Cover Page - USD ($)	12 Months Ended
Cover Page - USD ($)	Dec. 31, 2019	Mar. 19, 2020	Jun. 28, 2019
Cover [Abstract]
Document Type	10-K
Amendment Flag	false
Document Period End Date	Dec. 31, 2019
Document Fiscal Period Focus	FY
Document Fiscal Year Focus	2019
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 Public Float			$ 233,450,000
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 Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Incorporation, State or Country Code	DE
Document Annual Report	true
Document Transition Report	false
Documents Incorporated by Reference	Portions of the registrant’s definitive proxy statement relating to its annual meeting of stockholders to be held in 2020 (the “2020 Annual Meeting”), to be filed with the Securities and Exchange Commission (the “SEC”) within 120 days after the end of the fiscal year to which this Annual Report on Form 10-K relates, are incorporated herein by reference where indicated. Except with respect to information specifically incorporated by reference in this Annual Report on Form 10-K, such proxy statement is not deemed to be filed as part hereof.

Consolidated Balance Sheets - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Current assets
Cash and cash equivalents	$ 43,407	$ 23,439
Accounts receivable	96,994	80,641
Prepaid expenses	7,296	9,825
Other current assets	556	310
Total current assets	148,253	114,215
Property and equipment
Accumulated depreciation	(64,682)	(49,761)
Property and equipment, net	38,303	48,341
Intangible assets, net	130,568	151,918
Goodwill	395,171	394,167
Other assets	2,617	1,739
Total assets	714,912	710,380
Current liabilities
Current portion of long-term debt, net	11,689	12,355
Accounts payable and accrued expense	31,270	41,135
Current portion of contingent consideration	340
Deferred revenue	4,851	4,160
Total current liabilities	48,150	57,650
Long-term debt, net	468,932	413,064
Contingent consideration	482
Deferred tax liabilities	6,294	6,075
Other liabilities	7,289	4,635
Total liabilities	531,147	481,424
Commitments and contingencies
Stockholders' equity
$0.0001 par value, shares authorized - 200,000,000 shares authorized as of December 31, 2019 and December 31, 2018; shares issued and outstanding - 42,529,017 and 42,288,870 as of December 31, 2019 and December 31, 2018, respectively	4	4
Preferred Stock $0.0001 par value, 1,000,000 shares authorized, zero issued and outstanding as of December 31, 2019 and December 31, 2018, respectively
Additional paid-in capital	381,952	372,316
Treasury stock		(2,406)
Accumulated deficit	(205,498)	(147,954)
Accumulated other comprehensive income	7,307	6,996
Total stockholders' equity	183,765	228,956
Total liabilities and stockholders' equity	714,912	710,380
Computer software and hardware
Property and equipment
Property and equipment, gross	72,228	68,474
Leasehold improvements
Property and equipment
Property and equipment, gross	26,963	25,389
Furniture, fixtures and other equipment
Property and equipment
Property and equipment, gross	$ 3,794	$ 4,239

Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Statement Of Financial Position [Abstract]
Allowance for doubtful accounts	$ 7,486	$ 5,564
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	42,288,870
Common stock, shares outstanding	42,529,017	42,288,870
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 Comprehensive Loss - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Income Statement [Abstract]
Revenues	$ 312,054	$ 296,282
Cost of revenues	160,845	159,617
Gross profit	151,209	136,665
Operating expenses
General and administrative	55,005	54,633
Research and development	5,945	7,100
Sales and marketing	48,517	58,273
Depreciation and amortization	39,149	41,519
Total operating expenses	148,616	161,525
Income (loss) from operations	2,593	(24,860)
Other expenses
Other expense	308	29
Loss on extinguishment of debt	7,203
Interest expense	48,377	46,591
Loss before income taxes	(53,295)	(71,480)
Income tax (benefit) provision	719	(3,741)
Net loss	(54,014)	(67,739)
Other comprehensive income (loss), net of tax
Foreign currency translation	311	(870)
Total other comprehensive income (loss), net of tax	311	(870)
Comprehensive loss	$ (53,703)	$ (68,609)
Net loss per share - basic and diluted	$ (1.27)	$ (1.68)
Weighted average shares outstanding - basic and diluted	42,425,295	40,382,578

Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands	Total	Common stock	Additional Paid-In Capital	Treasury Stock	Stock Subscription Receivable	Accumulated Deficit	Accumulated Other Comprehensive (Loss) Income
Balance at Dec. 31, 2017	$ 254,986	$ 33	$ 330,931	$ (2,319)	$ (1,350)	$ (80,175)	$ 7,866
Balance (in shares) at Dec. 31, 2017		3,268,718
Retroactive application of recapitalization at Dec. 31, 2017		$ (29)	29
Retroactive application of recapitalization (in shares) at Dec. 31, 2017		35,141,195
Adjusted balance at Dec. 31, 2017	254,986	$ 4	330,960	(2,319)	(1,350)	(80,175)	7,866
Adjusted balance (in shares) at Dec. 31, 2017		38,409,913
Issuance of common stock	$ 39,191		39,191
Issuance of common shares (in shares)	3,826,151	3,826,151
Share based compensation	$ 2,125		2,125
Share based compensation (in shares)		61,010
Foreign exchange translation	(870)						(870)
Stock subscription receivable	1,350				$ 1,350
Repurchases of treasury stock	(87)			(87)
Repurchases of treasury stock (in shares)		(8,204)
Adoption of new accounting principle			40			(40)
Net loss	(67,739)					(67,739)
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
Issuance of common stock	$ 1,655		1,655
Issuance of common shares (in shares)	172,350	172,350
Recapitalization transaction	$ 4,592		8,122			(3,530)
Retirement of treasury stock			(2,406)	$ 2,406
Share based compensation	2,265		2,265
Share based compensation (in shares)		67,797
Foreign exchange translation	311						311
Net loss	(54,014)					(54,014)
Balance at Dec. 31, 2019	$ 183,765	$ 4	$ 381,952			$ (205,498)	$ 7,307
Balance (in shares) at Dec. 31, 2019		42,529,017

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Operating activities
Net loss	$ (54,014)	$ (67,739)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	50,407	54,749
Non-cash interest	5,320	4,564
Loss on extinguishment of debt	7,203
Stock-based compensation	2,265	2,125
Provision for losses on accounts receivable	3,104	2,226
Deferred income taxes	219	(6,686)
Change in fair value of contingent consideration	48
Changes in operating assets and liabilities:
Accounts receivable	(16,712)	(12,126)
Prepaid expenses and other assets	2,404	9,864
Accounts payable and accrued expenses	(8,937)	1,540
Deferred revenue	396	(459)
Net cash used in operating activities	(8,297)	(11,942)
Investing activities
Acquisitions, net of cash	(1,950)
Purchases of property and equipment	(13,268)	(12,387)
Net cash used in investing activities	(15,218)	(12,387)
Financing activities
Recapitalization transaction	186,503
Revolving credit facility - draws	54,500	21,000
Revolving credit facility - repayments	(54,500)	(21,000)
Payments for capital lease obligations	(1,427)	(544)
Payments on long-term debt	(142,000)	(8,500)
Issuance of common stock	414	40,541
Treasury share repurchases		(87)
Payments of contingent consideration		(2,380)
Net cash provided by financing activities	43,490	29,030
Effect of foreign exchange rates	(7)	(158)
Net increase in cash	19,968	4,543
Cash at beginning of period	23,439	18,896
Cash at end of period	43,407	23,439
Supplemental disclosure:
Cash paid for interest	42,693	41,596
Income taxes paid, net of refunds	470	1,229
Significant noncash investing and financing activities
Assumption of Pivotal Debentures	200,000
Equity issued for acquisitions	1,241
Purchases of property and equipment in accounts payable and accrued expenses on the consolidated balance sheets	$ 129	$ 489

Organization, Business and Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2019

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 more than 40 locations in 19 countries, 10 data centers and 22 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 of 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 its subsidiaries. All significant intercompany accounts and transactions have been eliminated upon consolidation.

The Business Combination was accounted for as a reverse recapitalization (the "Recapitalization Transaction") in accordance with Accounting Standard Codification (“ASC”) 805, Business Combinations. For accounting and financial reporting purposes, LD Topco, Inc. is considered the acquirer based on facts and circumstances, including the following:

•

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 SEC 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; (iii) the assets and liabilities of LD Topco, Inc. at their historical cost; and (iv) KL Discovery Inc.’ 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 years ended December 31, 2019 and 2018, the Company did not have a single customer that represents more than five percent (5%) or more 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. Our foreign revenues, principally from businesses in the UK and Germany, totaled approximately $69.8 million in 2019 and $62.2 million in 2018. Our long-lived assets in foreign countries, principally in the UK and Germany, totaled approximately $21.8 million at December 31, 2019 and $20.6 million at December 31, 2018.

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.”

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” on 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 amount 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.

A rollforward of the allowance for doubtful accounts is presented below (in thousands):

Balance at December 31, 2017	$	4,182
Charged to/reversed from expense		2,226
Charged to/from other accounts		—
Deductions (write offs)		(844	)
Balance at December 31, 2018	$	5,564
Charged to/reversed from expense		3,104
Charged to/from other accounts		—
Deductions (write offs)		(1,182	)
Balance at December 31, 2019	$	7,486

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 $18.6 million and $24.7 million for the years ended December 31, 2019 and 2018, respectively, and includes amortization of assets recorded under capital leases.

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 the “Intangible assets, net line” in the Company’s Consolidated Balance Sheets and totaled $13.5 million and $7.6 million, net of accumulated amortization, as of December 31, 2019 and 2018, respectively.

Intangible assets and other long-lived assets

The Company evaluates the recoverability of its long-lived assets, including finite-lived intangible assets, for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of any asset to future net undiscounted cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured as the difference between the fair value of the asset compared to its carrying amount. No impairment losses were recognized in the accompanying consolidated financial statements.

Amortization expense totaled $31.8 million and $30.0 million for the years ended December 31, 2019 and 2018, respectively; $11.3 million and $13.2 million of which was classified as part of the “Cost of revenues” line in the Company’s Consolidated Statements of Comprehensive Loss.

The Company allocates the purchase price of an acquisition to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values at the acquisition date. The Company recognizes as goodwill the amount by which the purchase price of an acquired entity exceeds the net of the fair values assigned to the assets acquired and liabilities assumed. In determining the fair values of assets acquired and liabilities assumed, the Company uses various recognized valuation methods including the income and market approaches. Further, the Company makes assumptions within certain valuation techniques, including discount rates, royalty rates, and the amount and timing of future cash flows. The Company records the net assets and results of operations of an acquired entity in the financial statements from the acquisition date. The Company initially performs these valuations based upon preliminary estimates and assumptions by management or independent valuation specialists under its supervision, where appropriate, and make revisions as estimates and assumptions are finalized. The Company expenses acquisition-related costs as they are incurred.

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.

In January 2017, Financial Accounting Standard Board (“FASB”) issued Accounting Standard Update (“ASU”) 2017-04 which simplifies the subsequent measurement of goodwill to eliminate Step 2 from the goodwill impairment test, removing the need to determine the implied fair value of goodwill and comparing it to the carrying amount of that goodwill to measure the impairment loss, if any. The Company has early adopted ASU 2017-04 during the fourth quarter of 2017.

Goodwill impairment exists when the estimated fair value of the reporting unit is less than its carrying value. If impairment exists, the carrying value of the goodwill is reduced by the excess through an impairment charge recorded in the Company’s statements of operations. The process of evaluating the potential impairment of goodwill is subjective and requires significant judgment at many points during the analysis.

The fair value of each reporting unit is estimated using a combination of a discounted cash flow (“DCF”) analysis and market-based valuation methodologies such as comparable public company trading values and values observed in recent business combinations. Determining fair value requires the exercise of significant judgments, including the amount and timing of expected future cash flows, long-term growth rates, discount rates and relevant comparable public company earnings multiples and relevant transaction multiples. The cash flows employed in the DCF analyses are based on the Company’s best estimate of future sales, earnings and cash flows after considering factors such as general market conditions, changes in working capital, long term business plans and recent operating performance. The carrying value of the reporting unit includes the assets and liabilities employed in its operations and goodwill.

Accordingly, the Company has not identified any indicators of impairment, nor have any impairment charges been recorded related to goodwill resulting from the annual impairment test.

