KERN - Earnings call transcript Q2 2022 | Gryphon Digital Mining, Inc.

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Operator

Good morning and welcome to Akerna’s second quarter 2022 financial results conference call.

As a reminder, today’s call is being recorded. At this time, I would like to turn the call over to Peter Seltzberg, Investor Relations for Akerna. Please go ahead, Peter.

Peter Seltzberg

Thank you and welcome to today’s second quarter ended June 30, 2022 conference call.

are Ditto, CEO CFO today Akerna, Chairman call Dean and of the Jessica and Billingsley, of On Akerna.

plans, risk regarding results uncertainties, unknown These will conference are these Before I’d management intends, forward-looking of regarding XXXX. and propose, Akerna prospects to such future could States which certain the or future this involve believes, statements the provisions statements or and other and the growth may, several recognition. for risks, forward-looking Act performance, expected revenue statements of assumptions limited and the and conditions, Private like remarks, that statements important call, United as anticipates, future factors to not remind estimates, versions future, of described projected, statements. of results are changes will, not guarantees statements with Safe Words known or cause to those are SEC. including intended the or forward-looking from and begins discussed, expressions forecasts, variations to words everyone that impact expressions words meaning with within expects, be risks similar made formal Securities pandemic. should, materially fully These filings of to differ related Reform are of such Harbor to COVID-XX These outcomes market more the the risks related in cannabis in but Akerna's during seeks, or of and Litigation include are factors the identify actual

a by obligation to as forward-looking revise speak or information, and are of undertakes Forward-looking statements result no law. made, required future new any only except events day they or of otherwise, as statements whether as the update Akerna

I ahead the ado, like further go CEO, Akerna's over call Jessica without please. Billingsley. Jessica, turn to to Now would

Jessica Billingsley

Q&A sheet we at areas XXXX for large; progress the Thank of it our everyone. balance our quarter, joining covering review Yesterday, session. the the sector the for over the be on of and alternatives, a then key to turn business: Dean morning three will QX financial clean-up Today you reported detailed us. by a we strategic and key highlights I’ll results. followed Good

top our solid bottom the six on I’m forces While and impacts elaborate and optimistic on execute of revenue Highlighting the from considered, will inflation line, did the a our in sales year. software strategy macroeconomic to which other into have months year-over-year we things back was line and comparison the shortly. team continue on some turned as we bookings XX% the head growth All the half year. of or of first quarter half XX% for year-over-year to over the we’ll

of range our in model. long is our a quarter, target key was nearly business, the annual Our first million, half $XX gross line at We growth rate growth run enterprise strategy. XX% term had current the of These us for of top our of which out approximately approximately the part XX% towards which track year. focus the reflect year on this margins upper putting on the of closing was margins

XXXX we our of did in start noted fast a decreased see we to release, spending end QX. at in but As press the beginning off got client we

year. considerations our million implemented path and approximately per reduced to restructuring we’ll expenses quarter will of and facility and including cost reduce us a reductions, those quarter, in realize saving the announced this costs $X third staff this save start we to Importantly, profitability. intended accelerate measures, quarter to other savings The and

metrics: are performance I’d of track his the in subscription like call have as transactions. quarter, which on important total client alternatives revenue; we revenue, committed originally revenue bookings, Starting performing, on in our report we’ll most restructuring provide then last significant anticipated. in as today’s CARR, Dean metric to recurring important result, call, I’ll of also the measures, of fully the non-recurring our CARR; explain growth while are cost Those of they’re with our recognized strategic revenue and update QX remarks. a we On We initiatives cover success pleased been for total specifics or an costs measure is financials, contracts. what clarify is each signed have clients these to why annual the how we present below growth at our and to were in evaluation. $X.X key our our will the that and or recurring metrics, amount of had most comprised the today million re-emphasize contracted

