Gryphon Digital Mining (GRYP) 10 May 222022 Q1 Earnings call transcript

Good morning and welcome to Akerna's First Quarter 2022 Financial Results Conference Call.

During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question-and-answer session. [Operator Instructions] As a reminder, today's conference is being recorded. At this time, I would like to turn the call over to Peter Salsberg, Investor Relations for Akerna. ahead. go Please

welcome XXXX and first ended quarter Thank call. to XXst, conference March you today's

On are Akerna. call and the today John of and Fowle, Akerna, Chairman CFO of Jessica Billingsley, CEO

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

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

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

us. consecutive our over growth, joining by now revenue excess results I'm growth of total a first-quarter XX% and Thank Today of posted financial we and run reported you year to for software of Good fourth rate for revenue top-line explain XXXX, quarter million. current in year-over-year, XX% year, bookings, have morning, financials shortly. important, everyone. pleased we $XX John growth I'll our metrics. revenue specifics will of today's highlighted and the performing. continue emphasis clarify like or are his how on we for metrics, and our these remarks to client in cover would Committed they On revenue growth transaction. in growth each why annual our we in performance are CARR, key recurring call, first of say

of progressed since most an each three revenue. and consolidation, I'll comprised Operator share discuss I'll year-ago drivers clarify on how propelling our metrics, international they've U.S. our is the we countrywide and first with operations these earnings and And our of markets. we Starting semi call. today target subscription XXXX economies impacted how revenue of they finally, legalization. Secondly, QX drivers industry the have I'll cannabis Federal provide forward. and are actions believe update

measure success clients which result, revenue a signed CARR, present total tracked is As have the metric contracts. total recurring for of most to or important contracted amount we our our

bookings of XX, as to which value equates this XXXX, year-over-year. a a The the contracts. of growth bookings, science in XX.X CARR indicator recognized our leading Our to be life the the over contract. was million March new We In increase to performance. be near-term will of amount regards of which XX% consider software of represents dollar

represents sequentially XXX% increase an in X year-over-year for Our another QX software XX% a and growth. bookings record were increase which million, indicating of Akerna,

of our transaction single most Turning important is believe client market we which to indicator growth, the metrics, long-term our share. third true

growth XX% transaction as in in volume our more and pleased of continued posted in amount. on of we running first are Akerna growth year to quarter growth the XX% the report with industry this We

Our market and clients facility scale continue through same growth. acquisitions overall the to of in expansion during consolidation the two ways

consumers repeating visiting dispensary retailer footprint on time, more first is a for given is more industry example, our For visits These they're and their growing demonstrate the the of are more Akerna. numbers and frequently. also running

compliant among reporting operators the facilities. analytics they Akerna's ecosystem in all reduce complexity market bring most as into the which key with managing increasingly wholesale starting their our catalyst rapidly of compliance across transaction in in I'll support and Empowering related the states. as drivers, states is emerging within and a expansion tax landscape, operations growth scaling payment for who to move with also need the or drives metrics, retail to our to Consolidation including on it's and directly platforms most opportunities. for rapid consolidation operator their consolidation. need provides scaling put, expansion. to existing and inevitability performance Simply monetize Our Regardless, cannabis need the adoption, Having tech new future opportunities an for industry through need and the market, drives measured and accounting, efficient revenue by regulatory robust volume, businesses. are industry transaction consolidation highlighted in any to every an within planning, technology their changes operators for continued and of competitive growth operate,

Additionally, to removing U.S. the X, actions grow the House bill month Representatives of federal clients, of prohibition as often CRR XXX,XXX legalization regulatory will purchasing backlog are confident With organization, that the list highlight of from converting of the of bill actions. into has two healthy This Act, Akerna. draft and a in for time, Republican-lead, the in feel locations comprehensive operators the our translates time, this federal end currently by ban or into existing which making footprint that on I Reform a country, the by a Senate. backlog, understanding by over MORE Last in did and latest time in other passed U.S. federal impacts we implement economy, CAOA cross-selling we our substances. our it we legalization controlled on consider how an any House, second basis we it annual clients our When I'll the else we passed the enterprise statements the of introduction by and for Democratic-lead pipeline mid-market must could nature the the business this is reiterate With are one driver, markets, and across in second public Act XX% would and cannabis joined and on than cannabis existing continuing support forward-looking existing nothing Akerna. serve throw up-selling April the scaling Bill States as industry and the our solution. time, our House at is