The following table provides a rollforward of the carrying amount of goodwill (in thousands):

Balance at December 31, 2017	$	395,062
Foreign currency translation		(895	)
Balance at December 31, 2018		394,167
Acquisitions		263
Foreign currency translation		741
Balance at December 31, 2019	$	395,171

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 the Consolidated Balance Sheets within “Other (current) assets.”

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.

Revenues are recognized when we satisfy a performance obligation by transferring goods or services promised in a contract to a customer, in an amount that reflects the consideration that we expect to receive in exchange for those services. Performance obligations in our contracts represent distinct or separate service streams that we provide to our customers.

We evaluate our 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 year ended December 31, 2019 (in thousands):

	Year Ended December 31, 2019
eDiscovery services	$	215,560
Managed review		50,290
Legal technology services		265,850
Data recovery		46,204
Total revenue	$	312,054

Share-based compensation

The Company measures and recognizes compensation expense for all share-based awards to employees based on estimated grant date fair values on a straight-line basis over the requisite service period. The Company uses the Black-Scholes valuation model, depending on terms, facts and circumstances of each share-based award.

Advertising

Advertising costs consist of marketing, advertising through print and other media, professional event sponsorship and public relations. These costs are expensed as incurred. Advertising costs totaled $7.1 million and $7.4 million for the years ended December 31, 2019 and 2018, respectively. Advertising costs are reflected within “Sales and marketing” in the accompanying Consolidated Statements of Comprehensive Loss.

Research and development expense

Costs incurred in the research and development of the Company’s technologies primarily consist of developer salaries. Research and development expenses were $5.9 million and $7.1 million for the years ended December 31, 2019 and 2018, respectively.

Income taxes

Income taxes are accounted for using the asset and liability method. Deferred income taxes are provided for temporary differences in recognizing certain income, expense and credit items for financial reporting purposes and tax reporting purposes. Such deferred income taxes primarily relate to the difference between the tax bases of assets and liabilities and their financial reporting amounts. Deferred tax assets and liabilities are measured by applying enacted statutory tax rates applicable to the future years in which deferred tax assets or liabilities are expected to be settled or realized. Excess tax benefits and tax deficiencies are recognized in the income tax provision in the period in which they occur.

The Company records a valuation allowance when it determines, based on available positive and negative evidence, that it is more-likely-than-not that some portion, or all its deferred tax assets will not be realized. The Company determines the realizability of its deferred tax assets primarily based on the reversal of existing taxable temporary differences and projections of future taxable income (exclusive of reversing temporary differences and carryforwards). In evaluating such projections, the Company considers its history of profitability, the competitive environment, and general economic conditions. In addition, the Company considers the time frame over which it would take to utilize the deferred tax assets prior to their expiration.

For certain tax positions, the Company uses a more-likely-than-not threshold based on the technical merits of the tax position taken. Tax positions that meet the more-likely-than-not recognition threshold are measured at the largest amount of tax benefits determined on a cumulative probability basis, which are more-likely-than-not to be realized upon ultimate settlement in the financial statements. The Company’s policy is to recognize interest and penalties related to income tax matters in income tax expense. As of December 31, 2019 and December 31, 2018, the Company is not aware of any material uncertain tax positions requiring adjustment to or disclosure in the financial statements.

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 year. Diluted net loss per common share is determined by dividing net loss by the weighted average number of common shares outstanding during the year, 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 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 annual financial statements of the Company. The impact of the stock exchange is also shown on the Company’s Statements of Stockholders’ Equity.”

Recently Adopted Accounting Standards

The Company adopted on January 1, 2018 ASU 2016-09, Compensation – Stock Compensation (Topic 718) (ASU 2016-09). This ASU provides amended guidance which simplifies the accounting for share-based payment transactions involving multiple aspects of the accounting for share-based transactions, including income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The Company now recognizes forfeitures of stock options as they occur. The impact of the adoption of ASU 2016-09 was $0.04 million which was not material to the Company’s consolidated financial statements.

In October 2016, the FASB issued ASU “Accounting for Income Taxes: Intra-Entity Transfers of Assets Other than Inventory” (Topic 740). ASU 2016-16 requires companies to recognize the income tax effects of intercompany sales of assets other than inventory when the transfer occurs. This standard was effective for the Company beginning January 1, 2019 and the adoption did not have a material impact on its consolidated financial statements.

We adopted ASC 606, effective January 1, 2019, utilizing the modified retrospective method. Under this method of adoption, a company is required to recognize the cumulative effect of initially applying the new revenue standard as an adjustment to the opening balance of accumulated deficit. The adoption of ASC 606 did not result in an adjustment to the opening balance of accumulated deficit.

As an emerging growth company, 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, therefore, the quarters presented in future fillings will not be directly comparable.

When we adopted ASC 606, we applied the following expedients and exemptions, which are allowed by the standard, to our prior period Financial Statements and disclosures:

•

We used the transaction price at the date of contract completion for our contracts that had variable consideration and were completed before January 1, 2019.

•

We considered the aggregate effect of all contract modifications that occurred before January 1, 2019 when: (1) identifying satisfied and unsatisfied performance obligations; (2) determining the transaction price; and (3) allocating the transaction price to the satisfied and unsatisfied performance obligations.

•

We did not: (1) disclose the amount of the transaction price that we allocated to remaining performance obligations; or (2) include an explanation of when we expect to recognize the revenue allocated to remaining performance obligations.

In August 2018, the FASB issued Accounting Standards Update No. 2018-15, Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (“ASU 2018-15”). ASU 2018-15 requires customers in a hosting arrangement that is a service contract to follow existing internal-use software guidance to determine which implementation costs to capitalize and which costs to expense. Under this model, customers would need to determine the nature of the implementation costs and the project stage in which they are incurred to determine which costs to capitalize or expense. Customers would be required to amortize the capitalized implementation costs over the term of the hosting arrangement, which might extend beyond the noncancelable period if there are options to extend or terminate. ASU 2018-15 specifies the financial statement presentation of capitalized implementation costs and related amortization in addition to required disclosures for material capitalized implementation costs related to hosting arrangements that are service contracts. The standard is effective for interim and annual periods beginning January 1, 2020. Early adoption is permitted. Entities can choose to adopt this guidance prospectively to eligible costs incurred on or after the date the guidance is first applied, or to adopt the guidance retrospectively. The Company is implemented this standard beginning on January 1, 2019 and this implementation did not have a material impact on its consolidated financial position, results of operations, and cash flows.

Accounting Standards Not Yet Adopted

In connection with the transaction with Pivotal (see Note 2), the Company elected to be an Emerging Growth Company, as defined in the Jumpstart Our Business Startups Act of 2012, or 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 FASB issued ASU No. 2016-02, Leases (Topic 842), which requires lessees to recognize on the balance sheet a right-of-use asset, representing their right to use the underlying asset for the lease term, and a lease liability for all leases with terms greater than 12 months. The guidance also requires qualitative and quantitative disclosures designed to assess the amount, timing and uncertainty of cash flows arising from leases. The standard requires the use of a modified retrospective transition approach, which includes a number of optional practical expedients that entities may elect to apply. This standard is effective for the Company for fiscal years beginning after December 15, 2020, and interim periods within fiscal years beginning after December 15, 2021, and the Company is currently evaluating the impact that Topic 842 will have on its consolidated financial statements.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (“ASC 326”): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). This guidance is intended to introduce a revised approach to the recognition and measurement of credit losses, emphasizing an updated model based on expected losses rather than incurred losses. The Company is required to adopt ASC 326 effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, and the Company is currently evaluating the impact that Topic 326 will have on its consolidated financial statements.

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which simplifies the accounting for income taxes by removing certain exceptions to the general principles for income taxes. The new standard is effective for fiscal years and interim periods within those fiscal years, beginning after December 15, 2020. Early adoption, including the adoption in any interim period, is permitted for all entities. The Company is currently evaluating the potential impact of adoption of the pronouncement on its consolidated financial statements but does not expect the impact to be material.

Acquisitions

12 Months Ended

Dec. 31, 2019

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 29,500,000 warrants which entitles the holder to purchase shares of the Company’s common stock beginning December 18, 2019 at an exercise price of $11.50 per share as part of this transaction.

As part of the transaction, on December 19, 2019, the Company assumed 8% convertible debentures (“Debentures”) due 2024 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 outstanding under its revolving credit facility.

The net proceeds from the Business Combination, as reported in the consolidated statements of cash flows for the year ended December 31, 2019 within the financing section are summarized below:

Gross cash received by KLDiscovery from Business Combination	$	201,657
Less: fees to underwriters		(6,500	)
Less: other transaction costs		(8,654	)
Net cash received by KLDiscovery from Business Combination	$	186,503

Fair Value Measurements

12 Months Ended

Dec. 31, 2019

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. ASC 820 defines fair value, establishes a fair value hierarchy for assets and liabilities measured at fair value, and requires expanded disclosures about fair value measurements. The ASC 820 hierarchy ranks the quality of reliability of inputs, or assumptions, used in the determination of fair value, and requires assets and liabilities carried at fair value to be classified and disclosed in one of the following three categories:

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 believes that the interest rates on its debt are current market rates.

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. As of December 31, 2018, all acquisition related contingent consideration was fully paid. 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, $1.2 million was in stock and $0.8 million related to future earnouts. The fair value of future expected acquisition-related contingent consideration obligations was $0.8 million at December 31, 2019.

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 an annual 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 on the 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 years ended December 31, 2019 and 2018 (in thousands):

Balance at December 31, 2017	$	2,380
Payment of contingent consideration		(2,380	)
Balance at December 31, 2018		—
Contingent consideration		774
Change in fair value of contingent consideration		48
Balance at December 31, 2019	$	822

Management estimates 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.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

Intangible Assets

12 Months Ended

Dec. 31, 2019

Goodwill And Intangible Assets Disclosure [Abstract]

Intangible Assets

Note 4 – Intangible assets

Intangible assets consist of the following (in thousands):

Description	Weighted Average Remaining Useful Life in Years		December 31, 2019			December 31, 2018
Trademark and tradenames		6.5	$	66,311		$	66,219
Accumulated amortization				(21,504	)		(14,340	)
Trademark and tradenames, net				44,807			51,879
Developed technology		3.3		71,327			52,891
Accumulated amortization				(36,838	)		(23,264	)
Developed technology, net				34,489			29,627
Non-compete agreements		2.0		1,467			1,402
Accumulated amortization				(1,242	)		(992	)
Non-compete agreements, net				225			410
Customer relationships		6.9		95,693			94,285
Accumulated amortization				(44,646	)		(31,922	)
Customer relationships, net				51,047			62,363
Intangible assets, net of amortization			$	130,568		$	144,279

Future amortization of intangible assets is as follows (in thousands):

December 31,	Amount
2020	$	29,435
2021		25,138
2022		20,925
2023		15,177
2024		10,877
Thereafter		22,772
In process		6,244
Total	$	130,568

Accrued Expenses

12 Months Ended

Dec. 31, 2019

Payables And Accruals [Abstract]

Accrued Expenses

Note 5 – Accrued expenses

Accrued expenses consisted of the following (in thousands):

	December 31,
	2019		2018
Accrued expenses:
Accrued interest	$	7,000	$	5,783
Accrued salaries		9,509		16,222
Current taxes payable		535		327
Other accrued expenses		2,847		2,109
Total	$	19,891	$	24,441

Leasing Arrangements

12 Months Ended

Dec. 31, 2019

Leases [Abstract]

Leasing Arrangements

Note 6 – 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 $14.7 million and $13.0 million for the years ended December 31, 2019 and 2018, respectively.

The amortization expense recorded for capital leases totaled $0.7 million and $0.4 million, respectively, for the years ended December 31, 2019 and 2018.

