Q3 2020 Earnings Call
[music].
Good morning, and welcome to a corner third quarter fiscal year 2020 financial results Conference call.
Today's call is being recorded.
All lines have been placed on me.
If you would like to ask a question at the end of the prepared remarks. Please press the star key then the number one on your Touchtone phone.
At this time I would like to turn the conference over to Jason Assad with the current up for introduction and the reading of the Safe Harbor statement.
Please go ahead Sir.
Thank you and welcome to today's third quarter fiscal year 2020 conference call representing the company today is just script honestly see over corner and John well see Oh will be available for questions. During the Q, what I portion of today's call.
Before we get 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 meeting up the safe Harbor provisions of the United States Private Securities Litigation Reform Act of 1995 words, such as estimates projector expects anticipates forecast plans into.
Wins believes seeks may will should future proposed and other variations of these words or similar expressions or the negative persons or such words or expressions are intended to identify forward looking statements. These forward looking statements are not guarantees of future performance conditions or results and involved.
Several known and unknown risks uncertainties assumptions and other important factors, which could cause actual results or outcomes to differ materially from those discussed and the forward looking statements. These risk factors are more fully discuss their cars filings with the Securities Exchange Commission forward looking statements speak only as up to date. They are made or 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'd like to turn the call over to occur as CEO transcript Bill obviously for a more in depth discussion of the company's third quarter financial results Jessica.
Thanks, Jason and good morning, everyone. Thank you for joining us and welcome to our third quarter fiscal year 2020 earnings call.
Before we go into a discussion about resolved.
I would like to spend a few minutes touching on the recession resilient nature of the candidates industry and the clients we start.
We've seen nearly every country in states within one notable exception, Massachusetts.
Claire Canada essential during these challenging times as we all worked to protect ourselves and our community.
Our platform insights team has been hard at work analyzing our data and tracking cannabis and CBD industry trends during the pandemic.
What we see is encouraging.
Year over year recreational cannabis spending is.
With a 39% increase in ticket size.
As the industry evolves to meet client needs credits picked up as the fulfillment nothing is increasing and now accounts for 15% of total sales.
I think we can't agree these are strong indicators about the future long term health of the industry and clients we serve.
And speaking to the strength of the candidates industry, our business strategy to provide technology solutions and business intelligence to the industry. It's working clients are using our insights to drive data driven decision, making around everything from inventory management and run rates.
To ordering.
On the candid this industry, we recognize what an extremely challenging time. This is.
Particularly for those on the front lines at the crisis.
Our thoughts are with all of those most affected.
As I say to our team at a kearney each week.
Well get through this together.
On our second quarter call, we discussed our growing operational traction I can tell you we have maintained our momentum.
Before the pant and make the industry was rebalancing in response to consolidation and disruptive market valuations for operators.
Even with these challenges our industry continues to evolve in fine solution. So what does it growing consumer demand.
Despite this positive momentum.
Global market valuations for cannabis related companies have declined over the last 12 months, leading some operators to rethink business models look for merger synergies and explore alternative financing options.
As the leading technology solution provider for the industry.
We are confident in our strategic positioning and long term competitive strategy.
Our comprehensive suite of cloud based integrated software solutions provide operators the technology to scale their operations.
And the business intelligence to increase profitability.
He has invested in developing and maintaining an extensive collection of prebuilt integrations that are designed to better solution into leading business application.
Putting accounting ERP E commerce and CRM solution.
Maintaining prebuilt integrations with a broad range of business applications provides a competitive notes. We currently have over 70 integrated products that leverage our platform infrastructure and extend the value of our ecosystem.
We have strategic partnership agreements with over a dozen of the best if these integrated products.
Overall, the third quarter can be described this one in which we solidified a strong foundation for our future growth by expanding our client base among emerging enterprise cannabis companies.
Increasing revenue from our existing client base.
And continuing to expand our ecosystem by seeking new relationships and software solutions that offer exposure to potential client.
Integrations with more business applications and cross sell opportunities.
As our technology solutions become further embedded in our clients business processes and systems.
Fighting them with an automated solution central to their ability to transact.
We are well positioned for the future.
Our competitive strengths and strategic focus areas well continue to drive productive long term client relationship.
Now, let me briefly comment on our financial result.
I'm pleased to report for the third quarter year over year revenues increased 32%.
