Quarterly revenues of $2.0 million represent 92% growth year-over-year,
including organic growth of 21% from increased network performance
management software revenues.
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OTTAWA, Nov. 27, 2018 /CNW/ - Martello Technologies
Group Inc., ("Martello" or the "Company"), a leading provider of
network performance management solutions for real-time
communications, today released financial results for the second
quarter of its 2019 fiscal year, including the three and six months
ended September 30, 2018.
Q2 Highlights
- Reported three and six month revenues of $2.0 million and $3.9
million, representing a year-over-year increase of 92% and
86% respectively. This included organic growth of 21%, from
increased network performance management software revenues.
- Gross margin was stable at 93.6% for the three months ended
September 30, 2018, compared to 93.4%
for the corresponding quarter in the 2018 fiscal year.
- Martello's revenue base continued to diversify in this
reporting period, with 67.9% of revenues from network performance
management software, a decrease of 32% from the corresponding
quarter in the 2018 fiscal year.
- Adjusted EBITDA, which assesses operating performance before
the impact of costs associated with acquisition activity and other
non-cash costs, amounted to a loss of $343,298 for the three months ended September 30, 2018 compared to income of
$17,114 for the corresponding quarter
in the 2018 fiscal year.
"Martello is doing exactly what we said we'd do, and growth in
this reporting period reflects the successful execution of the
Company's strategy, which includes organic growth and growth
through acquisitions", said John
Proctor, President and CEO of Martello. "This is a testament
to our team, the strength of our solutions, and our acquisition and
integration capabilities. Growth in revenue year-over-year
demonstrates the integration of Elfiq Networks after the
December 2017 acquisition, in
addition to increased sales of recurring, subscription-based
product licenses".
The Company is well positioned for future growth. Access to
public capital markets following the completion of Martello's
reverse takeover (RTO) transaction in this reporting period will
fuel new growth opportunities with future merger and acquisition
activity. The announced acquisition of Dutch-based software
company, Savision on November 1, 2018
is intended to accelerate recurring revenues and provide
opportunities to grow Martello's European sales.
Financial Information
Martello reported revenues of $2.0
million and $3.9 million for
the three and six months ending September
30, 2018, representing a year over year increase of 92% and
86% respectively. The growth in revenue is due to organic growth of
21% from network performance management software through the Mitel
channel, and revenue from the acquisition of Elfiq Inc. in
December 2017.
Statement of
operations -
Highlights
(in CAD
$000's)
|
For the three and
six-months ended
|
3 months
ended
|
6 months
ended
|
September 30,
2018
|
September 30,
2017
|
September 30,
2018
|
September 30,
2017
|
Sales
|
1,964
|
1,022
|
3,901
|
2,101
|
Loss from
operations
|
(858)
|
(65)
|
(1,620)
|
(295)
|
Adjusted EBITDA
(1)
|
(343)
|
17
|
(592)
|
(72)
|
Net loss and
comprehensive net loss
|
(2,150)
|
(141)
|
(3,324)
|
(451)
|
|
|
(1)
|
Adjusted EBITDA is
a non-GAAP measure defined by management as the Income/(Loss) from
operations, as reported, before interest, tax, and adjusted for
removing share-based compensation expense, depreciation,
amortization and further adjusted to remove acquisition-related
costs. Please refer to the September 30, 2018 Management's
Discussion & Analysis under "Adjusted EBITDA (Non-GAAP
Measure)" for further discussion on this area and a reconciliation
of Loss from operations to Adjusted EBITDA.
|
Balance Sheet –
Highlights
(in
CAD$000's)
|
As
at
|
September 30,
2018
|
March
31,
2018
|
Cash and Cash
Equivalents
|
7,866
|
2,141
|
Working
Capital
|
9,299
|
3,038
|
Martello had approximately $9.3
million in working capital as of September 30, 2018 available to fund acquisitions
and organic growth, after closing a $7.5
million private placement in June
2018.
Sales
Martello realized growth in organic sales for its network
performance management software and for the SD-WAN business of
Elfiq Networks, which Martello acquired in December 2017.
Sales represent the sale of network performance management
solutions for real-time communications and the sale of hardware and
software link balancing and bandwidth management solutions, and
maintenance and support services for these solutions. Martello's
sales are principally indirect, via distributors and value-added
resellers. The Company's network performance management
software is included in Mitel Networks' Premium Software Assurance
plan and Martello earns a fee for each subscriber of the plan.
