Akerna Corp.

Good morning, and welcome to the Acurnis quarter-ended December 31, 2020 Financial Results Conference Call. Today's call is being recorded. At this time, I'd like to turn the call over to Erica Mannion, Investor Relations for Acurnis. Thank you.

Thank you, and welcome to today's quarter-ended December 31, 2020 Conference Call. On the call today are Jessica Billingsley, CEO and Chairman of Acurnis, and John Fowle, CFO of Acurnis. 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. Such words as estimate, projected, expect, anticipate, forecast, plan, 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 a corner and statements regarding expected future revenue recognition. These forward-looking statements are not guarantees of future performance, conditions, or results and involves several known and unknown risks, uncertainties, assumptions, and other important factors which 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 occurrence 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, for a discussion of the company's quarter and full year ended December 31, 2020. Jessica?

Thank you, Erica, and good morning, everyone. Thank you for joining us today. We stated on our last quarterly call our intent to change our fiscal year end to December 31st, which we have done. And therefore, any references to the quarter period during today's call are references to our fourth calendar quarter for 2020 and to December 31st, 2020. And references to the year are references to the calendar year of 2020. 2020 was an important growth year for Acarna. and I'm pleased to share in the quarter we grew our software business by 38% year-over-year. Our business as a whole grew 24% in 2020, with our strong software growth offset by a contraction in our consulting business, which was impacted by pandemic-related shutdown and delays. As businesses and governments have adapted, we're encouraged to see our quarter-over-quarter consulting revenue increase by 75%, while our software revenue also grew sequentially in the December quarter. Our total staff ARR is currently 13.8 million, a 42% increase over the same time last year. In addition to top line growth, the restructuring activities taken in 2020 are delivering results with a 36% sequential improvement in adjusted EBITDA in the December quarter. We are encouraged by the pace of demand we saw going into 2021. We look forward to continued growth in the quarters ahead. As has been a theme for much of 2020, our focus on the multi-state, international, and emerging enterprises in the $21 billion global cannabis industry continues to serve us well. This quarter, we saw continued term improvement by 41% sequentially, while consolidation continues with many of our larger clients, significantly increasing their footprints. On average, MJ Platform clients' number of transactions tracked in our system has increased by 63% year-over-year. Our average MJ platform deal size has also increased by 21% year-over-year, further illustrating the value of our technology to the important mid-market and enterprise client base. MJ platform delivered 99.97% uptime in the quarter, and our average client satisfaction rating across all products now exceeds 8 on a scale of 1 to 10. With leading market share driven by the breadth and capabilities of our platform, we believe we are well positioned to capture the opportunity in front of us as the cannabis industry expands in the years ahead. At the core of Akerna's platform differentiation is our architectural approach to solving compliance and governance requirements. Being a pioneer in the cannabis industry, we identified early on the challenges and complexity that would arise in managing regulatory requirements as the industry grew. With different compliance requirements for such things as varying documentation required at each step of the cultivation process, labeling, taxes, details captured, and even down to basic units of measurement on what constitutes a batch or lot, we understood building these unique compliance requirements one by one into our individual software products, we have scaling limitations and become overly cumbersome as new markets develop. In addition, much like sales tax compliance on the national level, the regulations themselves continually change in both established and new markets, adding to the overall complexity of the problem. To address this fundamental challenge, six years ago, Akerna invested in a strategic architectural shift to extract compliance and governance layer from our solutions. By creating a standalone gateway, with which our applications then integrate via API, we have significantly reduced the complexity of maintaining compliance within the fragmented, ever-changing market framework, while creating the ability to rapidly scale as new markets are introduced. Streamlining changes and updates into a single compliance gateway ensures rapid deployment by eliminating the typical industry practice of continually rewriting code for each individual application. Given this architectural approach and our long-standing presence in the market, the net result is 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. In our view, this is critical to being an enterprise software provider in the cannabis industry because regulatory requirements are a foundational