For years subsequent to December 31, 2019, 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	$	1,586		$	12,057
2021		1,586			6,970
2022		1,346			5,709
2023		722			5,290
2024		—			5,000
Thereafter		—			4,416
Total	$	5,240		$	39,442
Less: interest on lease obligations		(726	)
Net amount		4,514
Less: current portion		(1,587	)
Non-current	$	2,927

Long Term Debt

12 Months Ended

Dec. 31, 2019

Long Term Debt [Abstract]

Long Term Debt

Note 7 – Long term debt

The table below summarizes the components of the Company’s long-term debt (in thousands):

	December 31,
	2019			2018
First lien facility due 2022		306,000			323,000
Second lien facility due 2023		—			125,000
Convertible debenture notes due 2024		200,000			—
Total debt		506,000			448,000
Less: unamortized original issue discount		(19,806	)		(13,043	)
Less: unamortized debt issuance costs		(5,573	)		(9,538	)
Total debt, net		480,621			425,419
Current portion of debt		17,000			17,000
Less: current portion of unamortized original issue discount		(3,687	)		(2,678	)
Less: current portion of unamortized debt issuance costs		(1,624	)		(1,967	)
Total current portion of debt, net		11,689			12,355
Total long term debt, net	$	468,932		$	413,064

2016 Credit Agreement

On December 9, 2016, KLDiscovery entered into a 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.

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 increase 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, twelve months thereafter. Interest payment dates include the last day of each interest period and any maturity dates of the 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 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 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%. At December 31, 2018, the balance due was $323.0 million with an interest rate of 5.875% plus an Adjusted Eurocurrency Rate of 2.61463%.

The Second Lien Facility required a balloon payment of $125.0 million due at maturity. The interest rate for the Second Lien Facility adjusted every interest rate period, which could have been one, two, three or six months in duration and was decided by the Company, or to the extent consented to by all appropriate Lenders, twelve months thereafter. Interest payment dates included the last day of each interest period and any maturity dates of the facility; however, if any interest period exceeded three months, the respective dates that fall every three months after the beginning of an interest period was also an interest payment date. For each interest period, the interest rate per annum was 10.0% plus the Adjusted Eurocurrency Rate which was defined as an amount equal to the Statutory Reserve Rate 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 December 19, 2019, the Second Lien Facility was paid off and closed. A loss on debt extinguishment was recognized related to the Second Lien Facility closing in the amount of $7.2 million in 2019 related to the write off of deferred financing costs and original issue discounts on the Second Lien Facility. At December 31, 2019 the balance due was zero. At December 31, 2018, the balance due was $125.0 million with an interest rate of 10.00% plus an Adjusted Eurocurrency Rate of 2.61463%.

The First and Second Lien Facilities are secured by substantially all the Company’s assets and contain financial covenants. As of December 31, 2019 and 2018, the Company was in compliance with all covenants.

The 2016 Credit Agreement includes a mandatory prepayment within ten 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 agreement. There were no mandatory prepayments with respect to 2019 and 2018.

Revolver

The 2016 Credit Agreement also provides for unfunded revolver commitment for borrowing up to $30.0 million, maturing December 9, 2021. Borrowings under the revolver commitment may be limited by certain financial covenants of the 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. No amounts were outstanding under the revolving loan as of December 31, 2019 and 2018.

As of December 31, 2019, there was approximately $29.1 million available capacity for borrowing under the revolving loan commitment due to $0.9 million of letters of credit outstanding (See Note 15).

Convertible Debentures

On December 19, 2019, the Company assumed 8% convertible debentures (“Debentures”) due 2024 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 outstanding under the Revolving Credit Facility.

The Debentures will mature on December 19, 2024 unless earlier converted, redeemed or repurchased. The Debentures will 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 will be 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 will be 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 will 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 December 31, 2019, the Company was in compliance with all covenants.

Future principal payments, including in kind interest, are as follows (in thousands):

December 31,	Amount
2020	$	17,000
2021		17,000
2022		272,000
2023		-
2024		277,287
Thereafter		—
Total	$	583,287

The initial term loan borrowings related to the 2016 Credit Agreement were issued at an original issue discount of $11.9 million and $6.3 million for the First Lien Facility and Second Lien Facility, respectively. The Debentures were issued at an original discount of $13.7 million. The original issue discount is amortized using the effective yield method over the respective term of each facility or debenture. Accretion of the original issue discount totaled $2.7 million and $2.5 million during the years ended December 31, 2019 and 2018. Amortization is recorded as interest expense in the accompanying Consolidated Statements of Comprehensive Loss.

The Company incurred term loan facilities and revolver closing fees related to the 2016 Credit Agreement of $13.6 million. The term loan facilities and revolver closing fees were deferred on December 9, 2016, along with fees of $0.6 million related to the 2016 Credit Agreement and are amortized over their respective terms. The Company incurred closing fees related to the Debentures of $0.9 million which were deferred on December 19, 2019 and are amortized over the term of the debentures. Amortization of debt issuance costs totaled $2.1 million and $1.8 million during the years ended December 31, 2019 and 2018, respectively. Amortization is recorded as interest expense in the accompanying Consolidated Statements of Comprehensive Loss. A loss on debt extinguishment was recognized related to the closing of the Second Lien Facility in the amount of $7.2 million for deferred financing costs and original issue discounts in 2019.

The future amortization of debt issuance costs and original issue discount related to the 2016 Credit Agreement, the revolver and Convertible Debentures are as follows (in thousands):

December 31,	Amount
2020	$	5,311
2021		5,907
2022		6,618
2023		3,527
2024		4,016
Total	$	25,379

Employee Benefit Plan

12 Months Ended

Dec. 31, 2019

Compensation And Retirement Disclosure [Abstract]

Employee Benefit Plan

Note 8 – Employee benefit plan

The Company’s 401(k) plan covers employees who are at least 21 years of age, have completed one year of employment and worked a minimum of 1,000 hours. Employees may elect to defer a percentage of their salary up to the maximum allowed under the Internal Revenue Service Code. The Company makes matching contributions to its 401(k) plan equal to 100% of the first 3% of salary deferred plus 50% of the next 2% of an employee’s contribution for a total maximum Company match of 4% of the salary deferred by the employee, subject to Internal Revenue Service Code limitations. Contributions to the 401(k) plan were $3.7 million and $2.8 million for the years ended December 31, 2019 and 2018, respectively.

Equity Incentive Plan

12 Months Ended

Dec. 31, 2019

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Equity Incentive Plan

Note 9 – 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. As of December 31, 2019, 7,500,000 shares of Common Stock were reserved under the 2019 Plan, of which 6,985,290 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.

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)

Balance at December 31, 2018		-
Granted		514,710	$	9.90
Forfeited		-
Expired		-
Cancelled		-
Balance at December 31, 2019		514,710	$	9.90		10.0	$	—
Vested and expected to vest		514,710	$	9.90		10.0	$	—
Exercisable		—	$	—		10.0	$	—

The following table summarizes the Company’s stock option activity under the 2016 Plan:

Description	Options Outstanding			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value (1)
Balance at December 31, 2017		410,310		$	100		8.8	$	—
Granted		84,270			100
Forfeited		(74,255	)		100
Expired		(8,845	)		100
Balance at December 31, 2018		411,480		$	100		8.3	$	—
Granted		67,050		$	90
Forfeited		(32,860	)	$	99
Expired		(8,640	)	$	99
Cancelled		(437,030	)	$	100
Balance at December 31, 2019		—
Vested and expected to vest		—		$	—		—	$	—
Exercisable		—		$	—		—	$	—

(1)	Aggregate intrinsic value represents the difference between the estimated fair value of the underlying common stock and the exercise price of outstanding, in-the-money options. There were no in-the-money options as of December 31, 2019 and 2018.

No stock options were exercised during the years ended December 31, 2019 and 2018.

The following table summarizes additional information on stock option grants and vesting (in thousands):

	2016 Plan				2019 Plan
	Year Ended December 31, 2019		Year Ended December 31, 2018		Year Ended December 31, 2019		Year Ended December 31, 2018

Total fair value of stock options granted	$	2,492	$	3,473	$	974	$	-
Total fair value of options vested		1,439		1,924		-		-

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 ten 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 and $41.20 during the years ended December 31, 2019 and 2018, respectively.

Under the 2016 Plan, for the years ended December 31, 2019 and 2018, the Company recognized $2.3 million and $1.5 million of stock-based compensation expense in connection with time-based stock options, respectively. As of December 31, 2019, there was $0 million of unrecognized stock-based compensation expense as the plan was terminated during 2019.

Under the 2019 Plan, time-based vesting stock options generally vest over a three-year period, are subject to graded vesting schedules, and expire ten 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 $1.89, during the year ended December 31, 2019.

Under the 2019 Plan, for the year ended December 31, 2019, the Company recognized $0.01 million of stock-based compensation expense in connection with time-based stock options, respectively. As of December 31, 2019, there was $1.0 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 three 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 expire ten years from the date of grant. The weighted-average fair value per share of performance-based vesting stock options granted by us was $37.16 and $41.20 during the years ended December 31, 2019 and 2018, respectively.

As of December 31, 2019, there were no stock options with performance-based vesting outstanding as the plan was terminated.

Award Valuation

The Company used valuation models to value both time and performance-based vesting stock options granted during 2019 and 2018. 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:

	Year Ended December 31, 2019			Year Ended December 31, 2018
Expected volatility	36.92 - 37.70%			35.51 - 36.39%
Expected term (in years)	6-6.5				6.5
Dividend yield		0	%		0	%
Risk free interest rate	1.79 - 2.89%			2.59 - 2.89%

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 years ended December 31, 2019 and 2018, 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 have 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 award activity

During the years ended December 31, 2019 and 2018, the Company granted to certain non- employee directors 7,223 and 6,500 stock awards, respectively. 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 and $0.6 million as stock-based compensation expense concurrent with the grant date of the awards during the years ended December 31, 2019 and 2018, respectively.

Stock-based compensation expense

Stock-based compensation expense is included in the Consolidated Statements of Comprehensive Loss within the following line items (in thousands):

	December 31,
	2019		2018
Cost of revenues	$	573	$	869
General and administrative		1,161		1,023
Research and development		87		14
Sales and marketing		444		219
Total	$	2,265	$	2,125

Restricted stock units

Certain employees may be eligible to receive restricted stock unit awards in the event of an change in control (as defined in the respective employment agreements) with a market value equal to the greater of (1) $3.5 million or (2) an amount determined using a formula-based model (as defined in the respective employment agreements), as of the date of such grants.

As of December 31, 2019, no such awards were issued under the 2019 Plan.

Equity

12 Months Ended

Dec. 31, 2019

Equity [Abstract]

Equity

Note 10 – Equity

The Company is authorized to issue up to 200,000,000 shares of common stock, $0.0001 par value per share (the “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 Company’s Board of Directors 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.

During 2019, the Company issued 172,350 shares of Common Stock in exchange for $1.7 million. During 2018, the Company issued 3,826,151 shares of Common Stock in exchange for $39.2 million, adjusted for the recapitalization.

Warrants

On December 19, 2019, in connection with the consummation of the Business Combination, the Company assumed 23,000,000 warrants (the “Public Warrants”), 4,585,281 warrants (the “Private Warrants”) and (iii) 1,764,719 warrants (the “Debenture Holder 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 reverse merger transaction, 550,000 shares of common stock held by Pivotal Acquisition Holdings LLC are subject 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 will be forfeited to the Company for no consideration. These shares are reported as outstanding in our financial statements.

Earnings (Loss) Per Share

12 Months Ended

Dec. 31, 2019

Earnings Per Share [Abstract]

Earnings (Loss) Per Share

Note 11 – Earnings (loss) per share

Basic earnings (loss) per common share (“EPS”) is calculated by dividing the net earnings (loss) for the year by the weighted-average number of common shares outstanding during the period. Due to the Company’s net loss for the years ended December 31, 2019 and 2018, all potential common stock equivalents were anti-dilutive.

The following table summarizes basic and diluted earnings (loss) per share or the years ended December 31, 2019 and 2018 (in thousands, except per share amounts):

	Year Ended December 31, 2019			Year Ended December 31, 2018
Basic and diluted loss per share:
Net loss	$	(54,014	)	$	(67,739	)
Weighted average common shares outstanding - basic		42,425,295			40,382,578
Dilutive effect of potentially issuable shares		—			—
Weighted average common shares outstanding - diluted		42,425,295			40,382,578
Basic loss per share	$	(1.27	)	$	(1.68	)
Dilutive effect of potentially issuable shares		—			—
Diluted loss per share	$	(1.27	)	$	(1.68	)
Common share equivalents excluded due to anti-dilutive effect		—			—

Foreign Currency

12 Months Ended

Dec. 31, 2019

Foreign Currency [Abstract]

Foreign Currency

Note 12 – Foreign currency

The Company had immaterial foreign currency losses that are reflected in “Other expense” on the Company’s Consolidated Statements of Comprehensive Loss for years December 31, 2019 and 2018, respectively. Transaction gains and losses, both realized and unrealized, relate to the remeasurement or settlement of monetary assets and liabilities that are denominated in a currency other than an entity’s functional currency. These monetary assets and liabilities include cash as well as third party receivables and payables.

