Gryphon Digital Mining Inc (GRYP) 2021 Q2 法說會逐字稿

Good morning and welcome to Akerna's second quarter ended June 30, 2021 financial results conference call. Today's call is being recorded.

At this time, I would like to turn the conference over to Erica Mannion, Investor of Director Relations (sic - Director of Investor Relations) for Akerna.

Thank you, and welcome to today's second quarter ended June 30, 2021 conference call. On the call today are Jessica Billingsley, CEO and Chairman of Akerna; and John Fowle, CFO of Akerna.

Before management begins with formal remarks, I'd like to remind everyone that during this conference call, certain statements will be made that are forward-looking statements within the meaning of the Safe Harbor provisions of the United States Private Securities Litigation Reform Act of 1995. Words such as estimate, projected, expect, anticipate, forecast, plans, intend, believes, seeks, may, will, should, future, propose, and variations of these words or similar expressions or versions of such words or expressions are intended to identify forward-looking statements. These statements include but are not limited to statements regarding the future growth and prospects for Akerna and statements regarding expected future revenue recognition.

These forward-looking statements are not guarantees of future performance, conditions, or results and involve certain known and unknown risks, uncertainties, assumptions, and other important factors that could cause actual results or outcomes to differ materially from those discussed, including risks related to changes in the cannabis market and risks related to the impact of the COVID-19 pandemic. These risk factors are more fully described in Akerna's filings with the SEC.

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

Now I would like to turn the call over to Akerna's CEO, Jessica Billingsley.

Good morning, everyone. Thank you for joining us today.

Our second quarter results continued their momentum for 2021 with software revenue growth of 56% year over year and 17% sequentially. Our business as a whole grew 63% year over year and 22% sequentially with the mix of both organic and inorganic software revenue and a rebound in consulting revenue compared to prior periods.

Our total SaaS ARR is currently $17.3 million, a 53% increase over the same period last year. In addition to topline growth, our focus on cost containment and accretive acquisitions continues to deliver results with adjusted EBITDA improving 54% year over year and 11% sequentially. We are encouraged by the pace of demand in the second quarter, and we look forward to continued growth in the quarters ahead.

Our focus on the multi-state international and emerging enterprises in the more than $20 billion global cannabis industry continues to serve us well. Churn has improved at 48% compared to prior year while consolidation continues with many of our larger clients significantly increasing their footprints. Our average B2B deal size has also increased by 27% year over year, adjusted for one-time project in Q2 2020. B2B transaction tracked in our system increased by 104% year over year.

Looking ahead to the growth drivers of our business. As we discussed in our last call, there are a series of opportunities ahead for Akerna from new products to new markets, to new regulations, and ultimately legalization at the federal levels. On today's call, I'd like to provide an update on two broad areas mainly industry trends within the current market landscape and the potential for new federal regulation.

Starting with the market as it stands today, despite the fact that it has been 25 years since medical cannabis was first legalized in California, the US industry is still very much an emerging one due to lack of federal reform. Emerging market pose various challenges and opportunities, elevated by cannabis's status as a regulated substance, which in turn creates volatility in the supply chain. In most states, many smaller operators generally compete in just one part of the supply chain and rely on partnerships to bring product to market.

Challenges emerge when a problem with the supplier or customers cascades through the supply chain. This can take the form of a product recall that has to traced from the retail store back to the cultivation and through each stop in between. The management challenges and business disruptions that result from such an event contribute to increased costs. With many smaller operators not capitalized to endure such a financial hit, the supply chain may be even further disrupted and start the cycle all over again.

Many operators have experienced the challenges of relying on others in the cannabis supply chain and have determined the best way to ensure the success of their business is to own the full vertical. The operators that have taken this approach have a significant advantage when expanding into a new legal market where they can replicate their model without the risk of depending on disparate operators.

Another benefit of consolidation lies within a critical part of operating any cannabis business, compliance. Laws can vary significantly from one state to the next and even from one municipality to another complicating compliant operation. To keep up with these variations, cannabis businesses need to dedicate significant time and money to ensure adherence to compliance with cannabis regulations. Failure to meet compliance is a daily risk that operators face with potentially business ending repercussions in the most severe cases.

