Akerna Corp.

Good morning and welcome to Akerna's quarter-ended September 30th, 2020 Financial Results Conference Call. Today's call is being recorded. All lines have been placed on mute. If you would like to ask a question at the end of the prepared remarks, please press the star key, then the number one on your touchstone phone. At this time, I would like to turn the conference over to Kristin Naughton with Akerna for introductions and reading of the Safe Harbor Statement. Please go ahead, Kristin.

Thank you, and welcome to today's quarter-ended September 30, 2020 conference call. Representing the company today are Jessica Billingsley, CEO of Akerna, and John Fowles, the FO of Akerna. Both will be available for questions during the Q&A portion of today's call. Before we begin our 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, plan, intend, believe, seeks, may, will, should, future, propose, and variations of these words or similar expressions or the negative 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 ACURNA and statements regarding expected future revenue recognition. These forward-looking statements are not guarantees of future performance, conditions, or results and involve several known and unknown risks, uncertainties, assumptions, and other important factors which could cause actual results or outcomes to differ materially from those discussed in the forward-looking statements, including risks related to changes in the cannabis market and risks related to the impact of the COVID-19 crisis. These risk factors are more fully discussed in Akerna's filings with the Securities and Exchange Commission. 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 the Ternus CEO, Jessica Billingsley, for a more in-depth discussion of the company's quarter ended September 30, 2020. Jessica?

Thank you, Kristen. Good morning, everyone. Thank you for joining us, and we welcome you to our conference call for the quarter ended September 30, 2020. As the calendar year comes to a close, I'd like to take a moment to reflect on all we have accomplished this quarter. First, let me begin by addressing the historic election we have just witnessed. A total of seven ballot measures in five states were up for a vote this past election. Every single state approved their cannabis measure by wide margins, and the only measures that did not pass were those competing with other cannabis ballot initiatives. We now have four new adult-use cannabis markets two new medical markets, and far more opportunity for the cannabis industry and cannabis technology solutions. Based on existing adult youth and medical markets, we estimate these ballot measures passing represent approximately $18 million in new total addressable market for our software offerings. In addition to the states that just passed via ballot measure, there are many more state governments with pending legislative initiatives as they look for ways to generate jobs and tax revenue. We are delighted to see the cannabis industry playing a role in helping these states generate new revenue streams. We also look forward to assisting clients in these states gain licensure, as we did in Iowa, where 100% of the medical cannabis dispensary licenses were awarded to MJ Freeway consulting clients. We are pleased to report in this quarter our total revenue increased 16% when compared to the same period last year to $3.7 million. We are on track to deliver strong year-over-year software growth in excess of 30%. Our software revenue increased 40% on a year-over-year basis. And our total SaaS ARR is currently $14.1 million, a 44% increase over the same time last year. These strong gains in software offset declines in our consulting revenue. As I noted several months ago in our annual earnings call remarks, narrowing our focus to client experience has increased our market share among the multi-state, international, and emerging enterprises in the $17 billion global cannabis industry. Further illustrating the value of our technology to the important mid-market and enterprise client base, our average MJ platform deal size has also increased by 94% year over year. On average, MJ platform clients, number of transactions tracked in our system, has also increased by 180% year over year. Throughout 2020, we have doubled down on our existing client partnerships and both our client and product experience, ensuring we are as sticky as possible with our rapidly consolidating and growing client base. Our retention rates have improved significantly. MJ Platform delivered 99.99% uptime And our average client satisfaction rating across all products exceeds 7 on a scale of 1 to 10. 2020 has been a banner year for the cannabis industry. Product demand continues to grow with consumer sales increasing nearly 80% year over year. Nearly every state and country has declared access to cannabis essential, with new technologies employed to facilitate digital sales channels, direct-to-consumer delivery, and and curbside pickup. The industry's growth has enabled us to continue to pursue our strategic objectives. In a time when investment capital is scarce among many sectors, Akerna successfully closed a $12 million public offering, which positions us to capitalize on the enormous market share opportunity in newly opening cannabis markets in New Jersey, Arizona, Montana, South Dakota, and Mississippi. With pro forma $23 million in cash and a strong balance sheet, we are well capitalized to deliver top-line growth and drive towards profitability. In addition to the public offering, we also announced a series of strategic partnerships and acquisitions that will boost our revenue growth and expand our market share gains across the industry. As Canada's industry-leading seed-to-sale platform, we enjoy a majority market share and serve some of the world's largest brands, including Aphria, Aurora Kronos Group, Organigram, and several other large Canadian enterprise businesses. After closing our Ample acquisition in early July, we fast-tracked our efforts to fully integrate Ample into our business. Under the leadership of Tom Ritchie, Ample Organics President, the pace of integration has accelerated. bringing the business unit to cash flow neutral ahead of schedule. We are now aligned and focused on revenue opportunities. In addition to the compelling opportunity to sell our retail offerings as provinces and territories continue to issue new licenses for adult use, there is a significant opportunity to sell the Akerna Ecosystems GMP and accounting system integrations with Sage Intact, NetSuite, and SAP into our significant Canadian enterprise operator base. We will also be pursuing opportunities to leverage our pharmacy-specific functionality in the U.S. In August, we signed an agreement with Priority Technology Holdings to provide CBD and hemp retailers that use Akerna's point-of-sale products with credit card payment processing. Through our agreement with Priority Technology, hemp and CBD brands now have a traditional credit card processing solution that is both affordable and seamlessly integrates with the rest of the Akerna ecosystem. With this agreement, we are positioned to also activate payment solutions through priority for medical and adult use cannabis sales pending legislative action at the federal level. This quarter marks the launch of MJ Retail, a first-of-a-kind proprietary software technology designed to provide merchants and consumers with a flexible and mobile-friendly experience. Cannabis businesses are often faced with the choice of using an underpowered but easy-to-use system or one that is fully featured and requires sufficient training. MJ Retail represents the best of both worlds by offering a clean and lightweight point-of-sale solution that connects the Akerna ecosystem without sacrificing critical features. MJ Retail positions us for even more robust growth among retail cannabis operators, where we can capture even more potential payment transaction volume post-federal change. As our mid-market and enterprise clients increasingly focus on their competitive positioning and business fundamentals, we partnered with the leading business intelligence firm, Domo, to release the next generation of cannabis data analysis MJ Analytics. Leveraging Domo's cloud-based intelligent systems, MJ Analytics helps operators run their business by empowering users to perform self-serve analytics on fresh data that can drive everyday decisions. As our existing clients upgrade to MJ Analytics, this represents as much as 25% in upsell revenue across our B2B software suite. Before I hand things over to John, but to just once again highlight the opportunities opened by the election. Despite a tight presidential election, cannabis once again proves to be a bipartisan issue that unites our fellow Americans. Five states voted on cannabis reform, and all five easily passed their respective measures. We now have four adult youth cannabis states in New Jersey, Montana, South Dakota, and Arizona, We are also proud to welcome Mississippi as the newest medical cannabis state, bringing the total medical-only states to 35. These new states represent as much as 18 million in new available total addressable market for our products and services. Once again proving to be more popular than either presidential candidate, cannabis reform has a clear and unambiguous national mandate. One out of three Americans now live in states where adult use cannabis is legal, and many more live in states where medical cannabis is legal. With the election in our rearview mirror, we now look forward to federal cannabis reform, which opens new revenue stream opportunities, representing orders of magnitude increase from where we are today, as we can begin to monetize based on transaction volumes. All of our work and achievements to date have positioned us for the inflection point of U.S. federal legalization. Now let's have John take us through the details of our financial results. John, please take it from here.