Income Taxes

12 Months Ended

Dec. 31, 2019

Income Tax Disclosure [Abstract]

Income Taxes

Note 13 – Income taxes

The components of income tax expense for the years ended December 31, 2019 and 2018 are presented below (in thousands):

	Year Ended December 31, 2019			Year Ended December 31, 2018
Current
Federal	$	(37	)	$	—
State		61			—
Foreign		447			2,808
Deferred
Federal		332			(4,049	)
State		705			49
Foreign		(789	)		(2,549	)
Total income tax (benefit) provision	$	719		$	(3,741	)

The actual income tax expense amounts for the years ended December 31, 2019 and 2018 differed from the expected tax amounts computed by applying the U.S. federal corporate income tax rate of 21% for 2019 and 2018 to the amounts of loss before income taxes as presented below (in thousands):

	Year Ended December 31, 2019			Year Ended December 31, 2018
Pre-tax book loss	$	(53,295	)	$	(71,480	)
Tax at Federal statutory rate of 21% in 2019 and 2018		(11,192	)		(15,011	)
Stock-based compensation		1,060			-
State taxes		766			49
Foreign rate differential		(871	)		(713	)
Deferred rate change		-			(80	)
TCJA impact		-			(7,712	)
Other adjustments		(1,707	)		1,578
Valuation allowance		12,663			18,148
Total income tax (benefit) provision	$	719		$	(3,741	)

The domestic and foreign components of loss before income taxes from continuing operations for the years ended December 31, 2019 and 2018 are as follows (in thousands):

	Year Ended December 31, 2019			Year Ended December 31, 2018
Domestic	$	(52,438	)	$	(65,356	)
Foreign		(857	)		(6,124	)
Total	$	(53,295	)	$	(71,480	)

The tax effects of temporary differences at December 31, 2019 and 2018 are as follows (in thousands):

	Year Ended December 31, 2019			Year Ended December 31, 2018
Net operating losses and other carryforwards	$	41,299		$	38,010
Interest expense carryforward		20,070			9,276
Property and equipment		2,221			—
Accrued expenses		82			701
Allowance for doubtful accounts		1,517			1,194
Stock-based compensation		—			916
Other		633			1,028
Deferred tax asset		65,822			51,125
Valuation allowance		(51,895	)		(36,595	)
Total deferred tax assets, net of valuation allowance		13,927			14,530
Property and equipment		—			(510	)
Intangible assets		(20,098	)		(19,283	)
Prepaid expenses		(73	)		(812	)
Other		(50	)		—
Deferred tax liability		(20,221	)		(20,605	)
Net deferred tax liability	$	(6,294	)	$	(6,075	)

At December 31, 2019 and 2018, the Company had tax effected U.S. federal net operating loss carryforwards of approximately $31.0 million and $29.0 million, respectively. At December 31, 2019 and 2018, the Company had tax effected state net operating loss carryforwards of approximately $6.5 million and $6.6 million, respectively. At December 31, 2019 and 2018, the Company also had U.S. tax credit carryforwards of approximately $0.9 million and $0.9 million, respectively. The net operating loss and credit carryforwards, if not used, will begin to expire in 2024

The tax effected foreign net operating loss at December 31, 2019 and 2018 is approximately $2.9 million and $1.5 million, respectively, the majority of which has an unlimited carryforward period.

The Company operates in multiple tax jurisdictions and, in the normal course of business, its tax returns are subject to examination by various taxing authorities. Such examinations may result in future assessments by these taxing authorities. The Company is subject to examination by U.S. tax authorities beginning with the year ended December 31, 2015. The Company is also subject to examination in various foreign jurisdictions. In material foreign jurisdictions, the statute of limitations ranges one – four years from the filing of a tax return.

No provision was made for U.S. taxes on the undistributed earnings of the foreign subsidiaries, as such earnings are considered to be permanently reinvested. Such earnings have been, and will continue to be, reinvested, but could become subject to additional tax, if they were remitted as dividends, loaned to the Company, or if the Company should sell its stock in the foreign subsidiaries. It is not practicable to determine the amount of additional tax, if any, that might be payable on the undistributed foreign earnings.

Valuation Allowance

As of December 31, 2019 and 2018, the Company had a valuation allowance of $51.9 million and $36.6 million, respectively, against certain deferred tax assets. The valuation allowance relates to the deferred tax assets of the Company’s U.S. entities, including federal and state tax attributes and timing differences, as well as the deferred tax assets of certain foreign subsidiaries. The increase in the valuation allowance during 2019 is primarily related to operating losses incurred during the year and the limitation on deductibility of interest expense. To the extent the Company determines that, based on the weight of available evidence, all or a portion of its valuation allowance is no longer necessary, the Company will recognize an income tax benefit in the period such determination is made for the reversal of the valuation allowance. If management determines that, based on the weight of available evidence, it is more-likely-than-not that all or a portion of the net deferred tax assets will not be realized; the Company may recognize income tax expense in the period such determination is made to increase the valuation allowance. It is possible that such reduction of or addition to the Company’s valuation allowance may have a material impact on the Company’s results from operations.

A summary of the deferred tax asset valuation allowance is as follows:

	Year Ended December 31, 2019			Year Ended December 31, 2018
Beginning Balance	$	36,595		$	22,513
Additions	$	15,622		$	22,636
Reductions		(322	)		(8,554	)
Ending Balance	$	51,895		$	36,595

Severance and Retention

12 Months Ended

Dec. 31, 2019

Restructuring And Related Activities [Abstract]

Severance and Retention

Note 14 – Severance and retention

In connection with the Company’s continued integration and realignment efforts following the 2016 acquisition of Kroll Ontrack, LLC, the Company recorded severance and retention expense of $1.4 million during the years ended December 31, 2019 and 2018, comprised of employee severance and other employee-related costs associated with a reduction in workforce of 33 and 47 employees for 2019 and 2018, respectively. Severance and retention expense are included in the Consolidated Statements of Comprehensive Loss as follows:

	Year Ended December 31, 2019		Year Ended December 31, 2018
Costs of revenues	$	301	$	8
General and administrative		567		799
Sales and marketing		516		616
Research and development		19		-
Total	$	1,403	$	1,423

The activity and balance of severance-related liabilities, which are recorded within Accounts payable and accrued expense in our Consolidated Balance Sheet, are as follows (in thousands):

Balance at December 31, 2017	$	1,071
Payments		(1,939	)
Expense		1,423
Balance at December 31, 2018	$	555
Payments		(1,600	)
Expense		1,403
Balance at December 31, 2019	$	358

Commitments and Contingencies

12 Months Ended

Dec. 31, 2019

Commitments And Contingencies Disclosure [Abstract]

Commitments and Contingencies

Note 15 – 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 December 31, 2019. The Company has four letters of credit totaling $0.9 million as additional security for lease guarantees related to four leased properties.

Related Parties

12 Months Ended

Dec. 31, 2019

Related Parties

Note 16 – Related parties

On December 22, 2015, the Company entered into a consulting agreement with Carlyle Investment Management, LLC, an affiliate of Carlyle, for advisory, consulting and other services in relation to the strategic and financial management of the Company. For each of the years ended December 31, 2019 and 2018, the Company recognized $1.0 million in management consulting fees, reflected within “General and administrative expenses” in the accompanying consolidated Statements of Comprehensive Loss. As of December 31, 2018, there was $2.3 million outstanding. In connection with the Business Combination, all previously accrued amounts were paid and the agreement was terminated.

In connection with the Business Combination, The Company assumed $200.0 million of Debentures of which $100.0 million are owed to affiliates of MGG Investment Group, an affiliate of Kevin Griffin, a director of the Company. For the year ended December 31, 2019, the Company recognized $0.4 million in interest expense related to the $100 million Debentures.

Subsequent Events

12 Months Ended

Dec. 31, 2019

Subsequent Events [Abstract]

Subsequent Events

Note 17 – Subsequent events

The Company has evaluated subsequent events through the dates on which this Form 10-K was filed, the date on which these financial statements were issued, and identified the below items for discussion.

On February 18, 2020 the Company issued an additional 3.5 million time-based options and 1 million performance/market-based restricted stock units to its employees under the 2019 Plan.

On March 25, 2020, the Company borrowed $29.0 million under its Revolving Credit Facility.

Organization, Business and Summary of Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2019

Organization Consolidation And Presentation Of Financial Statements [Abstract]

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 more than 40 locations in 19 countries, 10 data centers and 22 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 of 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 its subsidiaries. All significant intercompany accounts and transactions have been eliminated upon consolidation.

The Business Combination was accounted for as a reverse recapitalization (the "Recapitalization Transaction") in accordance with Accounting Standard Codification (“ASC”) 805, Business Combinations. For accounting and financial reporting purposes, LD Topco, Inc. is considered the acquirer based on facts and circumstances, including the following:

•

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 SEC 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; (iii) the assets and liabilities of LD Topco, Inc. at their historical cost; and (iv) KL Discovery Inc.’ 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 years ended December 31, 2019 and 2018, the Company did not have a single customer that represents more than five percent (5%) or more 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. Our foreign revenues, principally from businesses in the UK and Germany, totaled approximately $69.8 million in 2019 and $62.2 million in 2018. Our long-lived assets in foreign countries, principally in the UK and Germany, totaled approximately $21.8 million at December 31, 2019 and $20.6 million at December 31, 2018.

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.”

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” on 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 amount 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.

A rollforward of the allowance for doubtful accounts is presented below (in thousands):

Balance at December 31, 2017	$	4,182
Charged to/reversed from expense		2,226
Charged to/from other accounts		—
Deductions (write offs)		(844	)
Balance at December 31, 2018	$	5,564
Charged to/reversed from expense		3,104
Charged to/from other accounts		—
Deductions (write offs)		(1,182	)
Balance at December 31, 2019	$	7,486

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 $18.6 million and $24.7 million for the years ended December 31, 2019 and 2018, respectively, and includes amortization of assets recorded under capital leases.

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 the “Intangible assets, net line” in the Company’s Consolidated Balance Sheets and totaled $13.5 million and $7.6 million, net of accumulated amortization, as of December 31, 2019 and 2018, respectively.

Intangible assets and other long-lived assets

The Company evaluates the recoverability of its long-lived assets, including finite-lived intangible assets, for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of any asset to future net undiscounted cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured as the difference between the fair value of the asset compared to its carrying amount. No impairment losses were recognized in the accompanying consolidated financial statements.

Amortization expense totaled $31.8 million and $30.0 million for the years ended December 31, 2019 and 2018, respectively; $11.3 million and $13.2 million of which was classified as part of the “Cost of revenues” line in the Company’s Consolidated Statements of Comprehensive Loss.

The Company allocates the purchase price of an acquisition to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values at the acquisition date. The Company recognizes as goodwill the amount by which the purchase price of an acquired entity exceeds the net of the fair values assigned to the assets acquired and liabilities assumed. In determining the fair values of assets acquired and liabilities assumed, the Company uses various recognized valuation methods including the income and market approaches. Further, the Company makes assumptions within certain valuation techniques, including discount rates, royalty rates, and the amount and timing of future cash flows. The Company records the net assets and results of operations of an acquired entity in the financial statements from the acquisition date. The Company initially performs these valuations based upon preliminary estimates and assumptions by management or independent valuation specialists under its supervision, where appropriate, and make revisions as estimates and assumptions are finalized. The Company expenses acquisition-related costs as they are incurred.

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.

In January 2017, Financial Accounting Standard Board (“FASB”) issued Accounting Standard Update (“ASU”) 2017-04 which simplifies the subsequent measurement of goodwill to eliminate Step 2 from the goodwill impairment test, removing the need to determine the implied fair value of goodwill and comparing it to the carrying amount of that goodwill to measure the impairment loss, if any. The Company has early adopted ASU 2017-04 during the fourth quarter of 2017.