part of virtually every operational process. As we grow and strategically prepare for the enterprise evolution of the industry, our goal is to leverage our core capabilities and expands the breadth of our platform to capture the multitude of growth factors ahead. Over the last year, the infrastructure improvements we've made and the acquisitions we've closed, and the acquisition strategy we continue to pursue, position Acarna to be one of the largest cannabis technology winners as legalization expands to new states. Our platform has allowed us to create a true ecosystem with over 80 integrated products and more than a dozen strategic partners, making us stickier and helping us to maximize wallet share of our clients as they scale their operations and the industry makes a natural progression to maturity. Building on the enterprise capabilities of our platform, we have also integrated with large-scale financial and tax management solutions like Oracle's NetSuite, Sage and Tax, and SAP, with the core tenets being that as organizations grow, they will increasingly look to adopt more sophisticated financial and tax planning management tools on par with those of mid-market and enterprise companies and other industries. The importance of these integrations is the basis for our recently announced acquisition of Viridian. By way of background, Viridian is one of very few system integrators focused solely on the cannabis industry. and the only one leveraging SAP's Business One offering. While Viridian has experienced success in the cultivation and production markets, driven by their strong SAP implementation team, there were limitations on the breadth of their addressable market, given the regulatory complexities I mentioned earlier. By acquiring Viridian, the Viridian Business One product will now have direct access to our compliance gateway, while Acarna adds strong SAP system integration capabilities. At 1.7x 2020 ARR, we believe this transaction is a great value for both companies, particularly when taking into account the cash flow synergies we expect to realize in 2021. Equally important, this acquisition expands the breadth of our SAP integration, with Viridian's Business One offering serving smaller and mid-market organizations, while Acronis ECC offering continues to serve large international and enterprise players. In combination with our Sage and Oracle's NetSuite integration, we have significantly bolstered the capabilities of our platform to include enterprise-class tax planning solutions, including global financial statements and tax reporting, to help our clients more efficiently and, of course, compliantly address rapid industry growth. As a further substantiation of our approach to building enterprise capabilities into our platform, earlier this year, we partnered with Domo, to release the next generation of cannabis data analysis, MJ Analytics. As the industry continues to mature, we see analytics as the natural next step in technology spending to take advantage of the large data sets captured for regulatory requirements. Rather than simply capturing this data for the sake of submitting compliance reports, our clients can now leverage that data to make informed decisions about their own operations. thereby improving business outcomes, including sales growth and profitability. The value is being recognized by the market and has generated a six-figure increase in ARR since launch. Finally, as we expand further into the retail segment, last quarter we announced MJ Retail, a first-of-its-kind proprietary software technology designed to provide merchants and consumers with flexible and mobile-friendly experience. By providing a clean and lightweight point-of-sale solution that connects to the Akerna platform without sacrificing critical features, MJ Retail positions us for even more robust growth among cannabis retail operators. In conjunction with our retail offering earlier this year, we also signed an agreement with Priority Technology Holdings to provide CBD and hemp retailers with credit card payment processing through Akerna's point-of-sale products. With several clients now on beta versions of the product, we're encouraged by the feedback we have received thus far, and we look forward to a wider rollout in the coming quarters. In addition, combining our MGA retail point-of-sale solution with the ability to activate payment solutions through priority technology, we believe we're well-positioned to capture transactional revenue streams in the medical and adult-use cannabis markets, pending legislative action at the federal level. With the election and the subsequent Senate runoff races in our rearview mirror, the combination of the growing support for cannabis at the state level, coupled now with the Democratic administration and Senate majority, opens the door for significant movement within cannabis legislation. The first months of the new administration may include some exciting reforms at the federal level, including the long-awaited passage of the Safe Banking Act, which is back on the House floor, increased support for the hemp industry, and eventually federal decriminalization through legislation similar to the MORE Act. All of our work and achievements to date have positioned us for this 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.

