Vantage DX users more than doubled in
the first half of fiscal 2023 compared to Q4 FY22 as the Company
continues to see market adoption of the Microsoft-recommended
offering.
- Vantage DX users more than doubled to close to half a
million in the first two quarters of fiscal 2023 compared to Q4
FY22, representing a 252% increase in monthly recurring revenue
(MRR) in the same period as trials converted to bookings and
revenue. On a quarterly basis, Vantage DX MRR grew by 56%.
- Total revenue was $3.8M in Q2
FY23, with 99% recurring. The Mitel business line continues to
provide a large and stable recurring revenue base from which to
grow Vantage DX. The Vantage DX growth was offset by an 18% or
$0.4M decline in sunsetting legacy
product revenue.
- Operating expenses decreased by 9% year over year in Q2
FY23, driven by cost optimization measures implemented in Q2 FY23,
which are expected to eliminate 20% of annualized run rate costs.
The full benefit of these measures is expected to be realized in Q3
FY23.
- A private placement announced subsequent to quarter-end is
expected to bring capital of USD $2.0M into the company in January 2023.
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DISTRIBUTION OR DISSEMINATION DIRECTLY, OR INDIRECTLY, IN WHOLE OR
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OTTAWA,
ON, Nov. 22, 2022 /CNW/ - Martello
Technologies Group Inc., ("Martello" or the "Company") (TSXV:
MTLO), a provider of software that optimizes the Microsoft Modern
Workplace environment, a segment of the broader market for digital
experience monitoring (DEM) today released financial results for
the quarter ended September 30, 2022.
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 Teams and
Microsoft 365.
![Logo: Martello Technologies Group (CNW Group/Martello Technologies Group Inc.) Logo: Martello Technologies Group (CNW Group/Martello Technologies Group Inc.)](https://mma.prnewswire.com/media/1953998/Martello_Technologies_Group_Inc__Martello_Reports_Financial_Resu.jpg)
"Vantage DX continues to drive our growth strategy, with new
deals closing in Q2 FY23 and subsequent to quarter-end, and the
unification of our technology into a single platform creating
efficiencies", said John Proctor,
President and CEO of Martello. "While the continued and expected
sunsetting of certain legacy product revenue has offset the growth
in revenue from Microsoft Teams monitoring and optimization, I am
confident that our integration with Microsoft and accelerating
sales programs with Orange Business Services, Datacom and other
partners will continue to drive Vantage DX growth alongside our
direct business. I'm pleased that a number of Mitel partners are
also engaged with us to bring Vantage DX to their customers, to
manage Mitel and Microsoft Teams performance and user
experience."
"I'm pleased with the indicators I am seeing that Vantage DX
momentum is strengthening" said Jim
Clark, Chief Financial Officer of Martello. "We are managing
the Vantage DX investment program to build a profitable business
over the coming quarters, and as a result my focus is on close
monitoring of operational KPIs and ensuring we have adequate
capital for growth. The injection of an additional USD $2.0M in working capital will allow us to manage
growth as we prioritize reaching positive cash flow."
Q2 FY23 Financial Highlights
|
|
|
|
|
|
|
|
|
|
|
Financial
Highlights
|
|
|
September
30,
|
|
September
30,
|
|
September
30,
|
|
September
30,
|
(in 000's)
|
|
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
|
|
|
|
(Three months
ended)
|
|
(Six months
ended)
|
Sales
|
|
|
$
|
3,840
|
|
4,413
|
|
8,018
|
|
8,814
|
Cost of Goods
Sold
|
|
|
491
|
|
348
|
|
954
|
|
776
|
|
|
|
|
|
|
|
|
|
|
|
Gross
Margin
|
|
|
3,349
|
|
4,065
|
|
7,064
|
|
8,038
|
Gross
Margin
|
|
%
|
87.2 %
|
|
92.1 %
|
|
88.1 %
|
|
91.2 %
|
Operating
Expenses
|
|
|
4,689
|
|
5,135
|
|
9,713
|
|
10,831
|
Loss from
operations
|
|
|
(1,340)
|
|
(1,070)
|
|
(2,649)
|
|
(2,793)
|
Other
income/(expense)
|
|
|
(1,168)
|
|
(626)
|
|
(1,006)
|
|
(1,135)
|
Loss from continuing
operations before income tax
|
|
(2,508)
|
|
(1,695)
|
|
(3,655)
|
|
(3,928)
|
Income tax
recovery
|
|
|
87
|
|
(23)
|
|
8
|
|
42
|
Net
loss
|
|
|
|
(2,421)
|
|
(1,719)
|
|
(3,647)
|
|
(3,886)
|
Total Comprehensive
loss
|
|
$
|
(2,661)
|
|
(1,780)
|
|
(4,604)
|
|
(3,940)
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA (1)
|
|
|
$
|
(1,431)
|
|
(601)
|
|
(2,590)
|
|
(1,727)
|
Adjusted EBITDA
(1)
|
|
$
|
(850)
|
|
(297)
|
|
(1,495)
|
|
(1,253)
|
(1) Non-IFRS
measure. See "Non-IFRS Financial Measures".
