Executive Summary

KERN’s Q3 2022 (then Akerna Corp.) showed low-single-digit total revenue growth year over year but sequential declines, with gross margin compressing as sector softness persisted; Adjusted EBITDA loss narrowed materially versus Q2 on cost controls and a $3.0M favorable earn-out adjustment .
Reported revenue was $5.41M and EPS was $(0.59); S&P Global consensus was unavailable. Third-party (Zacks) indicated revenue missed by 4.2% and EPS missed by $0.16 vs $(1.20) estimate, implying a negative surprise on both lines .
Management emphasized a path toward sustainable profitability supported by ~75% recurring revenue, ongoing expense reductions, and improved Adjusted EBITDA trajectory; strategic and financial alternatives continue to be explored to strengthen the balance sheet .
Call commentary highlighted cash and restricted cash of ~$9.5M at quarter-end, reduced operating cash burn sequentially, and a debt amendment that deferred amortization to January 2023, while acknowledging going-concern disclosures—key overhangs for equity holders .

Note: In Q3 2022, KERN referred to Akerna Corp. (cannabis software). The ticker later became Gryphon Digital Mining via corporate actions. This recap covers the Akerna quarter (the then-current KERN) as requested .

What Went Well and What Went Wrong

What Went Well
- Adjusted EBITDA loss improved to $(1.39)M from $(2.15)M in Q2 and $(1.54)M in Q3’21, reflecting cost controls and a favorable contingent consideration adjustment .
- CEO tone on profitability pathway: “double-digit growth in reported software sales,” “aggressive cost control measures… tracking through the P&L,” and “narrowing of our Adjusted EBITDA losses” .
- Recurring revenue base (~75% of revenue) underpins visibility; management believes current units can support sustained profitability at current growth rates .
What Went Wrong
- Sequential contraction in total revenue ($5.41M vs $6.09M in Q2 and $6.95M in Q1) and gross margin (62% vs 69.8% in Q2 and 68% in Q1) as sector softness pressured sales mix and volumes .
- Bookings and CARR weakened: Q3 bookings ~$440K (vs $600K in Q2 and $2.0M in Q1) and CARR declined to $16.9M (from $18.9M in Q2 and $21.1M in Q1), highlighting demand headwinds .
- Balance sheet risks persisted: going-concern disclosure, convertible debt at $14.5M, and reliance on financing (July unit offering), keeping capital structure top of mind for investors .

Financial Results

Metric	Q3 2021	Q1 2022	Q2 2022	Q3 2022
Total Revenue ($M)	$5.14	$6.95	$6.09	$5.41
Software Revenue ($M)	$4.56	$6.51	$5.92	$5.33
Gross Profit ($M)	$3.16	$4.75	$4.25	$3.36
Gross Margin (%)	62%	68%	69.8%	62%
Operating Loss ($M)	$(3.72)	$(20.64)	$(29.22)	$(0.84)
Net Loss ($M)	$(1.55)	$(21.95)	$(29.57)	$(2.30)
Adjusted EBITDA ($M)	$(1.54)	$(2.26)	$(2.15)	$(1.39)
Basic/Diluted EPS ($)	$(1.17)	$(0.69)	$(0.83)	$(0.59)
Cash & Restricted Cash ($M, period-end)	N/A	$10.20	$5.13	$9.50

Segment revenue breakdown:

Revenue Category ($M)	Q3 2021	Q2 2022	Q3 2022
Software	$4.56	$5.92	$5.33
Consulting	$0.55	$0.12	$0.08
Other	$0.03	$0.05	$0.01
Total	$5.14	$6.09	$5.41

KPIs and operating metrics:

KPI	Q1 2022	Q2 2022	Q3 2022
CARR ($M)	$21.1	$18.9	$16.9
Software bookings ($K)	~2,000	~600	~440
Avg new business deal size (YoY)	+40%	−9%	−16%
Transactions (volume trend)	+16% YoY	+9% YoY	+10% QoQ

Vs Estimates:

S&P Global consensus: Not available for KERN Q3 2022 (SPGI mapping unavailable).
Alternative (Zacks): Revenue missed by 4.2% (reported $5.41M); EPS $(1.36) vs $(1.20) estimate (−$0.16 miss) .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Company guidance	FY/Q4 outlook	None provided	None provided	Maintained (no formal guidance)