Thanks, Jessica. Today I'll provide an overview of our financial results and key business metrics for the quarter ended December 31st, 2020. As a reminder, these results are discussed in our earnings release for quarter ended December 31st, 2020. Further detail for the six months ended December 31st, 2020, including our audited financial statements for that period, will be in our Form 10-KT, 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 annual report on Form 10-KT They 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. Before I review the financial results, I'd like to again highlight the administrative change. As discussed last quarter, our Board of Directors adopted resolutions to change our fiscal year-end from June 30 to December 31st. The transition period from June 30 to December 31st will be covered by filing a transition report on Form 10-KT for the six months ended December 31st, 2020. This change was made to simplify and standardize our operations for enhanced comparative analysis and reporting for both internal and external benefit. 2020 was a period of rapid transformation for Akerna. We have matured as a publicly traded company We completed three acquisitions that have expanded our footprint and provided additional TAM. We completed two financings, giving us the capital to accelerate growth. And we have made remarkable progress on internal initiatives of building scale, developing our software ecosystem, and while continuing to focus on client experience. The execution rigor is driving efficiencies across our income statement. In the fourth quarter, gross profit margin was 66%, a record for Akerna. Over the last six months, we have improved adjusted EBITDA 46%. This past quarter, we had strong sales to net new clients as a result of building momentum in both lead generation and sales, recording $800,000 of new ARR bookings. Our average booking amount is up 21% year over year, which illustrates the success we are seeing with larger multi-location and multi-state operators. As Jessica mentioned, we continue to have a strong software and consulting pipeline. Additionally, our platform engagement continues to grow and reach new heights. Transaction volume is up 63% year over year. Retail order volume is up 56% year over year. And retail order value is up 105% year over year. On the operations front, the restructuring actions we've taken are delivering results. as seen in our December quarter financials, with adjusted EBITDA improving 36% sequentially. While incremental cost improvement opportunities remain, we are pleased with the progress we've made in calendar 2020. Turning to the financial results, for the December quarter, total revenue increased 11% sequentially to $4.1 million, driven by a combination of organic software growth and a return in demand for our consulting practice. Software revenue grew 4% sequentially to 3.4 million. We currently have approximately 1.2 million of ARR backlog pending go-live. Consulting revenue grew 75% sequentially to approximately 600,000 and is up 345% from the June quarter. While we expect we will see increased demand for our consulting services as new state initiatives are implemented following this past election cycle, It is worth noting that revenue from these projects can be lumpy period to period due to the way services are delivered and revenue is recognized. Cost of revenue was down 339,000 or 19% sequentially. Gross profit was 2.7 million for the quarter, an increase of 37% from the September quarter and representing a 66% gross margin. This compares with a gross profit of 2 million and a 53% gross margin in the prior quarter. The increase in growth margin is tied to both a rebound in consulting revenue in the quarter as well as operational efficiencies achieved, driving an improvement in overall software margins. We expect to continue to expand our margin profile in the periods ahead as consulting 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 $4.7 million sequentially. mainly a result of non-cash impairment charges related to our annual impairment review required per U.S. GAAP, which I'll touch on shortly. Non-GAAP operating expenses decreased approximately 317,000, or 6% sequentially, as our incremental restructuring actions materialized. Non-GAAP operating expenses exclude a number of one-time, non-recurring, and non-cash expenses that include depreciation, amortization, stock comp expense, business combination expenses, impairment, and other non-recurring charges. 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. Product development decreased 352,000 or 20% sequentially, a result of efficiencies achieved integrating our acquired assets and continued focus on scalable infrastructure. Sales and marketing expense decreased 267,000, or 13% sequentially, as we have built a more focused and targeted sales organization and efficiencies achieved integrating our acquired assets. We have finalized our sales and marketing integration and expect to realize significant synergies in future periods as we refine our go-to-market strategy. We are pleased with our sales and marketing efficiency as we continue to deliver new business growth with improving customer acquisition costs. General and administrative expenses decreased over $500,000 or 20% sequentially. As I have shared previously, we are laser-focused on operating efficiencies across the organization, having completed a number of incremental restructurings that are starting to have a favorable impact to our financial results. In the quarter, adjusted EBITDA was negative $1.9 million, compared with negative $3 million for the quarter ended September 2020, an improvement this quarter of 36%. In 2020, macro-level shifts in the global economy led to delays in executing on strategic initiatives related to acquired assets. As part of our annual assessment required under U.S. GAAP, we updated our long-term forecast, and as a result, management concluded that an approximately $6.9 million impairment adjustment was required. The impairment charge is recorded as a component of operating income, but excluded for reporting adjusted EBITDA. The strategy for our acquired assets remains unchanged. The opportunities are significant in our commitment to their success and wavering. As of December 31st, 2020, our cash balance was approximately $17.8 million. Cash on hand and access to the capital market positions us well to execute on our strategy, which is a significant advantage over many of our competitors. We expect continued improvement in our financial performance as we continue to scale and drive towards profitability. The above-referenced non-GAAP financial measures are discussed and reconciled to GAAP financial measures in our earnings press release that was issued before this call. That press release is available on the company's investor relations website, and we encourage you to review the reconciliations there, as well as review our audited financial statements for the six months ended December 31, 2020, contained in our transition report on Form 10-KT to be filed with the SEC shortly. In this past quarter, we continued our efforts of becoming a leaner, more focused organization with the human capital and financial resources to execute our growth strategy. As evidenced by the meaningful sequential improvement in both gross and EBITDA margins, we believe there is significant operating leverage built into our current model as top line growth continues to improve. We are keenly focused on our performance and committed to delivering efficiencies across the income statement. 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. At this time, we'll be conducting a question-and-answer session. If you'd like to ask a question, please press star 1 on your telescope keypad. A confirmation tone will indicate your line is in the question queue. You may press Start 2 if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question comes from the line of Brian Kitzlinger with Alliance Global Partners. Please proceed with your question.