Our consulting revenue increased 219%, a strong leading indicator of future platform growth.
Software revenue increased 16% year over year.
Continued strong bookings were offset by revenue recognition delays due to suspended revenue related to cobot 19, and delays in advance of licensing and go lives.
We continue gaining share in the industry and the strategic platform investments are driving an improved margin profile.
The majority of onetime costs associated with completed acquisitions are behind us.
We will continue to focus on our infrastructure and achieving efficiencies of scale.
John Fowler, our CFO will take us through the details of our financial performance shortly.
As evidenced by our growing had been CBD clients more industries can benefit from how Canada's technology delivers on supply chain transparency and accountability in fact in the third quarter beside the traditional agricultural client.
While we recognize the opportunity in traditional agriculture is significant we will continue to focus on the candidates have been CBD markets.
Sure in a phase of rapid growth, we will explore opportunities to serve traditional agricultural clients as they arise.
Over the next few years, the Canada's market opportunity for our software products alone has the potential to grow to over a billion dollars.
While we are still a small fraction of this overall market opportunity.
Our that market leader.
Only scale tech provider to the space.
A current as primary competition remains spreadsheet.
But we believe consolidation among cannabis operators will lead to rapid scaling requiring accelerated adoption of technology and the use of data driven decision that spread sheet simply cannot support.
With this in mind, our strategy continues to position us to capture a growing share at enterprise market in the candidates industry.
To be ready for this paradigm shift our overall value creation strategy involves not only our focus on aggressive organic growth.
But also our previously stated intent to seek highly complementary acquisition opportunities.
In the quarter Weve executing on that initiative.
Having announced the acquisition of trellis, our third acquisition.
Let me take a few minutes to review our inorganic growth strategy and provide some details on the integration status of solar scientists trellis ample organics.
Our inorganic growth strategy is built around solidification of our position as the central technology infrastructure for the Canada supply chain.
We target technologies that extend our software ecosystem give us a broader reach across the supply chain and deliver more value to our clients, thereby increasing client wallet share and retention.
Our open architecture technology platform provides for seamless and synergistic technology integration.
Meeting the evolving needs of candidates operators drives our partnership integration and inorganic growth strategy.
We think about acquisition targets is generally falling into one of three channels.
Tam expanding technology product tuck in or competitor.
In each case, we pursue accretive valuations and leverage our infrastructure to create additional value.
The acquisitions, we have announced in our first 10 months since becoming a public company are good examples of each channel.
So low sciences authentication and anti counterfeit technology and branded consumer interaction platform extend a current as total addressable market by extending our reach through out the supply chain.
Additionally, we have gained an inexpensive highly profitable government tagging solution.
Trellis is a product tuck in acquisition generating immediate contribution a positive cash flow from operations by leveraging a kind of infrastructure.
We can offer trellis as a compliance solution in additional markets, enabling expansion outside its home market of California, and accessing growth that was not possible without integration into a current as compliance by us.
We can also sell other ecosystem connected services to trellis clients, such as advanced business intelligence and reporting access.
We have that added benefit now have a lightweight downmarket solution that becomes a feeder for our larger more robust MJ platform solution.
Ample organics is the leaning seed to sell software platform in Canada with a majority market share in the largest legal market in the world.
By bringing the companies together a current is leading market position covers all North America, giving us a commanding footprint operating leverage and opening many additional cross selling opportunities with our complimentary software solutions.
We are executing on the integration plans for each of these acquisitions.
I'm pleased to share both solo scientists and trellis are fully integrated.
And we are more than halfway through our hundred day integration plan with ample organics, which is on track to close.
From our perspective, there has never been a better time to be in our position as many smaller players in this space are finding limited access to capital.
Driving opportunities for us to pick and choose complimentary assets at prices far below what it would take to build internally.
We can be opportunistic and each of these categories.
Importantly, our transactions were structured in a manner, whereby we are not simply buying out our targeted acquisitions.
To the contrary, we are buying them in.
Like all of US here at a current Oh acquisition targets are now shareholders with a vested interest in our collective future success.
Part of that success depends on cultural fit.
Let me highlight our executive teams focused on culture Gerry integration process.
Culture is essential to effective integrations, our emphasis on placing clients first and value creating initiatives has been invaluable to building keen morale support and excitement about our business by time culture to value creation.
Culture has become a useful tool for achieving our post merger integration objectives.