No explicit quantitative revenue, margin, OpEx, or other guidance was issued; management focused on cost controls, recurring revenue base, and strategic alternatives .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1 & Q2)	Current Period (Q3)	Trend
Cost reductions/Non-GAAP OpEx	Announced expense reduction program; targeting margin improvements beginning Q3 .	Adjusted EBITDA loss narrowed to $(1.39)M; non-GAAP OpEx reconciliations provided .	Improving
Strategic/financial alternatives	“Pursue strategic alternatives to optimize capital structure and strengthen the balance sheet” .	Continuing to explore alternatives; July unit offering closed; reverse split to maintain Nasdaq compliance .	Ongoing
Bookings pipeline and demand	Q1 bookings ~$2.0M; strong deal size; Q2 bookings ~$600K amid sector softness .	Q3 bookings ~$440K; avg deal size −16% YoY; sequential transaction volume +10% .	Soft demand
Recurring revenue/CARR	CARR $21.1M (Q1) → $18.9M (Q2) .	CARR $16.9M; management cites ~75% recurring revenue mix .	Declining CARR
Balance sheet/going concern	Capital structure under review; impairments and cash burn pressured liquidity .	~$9.5M cash & restricted cash; debt amortization deferred to Jan-2023; going-concern addressed on call .	Mixed (liquidity still tight)

Management Commentary

CEO strategic message: “We continue to focus our resources on building a stable and sustainable financial model… evident in our double-digit growth in reported software sales… cost control measures… and the narrowing of our Adjusted EBITDA losses.” “We believe that our current business units, which are supported by and consist of 75% recurring annual revenue, provide us the means to reach a point of sustained profitability…” .
Non-GAAP framing: Company prioritizes Adjusted EBITDA and non-GAAP OpEx to track operating progress ex one-time/non-cash items; detailed reconciliations provided .
Capital markets actions: Equity raise in July ($9.2M net) and 20-for-1 reverse split to maintain Nasdaq listing; continuing to explore alternatives .

Q&A Highlights

Cash, burn, and liquidity: Management noted ~$9.5M cash & restricted cash at 9/30, net cash used in operating activities of ~$3.2M for the quarter, and ongoing investment in capitalized software; investors focused on runway and burn profile .
Debt profile and timing: CFO discussed convertible debt of ~$14.5M and a debt amendment moving amortization out to January 2023, relieving near-term pressure; this addressed part of the going-concern discussion .
Profitability path: Management reiterated non-GAAP cost discipline and recurring revenue base as levers for reaching sustained profitability at current sales growth rates .

Estimates Context

S&P Global (Capital IQ) consensus for Q3 2022 was unavailable for KERN due to mapping constraints on our side; therefore we cannot report S&P figures.
As a secondary reference, Zacks reported: revenue missed by 4.20% (reported $5.41M), and EPS missed by $0.16 vs $(1.20) estimate, indicating downside vs expectations .

Key Takeaways for Investors

Sequential top-line and margin pressure with deteriorating CARR and bookings signal continued demand softness in cannabis software; however, Adjusted EBITDA trajectory improved on cost actions and a favorable contingent consideration adjustment .
Liquidity is the gating factor: ~$9.5M cash & restricted cash at quarter-end and deferred debt amortization provide near-term breathing room, but going-concern and leverage remain central risks until alternatives or sustainable FCF materialize .
No formal guidance was issued; near-term catalysts hinge on strategic/financial alternatives, stabilization of bookings/CARR, and evidence of continued OpEx discipline feeding Adjusted EBITDA improvements .
The recurring revenue base (~75%) provides some revenue durability; watch for conversion of pipeline into new bookings and upsells to re-accelerate growth .
For trading: estimate misses (per third-party) and continued liquidity concerns likely keep sentiment cautious; upside could emerge with positive balance sheet actions or sustained Adjusted EBITDA progress .
Structural note: This quarter reflects Akerna’s results under the KERN ticker in 2022; subsequent corporate actions changed business mix and identity to Gryphon Digital Mining, so historical comparability to current KERN operations is limited .

Sources: Q3 2022 8-K and press release with financial statements and reconciliations ; Q2 2022 8-K and press release with statements and KPIs ; Q1 2022 8-K and press release with statements and KPIs ; Earnings call transcript excerpts and topics ; Third-party estimate context .

Gryphon Digital Mining, Inc. (KERN)·Q3 2022 Earnings Summary