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Renewed discipline on business priorities and operational
excellence focused on driving revenue growth, positive cash flows
and earnings. Disciplined management of operating expenses and
working capital have created a stable foundation for investment in
growth.
- Technology leader Paul
Butcher joins Martello's Board of Directors, bringing a
track record of driving innovation and catalyzing transformative
business changes.
- Interim CEO Jim Clark to
prioritize disciplined execution of Martello's strategic plan
within revamped business management constructs.
- FY23 actions to reduce costs and Q2 FY24 re-engineering of
long-term debt have improved Martello's adjusted EBITDA by 88% in
Q2 FY24 and increased working capital.
- As partners leverage Vantage DX to expand their service
offerings and revenue streams, Orange Business Services, a
Microsoft partner, added Vantage DX to its managed service
offering. The solution helps Orange Business Services proactively
measure and manage their customer's experience of Microsoft
Teams.
- The Mitel business line continues to provide a stable and
profitable recurring revenue base with a 2% increase in Q2 FY24 to
$1.76M. Martello is also
demonstrating Vantage DX to interested Mitel partners in
the United States and UK
for the large number of Mitel users who also use Microsoft
Teams. The recent acquisition of Unify by Mitel brings long-term
upside potential.
- Chairman Terence Matthews
demonstrated his continued confidence in Martello by providing
USD$3M in additional debt financing
through Wesley Clover International Corporation to repay the
remaining Vistara debt in full, extending the maturity date to
2026.
OTTAWA,
ON, Nov. 21, 2023 /CNW/ - Martello
Technologies Group Inc., ("Martello" or the "Company") (TSXV:
MTLO), a provider of software that optimizes the Microsoft Modern
Workplace environment, today released financial results for the
three months ended September 30,
2023. Martello software provides businesses with actionable
insights on the performance and user experience of cloud services
such as video conferencing and voice calls, with a focus on
Microsoft 365, Microsoft Teams and Mitel unified
communications.
"I am pleased to report that the business opportunities for
Martello with existing and potential clients are highly motivating
for the Martello team, who are all working hard to create success
for our shareholders." said Terence
Matthews, Chairman of Martello. "Martello is strategically
positioned amidst several promising growth avenues in a dynamic
global market of over 400 million users. Recognizing Microsoft
Teams has a pivotal role in employee satisfaction, business
continuity, and overall enterprise customer experience, Vantage DX
is a catalyst for seamless Teams collaboration and communication.
Vantage DX continues to emerge as the key solution for Microsoft
Operator Connect partners seeking to deliver top-tier Teams
services and enhanced quality to enterprise clients. The recent
acquisition of Unify by Mitel, doubling Mitel's installed base,
creates another avenue for future growth for both Mitel Performance
Analytics and Vantage DX. Together with the Martello Board of
Directors, I am confident that Interim CEO Jim Clark and his team possess the capabilities
to execute the Company's strategic vision."
"In my expanded role as Interim CEO, my foremost objective is to
drive increased sales and profitability through a revitalized focus
on operational excellence," said Jim
Clark, Interim Chief Executive Officer and Chief Financial
Officer of Martello. "Today, Vantage DX is trusted by major
enterprise clients and key partners, and we've made significant
improvements to our sales and demand generation processes to drive
our sales pipeline. Our enhanced assessment of the voice of the
customer is a primary driver to many of the compelling improvements
across the value chain. By optimizing working capital and
repurposing capacity, we have strengthened our growth strategy and
operational performance. In hand with the entire Martello team,
alignment and focus is aimed at driving customer satisfaction and
sustainable profitable growth for our shareholders."