In summary, we are pleased with what we've achieved to date in the short time since becoming a public company, we're strategically position to capitalize on the market. During this period of correction consolidation and realignment.
Our growth is providing scale and operating leverage we continue to expand our portfolio of integrated technologies.
Our partnership and inorganic growth strategy is expanding our software ecosystem.
And as a NASDAQ listed public company, we have unique access to capital and the opportunity to use our public currency in accretive acquisitions.
Our continued operational progress helps solidify our position as a leader in Canada, CRP and government cannabis compliance and we intend to extend that leadership position.
With that I will now turn the call over to our CFO John So for a detailed review of our third quarter 2020 financial results.
Uh huh.
Thanks, Jessica today, I will provide an overview of our financial results and key business metrics for the quarter ended March 30, Onest 2020, as a reminder of these results are discussed in further detail in our form 10-Q, which will be filed this week with the FCC. We encourage you to review the filing.
I was just like a noted we made significant progress in the quarter towards solidifying the foundation for future growth key investments and strategic shifts throughout the business have delivered results that I would like to highlight.
This past quarter, we evolved our sales and marketing teams to better align with our market and serve our clients. We recorded approximately $1 million of new a our bookings in the quarter.
This includes near record level bookings in March despite the cobot 19 pandemic. We also have a strong pipeline heading into our fiscal your fourth quarter. This continued momentum demonstrates the strength of our industry.
[noise] strategic platform investments and changes in third party technology applications have helped increase our margin profile to 54% up from 50% in the same quarter of 2019.
And at the end of March we executed a small restructuring of our organization, which we expect to reduce operating expenses $2 million to $3 million annually. The reorganization results in a qurna being a leaner more focused organization with the human capital and financial resources to execute our organic and inorganic growth strategy.
Yeah.
Turning to our financial results total revenue increased to 3.1 million for the period ended March 30, Onest 2020 from 2.3 million for the period ended March 30, Onest 2018, an increase of $700000 for 32%. The increase in total revenue was achieved across each of our product lines driven by growth.
Both from our commercial software business MJ platform. In addition to our consulting business and our government regulatory software business Weve data systems.
Software revenue increased to 2.3 million for the period ended March 31st 2020 from 2 million for that period ended March 30, Onest 29 team an increase of 300000 or 16%.
The increase in software revenue was primarily driven by growth in revenue from MJ platform over $100000 or 11%.
The increase in subscription revenue was primarily caused by volume driven increases from new business, which includes new clients upgrades and additional subscriptions from existing clients. We continue to invest in a variety of client programs and initiatives, which along with increasing adoption have helped keep our attrition rate consistent compared to prior periods.
Consistent attrition rates play a role in our ability to maintain growth in our subscription revenue.
Revenues from the data system increased by 200000 or 18%, primarily a result of our contract with the state of Utah, which commenced in August 2018.
Consulting revenue, which includes revenue generated from professional services delivered to clients to help to maintain compliance with state law initiate new business or expand existing business operation increased to approximately 700000 for the period ended March 30, Onest 2020, an increase of 219% compared to approximately two.
200000, and the period ended March 31st 2019.
The result was driven by a higher volume of consulting activities and engagements as we continue to experience strong demand for our consulting services in emerging state.
Consulting services are highly correlated to state legalization and other regulatory expansion activity as a result individual period over period comparisons may experience variability depending on the timing of recent legislative changes.
Consulting revenue as a strong leading indicator of future platform growth.
Our cost of revenue for that period ended March 30, Onest 20, Tony was 1.4 million, an increase of 300000 or 22% as compared to the cost of revenue for the period ended March 30, Onest 29 team of 1.2 million.
The increase compared to the prior years quarter was primarily a result of the costs incurred to service the new contract with the state of Utah.
For hosting costs have increased due primarily to higher transaction volumes.
We will continue to invest in our platform infrastructure to drive scale and reduce ongoing costs.
Gross profit increased to approximately 1.6 million for the quarter ended March 30, Onest 2020, an increase of approximately 500000 or 42% compared to the quarter ended March 30, Onest 2019.
Gross profit margin increased to 54% for the quarter ended March 30, Onest 2020, an increase of four percentage points compared to the quarter ended March 30, Onest 2019.
The increase was primarily a result of increased software revenue and the minimum marginal cost to service that revenue and infrastructure investments to reduce ongoing costs.
