Akerna Corp (NASDAQ:KERN) is an overlooked marijuana stock that has made major gains, advancing about 140% since the middle of November (as of this writing).
Despite the serious upward move, Akerna stock still has plenty of room to run in 2020.
As the leading global technology provider for the cannabis industry, Akerna recently announced solid results for fiscal 2019 and a strong outlook for fiscal 2020.
Since October, the company has made two major investments in two privately held technology companies that operate in the cannabis industry. Then, on December 18, it announced a strategic acquisition.
KERN Stock Overview
Akerna Corp is the first Nasdaq-listed supply chain management company to serve the cannabis industry.
The backbone of the company’s regulatory compliance technology are its “MJ Platform” and “Leaf Data Systems,” which provide business clients and governments with a central data management system for tracking regulated cannabis products from seed to sale. (Source: “Akerna Corp. Reports First Quarter Fiscal Year 2020 Results,” Akerna Corp, November 14, 2019.)
The company only began trading on the Nasdaq as Akerna in June, but it has been operating since 2010. Since then, Akerna has tracked more than $16.0 billion in marijuana sales.
To help expand its market-leading position, the company said it will target strategic acquisitions that complement its current operations. Akerna will also grow its business organically through product development.
Akerna Stock Information
|Market Cap||$99.5 Million|
|Shares Outstanding||11.0 Million|
|50-Day Moving Average||$7.87|
|200-Day Moving Average||$10.00|
(Source: “Akerna Corp. (KERN),” Yahoo! Finance, last accessed December 23, 2019.)
Q1 Revenue Up 39%, Recurring Revenue Up 40%
On November 14, Akerna announced that revenue for the first quarter of its fiscal 2020, ended September 30, 2019, increased 39% year-over-year to $3.2 million. (Source: Akerna Corp, November 14, 2019, op. cit..)
Total software revenue advanced 21% to $2.3 million year-over-year. Revenue from the company’s MJ Platform advanced 36% while recurring revenue was up 40%. Revenue from Leaf Data Systems was flat.
Consulting revenue, meanwhile, increased 125% year-over-year to $800,000. The big boost was primarily a result of the expanding legal pot market.
Akerna reported a net loss of $2.8 million, or $0.26 per share, compared to approximately $1.7 million, or $0.31 per share in the quarter ended September 30, 2018.
The company ended the first quarter of 2020 with about $22.4 million in cash.
Strategic Investment in ZolTrain
In October, Akerna made a strategic investment in ZolTrain. (Source: “Akerna Makes Strategic Investment in ZolTrain Company Launches First-of-Its-Kind Education Resource,” Akerna Corp, October 24, 2019.)
ZolTrain provides a marijuana training platform that pairs education with production information at the point of sale.
Approximately 90% of legal weed purchases are controlled in a retail setting by the employee. Their expertise and recommendations have a direct impact on the consumer.
Integrating ZolTrain’s program and the MJ Platform allows Akerna’s clients to educate their retail employees, track their training, and provide a source of greater knowledge at the point of sale.
$18-Million Investment in Anti-Counterfeiting Company
In late November, Akerna took a majority stake in the privately held solo sciences inc, a leading provider of patented anti-counterfeiting technology. (Source: “Akerna Makes $18M Investment in Anti-Counterfeiting Technology Leader solo sciences,” Akerna Corp, November 26, 2019.)
Essentially, with Akerna’s MJ platform and solo code, manufacturers can track each plant, batch, and inventory item during the post-harvest process.
The finished, packaged inventory has a unique code that consumers can scan with the solo app to ensure that the product they are using is what it purports to be.
Counterfeiting is a growing concern in the marijuana industry. And many pot companies and governments are looking at ways to curb illegal sales.
The Utah Department of Health and Department of Agriculture has teamed up with Akerna to use its seed-to-sale tracking platform for its medical marijuana program. Utah is the first state to use Akerna’s regulatory technology with solo, as part of its traceable platform.
Akerna Acquires Ample Organics
Akerna announced on December 18 that it entered into a definitive agreement to acquire Canadian-based Ample Organics Inc. in a cash and stock transaction that’s valued at up to $45.0 million.
Ample Organics serves more than 70% of the Canadian legal marijuana market with its seed-to-sale platform. It was recently selected by St. Vincent and The Grenadines to deliver the first national marijuana tracking platform. (Source: “Akerna Announces Acquisition of Ample Organics,” Akerna Corp, December 18, 2019.)
In calendar-year 2020, Akerna projects that revenue from Ample Organics will hit $8.7 million and be cash-flow-positive in the second quarter of fiscal 2020.
Chart courtesy of StockCharts.com
The broader marijuana industry is still emerging, but Akerna Corp is the undisputed leader of compliance technology operating in the cannabis space.
In addition to being the go-to company for tracking pot from seed to sale, it has been announcing strategic acquisitions and investments.
All that has been helping Akerna widen its competitive advantage and juice its revenue. And if history is any indicator, the company’s accretive acquisitions and additions are just the start. That bodes well for KERN stock shareholders in 2020 and beyond.