Q2 FY24 Financial
Highlights
Financial
Highlights
|
|
September
30,
|
|
September
30,
|
|
September
30,
|
|
September
30,
|
(in 000's)
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
|
|
(Three months
ended)
|
|
(Six months
ended)
|
Sales
|
|
$
|
3,982
|
|
3,840
|
|
7,986
|
|
8,018
|
Cost of Goods
Sold
|
|
506
|
|
491
|
|
987
|
|
954
|
|
|
|
|
|
|
|
|
|
|
Gross
Margin
|
|
3,476
|
|
3,349
|
|
6,999
|
|
7,064
|
Gross
Margin
|
%
|
87.3 %
|
|
87.2 %
|
|
87.6 %
|
|
88.1 %
|
Operating
Expenses
|
|
4,158
|
|
4,689
|
|
8,444
|
|
9,713
|
Loss from
operations
|
|
(683)
|
|
(1,340)
|
|
(1,445)
|
|
(2,649)
|
Other
income/(expense)
|
|
(885)
|
|
(1,168)
|
|
(1,447)
|
|
(1,006)
|
Loss before income
tax
|
|
(1,568)
|
|
(2,508)
|
|
(2,892)
|
|
(3,655)
|
Income tax
recovery
|
|
2
|
|
87
|
|
119
|
|
8
|
Net
loss
|
|
|
(1,566)
|
|
(2,421)
|
|
(2,773)
|
|
(3,647)
|
Total Comprehensive
loss
|
$
|
(1,653)
|
|
(2,661)
|
|
(2,809)
|
|
(4,604)
|
|
|
|
|
|
|
|
|
|
|
EBITDA
(1)
|
|
$
|
(358)
|
|
(1,431)
|
|
(646)
|
|
(2,590)
|
Adjusted EBITDA
(1)
|
$
|
(99)
|
|
(850)
|
|
(2,513)
|
|
(2,860)
|
|
|
|
|
|
|
|
|
|
|
(1) Non-IFRS
measure. See "Non-IFRS Financial Measures".
|
|
|
|
|
|
|
- Revenue of $3.98M represented a
4% increase compared to Q2 FY23. Vantage DX revenue grew
year-over-year and Mitel revenue remained stable. Sunsetting legacy
product revenue declined at a slower pace as increased budget
scrutiny delayed software vendor changes for many of these
businesses.
- Vantage DX is Martello's key Microsoft modern workplace
optimization business. In Q2 FY24 Vantage DX monthly recurring
revenue ("MRR") grew by 142% compared to Q2 FY23, both from net new
clients and conversion of clients from legacy products to Vantage
DX. Total Vantage DX revenue in Q2 FY24 was $0.61M, compared to $0.24M in Q2 FY23. Martello won large enterprise
clients for Vantage DX in the twelve months ending September 30, 2023, including a government
department with more than 100,000 users and a former legacy product
client in the professional services sector with more than 400,000
users.
- Sunsetting legacy product revenue declined by 13% or
$0.25M in Q2 FY24 compared to Q2
FY23. The ongoing decline of legacy product revenue is proceeding
as planned. The Company is executing a strategy to convert certain
legacy customers to the Vantage DX platform.
- The Mitel business remains a stable and profitable source of
recurring revenue and cash, with a 2% increase in revenue from this
segment in Q2 FY24. The Mitel business represented 44% of total
revenues in Q2 FY24 (45% in Q2 FY23).
- Revenue was 98% recurring in Q2 FY24 compared to 99% in Q2
FY23.
- Gross margin as a percentage of revenue was 87% in Q2 FY24,
consistent with the comparative period in FY23. Gross margin
included lower software hosting costs year-over-year, offset by an
increase in the cost of third-party software resale. Management
continues to execute a strategy to reduce hosting costs.
- MRR increased by 3% to $1.31M in
Q2 FY24 compared to $1.27M in the
prior year. The increase is primarily attributable to favourable
foreign exchange. Normalized for foreign exchange, MRR in Q2 FY24
declined by 2% year over year. MRR is impacted by the decline in
maintenance and support subscriptions for legacy products. MRR is a
non-IFRS measure, representing average monthly recurring revenues
earned in a fiscal quarter.
- Operating expenses decreased 11% to $4.16M in Q2 FY24, also decreasing 3%
sequentially since Q1 FY24. The decrease is attributable to the
cost optimization exercise launched in Q2 FY23, which included
headcount reductions combined with lower vendor spend.
- The Q2 FY24 loss from operations of $0.68M represented a 49% improvement compared to
$1.34M in Q2 FY23. The improvement is
primarily attributable to the cost optimization exercise initiated
in Q2 FY23 as described above.
- The Adjusted EBITDA (a non-IFRS measure) loss improved by 88%
to $0.10M in Q2 FY24 compared to
$0.85M in Q2 FY23. This is primarily
attributable to the cost optimization exercise described
above.
- The Company's cash and short-term investments balance was
$4.17M as of September 30, 2023 (compared to $2.23M at March 31,
2023). Working capital improved as a result of the discharge
and refinancing of the Vistara loan, with the extension of the
Wesley Clover International Corporation loan to August 28, 2026.