CARR $XX.X acknowledge to some X% a does a growth, a of represents want increase decrease year-over-year. it XX, June as that I sequentially, million also was represent warrants year-over-year Our which explanation. this X% nice which while represents

and us. is where factors, light reduced with economy does macroeconomic that have a who reality First, a service spike contracts clients clients that’s reduction there in represent are reason of decrease clients. their let me of have the primary reality not some cuts. a this clarify across this for represents reaching This that renegotiated in select number The CARR sectors, softer in of consumer a made lost

their However, our needs. mission have broadly critical most speaking for we retained clients

this and life in performance. With anticipate software to to of of signed future. be bookings, recognized to maintain the growth a dollar with while amount a term, given value to them indicator the the this The over reduce be to long routine this clients underscore climate, Importantly, to industry both to We provide businesses challenge new regard future. for of to us point, our in continue of relationships, of term as by expand this opportunity this the to we the we potential client growth bookings is in positioning our now equates ability cost, serve consider contracts. ultimately near will partnering expand economic represents evolve contract. important demonstrated and to them our and our growing the this it they To with times in value leading adjust for

QX Our record-setting softer than approximately million, $X.X quarters. two which bookings our software were was last

of back year revenue course recognize the lead pick half longer to times. also in expect from the of up with to the We of prior start some quarters see the and bookings we’ll

in This opportunities. initiative our wholesale is so to need capitalize follow ultimately we single in running future was industry is through including market to term volume driven monetize our revenue opportunities transaction posted domestic macroeconomic can as industry bring prudently on our on the strategic balance announced alternatives X% we amount. third and still on The the transaction plan to was a by continued more course continue X% climate the our regulatory most business fund for massive provides as of the important volume, collective transaction industry and are for transaction metric, to and of to a in true Akerna growth sheet certainly the believe quarter Turning continue changes headwinds the growth I’d that create report but charting opportunity growth our The an growth. to pleased believe in horizon. we of the initiative also share, like QX. on long we political which and are client to update challenges strengthen provide that growth on we payment year our retail and indicator this growth, catalyst with market we growth second

stakeholders. us opportunities through previously create in all for to communicated, strategic we profitability to remain maintain us Securities and we’ve with produce asset other and hired balance active to pursuing alternatives. As reach consistent sales, the identify and rewards to business sheet value and our dialog help up about parties position ways JMP partnerships, sustainable working to that We shore stakeholders numerous a model

As we raised an transaction stakeholders our convertible working We including ongoing $XX of underwritten general million the from mind, proceeds in have obligations Partners. Alliance while our expenditures. best intend taken have in interests and successfully purposes, additional we development, to capital, with by use capital measure this corporate offering Global our for the operating a debt product notes, marketing, under net servicing

Act, year three States point our the act quarter this have key of as balance we we progress Booker a now to Schumer rest which leading the maintained XXXX federal Booker reasonable and term of discussions suggest state Akerna. long In and publicly good and in Majority demonstrable support the the Wyden. is first Senators they Schumer stated Cannabis and Congress for and, saw believe have both and Senate third of an inflection legalization, into end Leader that and of the along step Administration will of We CAOA, with for the likelihood potential progress indicators of get of During quarter, Senators by filed sign before passing banking. revenue opportunity for passage immediate have heading Opportunity the legalization, a or new peers, represents reasons. all our a

and of compliance First, a for clients. not nice-to-have must-have core service our our business a is

addresses services We will small and enterprises. continue that to medium the cannabis enterprises, of sized businesses, offering larger midsize needs a best-in-class suite of

the grow year. as positioned player average market a the more the central projected cannabis Second, are on an rate running years, of each we XX% coming at Akerna industry and is in with to of

for for our must-have focus the household industry to Third, name with cannabis and to enjoy category the by the ahead. we are core decisions the to are entrenched to narrowing space in are we making that firmly the to years necessary many projected lines is ensure that we prudent and ensuring years product growth a come rise our and

We financial to will front enable believe leadership are us conjunction of excited we about long the and objectives. position have we in with opportunities the cost term cement our in done we’ve future, our our cutting realize and us

our the hand as Dean, us his call CFO, will I the call first us Ditto of Dean through today who over again. full-time results. take and details will investor Now joins to congratulations for our financial who

to with overview are on quarter. excited have and board. ahead very Please of go the We proceed the you financial

