Q2 2021 Akerna Corp Earnings Call
[music].
Good morning, and welcome to the current is.
Quarter ended December 31, 2020 financial results conference call.
Today's call is being recorded at this time I'd like to turn the call over to Erica Mannion Investor Relations for a car and you. Thank you.
Thank you and welcome to today's quarter ended December 31, and 2020 conference call on the call today of Jessica Billingsley, CEO and chairman of the coroner and John <unk> CFO of the corner before we begin our formal remarks I'd like to remind everyone that during this conference call certain statements will be made that of forward looking statements within the.
Meaning of the Safe Harbor provisions of the United States Private Securities Litigation Reform Act of 1995.
Such words as estimate projected expect anticipate forecast plan intend believes seeks may will should future propose and variations of these words of similar expressions or versions of such of words or expressions are intended to identify forward looking.
Statements.
These statements include but are not limited to statements regarding the future growth and prospects for Kona and statements regarding expected future revenue recognition piece.
These forward looking statements are not guarantees of future performance conditions or results and and several known and unknown risks uncertainties assumptions and the other important factors, which could cause actual results or outcomes to differ materially from those discussed including risks related to changes and the cannabis.
Market and risks related to the impact of the COVID-19 pandemic.
These risk factors are more fully described in the current filings with the SEC.
Forward looking statements speak only as of the date they are made of.
<unk> 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 would like to turn the call over to kind of Seo Jessica Billingsley for a discussion of the Companys quarter and full year ended December 31 2020, Jessica.
Thank you Erica and good morning, everyone. Thank you for joining us today.
As stated on our last quarterly call our intent to change our fiscal year ended December 31st, which we've done and therefore any references to the quarter period. During today's call are references to our fourth calendar quarter for 2020.
And at December 31, 2020 and.
And references to the year of references to the calendar year of 2020.
One of the 20 was important growth year for our current and I'm pleased to share and the quarter. We grew our software business the 38% year over year our.
Our business is the whole grew 24% and 2020 with our strong software growth offset by a contraction and our consulting business, which was impacted by pandemic related shutdowns and delays.
And I says and governments have adopted we're encouraged to see our quarter over quarter consulting revenue increased by 75% well of our software revenue also grew sequentially and the December quarter.
Our total SaaS air or is currently $13 8 million of 42% increase over the same time last year.
In addition to top line growth the restructuring activities taken in 2020 are delivering results with a 36% sequential improvement and adjusted EBITDA and the December quarter.
We are encouraged by the pace of demand, we saw going into 2020. One we look forward to continued growth and the quarters of hats.
And so it's been a theme for much of 2020 are focused on the multistate international and emerging enterprises and the 21 billion dollar global cannabis industry continues to serve us well.
This quarter, we saw continued chairman improvement by 41% sequentially, while consolidation continues with many of our larger clients significantly increasing their footprints on average MJ platform clients number of transactions tracked and our system has.
And as increased by 63% year over year our.
Our average and blockchain platform deal size has also increased by 21% year over year.
Further illustrating the value of our technology to the important midmarket and enterprise client base and.
G platform delivered 99, nine and 7% uptime and the quarter and our average client satisfaction rating across all products now exceeds the H on the scale of one to 10.
With leading market share driven by the breadth and capabilities of our platform.
We believe we are well positioned to capture the opportunity in front of us as the cannabis industry expense and the years ahead.
At the core of of current of platform differentiation is our architectural approach to solving compliance and governance requirements.
On a pioneer and the cannabis industry, we identified early on the challenges and complexity that would arise and managing regulatory requirements as the industry grill.
But the different compliance requirements for such thing Thats very documentation required at each step of the cultivation process labeling taxes due.
Sales captured and even down to basic units of measurement on what constitutes a batch or large we understood building. These unique compliance requirements one by one into our individual software products, we have scaling limitations and become overly cumbersome as new markets develops.
The addition, much like the sales tax compliance and the national level, the regulations themselves continually change and both established and new markets, adding to the overall conceptually if the problem.
The address this fundamental challenge six years ago of current invested and the strategic architectural shifts two abstracts of compliance and governance layer from our solutions by creating a standalone and gateway, which of our applications and then integrate via API.
And have significantly reduced the complexity of maintaining compliance within the fragmented ever changing market framework, while creating the ability to rapidly scale as new markets are introduced.
Streamlining changes and updates and tree single compliance gateway and <unk>.
<unk> rapid deployment by eliminating the typical industry practice of continually rewrite and code for each individual application.