Hi, good morning, guys. Thanks for taking my questions. Good morning, Brian. How are you, Jessica? So you talked about consulting. Obviously, a lot of states have... regulated in most recently Virginia. Can you talk about maybe a little bit more? Have you won consulting projects that you expect to see ramp over calendar 2021? Yes, you said it was lumpy, but should we continue to expect significant increases and the impact on margin would be helpful?

Sure. Well, I'll take that first part and then let John speak to margin. On the first part of your question, we're seeing a combination of both projects that were placed on hold at the beginning of the pandemic start to come back in terms of where we're able to execute on them and recognize that revenue from the booking, as well as new projects from recently passed state initiatives. So one example is the state of Georgia resumed accepting applications. We were able to help a number of clients with those applications, and we're already signing clients in some of the new states. Now, I do want to note that we do expect to see continued lumpiness in our consulting revenue. Sometimes a quarter to quarter, those bookings may not translate directly into revenue recognition, although we do expect a return to historical levels roughly this year. John, do you want to speak to how that impacts margins? Sure.

Sure. So morning, Brian. How are you? So as we've shared before, our cost structure really and our cost of sales is largely fixed. So as it relates to consulting, that's a highly specialized group of people, and we try not to flex them up or down. So we maintain sort of the continuity of those groups. So as we bring on new revenue and new business, that, as you can imagine, comes with a very high margin profile and just drops right through to the bottom line.

Yep. I figured. Great. So in terms of the states in November that regulated in different ways and Virginia as well, are any discussing a single source software provider like Utah, for example? And then can you talk about when we should and how we should think about new state regulation driving software revenue? Is that a year after? Is it months after?

That's a great question, and it's mixed, as you might expect. So, for instance, we're starting to see activity in New Jersey and Mississippi, while South Dakota, which legalized both medical and recreational with no prior framework, is moving more slowly. So we do expect to see that be mixed to some extent. I can share that we are in conversations with a number of states, both new and existing about our LEAF data systems product. There have been no new RFPs issued since our last call, but we are in conversations with several states. The pipeline will result in consulting revenue first and then software revenue following, and we expect something of a rolling thunder as some of those markets will be faster than others.

Are there any states talking about on the speed-to-sale tracking software requiring their licensees to use one single source? Is that in discussion at all, or you don't see that for any of the new states?

