support solutions and services including computer e-discovery, data hosting, and managed review, predominantly to top law firms, corporations and government agencies. The majority of the Company’s current business is derived from these services. The Company’s headquarters is located in McLean, Virginia and has 34 locations in 19 countries, 8 data centers and 19 data recovery labs around the globe. The Company was originally incorporated under the name Pivotal Acquisition Corp. (“Pivotal”) as a blank check company on August 2, 2018 under the laws of the State of Delaware for the purpose of entering into a merger, capital stock exchange, stock purchase, reorganization or similar business combination with one or more businesses or entities. On December 19, 2019, Pivotal acquired the outstanding shares of LD Topco, Inc. via a reverse capitalization (the “Business Combination”) and was renamed KLDiscovery Inc. Principles of consolidation The accompanying consolidated financial statements are prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). The accompanying consolidated financial statements include the accounts of KLDiscovery and all of its subsidiaries. All significant intercompany accounts and transactions have been eliminated upon consolidation. The Business Combination was accounted for as a reverse recapitalization in accordance with Accounting Standard Codification (“ASC”) 805, Business Combinations • LD Topco, Inc.’s operations comprise the ongoing operations of the combined entity; • The officers of the newly combined company consist of LD Topco, Inc.’s executives, including the Chief Executive Officer, Chief Financial Officer and General Counsel; and • The former shareholders of LD Topco, Inc. own a majority voting interest in the combined entity. As a result of LD Topco, Inc. being the accounting acquirer, the financial reports filed with the Securities and Exchange Commission by the Company subsequent to the Business Combination are prepared “as if” LD Topco, Inc. is the predecessor and legal successor to the Company. The historical operations of LD Topco, Inc. are deemed to be those of the Company. Thus, the financial statements included in this report reflect (i) the historical operating results of LD Topco, Inc. prior to the Business Combination; (ii) the combined results of the Company and LD Topco, Inc. following the Business Combination on December 19, 2019 (the “Closing Date”); (iii) the assets and liabilities of LD Topco, Inc. at their historical cost; and (iv) KLDiscovery Inc.’s equity structure for all periods presented. The recapitalization of the number of shares of common stock attributable to the purchase of LD Topco, Inc. in connection with the Business Combination is reflected retroactively to January 1, 2018 and will be utilized for calculating earnings per share in all prior periods presented. No step-up basis of intangible assets or goodwill was recorded in the Business Combination transaction consistent with the treatment of the transaction as a reverse capitalization of LD Topco, Inc. Use of estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts and disclosures in the consolidated financial statements. Although actual results could differ from those estimates, management does not believe that such differences would be material. Significant estimates include, but are not limited to, the allowance for doubtful accounts, determining the fair values of assets acquired and liabilities assumed, the recoverability and useful lives of property and equipment, intangible assets, and other long-lived assets, the impairment of goodwill, the valuation and realization of deferred income taxes, the fair value of the Company’s common stock and stock option awards, and acquisition-related contingent consideration. Segments, concentration of credit risk and major customers The Company operates in one business segment, providing technology-based litigation support solutions and services. Financial instruments, which potentially expose the Company to concentrations of credit risk, consist principally of cash and accounts receivable. The Company places its cash with a banking institution where the balances, at times, exceed federally insured limits. Management believes the risks associated with these deposits are limited. With respect to accounts receivable, the Company performs ongoing evaluations of its customers, generally grants uncollateralized credit terms to its customers, and maintains an allowance for doubtful accounts based on historical experience and management’s expectations of future losses. As of and for the three and nine months ended September 30, 2020 and 2019, the Company did not have a single customer that represented more than five percent (5%) of its consolidated revenues or accounts receivable. The Company believes that the geographic and industry diversity of the Company’s customer base throughout the U.S. and internationally minimizes the risk of incurring material losses due to concentrations of credit risk. Foreign currency Results of operations for the Company’s non-U.S. subsidiaries are translated from the designated functional currency to the reporting currency of the U.S. dollar. Revenues and expenses are translated at average exchange rates for each month, while assets and liabilities are translated at balance sheet date exchange rates. Resulting net translation adjustments are recorded as a component of stockholders’ equity in “Accumulated other comprehensive income” in the Company’s Condensed Consolidated Balance Sheets. Transaction gains and losses arising from currency exchange rate fluctuations on transactions denominated in a currency other than the local functional currency are included in “Other expense” in the Company’s Consolidated Statements of Comprehensive Loss. Such transaction gains and losses may be realized or unrealized depending upon whether the transaction settled during the period or remains outstanding at the balance sheet date. Cash and cash equivalents The Company considers all highly liquid financial instruments with an original maturity of three months or less when purchased to be cash equivalents. Accounts receivable Accounts receivable are recorded at original invoice amounts less an estimate for doubtful receivables based on a review of outstanding amounts monthly. Management determines the allowance for doubtful accounts by regularly evaluating individual customer receivables and considering a customer’s financial condition and credit history. Accounts receivable are written off when deemed uncollectible. Recoveries of trade accounts receivable previously written off are recorded when received. Computer software, property and equipment Computer software, property and equipment are recorded at cost. Depreciation is calculated using the straight-line method over the following estimated useful lives of the assets: Computer software and hardware 3 to 5 years Leasehold improvements Shorter of lease term or useful life Furniture, fixtures and other equipment 3 to 5 years Gains or losses on disposals are included in results of operations at amounts equal to the difference between the net book value of the disposed assets and the proceeds received upon disposal. Costs for replacements and betterments are capitalized, while the costs of maintenance and repairs are expensed as incurred. Property under capital leases are depreciated using the straight-line method over the lease term. Depreciation expense totaled $4.3 million and $4.5 million for the three months ended September 30, 2020 and 2019, respectively, and includes amortization of assets recorded under capital leases. Depreciation expense totaled $12.8 million and $13.8 million for the nine months ended September 30, 2020 and 2019, respectively. Internal-use software development costs The Company capitalizes certain internal computer software costs incurred during the application development stage. The application development stage generally includes software design and configuration, coding, testing and installation activities. Training and maintenance costs are expensed as incurred, while upgrades and enhancements are capitalized if it is probable that such expenditure will result in additional functionality. Capitalized software costs are depreciated over the estimated useful life of the underlying project on a straight-line basis. The Company’s estimated useful life of capitalized software costs varies between three and five years, depending on management’s expectation of the economic life of various software. Capitalized software depreciation costs are recorded as a component of cost of revenue. Capitalized software costs are reflected as part of “Intangible assets, net” in the Company’s Consolidated Balance Sheets and totaled $17.6 million and $13.5 million, net of accumulated amortization, as of September 30, 2020 and December 31, 2019, respectively. Goodwill Goodwill represents the excess of the total consideration paid over identified intangible and tangible assets of the Company and its acquisitions. The Company tests its goodwill for impairment at the reporting unit level on an annual basis on October 1, and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. These events or circumstances could include a significant change in the business climate, legal factors, operating performance indicators, competition, or sale or disposition of a significant portion of a reporting unit. As of the October 1 testing date, the Company determined there is one entity-wide reporting unit. The Company considered COVID-19 as an indicator of impairment to the value of goodwill and intangible assets and performed a qualitative assessment. Management considered factors that could be affected by COVID-19 such as impact to stock price, consequences of “stay-at-home” orders, impacts to competitors due to COVID-19, changes in demand, and updates to the Company forecasts among other factors. Management concluded that there was no impairment of goodwill and intangible assets during the nine months ended September 30, 2020. Debt issuance costs Debt issuance costs are stated at cost, net of accumulated amortization, and are amortized over the term of the debt using both the straight-line and the effective yield methods. U.S. GAAP requires that the effective yield method be used to amortize debt acquisition costs; however, if the effect of using the straight-line method is not materially different from the results that would have been obtained under the effective yield method, the straight-line method may be used. The amortization for funded term debt is calculated according to the effective yield method and revolving and unfunded term debt is calculated according to the straight-line method. Debt issuance costs related to funded term debt is presented in the Consolidated Balance Sheets as a direct deduction from the carrying amount of the debt liability, consistent with debt discounts or premiums. Debt issuance costs related to revolving and unfunded term debt is presented in “Other current assets” in the Company’s Consolidated Balance Sheets. Revenue recognition The Company adopted Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (“ASC 606”), effective January 1, 2019, utilizing the modified retrospective method. The Company’s adoption of ASC 606 did not result in material changes to the Company’s revenue recognition. As an Emerging Growth Company, as defined in the Jumpstart Our Business Startups Act of 2012 (“the JOBS Act”), the JOBS Act allowed us to delay adoption of new or revised accounting pronouncements applicable to public companies until December 31, 2019, which is when such pronouncements are made applicable to private companies. We elected to use this extended transition period and there were no material differences for revenue recognition between the three and nine months ended September 30, 2020 and September 30, 2019. Revenues are recognized when the Company satisfies a performance obligation by transferring goods or services promised in a contract to a customer, in an amount that reflects the consideration that the Company expects to receive in exchange for those services. Performance obligations in the Company’s contracts represent distinct or separate service streams that are provided to its customers. The Company evaluates its revenue contracts with customers based on the five-step model under ASC 606: (1) identify the contract with the customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to separate performance obligations; and (5) recognize revenues when (or as) each performance obligation is satisfied. The following table summarizes revenue from contracts with customers for the three and nine months ended September 30, 2020 and September 30, 2019 (in thousands): Three months ended September 30, 2020 Three months ended September 30, 2019 Nine months ended September 30, 2020 Nine months ended September 30, 2019 eDiscovery services $ 48,021 $ 52,910 $ 147,056 $ 161,075 Managed review 14,015 14,025 36,847 35,944 Legal technology services 62,036 66,935 183,903 197,019 Data recovery 10,265 11,234 31,050 34,508 Total revenue $ 72,301 $ 78,169 $ 214,953 $ 231,527 Performance Obligations and Timing of Revenue Recognition We primarily sell services and products that fall into the categories discussed below. Each category contains one or more performance obligations that are either (1) capable of being distinct (i.e., the customer can benefit from the product or service on its own or together with readily available resources, including those purchased separately from us) and distinct within the context of the contract (i.e., separately identified from other promises in the contract) or (2) a series of distinct products or services that are substantially the same and have the same pattern of transfer to the customer. (1) eDiscovery services, which provides end-to-end eDiscovery services support including collections, processing, analytics, hosting, production and professional services; (2) Managed review services which provides the staffing necessary to review large complex data sets; and (3) Data recovery, which offers data restoration, data erasure and data management. We generate the majority of our revenues by providing Legal Technology services to our clients. All of our eDiscovery service contracts are time and materials types of arrangements. Time and materials arrangements are based on units of data stored or processed. Unit-based revenues are recognized as services are provided, based on either the amount of data stored or processed, the number of concurrent users accessing the information or the number of pages or images processed for a client, at agreed upon per unit rates. We recognize revenues for these arrangements utilizing a right-to-invoice practical expedient because we have a right to consideration for services completed to date. Certain of our eDiscovery contracts are subscription-based, fixed fee arrangements, which have tiered pricing based on the quantity of data hosted. For a fixed monthly fee, our clients receive a variety of optional eDiscovery services, which are included in addition to the data hosting. We recognize revenues for these arrangements based on predetermined monthly fees as determined in our contractual agreements, utilizing a right-to-invoice practical expedient because we have a right to consideration for services completed to date. Managed review services are time and materials types of arrangements. These agreements require the client to pay us based on the number of hours worked at contractually agreed-upon rates. We recognize revenues for these arrangements based on hours incurred and contracted rates utilizing a right-to-invoice practical expedient because we have a right to consideration for services completed to date. Data recovery services are mainly fixed fee arrangements requiring the client to pay a pre-established fee in exchange for the successful completion of a data recovery on a predetermined device. For the recovery services performed by the Company’s technicians, the revenue is recognized at a point in time, when the recovered data is sent to the customer. Data erasure services are fixed fee arrangements for which revenue is recognized at a point in time, when the certificate of erasure is sent to the customer. Ontrack PowerControls offers term license subscriptions for customers with on-premises installations of the software pursuant to contracts that are historically one to four years in length. The term license subscriptions include maintenance, support, as well as access to future software upgrades and fixes. The license and the additional support services are deemed to be one performance obligation, and thus revenue for these arrangements is recognized ratably over the term of the agreement. Net loss per common share Basic net loss per common share is determined by dividing net loss by the weighted average number of common shares outstanding during the period. Diluted net loss per common share is determined by dividing net loss by the weighted average number of common shares outstanding during the period, plus the dilutive effect of common stock equivalents, including stock options and restricted shares. Common stock and common stock equivalents included in the computation represent shares issuable upon assumed exercise of outstanding stock options and release of restricted shares, except when the effect of their inclusion would be antidilutive. On December 19, 2019, the Company completed a reverse merger with Pivotal Acquisition Corp. whereby the Company received 34,800,000 shares for its outstanding 3,707,564 shares, effecting a 1-to-9.3862 stock exchange. The per share amounts have been updated to show the effect of the exchange on earnings per share as if the exchange occurred at the beginning of both years for the quarterly financial statements of the Company. The impact of the stock exchange is also shown on the Company’s Statements of Stockholders’ Equity. Accounting standards not yet adopted In connection with the transaction with Pivotal, as discussed in more detail in “Note 2, Acquisitions,” the Company elected to be an Emerging Growth Company under the JOBS Act and take advantage of the extended transition period of delaying the adoption of new or revised accounting standards until such time as those standards apply to private companies. This may make the comparison of the Company’s consolidated financial statements to other public companies not meaningful due to the differences in accounting standards being applied. In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2016-02, Leases In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses Measurement of Credit Losses on Financial Instruments In December 2019, the FASB issued ASU 2019-12, Income Taxes Simplifying the Accounting for Income Taxes |
Acquisitions
Acquisitions | 9 Months Ended |
Sep. 30, 2020 | |
Business Combinations [Abstract] | |
Acquisitions | Note 2 – Acquisitions Pivotal Acquisition Corp. On December 19, 2019, Pivotal, the legal predecessor company, consummated the Business Combination with LD Topco, Inc. The stockholders of LD Topco, Inc. received an aggregate of 34,800,000 shares of Pivotal common stock. The former stockholders of LD Topco, Inc. also have the right to receive up to 2,200,000 shares of the Company’s common stock if (i) a change in control occurs or (ii) the reported closing sale price of the Company’s common stock exceeds $13.50 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations or other similar actions) for any 20 consecutive trading days during the five-year period following the closing of the Business Combination. The Company also assumed 29,350,000 warrants, each of which entitles the holder to purchase shares of the Company’s common stock beginning on February 4, 2020 at an exercise price of $11.50 per share as part of the Business Combination. As part of the Business Combination, on December 19, 2019, the Company issued $200 million aggregate principal amount of 8% convertible debentures (“Debentures”) due in 2024. The proceeds of the Debentures were used in part to repay LD Topco, Inc.’s outstanding Second Lien Facility (as defined below) and amounts outstanding under its Revolving Credit Facility (as defined below). |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Note 3 – Fair value measurements The Company accounts for recurring and non-recurring fair value measurements in accordance with ASC 820, Fair Value Measurements Level 1 – Fair value is determined by using unadjusted quoted prices that are available in active markets for identical assets and liabilities. Level 2 – Fair value is determined by using inputs other than Level 1 quoted prices that are directly or indirectly observable. Inputs can include quoted prices for similar assets and liabilities in active markets or quoted prices for identical assets and liabilities in inactive markets. Related inputs can also include those used in valuation or other pricing models, such as interest rates and yield curves that can be corroborated by observable market data. Level 3 – Fair value is determined by inputs that are unobservable and not corroborated by market data. Use of these inputs involves significant and subjective judgments to be made by a reporting entity – e.g., determining an appropriate adjustment to a discount factor for illiquidity associated with a given security. The Company evaluates financial assets and liabilities subject to fair value measurements on a recurring basis to determine the appropriate level at which to classify them each reporting period. This determination requires significant judgments to be made by the Company. The Company believes that the fair values of its current assets and current liabilities (cash, accounts receivable, accounts payable, and other current liabilities) approximate their reported carrying amounts. The Company estimates the fair value of contingent purchase consideration based on the present value of the consideration expected to be paid during the remainder of the earn-out period, based on management’s assessment of the acquired operations’ forecasted earnings. This fair value measure is based on significant inputs not observed in the market and thus represents a Level 3 measurement. During 2019, the Company acquired three companies for total consideration of $5.5 million, of which $2.0 million was in cash, $1.5 million was in deferred payments which were subsequently paid, $1.2 million was in stock and contingent consideration ($1.0 million which was recorded at its estimated fair value of $0.8 million). The fair value of future expected acquisition-related contingent consideration obligations was $0.9 million and $0.8 million at September 30, 2020 and December 31, 2019, respectively. The significant unobservable inputs used in the fair value measurements of the Company’s contingent purchase consideration include its measures of the future profitability and related cash flows of the acquired business or assets, impacted by appropriate discount rates. Significant increases (decreases) in any of these individual inputs would result in a significantly lower (higher) fair value measurement. Generally, a change in the assumptions used for the discount rates is indirectly proportional to the fair value of contingent purchase consideration and a change in the assumptions used for the future cash flows is directly proportional to the fair value of contingent purchase consideration. The Company, using additional information as it becomes available, reassesses the fair value of the contingent purchase consideration on a quarterly basis. Any change in the fair value of contingent consideration liability results in a remeasurement gain or loss that is recorded as income or expense in the Company’s Consolidated Statements of Comprehensive Loss. The following table provides a reconciliation of liabilities measured at fair value using significant unobservable inputs (Level 3) for the periods ended September 30, 2020 and December 31, 2019 (in thousands): Balance at December 31, 2018 $ - Contingent consideration 774 Change in fair value of contingent consideration 48 Balance at December 31, 2019 $ 822 Payment of contingent consideration - Change in fair value of contingent consideration 80 Balance at September 30, 2020 $ 902 Management estimates that the carrying amount of the Company’s long-term debt approximates its fair value because the interest rates on these instruments are subject to changes in market interest rates or are consistent with prevailing interest rates. |
Leasing Arrangements
Leasing Arrangements | 9 Months Ended |
Sep. 30, 2020 | |
Leases [Abstract] | |
Leasing Arrangements | Note 4 – Leasing arrangements The Company leases office space and certain equipment under operating and capital lease agreements, expiring in various years through 2027. Certain leases contain annual rent escalation clauses. Rent expense totaled $3.4 million and $3.7 million for the three months ended September 30, 2020 and 2019, respectively. Rent expense totaled $11.0 million and $11.2 million for the nine months ended September 30, 2020 and 2019, respectively. As part of an effort to optimize the Company’s real estate footprint, during the three months ended September 30, 2020 the Company recorded $1.2 million in lease termination related expenses which were included in cost of goods sold and operating expenses in our consolidated statements of comprehensive loss. For years subsequent to September 30, 2020, future minimum payments for all operating and capital lease obligations that have initial non-cancelable lease terms exceeding one year, net of rental income from subleases are as follows (in thousands): December 31, Capital Leases Operating Leases 2020 (3 months) $ 886 $ 2,384 2021 1,586 9,209 2022 1,346 8,277 2023 721 7,736 2024 - 6,597 Thereafter - 13,103 Total $ 4,539 $ 47,306 Less interest on lease obligations (464 ) 4,075 Less current portion (886 ) Non-current portion $ 3,189 |
Long Term Debt
Long Term Debt | 9 Months Ended |
Sep. 30, 2020 | |
Long Term Debt [Abstract] | |