Large cannabis operations often employ a dedicated compliance role or outsource the regulatory work, but smaller operations rarely have the resources to do so. It is within this framework that Akerna's platform solves the complex needs of the industry. Given our long-standing leadership presence in the market, we have built an ecosystem with the most comprehensive compliance and regulatory capabilities in the industry, able to serve off the shelf the requirements of the entire cannabis supply chain in more medical and recreational markets in North America and beyond than anyone else.

The net result is a platform able to serve both small operators and large multi-state and emerging enterprises who are driving consolidation in the industry. As we've articulated on prior calls given the strategic importance of compliance within the cannabis market, we are focused on building out the ecosystem around our core compliance gateway to secure our leadership in this segment of the market.

Our point of sale app, MJ Retail, which has completed its beta adoption and will now be broadly marketed to both existing clients and new prospects in the second half of the year proves this concept by integrating a clean and streamlined app with our robust compliance, integration, and business intelligence available in our ecosystem. The Akerna ecosystem was developed to provide a wide range of solutions and insights to our clients in the cannabis industry at large. Our platform allows cannabis operators to manage every detail of their business while our business intelligence helps them make the most impactful decision for their operations.

With over 80 integration partners, we are able to provide the full range of services that enhance cannabis businesses, including integration with large-scale financial and tax management solutions, inventory management, online ordering, digital menus, and payment options just to name a few. Demonstrating the success of our strategy to build an enterprise-grade platform, the tools we've built into our ecosystem have had an almost 100% adoption rate with our largest MSOs who are largely signing on for multiple-year contracts with Akerna offerings. These MSOs rely on our premium offerings like MJ analytics to make operations more efficient as they continue to grow and scale their businesses.

Over the last year, the infrastructure improvements we've made and the acquisitions we've closed and acquisition strategy we continue to pursue position Akerna to be one of the largest cannabis technology winners as legalization expands to new states. There is no denying this past year has seen significant strides in the legalization of cannabis.

In the 2020 US election, we saw Montana, New Jersey, South Dakota, and Arizona support legalization for the recreational use of cannabis. In March of this year, New York became the latest to join that ever-growing list. And only a month later, Virginia became the first southern region state to begin the process for full legalization.

Even the historically conservative Deep South has started to make steady gains with Alabama joining Louisiana as states from the region to legalize medical marijuana. While the timing of each of these distinct opportunities varies based on factors such as the prior existence of a medical market and associated regulatory framework, in general, we're seeing an uplift in our consulting backlog indicating states are moving forward.

With muted consulting results in the first half of the year as some of the larger states were slow to start, we are encouraged to see the strength of planned projects in the second half. As these projects are completed, we would expect a corresponding increase in software revenue as licenses are granted and our consulting clients begin to build out their IT infrastructure in these new markets.

Looking beyond our growth initiatives within the existing regulatory framework, we're encouraged to see the priority which has been placed on the recently proposed Cannabis Administration and Opportunity Act. As many of you know on July 14, senators Chuck Schumer, Ron Wyden, and Cory Booker unveiled their 163-page bill draft which, upon passage, would federally legalize cannabis in the United States.

This is important legislation as it addresses crucial needs in cannabis including decriminalization, social equity, taxation and regulation, consumer safety concerns, reform of banking laws, investment research, authorized medical use access to veterans, interstate commerce, and economic empowerment to communities and individuals directly impacted by the war on drugs.

These are the necessary categories to address the regulation of the cannabis industry and help propel American economic recovery in the wake of the COVID-19 pandemic. In addition to the broad beneficial implications of federal legalization for Akerna, this bill also includes language directing the Secretary of the Treasury to establish a federal track and trace system for cannabis products to prevent diversion as well as federal and state tax evasion.

Given the B2G capabilities we have built with our Leaf Data Systems offering and our recently announced federal software contract with St. Vincent and the Grenadines, as well as the breadth of our regulatory compliance across current states, we believe there may be an additional opportunity for us to pursue software sales at a federal level.

While the proposal of this bill has been met with great support, many of those reporting on the topic have focused on the likelihood of bipartisan support. While a worthy point equally applicable to any proposed legislation given the current political environment, what is often overlooked is the evolution of bipartisan support on cannabis-related measures over the last few years.

Using our own state of Colorado as an example, when recreational cannabis legislation was first introduced in 2014, it received harsh criticism from both the democratic governor and republican senator. After those initial objections and witnessing first hand the economic benefits derived from such legislation, both became supporters with senator Corey Gardner co-sponsoring most subsequent cannabis-related bills.