Operating expenses were 7.1 million for the quarter ended March 31st 2020, compared to 3.7 million for the quarter ended March 30, Onest 2018.
The increase in operating expenses was driven by higher selling general and administrative expenses, an increase of 2.8 million or 170%. In addition to higher product development expenses, an increase of 600000 or 63%.
Our operating expenses were impacted by a number of onetime costs or first time cost compared to the same period in 2019.
They include the following 1.1 million of acquisition related costs as Jessica noted these costs are largely behind us as we move forward with integration.
$500000 in new expenses related to solar Sciences.
$300000 related to stock compensation, and 1 million related to investments in technology and other infrastructure to position ourselves for growth and the cost of operating as a public company.
We will continue to focus on or infrastructure and achieving efficiencies of scale as we continue to grow.
Qurna incurred a net loss of approximately 5.3 million for the period ended March 30, Onest 2020, compared to a net loss of approximately 2.5 million for the period ended March 30, Onest 2019.
As of March 30, Onest 2020, we had 14.3 million of unrestricted cash cash on hand, and access to the capital markets positions us well to execute on our strategy, which is a significant advantage over many of our key competitors. We expect continued improvements in our financial performance as we continue to scale and drive towards profitability.
This concludes our prepared remarks, we will be 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 and a session. Operator, please open the phone line.
Thank you at this time it will be conducting a question and answer session. If you like to ask a question. Please press star one on your telephone keypad.
Confirmation Tono indicate your line is in the question Q you made Chris start to if you'd like to remove your question from the Q. Good participants using speaker equipment. It may be necessary to pick up your handset before pressing the star keys, one moment, please while we pull for questions.
Your first question comes from line of Brian Pinpoint.
<unk> with Alliance Global Partners. Please proceed with your question.
Hi, guys. Thanks for taking my questions good morning.
Good morning, I mean.
Jessica I am curious how koeppen Nineteens change your business, specifically, maybe you can highlight the biggest challenges that he was the company's facing and then on the other side, how maybe it's benefiting your company as well.
I sure. It's a great question and certainly timely as a tech company, we are well positioned to work effectively anywhere and then.
So where we could work remotely for the past many many years so for men from that company impact. It has not had a a tremendous impact on our company, we were able to to that to work from home I immediately and its of course, we had a number of internal initiatives focusing on culture and really supporting our team during the.
This time.
On the on the flip side, while Weve certainly seen the cannabis if history is being recession, resilient, which I find to be incredibly encouraging and promising as soon as far.
As noted in our prepared remarks, we have seen some delays some suspensions and delays in revenue recognition covet 19.
We did we don't.
We do expect to recognize that revenue.
Going forward, but we have seen some delays at least I. It during this time [laughter]. We've also really been.
Taking this opportunity on the benefits tied to double down on our relationships with our existing client and really focusing on I'm working with them help support them. During this time in different ways leveraging pot from insights to help our clients make smarter business decisions and thinking about.
At this time is a focus on relationship at Matt.
That's focused on relationship will be well remembered as we as he is back in for a more normal normalized mode of operation as well.
Great.
And then it was encouraging to see the bookings acceleration.
I'm curious if that was mainly the result of tax labs and then.
Howard how a bookings trends that have you been able to continue that momentum in April in early may or.
Has there been more difficult difficulties and challenges as stores, maybe not opening as quickly right now.
So anecdotally I first fit into the first part of your question that those bookings were friends platforms to not related to their packs labs platform insights.
I just don't account that we announced previously and just continued strong demand for our be the product and Jay platform.
And we have seen really nice continued bookings through April and May.
Are they couldn't do you have seen some impacts might they have been even higher a in a non covered scenario potentially but we're really encouraged to see continued strong bookings. During this time and all as I mentioned, we have seen some delays that we have and certainly we've seen some pipeline opera.
Todays push out as well we have not <unk>.
At least anecdotally lost any business or or had any clients go out of business and this also indefinitely.
Great and then maybe an update on solo sciences, and more specifically with Coburn 19.
Does it require a demonstration and maybe that speaks also to the rest of your technology and Furthermore, maybe talk about your plan to tie your revenue more to cannabis sales are growing so fast which.
In the past maybe you haven't been is tied to.
I can get like that one yeah I could take at what rate bright apologies, maybe could you repeat it read restate. The question again, just so I can have a better content.