Dean Ditto

of I’ll results overview metrics morning, This Jessica. quarter June provide an second ended and XXXX. XX, for business Thanks key the financial our

in will materially XX-Q may results final on As total same the results a today further the be and was procedures, reported information. for the the the revenue up events, results a with increased differ discussed profit additional quarter the you occurrence reported quarter, other are XX-Q. the quarter Gross to to due in XX% QX and financial filings in completion of report disclosures or the increased in detail Final year. year-over-year. of encourage among million, other year-over-year, disclosures of last in preliminary. $X.X in more million reminder, from Akerna XX% $X.X subsequent discovery gross margin things, Financial representing are quarter solid review from and review XX.X% XX.X% second our these on our today of increase results Form to detail. Form another and to, We second quarterly

anticipate we what industry. invest our be of to in continued top will and we and the continue are for players platform the in growth We among another technology year prepared consolidation

We to continue retention by our many to with experience improved compared our footprint. while consolidation significantly to has growing prior year improvements and Churn continues in increasing our volumes clients, of larger customer platform. XX%

by increased by system Our year-over-year, average order BXB transactions tracked X% year-over-year up the retail volume size period deal BXB down was while our against decreased X% X% X% XXXX. has spend transaction in was same year-over-year. in and

financial review Now quarter. the for I’ll results the

our million, Form reminder, encourage our As the software financials posted our website. for as release non-GAAP. or largely the in growth. improvement businesses same and We compared there accelerating the XX, reconciliation reconciliation financial quarter year. statements acquired quarter of non-GAAP June XX-Q the $X.X on of This an review are to some prior [indiscernible] you as in increase GAAP contained Investor our of the a of included ended earnings is of driven is the addition A press well to metrics and XX% approximately to XXXX Relations

on revenue of XX% $X.X platforms. XX% quarter $X.X legacy presently $XXX,XXX million was the driver our same of legislation of revenue consulting year. be CARR the compared well market state from million total mixed. a as of revenue to as XX% to basis, from has approximately acquisition extent, organic from date. for new to expanded Progress in Consulting a quarter on depending backlog. and, year-over-year, of of revenue revenue The up growth was year period growth period as growth to On participants. allow from primary of to total existing of revenue last of has have comparative entrants representing the declined XXX state initiatives year-over-year and continues We a the Software lesser to Cannabis, whether or new varied total percent

from Some states the of process while deferred a have have lottery to licensing license others awards. application transitioned system style

in to quarter margins. their in synergies issue from are aggressive million XX.X% profit to and slightly quarter margin prior the and increased the was recovery as operating are million of the XX% space year, our this second increased gross year-over-year. for return well states to last quarter We clear to in an $X.X second which in more quarter Gross programs. capitalize and as margin year, $X.X in to primarily same enterprise licenses the the states increase positioned from the from leader licensing higher last same Gross quarter. up acquired XX.X% XX% have from realized The assets, due emerging

We effort at these to to drive implement levels. to also operating continued in ongoing initiatives stable hold margins efficiency

Moving sales million marketing offset same the to was by lived million, $XX.X increased asset million, last long $X.X A by to by more expense excluding and were million flat expenses, the increased following depreciation quarter total increased increases: at and million in $X.X $X.X development product of operating relatively expenses cost administrative general impairments year. and reduction in operating than million. $X.X compared amortization and million, $X.X by $X.X

June the XX, changes primarily Sciences The related also share-based Within in partially Cannabis in in and related period million XXXX salary-related development due acquisition which marketing increased costs lower $X.X Cannabis, XXX of and months was months includes salary-related XXXX. QX. restructuring, cost and three associated by $X.X Product same the and ended in increase financing to XX, three XXXX and compensation primarily Veridian million period for the expenses The expenses June contractor million June these XXX the the XX, an benefit resulted and contractor the to year. the prior in compared expense the the are of costs. for Sciences in in a recruiting severance three expenses transactions increase restructuring acquisitions, compared non-recurring ended resulted to to which with in to ended sales the offset and $X.X Veridian XXXX costs increase months