We are in discussion with a couple of states who are very interested in the Pennsylvania-Utah model.

Got it. Great. And then can you quantify the dollar value? You mentioned the growth, but the dollar value of cannabis that's been processed through your platform – And if you were able to provide payment solutions, what would that mean from a revenue perspective for the cannabis? And then similarly, once the priority solutions technology is available for you to use, what would that – what market does that give you for CBD and hemp if everyone who sold CBD and hemp used that solution?

Do you want to take that one, John?

Yeah, I'll take that, Brian. Yeah, so if – So let's frame it correctly just to make sure. So if we assumed every one of our customers today on MJ platform at a retail location was processing through our transaction platform, that would probably, you know, plus or minus $20 million I think is the right way to think about it in terms of total size, in terms of our revenue share with our service provider. Right.

Yeah. And then on the SEM TBD side of the same question, right, because that is legal. So once that solution is ready and can be integrated, if everyone who sold CBD and hemp used that solution, I take it it's a smaller addition. But what would that look like?

Oh, it's significantly smaller as an order of magnitude. I mean, obviously a large part of our clients today are on the cannabis front. You know, just to be frank, we haven't looked at that specifically, our hemp and CBD, but it would be several hundred thousand dollars a year is is what I would guess. I mean, the real upside for us here is federal legalization and transacting with our cannabis clients.

Great. And then you mentioned why Viridian. You clearly made a couple of moves to align yourself with SAP. Can you take a minute to discuss, because maybe I missed it, the software function? What are they providing to their customers? And I'm not sure I heard Jessica right, or maybe I did, but how much revenue do they generate in 2020?

So, John, for you, for what is public about revenue, I think what we disclosed – actually, I know the answer. We disclosed a $6 million purchase price, which represents 1.7x 2020 ARR. So not total revenue, but they're ARR. And, you know, maybe just speaking to a little bit of a bigger – your bigger question there in terms of what they do. For a long period of time, we believed the greatest potential competitors would be the large ERP system providers such as SAP and NetSuite. And as a result, we've made significant investments over the past several years in integrations and developing strategic partnerships with these providers, including our recent acquisition of Veridian. Veridian is SAP Business One product that has a number of cannabis-specific compliance pieces that have been built into it today. Of course, there's future synergy and connecting Viridian's Business One product to our compliance gateway and not having to rebuild that compliance or redo it, reimplement it every time in every new market for each new client. So that's where there's some real tech synergy. and continues to prove, I think, the overall strategic value of our product and our product lines. So at this point, we feel really 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.

Great. Thank you.

Thank you.

Thank you. Ladies and gentlemen, as a reminder, if you'd like to join the question queue, please press star 1 on your telephone keypad. We'll pause a moment to allow for other questions. Our next question is a follow-up from Brian Kinslinger with Alliance Global Partners. Please proceed with your question.

Well, I wanted to give others a chance before I ask one more question. You've clearly been acquisitive over the last 18 months or so, as you highlighted. But I know M&A is a big piece to augmenting organic growth. So maybe talk about what valuations look like these days and, you know, what the pipeline looks like. Are there a number of these small tuck-in acquisitions or, you know, couple million dollars in revenue and what specifically, as you look at your total solution, you know, might you, is on your wish list, for example, to add to the platform?

Great question. So we continue to have a strong pipeline of potential technology in each of our three target categories we've shared previously, namely PAM expanding technology, product tuck-in, and market share. And I can share that that pipeline has increased dramatically following the Georgia Democratic election to the Senate, which probably makes some progress towards federal legalization more likely in the near term. So as a result, we can afford to be very opportunistic with anything we pursue and focus on opportunities where there's positive cash flow industry. The second part of your question there, as we look at the industry landscape, there are more Trellis and Viridian-sized opportunities out there and available than there are larger opportunities. And, Jen, I don't know if you want to speak briefly to the valuation for both Trellis and Viridian, the two deals we've announced over the past eight, nine months and sort of how we're seeing some of those valuations.