For the three months ended September 30,
2018 and 2017, the Company earned revenue of
$1,964,795 and $1,022,215 respectively. For the six months
ended September 30, 2018 and 2017,
the Company earned revenue of $3,901,949 and $2,101,686 respectively. The year-over-year
increases of $942,580 and
$1,800,263 for the three and
six-months ended September 30, 2018
are driven primarily by the following:
- Growth in the number of users for Mitel's Premium Software
Assurance program as more customers are requesting to use this
platform. Growth year over year on revenue from network performance
management is 21% for the six months ended September 30, 2018.
- The acquisition of Elfiq. Elfiq contributed $639,064 and $1,257,006 in sales in the three and six-months
ended September 30, 2018, whereas
there was no Elfiq revenue in Q2 FY18.
Expenses
Expenses –
Snapshot
(in
CAD$000's)
|
|
3 months ended
September 30
|
6 months ended
September 30
|
|
2018
|
2017
|
2018
|
2017
|
Research and
development
|
787
|
526
|
1,659
|
1,126
|
Sales and
marketing
|
590
|
109
|
1,087
|
253
|
General and
administrative
|
1,052
|
336
|
1,893
|
745
|
Depreciation of
equipment and leasehold improvements
|
20
|
11
|
41
|
21
|
Amortization of
intangible assets
|
106
|
-
|
211
|
-
|
Acquisition-related costs
|
142
|
38
|
379
|
131
|
|
TOTAL
|
2,697
|
1,020
|
5,270
|
2,276
|
Delivering on the Company's aggressive build and buy strategy,
Martello incurred expenses during this reporting period related to
acquisitions and the reverse takeover transaction. In addition, the
Company had non-cash expenses such as share-based compensation.
For the three months ended September 30,
2018 and 2017, operating expenses totaled $2,697,176 and $1,019,625 respectively, an increase of
$1,677,551. For the six months ended
September 30, 2018 and 2017,
operating expenses totaled $5,270,530
and $2,276,025 respectively.
The expenses for the quarter and six months ended September 30, 2018 include $799,082 and $1,632,621 in Elfiq expenses, respectively. Elfiq
was acquired in December 2017, so no
related expenses were included in the three and six months ended
September 30, 2017. Excluding the
impact of Elfiq, increases total $936,469 and $1,419,884 for the three and six months ended
Sept 30, 2018 respectively.
Acquisition related costs increased year over year by
$104,668 for the three months ended
September 30, and $248,543 for the six months ended September
30. Costs in the current year in both Q1 and Q2 relate to the
integration of Elfiq and the acquisition of Savision and prior year
costs related to advisory, due diligence and legal costs for the
acquisition of Elfiq.
Adjusted EBITDA Summary (Non-GAAP measure)
Adjusted EBITDA for the three months ended September 30, 2018 amounted to a loss of
$343,298 compared to income of
$17,114 for the same quarter last
year.
For the six months ended September 30,
2018, Adjusted EBITDA amounted to a loss of $592,330 compared to a loss of $72,054 in the same period last year.
Adjusted EBITDA is reconciled and explained in the Management's
Discussion & Analysis under "Adjusted EBITDA (Non-GAAP
Measure)". Management believes Adjusted EBITDA is a useful
financial metric to assess its operating performance before the
impact of costs associated with acquisition activity and other
non-cash costs, and therefore provides a more useful tool for
comparison between reporting periods.
Subsequent Activities
- On November 1, 2018, the Company
completed the acquisition of Savision B.V., which will enhance its
already strong customer base and network performance management
capabilities, while expanding its sales presence in Europe.
- In conjunction with the acquisition of Savision, the Company
closed a financing with Royal Bank of Canada (RBC), including a $3 million term loan.
The financial statements and notes 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, excluding Savision,
which was acquired on November 1,
2018. All amounts are reported in Canadian dollars.
About Martello Technologies Group
Martello Technologies Group Inc. (TSXV: MTLO) delivers
confidence in network performance. Our solutions manage and
optimize the performance of real-time services on cloud and
enterprise networks and include network and IT performance
management software as well as SD-WAN technology. Over the top
(OTT) service providers and enterprises around the world rely on
Martello's technology to deliver better service quality and a
reliable user experience. Designed for real-time communications
such as voice and video, Martello's solutions detect, identify and
address network performance problems BEFORE service quality is
impacted. Martello Technologies Group is a public company
headquartered in Ottawa, Canada
with offices in Montreal,
Amsterdam, Paris, Dallas
and New York. Learn more at
http://www.martellotech.com.
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.
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
Statements
The forward-looking statements contained in this news release
are made as of the date of this news release. Except as required by
law, the Company disclaims any intention and assume 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 applicable securities law. Additionally, the Company
undertakes no obligation to comment on the expectations of, or
statements made, by third parties in respect of the matters
discussed above.
SOURCE Martello Technologies Group