XXXX the company In marketing has the of period and million In office of restructuring. locations Toronto the and sales addition, included overhead reduce in running and to benefits years, burden for offices. Denver $X.X associated with severance terminated approximately recent lease

office During Vegas quarter of space XXXX, of million. also our we cost incurred the exited $X.X second Las and one-time a

bad when addition, was period. In expense period $X.X to by million during the XXXX debt compared lower XXXX the

and changes due assets in declines contains also of in impairment to changes value non-cash operating due certain related goodwill a intangible The software results. and in charge second fair to to quarter market capitalized capitalization

as combination, helpful As stock-based allows strength our because our Adjusted and adjusted like a items reminder, the and impairment in to we measure performance compensation, credit EBITDA such performance charges. fair adjustments and EBITDA non-cash effects business excludes investors peers. our EBITDA charges, expenses value, comparisons of we believe financing to and for and and it is non-recurring restructuring, understanding of to

contained loss was Both to and periods non-cash a $X.X $X.X a year. period For from the of charges. compared the EBITDA in second quarter, adjusted loss million the same million prior of non-recurring

reflecting charges was improvement despite from quarter the the in X% EBITDA million year, of adjusted of this first restructuring sequential $X.X QX. Importantly,

of July partially was our offset net issuance development capitalized the prior XXXX. million equity invest of Adding funded from $XX.X to of by with used million transactions. of million, working to figures cash cash key statement, software flow activities proceeds activities $X.X June $X.X in cash cash million a end the which just in used the in was X, for our $X.X cash XXXX. was settlement the and of capital our the quarter. used Net restricted on balance and sheet after one Turning $X.X quarter, operating XX, includes cash was as that our million receipt the investing Net balance acquisition

the convertible in disclosure XX, year. million principle or incorporated shares. by paid to was As as this $X.X a $XX.X $X.X of in million take million reduced of million. into $X.X XXXX, our debt June the filed going concern We with settled the outstanding during like required, to I’d XX-K quarter in moment, address March and cash

unit, company ability results The ability are attain capital. on to especially operations. quarter, pleased the past as our secure downward dependent going to on the the working concern to of financing of our we continued with a pressure operating sources we enterprise debt profitable is While continue this reduce to and recognize other business

payroll technology service requirements liquidity debt and corporate expense, infrastructure overhead Our costs. corporate primarily costs, and include costs,

Our current sources as of well we our liquidity the include from on anticipate access cash hand to as program. proceeds ATM

will our a board company in addressing vote this on proposal available later proposed have We The the shareholders. shareholders to month. who of to stock split all our and working the capital best is the interest reversed considering deficiency options the

we forward, accommodate still environment can of continues adopt regulatory as sector. market are a compliance capital automation great additions large unprecedented made our any a consolidation. makes in all its is of challenge that leader industry we for platform to move technology. the size markets the early the We’ve participants nature As The in that clients it to the and

develop while position to to I continue to as do with a headwinds like working leadership to to to continued sheet. will balance you these and upon the plans diligently minute implement Akerna’s update take address to success. trying we’re what would also We build for

us and business a us with and hired sheet opportunities active pursuing working we produce alternatives, Securities know, in other profitability through create consistent remain partnerships, to maintain identify and rewards you model numerous balance reach and we ways dialogs to about shore parties value our strategic to to to asset position that sales, up As help sustainable JMP the shareholders. and

concludes a reach leader This our enable excited cost space future and should prepared that us cannabis in of in financial confident term our done, for to objectives. the front software have remarks. long we the opportunities our compliance as are we very are and our cutting the we’ve We us, positioning about

the may mind session. any you happy to We of statement beginning applies disclaimer call forward-looking questions Please keep take have. that are to this at the discussed in equally the Q&A

call the turn Operator over Operator? for the to questions. let’s Now

Operator

Our Alliance instructions] Kintslinger Global. [Operator from first Ryan Ryan. from question Please go comes ahead,