Long Term Debt | Note 5 – Long term debt The table below summarizes the components of the Company’s long-term debt (in thousands): September 30, 2020 December 31, 2019 First lien facility due 2022 $ 293,250 $ 306,000 Convertible debenture notes due 2024 206,423 200,000 Total debt 499,673 506,000 Less: unamortized original issue discount (17,109 ) (19,806 ) Less: unamortized debt issuance costs (4,295 ) (5,573 ) Total debt, net 478,269 480,621 Current portion of debt 17,000 17,000 Less: current portion of unamortized original issue discount (4,170 ) (3,687 ) Less: current portion of unamortized debt issuance costs (1,724 ) (1,624 ) Total current portion of debt, net 11,106 11,689 Total long term debt, net $ 467,163 $ 468,932 2016 Credit Agreement On December 9, 2016, certain subsidiaries of the Company entered into a credit agreement (as amended or supplemented to date, the “2016 Credit Agreement”) with a group of lenders to establish term loan facilities and a revolving line of credit for borrowings by LD Intermediate, Inc. and LD Lower Holdings, Inc. (the “Initial Term Loans”). The Initial Term Loan borrowings of $340.0 million (“First Lien Facility”) and $125.0 million (“Second Lien Facility”) were to mature on December 9, 2022 and December 9, 2023, respectively. The Second Lien Facility was repaid on December 19, 2019 in connection with the consummation of the Business Combination. The First Lien Facility established a term loan principal payment schedule with payments due on the last day of each calendar quarter beginning on March 31, 2017 of $2.1 million. Quarterly principal payments increased to $4.3 million beginning on March 31, 2019 with a balloon payment of $259.3 million due at maturity. The interest rate for the First Lien Facility adjusts every interest rate period, which can be one, two, three or six months in duration and is decided by the Company, or to the extent consented to by all Appropriate Lenders (as defined in the 2016 Credit Agreement), 12 months thereafter. Interest payment dates include the last day of each interest period and any maturity dates of the First Lien Facility; however, if any interest period exceeds three months, the respective dates that fall every three months after the beginning of an interest period is also an interest payment date. For each interest period, the interest rate per annum is 5.875% plus the Adjusted Eurocurrency Rate which is defined as an amount equal to the Statutory Reserve Rate (as defined in the 2016 Credit Agreement) multiplied by the greatest of a) LIBOR, b) 0.00% per annum and c) solely with respect to the Initial Term Loans, 1.00% per annum. At September 30, 2020, the balance due was $293.3 million with an interest rate of 5.875% plus an Adjusted Eurocurrency Rate of 1.000%. At December 31, 2019, the balance due was $306.0 million with an interest rate of 5.875% plus an Adjusted Eurocurrency Rate of 2.61463%. The First Lien Facility is secured by substantially all the Company’s assets and contains financial covenants. As of September 30, 2020 and December 31, 2019, the Company was in compliance with all covenants. The 2016 Credit Agreement includes a mandatory prepayment within 10 days after delivery of the annual audited financial statements commencing with the year ending December 31, 2016, in an amount equal to the Excess Cash Flow Percentage of Excess Cash Flow for such Fiscal Year, as defined in the 2016 Credit Agreement. There were no mandatory prepayments with respect to the nine months ended September 30, 2020 and 2019. Revolving Credit Facility The 2016 Credit Agreement also provides for an unfunded revolver commitment for borrowing up to $30.0 million, maturing December 9, 2021 (the “Revolving Credit Facility”). Borrowings under the Revolving Credit Facility may be limited by certain financial covenants of the 2016 Credit Agreement including the First Lien Net Leverage Ratio. The Company may draw up to $30.0 million, on a term loan basis, with an adjustable interest rate of 5.375%, 5.625%, or 5.875% based on the First Lien Net Leverage Ratio plus an amount equal to the LIBOR. As of September 30, 2020 and December 31, 2019, the balance was zero under the Revolving Credit Facility. As of September 30, 2020, there was $29.2 million available capacity for borrowing under the revolving loan commitment due to the $0.8 million of letters of credit outstanding (See Note 9 – Commitments and contingencies). Convertible Debentures On December 19, 2019, the Company issued the Debentures in an aggregate principal amount of $200 million. The proceeds of the Debentures were used in part to repay the Company’s outstanding Second Lien Facility and amounts then outstanding under the Revolving Credit Facility. At September 30, 2020, the balance due under the Convertible Debentures was $206.4 million. At December 31, 2019, the balance due under the Convertible Debentures was $200.0 million. The Debentures mature on December 19, 2024 unless earlier converted, redeemed or repurchased, and bear interest at an annual rate of 4.00% in cash, payable quarterly, and 4.00% in kind, accrued quarterly, on the last business day of March, June, September and December. In addition, on each anniversary of the Closing Date, the Company will add to the principal amount (subject to reduction for any principal amount repaid) of the Debentures an amount equal to 3.00% of the original aggregate principal amount of the Debentures outstanding. The additional payment will accrue from the last payment date for the additional payment (or the Closing Date if no prior payment has been made), and will also be payable at maturity, upon conversion and upon an optional redemption. At any time, upon notice as set forth in the Debentures, the Debentures are redeemable at the Company’s option, in whole or in part, at a price equal to 100% of the principal amount of the Debentures redeemed, plus accrued and unpaid interest thereon. Subject to approval to allow for the full conversion of the Debentures into common stock, the Debentures are convertible into shares of the Company’s common stock at the option of the Debenture holders at any time and from time to time at a price of $18 per share, subject to certain adjustments. However, in the event the Company elects to redeem any Debentures, the holders have a right to purchase common stock from the Company in an amount equal to the amount redeemed at the conversion price. The Debentures contain covenants that limit the Company’s ability to, among other things: (i) incur additional debt; (ii) create liens on assets; (iii) engage in certain transactions with affiliates; or (iv) designate the Company’s subsidiaries as unrestricted subsidiaries. The Debentures provide for customary events of default, including non-payment, failure to comply with covenants or other agreements in the Debentures and certain events of bankruptcy or insolvency. If an event of default occurs and continues, the holders of at least 25% in aggregate principal amount of the outstanding Debentures may declare the entire principal amount of all the Debentures to be due and payable immediately. As of September 30, 2020, the Company was in compliance with all covenants. |
Equity Incentive Plan
Equity Incentive Plan | 9 Months Ended |
Sep. 30, 2020 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
Equity Incentive Plan | Note 6 – Equity incentive plan On December 19, 2019, the Company adopted the 2019 Incentive Award Plan (the “2019 Plan”) under which eligible employees, officers, directors and consultants of the Company may be granted incentive or non-qualified stock options, restricted stock, restricted stock units, or other stock-based awards, including shares of common stock. The Compensation Committee did not increase the share reserve under the 2019 Plan in 2020. As of September 30, 2020, 7,500,000 shares of common stock, $0.0001 par value per share (the “Common Stock”) were reserved under the 2019 Plan, of which 1,767,156 shares of Common Stock remained available for issuance. On March 29, 2016, the Company adopted the 2016 Equity Incentive Plan (as amended, the “2016 Plan”) under which eligible employees, officers, directors and consultants of the Company may be granted incentive or non-qualified stock options, restricted stock, restricted stock units, or other stock-based awards, including shares of common stock. The 2016 Plan was terminated on December 19, 2019 and all outstanding awards were cancelled for no consideration. Stock option activity The following table summarizes the Company’s stock option activity under the 2019 Plan: Description Options Outstanding Weighted Average Exercise Price Weighted Average Remaining Contractual Term (Years) Aggregate Intrinsic Value (1) Options Outstanding, December 31, 2019 514,710 $ 9.90 10.0 $ - Granted 4,137,750 8.49 Forfeited (248,101 ) 9.08 Expired - Options Outstanding, September 30, 2020 4,404,359 $ 8.46 9.3 $ - Options Exercisable, September 30, 2020 - $ - - $ - (1) Aggregate intrinsic value represents the difference between the estimated fair value of the underlying Common Stock (as defined below) and the exercise price of outstanding, in-the-money options. There were no in-the-money options as of September 30, 2020 or December 31, 2019. No stock options were exercised during the nine months ended September 30, 2020 and 2019 under the 2019 Plan or the 2016 Plan. The following table summarizes additional information on stock option grants and vesting (in thousands): 2016 Plan 2019 Plan Nine Months Ended September 30, 2020 Nine Months Ended September 30, 2019 Nine Months Ended September 30, 2020 Nine Months Ended September 30, 2019 Total fair value of stock options granted $ - $ 2,492 $ 9,241 $ - Total fair value of options vested - 1,439 - - Time-based vesting stock options Under the 2016 Plan, time-based vesting stock options vested over a five-year period, subject to graded vesting schedules, and expired 10 years from the date of grant or within 90 days of termination. The weighted-average fair value per share of time-based vesting stock options granted by us was $37.16 during the nine months ended September 30, 2019. Under the 2016 Plan, for the three months ended September 30, 2020 and 2019, the Company recognized $0.0 million and $0.4 million of stock-based compensation expense in connection with time-based stock options, respectively. Under the 2016 Plan, for the nine months ended September 30, 2020 and 2019, the Company recognized $0.0 million and $1.9 million of stock-based compensation expense in connection with time-based stock options, respectively. As of September 30, 2020, there was no unrecognized stock-based compensation expense as the 2016 Plan was terminated during 2019 and all options were forfeited. Under the 2019 Plan, time-based vesting stock options generally vest over a three-year period and expire not more than 10 years from the date of grant. The weighted-average fair value per share of time-based vesting stock options granted by us was $2.19, during the nine months ended September 30, 2020. Under the 2019 Plan, for the three months ended September 30, 2020, the Company recognized $0.9 million of stock-based compensation expense in connection with time-based stock options. Under the 2019 Plan, for the nine months ended September 30, 2020, the Company recognized $2.5 million of stock-based compensation expense in connection with time-based stock options. As of September 30, 2020, there was $7.2 million of unrecognized stock-based compensation expense related to unvested time-based stock options that is expected to be recognized over a weighted-average period of 2.3 years. Performance-based vesting stock options Performance-based vesting stock options generally vested upon the satisfaction of performance- and market-based criteria, based on the Principal Stockholders’ (as defined in the 2016 Plan) internal rate of return on their investment in the Company as measured following their sale of at least 70% of the Principal Stockholders total holdings in the Company, and expired 10 years from the date of grant. The weighted-average fair value per share of performance-based vesting stock options granted by us was $0 and $37.16 during the nine months ended September 30, 2020 and 2019, respectively. As of September 30, 2020, there were no stock options with performance-based vesting outstanding, as the 2016 Plan was terminated and all options were forfeited. Award Valuation The Company used valuation models to value both time and performance-based vesting stock options granted during the nine months ended September 30, 2020 and 2019. The following table summarizes the assumptions used in the valuation models to determine the fair value of awards granted to employees and non-employees under both the 2019 Plan and the 2016 Plan: Nine Months Ended September 30, 2020 Nine Months Ended September 30, 2019 Expected volatility 37.63% - 41.24% 36.92% Expected term (in years) 6.0 6.5 Dividend yield 0.00% 0.00% Risk free interest rate 1.43% - 0.30% 2.42% A discussion of management’s methodology for developing each of the assumptions used in the valuation model follows • Expected volatility – Volatility is a measure of the amount by which a financial variable such as a share price has fluctuated (historical volatility) or is expected to fluctuate (expected volatility) during