I'm curious in terms of solo Sciences, I mean, I believe it's your way to tie yourself with your customers more towards the growth in that they're enjoying encana bear so I'm curious how that's.
The early signs of that.
Does that technology is there any demonstration needed.
In person that.
Maybe it's not happening is there any demonstration at all that's needed for solar sciences for customers Im just curious how that's being impacted.
So, let's let's break out into the two into two parts I think to answer your first question.
We continue to see momentum with solar Sciences. This past quarter. We you know when we acquired till the science is there a pre revenue this past quarter, we booked some of our first revenue for the business, we're continuing to see that pipeline of interest grow and in fact, both in cannabis and non kind of a sectors and certainly the technology is unique and.
So the insights that we get through their technology platform or are highly valuable. So we are seeing the interest grow we are seeing a more and more RFP is come through our business as we get ready to really go to market I mean again highlighting that this was a pre revenue business and we're still not go to market phase. So I think the overall reception from our key.
I mean, it he has been strong and it has been great and so we're really happy with the work we're doing so far as far as in person demonstration you know like the rest of world. We've been able to work in pivot into just a remote capacity and demonstrate the technology University that technology and in a remote settings, so use of technology and so forth. So.
It hasn't really impacted us significantly in that regard.
Oh great.
To more of the first one is on RF piece for leap data systems I think in the past we've talked about some of the stage thinking about their options, maybe the really happy with our operators, maybe they're moving forward for the first time or close so maybe talk about our those getting delayed right now given the current.
To environment or our states moving forward with a their plans to maybe evaluate their options.
Oh, that's another great question.
We are seeing some near term delays in states focusing on.
Our fees and Onsen certain this initiative.
However, I am very encouraged by it certainly the the consumption trends that we're seeing and how recession resilient candidates is proving to be and we've also received new inbound inquiries from new states that are looking at some of the states that have.
As candidates programs in place and they're looking at that job creation and that tax revenue.
And I personally believe that we will see a.
Strong this meant toward legalization and many different initiatives much like we saw alcohol prohibition and around the time of the great Depression, we will see some very meaningful legislative change around cannabis to as more governments look at those to.
As a way to create jobs and generate tax revenue during a challenging economic times.
Great. Thanks, Lastly, can you quantify your turn you mentioned it was pretty flat for EM, especially for the I'm gay freeways business. Thanks, So much for all your questions.
I missed that very first part connect quantify a robust curious churn churn or I think you called it attrition Im just im just curious.
How about how do you have a can you quantify it is there a rough percentage on an annual basis.
You can provide.
<unk>.
I can take that question, Brian I, Yes, we shared before we fully intend to to roll out with the with our 10-K. This this coming this coming year, our non-GAAP metrics and that will include a lot of the traditional sop south metrics that you know our investors are looking to track and so we don't know how.
But I don't have that readily available today, but one thing I think it's important to point out is the we would look at churn in two respects the retail and non retail non retail metrics, because obviously retail has a very different profile than our non retail clients and so what we're seeing today is as consistent churn and a consistent attrition.
Well in our business of course, any south business is going to look to maintain there. So we're seeing the consistent attrition rates across the board I think we're not seeing that improve or decline in any regard, but we think are we expect going forward. We're gonna be of course more focused on that as we want to improve that and then certainly with the rollout of our 10-K.
Look look for that to include more of the non-GAAP metrics that are investors are looking to track.
Great. Thanks, so much.
Your next question comes from line I'm, Scott for tune with Roth Capital. Please proceed with your question.
Good morning, and thank you for the time in the call real quick to follow up on the state side of things you announce a oh strategy with with metric can you follow up on that and how that helps integrate the newly four or least either.
On the state side of things with fewer platform.
Sure. Thanks, Good morning, Cat and happy to take that one.
So there are we to defense.
Thats mindset offer seat this that it offers some type of campus compliance we had him Jay platform, which is used by the operators the call Fitters manufacturers distributors and retailers to maintain compliance and then to report compliance a few a government track and trace system, which might be.
He our other product me state assistance as is the case for we have to stay contract and in other states it might be as a product metrics that you referenced in states, where metric pass that state contract and the deep integration that we announced well and I believe that we.
Are the the only I cannabis compliance operator to currently offer this deeper level of integration for our product suite C habit available at both MJ platform as well as trial. This is a integration at the transfer level for a metric and what it really means is just it eliminates more.