Goodwill impairment exists when the estimated fair value of the reporting unit is less than its carrying value. If impairment exists, the carrying value of the goodwill is reduced by the excess through an impairment charge recorded in the Company’s statements of operations. The process of evaluating the potential impairment of goodwill is subjective and requires significant judgment at many points during the analysis.

The fair value of each reporting unit is estimated using a combination of a discounted cash flow (“DCF”) analysis and market-based valuation methodologies such as comparable public company trading values and values observed in recent business combinations. Determining fair value requires the exercise of significant judgments, including the amount and timing of expected future cash flows, long-term growth rates, discount rates and relevant comparable public company earnings multiples and relevant transaction multiples. The cash flows employed in the DCF analyses are based on the Company’s best estimate of future sales, earnings and cash flows after considering factors such as general market conditions, changes in working capital, long term business plans and recent operating performance. The carrying value of the reporting unit includes the assets and liabilities employed in its operations and goodwill.

Accordingly, the Company has not identified any indicators of impairment, nor have any impairment charges been recorded related to goodwill resulting from the annual impairment test.

The following table provides a rollforward of the carrying amount of goodwill (in thousands):

Balance at December 31, 2017	$	395,062
Foreign currency translation		(895	)
Balance at December 31, 2018		394,167
Acquisitions		263
Foreign currency translation		741
Balance at December 31, 2019	$	395,171

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 the Consolidated Balance Sheets within “Other (current) assets.”

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.

Revenues are recognized when we satisfy a performance obligation by transferring goods or services promised in a contract to a customer, in an amount that reflects the consideration that we expect to receive in exchange for those services. Performance obligations in our contracts represent distinct or separate service streams that we provide to our customers.

We evaluate our 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 year ended December 31, 2019 (in thousands):

	Year Ended December 31, 2019
eDiscovery services	$	215,560
Managed review		50,290
Legal technology services		265,850
Data recovery		46,204
Total revenue	$	312,054

Share-based compensation

The Company measures and recognizes compensation expense for all share-based awards to employees based on estimated grant date fair values on a straight-line basis over the requisite service period. The Company uses the Black-Scholes valuation model, depending on terms, facts and circumstances of each share-based award.

Advertising

Advertising costs consist of marketing, advertising through print and other media, professional event sponsorship and public relations. These costs are expensed as incurred. Advertising costs totaled $7.1 million and $7.4 million for the years ended December 31, 2019 and 2018, respectively. Advertising costs are reflected within “Sales and marketing” in the accompanying Consolidated Statements of Comprehensive Loss.

Research and development expense

Costs incurred in the research and development of the Company’s technologies primarily consist of developer salaries. Research and development expenses were $5.9 million and $7.1 million for the years ended December 31, 2019 and 2018, respectively.

Income taxes

Income taxes are accounted for using the asset and liability method. Deferred income taxes are provided for temporary differences in recognizing certain income, expense and credit items for financial reporting purposes and tax reporting purposes. Such deferred income taxes primarily relate to the difference between the tax bases of assets and liabilities and their financial reporting amounts. Deferred tax assets and liabilities are measured by applying enacted statutory tax rates applicable to the future years in which deferred tax assets or liabilities are expected to be settled or realized. Excess tax benefits and tax deficiencies are recognized in the income tax provision in the period in which they occur.

The Company records a valuation allowance when it determines, based on available positive and negative evidence, that it is more-likely-than-not that some portion, or all its deferred tax assets will not be realized. The Company determines the realizability of its deferred tax assets primarily based on the reversal of existing taxable temporary differences and projections of future taxable income (exclusive of reversing temporary differences and carryforwards). In evaluating such projections, the Company considers its history of profitability, the competitive environment, and general economic conditions. In addition, the Company considers the time frame over which it would take to utilize the deferred tax assets prior to their expiration.

For certain tax positions, the Company uses a more-likely-than-not threshold based on the technical merits of the tax position taken. Tax positions that meet the more-likely-than-not recognition threshold are measured at the largest amount of tax benefits determined on a cumulative probability basis, which are more-likely-than-not to be realized upon ultimate settlement in the financial statements. The Company’s policy is to recognize interest and penalties related to income tax matters in income tax expense. As of December 31, 2019 and December 31, 2018, the Company is not aware of any material uncertain tax positions requiring adjustment to or disclosure in the financial statements.

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 year. Diluted net loss per common share is determined by dividing net loss by the weighted average number of common shares outstanding during the year, 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 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 annual financial statements of the Company. The impact of the stock exchange is also shown on the Company’s Statements of Stockholders’ Equity.”

Recently Adopted Accounting Standards and Accounting Standards Not Yet Adopted

Recently Adopted Accounting Standards

The Company adopted on January 1, 2018 ASU 2016-09, Compensation – Stock Compensation (Topic 718) (ASU 2016-09). This ASU provides amended guidance which simplifies the accounting for share-based payment transactions involving multiple aspects of the accounting for share-based transactions, including income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The Company now recognizes forfeitures of stock options as they occur. The impact of the adoption of ASU 2016-09 was $0.04 million which was not material to the Company’s consolidated financial statements.

In October 2016, the FASB issued ASU “Accounting for Income Taxes: Intra-Entity Transfers of Assets Other than Inventory” (Topic 740). ASU 2016-16 requires companies to recognize the income tax effects of intercompany sales of assets other than inventory when the transfer occurs. This standard was effective for the Company beginning January 1, 2019 and the adoption did not have a material impact on its consolidated financial statements.

We adopted ASC 606, effective January 1, 2019, utilizing the modified retrospective method. Under this method of adoption, a company is required to recognize the cumulative effect of initially applying the new revenue standard as an adjustment to the opening balance of accumulated deficit. The adoption of ASC 606 did not result in an adjustment to the opening balance of accumulated deficit.

As an emerging growth company, 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, therefore, the quarters presented in future fillings will not be directly comparable.

When we adopted ASC 606, we applied the following expedients and exemptions, which are allowed by the standard, to our prior period Financial Statements and disclosures:

•

We used the transaction price at the date of contract completion for our contracts that had variable consideration and were completed before January 1, 2019.

•

We considered the aggregate effect of all contract modifications that occurred before January 1, 2019 when: (1) identifying satisfied and unsatisfied performance obligations; (2) determining the transaction price; and (3) allocating the transaction price to the satisfied and unsatisfied performance obligations.

•

We did not: (1) disclose the amount of the transaction price that we allocated to remaining performance obligations; or (2) include an explanation of when we expect to recognize the revenue allocated to remaining performance obligations.

In August 2018, the FASB issued Accounting Standards Update No. 2018-15, Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (“ASU 2018-15”). ASU 2018-15 requires customers in a hosting arrangement that is a service contract to follow existing internal-use software guidance to determine which implementation costs to capitalize and which costs to expense. Under this model, customers would need to determine the nature of the implementation costs and the project stage in which they are incurred to determine which costs to capitalize or expense. Customers would be required to amortize the capitalized implementation costs over the term of the hosting arrangement, which might extend beyond the noncancelable period if there are options to extend or terminate. ASU 2018-15 specifies the financial statement presentation of capitalized implementation costs and related amortization in addition to required disclosures for material capitalized implementation costs related to hosting arrangements that are service contracts. The standard is effective for interim and annual periods beginning January 1, 2020. Early adoption is permitted. Entities can choose to adopt this guidance prospectively to eligible costs incurred on or after the date the guidance is first applied, or to adopt the guidance retrospectively. The Company is implemented this standard beginning on January 1, 2019 and this implementation did not have a material impact on its consolidated financial position, results of operations, and cash flows.

Accounting Standards Not Yet Adopted

In connection with the transaction with Pivotal (see Note 2), the Company elected to be an Emerging Growth Company, as defined in the Jumpstart Our Business Startups Act of 2012, or 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 FASB issued ASU No. 2016-02, Leases (Topic 842), which requires lessees to recognize on the balance sheet a right-of-use asset, representing their right to use the underlying asset for the lease term, and a lease liability for all leases with terms greater than 12 months. The guidance also requires qualitative and quantitative disclosures designed to assess the amount, timing and uncertainty of cash flows arising from leases. The standard requires the use of a modified retrospective transition approach, which includes a number of optional practical expedients that entities may elect to apply. This standard is effective for the Company for fiscal years beginning after December 15, 2020, and interim periods within fiscal years beginning after December 15, 2021, and the Company is currently evaluating the impact that Topic 842 will have on its consolidated financial statements.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (“ASC 326”): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). This guidance is intended to introduce a revised approach to the recognition and measurement of credit losses, emphasizing an updated model based on expected losses rather than incurred losses. The Company is required to adopt ASC 326 effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, and the Company is currently evaluating the impact that Topic 326 will have on its consolidated financial statements.

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which simplifies the accounting for income taxes by removing certain exceptions to the general principles for income taxes. The new standard is effective for fiscal years and interim periods within those fiscal years, beginning after December 15, 2020. Early adoption, including the adoption in any interim period, is permitted for all entities. The Company is currently evaluating the potential impact of adoption of the pronouncement on its consolidated financial statements but does not expect the impact to be material.

Organization, Business and Summary of Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2019

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Rollforward of Allowance for Doubtful Accounts

A rollforward of the allowance for doubtful accounts is presented below (in thousands):

Balance at December 31, 2017	$	4,182
Charged to/reversed from expense		2,226
Charged to/from other accounts		—
Deductions (write offs)		(844	)
Balance at December 31, 2018	$	5,564
Charged to/reversed from expense		3,104
Charged to/from other accounts		—
Deductions (write offs)		(1,182	)
Balance at December 31, 2019	$	7,486

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

Rollforward of Carrying Amount of Goodwill

The following table provides a rollforward of the carrying amount of goodwill (in thousands):

Balance at December 31, 2017	$	395,062
Foreign currency translation		(895	)
Balance at December 31, 2018		394,167
Acquisitions		263
Foreign currency translation		741
Balance at December 31, 2019	$	395,171

Summary of Revenue from Contracts with Customers

The following table summarizes revenue from contracts with customers for the year ended December 31, 2019 (in thousands):

	Year Ended December 31, 2019
eDiscovery services	$	215,560
Managed review		50,290
Legal technology services		265,850
Data recovery		46,204
Total revenue	$	312,054

Acquisitions (Tables)

12 Months Ended

Dec. 31, 2019

Business Combinations [Abstract]

Summary of Net Proceeds from Business Combination

The net proceeds from the Business Combination, as reported in the consolidated statements of cash flows for the year ended December 31, 2019 within the financing section are summarized below:

Gross cash received by KLDiscovery from Business Combination	$	201,657
Less: fees to underwriters		(6,500	)
Less: other transaction costs		(8,654	)
Net cash received by KLDiscovery from Business Combination	$	186,503

Fair Value Measurements (Tables)

12 Months Ended

Dec. 31, 2019

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 years ended December 31, 2019 and 2018 (in thousands):

Balance at December 31, 2017	$	2,380
Payment of contingent consideration		(2,380	)
Balance at December 31, 2018		—
Contingent consideration		774
Change in fair value of contingent consideration		48
Balance at December 31, 2019	$	822

Intangible Assets (Tables)

12 Months Ended

Dec. 31, 2019

Goodwill And Intangible Assets Disclosure [Abstract]

Schedule of Intangible Assets

Intangible assets consist of the following (in thousands):

Description	Weighted Average Remaining Useful Life in Years		December 31, 2019			December 31, 2018
Trademark and tradenames		6.5	$	66,311		$	66,219
Accumulated amortization				(21,504	)		(14,340	)
Trademark and tradenames, net				44,807			51,879
Developed technology		3.3		71,327			52,891
Accumulated amortization				(36,838	)		(23,264	)
Developed technology, net				34,489			29,627
Non-compete agreements		2.0		1,467			1,402
Accumulated amortization				(1,242	)		(992	)
Non-compete agreements, net				225			410
Customer relationships		6.9		95,693			94,285
Accumulated amortization				(44,646	)		(31,922	)
Customer relationships, net				51,047			62,363
Intangible assets, net of amortization			$	130,568		$	144,279

Schedule of Future Amortization of Intangible Assets

Future amortization of intangible assets is as follows (in thousands):

December 31,	Amount
2020	$	29,435
2021		25,138
2022		20,925
2023		15,177
2024		10,877
Thereafter		22,772
In process		6,244
Total	$	130,568