a period. The Company uses an estimated volatility based on the historical and implied volatilities of comparable companies. • Expected term – This is the period that the options granted are expected to remain unexercised. For options granted during the three and nine months ended September 30, 2020 and 2019, the Company derived the expected life of the option based on the average midpoint between vesting and the contractual term as there is little exercise history. • Dividend yield – The Company has never declared or paid dividends and has no plans to do so in the foreseeable future. • Risk-free interest rate – This is the U.S. Treasury rate for securities with similar terms that most closely resembles the expected life of the option. Stock-based award activity During the nine months ended September 30, 2020, the Company granted to certain non-employee directors 136,956 restricted stock units (“RSUs”) for their initial appointment to the Company’s board of directors (the “Board”) and for continued service, which awards are subject to a three or one-year vesting period. Accordingly, the Company will recognize the grant-date fair value of the stock awards, ratably over the vesting period. During the three and nine months ended September 30, 2020, the Company recognized $0.2 million as stock-based compensation expense related to this grant. During the nine months ended September 30, 2019, the Company granted to certain non-employee directors 7,223 stock awards. These stock awards were issued to non-employee directors in satisfaction of their annual retainer payments and are not subject to any vesting conditions, and thus became issued and outstanding shares on the grant date. Accordingly, the Company recognized the grant-date fair value of the stock awards of $0.7 million as stock-based compensation expense concurrent with the grant date of the awards during the three and nine months ended September 30, 2019. Stock-based compensation expense Stock-based compensation expense is included in the Company’s Consolidated Statements of Comprehensive Loss within the following line items (in thousands): Three Months Ended September 30, 2020 Three Months Ended September 30, 2019 Nine Months Ended September 30, 2020 Nine Months Ended September 30, 2019 Cost of revenues $ 339 $ 144 $ 1,020 $ 442 General and administrative 350 127 841 1,045 Research and development 65 24 205 67 Sales and marketing 159 116 486 346 Total $ 913 $ 411 $ 2,552 $ 1,900 Restricted stock units The Company granted RSUs to certain employees which are subject to certain vesting criteria. The RSUs become eligible to begin vesting upon a liquidity event (as defined in the award agreements governing the RSUs). The amount and timing of the vesting of the RSUs is dependent on the type and timing of the liquidity event as it relates to the Business Combination date of December 19, 2019. Generally, a portion of the RSUs will first vest upon the occurrence of the liquidity event and the remainder will vest in installments thereafter, provided that if the liquidity event occurs after the third anniversary of the Business Combination, all RSUs will vest immediately upon the liquidity event. The vesting of the RSUs is generally subject to continued employment. RSU activity The following table summarizes the Company’s RSU activity under the 2019 Plan: Description RSUs Outstanding Balance at December 31, 2019 - Granted 1,402,312 Forfeited (73,827 ) Expired - Balance at September 30, 2020 1,328,485 The Company determined that the achievement of the liquidity event was not probable and therefore no expense was recorded during the three or nine months ended September 30, 2020. |
Equity
Equity | 9 Months Ended |
Sep. 30, 2020 | |
Equity [Abstract] | |
Equity | Note 7 – Equity The Company is authorized to issue up to 200,000,000 shares of Common Stock and 1,000,000 shares of preferred stock, $0.0001 par value per share. Each holder of Common Stock is entitled to one vote for each share of Common Stock held on all matters submitted to a vote of stockholders. The holders of the Common Stock are entitled to receive dividends out of assets legally available at the time and in the amounts as the Board may from time to time determine. In the event of any liquidation, dissolution or winding up of the Company, the assets of the Company shall be distributed ratably among the holders of the then outstanding Common Stock. Warrants On December 19, 2019, in connection with the consummation of the Business Combination, the Company assumed (i) 23,000,000 warrants (the “Public Warrants”), (ii) 4,585,281 warrants (the “Private Warrants”) and (iii) 1,764,719 warrants (the “Debenture Holder Warrants” and together with the Public Warrants and the Private Warrants, the “Warrants”). These Warrants qualified for equity accounting as the Warrants did not fall within the scope of ASC Topic 480, Distinguishing Liabilities from Equity The Warrants were measured at fair value at the time of issuance and classified as equity. Each Warrant entitles the holder to purchase one share of Common Stock for $11.50 per share. If held by the initial purchaser of the Private Warrant or certain permitted transferees, the purchase can occur on a cashless basis. The Warrants will expire on December 19, 2024 or earlier upon redemption or liquidation. If the reported last sale price of the Company’s Common Stock equals or exceeds $18.00 per share for any 20 trading days within a 30-trading day period ending three business days before the Company sends the notice of redemption to the Warrant holders, the Company may redeem all the Public Warrants at a price of $0.01 per Warrant upon not less than 30 days’ prior written notice. If the Company calls the Public Warrants for redemption, management will have the option to require all holders that wish to exercise the Public Warrants to do so on a cashless basis. The exercise price and number of shares of Common Stock issuable upon exercise of the Warrants may be adjusted in certain circumstances including in the event of a stock dividend, or recapitalization, reorganization, merger or consolidation. The Warrants will not be adjusted for issuance of Common Stock at a price below its exercise price. The Company will not be required to net cash settle the Warrants. The Private Warrants are identical to the Public Warrants except that the Private Warrants will be exercisable on a cashless basis and be non-redeemable so long as they are held by the initial purchasers or their permitted transferees. If the Private Warrants are held by someone other than the initial purchasers or their permitted transferees, the Private Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants. Shares Subject to Forfeiture On December 19, 2019, in connection with the consummation of the Business Combination, 550,000 shares of Common Stock held by Pivotal Acquisition Holdings LLC were subjected to an additional lockup that will be released only if the last reported sale price of the Common Stock equals or exceeds $15.00 for a period of 20 consecutive trading days during the five-year period following the Closing Date. If the last reported sale price of Common Stock does not equal or exceed $15.00 within five years from the Closing Date, such shares of Common Stock will be forfeited to the Company for no consideration. These shares are reported as outstanding in our financial statements. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Note 8 – Income taxes A valuation allowance has been established against our net U.S. federal and state deferred tax assets, including net operating loss (“NOL”) carryforwards. As a result, our income tax position is primarily related to foreign tax activity and U.S. deferred taxes for tax deductible goodwill and other indefinite-lived liabilities. During the three months ended September 30, 2020 and 2019, the Company recorded an income tax provision of $0.4 million and $0.1 million, respectively, resulting in an effective tax rate of (3.3)% and (0.6)%, respectively. During the nine months ended September 30, 2020 and 2019, the Company recorded an income tax provision of $1.0 million and $0.4 million, respectively, resulting in an effective tax rate of (2.6)% and (1.1)%, respectively. These effective tax rates differ from the U.S. federal statutory rate primarily due to the effects of foreign tax rate differences and the valuation allowance against our domestic deferred tax assets. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2020 | |
Commitments And Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 9 – Commitments and contingencies The Company is involved in various legal proceedings, which may arise occasionally in the normal course of business. While the ultimate results of such matters generally cannot be predicted with certainty, management does not expect such matters to have a material effect on the financial position and results of operations as of September 30, 2020. The Company has f our letters of credit totaling $0.8 million as additional security for lease guarantees related to four leased properties. Risks and Uncertainties Impacts of COVID-19 pandemic on KLDiscovery’s Business The potential impacts of the ongoing COVID-19 pandemic on the Company’s business are currently not estimable or determinable. The Company has made modifications to employee travel, employee work locations, and cancellation of certain events, among other modifications. During 2020, the Company implemented a salary exchange program pursuant to which certain employees have taken a temporary reduction in salary through December 31, 2020 that ranges from 2% to 20% in exchange for receiving 417,673 stock options and 211,207 RSUs to purchase shares of Common Stock in future periods On March 27, 2020, the President signed into U.S. federal law the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), which is aimed at providing emergency assistance and health care for individuals, families, and businesses affected by the COVID-19 pandemic and generally supporting the U.S. economy. The CARES Act, among other things, includes provisions relating to refundable payroll tax credits, deferment of employer-side social security payments, NOL carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property. In particular, under the CARES Act, (i) for taxable years beginning before 2021, NOL carryforwards and carrybacks may offset 100% of taxable income, (ii) NOLs arising in 2018 , 2019, and 2020 taxable years may be carried back to each of the preceding five years to generate a refund and (iii) for taxable years beginning in 2019 and 2020, the base for interest deductibility is increased from 30% to 50% of taxable income. As permitted under the CARES Act, we are deferring payroll taxes due in 2020 to 2021 and 2022. We continue to analyze other aspects of the CARES act as well as similar tax legislation in other countries we operate but do not believe they will have a meaningful impact to our results. |
Related Parties
Related Parties | 9 Months Ended |
Sep. 30, 2020 | |
Related Party Transactions [Abstract] | |
Related Parties | Note 10 – Related parties On December 22, 2015, the Company entered into a consulting agreement with Carlyle Investment Management, LLC, an affiliate of The Carlyle Group, Inc., for advisory, consulting and other services in relation to the strategic and financial management of the Company. For the nine months ended September 30, 2019, the Company recognized $0.8 million in management consulting fees, reflected within “General and administrative expenses” in the accompanying consolidated Statements of Comprehensive Loss. The consulting agreement was terminated on December 19, 2019. In connection with the Business Combination, the Company assumed Debentures of which $103.2 million are owed to affiliates of MGG Investment Group, an affiliate of Kevin Griffin, a director of the Company as of September 30, 2020. For the three months ended September 30, 2020 and 2019, the Company recognized $3.1 million and $0 million in interest expense, respectively, related to the Debentures. For the nine months ended September 30, 2020 and 2019, the Company recognized $9.0 million and $0 million in interest expense, respectively, related to the Debentures. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 11 – Subsequent events The Company has evaluated subsequent events through the dates on which this Quarterly Report on Form 10-Q was filed, the date on which these financial statements were issued, and identified no additional items for disclosure. |
Organization, Business and Su_2