This is not an isolated event. Of the 37 states which have thus far passed some form of legislation around cannabis legalization, there is a large contingent of republicans within those states who have similarly seen the benefits first hand and are beginning to step forward. The most recent co-sponsor to add his name to the SAFE Banking Act is Republican Roy Blunt of Missouri. While it is too soon to make predictions on the likelihood of the Cannabis Administration and Opportunity Act ultimately passing, the evolution of public and political perception on the topic of cannabis reform continues.

With the priorities set in place by the current congress, there's a strong chance that even if the current proposed bill does not move forward, it will pave the way for some form of meaningful legislation such as the SAFE Act or safe plus tax reform to pass in the current session, further increasing the opportunity in front of us. In fact, the US House of Representatives approved a package of pending legislation last month that contains similar language and provisions to the SAFE Banking Act.

Closing, we are very excited about the many value creation opportunities ahead and the business we have built to leverage the upcoming waves of growth. With the leadership position we have and our core business and capabilities we have integrated to take advantage of new opportunities such as new state initiatives and ultimately US federal legalization, we strongly believe we are quickly approaching an inflection point in growth both in the cannabis industry and to Akerna's role within it.

All our hard work and achievements to date have positioned us very well for this moment, and we look forward to driving long-term shareholder value as the path unfolds in front of us.

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

Thanks Jessica. Today I'll provide an overview of our financial results and key business metrics for the second quarter ended June 30, 2021. As a reminder, these results are discussed in further detail in our form 10-Q which will be filed shortly with the SEC. Financial results reported today are preliminary.

Final financial results and other disclosures will be reported in our quarterly report on form 10-Q and may differ materially from the results and disclosures today due to, among other things, the completion of final review procedures, the occurrence of subsequent events, or the discovery of additional information. We encourage you to review the filing in detail.

Moving along to business updates, this past quarter we continue to deliver on our core objectives of investing in innovation and revenue growth opportunities including the acquisition of Viridian Sciences, optimizing our operating infrastructure and improving profitability. With software revenue up 17% sequentially and 56% year over year, approximately 900,000 of new ARR bookings and the average booking amount of 27% year over year adjusted for a one-time transaction in Q2 2020, the growth momentum of our business continues as larger multi-location and multi-state operators increasingly implement our solutions to solve their business needs.

Transaction volume was up 57% year over year. Retail order value was flat year over year. However, in Q2 of 2020, retail order value was up 90% against the same period of 2019, as consumers stocked up on product ahead of potential shutdowns related to COVID. Our strong demand pipeline generated by both client growth and organization-wide implementation plans gives us confidence in our ability to grow our revenue and profitability as we prepare for the upcoming industry catalyst Jessica mentioned earlier.

Now let's review the financial results for the quarter. As a reminder and unless otherwise noted, all metrics are non-GAAP. A reconciliation of GAAP to non-GAAP financials is included in our earnings release and posted on our Investor Relations website. We encourage you to review the reconciliations there as well as review our financial statements for the quarter ended June 30, 2021 contained in our form 10-Q to be filed with the SEC shortly.

Total revenue grew 22% on a sequential basis and 63% year over year to $4.9 million through a combination of organic and inorganic growth, including strength in our consulting business, new software product lines and partnership revenue, and the revenue contribution from acquired assets. Software revenue was up 17% sequentially to $4.5 million and up 56% compared to the prior year. We currently have approximately $1.2 million of ARR backlog pending go live.

Consulting revenue more than doubled sequentially to approximately $400,000 as a result of project timing in the prior period. Progress on new state initiatives continues to be mixed. However, as Jessica previously mentioned with our current backlog and growing pipeline of opportunities, we believe the second half will be meaningfully stronger than the first half.

Gross profit was $3 million for the quarter and represented a 52% gross margin compared to a gross profit of $2.6 million and a 64% gross margin in the prior quarter. Our gross margin percentage was slightly impacted by the Viridian acquisition as we have not fully realized the cost synergies. Throughout the second half of the year, we'll continue to focus on driving leverage from our infrastructure, and we expect our margin profile to return to the mid to upper 60% range near term as cost synergies are realized, consulting revenue rebounds, and as our software revenue grows adding a higher contribution margin to our revenue mix.