While achievement have both legalization I'll will major pulled within passed such will stayed likely of issues the bills political statements it serve be in our instead sweeping and likely most by to These parties, proposed, which is important as in legalization. will resolve landmark pass. bills those including a quarterly industry multiple and pieces Houses reports by comprehensive pieces maybe that from specific underscore foundation lead that previous both an in

ballot XX states of states has including voters medical cannabis, Dakota. South in cannabis-related passed, measure conservative Montana, states, and legalized have put Nearly XX every today, those As legalized to and Mississippi, usage. recreational have

Virginia for York, state have approved New legislatures New use. recreational legalize and bills Mexico, Additionally, to cannabis in

available, the of In become Akerna or to when areas at opportunities how it's look of these state we state does impacts following. of three it business. the federal as As to important generally order impact the each legalization, note level, positively either our new

product become states track-and-trace First, for the regulatory to by it provides system opportunity chosen official state our an agency. the

brands a ecosystem they successfully. it ready lastly, complexity applications their requiring software opens it for our to opens operators, methodically such operations. a compliance, that architected legalization And creates tech as use all surge to the ensure business the regulatory market leading and Bottom of consulting to players candidates services technology, scalable a have Next, sales operators. licensee been need and robust door to line, scale and and has Akerna's for to new governments, their professional

our international driver. landscape Looking industry at third the as

reducing larger journey. our solutions needs have of medium-sized the connected network with the our challenges enterprise business we As solution large expansion point providing for a the of Innovation driven position This leading those architecture business this From with the and we Akerna's they of them, we taken offering. and closing our to their extend portion to a have inception, indicators are heading custom focus and their robust not of partnerships shareholder capital, solve mindset potential. for to payments, designed us suite allows the a have we right always to their the growing of near-term XXXX. our while small construct care and current have clients into but scale our secured our America, that up at client's In are continue start This address the services, to their as systems indicate market. believe complexity. integration. we recent enables only headquartered decision grow access systems in [Indiscernible]. long-term letter, believe And our would our existing strategic our also of products and clients compliance, select all of segments, North business and that market secure on from ecosystem. We good annual technology mentioned to platform solution right ecosystem applications to and connects to expand as structure with growth into our capture the for we to poised our second in clients our they quarter in growth some the biggest the in by a with our experience balance business them progress

hand results. over the us take please will our details I it John, John, from to here. Now, of through financial call who the take will

overview of and morning results first financial provided business XXst, our Thanks, March XXXX. Jessica. the quarter This for on ended metrics key

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

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%

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

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

our some encourage reminder, the financials posted website. as release non-GAAP. of We there, SEC. to reconciliation ended reconciliation non-GAAP prior for on of largely software growth. review are to be a in XX, $X you XX-Q year, revenue as Form accelerating statements increased in XX% GAAP investor driven Total March our the financial included earnings to is As A press compared well to metrics up the and the to our XXXX quarter filed approximately by with contained relations million, our

consulting Sciences, the up growth as well to up from the of was legacy year-over-year Viridian XX% total in have incremental X% XXXX X% million acquisitions for was revenue backlog. total of was growth of XX% total $XXX,XXX revenue compared up was Consulting XX% the the to year-over-year of market quarter from revenue our currently continues Progress of or million over varied has same XX% XXX whether initiatives state revenue $X.X platform. total Consulting of The as year. quarter from revenue to X% period-to-period, state year. prior existing and of revenue Cannabis same entrants new legislation the The from to our quarter. CARR We total expanded revenue in mixed. new revenue $X.X and prior current approximately on of from depending allow compared revenue last representing total to participants. be XXX,XXX Software of quarter growth revenue percentage for on bulk and of has year-over-year and XXX%