Accrued Expenses (Tables)

12 Months Ended

Dec. 31, 2019

Payables And Accruals [Abstract]

Schedule of Accrued Expenses

Accrued expenses consisted of the following (in thousands):

	December 31,
	2019		2018
Accrued expenses:
Accrued interest	$	7,000	$	5,783
Accrued salaries		9,509		16,222
Current taxes payable		535		327
Other accrued expenses		2,847		2,109
Total	$	19,891	$	24,441

Leasing Arrangements (Tables)

12 Months Ended

Dec. 31, 2019

Leases [Abstract]

Schedule of Future Minimum Payments for Operating and Capital Lease Obligations

For years subsequent to December 31, 2019, 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	$	1,586		$	12,057
2021		1,586			6,970
2022		1,346			5,709
2023		722			5,290
2024		—			5,000
Thereafter		—			4,416
Total	$	5,240		$	39,442
Less: interest on lease obligations		(726	)
Net amount		4,514
Less: current portion		(1,587	)
Non-current	$	2,927

Long Term Debt (Tables)

12 Months Ended

Dec. 31, 2019

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):

	December 31,
	2019			2018
First lien facility due 2022		306,000			323,000
Second lien facility due 2023		—			125,000
Convertible debenture notes due 2024		200,000			—
Total debt		506,000			448,000
Less: unamortized original issue discount		(19,806	)		(13,043	)
Less: unamortized debt issuance costs		(5,573	)		(9,538	)
Total debt, net		480,621			425,419
Current portion of debt		17,000			17,000
Less: current portion of unamortized original issue discount		(3,687	)		(2,678	)
Less: current portion of unamortized debt issuance costs		(1,624	)		(1,967	)
Total current portion of debt, net		11,689			12,355
Total long term debt, net	$	468,932		$	413,064

Summary of Future Principal Payments, Including in Kind Interest

Future principal payments, including in kind interest, are as follows (in thousands):

December 31,	Amount
2020	$	17,000
2021		17,000
2022		272,000
2023		-
2024		277,287
Thereafter		—
Total	$	583,287

Summary of Future Amortization of Debt Issuance Costs and Original Issue Discount

The future amortization of debt issuance costs and original issue discount related to the 2016 Credit Agreement, the revolver and Convertible Debentures are as follows (in thousands):

December 31,	Amount
2020	$	5,311
2021		5,907
2022		6,618
2023		3,527
2024		4,016
Total	$	25,379

- Definition

Tabular disclosure of long-debt instruments or arrangements, including identification, terms, features, collateral requirements and other information necessary to a fair presentation. These are debt arrangements that originally required repayment more than twelve months after issuance or greater than the normal operating cycle of the entity, if longer.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
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-Name Accounting Standards Codification
-Topic 210
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.5-02.22)
-URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682

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-Name Accounting Standards Codification
-Topic 835
-SubTopic 30
-Section 45
-Paragraph 1A
-URI http://asc.fasb.org/extlink&oid=114775744&loc=d3e28541-108399

Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef
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-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
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-URI http://asc.fasb.org/extlink&oid=109259400&loc=d3e21506-112644

Reference 4: http://fasb.org/us-gaap/role/ref/legacyRef
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-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08.(e),(f))
-URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690

Reference 5: http://fasb.org/us-gaap/role/ref/legacyRef
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-Name Accounting Standards Codification
-Topic 835
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-Section 45
-Paragraph 2
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Reference 6: http://fasb.org/us-gaap/role/ref/legacyRef
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-Topic 505
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Reference 7: http://fasb.org/us-gaap/role/ref/legacyRef
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Reference 8: http://fasb.org/us-gaap/role/ref/legacyRef
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-Name Accounting Standards Codification
-Topic 942
-SubTopic 470
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=75038535&loc=d3e64711-112823

Reference 9: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 835
-SubTopic 30
-Section 55
-Paragraph 8
-URI http://asc.fasb.org/extlink&oid=114775985&loc=d3e28878-108400

Reference 10: http://fasb.org/us-gaap/role/ref/legacyRef
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-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=109259400&loc=d3e21475-112644

+ Details

Equity Incentive Plan (Tables)

12 Months Ended

Dec. 31, 2019

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
	Year Ended December 31, 2019		Year Ended December 31, 2018		Year Ended December 31, 2019		Year Ended December 31, 2018

Total fair value of stock options granted	$	2,492	$	3,473	$	974	$	-
Total fair value of options vested		1,439		1,924		-		-

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:

	Year Ended December 31, 2019			Year Ended December 31, 2018
Expected volatility	36.92 - 37.70%			35.51 - 36.39%
Expected term (in years)	6-6.5				6.5
Dividend yield		0	%		0	%
Risk free interest rate	1.79 - 2.89%			2.59 - 2.89%

Stock Based Compensation Expense Included In Consolidated Statements of Comprehensive Loss

Stock-based compensation expense is included in the Consolidated Statements of Comprehensive Loss within the following line items (in thousands):

	December 31,
	2019		2018
Cost of revenues	$	573	$	869
General and administrative		1,161		1,023
Research and development		87		14
Sales and marketing		444		219
Total	$	2,265	$	2,125

2019 Plan [Member]

Schedule of 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)

Balance at December 31, 2018		-
Granted		514,710	$	9.90
Forfeited		-
Expired		-
Cancelled		-
Balance at December 31, 2019		514,710	$	9.90		10.0	$	—
Vested and expected to vest		514,710	$	9.90		10.0	$	—
Exercisable		—	$	—		10.0	$	—

2016 Plan [Member]

Schedule of Stock Option Activity

The following table summarizes the Company’s stock option activity under the 2016 Plan:

Description	Options Outstanding			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value (1)
Balance at December 31, 2017		410,310		$	100		8.8	$	—
Granted		84,270			100
Forfeited		(74,255	)		100
Expired		(8,845	)		100
Balance at December 31, 2018		411,480		$	100		8.3	$	—
Granted		67,050		$	90
Forfeited		(32,860	)	$	99
Expired		(8,640	)	$	99
Cancelled		(437,030	)	$	100
Balance at December 31, 2019		—
Vested and expected to vest		—		$	—		—	$	—
Exercisable		—		$	—		—	$	—

(1)	Aggregate intrinsic value represents the difference between the estimated fair value of the underlying common stock and the exercise price of outstanding, in-the-money options. There were no in-the-money options as of December 31, 2019 and 2018.

Earnings (Loss) Per Share (Tables)

12 Months Ended

Dec. 31, 2019

Earnings Per Share [Abstract]

Summary of Basic and Diluted Earnings (Loss) Per Share

The following table summarizes basic and diluted earnings (loss) per share or the years ended December 31, 2019 and 2018 (in thousands, except per share amounts):

	Year Ended December 31, 2019			Year Ended December 31, 2018
Basic and diluted loss per share:
Net loss	$	(54,014	)	$	(67,739	)
Weighted average common shares outstanding - basic		42,425,295			40,382,578
Dilutive effect of potentially issuable shares		—			—
Weighted average common shares outstanding - diluted		42,425,295			40,382,578
Basic loss per share	$	(1.27	)	$	(1.68	)
Dilutive effect of potentially issuable shares		—			—
Diluted loss per share	$	(1.27	)	$	(1.68	)
Common share equivalents excluded due to anti-dilutive effect		—			—

Income Taxes (Tables)

12 Months Ended

Dec. 31, 2019

Income Tax Disclosure [Abstract]

Schedule of Components of Income Tax Expense

The components of income tax expense for the years ended December 31, 2019 and 2018 are presented below (in thousands):

	Year Ended December 31, 2019			Year Ended December 31, 2018
Current
Federal	$	(37	)	$	—
State		61			—
Foreign		447			2,808
Deferred
Federal		332			(4,049	)
State		705			49
Foreign		(789	)		(2,549	)
Total income tax (benefit) provision	$	719		$	(3,741	)

Schedule of Loss Before Income Taxes

The actual income tax expense amounts for the years ended December 31, 2019 and 2018 differed from the expected tax amounts computed by applying the U.S. federal corporate income tax rate of 21% for 2019 and 2018 to the amounts of loss before income taxes as presented below (in thousands):

	Year Ended December 31, 2019			Year Ended December 31, 2018
Pre-tax book loss	$	(53,295	)	$	(71,480	)
Tax at Federal statutory rate of 21% in 2019 and 2018		(11,192	)		(15,011	)
Stock-based compensation		1,060			-
State taxes		766			49
Foreign rate differential		(871	)		(713	)
Deferred rate change		-			(80	)
TCJA impact		-			(7,712	)
Other adjustments		(1,707	)		1,578
Valuation allowance		12,663			18,148
Total income tax (benefit) provision	$	719		$	(3,741	)

Components of Loss Before Income Taxes from Continuing Operations

The domestic and foreign components of loss before income taxes from continuing operations for the years ended December 31, 2019 and 2018 are as follows (in thousands):

	Year Ended December 31, 2019			Year Ended December 31, 2018
Domestic	$	(52,438	)	$	(65,356	)
Foreign		(857	)		(6,124	)
Total	$	(53,295	)	$	(71,480	)

Summary of Tax Effects of Temporary Differences

The tax effects of temporary differences at December 31, 2019 and 2018 are as follows (in thousands):

	Year Ended December 31, 2019			Year Ended December 31, 2018
Net operating losses and other carryforwards	$	41,299		$	38,010
Interest expense carryforward		20,070			9,276
Property and equipment		2,221			—
Accrued expenses		82			701
Allowance for doubtful accounts		1,517			1,194
Stock-based compensation		—			916
Other		633			1,028
Deferred tax asset		65,822			51,125
Valuation allowance		(51,895	)		(36,595	)
Total deferred tax assets, net of valuation allowance		13,927			14,530
Property and equipment		—			(510	)
Intangible assets		(20,098	)		(19,283	)
Prepaid expenses		(73	)		(812	)
Other		(50	)		—
Deferred tax liability		(20,221	)		(20,605	)
Net deferred tax liability	$	(6,294	)	$	(6,075	)

Summary of Deferred Tax Asset Valuation Allowance

A summary of the deferred tax asset valuation allowance is as follows:

	Year Ended December 31, 2019			Year Ended December 31, 2018
Beginning Balance	$	36,595		$	22,513
Additions	$	15,622		$	22,636
Reductions		(322	)		(8,554	)
Ending Balance	$	51,895		$	36,595

Severance and Retention (Tables)

12 Months Ended

Dec. 31, 2019

Restructuring And Related Activities [Abstract]

Summary of Severance and Retention Expense

Severance and retention expense are included in the Consolidated Statements of Comprehensive Loss as follows:

	Year Ended December 31, 2019		Year Ended December 31, 2018
Costs of revenues	$	301	$	8
General and administrative		567		799
Sales and marketing		516		616
Research and development		19		-
Total	$	1,403	$	1,423

Summary of Severance Related Liabilities within Accounts Payable and Accrued Expense

The activity and balance of severance-related liabilities, which are recorded within Accounts payable and accrued expense in our Consolidated Balance Sheet, are as follows (in thousands):

Balance at December 31, 2017	$	1,071
Payments		(1,939	)
Expense		1,423
Balance at December 31, 2018	$	555
Payments		(1,600	)
Expense		1,403
Balance at December 31, 2019	$	358