Organization, Business and Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2020 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Organization | Organization KLDiscovery Inc. (the “Company”) provides technology-based litigation support solutions and services including computer e-discovery, data hosting, and managed review, predominantly to top law firms, corporations and government agencies. The majority of the Company’s current business is derived from these services. The Company’s headquarters is located in McLean, Virginia and has 34 locations in 19 countries, 8 data centers and 19 data recovery labs around the globe. The Company was originally incorporated under the name Pivotal Acquisition Corp. (“Pivotal”) as a blank check company on August 2, 2018 under the laws of the State of Delaware for the purpose of entering into a merger, capital stock exchange, stock purchase, reorganization or similar business combination with one or more businesses or entities. On December 19, 2019, Pivotal acquired the outstanding shares of LD Topco, Inc. via a reverse capitalization (the “Business Combination”) and was renamed KLDiscovery Inc. |
Principles of consolidation | Principles of consolidation The accompanying consolidated financial statements are prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). The accompanying consolidated financial statements include the accounts of KLDiscovery and all of its subsidiaries. All significant intercompany accounts and transactions have been eliminated upon consolidation. The Business Combination was accounted for as a reverse recapitalization in accordance with Accounting Standard Codification (“ASC”) 805, Business Combinations • LD Topco, Inc.’s operations comprise the ongoing operations of the combined entity; • The officers of the newly combined company consist of LD Topco, Inc.’s executives, including the Chief Executive Officer, Chief Financial Officer and General Counsel; and • The former shareholders of LD Topco, Inc. own a majority voting interest in the combined entity. As a result of LD Topco, Inc. being the accounting acquirer, the financial reports filed with the Securities and Exchange Commission by the Company subsequent to the Business Combination are prepared “as if” LD Topco, Inc. is the predecessor and legal successor to the Company. The historical operations of LD Topco, Inc. are deemed to be those of the Company. Thus, the financial statements included in this report reflect (i) the historical operating results of LD Topco, Inc. prior to the Business Combination; (ii) the combined results of the Company and LD Topco, Inc. following the Business Combination on December 19, 2019 (the “Closing Date”); (iii) the assets and liabilities of LD Topco, Inc. at their historical cost; and (iv) KLDiscovery Inc.’s equity structure for all periods presented. The recapitalization of the number of shares of common stock attributable to the purchase of LD Topco, Inc. in connection with the Business Combination is reflected retroactively to January 1, 2018 and will be utilized for calculating earnings per share in all prior periods presented. No step-up basis of intangible assets or goodwill was recorded in the Business Combination transaction consistent with the treatment of the transaction as a reverse capitalization of LD Topco, Inc. |
Use of estimates | Use of estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts and disclosures in the consolidated financial statements. Although actual results could differ from those estimates, management does not believe that such differences would be material. Significant estimates include, but are not limited to, the allowance for doubtful accounts, determining the fair values of assets acquired and liabilities assumed, the recoverability and useful lives of property and equipment, intangible assets, and other long-lived assets, the impairment of goodwill, the valuation and realization of deferred income taxes, the fair value of the Company’s common stock and stock option awards, and acquisition-related contingent consideration. |
Segments, concentration of credit risk and major customers | Segments, concentration of credit risk and major customers The Company operates in one business segment, providing technology-based litigation support solutions and services. Financial instruments, which potentially expose the Company to concentrations of credit risk, consist principally of cash and accounts receivable. The Company places its cash with a banking institution where the balances, at times, exceed federally insured limits. Management believes the risks associated with these deposits are limited. With respect to accounts receivable, the Company performs ongoing evaluations of its customers, generally grants uncollateralized credit terms to its customers, and maintains an allowance for doubtful accounts based on historical experience and management’s expectations of future losses. As of and for the three and nine months ended September 30, 2020 and 2019, the Company did not have a single customer that represented more than five percent (5%) of its consolidated revenues or accounts receivable. The Company believes that the geographic and industry diversity of the Company’s customer base throughout the U.S. and internationally minimizes the risk of incurring material losses due to concentrations of credit risk. |
Foreign currency | Foreign currency Results of operations for the Company’s non-U.S. subsidiaries are translated from the designated functional currency to the reporting currency of the U.S. dollar. Revenues and expenses are translated at average exchange rates for each month, while assets and liabilities are translated at balance sheet date exchange rates. Resulting net translation adjustments are recorded as a component of stockholders’ equity in “Accumulated other comprehensive income” in the Company’s Condensed Consolidated Balance Sheets. Transaction gains and losses arising from currency exchange rate fluctuations on transactions denominated in a currency other than the local functional currency are included in “Other expense” in the Company’s Consolidated Statements of Comprehensive Loss. Such transaction gains and losses may be realized or unrealized depending upon whether the transaction settled during the period or remains outstanding at the balance sheet date. |
Cash and cash equivalents | Cash and cash equivalents The Company considers all highly liquid financial instruments with an original maturity of three months or less when purchased to be cash equivalents. |
Accounts receivable | Accounts receivable Accounts receivable are recorded at original invoice amounts less an estimate for doubtful receivables based on a review of outstanding amounts monthly. Management determines the allowance for doubtful accounts by regularly evaluating individual customer receivables and considering a customer’s financial condition and credit history. Accounts receivable are written off when deemed uncollectible. Recoveries of trade accounts receivable previously written off are recorded when received. |
Computer software, property and equipment | Computer software, property and equipment Computer software, property and equipment are recorded at cost. Depreciation is calculated using the straight-line method over the following estimated useful lives of the assets: Computer software and hardware 3 to 5 years Leasehold improvements Shorter of lease term or useful life Furniture, fixtures and other equipment 3 to 5 years Gains or losses on disposals are included in results of operations at amounts equal to the difference between the net book value of the disposed assets and the proceeds received upon disposal. Costs for replacements and betterments are capitalized, while the costs of maintenance and repairs are expensed as incurred. Property under capital leases are depreciated using the straight-line method over the lease term. Depreciation expense totaled $4.3 million and $4.5 million for the three months ended September 30, 2020 and 2019, respectively, and includes amortization of assets recorded under capital leases. Depreciation expense totaled $12.8 million and $13.8 million for the nine months ended September 30, 2020 and 2019, respectively. |
Internal-use software development costs | Internal-use software development costs The Company capitalizes certain internal computer software costs incurred during the application development stage. The application development stage generally includes software design and configuration, coding, testing and installation activities. Training and maintenance costs are expensed as incurred, while upgrades and enhancements are capitalized if it is probable that such expenditure will result in additional functionality. Capitalized software costs are depreciated over the estimated useful life of the underlying project on a straight-line basis. The Company’s estimated useful life of capitalized software costs varies between three and five years, depending on management’s expectation of the economic life of various software. Capitalized software depreciation costs are recorded as a component of cost of revenue. Capitalized software costs are reflected as part of “Intangible assets, net” in the Company’s Consolidated Balance Sheets and totaled $17.6 million and $13.5 million, net of accumulated amortization, as of September 30, 2020 and December 31, 2019, respectively. |
Goodwill | Goodwill Goodwill represents the excess of the total consideration paid over identified intangible and tangible assets of the Company and its acquisitions. The Company tests its goodwill for impairment at the reporting unit level on an annual basis on October 1, and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. These events or circumstances could include a significant change in the business climate, legal factors, operating performance indicators, competition, or sale or disposition of a significant portion of a reporting unit. As of the October 1 testing date, the Company determined there is one entity-wide reporting unit. The Company considered COVID-19 as an indicator of impairment to the value of goodwill and intangible assets and performed a qualitative assessment. Management considered factors that could be affected by COVID-19 such as impact to stock price, consequences of “stay-at-home” orders, impacts to competitors due to COVID-19, changes in demand, and updates to the Company forecasts among other factors. Management concluded that there was no impairment of goodwill and intangible assets during the nine months ended September 30, 2020. |
Debt issuance costs | Debt issuance costs Debt issuance costs are stated at cost, net of accumulated amortization, and are amortized over the term of the debt using both the straight-line and the effective yield methods. U.S. GAAP requires that the effective yield method be used to amortize debt acquisition costs; however, if the effect of using the straight-line method is not materially different from the results that would have been obtained under the effective yield method, the straight-line method may be used. The amortization for funded term debt is calculated according to the effective yield method and revolving and unfunded term debt is calculated according to the straight-line method. Debt issuance costs related to funded term debt is presented in the Consolidated Balance Sheets as a direct deduction from the carrying amount of the debt liability, consistent with debt discounts or premiums. Debt issuance costs related to revolving and unfunded term debt is presented in “Other current assets” in the Company’s Consolidated Balance Sheets. |
Revenue recognition | Revenue recognition The Company adopted Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (“ASC 606”), effective January 1, 2019, utilizing the modified retrospective method. The Company’s adoption of ASC 606 did not result in material changes to the Company’s revenue recognition. As an Emerging Growth Company, as defined in the Jumpstart Our Business Startups Act of 2012 (“the JOBS Act”), the JOBS Act allowed us to delay adoption of new or revised accounting pronouncements applicable to public companies until December 31, 2019, which is when such pronouncements are made applicable to private companies. We elected to use this extended transition period and there were no material differences for revenue recognition between the three and nine months ended September 30, 2020 and September 30, 2019. Revenues are recognized when the Company satisfies a performance obligation by transferring goods or services promised in a contract to a customer, in an amount that reflects the consideration that the Company expects to receive in exchange for those services. Performance obligations in the Company’s contracts represent distinct or separate service streams that are provided to its customers. The Company evaluates its revenue contracts with customers based on the five-step model under ASC 606: (1) identify the contract with the customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to separate performance obligations; and (5) recognize revenues when (or as) each performance obligation is satisfied. The following table summarizes revenue from contracts with customers for the three and nine months ended September 30, 2020 and September 30, 2019 (in thousands): Three months ended September 30, 2020 Three months ended September 30, 2019 Nine months ended September 30, 2020 Nine months ended September 30, 2019 eDiscovery services $ 48,021 $ 52,910 $ 147,056 $ 161,075 Managed review 14,015 14,025 36,847 35,944 Legal technology services 62,036 66,935 183,903 197,019 Data recovery 10,265 11,234 31,050 34,508 Total revenue $ 72,301 $ 78,169 $ 214,953 $ 231,527 Performance Obligations and Timing of Revenue Recognition We primarily sell services and products that fall into the categories discussed below. Each category contains one or more performance obligations that are either (1) capable of being distinct (i.e., the customer can benefit from the product or service on its own or together with readily available resources, including those purchased separately from us) and distinct within the context of the contract (i.e., separately identified from other promises in the contract) or (2) a series of distinct products or services that are substantially the same and have the same pattern of transfer to the customer. (1) eDiscovery services, which provides end-to-end eDiscovery services support including collections, processing, analytics, hosting, production and professional services; (2) Managed review services which provides the staffing necessary to review large complex data sets; and (3) Data recovery, which offers data restoration, data erasure and data management. We generate the majority of our revenues by providing Legal Technology services to our clients. All of our eDiscovery service contracts are time and materials types of arrangements. Time and materials arrangements are based on units of data stored or processed. Unit-based revenues are recognized as services are provided, based on either the amount of data stored or processed, the number of concurrent users accessing the information or the number of pages or images processed for a client, at agreed upon per unit rates. We recognize revenues for these arrangements utilizing a right-to-invoice practical expedient because we have a right to consideration for services completed to date. Certain of our eDiscovery contracts are subscription-based, fixed fee arrangements, which have tiered pricing based on the quantity of data hosted. For a fixed monthly fee, our clients receive a variety of optional eDiscovery services, which are included in addition to the data hosting. We recognize revenues for these arrangements based on predetermined monthly fees as determined in our contractual agreements, utilizing a right-to-invoice practical expedient because we have a right to consideration for services completed to date. Managed review services are time and materials types of arrangements. These agreements require the client to pay us based on the number of hours worked at contractually agreed-upon rates. We recognize revenues for these arrangements based on hours incurred and contracted rates utilizing a right-to-invoice practical expedient because we have a right to consideration for services completed to date. Data recovery services are mainly fixed fee arrangements requiring the client to pay a pre-established fee in exchange for the successful completion of a data recovery on a predetermined device. For the recovery services performed by the Company’s technicians, the revenue is recognized at a point in time, when the recovered data is sent to the customer. Data erasure services are fixed fee arrangements for which revenue is recognized at a point in time, when the certificate of erasure is sent to the customer. Ontrack PowerControls offers term license subscriptions for customers with on-premises installations of the software pursuant to contracts that are historically one to four years in length. The term license subscriptions include maintenance, support, as well as access to future software upgrades and fixes. The license and the additional support services are deemed to be one performance obligation, and thus revenue for these arrangements is recognized ratably over the term of the agreement. |
Net Loss per Common Share | Net loss per common share Basic net loss per common share is determined by dividing net loss by the weighted average number of common shares outstanding during the period. Diluted net loss per common share is determined by dividing net loss by the weighted average number of common shares outstanding during the period, plus the dilutive effect of common stock equivalents, including stock options and restricted shares. Common stock and common stock equivalents included in the computation represent shares issuable upon assumed exercise of outstanding stock options and release of restricted shares, except when the effect of their inclusion would be antidilutive. On December 19, 2019, the Company completed a reverse merger with Pivotal Acquisition Corp. whereby the Company received 34,800,000 shares for its outstanding 3,707,564 shares, effecting a 1-to-9.3862 stock exchange. The per share amounts have been updated to show the effect of the exchange on earnings per share as if the exchange occurred at the beginning of both years for the quarterly financial statements of the Company. The impact of the stock exchange is also shown on the Company’s Statements of Stockholders’ Equity. |
Accounting standards not yet adopted | Accounting standards not yet adopted In connection with the transaction with Pivotal, as discussed in more detail in “Note 2, Acquisitions,” the Company elected to be an Emerging Growth Company under the JOBS Act and take advantage of the extended transition period of delaying the adoption of new or revised accounting standards until such time as those standards apply to private companies. This may make the comparison of the Company’s consolidated financial statements to other public companies not meaningful due to the differences in accounting standards being applied. In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2016-02, Leases In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses Measurement of Credit Losses on Financial Instruments In December 2019, the FASB issued ASU 2019-12, Income Taxes Simplifying the Accounting for Income Taxes |
Organization, Business and Su_3
Organization, Business and Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Estimated Useful Lives of Assets | Depreciation is calculated using the straight-line method over the following estimated useful lives of the assets: Computer software and hardware 3 to 5 years Leasehold improvements Shorter of lease term or useful life Furniture, fixtures and other equipment 3 to 5 years |
Summary of Revenue from Contracts with Customers | The following table summarizes revenue from contracts with customers for the three and nine months ended September 30, 2020 and September 30, 2019 (in thousands): Three months ended September 30, 2020 Three months ended September 30, 2019 Nine months ended September 30, 2020 Nine months ended September 30, 2019 eDiscovery services $ 48,021 $ 52,910 $ 147,056 $ 161,075 Managed review 14,015 14,025 36,847 35,944 Legal technology services 62,036 66,935 183,903 197,019 Data recovery 10,265 11,234 31,050 34,508 Total revenue $ 72,301 $ 78,169 $ 214,953 $ 231,527 Performance Obligations and Timing of Revenue Recognition We primarily sell services and products that fall into the categories discussed below. Each category contains one or more performance obligations that are either (1) capable of being distinct (i.e., the customer can benefit from the product or service on its own or together with readily available resources, including those purchased separately from us) and distinct within the context of the contract (i.e., separately identified from other promises in the contract) or (2) a series of distinct products or services that are substantially the same and have the same pattern of transfer to the customer. (1) eDiscovery services, which provides end-to-end eDiscovery services support including collections, processing, analytics, hosting, production and professional services; (2) Managed review services which provides the staffing necessary to review large complex data sets; and (3) Data recovery, which offers data restoration, data erasure and data management. We generate the majority of our revenues by providing Legal Technology services to our clients. All of our eDiscovery service contracts are time and materials types of arrangements. Time and materials arrangements are based on units of data stored or processed. Unit-based revenues are recognized as services are provided, based on either the amount of data stored or processed, the number of concurrent users accessing the information or the number of pages or images processed for a client, at agreed upon per unit rates. We recognize revenues for these arrangements utilizing a right-to-invoice practical expedient because we have a right to consideration for services completed to date. Certain of our eDiscovery contracts are subscription-based, fixed fee arrangements, which have tiered pricing based on the quantity of data hosted. For a fixed monthly fee, our clients receive a variety of optional eDiscovery services, which are included in addition to the data hosting. We recognize revenues for these arrangements based on predetermined monthly fees as determined in our contractual agreements, utilizing a right-to-invoice practical expedient because we have a right to consideration for services completed to date. Managed review services are time and materials types of arrangements. These agreements require the client to pay us based on the number of hours worked at contractually agreed-upon rates. We recognize revenues for these arrangements based on hours incurred and contracted rates utilizing a right-to-invoice practical expedient because we have a right to consideration for services completed to date. Data recovery services are mainly fixed fee arrangements requiring the client to pay a pre-established fee in exchange for the successful completion of a data recovery on a predetermined device. For the recovery services performed by the Company’s technicians, the revenue is recognized at a point in time, when the recovered data is sent to the customer. Data erasure services are fixed fee arrangements for which revenue is recognized at a point in time, when the certificate of erasure is sent to the customer. Ontrack PowerControls offers term license subscriptions for customers with on-premises installations of the software pursuant to contracts that are historically one to four years in length. The term license subscriptions include maintenance, support, as well as access to future software upgrades and fixes. The license and the additional support services are deemed to be one performance obligation, and thus revenue for these arrangements is recognized ratably over the term of the agreement. |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Fair Value Disclosures [Abstract] | |
Summary of Reconciliation of Liabilities Measured at Fair Value Using Significant Unobservable Inputs (Level 3) | The following table provides a reconciliation of liabilities measured at fair value using significant unobservable inputs (Level 3) for the periods ended September 30, 2020 and December 31, 2019 (in thousands): Balance at December 31, 2018 $ - Contingent consideration 774 Change in fair value of contingent consideration 48 Balance at December 31, 2019 $ 822 Payment of contingent consideration - Change in fair value of contingent consideration 80 Balance at September 30, 2020 $ 902 |
Leasing Arrangements (Tables)
Leasing Arrangements (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Leases [Abstract] | |
Schedule of Future Minimum Payments for Operating and Capital Lease Obligations | For years subsequent to September 30, 2020, future minimum payments for all operating and capital lease obligations that have initial non-cancelable lease terms exceeding one year, net of rental income from subleases are as follows (in thousands): December 31, Capital Leases Operating Leases 2020 (3 months) $ 886 $ 2,384 2021 1,586 9,209 2022 1,346 8,277 2023 721 7,736 2024 - 6,597 Thereafter - 13,103 Total $ 4,539 $ 47,306 Less interest on lease obligations (464 ) 4,075 Less current portion (886 ) Non-current portion $ 3,189 |
Long Term Debt (Tables)
Long Term Debt (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Long Term Debt [Abstract] | |
Summary of Components of Long-term Debt | The table below summarizes the components of the Company’s long-term debt (in thousands): September 30, 2020 December 31, 2019 First lien facility due 2022 $ 293,250 $ 306,000 Convertible debenture notes due 2024 206,423 200,000 Total debt 499,673 506,000 Less: unamortized original issue discount (17,109 ) (19,806 ) Less: unamortized debt issuance costs (4,295 ) (5,573 ) Total debt, net 478,269 480,621 Current portion of debt 17,000 17,000 Less: current portion of unamortized original issue discount (4,170 ) (3,687 ) Less: current portion of unamortized debt issuance costs (1,724 ) (1,624 ) Total current portion of debt, net 11,106 11,689 Total long term debt, net $ 467,163 $ 468,932 |
Equity Incentive Plan (Tables)
Equity Incentive Plan (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Schedule of Additional Information on Stock Option Grants And Vesting | The following table summarizes additional information on stock option grants and vesting (in thousands): 2016 Plan 2019 Plan Nine Months Ended September 30, 2020 Nine Months Ended September 30, 2019 Nine Months Ended September 30, 2020 Nine Months Ended September 30, 2019 Total fair value of stock options granted $ - $ 2,492 $ 9,241 $ - Total fair value of options vested - 1,439 - - |