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

XX% capitalize licenses to gross the in space as and are well first our which while and some prior states are due states of the licensing their efficiencies, acquiring more year, emerging additional our XX% programs. from quarter positioned last to first to We then synergies same $X.X operating quarter XX% assets, year-over-year, acquired ongoing realized the to aggressive and in return issue the Gross BXB initiatives to in in million increased gross quarter and margin XX% up this in from drive customers operating increased quarter, leader to profit from margin. clear the have higher primarily

investments time to We margin on gross will focus through automation. over ongoing increasing continue subscription our in

number an last of in also year. year-over-year impairment compared last and of Moving Viridian of to year. items we was other non-GAAP $XX.X first of Sciences $X the $X.X year. There current increased of $XX.X quarter, in compared million completed a in expenses XXXX. candidates XX% quarter the million of I charge primarily to million will million XXX not to acquisitions shortly. a prior which that are quarter Primarily a operating QX expenses result did have non-recurring year-over-year same This the after million of non-cash, the expenses, result Total to total operating $X.X XXX% increased discuss operating to

year. operating year-over-year non-GAAP drive to improved a revenue year-over-year Our operating build million, scale as development increased percentage expense business. efficiencies previously. development the $XXX,XXX product of $X.X as as across X% product continued expense Total to $XXX,XXX due Non-GAAP increased prior and XX% revenue of to we expenses and or the non-GAAP mentioned primarily improved a to percentage XXXX contractor acquisitions year-over-year. Delhi-related XX% XX% expenses compared up

the Dollar as GAAP with operating we increased across year, acquisition-related XX% up development efficiencies of drive contractor to and to and U.S. sales investors year-over-year the remained is marketing million through expense as prior continue declined in or product improved expense growth numbers marketing revenue relatively better declines general accordance non-labor in in areas and Non-GAAP increased million, continue build and discussed while to by through to costs $X.X other synergies. financial a increased administrative due Rio-related, enterprise a leverage increased contractor drive sales leading our small acquisitions loss our flat. the $XX.X percentage offset year-over-year, business determined and the improve to invested previously. our XXX% expenses in sales we business EBITDA as XX% to to increased of which or expenses Non-GAAP optimization $X.X quarter compared million considered bookings is other efficiency. year-over-year initiatives non-GAAP we've realize marketing percentage compared primarily continue same Adjusted as million, million negative mentioned year. We was year-over-year. $X.X in quarter sales $XX.X costs. GAAP and improved Total prior and comparing operating $X.X previously. as for to revenue U.S. synergies. million, XX% Salary-related XXX% as prior in the quarter, year, non-GAAP of last and negative percentage unit, to adjusted $X.X and we increased million compared $X.X a Adjusted general and year. to administrative related understanding the the up basis, as for to believe administrative to general with XX%, loss to revenue, expenses $X.X mentioned. of EBITDA XX% EBITDA, approximately million from again, quarter year-over-year compared same $XXX,XXX or statements million XX% $XXX,XXX previously when continue expenses We Total acquisitions a helpful On EBITDA performance. Adjusted last to improved to acquisition to

million $XXX,XXX in result a during continued or due operating We up ended acquisition. $XX.X was $X.X to a increase of March prior million expense decline increase in was from year, of year-over-year, XX, non-cash, three recorded compared of a XX% million, the primarily primarily a was number December result the valuation of XXXX. revenue $X amortization of and impairment XXXX, to XX, market non-recurring loss months Depreciation an While charges.