Organization, Business and Summary of Significant Accounting Policies - Additional Information (Detail)		12 Months Ended
	Dec. 19, 2019 shares	Dec. 31, 2019 USD ($) Location Country Datacenter Lab Segment Customer	Dec. 31, 2018 USD ($) Customer
Organization Business And Summary Of Significant Accounting Policies [Line Items]
Number of countries \| Country		19
Number of data centers \| Datacenter		10
Number of data recovery labs \| Lab		22
Date of incorporation		Aug. 02, 2018
Number of business segment \| Segment		1
Revenues		$ 312,054,000	$ 296,282,000
Depreciation expense		18,600,000	24,700,000
Impairment losses recognized		0
Amortization expense		$ 31,800,000	30,000,000
Number of reporting unit \| Segment		1
Research and development		$ 5,945,000	7,100,000
ASU 2016-09 [Member]
Organization Business And Summary Of Significant Accounting Policies [Line Items]
Impact of adoption of recent accounting pronouncements			40,000
Pivotal Acquisition Corp. [Member]
Organization Business And Summary Of Significant Accounting Policies [Line Items]
Business combination, aggregate shares of common stock received by stockholders \| shares	34,800,000
Business combination, outstanding shares \| shares	3,707,564
Business combination, stock exchange ratio \| shares	9.3862
Cost of Revenues [Member]
Organization Business And Summary Of Significant Accounting Policies [Line Items]
Amortization expense		11,300,000	13,200,000
Sales and Marketing [Member]
Organization Business And Summary Of Significant Accounting Policies [Line Items]
Advertising costs		7,100,000	7,400,000
Internal-Use Software Development [Member]
Organization Business And Summary Of Significant Accounting Policies [Line Items]
Capitalized software costs		13,500,000	7,600,000
UK and Germany [Member]
Organization Business And Summary Of Significant Accounting Policies [Line Items]
Revenues		69,800,000	62,200,000
Long-lived assets		$ 21,800,000	$ 20,600,000
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
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
Minimum [Member]
Organization Business And Summary Of Significant Accounting Policies [Line Items]
Number of locations \| Location		40
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 Summary of Significant Accounting Policies - Rollforward of Allowance for Doubtful Accounts (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Allowance for Doubtful Accounts [Roll Forward]
Balance at beginning	$ 5,564	$ 4,182
Charged to/reversed from expense	3,104	2,226
Deductions (write offs)	(1,182)	(844)
Balance at ending	$ 7,486	$ 5,564

Organization, Business and Summary of Significant Accounting Policies - Estimated Useful Lives of Assets (Detail)	12 Months Ended
	Dec. 31, 2019
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 Summary of Significant Accounting Policies - Rollforward of Carrying Amount of Goodwill (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Goodwill [Roll Forward]
Balance at beginning	$ 394,167	$ 395,062
Acquisitions	263
Foreign currency translation	741	(895)
Balance at end	$ 395,171	$ 394,167

Organization, Business and Summary of Significant Accounting Policies - Summary of Revenue from Contracts with Customers (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Disaggregation Of Revenue [Line Items]
Revenues	$ 312,054	$ 296,282
eDiscovery Services [Member]
Disaggregation Of Revenue [Line Items]
Revenues	215,560
Managed Review [Member]
Disaggregation Of Revenue [Line Items]
Revenues	50,290
Legal Technology Services [Member]
Disaggregation Of Revenue [Line Items]
Revenues	265,850
Data Recovery [Member]
Disaggregation Of Revenue [Line Items]
Revenues	$ 46,204

Acquisitions - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Millions		12 Months Ended
	Dec. 19, 2019	Dec. 31, 2019	Dec. 18, 2019
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	29,500,000
Exercise price per share	$ 11.50		$ 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

Acquisitions - Summary of Net Proceeds from Business Combination (Detail) $ in Thousands	12 Months Ended
	Dec. 31, 2019 USD ($)
Business Acquisition [Line Items]
Net cash received by KLDiscovery from Business Combination	$ 186,503
Pivotal Acquisition Corp. [Member]
Business Acquisition [Line Items]
Gross cash received by KLDiscovery from Business Combination	201,657
Less: fees to underwriters	(6,500)
Less: other transaction costs	(8,654)
Net cash received by KLDiscovery from Business Combination	$ 186,503

Fair Value Measurements - Additional Information (Detail) $ in Millions	12 Months Ended
	Dec. 31, 2019 USD ($) Company
Fair Value Disclosures [Abstract]
Fair value of future expected acquisition-related contingent consideration obligations	$ 0.8
Number of companies acquired \| Company	3
Business acquisition, total consideration	$ 5.5
Business acquisition, consideration in cash	2.0
Business acquisition, deferred payments	1.5
Business acquisition, stock	1.2
Business acquisition, future earnouts	$ 0.8

Fair Value Measurements - Summary of Reconciliation of Liabilities Measured at Fair Value Using Significant Unobservable Inputs (Level 3) (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Balance at beginning		$ 2,380
Payment of contingent consideration		$ (2,380)
Contingent consideration	$ 774
Change in fair value of contingent consideration	48
Balance at ending	$ 822

Intangibles Assets - Schedule of Intangible Assets (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Finite Lived Intangible Assets [Line Items]
Intangible assets, net of amortization	$ 130,568	$ 144,279
Trademarks and Trade Names [Member]
Finite Lived Intangible Assets [Line Items]
Weighted Average Remaining Useful Life in Years	6 years 6 months
Gross intangible assets	$ 66,311	66,219
Accumulated amortization	(21,504)	(14,340)
Intangible assets, net of amortization	$ 44,807	51,879
Developed Technology Rights [Member]
Finite Lived Intangible Assets [Line Items]
Weighted Average Remaining Useful Life in Years	3 years 3 months 18 days
Gross intangible assets	$ 71,327	52,891
Accumulated amortization	(36,838)	(23,264)
Intangible assets, net of amortization	$ 34,489	29,627
Non-compete Agreements [Member]
Finite Lived Intangible Assets [Line Items]
Weighted Average Remaining Useful Life in Years	2 years
Gross intangible assets	$ 1,467	1,402
Accumulated amortization	(1,242)	(992)
Intangible assets, net of amortization	$ 225	410
Customer Relationships [Member]
Finite Lived Intangible Assets [Line Items]
Weighted Average Remaining Useful Life in Years	6 years 10 months 24 days
Gross intangible assets	$ 95,693	94,285
Accumulated amortization	(44,646)	(31,922)
Intangible assets, net of amortization	$ 51,047	$ 62,363

Intangibles Assets - Schedule of Future Amortization of Intangible Assets (Detail) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Finite Lived Intangible Assets Future Amortization Expense [Abstract]
2020	$ 29,435
2021	25,138
2022	20,925
2023	15,177
2024	10,877
Thereafter	22,772
In process	6,244
Intangible assets, net of amortization	$ 130,568	$ 144,279

Accrued Expenses - Schedule of Accrued Expenses (Detail) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Accrued expenses:
Accrued interest	$ 7,000	$ 5,783
Accrued salaries	9,509	16,222
Current taxes payable	535	327
Other accrued expenses	2,847	2,109
Total	$ 19,891	$ 24,441

Leasing Arrangements - Additional Information (Detail) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Leases [Abstract]
Operating and capital lease agreements lease expiring year	2027
Rent expense	$ 14.7	$ 13.0
Amortization expense for capital leases	$ 0.7	$ 0.4

Leasing Arrangements - Schedule of Future Minimum Payments for Operating and Capital Lease Obligations (Detail) $ in Thousands	Dec. 31, 2019 USD ($)
Capital Leases
2020	$ 1,586
2021	1,586
2022	1,346
2023	722
Total	5,240
Less: interest on lease obligations	(726)
Net amount	4,514
Less: current portion	(1,587)
Non-current	2,927
Operating Leases
2020	12,057
2021	6,970
2022	5,709
2023	5,290
2024	5,000
Thereafter	4,416
Total	$ 39,442

Long Term Debt - Summary of Components of Long-term Debt (Detail) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Debt Instrument [Line Items]
Total debt	$ 506,000	$ 448,000
Less: unamortized original issue discount	(19,806)	(13,043)
Less: unamortized debt issuance costs	(5,573)	(9,538)
Total debt, net	480,621	425,419
Current portion of debt	17,000	17,000
Less: current portion of unamortized original issue discount	(3,687)	(2,678)
Less: current portion of unamortized debt issuance costs	(1,624)	(1,967)
Total current portion of debt, net	11,689	12,355
Long-term debt, net	468,932	413,064
First Lien Facility Due 2022
Debt Instrument [Line Items]
Total debt	306,000	323,000
Second Lien Facility Due 2023
Debt Instrument [Line Items]
Total debt		$ 125,000
Convertible Debenture Notes Due 2024
Debt Instrument [Line Items]
Total debt	$ 200,000

Long Term Debt - Additional Information (Detail) - USD ($)			12 Months Ended
	Dec. 19, 2019	Dec. 09, 2016	Dec. 31, 2019	Dec. 31, 2018
Debt Instrument [Line Items]
Loss on extinguishment of debt			$ 7,203,000
Mandatory prepayment amount			0	$ 0
Accretion of original issue discount			2,700,000	2,500,000
Amortization of debt issuance costs			2,100,000	1,800,000
2016 Credit Agreement
Debt Instrument [Line Items]
Debt closing fees			13,600,000
Deferred closing fees		$ 600,000
2016 Credit Agreement \| Revolving Loan Commitment
Debt Instrument [Line Items]
Maximum borrowing capacity			$ 30,000,000
Loan maturing date			Dec. 09, 2021
Outstanding loan amount			$ 0	$ 0
Available borrowing capacity			29,100,000
2016 Credit Agreement \| Letter of Credit [Member]
Debt Instrument [Line Items]
Outstanding loan amount			$ 900,000
LIBOR \| 2016 Credit Agreement \| Revolving Loan Commitment
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. 09, 2022
Payments for loans			$ 2,100,000
Debt instrument, date of first required payment			Mar. 31, 2017
Quarterly principal payments increase			$ 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 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			$ 306,000,000	$ 323,000,000
First Lien Facility \| 2016 Credit Agreement
Debt Instrument [Line Items]
Original issue discount		11,900,000
First Lien Facility \| Adjusted Eurocurrency Rate
Debt Instrument [Line Items]
Loan variable interest rate			2.61463%	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. 09, 2023
Term loan balloon payment			$ 125,000,000
Term loan interest rate per annum during period			10.00%	10.00%
Loan variable interest rate			0.00%	2.61463%
Term loan balance due			$ 0	$ 125,000,000
Loss on extinguishment of debt			$ 7,200,000
Second Lien Facility \| 2016 Credit Agreement
Debt Instrument [Line Items]
Original issue discount		$ 6,300,000
Second Lien Facility \| Term Loan
Debt Instrument [Line Items]
Loan variable interest rate			1.00%
8% Convertible Debentures Due 2024 [Member]
Debt Instrument [Line Items]
Term loan maturity date	Dec. 19, 2024
Debt principal amount	$ 200,000,000
Debt interest rate	8.00%
Debt interest rate in cash	4.00%
Debt interest rate in kind	4.00%
Debt periodic payment			The Debentures will 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%
Original issue discount	$ 13,700,000
Deferred closing fees	$ 900,000

Long Term Debt - Summary of Future Principal Payments, Including in Kind Interest (Detail) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Debt Instrument [Line Items]
Total debt, net	$ 480,621	$ 425,419
Kind Interest
Debt Instrument [Line Items]
2020	17,000
2021	17,000
2022	272,000
2024	277,287
Total debt, net	$ 583,287

Long Term Debt - Summary of Future Amortization of Debt Issuance Costs and Original Issue Discount (Detail) - 2016 Credit Agreement $ in Thousands	12 Months Ended
	Dec. 31, 2019 USD ($)
Debt Instrument [Line Items]
2020	$ 5,311
2021	5,907
2022	6,618
2023	3,527
2024	4,016
Total	$ 25,379

Employee Benefit Plan - Additional Information (Detail) - 401(k) plan [Member] - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Defined Benefit Plan Disclosure [Line Items]
Defined contribution plan, description	The Company’s 401(k) plan covers employees who are at least 21 years of age, have completed one year of employment and worked a minimum of 1,000 hours. Employees may elect to defer a percentage of their salary up to the maximum allowed under the Internal Revenue Service Code. The Company makes matching contributions to its 401(k) plan equal to 100% of the first 3% of salary deferred plus 50% of the next 2% of an employee’s contribution for a total maximum Company match of 4% of the salary deferred by the employee, subject to Internal Revenue Service Code limitations.
Defined contribution plan, employee eligibility age	21 years
Defined contribution plan, minimum service period required for eligibility	1 year
Defined contribution plan, cost	$ 3.7	$ 2.8
Defined contribution plan, matching contribution percent	100.00%
Defined contribution plan, employee contribution deferred percent	3.00%
Defined contribution plan, employee contribution percent	2.00%
Defined contribution plan, maximum employee contribution percent	4.00%
Maximum [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined contribution plan, matching contribution percent	50.00%