Ryan Kintslinger

Great, successful late of a number questions, these tracking? seed most Which of states and your use early least been XXXX have states you cannabis. for medical thanks to were In much sale guys. taking legalized and my there ’XX, so adult that within for

Jessica Billingsley

here. Hi that at answer. morning. I’ll Jessica take good first Brian, crack

new this I that although to process, preparing expected some out licensing into quite half point maybe we from some still year. open really would and issuing the there we in licenses flood seen to new see In of see I to and in play we’ve those more guess we’ve expansion with business. a horizon, of for a potential that do medical from I market states, think ton will outcome Jersey licenses, seen states the still, bit York, seen that operators opening, in earlier the come new licensed still--they’re other opportunities, and a it’s New a existing market in so expect of are being bag. But of just date, to of it’s to preparation proceeding not seen how are haven’t as what a of just operate, that I say and of we and bit on we markets some or really states, the question general, we so year. have expansion are back issued the new that expand, ton that expansion say market a markets mixed really a are the New are

Ryan Kintslinger

take, actually or you some Great, that net I back have modules, that and on then anything bookings some I on about you more then is with bookings, so business customers that incorrect? the pulling offset was and do reversed, you that or book did just of services, the gross in talked

Jessica Billingsley

de-booking churn. way anyone together do look added haven’t great question. look take a the than who’s at our started take renegotiated, as we frame that rather we time a--just bookings at for a that’s the that their so No, net, rather as we as as as a it bookings rather--depending that than as would the yet internally on on-boarding, they We are--we numbers

of has the that is de-booking, team QX end The of number quarter, this signaling was. was to to I be was a optimistic going is--this QX it light, I back that, be do of lighter certainly although say a the holding hey, would something end QX, kind and is hey, team the was the towards that that year, Some really we signaled like QX to is going want true. and looks that say about of it feel still that’s of still the half

Ryan Kintslinger

was of terms you ask, trend, I up do near kind Yes, given economy? do see to the weaker it a keep will bookings is dealing term of see your think you whole opportunity that greatest half with industry, everyone, you of by and including second in the by the that revenue growth year going state, bookings - for module? Then do where it is opportunity? is Where

Jessica Billingsley

accelerate, ready the see who app, upgrade that into non-existing upgrade retail really careful and at looking they’re enterprise MJ base, be also from continue we’re also is are our MJ platform with one Demand demand something growth way. for see are We right, because platform enterprise so a to then and we’re real and more continued. MJ that our at say a customers, really to who to from organic biggest using most--the in that existing we’re certainly both temper in certainly really may client uptick our just and starting I interest demand our particular, would offering that has huge solutions, I into retail in two has opportunities midsized ready else to opportunity two enterprise, the systems, small continued--that’s client and base and folks to in in real existing and seeing--well, some our our some where that should really also so a seeing

can there’s module prudently there back client a each it, enterprise and by the spending as module, is the of As start in as where more into implement and I some financials really now a retail mentioned offerings. mentioned concern seeing good a you and on done of with surge quite among as end software our modules ROI in because in that, focus an implement I my moving that real prepared remarks and and then be right for we’re base, systems, interest lot in to and interest noted, our a to start and well they people

Ryan Kintslinger

is the last one cost a question two-part cuts. on My Great.

a about in talked million You dollars reductions. expense quarterly

financing First, million, is second it like $XXX,XXX it’s that dollars the a the I $X.X it closure take you Vegas I in it’s that want and you year-over-year, from is have $X.X Las of or that more million the sequentially. I your million, think based right. a drop from had charges, lack together, I year. huge all to sure make I my reduction so the take half talk that million office, or that from more I last But about severance, question of sequential when doesn’t include add when the thereof