Given this architectural approach and our long standing presence and the market the.
The net result.
Ecosystem.
With the most comprehensive compliance and regulatory capabilities and the industry.
Able to serve off the shelf the requirements of the entire canvas supply chain and more of medical and recreational markets in North America and beyond and anyone else.
And our view this is critical to being and enterprise software provider and the cannabis industry.
Because of regulatory requirements are a foundational part of virtually every operational process.
As we grow and strategically prepare for the enterprise evolution of the industry. Our goal is to leverage our core capabilities.
And expands the breadth of our platform to capture the multitude of growth vectors the hat.
Over the last year the infrastructure improvements, we've made and the acquisition please close and.
On the acquisition strategy, we continue to pursue position of current ought to be one of the largest catalyst technology winners as legalization expense to new states. Our platform has allowed us to create a true ecosystem with over 80 integrated products and more than it does and strategic partners, making of stickier and helping.
To maximize wallet share of our clients as they scale their operations and the industry makes and natural progression to maturity.
Building on the enterprise capabilities of our platform.
We've also integrated with large scale financial and tax management solution like Oracle and Netsuite week change in tact and S. E T with the core tenant being that as the organization grow they will increasingly look to adopt more sophisticated financial and tax planning management tool.
On par with those of Midmarket and enterprise companies and other industry the.
The importance of ease of integration is the basis for our recently announced the acquisition of Viridian.
By way of background Meridian is one of very few system integrators focused solely on the cannabis industry and the only one leveraging SVP of business one offer.
All of Radian has experienced success and the cultivation and production markets driven by their strong S. E. T implementation team there were limitations on the breadth of their addressable market given the regulatory complexities I mentioned earlier.
By acquiring meridian.
And this is one products will now have direct access to our compliance gateway, while our current of adds strong S. E. T system integration capabilities at 1.7 acts 'twenty 'twenty are are we believe this transaction is of great value for both companies, particularly when taking into account the cashless synergies we expect to realize.
And 2021.
Equally important this acquisition expands the breadth of our S E T integration.
With Floridians, because it's one offering serving smaller and mid market organizations, while the current of ECC offering continues to serve large international and the enterprise players and.
The combination with our stage and Oracle Netsuite integration, we have significantly bolstered the capabilities of our platform to include enterprise class tax planning solutions, including global financial statement and tax reporting to help our clients more efficiently and of course compliant Lee address rapid industry growth.
As of further substantiation of our approach to building enterprise capabilities into our platform.
Earlier this year, we partnered with Domo to release, the next generation of canvas data analysis, and Jay analytics and see.
The industry continues to mature we see analytics as the natural next step and technology spending to take advantage of the large datasets captured for regulatory requirements.
And that's simply capture in the state of for the sake of submitting compliance reports and our clients can now leverage that data they can form decisions about their own operation.
Thereby improving the outcomes, including sales growth and profitability.
And the value is being recognized by the market and has generated a six figure increase and a R. R. Since March.
Finally, as we see and further into the retail segment.
Last quarter, we announced and J retail of first of its kind and proprietary software technology designed to provide merchants and consumers of the flexible and mobile friendly experience by.
By providing a clean and lightweight point of sales solution that connects via current of platform without sacrificing critical features and.
And Jay retail positions us for even more robust growth among cannabis retail operators.
Junction with our retail offering earlier this year, we also signed an agreement with priority Technology Holdings.
Provide CBD and hemp retailers with credit card payment processing through of current at the point of sale of products.
The several clients now on beta version of the product. We're encouraged by the feedback we have received thus far and we look forward to a wider rollout and the coming quarters.
In addition, combining our M. G of retail point of sale solution with the ability to after the payment solutions through priority technology.
We believe we're well positioned to capture transactional revenue streams, and the medical and adult use cannabis markets.
And the legislative actions of the federal level.
With the election and the subsequent Senate runoff races, and a rearview mirror the combination of the growing support for candidates at the state level.
Coupled now with the Democratic Administration and Senate majority.
Opens the door for significant the net and cannabis legislation.
The first months of the New administration may include some exciting reforms at the federal level, including the long awaited passage of the Safe Banking Act just back on the house floor increased support for the hemp industry and eventually federal decriminalization through legislation similar to the more act.
All of our work and achievements to date have positioned us for this inflection point of U S Federal legalization.
Now, let's have John take us through the details of our financial results John Please take it from here.