Summary of Valuation Models of Fair Value of Awards Granted To Employees and Non-Employees Under 2016 Plan | The following table summarizes the assumptions used in the valuation models to determine the fair value of awards granted to employees and non-employees under both the 2019 Plan and the 2016 Plan: Nine Months Ended September 30, 2020 Nine Months Ended September 30, 2019 Expected volatility 37.63% - 41.24% 36.92% Expected term (in years) 6.0 6.5 Dividend yield 0.00% 0.00% Risk free interest rate 1.43% - 0.30% 2.42% |
Stock Based Compensation Expense Included In Consolidated Statements of Comprehensive Loss | Stock-based compensation expense is included in the Company’s Consolidated Statements of Comprehensive Loss within the following line items (in thousands): Three Months Ended September 30, 2020 Three Months Ended September 30, 2019 Nine Months Ended September 30, 2020 Nine Months Ended September 30, 2019 Cost of revenues $ 339 $ 144 $ 1,020 $ 442 General and administrative 350 127 841 1,045 Research and development 65 24 205 67 Sales and marketing 159 116 486 346 Total $ 913 $ 411 $ 2,552 $ 1,900 |
Restricted Stock Units [Member] | |
Schedule of RSUs Activity Under 2019 Plan | The following table summarizes the Company’s RSU activity under the 2019 Plan: Description RSUs Outstanding Balance at December 31, 2019 - Granted 1,402,312 Forfeited (73,827 ) Expired - Balance at September 30, 2020 1,328,485 |
2019 Plan [Member] | |
Schedule of Stock Option Activity Under 2019 Plan | The following table summarizes the Company’s stock option activity under the 2019 Plan: Description Options Outstanding Weighted Average Exercise Price Weighted Average Remaining Contractual Term (Years) Aggregate Intrinsic Value (1) Options Outstanding, December 31, 2019 514,710 $ 9.90 10.0 $ - Granted 4,137,750 8.49 Forfeited (248,101 ) 9.08 Expired - Options Outstanding, September 30, 2020 4,404,359 $ 8.46 9.3 $ - Options Exercisable, September 30, 2020 - $ - - $ - (1) Aggregate intrinsic value represents the difference between the estimated fair value of the underlying Common Stock (as defined below) and the exercise price of outstanding, in-the-money options. There were no in-the-money options as of September 30, 2020 or December 31, 2019. |
Organization, Business and Su_4
Organization, Business and Summary of Significant Accounting Policies - Additional Information (Detail) $ in Millions | Dec. 19, 2019shares | Sep. 30, 2020USD ($)LocationCountryDatacenterLabCustomer | Sep. 30, 2019USD ($)Customer | Sep. 30, 2020USD ($)LocationCountryDatacenterLabSegmentCustomer | Sep. 30, 2019USD ($)Customer | Dec. 31, 2019USD ($) |
Organization Business And Summary Of Significant Accounting Policies [Line Items] | ||||||
Number of countries | Country | 19 | 19 | ||||
Number of data centers | Datacenter | 8 | 8 | ||||
Number of data recovery labs | Lab | 19 | 19 | ||||
Date of incorporation | Aug. 2, 2018 | |||||
Number of business segment | Segment | 1 | |||||
Depreciation expense | $ | $ 4.3 | $ 4.5 | $ 12.8 | $ 13.8 | ||
Number of reporting unit | Segment | 1 | |||||
Pivotal Acquisition Corp. [Member] | ||||||
Organization Business And Summary Of Significant Accounting Policies [Line Items] | ||||||
Business combination, aggregate shares of common stock received by stockholders | 34,800,000 | |||||
Business combination, outstanding shares | 3,707,564 | |||||
Business combination, stock exchange ratio | 9.3862 | |||||
Internal-Use Software Development [Member] | ||||||
Organization Business And Summary Of Significant Accounting Policies [Line Items] | ||||||
Capitalized software costs | $ | $ 17.6 | $ 17.6 | $ 13.5 | |||
Consolidated Revenues [Member] | Customer Concentration Risk [Member] | ||||||
Organization Business And Summary Of Significant Accounting Policies [Line Items] | ||||||
Number of customers representing more than 5% of consolidated revenues or accounts receivable | Customer | 0 | 0 | 0 | 0 | ||
Accounts Receivable [Member] | Customer Concentration Risk [Member] | ||||||
Organization Business And Summary Of Significant Accounting Policies [Line Items] | ||||||
Number of customers representing more than 5% of consolidated revenues or accounts receivable | Customer | 0 | 0 | 0 | 0 | ||
Minimum [Member] | ||||||
Organization Business And Summary Of Significant Accounting Policies [Line Items] | ||||||
Number of locations | Location | 34 | 34 | ||||
Minimum [Member] | Internal-Use Software Development [Member] | ||||||
Organization Business And Summary Of Significant Accounting Policies [Line Items] | ||||||
Estimated useful life | 3 years | |||||
Maximum [Member] | Internal-Use Software Development [Member] | ||||||
Organization Business And Summary Of Significant Accounting Policies [Line Items] | ||||||
Estimated useful life | 5 years |
Organization, Business and Su_5
Organization, Business and Summary of Significant Accounting Policies - Estimated Useful Lives of Assets (Detail) | 9 Months Ended |
Sep. 30, 2020 | |
Computer software and hardware | Minimum [Member] | |
Property Plant And Equipment [Line Items] | |
Estimated useful lives of assets | 3 years |
Computer software and hardware | Maximum [Member] | |
Property Plant And Equipment [Line Items] | |
Estimated useful lives of assets | 5 years |
Leasehold improvements | |
Property Plant And Equipment [Line Items] | |
Estimated useful lives of assets | Shorter of lease term or useful life |
Furniture, fixtures and other equipment | Minimum [Member] | |
Property Plant And Equipment [Line Items] | |
Estimated useful lives of assets | 3 years |
Furniture, fixtures and other equipment | Maximum [Member] | |
Property Plant And Equipment [Line Items] | |
Estimated useful lives of assets | 5 years |
Organization, Business and Su_6
Organization, Business and Summary of Significant Accounting Policies - Summary of Revenue from Contracts with Customers (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Disaggregation Of Revenue [Line Items] | ||||
Revenues | $ 72,301 | $ 78,169 | $ 214,953 | $ 231,527 |
eDiscovery Services [Member] | ||||
Disaggregation Of Revenue [Line Items] | ||||
Revenues | 48,021 | 52,910 | 147,056 | 161,075 |
Managed Review [Member] | ||||
Disaggregation Of Revenue [Line Items] | ||||
Revenues | 14,015 | 14,025 | 36,847 | 35,944 |
Legal Technology Services [Member] | ||||
Disaggregation Of Revenue [Line Items] | ||||
Revenues | 62,036 | 66,935 | 183,903 | 197,019 |
Data Recovery [Member] | ||||
Disaggregation Of Revenue [Line Items] | ||||
Revenues | $ 10,265 | $ 11,234 | $ 31,050 | $ 34,508 |
Acquisitions - Additional Infor
Acquisitions - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Millions | Dec. 19, 2019 | Sep. 30, 2020 |
8% Convertible Debentures Due 2024 [Member] | ||
Business Acquisition [Line Items] | ||
Debt, principal amount | $ 200 | |
Pivotal Acquisition Corp. [Member] | ||
Business Acquisition [Line Items] | ||
Business combination, date of merger | Dec. 19, 2019 | |
Business combination, aggregate shares of common stock received by stockholders | 34,800,000 | |
Closing sale price of company's common stock | $ 13.50 | |
Business combination, contingent consideration arrangements, description | The former stockholders of LD Topco, Inc. also have the right to receive up to 2,200,000 shares of the Company’s common stock if (i) a change in control occurs or (ii) the reported closing sale price of the Company’s common stock exceeds $13.50 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations or other similar actions) for any 20 consecutive trading days during the five-year period following the closing of the Business Combination. | |
Warrants to receive shares of common stock | 29,350,000 | |
Exercise price per share | $ 11.50 | |
Pivotal Acquisition Corp. [Member] | 8% Convertible Debentures Due 2024 [Member] | ||
Business Acquisition [Line Items] | ||
Debt, principal amount | $ 200 | |
Pivotal Acquisition Corp. [Member] | Maximum [Member] | Common Stock Issuable Contingently [Member] | ||
Business Acquisition [Line Items] | ||
Common stock issuable pursuant to merger | 2,200,000 |
Fair Value Measurements - Addit
Fair Value Measurements - Additional Information (Detail) $ in Millions | 12 Months Ended | |
Dec. 31, 2019USD ($)Company | Sep. 30, 2020USD ($) | |
Fair Value Disclosures [Abstract] | ||
Fair value of future expected acquisition-related contingent consideration obligations | $ 0.8 | $ 0.9 |
Number of companies acquired | Company | 3 | |
Business acquisition, total consideration | $ 5.5 | |
Business acquisition, consideration in cash | 2 | |
Business acquisition, deferred payments | 1.5 | |
Business acquisition, stock | 1.2 | |
Business acquisition, future earn outs | $ 1 |
Fair Value Measurements - Summa
Fair Value Measurements - Summary of Reconciliation of Liabilities Measured at Fair Value Using Significant Unobservable Inputs (Level 3) (Detail) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2020 | Dec. 31, 2019 | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Balance at beginning | $ 822 | |
Contingent consideration | $ 774 | |
Change in fair value of contingent consideration | 80 | 48 |
Balance at ending | $ 902 | $ 822 |
Leasing Arrangements - Addition
Leasing Arrangements - Additional Information (Detail) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Leases [Abstract] | ||||
Operating and capital lease agreements lease expiring year | 2027 | |||
Rent expense | $ 3.4 | $ 3.7 | $ 11 | $ 11.2 |
Lease termination expense | $ (1.2) |
Leasing Arrangements - Schedule
Leasing Arrangements - Schedule of Future Minimum Payments for Operating and Capital Lease Obligations (Detail) $ in Thousands | Sep. 30, 2020USD ($) |
Capital Leases | |
2020 (3 months) | $ 886 |
2021 | 1,586 |
2022 | 1,346 |
2023 | 721 |
Total | 4,539 |
Less interest on lease obligations | (464) |
Net amount | 4,075 |
Less current portion | (886) |
Non-current portion | 3,189 |
Operating Leases | |
2020 (3 months) | 2,384 |
2021 | 9,209 |
2022 | 8,277 |
2023 | 7,736 |
2024 | 6,597 |
Thereafter | 13,103 |
Total | $ 47,306 |
Long Term Debt - Summary of Com
Long Term Debt - Summary of Components of Long-term Debt (Detail) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 | Dec. 19, 2019 |
Debt Instrument [Line Items] | |||
Total debt | $ 499,673 | $ 506,000 | |
Less: unamortized original issue discount | (17,109) | (19,806) | |
Less: unamortized debt issuance costs | (4,295) | (5,573) | |
Total debt, net | 478,269 | 480,621 | |
Current portion of debt | 17,000 | 17,000 | |
Less: current portion of unamortized original issue discount | (4,170) | (3,687) | |
Less: current portion of unamortized debt issuance costs | (1,724) | (1,624) | |
Total current portion of debt, net | 11,106 | 11,689 | |
Long-term debt, net | 467,163 | 468,932 | |
First Lien Facility Due 2022 | |||
Debt Instrument [Line Items] | |||
Total debt | 293,250 | 306,000 | |
Convertible Debenture Notes Due 2024 | |||
Debt Instrument [Line Items] | |||
Total debt | $ 206,423 | $ 200,000 | $ 200,000 |
Long Term Debt - Additional Inf
Long Term Debt - Additional Information (Detail) - USD ($) | Dec. 19, 2019 | Sep. 30, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Dec. 09, 2016 |
Debt Instrument [Line Items] | |||||
Mandatory prepayment amount | $ 0 | $ 0 | |||
Total debt | 499,673,000 | $ 506,000,000 | |||
2016 Credit Agreement | Revolving Credit Facility [Member] | |||||
Debt Instrument [Line Items] | |||||
Maximum borrowing capacity | $ 30,000,000 | ||||
Loan maturing date | Dec. 9, 2021 | ||||
Outstanding loan amount, current | $ 0 | ||||
Outstanding loan amount | $ 0 | ||||
Available borrowing capacity | 29,200,000 | ||||
2016 Credit Agreement | Letter of Credit [Member] | |||||
Debt Instrument [Line Items] | |||||
Outstanding loan amount | $ 800,000 | ||||
LIBOR | 2016 Credit Agreement | Revolving Credit Facility [Member] | |||||
Debt Instrument [Line Items] | |||||
Loan variable interest rate | 5.375% | ||||
Loan variable interest rate option two | 5.625% | ||||
Loan variable interest rate option three | 5.875% | ||||
First Lien Facility | |||||
Debt Instrument [Line Items] | |||||
Initial term loan borrowing | $ 340,000,000 | ||||
Term loan maturity date | Dec. 9, 2022 | ||||
Debt instrument, date of first required payment | Mar. 31, 2017 | ||||
Payments for loans | $ 2,100,000 | ||||
Quarterly principal payments increased | 4,300,000 | ||||
Term loan balloon payment | $ 259,300,000 | ||||
Term loan interest rate per annum during period | 5.875% | 5.875% | |||
Loan variable interest rate | 0.00% | ||||
Term loan description of variable rate basis | For each interest period, the interest rate per annum is 5.875% plus the Adjusted Eurocurrency Rate which is defined as an amount equal to the Statutory Reserve Rate (as defined in the 2016 Credit Agreement) multiplied by the greatest of a) LIBOR, b) 0.00% per annum and c) solely with respect to the Initial Term Loans, 1.00% per annum. | ||||
Term loan balance due | $ 293,300,000 | $ 306,000,000 | |||
First Lien Facility | Adjusted Eurocurrency Rate | |||||