<unk> double industry for our NJ platform, our trial last business clients and allows them to more seamlessly integrate in states, where metric is that state track and trace system does that answer here so while.
Yeah, and what I'm getting at is that's beneficial for people, adding on him J.
Platform with those states because metric has a fair number states from that side you see is a beneficial to cultivate new operators into your platform because of that.
[music].
Absolutely. It's a it's an ex it's a wonderful competitive advantage and metric does not have either be products. So in states where metric is the state's system.
Having that competitive advantage of having it as a tighter and better integration than anyone else is a very strong competitive advantage and when we were pleased to announce.
Okay. Thanks, and then a follow up you and you have a nice platforms around data collection and as you stated that we saw stockpiling and since in a lot of the numbers have normalize higher than January February and so big very resilient.
How is your timeline or kind of a roadmap in terms of monetizing the data new future <unk>. How are you looking at that portion of a new opportunities for that business.
It still is as Brian referenced a a better go we announced.
I believe in January a cornerstone client for our business analytics product, we announced packs labs as our cornerstone client for that product. So it certainly is our intention.
[noise] to generate and monetize that revenue, we don't expect to see significant revenue from that product in this fiscal year, we're really focusing on knows our first cornerstone accounts, there and ensuring that we're meeting when it's filed but we do expect to see significant revenue and next fiscal year from our business.
Intelligence product.
Okay, and then probably a a follow up question for John kind of a you implemented or reorg to reduce expenses two to 3 million annually can you provide a little more color on the cuts across the board and timing of those savings.
Sure. So so maybe talk timing first.
The the reorder, we put together took place at the end of March and so we expect some of those we expect those cost savings to start materializing here in the current quarter and go forward as we thought about the Reorgs you know we looked of course, it opportunities to streamline where where did we have redundancy.
And certainly as an emerging growth company, we're still working through a lot about a lot of that growth curve and so we just saw a law across the business. Some opportunities to just you know combined reduce can then some operations of course, certainly looking externally and focusing on you know duplicative vendors and third party resources I highlight.
Got it in my prepared remarks, we made some changes and and platform infrastructure and other sales and marketing type activities that helped improve gross margin or or some of the other efficiencies. We gained on the sales and marketing group. So it really wasn't any one particular area. One particular focus area. It was just an opportunity to you know maybe get a little.
More little leaner, a little more focused and just take the bell a little bit in some key areas.
Okay. Yeah, I mean, you obviously you have to way. Thank you for the cover your wage growth. That's most important thing right now as you guys drive these opportunities from an acquisition standpoint with all these letting it flow to the you know the EBITDA line today, but that the hope you get to positive EBITDA a quicker basis overall.
<unk>.
Okay. That's it for me I'll jump back in the Q.
Great. Thank you.
Thank you.
Your next question comes from line of Gerald Pass Girly with Cowen. Please proceed with your question.
Hi, good morning, Thanks, very much for taking the questions.
And money Joe's Morty, Jessica So lets told me spoke at the end of March you know your analytics, obviously from an industry perspective pointed to pantry loading similar to the trends that we've been seeing any off premise channel within alcoholic beverages. So I guess my my high level question is now there.
Through April would love to get your thoughts and some color.
On you know what you're seeing in terms of a the sustainability of the load and then in particular I'm, which form factors within Canada is continue to outperform if theres been any kind of a any kind of a change since the end of March I think it'd be helpful. Thank you.
Sure thing good question.
So I'll answer as much as I cant off the top of my head and of course, we do released a Kernis weekly Flash reports, where we continue to update on things like that that mix between categories. So if you're not probably noticed the of course and this is for anyone and on line. Please at pretty good luck on its website and and sign up to receive beds.
So we have seen a continued.
Strong.
Okay, just strong buying across all of our markets, we may see some impact from Nevada.
Which just recently allow for purpose side and certainly Nevada's, Nevada was a an outlier among and across most of our markets, where there was a negative impact through during cobot compared to many of our markets, where we were seeing a upon.
So the impact of Nevada as Governor recently allowed for curbside as the fulfillment nothing and we saw sales score at following that increased 68% with an average ticket size of <unk> hundred one.
$123.
We've also seen the product mix and is you're asking about the different categories and this is something that we would that we would expect to see in a challenged economic time, we have seen the products Smith mix shift a bit more toward flowers and toward some lower cost at Prada.
