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Cannabis Software Company Akerna Leverages NASDAQ Listing to Attract Acquisition Partners – New Cannabis Ventures

February 21, 2020

Exclusive Interview with Akerna Chairman and CEO Jessica Billingsley

New Cannabis Ventures last spoke with Akerna (NASDAQ: KERN) Chairman and CEO Jessica Billingsley just ahead of the company’s public debut in the summer of 2019. Since becoming the first cannabis technology company to trade on a major U.S. exchange, Akerna has added to its leadership team, fleshed out its platform with acquisitions and made new industry partnerships. Billingsley checked in with New Cannabis Ventures to discuss the companys deals and plans to continue using its ecosystem to drive compliance across the cannabis supply chain. The audio of the entire conversation is available at the end of this written summary.

Talent at Akerna

In addition to Billingsley, the Akerna leadership team includes COO Ray Thompson and CRO Nina Simosko. Thompson has experience in scaling SaaS businesses, while Simosko brings her executive experience with SAP, Nike, and Oracle to the table.

Akerna – Top 50 Cannabis Employers – MG Magazine

Akerna has also recently added John Fowle as CFO he has experience in acquisitions and integration. Following the companys acquisition of solo sciences, Alex Shah has come onboard as CTO. Shah holds a number of patents and has successfully navigated a number of tech edits during his career.

The Companys Evolving Platform

The Akerna platform began with the seed-to-sale technology Billingsley invented a decade ago at MJ Freeway. MJ Platform remains a core part of Akernas business, and it has grown approximately 30 percent year-over-year.

Additionally, new acquisitions are expanding the Akerna platform. A majority stake acquisition in solo sciences is putting the power of accountability and transparency into the hands of consumers, according to Billingsley. Cannabis design and technology company 14th Round has become a solo sciences customer, giving Akerna 40 percent of the California vaporizer market.

The solo sciences anti-counterfeiting technology also gives Akerna the opportunity to offer state regulatory tracking programs a less expensive alternative to RFID technology, according to Billingsley.

Akerna is also in the process of acquiring Canadian cannabis technology company Ample Organics for up to $45 million. The acquisition opens the door to cross-selling to both customer bases. Ample Organics does not have a point-of-sale offering in its product suite Akerna has MJ Platform. Akerna will also have the ability to leverage Ample Organics e-commerce platform, pharmacy integration, and insurance adjudication product, according to Billingsley.

Industry Partnerships

Akerna signed a deal with PAX Labs, which will provide business intelligence and market insight data. The company has also formed strategic partnerships with Netsuite and Sage. The integration with Netsuite will offer access to tax and financial planning, available first in Canada. Through the partnership with Sage, the Akerna platform will offer tax and financial planning globally, according to Billingsley.

The investment in ZolTrain will give Akerna clients access to a learning management system, which can help drive the education of budtenders and sales associates.

Acquisitions

Akerna had disclosed three previously signed LOIs. One has closed (solo sciences), while the second (Ample Organics) is expected to close in the next couple of months, according to Billingsley. The third is pending but on track to be completed.

Going forward, the company will continue to watch for acquisitions that will be accretive to shareholders. Those acquisitions could potentially be of competing companies or companies with compatible technology. Billingsley, a large shareholder herself, aims to keep shareholder interest in mind when evaluating opportunities.

Organic Growth

Organic growth is also a driving force for Akerna, with strong prospects across all of its product lines, according to Billingsley. The company is focused on leveraging its ecosystem and supporting cross-promotion across its platform. Consolidation in the industry is a significant growth opportunity for Akerna as well. Billingsley sees this activity driving technology adoption.

Funding Now and in the Future

At the end of 2019, Akerna has approximately $18.8 million in cash. Billingsley characterizes the company as adequately funded. Being listed on NASDAQ gives the company plenty of flexibility, and, going forward, it will continue to evaluate capital market strategies, she said.

Established Market Leaders Joining Forces

The Akerna team views the company as a software as a service (SaaS) company that happens to serve the fast-growing cannabis space. Its capital allocation looks like that of a traditional SaaS company. Akerna has investments in R&D, sales and marketing, and G&A that decreases over time, according to Billingsley.

Growth Factors

Much of the companys 28 percent growth has been driven by further adoption of the companys B2B MJ Platform. Billingsley also expects to see the growth of its government product offering, Leaf Data Systems.

The company has offered pro forma guidance of $27.5 million for the calendar year. That number takes into consideration both Akerna and Ample Organics, the acquisition of which is expected to close within a couple of months. The guidance offers investors a look at the result of this accretive transaction, according to Billingsley.

Akerna is focused on growth and innovation to meet the needs of the industry today and in the future. The companys intention is to deliver technology that provides more value than it costs.

To learn more, visit the Akerna website.