The financial statements, notes and Management Discussion and
Analysis ("MD&A") are available under the Company's profile on
SEDAR at www.sedar.com, and on Martello's website at
www.martellotech.com. The financial statements include the
wholly-owned subsidiaries of Martello. All amounts are reported in
Canadian dollars.
This press release does not constitute an offer of the
securities of the Company for sale in the
United States. The securities of the Company have not been
registered under the United States Securities Act of 1933, (the
"1933 Act") as amended, and may not be offered or sold
within the United States absent
registration or an exemption from registration under the 1933
Act.
This press release shall not constitute an offer to sell or
the solicitation of an offer to buy nor shall there be any sale of
the securities in any state in which such offer, solicitation or
sale would be unlawful.
About Martello Technologies
Group
Martello Technologies Group Inc. (TSXV: MTLO) is a technology
company that provides digital experience monitoring (DEM) solutions
to optimize the modern workplace. The company's products provide
actionable insight on the performance and user experience of cloud
business applications, while giving IT teams and service providers
control and visibility of their entire IT infrastructure.
Martello's software products include Vantage DX, which provides
Microsoft 365 and Microsoft Teams end user experience monitoring
and optimization. Martello is a public company headquartered in
Ottawa, Canada with employees in
Europe, North America and the Asia Pacific region. Learn more at
http://www.martellotech.com
Neither the TSXV nor its Regulation Services Provider (as
that term is defined in the policies of the TSXV) accepts
responsibility for the adequacy or accuracy of this news
release.
Cautionary Note Regarding
Forward-Looking Information
This news release contains "forward-looking information"
within the meaning of applicable Canadian securities legislation.
Forward-looking information can be identified by words such as:
"anticipate," "intend," "plan," "goal," "seek," "believe,"
"project," "estimate," "expect," "strategy," "future," "likely,"
"may," "should," "will" and similar references to future periods
and " includes, but is not limited to, statements with respect to
activities, events or developments that the Company expects or
anticipates will or may occur in the future including the execution
of a strategy to reduce hosting costs, the long-term upside
potential and avenue for future growth from the recent
acquisition of Unify by Mitel, the aim to drive
customer satisfaction and sustainable profitable growth for
shareholders, the aim to drive increased sales and profitability
through a revitalized focus on operational excellence, the
expectation that significant improvements to our sales and demand
generation processes will drive sales pipeline, and the execution
of a strategy to convert certain legacy customers to the Vantage DX
platform.
Forward-looking information is neither a statement of
historical fact nor assurance of future performance. Instead,
forward-looking information is based only on our current beliefs,
expectations and assumptions regarding the future of our business,
future plans and strategies, projections, anticipated events and
trends, the economy and other future conditions. Because
forward-looking information relates to the future, such statements
are subject to inherent uncertainties, risks and changes in
circumstances that are difficult to predict and many of which are
outside of our control. Our actual results and financial condition
may differ materially from those indicated in the forward-looking
information. Therefore, you should not rely on any of the
forward-looking information. Important factors that could cause our
actual results and financial condition to differ materially from
those indicated in the forward-looking information include, among
others, the following:
- Continued volatility in the capital or credit markets and
the uncertainty of additional financing.
- Our ability to maintain our current credit rating and the
impact on our funding costs and competitive position if we do not
do so.
- Changes in customer demand.
- Disruptions to our technology network including computer
systems and software, as well as natural events such as severe
weather, fires, floods and earthquakes or man-made or other
disruptions of our operating systems, structures or
equipment.
- Delayed purchase timelines and disruptions to customer
budgets, as well as Martello's ability to maintain business
continuity as a result of COVID-19.
- and other risks disclosed in the Company's filings with
Canadian Securities Regulators, including the Company's annual
information form for the year ended March
31, 2021 dated January 7,
2022, which is available on the Company's profile on SEDAR
at www.sedar.com.
Any forward-looking information provided by the Company in
this news release is based only on information currently available
and speaks only as of the date on which it is made. Except as
required by applicable securities laws, we undertake no obligation
to publicly update any forward-looking information, whether written
or oral, that may be made from time to time, whether as a result of
new information, future developments or otherwise.
SOURCE Martello Technologies Group Inc.