And we've seen that maintain throughout this this helps period of time outlet of course.
There's been a long term trend of concentrates increasing and gaining more share.
During this period of time.
Also sina and uptick and flower.
That's a very helpful color. Thank you for that my next question look you guys have obviously been I'm very active on the M&A front.
And can you just speak to I guess your your overall capital allocation strategy and how that potentially changes at least over the near term in light of the cobot 19 pandemic. Thanks.
Sure I can let me take them, yeah, I'll take that one great question.
So of course at the at the high level, we're always going to be we're always going to look at our capital our capital structure and look for ways to to optimize out and whether that you know as you know it's always a you know where do you deploy your capital in the most in the banner that's going to deliver the best ROI in that that is that through.
Organic means is it through development means through expanding these data that a or b to b platform. So it's a great question and then certainly in these times, we're very mindful of you know our capital or access to capital the strength of our balance sheet today and so we're very mindful about decisions, we make and you know again as we prepare.
There was we've made you know comments too in our prepared remarks are we stated previously we do have access to.
You need currency for M&A, and so that continues to be an option for us and certainly as we do transactions are we pursue transaction, making sure from an a from a valuation perspective. They are created to our current shareholder base, which historically and yet so far they are and they've been very.
Very well financially structure to our favor.
But yeah capital allocation and how we allocate you know the different resources, we have it's something we're very mindful of.
Super helpful. Ah that's it for me I'll hop back into queue. Thanks very much.
Thanks, John.
Ladies and gentlemen, you would like to ask a question. Please press star one on your telephone keypad. As a reminder, if you would like to ask a question. Please press star one on your telephone keypad. One moment, please where are we pull for more questions.
Your next question comes from one of Alan Buckstein with and see the media. Please proceed with your question.
Hey.
To be on the call I appreciate your crude oil.
I wanted to money Tibor Hey was.
Well you had said originally there were three potential transactions, obviously, you you've announced a third I just wanted to verified that Charles was indeed, the third acquisition.
Okay. So if we had previously disclosed three otherwise somebody has now announced three transactions. So I I think I'm answering your question.
So so there's not as an alliance. It was all three you did you close three for three there wasn't a public wasn't need to the mix.
We closed three for three for three Okay, and then Oh My next question and I know this year's tough so long as it certainly looking for guidance, but given that you're you're relatively new recently I think your business has been around for a long time can you give us a little color, though seasonality companies like yours awful, we'll have a very strong.
Fourth quarter, which are in right now relative to the other three quarters, who is that is they're seeking out in the numbers Jessica.
[laughter], so I'll take that briefly and then I'll.
Pivoted to John to share and I'll speak to the seasonality historically it has a good question and interesting, especially given the candidates market and then I'll I'll I'll I'll throw to your John to just speak generally to what we expect to see anything forward.
Hey, these are the seasonality Alan I think that shows your deep experience in Canada, and we do see.
Certainly a couple time periods that has historically been really good great time periods for bookings that doesn't necessarily translate into revenue recognition in that quarter, but I can anecdotally share that that both in the spring as is often a.
A very busy time for us from a bookings perspective as is the CLO and this would be very normal for any software business. We often have a very strong as you mentioned at fourth quarter calendar quarter or pending entered the end at the calendar year as.
Many business as well it looks to change assist them on January 1st and started immune system for the year. So just.
Ah sharing a little bit as Ive historic color there around seasonality.
We don't see a tremendous impact from that add because as I said those are those your bookings not necessarily a revenue recognition and we do have a really nice profile of as strong bookings month over month without a ton of variability between two month, but anecdotally.
Those are sometimes that they seem to be just a bit this year from bookings at John do you want to speak to any expectations that moving forward and in the future.
Yeah, I'll touch on that briefly I think expanding on on some of those comments I think when I see the business I don't think of it as much about seasonality as I think I I think the impact to our financial results are more driven by legislative changes as you know it just didn't a brief time I've been here to see new states come on board.
Word and open up open up there.
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Open up their state to some form of legalization, that's when we really see the the impact of about so I don't like Jessica said I.
I don't see too much of a financial impact with regards to seasonality I type more back to legislative changes and certainly as we shared you known as we go with data systems that can have an impact to our numbers as well just due to timing and in some of the nature of our products and services.