Thanks, Jessica today, I'll provide an overview of our financial results and key business metrics for the quarter ended December 31 2020.
As a reminder of these results are discussed in our earnings release for quarter ended December 31, 2020 further detail for the six months ended December 31, 2020, including our audited financial statements for that period will be and our form 10-K, T, which will be filed shortly with the SEC financial results reported today are preliminary.
The final financial results and the other disclosures will be reported and our annual report on form 10-K T. The Ma.
Differ materially from the results and disclosures today due to among other things. The completion of final review procedures. The occurrence of subsequent events or the discovery of additional information. We encourage you to review the filing and detail.
Before I review the financial results I'd like to again highlight the administrative change as discussed last quarter. Our board of directors adopted resolutions to change our fiscal year and from June 30 to December 31st the transition period from June 30 to December 31 will be covered by filing of transition report on form 10-K T.
For the six months ended December 31 2020.
This change was made to simplify and standardize our operations for enhanced comparative analysis and reporting for both internal and external benefit.
2020 was a period of rapid transformation for our current AR, we have matured as a publicly traded company. We completed three acquisitions that have expanded our footprint and provided additional tam.
We completed two financings, giving us the capital to accelerate growth and we have made remarkable progress on internal initiatives of building scale and developing our software ecosystem and while continuing to focus on client experience. The execution rigor is driving efficiencies across our income statement and the fourth quarter gross.
Profit margin was 66% of record for a current on over the last six months, we have improved adjusted EBITDA, 46%.
This past quarter, we had strong sales to net new clients as a result of building momentum and both lead generation and sales recording $800000 of new Arrow of bookings our average booking about is up 21% year over year, which illustrates the success, we are seeing with larger multi location and multistate.
Readers as Jessica mentioned, we continue to have a strong software and consulting pipeline.
Additionally, our platform engagement continues to grow and reached new Heights and transaction volume is up 63% year over year retail order volume was up 56% year over year and retail order value is up 105% year over year on the operations front. The restructuring actions we've taken are delivering results.
As seen in our December quarter financials, with adjusted EBITDA, improving 36% sequentially.
While incremental cost improvement opportunities remain.
With the progress, we've made and calendar 2020.
Turning to the financial results for the December quarter total revenue increased 11% sequentially to $4 1 million driven by a combination of organic software growth and a return of demand for our consulting practice.
Software revenue grew 4% sequentially to $3 4 million. We currently have approximately $1 2 million of our our backlog of pending go lives.
Consulting revenue grew 75% sequentially to approximately 600000 and is up 345% from the June quarter. While we expect we will see increased demand for our consulting services as new state initiatives are implemented following this past election cycle. It is worth noting that revenue from these projects can be lumpy period to peer.
Due to the way services are delivered and revenue is recognized.
Cost of revenue was down 339000, or 19% sequentially gross profit was $2 7 million for the quarter and increase of 37% from the September quarter, and representing a 66% gross margin. This compares with the gross profit of 2 million and of 53% gross margin and the private.
Quarter.
The increase in gross margin is tied to both a rebound and consulting revenue in the quarter as well as operational efficiencies achieved driving and improvement in overall software margins.
We expect to continue to expand our margin profile and the periods ahead as consulting rebounds, and as our software revenue grows and adding a higher contribution margin to our revenue mix.
Moving to operating expenses total operating expenses increased approximately $4 7 million sequentially, mainly as a result of noncash impairment charges related to our annual impairment review required per U S GAAP, which I'll touch on shortly.
Non-GAAP operating expenses decreased approximately 317000 or 6% sequentially as our incremental restructuring actions materialize.
Non-GAAP operating expenses exclude a number of one time nonrecurring and noncash expenses that include depreciation amortization and stock comp expense business combination expenses impairment and other nonrecurring charges.
We believe adjusted EBITDA when considered with the financial statements determined in accordance with GAAP is helpful to investors and understanding and comparing our performance.
Product development decreased 352000, or 20% sequentially. A result of efficiencies achieved integrating our acquired assets and continued focus on scalable infrastructure.
Sales and marketing expense decreased 267000 of 13% sequentially as we have built a more focused and targeted sales organization and efficiencies achieved integrating our acquired assets, we have finalized our sales and marketing integration and expect to realize significant synergies and future periods as we refine our go to market strategy.
We are pleased with our sales and marketing efficiency as we continued to deliver new business growth with improving customer acquisition costs.
General and administrative expenses decreased over 500000 or 20% sequentially as I've shared previously we are laser focused on operating efficiencies across the organization, having completed a number of incremental restructuring that are starting to have a favorable impact to our financial results.