Moving to operating expenses. Total operating expenses increased approximately $236,000 sequentially, mainly a result of the acquisition of Viridian offset by the continued execution on cost management and operating efficiencies. In the quarter operating expenses increased only 5% from the prior quarter even though revenue increased by 22%, demonstrating our ability to drive significant leverage out of our total cost structure.

The net effect of increased revenue, while leveraging cost was an improvement in our adjusted EBITDA margin of 27 percentage points sequentially and 72 percentage points year over year. These are sustainable changes that will drive our operating margins higher over time. These efforts include productivity enhancements through system and process improvements and improved allocation of human capital. Product development expense increased approximately $140,000 or 12% from the prior quarter mainly a result of the Viridian acquisition.

In the quarter, we capitalized approximately $1.2 million of software development as we continue to accelerate our product roadmap. We continue to invest in product development that we believe will deliver the complete compliance experience for our clients.

Sales and marketing expense similarly increased $80,000 or 5% sequentially with incremental expenses related to the Viridian acquisition offset by the continuing refinement of our go-to-market strategy. While we continue to be pleased with our sales and marketing efficiency as we continue to deliver new business growth with improving client acquisition costs, we plan to make incremental investments in the second half of the year to enhance our marketing messaging, create alignment across our portfolio of brands, and capitalize on our key development initiatives. General and administrative expenses were flat sequentially and down 9% year over year.

In the quarter, adjusted EBITDA was negative $1.6 million compared with negative $1.8 million for the quarter ended March 31, 2021, an improvement this quarter of 11%, and compared with negative $3.6 million for the prior year, a year-over-year improvement of 54%. We believe adjusted EBITDA, when considered with the financial statements determined in accordance with GAAP, is helpful to investors in understanding and comparing our performance.

As of June 30, 2021, our cash balance was approximately $11.8 million. We continue to be prudent with our spending levels, and we've maintained a healthy cash position to manage the business. Cash on hand and access to the capital markets positions us well to execute on our strategy, which is a significant advantage over many of our competitors. We expect continued improvements in our financial performance as we continue to scale and drive towards profitability.

In closing, the tailwind of cannabis reform and consumer adoption is growing but, in some cases, offset by short-term budget constraints, largely a result from the uncertainty presented from COVID-19. However, we are optimistic about our product roadmap and our new software solutions coming to market. We continue to develop more platform capabilities and expand market reach.

We believe our strategy positions us well within our industry. We continue to have a strong balance sheet, and we're well positioned to invest in the growth we expect going forward.

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

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

Thank you. (Operator Instructions) Brian Kinstlinger, Alliance Global Partners.

Hi. Good morning, guys. Thanks for taking my questions.

Good morning, Brian.

Good morning, Brian.

You mentioned you expected the ramp in consulting in the second half as many states are working through regulation and some were slow to start. Can you help frame that? Will we see quarters similar to 2019, and do you expect demand will be sustained in 2022 based on the timelines that states plan to launch? I know consulting has been lumpy, a couple of quarters good, a couple of quarters down. So I'm just trying to understand the sustainability also.

Great question. Thanks Brian.

We do expect a continued rebound, although I do want to note that states can and often do make changes to their programs that can delay initiatives. And we just speaking to the delay. We've seen some states delay as they focus on perceived, higher priority initiatives and continued response to COVID. And in addition, a few states have moved from a competitive limited award of licensing to a lottery style based on the lock of the draw.

And this shift in awarding of licensing, which is new this year, it can limit our opportunity to consult with some of those clients in advance of license award, although it certainly does not impact our post license award consulting opportunity or software opportunity in those states. And we still have a strong pipeline backlog -- pipeline and backlog of opportunity, including some near-term opportunities expected in both New Jersey and Ohio.

Great. And then with many states in the process of regulating as we've discussed, do you see a possible acceleration in the bookings trends we've been at, about a $1 million a quarter for a few quarters which, by the way, is much better than the previous trends. So that's great. But I'm curious if they have to select software partners, if they're -- if we should expect an acceleration on the software side, can you talk about how Akerna is innovating to create differentiation in the marketplace with its software?

Sure. We're still very optimistic and of course closely watching for state progression and new markets, as well as how our pipeline bookings and backlogs shape up as we progress into Q3. Also as we noted, our MJ Retail offering is out of beta. We have great adoption among existing clients as well as new prospects. We continue to see increased interest in MJ Analytics. We've got some Leaf Data RFPs out there, as well as integrations with our leading financial planning systems leveraging our recent acquisition of Viridian.