Jessica Billingsley

Dean, do one? you take want to that

Dean Ditto

we’ve our which events, rate. really so on the cost approximately on seen Brian. cash in basis, and point thinking your it where run our is sure. a by been labor, more at the labor been those month. rate we’ve way is in XXX so cuts one-time run a Yes, a we’ve stabilize, Yes, looking to the we’re cost burn monthly has with Really, Hello projections reduced

drop consumes situation services neutral kind to run thinking XX month That’s how cost our our into the the now know the that about on kind internally look really range. to in We’re rate out to cash one-time operational at with potentially also XX that mix, company run to flow right on but reductions, rate rate. move our we’re taking we and it. of a the have and additional operations take close costs you I will positive projections a burn identify the those of very of focused the indicate are

Ryan Kintslinger

Right. thank you That’s helpful, so much.

Operator

comes [ph]. Ray. question Please from Rasa Ray go ahead, next Our

Ray Rasa

New those contracts today. to York question going your you New Thank with states? you have back new acquiring daily, resources What devoted had have you recreational also, strategy. on in the been marketing of Jersey A to ground, getting relationships able boots contractual to you terms dispensaries secure and and information live the in for

Jessica Billingsley

not have Hi a very there feel folks we some We to good, we when morning. there’s back New hybrid we’re New the in few New year. and that some so - northeast, to Ray, strategy, New I the and see boots of that a events ground not robust York, we to may meaningful operations generally York, applicants really, ton as hitting employ have especially we’re saying note of start some of small business. sometimes just new we hear We licensees the the have licensed, had you a that and part although of going a pipeline which expanded in really, good fully Jersey that new lot not may area, be seeing in I do really and think markets. open Jersey activity is a not--the been area streets, every the on rapidly, in of or half do we really have micro new what market seen have around, I day want is, has

thought Of business but had year. we to this date, earlier been that course, wave might we not it’s the we’ve see had some

Ray Rasa

are operators? approach the transactional folks growth? do like multi-location pricing received Leaf, as it partnership you But dispensaries these that multi-state, approach a or Zen eroding is more grow? How is of their it Is to margins

Jessica Billingsley

than we really and open very are take good SMB out that and enterprise just I are so say that approach, quite I way are see we it for or an ROI, pop-up we and The as lot our We the fees, functionality, an markets base, exchange retail and is I provides really grow. those may compliance open. of then without do--the comfort partnership all lowest great But our approach, functional would have access very platform do we the more grow the instance, to options price kind the structure very we of that competitive mentioned been user what’s midsized first month. a answer can’t generally have our already conversations month of guess folks job than at if upper that value more I When sales yes, but - software and knowing and be for operators what at very, we additional to based smallest look We the of is best-in-class, is little way bit annual clients our SMB, annual general systems, more some to for I pieces and contract well, be mom know, then emerging. see operator and We is with partnership in it on our going software of the--with would bit we’re end that much that we check that appealing our and and reporting, do robust of to in someone are double-checking provides certainly--I’d with operators. about delivery module its you least at in there month-to-month our--first, not very that but certainly system. question. whom what upper in the a our conversation which pricing, the answer to these a we’ve see Salesforce and tell our start lowest you - specific we historically extremely for not--and you or a some had end with contracts. you least costs, of as very end they’re clients, and that systems that’s is done team probably think look clients with mentioned is there that We at get most don’t midsized--you pricing, We pop compliance-only midsized with tell business, look do small doing expensive that so

we stand so the our value partnership bring. and approach anyway, by Okay, we

Operator

this At to would no time, questions. turn are closing back further there for I remarks. Jessica like the to call

Jessica Billingsley

you Thank Operator.

We cannabis, serving are for and operators, the brands. ecosystem technology governments,

with progress look technology increased to and sharing tech with thank your consumers focused growing locking you cannabis and strategy for We forward. ecosystem for among forward Our businesses you enterprise are move and spend we strategic of the supply as governments. chain in up the Akerna and on our solving interest investments demand we transparency

Operator

you This concludes today’s conference for call. attending. Thank

Gryphon Digital Mining (GRYP) 11 Aug 222022 Q2 Earnings call transcript