And the quarter adjusted EBITDA was negative $1 9 million compared with negative $3 million for the quarter ended September 'twenty, and 'twenty and improvement this quarter of 36%.
And 2020 macro level shifts and the global economy led to delays and executing on strategic initiatives related to acquired assets as part of our annual assessment required under U S. GAAP, we updated our long term forecast and as a result management concluded that and approximately $6 9 million impairment adjustment was required the <unk>.
Current charges recorded as a component of operating income, but excluded four reporting adjusted EBITDA of the strategy for our acquired assets remains unchanged the opportunities are significant and our commitment to their success and wavering.
As of December 31, 2020, our cash balance of approximately $17 8 million.
Cash on hand, and access of the capital markets positions us well to execute on our strategy, which is the significant advantage over many of our competitors. We expect continued improvements and our financial performance as we continue to scale and drive towards profitability.
Love referenced non-GAAP financial measures are discussed and reconciled to GAAP financial measures and our earnings press release that was issued before this call that press release is available on the company's Investor Relations website, and we encourage you to review the reconciliations there as well as review of our audited financial statements for the six months ended December 31, 2020 contained in our true.
<unk> report on form 10-K T to be filed with the SEC shortly.
And this past quarter, we continued our efforts of becoming a leaner more focused organization with the human capital and financial resources to execute our growth strategy and.
As evidenced by the meaningful sequential improvement and both gross and EBITDA margin. We believe there is significant operating leverage built into our current model as top line growth continues to improve we are keenly focused on our performance and committed to delivering efficiencies across the income statement.
This concludes our prepared remarks, we are 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 of applies equally to the Q&A session now lets turn the call over to the operator for questions operator.
Thank you.
At this time, we'll be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad of confirmation tone will indicate your line is and the question. Kim You May press star two if you'd like to remove your question from the queue for participants using speaker equipment and may be necessary to pick up your handset before pressing the star keys on.
First question comes from the line of Bryan Kipp Flinger with Alliance Global Partners. Please proceed with your question.
Hi, Good morning, guys. Thanks for taking my questions.
And good morning, Bryan you, obviously, how long are you Jessica so you've talked about a consulting and.
Obviously, a lot of states of the regulated and most recently, Virginia can you talk about maybe a little bit more of it have you won consulting projects that you expect to see ramp over calendar 2021.
Yes.
Yes, you said it was lumpy, but should we continue continue to expect significant and increases and the impact on margin would be helpful.
Sure well I'll take that first part and then let John speak to the margin and so on the <unk>.
First of all of your question, where we're seeing a combination of both projects that were placed on hold at the beginning of the pandemic I start to come back in terms of where we're able to execute on them and and recognize that revenue from the booking.
And as well as new projects from recently passed state of initiatives. So one example of the state of Georgia and resumed accepting applications. We were able to help the number of clients with those applications and we're already signing clients and some of the new states and now I do want to note that we do.
Expect to see continued lumpiness and our consulting revenue sometimes quarter to quarter of those those bookings may not translate directly into revenue recognition. Although we do expect a return to historical levels roughly this year, John do you want to speak to how that impacts margin.
Sure. So good morning, Brian how are you.
And so as we've shared before our our cost structure really and at our cost of sales is largely fixed so as it relates to consulting and.
That's the that's a highly specialized group of people and we try not to flex them up or down and so we we maintain sort of the continuity of of those groups. So as we bring on new revenue and new business.
As you can imagine comes with a very high margin profile and just drops right through to the bottom line.
Yeah, I think of it.
So.
In terms of of the states and November that regulated and different ways, and and Virginia, as well or any discussing of single store software provider of like Utah. For example, and then can you talk about when we should and how we should think about new state regulation driving software revenue was the.
On a year after is it months after.
And that's a great question and and it's mixed as you as you might expect and.
So for instance, we're starting to see activity and New Jersey, and Mississippi, While South Dakota, which legalized both medical and recreational and with no. Prior framework is moving more slowly so and we do expect to see that the mix to some extent I can share that we're in conversations with the.
And a number of states, both new and in existing and about our leaf data systems product and there've been no new of Rfps issued since our last call that we are and conversations with several states.
The the pipeline will result in consulting revenue first and then software revenue following and we expect something of a rolling Thunder of some of those markets will be faster than others.
And part of any states talking about on the sheet the shale tracking software requiring their licensees to use one single source is that debt and discussion at all or do you don't see that or any of the new states.