In addition, as we recently announced, we've secured the world's first national government cannabis contract with the Vincent and the Grenadines. So we think we've got some great opportunities there on the horizon. But we'll be closely watching that state progression.

Okay. I'll ask one more then I'll get back in the queue with my others. We haven't heard much lately about the solo*TAGs. So maybe can you provide an update on this product and how adoption has gone? And has it been impactful to sales in the last few quarters especially this quarter that was just reported?

Yes, sure. So as I noted, we've either recently responded or we're responding to some RFPs from new states with these data systems and nearly all of those conversations, either the RFPs or the conversations that we're having with interested states do include the solo product as well.

Okay. Thank you. I'll get back in the queue.

Max Michaelis, Lake Street Capital Markets.

Hey. Good morning, guys, and congrats on your quarter.

So my first question is actually towards more of the retention in like [landings] and account model. First one is for the Viridian Sciences. Are you seeing any threat of account turnover at Viridian within the install base?

Can you clarify turnover? Do you mean turnover of the client, is that what you said? Sorry, I didn't quite hear.

It's more of the accounts within Viridian Sciences. Are you seeing any turnover? Are you seeing threat of account turnover possibly leaving within the install base?

Sure. So generally, the heavier the lift and the more deeply embedded it is with every facet of your business and your financials, the less likely any turnover is. And Viridian Sciences being an SAP-based product that certainly does take an investment and commitment in time to install and implement in order to leverage the benefit and synergies of having that product installed, it generally has a very low turnover rate. And we would expect to see that continue.

Okay. Thanks guys. And then my other question is related to competition. So you guys mentioned that like the emergence and like the opening of the overall market. I just want to know. Are you guys seeing any danger from larger competitors who may be broadening their product suites to close the gap with turn in relation to track and chase, trace, and seed the sale?

Sure. Good question. For a long time, we believe that the greatest potential competitors would be the large ERP system providers such as SAP and NetSuite. And as you know as a result, we've made significant investments over the past several years in integrations and developing those strategic partnerships with these providers, including our recent acquisition of Viridian. At this point, we feel quite good about the position we've created for ourselves with the large players now looking to partner with us versus trying to build it themselves to compete and the value where we've carved out, where we live in our compliance gateway and our ecosystem and how that works synergistically with a large financial system.

Okay. And then just my last follow-up before I'll jump back in the queue, more related to the MJ Freeway rollout. You guys mentioned it would be more in the second half of 2021. Is there any more color you can provide on that possibly end of third quarter, beginning of fourth quarter, kind of a better timeline on when we might see that full rollout?

In MJ Retail and talking about our new offering there, we just completed our beta and are launching broader scale sales and marketing effort this quarter. I do want to note that although we certainly expect to see some incremental nice growth from that MJ Retail product, the larger play there is really in gaining all of that additional access to the point-of-sale transaction in advance of SAFE banking and being able to leverage something with payments.

Scott Buck, H.C. Wainwright.

Hi, good morning. First one is Johnny. I was hoping you could provide a little bit more color on some of the enhanced sales and marketing you talked about. Are we talking about adding heads or kind of what are we looking at?

Good morning. Good question. I think as we look to the back half of the year, obviously we've done a lot of M&A, and we really want to make sure we refine the sales and marketing and the go-to market strategy a little bit more. Certainly, over the last 12 months it has been -- there has been a lot going on.

So there's no new heads. There's no new -- really nothing of significance. It's really just refining a little bit of that investment and starting to pump a little bit more into that sales and marketing channel sort of in advance of a lot of the federal initiatives that I think we see coming. So it's nothing of significance. It's nothing material. But it's really just maybe a little bit of a renewed focus there.

Okay. That's helpful. And the second one for me. I was hoping you guys might be able to provide a little bit of commentary around the M&A pipeline and environment. I know you're still in the process of digesting Viridian. But any kind of color there would be helpful as well?

Sure. We continue to have a strong pipeline of potential technology in each of our three target categories namely TAM expanding technology, product tuck-in, and market share. And as a result, we can afford to be very opportunistic with anything we pursue and focus on opportunities where there's positive cash flow synergy. So as you look at the industry landscape, there are probably more Trellis and Viridian size opportunities out there and available than there are larger opportunities.