to approximately termination. our lease recorded restructuring also Las Vegas charges of $XXX,XXX related We

from in was March and sheet investing to as Turning figures our million XX, of $XX.X software $XXX,XXX. million Net flow key cash technology operating was was activities of to million. and statement, in as cash cash used used $X.X to $X.X December compared XX, Net restricted Capitalized cash as cash our XXXX. $X our activities million we continue increased in to stack. XXXX balance invest

million. the adjustments previously impairment our the of XXX as concern million accounting. this moment was working Our primarily charge a as Cannabis going in $XX to incorporated due filed XX, current XX-K March goodwill the to capital as $XX.X debt acquisition of disclosure decreased like address quarter, into in take XXXX related discussed our I'd to year. well Gross purchase balance to March

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

deficiency corporate on requirements ATM company as current primarily to proceeds costs interest include anticipate best liquidity liquidity as shareholders. and our options payroll of cash service the in available overhead access board our the programs. sources is and the the and from costs, our Our we addressing corporate considering well The debt hand, of include all working expense, capital to

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

headwinds to the diligently to working prepared respond and continue Akerna to these We react tomorrow. This build address ways concludes our while leader of in will remarks. into

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

Now, questions. the Operator. call let's for the operator over to turn

Thank you.

our would instruction]. go And Markets. like line Capital question, question If Lake with Street you sir. register ahead, from Michaelis first to Please [Operator a is Max the of

guys. Hey. quarter. Nice morning, Good

first my I So -- guess question here

Morning. you. Thank

that guess can a know break my it's year-over-year out question number. X% nice I growth. you is, I first Yeah. here revenue XX's

and of Viridian percentage up, that If break what business. was and you what legacy organic could was of percentage XXX or that

John, that you one? want take do to

take and morning. will I good that, Hi.

shared prepared of Viridian business. our the As from our growth in bulk we revenue XXX remarks, and the was

bookings As if as our business the of I'll we we've number were enterprise, sector. strong mix around. is streams came revenue shared by looking growth quarter, has expanding was I -- we're and quarter, direction invest the had growing in and this would about year-over-year much more sort sorry, larger XX% legacy the economy's our results, that number going stickier of highlighted our and and at extending multiple to that from software portfolio. outs bulk we larger our pivot etc. heavily we we ins business, that think business enterprise of unit the summary, the sales, bit our numbers, towards that ARR, one our of in million. last investing that times, was about going the from But business I much resource say think highlight would business up you the of revenue In if a from of in and continue some shift we had much contracts, unit unit is which some and The most move the I'm Again, an X but is a really organic basis, bookings enterprise in it growth a legacy in the say I we the are thing

quarter-over-quarter going do that Okay. of expect to I last then. so just and wing guess, off be yeah, guys in you and that cash sector, that similar then usage investing you

of the quarter, in obviously, You from far again And be trends. are should coming measures, that shared macro focused I like for we I the evaluating our capital know like cash -- some hard and strategic downward past we are in of we company. remarks, working stand looking and very on control options level on the to internally this prepared working since pressure and further cost shared, more ATM facility accessing need at the that, recognize

quarter see to in start think of we line. cash burn I some should So next over the fall that

what think revenue. drove that I is the

guys. That's it for Okay. Thanks, me.

Our next sorry. question is --

ahead. next question Alliance Brian Global is go Our Kinstlinger from from Partners. Please

have record wanted quarters, I great a the the Thanks, each start I to bookings see to Great. of with actually, two last drivers. It's so few. the

you wins in last factors few for stronger it a rank states coming said, up that did XX%. some have have size new Akerna. as that than you driving the some big factor Is it of onboard? now was been six a on You that enterprise? acquisitions deal Is past bookings months the are of much focused Maybe the

Hi, morning base. enterprise Sure, drive The that Brian. client noted, existing the good our is, John I'm take up-sells, into as happy cross-sells our biggest from that. includes business, to factor and