And we are in discussion with a couple of states, we're very interested and the Pennsylvania and get top model.
Got it great and then can.
Can you quantify the dollar value you mentioned the growth, but the dollar value of cannabis that's been processed through your platform and if you're able to provide payment solutions, what would that mean from a revenue expected for the cannabis and then.
Similarly, once the priority solutions.
The technology is available for you to use.
What would that what market does that give you for CBD and hemp and if everyone, who sold CBD and hemp and use that solution.
And to take Tom and John.
Yeah, I'll take that Brian and yeah. So if if.
So let's frame it correctly just to make sure. So if we assume if we assumed every one of our customers today.
On MJ platform out of retail location was was processing through our transaction platform that would probably you know plus or minus $20 million I think of the right way to think about it in terms of the total size in terms of our revenue share with our service provider right Yep.
And then on the San P B and C V decided at the same question right because that is legal so once that solution is ready and can be integrated the everyone, who sold San CBD and hemp use that solution I take it. It's a smaller addition, but what would that look like.
Oh, it's it's it's and or it's significantly smaller as an order of magnitude I mean, obviously, a large part of our clients today are on the cannabis front you know just to be Frank I haven't we haven't looked at that specifically are or have been and CBD, but it would be several hundred thousand dollars of years is what I would guess I mean, the real upside for us here is instead.
All of legalization and and transacting with organic of as clients.
Great and then and you mentioned why I've already and.
You clearly made a couple of moves to align yourself with a S. A P. But can you take a minute to discuss can you maybe I missed it the software function and what are they providing to their customers and I'm not sure I heard Jessica right or maybe I did but how much revenue they generate and 2020.
And so John to you for what is public about revenue I think what we disclosed right and actually I think I know the answer is we we disclosed a 6 million dollar purchase price, which represents 1.7 acts 2020 I E. R. R.
Total revenue of about there.
And a R R.
And you.
You know, maybe just speaking to a little bit of of a bigger your bigger question. There in terms of what they do for a long period of time, we believe the greatest potential competitors would be the large ERP system providers, such as the S. E T and net suite and as a result, we've made significant investments over the past several years and integrations.
And developing strategic partnerships with these providers, including our recent acquisition of Viridian.
And viridian is S. A piece of since one product and that has a number of candidates specific compliance pieces that have been built into it today of course, there's future synergy and at connecting the variance business one product to our compliance gateway and.
And not having to rebuild that compliance and redo. It re implemented every time and every new market for each new client and so that's where there's some some real tax synergy and continues to prove I think the the overall strategic value of our and our products and our product lines.
And so at this point, we feel really good about the position we've created for ourselves with the large players now looking to partner with us versus trying to build it themselves to compete.
Great. Thank you.
Thank you.
Thank you, ladies and gentlemen, as a reminder, if you'd like to join the question queue. Please press star one on your telephone keypad will pause a moment to allow for other questions.
Our next question is a follow up from Brian <unk> with Alliance Global Partners. Please proceed with your question.
Well I wanted to give others a chance before I ask one more question.
You've clearly.
<unk> been acquisitive over the last 18 months or so as you highlighted so but I know M&A is a big piece to augmenting organic growth. So maybe talk about what valuations look like these days and.
And what the pipeline looks like there were a number of these are the small tuck in acquisitions or you know.
Couple of million dollars and revenue and and what specifically as you look at your total solution.
Hmm.
Might you is on your wish list for example to add to the platform.
Hi, Great Great question so.
We continue to have a strong pipeline of potential technology and and each of our three target categories. I. We've shared previously, namely Tam expanding technology product tuck in and market share high and and I can share that that that pipeline has increased dramatically following the and the Georgia.
Democratic election to the Senate, which.
Probably makes.
And some progress toward federal legalization and more likely and the near term. So as of results. We can afford to be very opportunistic with anything we pursue and focus on opportunities, where there's positive cash flow of industry.
The second part of your question, there and as we look at the industry landscape. There are more trellis and verdean sized opportunities out there and available than there are larger opportunities and are generally on the I don't know if you want to speak briefly to the the evaluation for both Charleston Verde and the the two deals.
Deal suites and.
Announced over the past eight and nine months and and and sort of how we're seeing some of those evaluations.
Sure I think I think the I think the valuations are a bit over the board and maybe there's a way to answer that I think I think deals are getting done at lower values and maybe more realistic values I think as you look at trellis was two X revenue and viridian sort of in that neighborhood, there's certainly no shortage as Jessica shared.