|
- Revenues were $3.84M, a 13%
decrease compared to $4.40M in Q2
FY22. Vantage DX revenue of $0.24M
represented 56% sequential growth quarter over quarter. This growth
was offset by an 18% or $0.4M decline
in sunsetting legacy product revenue. On a constant currency basis,
revenue decreased by 11% year-over-year.
- Gross margin as a percentage of revenue was 87%, compared to
92% in the comparative period. The decrease is primarily
attributable to the higher cost of hosting software products on the
cloud and an increase in the cost of inventory related to
third-party software resale. Management is taking actions that are
expected to result in a 52% decrease in the cost of hosting
instances in the future. As the Company onboards new Vantage DX
clients, the variable cost will continue to reduce.
- The recurring portion of total revenue was 99%, compared to 98%
in Q2 FY22. This is primarily attributable to the growing mix of
subscription-based licenses versus perpetual.
- The Mitel business line continues to provide a steady
$7M annual revenue base (99%
recurring) as the Company sees strong growth rates from its new
Vantage DX product targeted at the Microsoft ecosystem. Management
is maximizing the transition of certain users currently on legacy
Microsoft-focused products to Vantage DX. Conversion rates will
continue to vary by legacy product. Modern Workplace Optimization
continues to be Martello's dominant business line, with 55% of
total revenues in Q2 FY23. Mitel Performance Analytics represented
45% of revenues in Q2 FY23.
- In Q2 FY23, MRR was $1.26M
compared to $1.44M, a 12% decrease
attributable to declining maintenance and support and subscriptions
on sunsetting legacy products, a decrease in Mitel subscriptions
and unfavourable currency conversion. MRR is a non-IFRS measure,
representing average monthly recurring revenues earned in a fiscal
quarter.
- There were 474,000 Microsoft users on the Vantage DX platform
as of September 30, 2022, a 33%
increase compared to Q1 FY23 and a 117% increase in the first half
of the 2023 fiscal year compared to Q4 FY22. The total number of
Microsoft users on all Martello products totaled 2.20M, compared to 2.90M in Q2 FY22. The decrease is related to the
offboarding of a sunsetting GSX partner. The Company is focused on
driving Microsoft user growth through sales of Vantage DX to new
customers and the transition of Microsoft-focused legacy product
customers onto the newer Vantage DX platform.
- Operating expenses decreased 9% year-over-year to $4.69M in Q2 FY23 from $5.14M in Q2 FY22. The decrease is primarily
attributable to headcount reductions in the recent cost
optimization exercise and decreased depreciation, amortization and
acquisition related costs due to a lower foreign currency
conversion rate on EUR-CAD.
- The Q2 FY23 net loss of $2.42M
represents a 41% increase compared to a net loss of $1.72M in the same period of FY22. The increase
is attributable to the items explained above.
- Adjusted EBITDA (a non-IFRS measure) loss in Q2 FY23 was
$0.85M, compared to a loss of
$0.30M in Q2 FY22, due to higher
operating losses as described above.
- The Company's cash and short-term investments balance was
$4.24M at September 30, 2022, compared to $5.02M at March 31,
2022. Working capital now reflects the move of the
CAD$10.2M Vistara Growth debt from
long-term to current. This is the predominant reason for the
$12.0M change in working capital
(Minus $9.76M at September 30, 2022 compared to $2.27M at March 31,
2022).
Conference Call Details
Martello will host a conference call with John Proctor, President & CEO and
Jim Clark, CFO at 8:00 AM Eastern Time on Wednesday, November 23,
2022 to discuss the Q2 FY23 financial results.
Canada/USA Toll Free:
1-800-319-4610
International Toll:
+1-604-638-5340
Callers should dial in 5 – 10 min prior to the scheduled start
time and ask to join the Martello call. An audio recording of the
call will be available on November 23,
2022 at
https://martellotech.investorroom.com/quarterly-results.
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.
Two institutional investment firms provide research coverage of
Martello. The Company does not endorse the research of third-party
institutions.
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 management's
intent to maximize the transition of certain users currently on
legacy Microsoft-focused products to Vantage DX, the expectation of
a 52% decrease in the cost of hosting instances in the future, the
aim to build a profitable business over the coming quarters, and
the expectation that the full benefit of the cost optimization
measures implemented in Q2 FY23 will be realized in Q3
FY23.
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.