Debt Instrument [Line Items] | |||||
Loan variable interest rate | 1.00% | 2.61463% | |||
First Lien Facility | Term Loan | |||||
Debt Instrument [Line Items] | |||||
Loan variable interest rate | 1.00% | ||||
Second Lien Facility | |||||
Debt Instrument [Line Items] | |||||
Initial term loan borrowing | $ 125,000,000 | ||||
Term loan maturity date | Dec. 9, 2023 | ||||
Debt instrument, date of first required payment | Dec. 19, 2019 | ||||
8% Convertible Debentures Due 2024 [Member] | |||||
Debt Instrument [Line Items] | |||||
Term loan maturity date | Dec. 19, 2024 | ||||
Debt principal amount | $ 200,000,000 | ||||
Total debt | $ 200,000,000 | $ 206,423,000 | $ 200,000,000 | ||
Debt interest rate in cash | 4.00% | ||||
Debt interest rate in kind | 4.00% | ||||
Debt periodic payment | bear interest at an annual rate of 4.00% in cash, payable quarterly, and 4.00% in kind, accrued quarterly, on the last business day of March, June, September and December. | ||||
Percentage of amount will add to principal amount | 3.00% | ||||
Principal amount of debt redeemed | 100.00% | ||||
Debt conversion price per share | $ 18 | ||||
Percentage of principal amount paid in event of default | 25.00% |
Equity Incentive Plan - Additio
Equity Incentive Plan - Additional Information (Detail) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||
Common stock, par value | $ 0.0001 | $ 0.0001 | $ 0.0001 | ||
Stock-based compensation | $ 2,552,000 | $ 1,900,000 | |||
Non Employee Director [Member] | |||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||
Stock-based compensation | $ 700,000 | $ 700,000 | |||
Options granted | 7,223 | ||||
Performance Based Vesting Stock Option [Member] | |||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||
Expiration period | 10 years | ||||
Weighted average fair value granted | $ 0 | $ 37.16 | |||
Stock option outstanding | 0 | 0 | |||
Performance Based Vesting Stock Option [Member] | Minimum [Member] | |||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||
Internal rate of return on investment | 70.00% | ||||
Restricted Stock Units [Member] | Non Employee Director [Member] | |||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||
Options granted | 136,956 | ||||
Restricted Stock Units [Member] | Maximum [Member] | Non Employee Director [Member] | |||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||
Vesting period | 3 years | ||||
Restricted Stock Units [Member] | Minimum [Member] | Non Employee Director [Member] | |||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||
Vesting period | 1 year | ||||
2019 Plan [Member] | |||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||
Common stock options authorized under plan | 7,500,000 | 7,500,000 | |||
Common stock, par value | $ 0.0001 | $ 0.0001 | |||
Common stock options available for issuance | 1,767,156 | 1,767,156 | |||
Stock option exercised | 0 | 0 | |||
Options granted | 4,137,750 | ||||
2019 Plan [Member] | Time Based Vesting Stock Option [Member] | |||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||
Vesting period | 3 years | ||||
Weighted average fair value granted | $ 2.19 | ||||
Stock-based compensation | $ 900,000 | $ 2,500,000 | |||
Unrecognized stock-based compensation expense | 7,200,000 | $ 7,200,000 | |||
Unrecognized stock-based compensation expense, period | 2 years 3 months 18 days | ||||
2019 Plan [Member] | Time Based Vesting Stock Option [Member] | Maximum [Member] | |||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||
Expiration period | 10 years | ||||
2019 Plan [Member] | Restricted Stock Units [Member] | |||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||
Stock-based compensation | $ 0 | $ 0 | |||
Stock option outstanding | 1,328,485 | 1,328,485 | |||
2016 Plan [Member] | |||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||
Stock option exercised | 0 | 0 | |||
2016 Plan [Member] | Time Based Vesting Stock Option [Member] | |||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||
Vesting period | 5 years | ||||
Expiration period | 10 years | ||||
Weighted average fair value granted | $ 37.16 | ||||
Stock-based compensation | $ 0 | $ 400,000 | $ 0 | $ 1,900,000 | |
Unrecognized stock-based compensation expense | $ 0 | $ 0 |
Equity Incentive Plan - Schedul
Equity Incentive Plan - Schedule of Stock Option Activity Under 2019 Plan (Detail) - 2019 Plan [Member] - $ / shares | 9 Months Ended | 12 Months Ended |
Sep. 30, 2020 | Dec. 31, 2019 | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Options outstanding, beginning balance | 514,710 | |
Options granted | 4,137,750 | |
Options forfeited | (248,101) | |
Options outstanding, ending balance | 4,404,359 | 514,710 |
Weighted average exercise price, beginning balance | $ 9.90 | |
Weighted average exercise price, granted | 8.49 | |
Weighted average exercise price, forfeited | 9.08 | |
Weighted average exercise price, ending balance | $ 8.46 | $ 9.90 |
Weighted average remaining contractual term, balance | 9 years 3 months 18 days | 10 years |
Equity Incentive Plan - Sched_2
Equity Incentive Plan - Schedule of Additional Information on Stock Option Grants And Vesting (Detail) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
2016 Plan [Member] | ||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Total fair value of stock options granted | $ 2,492 | |
Total fair value of options vested | $ 1,439 | |
2019 Plan [Member] | ||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Total fair value of stock options granted | $ 9,241 |
Equity Incentive Plan - Summary
Equity Incentive Plan - Summary of Valuation Models of Fair Value of Awards Granted To Employees and Non-Employees Under 2016 Plan (Detail) - 2019 Plan and 2016 Plan [Member] | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Expected volatility | 36.92% | |
Expected term (in years) | 6 years | 6 years 6 months |
Dividend yield | 0.00% | 0.00% |
Risk free interest rate | 2.42% | |
Minimum [Member] | ||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Expected volatility | 37.63% | |
Risk free interest rate | 0.45% | |
Maximum [Member] | ||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Expected volatility | 40.98% | |
Risk free interest rate | 1.43% |
Equity Incentive Plan - Stock B
Equity Incentive Plan - Stock Based Compensation Expense Included In Consolidated Statements of Comprehensive Loss (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
Stock-based compensation expense | $ 913 | $ 411 | $ 2,552 | $ 1,900 |
Cost of Revenues [Member] | ||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
Stock-based compensation expense | 339 | 144 | 1,020 | 442 |
General and administrative [Member] | ||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
Stock-based compensation expense | 350 | 127 | 841 | 1,045 |
Research and development [Member] | ||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
Stock-based compensation expense | 65 | 24 | 205 | 67 |
Sales and Marketing [Member] | ||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
Stock-based compensation expense | $ 159 | $ 116 | $ 486 | $ 346 |
Equity Incentive Plan - Sched_3
Equity Incentive Plan - Schedule of RSUs Activity Under 2019 Plan (Detail) - 2019 Plan [Member] - Restricted Stock Units [Member] | 9 Months Ended |
Sep. 30, 2020shares | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |
Granted | 1,402,312 |
Forfeited | (73,827) |
Ending balance | 1,328,485 |
Equity - Additional Information
Equity - Additional Information (Detail) - USD ($) | Dec. 19, 2019 | Sep. 30, 2020 | Dec. 31, 2019 |
Class Of Stock [Line Items] | |||
Common stock, shares authorized | 200,000,000 | 200,000,000 | |
Common stock, par value | $ 0.0001 | $ 0.0001 | |
Preferred stock, shares authorized | 1,000,000 | 1,000,000 | |
Preferred Stock, per share | $ 0.0001 | $ 0.0001 | |
Common stock, voting rights | one vote for each share | ||
Pivotal Acquisition Corp. [Member] | |||
Class Of Stock [Line Items] | |||
Warrants outstanding | 29,350,000 | ||
Description of warrants | Each Warrant entitles the holder to purchase one share of Common Stock for $11.50 per share. If held by the initial purchaser of the Private Warrant or certain permitted transferees, the purchase can occur on a cashless basis. The Warrants will expire on December 19, 2024 or earlier upon redemption or liquidation. | ||
Exercise price per share | $ 11.50 | ||
Warrants expiration date | Dec. 19, 2024 | ||
Price per share | $ 11.50 | ||
Sale price of common stock | $ 18 | ||
Number of business days | 3 days | ||
Recapitalization transaction (in shares) | 34,800,000 | ||
Pivotal Acquisition Corp. [Member] | Minimum [Member] | |||
Class Of Stock [Line Items] | |||
Number of trading days | 20 days | ||
Pivotal Acquisition Corp. [Member] | Maximum [Member] | |||
Class Of Stock [Line Items] | |||
Number of trading days | 30 days | ||
Pivotal Acquisition Corp. [Member] | Common Stock [Member] | |||
Class Of Stock [Line Items] | |||
Number of securities eligible for each warrant | 1 | ||
Pivotal Acquisition Holdings LLC [Member] | |||
Class Of Stock [Line Items] | |||
Recapitalization transaction (in shares) | 550,000 | ||
Number of consecutive trading days | 20 days | ||
Reverse merger transaction, sale of common stock description | On December 19, 2019, in connection with the consummation of the Business Combination, 550,000 shares of Common Stock held by Pivotal Acquisition Holdings LLC were subjected to an additional lockup that will be released only if the last reported sale price of the Common Stock equals or exceeds $15.00 for a period of 20 consecutive trading days during the five-year period following the Closing Date. If the last reported sale price of Common Stock does not equal or exceed $15.00 within five years from the Closing Date, such shares of Common Stock will be forfeited to the Company for no consideration. These shares are reported as outstanding in our financial statements. | ||
Closing stock price period | 5 years | ||
Forfeited amount | $ 0 | ||
Pivotal Acquisition Holdings LLC [Member] | Minimum [Member] | |||
Class Of Stock [Line Items] | |||
Closing sale price of company's common stock | $ 15 | ||
Pivotal Acquisition Holdings LLC [Member] | Maximum [Member] | |||
Class Of Stock [Line Items] | |||
Closing sale price of company's common stock | $ 15 | ||
Public Warrants [Member] | Pivotal Acquisition Corp. [Member] | |||
Class Of Stock [Line Items] | |||
Warrants outstanding | 23,000,000 | ||
Exercise price per share | $ 0.01 | ||
Price per share | $ 0.01 | ||
Public Warrants [Member] | Pivotal Acquisition Corp. [Member] | Maximum [Member] | |||
Class Of Stock [Line Items] | |||
Minimum prior written notice period | 30 days | ||
Private Warrants [Member] | Pivotal Acquisition Corp. [Member] | |||
Class Of Stock [Line Items] | |||
Warrants outstanding | 4,585,281 | ||
Debenture Holder Warrants [Member] | Pivotal Acquisition Corp. [Member] | |||
Class Of Stock [Line Items] | |||
Warrants outstanding | 1,764,719 |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Income Tax Disclosure [Abstract] | ||||
Income tax provision | $ 390 | $ 62 | $ 964 | $ 391 |
Effective tax rate | (3.30%) | (0.60%) | (2.60%) | (1.10%) |
Commitments and Contingencies -
Commitments and Contingencies - Additional Information (Detail) $ in Millions | 1 Months Ended | 9 Months Ended | 12 Months Ended | |
Mar. 31, 2020shares | Sep. 30, 2020USD ($)LetterofCredit | Dec. 31, 2019 | Dec. 31, 2018 | |
Loss Contingencies [Line Items] | ||||
Number of letters of credit | LetterofCredit | 4 | |||
Letters of credit as additional security for lease guarantees | $ | $ 0.8 | |||
Percentage of taxable income offset by NOL carryforwards and carrybacks | 100.00% | |||
Net operating loss carrybacks, period | 5 years | |||
Tax-deductible interest, base percentage | 50.00% | 50.00% | 30.00% | |
Salary Exchange Program [Member] | Minimum [Member] | ||||
Loss Contingencies [Line Items] | ||||
Percentage of salary exchange program for award | 2.00% | |||
Salary Exchange Program [Member] | Maximum [Member] | ||||
Loss Contingencies [Line Items] | ||||
Percentage of salary exchange program for award | 20.00% | |||
Salary Exchange Program [Member] | Employee Stock Options [Member] | ||||
Loss Contingencies [Line Items] | ||||
Options granted | 417,673 | |||
Salary Exchange Program [Member] | Restricted Stock Units [Member] | ||||
Loss Contingencies [Line Items] | ||||
Granted | 211,207 |
Related Parties -Additional Inf
Related Parties -Additional Information (Detail) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
MGG Investment Group [Member] | ||||
Related Party Transaction [Line Items] | ||||
Interest expense, related party | $ 3.1 | $ 0 | $ 9 | $ 0 |
MGG Investment Group [Member] | Pivotal Acquisition Corp. [Member] | Debentures [Member] | ||||
Related Party Transaction [Line Items] | ||||
Debt instrument outstanding | $ 103.2 | $ 103.2 | ||
Carlyle Investment Management, LLC [Member] | ||||
Related Party Transaction [Line Items] | ||||
Agreement termination date | Dec. 19, 2019 | |||
General and administrative [Member] | Carlyle Investment Management, LLC [Member] | ||||
Related Party Transaction [Line Items] | ||||
Management consulting fees | $ 0.8 |