Akerna Stock Falls On New Offering

Akerna Corp. (Nasdaq: KERN) has priced a public offering of 5,000,000 shares of its common stock at a public offering price of $2.40 per share. The company said it expects that the gross proceeds of the offering of the shares will be approximately $12,000,000.  Akerna said it intends to use the net proceeds from the offering to fund its growth initiatives, including product development, sales and marketing, strategic acquisitions, working capital, and general corporate purposes.

The stock was falling in pre-market trading from $2.93 to $2.39, a decline of 18%. According to Yahoo Finance, the company’s price to sales is $3.56.

Last month CEO Jessica Billingsley said on the company’es earnings call, “We are pleased to share that our year-over-year software revenues are up 21%. While consulting bookings increased year-over-year, delivery delays in the fourth quarter due to COVID-19 caused consulting revenue to come in at a modest 3% increase. We expect to recognize the delayed revenue this coming fiscal year. As expected, our operating expenses increased for the fiscal year as we digested our acquisition. Our cost structure is improving. And we expect it will continue to improve through this coming fiscal year as a result of our successful integration, realizing efficiencies and, of course, economies of scale.”

In addition, CFO John Fowle said on that call, “Our fourth quarter and fiscal year 2020 results were highlighted by solid sales execution and continued market demand. In the fourth quarter, total revenue declined 17% to $3 million, a decrease driven entirely by a decline in our consulting revenue related to delays associated with COVID-19. For the year, our total revenue grew 16% to $12.6 million. With regard to software revenue, in the fourth quarter, software revenue grew 36% to $2.8 million. For the year, our software revenue grew 21% to $10 million. The growth in the quarter and for the year was once again driven by increased demand from both new and existing customers, combined with strong sales execution across channels.”

The company did not give guidance at the time. The company also did not mention nor was it asked during the earnings call about the disgruntled comments from John Prentice, the founder of Ample Organics, who sold his company to Akerna in September. Prentice released a scathing letter announcing his resignation and demanding Billinsgley resign. Typically, a company that is acquired doesn’t have the position to make such demands and there was little response from shareholders.

When asked about the Ample acquisition, Billingsley said on the call, “Ample business has very, very sticky enterprise clients that are well suited to weather the storm and are great additions to our portfolio of large enterprise clients. And so, the revenue is very, very stable. And we do expect now that the economic and some of the COVID restrictions are starting to ease for that license flow to uptick again, and also for us to have that great cross sell opportunity, which was one of the most compelling things about the acquisition for us was this ability to sell retail into their client base. And also, there are some really great pieces to the Ample technology as well, particularly a very robust pharmacy module and some insurance adjudication that they’ve constructed.”


Debra Borchardt

Debra Borchardt is the Co-Founder, and Executive Editor of GMR. She has covered the cannabis industry for several years at Forbes, Seeking Alpha and TheStreet. Prior to becoming a financial journalist, Debra was a Vice President at Bear Stearns where she held a Series 7 and Registered Investment Advisor license. Debra has a Master's degree in Business Journalism from New York University.

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