Equity Incentive Plan - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock option exercised	0	0
Stock-based compensation	$ 2,265	$ 2,125
Stock issued during period value	$ 3,500
Restricted stock units, Description	market value equal to the greater of (1) $3.5 million or (2) an amount determined using a formula-based model (as defined in the respective employment agreements), as of the date of such grants.
Non Employee Director [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock-based compensation	$ 700	$ 600
Stock award, Granted	7,223	6,500
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	$ 37.16	$ 41.20
Stock option outstanding	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%
2019 Plan [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Common stock options authorized under plan	7,500,000
Common stock options available for issuance	6,985,290
Stock award, Granted	514,710
Stock issued during period shares	0
2019 Plan [Member] \| Time Based Vesting Stock Option [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Vesting period	3 years
Expiration period	10 years
Weighted average fair value granted	$ 1.89
Stock-based compensation	$ 10
Unrecognized stock-based compensation expense	$ 1,000
Unrecognized stock-based compensation expense, period	3 years
2016 Plan [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Unrecognized stock-based compensation expense	$ 0
Stock award, Granted	67,050	84,270
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	$ 41.20
Stock-based compensation	$ 2,300	$ 1,500

Equity Incentive Plan - Schedule of Stock Option Activity Under 2019 Plan (Detail) - 2019 Plan [Member]	12 Months Ended
	Dec. 31, 2019 $ / shares shares
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Options granted \| shares	514,710
Options outstanding, ending balance \| shares	514,710
Options vested and expected to vest \| shares	514,710
Weighted average exercise price, granted \| $ / shares	$ 9.90
Weighted average exercise price, ending balance \| $ / shares	9.90
Weighted average exercise price, vested and expected to vest \| $ / shares	$ 9.90
Weighted average remaining contractual term, balance	10 years
Weighted average remaining contractual term, vested and expected to vest	10 years
Weighted average remaining contractual term, exercisable	10 years

Equity Incentive Plan - Schedule of Stock Option Activity Under 2016 Plan (Detail) - 2016 Plan [Member] - $ / shares	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Options outstanding, beginning balance	411,480	410,310
Options granted	67,050	84,270
Options forfeited	(32,860)	(74,255)
Options expired	(8,640)	(8,845)
Options outstanding, ending balance		411,480	410,310
Options cancelled	(437,030)
Weighted average exercise price, beginning balance	$ 100	$ 100
Weighted average exercise price, granted	90	100
Weighted average exercise price, forfeited	99	100
Weighted average exercise price, expired	99	100
Weighted average exercise price, ending balance		$ 100	$ 100
Weighted average exercise price, cancelled	$ 100
Weighted average remaining contractual term, balance		8 years 3 months 18 days	8 years 9 months 18 days

Equity Incentive Plan - Schedule of Additional Information on Stock Option Grants And Vesting (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
2016 Plan [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Total fair value of stock options granted	$ 2,492	$ 3,473
Total fair value of options vested	1,439	$ 1,924
2019 Plan [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Total fair value of stock options granted	$ 974

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]	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Expected volatility	36.92%	35.51%
Expected volatility	37.70%	36.39%
Expected term (in years)		6 years 6 months
Dividend yield	0.00%	0.00%
Risk free interest rate	1.79%	2.59%
Risk free interest rate	2.89%	2.89%
Minimum [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Expected term (in years)	6 years
Maximum [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Expected term (in years)	6 years 6 months

Equity Incentive Plan - Stock Based Compensation Expense Included In Consolidated Statements of Comprehensive Loss (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock-based compensation expense	$ 2,265	$ 2,125
Cost of Revenues [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock-based compensation expense	573	869
General and administrative [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock-based compensation expense	1,161	1,023
Research and development [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock-based compensation expense	87	14
Sales and Marketing [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock-based compensation expense	$ 444	$ 219

Equity - Additional Information (Detail) - USD ($)		12 Months Ended
Equity - Additional Information (Detail) - USD ($)	Dec. 19, 2019	Dec. 31, 2019	Dec. 31, 2018	Dec. 18, 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
Common stock, shares issued		172,350	3,826,151
Common stock, shares issued value		$ 1,655,000	$ 39,191,000
Common Stock [Member]
Class Of Stock [Line Items]
Common stock, shares issued		172,350	3,826,151
Pivotal Acquisition Corp. [Member]
Class Of Stock [Line Items]
Warrants outstanding	29,500,000
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.
Price per share	$ 11.50			$ 11.50
Warrants expiration date	Dec. 19, 2024
Sale price of common stock	$ 18.00
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 reverse merger transaction, 550,000 shares of common stock held by Pivotal Acquisition Holdings LLC are subject 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 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	$ 15.00
Pivotal Acquisition Holdings LLC [Member] \| Maximum [Member]
Class Of Stock [Line Items]
Closing sale price of company's common stock	$ 15.00
Public Warrants [Member] \| Pivotal Acquisition Corp. [Member]
Class Of Stock [Line Items]
Warrants outstanding	23,000,000
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

Earnings (Loss) Per Share - Summary of Basic and Diluted Earnings (Loss) Per Share (Detail) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Basic and diluted loss per share:
Net loss	$ (54,014)	$ (67,739)
Weighted average common shares outstanding - basic	42,425,295	40,382,578
Weighted average common shares outstanding - diluted	42,425,295	40,382,578
Basic loss per share	$ (1.27)	$ (1.68)
Diluted loss per share	$ (1.27)	$ (1.68)

- Definition

The amount of net income (loss) for the period per each share of common stock or unit outstanding during the reporting period.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 944
-SubTopic 220
-Section S99
-Paragraph 1
-Subparagraph (SX 210.7-04(19))
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+ Details

- Definition

The amount of net income (loss) for the period available to each share of common stock or common unit outstanding during the reporting period and to each share or unit that would have been outstanding assuming the issuance of common shares or units for all dilutive potential common shares or units outstanding during the reporting period.

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+ Details

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References + Details

Income Taxes - Schedule of Components of Income Tax Expense (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Current
Federal	$ (37)
State	61
Foreign	447	$ 2,808
Deferred
Federal	332	(4,049)
State	705	49
Foreign	(789)	(2,549)
Total income tax (benefit) provision	$ 719	$ (3,741)

Income Taxes - Additional Information (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Operating Loss Carryforwards [Line Items]
Federal corporate income tax rate	21.00%	21.00%
Tax credit carryforward	$ 900	$ 900
Valuation allowance	$ 51,895	36,595	$ 22,513
Minimum [Member]
Operating Loss Carryforwards [Line Items]
Limitation range for income tax examination year	1 year
Maximum [Member]
Operating Loss Carryforwards [Line Items]
Limitation range for income tax examination year	4 years
Federal [Member]
Operating Loss Carryforwards [Line Items]
Net operating loss carryforwards	$ 31,000	29,000
State and Local Jurisdiction [Member]
Operating Loss Carryforwards [Line Items]
Net operating loss carryforwards	6,500	6,600
Foreign [Member]
Operating Loss Carryforwards [Line Items]
Net operating loss carryforwards	$ 2,900	$ 1,500

Income Taxes - Schedule of Loss Before Income Taxes (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Income Tax Disclosure [Abstract]
Pre-tax book loss	$ (53,295)	$ (71,480)
Tax at federal statutory rate	(11,192)	(15,011)
Stock-based compensation	1,060
State taxes	766	49
Foreign rate differential	(871)	(713)
Deferred rate change		(80)
TCJA impact		(7,712)
Other adjustments	(1,707)	1,578
Valuation allowance	12,663	18,148
Total income tax (benefit) provision	$ 719	$ (3,741)

Income Taxes - Schedule of Loss Before Income Taxes (Parenthetical) (Detail)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Income Tax Disclosure [Abstract]
Federal Statutory rate	21.00%	21.00%

Income Taxes - Components of Loss Before Income Taxes from Continuing Operations (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Income Tax Disclosure [Abstract]
Domestic	$ (52,438)	$ (65,356)
Foreign	(857)	(6,124)
Total	$ (53,295)	$ (71,480)

Income Taxes - Summary of Tax Effects of Temporary Differences (Detail) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Income Tax Disclosure [Abstract]
Net operating losses and other carryforwards	$ 41,299	$ 38,010
Interest expense carryforward	20,070	9,276
Property and equipment	2,221
Accrued expenses	82	701
Allowance for doubtful accounts	1,517	1,194
Stock-based compensation		916
Other	633	1,028
Deferred tax asset	65,822	51,125
Valuation allowance	(51,895)	(36,595)	$ (22,513)
Total deferred tax assets, net of valuation allowance	13,927	14,530
Property and equipment		(510)
Intangible assets	(20,098)	(19,283)
Prepaid expenses	(73)	(812)
Other	(50)
Deferred tax liability	(20,221)	(20,605)
Net deferred tax liability	$ (6,294)	$ (6,075)

Income Taxes - Summary of Deferred Tax Asset Valuation Allowance (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Income Tax Disclosure [Abstract]
Beginning Balance	$ 36,595	$ 22,513
Additions	15,622	22,636
Reductions	(322)	(8,554)
Ending Balance	$ 51,895	$ 36,595

Severance and Retention - Additional Information (Detail) $ in Thousands	12 Months Ended
	Dec. 31, 2019 USD ($) Employee	Dec. 31, 2018 USD ($) Employee
Restructuring And Related Activities [Abstract]
Severance and retention expense \| $	$ 1,403	$ 1,423
Number of employees associated with reduction in workforce \| Employee	33	47

Severance and Retention - Summary of Severance and Retention Expense (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Restructuring Cost And Reserve [Line Items]
Severance and retention expense	$ 1,403	$ 1,423
Cost of Revenues [Member]
Restructuring Cost And Reserve [Line Items]
Severance and retention expense	301	8
General and Administrative [Member]
Restructuring Cost And Reserve [Line Items]
Severance and retention expense	567	799
Sales and Marketing [Member]
Restructuring Cost And Reserve [Line Items]
Severance and retention expense	516	$ 616
Research and Development [Member]
Restructuring Cost And Reserve [Line Items]
Severance and retention expense	$ 19

Severance and Retention - Summary of Severance Related Liabilities within Accounts Payable and Accrued Expense (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Restructuring And Related Activities [Abstract]
Balance at beginning of year	$ 555	$ 1,071
Payments	(1,600)	(1,939)
Expense	1,403	1,423
Balance at ending of year	$ 358	$ 555

Commitments and Contingencies - Additional Information (Detail) $ in Millions	Dec. 31, 2019 USD ($) LetterofCredit
Commitments And Contingencies Disclosure [Abstract]
Number of letters of credit \| LetterofCredit	4
Letters of credit as additional security for lease guarantees \| $	$ 0.9

Related Parties -Additional Information (Detail) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Pivotal Acquisition Corp. [Member] \| Debentures [Member]
Related Party Transaction [Line Items]
Debt principal amount	$ 200.0
MGG Investment Group [Member]
Related Party Transaction [Line Items]
Interest expense, related party	0.4
MGG Investment Group [Member] \| Debentures [Member]
Related Party Transaction [Line Items]
Debt instrument outstanding	100.0
MGG Investment Group [Member] \| Pivotal Acquisition Corp. [Member] \| Debentures [Member]
Related Party Transaction [Line Items]
Debt instrument outstanding	100.0
Carlyle Investment Management, LLC [Member]
Related Party Transaction [Line Items]
Related parties, amounts outstanding		$ 2.3
General and administrative [Member] \| Carlyle Investment Management, LLC [Member]
Related Party Transaction [Line Items]
Management consulting fees	$ 1.0	$ 1.0

Subsequent Events - Additional Information (Detail) - USD ($) $ in Millions			12 Months Ended
	Mar. 25, 2020	Feb. 18, 2020	Dec. 31, 2019
Subsequent Events [Member] \| Revolving Credit Facility [Member]
Subsequent Event [Line Items]
Amount borrowed under facility	$ 29.0
2019 Plan [Member]
Subsequent Event [Line Items]
Stock issued during period shares			0
2019 Plan [Member] \| Subsequent Events [Member] \| Time-based Options [Member] \| Employees [Member]
Subsequent Event [Line Items]
Stock issued during period additional options issued		3,500,000
2019 Plan [Member] \| Subsequent Events [Member] \| Performance/Market-based Restricted Stock Units [Member] \| Employees [Member]
Subsequent Event [Line Items]
Stock issued during period shares		1,000,000