As far as expectations, you know we reported a good bookings number and like we shared we're going to focus on churn in attrition and and driving out and so I don't think seasonality has really got much effect on our business going forward, we look at it more holistically throughout the year.
Great and then my last question and.
I apologize if this is a slow so.
Materials or your the files, but I I don't see a geographical breakdown of your business I'm also so when I see a third party reports your market share is certainly not it's a very fragmented industry, that's frustrating to say.
Can you address.
Both those issues in terms of what you think your overall market shares can sort of talking about a injury platforms a what the overall market share might be in this yeah I'm guessing that you guys are real heavy in Colorado, but if you could.
Maybe address other geographies.
Sure I'm happy to speak to that when it's a great question, Yeah, I think I'm.
I've seen some at the same report you have which are generally its self survey reported and generally focused only on the retail a portion of that business. So often those numbers are not taking into account the full supply chain, which of course, we serve and so when we look at our market share.
We look at <unk> and in some states, it's publish the number of licenses and some countries in markets and in others. It's not published and we have to do some extrapolation.
To determine.
What the available number of licenses certainly given market to we looked at that then we determine how many of those are actually operational and then we look at our numbers to see what our market share as I can tell you that what we see in our numbers is leading market share in and.
Certainly with our.
Acquisition of handful organics as meeting, which has been jordi market share in Canada, and North American a commanding footprints in North America, when you look across the whole supply chain.
And the other thing that I would just mentioned on that.
Is that in we also look at you tend to serve the more enterprise tears assist us until we also look at [noise].
Not only what is our capture of the number of licenses, but we will also internally look at what is our capture of the volume of I cant end market and generally we we are we do have some states for were a little stronger than others I.
And of course in both Pennsylvania, and Utah, where [noise].
Not for at least it assistance contracts the state mandates I. They use it MK platform of course, we had 100% and market share and in other states. We generally track a internally the number of licenses for instance, California is a state with a lot of licenses as well.
We're gonna have a high number of licenses in California compared to some other states that have led to numbers.
Hi. This is the quality can you a whale, Colorado, specifically, how much of Colorado might be your business ballpark.
So we don't have that published they can share that among the enterprise tier of operators are we have a really great market share and Colorado and including a couple at cornerstone clients and clients that that had been with us for for a very long time if.
Clients hitting back too.
And the very earliest days as the industry add back when we first started in 2010.
Okay that leads to any lost a part of the same question.
So when I when I talk to people about your coping I say no for a lot of investors it's difficult to pick the winners, although maybe it's getting easier when it comes to the a large invesco's.
And Oh are you able to disclose like your opportunity ahead, or where you are now with no I don't know how you would decline at the let's say you have looked at the new candidates ventures ranking you'll look at the top end lessors by revenue can you.
Trying to describe it it's fully penetrated or past penetrated kind of where do you see yourself in terms of the large enterprises.
Outside of come just mentioned.
Okay sure it's very good question.
So we do as we look at the largest set us M.S. shows us them and all of the and says that you have signed there are few in which we have fully rolled out and installed across all locations, although of course and some have.
Others are very much still in that process and we are partnered a we've announced a our integration. This stage a for accounting and tax planning that we also have a integration with that suite and the strategic partnership that sweet and certainly.
Those integrations are immense though cornerstone account for those integrations, we expect to see that is a compelling competitive differentiator and we expect to see that drives significant revenue next fiscal year that that focus on.
And on completing those integrations and and really ensuring that [noise].
No one tries to reinvent the wheel when we already solved for all pieces at the business, including global currency conversions, the advanced tax planning and financials.
Great well, Hey, I really appreciate the color wish you all the best as you wrap up this year.
Wonderful. Thank you so much in of course, there's always room to grow and when we're laser focused on execution. Thanks, so much like.
Ladies and gentlemen, we have reached the end of the question answer session and I would like to turn the call back suggests good doing Lee for closing comments.
Thank you operator.
We continue to do what we say, we're going to do we create trust between products creator and product consumers.
Our acquisition and strategic investments are focused on locking up the text ended the enterprise cannabis businesses.
So having with technology the growing demand for increased supply chain transparency.
Consumers and government.
You can depend on us to continue to execute.
We believe our greatest opportunities May just ahead.
Thanks, you for your continued support.
We look forward to sharing our continuing progress with you in the future.
This concludes Akorn is conference call. Thank you and have a great there.
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