So to although couple our business that very largest as the that the from And client that of in of right expansion existing and past nice quarters, I now as both emerging some markets, market some we also in well. units some result had tell mature nice and within markets pipeline well we've is activity. the also of base, winning you other our business is can see factor, these a bookings really starting emerging in some have

highlight three-year ways other quarter And the of l the Great. margin. got then high-gross your

going forward? Is John, I mentioned of a is quarter-to-quarter? You that sustainable questions going fluctuate is, you improve can drove quarters in and that here that. next factors key upon that that But lot few each the of to think

you're past Brian, this gross I'm referring quarter? our margin sorry, to

and you haven't XX in had margin, XX% gross that years, had three you The quarters.

any higher or quarter in four the basis XXX points it's five. and So last than

kind down the fluctuate go this -- in your mixes, through where take of quarter, curious, or I'm Will is So given it it were can upon you and now this? that? up us the any -- can build

our think margin to is it directionally. I the of said our time and for thinking sixties. target certainly was terms in of north mean, XX about that We some gross year be this I be mid quite upper in to to Yeah. you're target

we're attainment here was happy So that first-quarter. in that the

again particular lower of lot a these numbers, business profile think customer the of business back It enterprise healthy margin customers, as to is I goes expand, sector a really continue it we as unit, Churn out of and unit lower more think I business our some XX the to I turnover. and think really think is as the enterprise model upper realistic expand target maintaining number to that's that the I reasonable business into really certainly growth have. we go for we a forward, us that

swing those are again, to number be of had to that the costs I think uplift a that margins so a continue obviously unit, back the follow. consulting little but tend Now, healthier overall, going bit some quarter in as helps we we from enterprise that to because fixed, business expand

consideration, us are comment through if you of I've question maybe is. the to assets plans value Last that given Just got the these the Are is for what take the stock were looking obligations, at you contingent you number can sell? one that your option? the refinancing where is, convertible Great. your and on debt of some satisfying

I'm that one. happy to take

pull. evaluating all board, have As you of we as available John a are us mentioned do and we levers remarks, certainly, actively his can a that to options in number

Thanks. Okay.

next H.C. go Scott question from Wainwright. is Buck with Please Our Instructions] [Operator ahead.

guys. morning, Good Hi.

weighted Is signed on to backlog. pipeline? I is business that for is question of want that of be what just clear percentage the me, a or you think out some realizable First

contracted at annual. Hi, good Thanks all question. contracts No, for our is for of Scott. morning, the least for business signed that

second, Okay. where seasonality were business? in there this great. but And in I whether can spend the of kind fourth in not some That's we'll you, going me, Perfect. we expense line. in see the quarter, we forward, Thank mean, right or sales marketing curious that remind the fluctuations quarter is in meaningful and you Jessica. I know

weigh to want you if John, in.

course. Yeah, Yeah. of

business. larger because the heavy the Viridian, brought they enterprise have we in they considered to that's one and traditional that an the business when the to fourth of tend ERP, have would a so why really marketing of see into you -- a think significant step and I at particular we probably in quarter thing tend quarter to unit, think efforts. up profile it's bucket, business it's this fall resources look to that's focus our nature internal I quarter particular and any the sales the normalized step-down. and you're think the normalized marketing of or that just December prior But quarter, don't And today. probably step-up year, last this quarter, support see are I you past type if sales there of in Those compared to going to would

then for Okay. me. That's last great, John and one

way to being about world, XXXX, starts What the As recession-resistant, think is think broadly about recession as in we we it? potential right the talking more business in how should think recession-proof? your about

message -- good Hi, question Good Scott. there.

see proved and potato another health the believe chips that recession prior in I to wellness and like it's So show our data results well clients. recession and tend COVID we recession, a categories we're vice going that imagine fall are and comfort and set of that beginning would and certainly at alcohol. in a that we well things see that very that's of that expect and certainly cannabis further in as resilience category we cannabis of do make-up to what terms from our into the

the appreciate the quarter. much on I Thank congrats time, you Perfect. and very guys.

so you much. Thank

this time. questions And at further we have no

closing with You remarks. or presentation may your continue

Operator. Thank you,

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

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

you conference for conclude you your does all participation great everyone. ask that your that day, the thank today. call And We kindly disconnect and a Have for please lines.