Okay. That's perfect. I appreciate the time guys.

(Operator Instructions) Brian Kinstlinger, Alliance Global Partners.

Great. Thanks for taking the follow-ups. First, I wanted to -- I'm glad you mentioned Leaf Data because obviously with a number of states regulating, there's a lot of opportunity there. Has there been any change in the competitive landscape at all? You've got two major competitors there, but maybe just discuss the competitive landscape on the state side?

Sure. Good question. So as I mentioned earlier we've either recently responded or we're responding to some RFPs from new states and just given the length of the RFP process, even if new ones and new contracts are issued near term, it's unlikely we would see revenue in calendar 2021. However, I can share that we are additionally in conversation with a number of additional states that are very interested in both Leaf Data Systems as well as the Solo product.

And in particular, we have the closed loop model that combines both our B2C and B2G products with the Leaf Data Systems and MJ Platform that is in use in both Pennsylvania and Utah. And I can share that our contacts in Pennsylvania and Utah are regularly contacted about this particularly in Pennsylvania, which has a very robust and healthy program that is appealing to the industry and enforcers alike. And we expect it to serve as a model in future states based on the states we know are already having those discussions.

Just to follow-up on that just to make sure I understand. Are there -- I mean there's half dozen states that are working through regulation. Are there any kind of already communicated to the market that they are going to move forward with a similar model to Utah or Pennsylvania where whoever is the B2G provider is also going to be the B2C provider exclusively?

The current RFPs to which we responded, I think there's a handful out there, two or three. Rhode Island, Connecticut, and I think South Dakota. Those do not specify. So there has been an open opportunity to respond with that. However, there are some quite a bit larger markets, larger states with whom we're having those conversations that we would expect to see issues from RFPs over the -- given the state timing we should probably talk in terms of coming quarters, we would expect to see those RFPs.

Okay. Lastly, can you quantify, John, maybe revenue from Viridian and Ample? I think this is the last quarter where Ample wouldn't be part of Organics as it has been about a year since the acquisition. And then, although it has been a little bit slower during the pandemic, can you maybe provide a general update on the Canadian market?

Sure. Maybe Jessica, if you want to touch on the Canadian market overall, I think. And then, I can certainly touch on the Viridian and Ample revenue. Maybe talk more strategically first.

Sure, sure. So we are seeing some more activity just over the past year given COVID. We've seen more activity and opportunity domestically versus Canada due to the mostly stricter COVID regulations in Canada. For example, Health Canada did place a hold on issuing any new licenses for a meaningful portion of the year.

With that said, in the mid to long term as the situation normalize, we remain very excited about our opportunities in Canada particularly with our enterprise partnerships including Shoppers Drug Mart. And we are starting to see Health Canada begin to issue some new licenses again.

Yes. And then Brian, I guess back to your other question. So starting in Canada, I think COVID actually impacted Canada quite a bit. As we know, they've probably done a little more shut down than here in the US. I think we're happy with the work we've done in Canada with Ample, and we're seeing really good penetration and continued market opportunity there. So I think overall in spite of some pretty difficult headwinds north of the border, we continue to execute and deliver on that platform.

I think here in the US, I think we're really excited about the Viridian opportunity. It's a significantly larger opportunity for us -- sorry, that platform and the SAP or sorry the -- yes, the SAP solution I think for us is pretty significant. And they had a really strong quarter, and we're starting to see some of our customers display some interest in the Viridian product. And we're excited about where we can take that here in the year ahead.

And would a $1.5 million be in the ballpark of the contribution in the quarter from these two acquisitions?

Yes. Without having the right number -- the exact number in front of me, I think it's a fair way to think about the two contributions of that business.

There are no further questions at this time. I'd like to turn the floor back to Jessica Billingsley for any closing remarks.

Thank you, operator. We are the technology ecosystem for cannabis serving operators, governments, and brands. Our ecosystem strategy and strategic investments are focused on locking up the tax spend of the enterprise cannabis businesses and solving with technology the growing demand for increased supply chain transparency among consumers and governments.

We thank you for your interest in Akerna, and we look forward to sharing our progress with you as we move forward.

Ladies and gentlemen, this concludes today's webcast. You may now disconnect your lines this time. Thank you for your participation and have a great day.