Of opportunity out there I think there's there's those who sort of hold themselves out for really high valuations and and obviously when that happens it's harder to get deals done. So I think we see it I think we see it pretty dispersed, but I do believe that where we've been able to complete some some transactions as sort of indicative of.
The word deals actually are completed.
Great and then when I think about the margin profile of the Meridian is it the majority of the revenue software licenses or SaaS is it says it is it software license and maintenance just take us through so we can at least.
And how we should think about the the gross margins compare to yours.
Yeah. So it's so again traditional SaaS business with recurring software revenue professional services et cetera, and I think they're gonna have you youll expect to see.
A nice margin profile I think probably similar if not maybe slightly uptick to ours. So that'll certainly I think add to our overall margin profile and help improve it but you know as we think about Verde and I think the the best way to think about that and it's just as the standard SaaS business with software licensing and recurring revenue and then the traditional professional.
As the supplement.
Great last question I have maybe.
We haven't touched on a while and Canada.
And ample so maybe just talk about and.
How did that market's materializing in terms of the outlook and and more licensees and things like that.
And it.
Can you can you ask that one more time, Brian sorry, I'm, just wondering Canada stalled out for awhile and.
And so I'm just wondering how that market is materializing in terms of.
And the opportunity for a corner.
Yes, so as as we know I, it's and you know as you can imagine it's always difficult to predict.
But from the pace of activity were seeing thus far we would expect an uptick and licensing activity and and mid 'twenty 'twenty. One maybe followed by some software decisions towards the end of 2021 sort of typical the software spending cycles and cash.
Canada of course, and had more strict and stringent and COVID-19 locked down across most of its provinces and territories than we did here.
And the U S and as and Health, Canada itself also paused on the license issuances for a period of time that is beginning to reopen and and we're optimistic for 2020 one.
Great. Thanks, guys.
Okay. Thanks, so much.
Thank you. Our next question comes from the line of Martin Toner with ADP a T. B capital markets. Please proceed with your question.
Good morning, Thanks for taking my questions and congrats on the good quarter.
Good morning, Thanks for it and that's it thanks.
Martin.
Can you guys yes.
Yes.
Give me, what's the organic growth number was for software revenue.
And then.
Can you guys comment a little bit about sales efficiency and what youre doing on the sales and marketing front.
And if you're doing anything different and what.
What do you see prospects looking like going into this year and then lastly, Oh broke question about churn and there too can you just talk about it.
And just talk generally about what churn looks like thanks.
Sure well I'll take the sales and marketing and what we're seeing and the landscape and and I'll touch on churn and then turn it over to John to take to get into the numbers. There. So from the sales and marketing standpoint, we're seeing some really great traction on it and and efficiencies from our combined.
The and selling approach at the current level for all of our products and as evidenced by high on.
Our our reporting of our and over over 20% our growth and our average deal size for MJ platform, we're continuing to see a consolidation within the industry existing clients really expanding their footprints as well as a new.
<unk> consolidators are beginning to expand and and consolidate we're seeing more and more at those net enterprise size deals that are really where we've targeted our products and services to the industry.
The.
And we did improve and report some improvement on the churn for France, and I think the number we reported was 42%.
The churn improvement sequentially quarter over quarter.
John do you Wanna comment too on our growth.
Yeah, Yeah, you know I would say more of the more of the growth actually came organically from our core businesses as we know the last 12 months has been it's been pretty.
On dramatic and at a macro level and I think we've seen a little more slowdown and in the Canadian markets with ample organics and we have here and the U S and so I would attribute our growth here in the quarter sequentially like just to Jessica's point of of what we're seeing with some of our larger operators. Some of that growth is more tied to our core businesses although were.
Certainly you know opportunistic of where we think long term candidate will be but short term I think it was more of our legacy systems.
Great. Thanks, guys.
Thanks Martin.
Thank you. This concludes our time allowed for questions and I'll turn the floor back to Ms. Billingsley for any final comments.
Thank you operator, we are the technology ecosystem for cannabis serving operators governments and brands our ecosystem strategy and strategic investments are focused on locking up the tech spend of the enterprise cannabis businesses and solving with technology the growing demand for increased supply chain.
Transparency among consumers and governments, we thank you for your interest in the corner and we look forward to sharing our progress with you assuming the forward.
Thank you. This concludes today's conference you may disconnect. Your lines at this time. Thank you for your participation.