Akerna Corp.

For the three months ended September 30, 2022, Akerna reported revenue of $5.4 million, of which $5.3 million, or 98%, was software sales. Gross profit was $3.4 million versus $3.2 million in last year’s quarter, and gross margin was 62%, in line with Q3 2021; year-to-date gross margin was 67% versus 62% a year ago. Adjusted EBITDA loss was approximately $1.4 million, improved from $2.3 million in the June quarter and slightly better than a year ago. On the balance sheet, cash and restricted cash was about $9.5 million, net cash used in operating activities was $3.2 million, and net cash used in investing activities was $1.6 million. Management did not provide specific next-quarter or full-year revenue guidance, but said it expects some strong catalysts in 2023 and remains focused on profitability, cost control, and balance-sheet strengthening.

Jessica Billingsley framed the quarter as part of a deliberate transition from acquisition-heavy investment to integration, cost discipline, and profitability. She said Akerna has made tough decisions early, reduced its cost structure, and reviewed pricing to accelerate the path to profitability. Her tone was cautiously optimistic: she highlighted market openings in places like Pennsylvania, Puerto Rico, New Jersey, Mississippi, Alabama, the Southern U.S., and Latin America, and said the company is positioned for a ‘land and expand’ opportunity as clients recover.

Dean Ditto emphasized the quarter’s financial improvement and expense discipline. He said product development expense fell to $1.4 million from $1.6 million, sales and marketing to $1.9 million from $2.0 million, and G&A to $1.8 million from $2.1 million, driven largely by restructuring and lower stock-based compensation. He also noted a contingent consideration fair value reduction to $3.3 million, a $9.2 million unit offering closed in July, convertible debt valued at $14.5 million, and reiterated that going-concern risk persists because the company needs additional financing and profitable operations.

Analyst Ryan Kintslinger asked where management saw strength in bookings and whether service-level reductions would continue to pressure results. Jessica Billingsley pointed to stronger activity in Pennsylvania and Puerto Rico, early movement in New Jersey, and emerging opportunities in the South and Latin America, while saying some clients are still being selective in a weak economy. She also said she hopes the current wave of service reductions is nearing an end, but would not call it conclusively, and stressed that Akerna’s software is a must-have, which could support future land-and-expand growth.