Sure. I think the valuations are a bit over the board, and maybe there's a way to answer that. I think deals are getting done at lower values, maybe more realistic values, I think, as you look at Trellis with 2X revenue and Viridian sort of in that neighborhood. There's certainly no shortage, as Jessica shared, of opportunity out there. I think there's those who sort of hold themselves out for really high valuations, and obviously when that happens, it's harder to get deals done. So I think we see it pretty dispersed, but I do believe that, you know, where we've been able to complete some transactions is sort of indicative of where deals actually are completed.

Great. And then when I think about the margin profile of Meridian, is it the majority of the revenue software license or SaaS? Is it software license and maintenance? Just take us through so we can at least you know, how we should think about the gross margins compared to yours.

Yeah, so again, I mean, traditional SaaS business with, you know, recurring software revenue, professional services, et cetera, I think they're going to have – you'll expect to see a nice margin profile. I think probably similar, if not maybe slightly uptick to ours, so that'll certainly – I think, add to our overall margin profile and help improve it. But, you know, if we think about Viridian, I think the best way to think about them is just as a standard SaaS business with, you know, software licensing, recurring revenue, and then the traditional professional services to supplement.

Great. Last question I have, maybe, you know, we haven't touched in a while on Canada and Ample. So maybe just talk about how that market's materializing in terms of the outlook and and, you know, more licensees and things like that.

Can you ask that one more time, Brian? Sorry.

Yeah, I'm just wondering, you know, Canada stalled out for a while, and so I'm just wondering how that mark is materializing in terms of, you know, the opportunity for a Kerner.

Yes. So as we know, and, you know, as you can imagine, it's always difficult to predict, But from that pace of activity we're seeing thus far, we would expect an uptick in licensing activity in mid-2021, maybe followed by some software decisions toward the end of 2021, sort of typical with software spending cycles. Canada, of course, had more strict and stringent COVID lockdown across most of its provinces and territories than we did here. in the U.S. and Health Canada itself also paused all new license issuances for a period of time that is beginning to reopen, and we're optimistic for 2021. Great.

Thanks, guys.

Okay. Thanks so much. Thank you. Our next question comes from the line of Martin Toner with ATB Capital Markets. Please proceed with your question.

Good morning. Thanks for taking my questions and congrats on a good quarter.

Good morning. Thanks, Martin. Thanks, Martin.

Hey, can you guys give me what the organic growth number was for software revenue? And then, you know, can you guys comment a little bit about sales efficiency, what you're doing on the sales and marketing front? if you're doing anything different and what you see prospects looking like going into this year. And then lastly, I'll throw a question about churn in there too. Can you just talk about, just talk generally about what churn looks like?

Thanks. Sure. Well, I'll take the sales and marketing and what we're seeing in the landscape and I'll touch on churn and then turn it over to John to get into the numbers there. So from the sales and marketing standpoint, we're seeing some really great traction and efficiencies from our combined selling approach at the Akerna level for all of our products. And as is evidenced by our reporting of over 20% growth in our average deal size for MJ Platform, we're continuing to see consolidation within the industry, existing clients really expanding their footprints, as well as new consolidators beginning to expand and consolidate. We're seeing more and more of those mid to enterprise-sized deals that are really where we've targeted our products and services to the industry. We did report some improvement on the churn front. I think the number we reported was 42% churn improvements, sequentially quarter over quarter. John, do you want to comment to our growth?

Yeah. You know, I would say more of the growth actually came organically from our core business. As we know, the last 12 months has been pretty – you know, dramatic at a macro level. And I think we've seen a little more slowdown in the Canadian markets with ample organics than we have here in the U.S. And so I would attribute our growth here in the quarter sequentially, like to Jessica's point of what we're seeing with some of our larger operators, some of that growth is more tied to our core businesses, although we're certainly, you know, opportunistic of where we think long-term Canada will be. But short-term, I think it was more of our legacy systems.

Great. Thanks, guys.

Thanks, Martin. Thank you. This concludes our time allowed for questions. I'll turn the floor back to Ms. Billingsley for any final comments.

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 tech 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.

Thank you. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.