Microsoft DEM is the leading recurring revenue stream as
Vantage DX momentum grows.
- Total revenue in Q3 FY22 was $4.46M, with 97% recurring and gross margins of
90%.
- Microsoft DEM revenue grew for the third consecutive
quarter. This revenue stream increased by 4% sequentially from Q2
to Q3 FY22, reaching $2.14M and 48%
of total revenue in Q3 FY22.
- Demand for Vantage DX grew in Q3 FY22, with 500,000 users
entering trials, customers representing more than 70,000 users
purchasing the product, and new sales pipeline increasing by 70%
(compared to Q2 FY22).
- The addition of Vantage DX to the Microsoft Azure
Marketplace creates a new sales channel with incentives for
Microsoft sellers.
/NOT FOR DISTRIBUTION TO UNITED
STATES NEWSWIRE SERVICES OR FOR RELEASE, PUBLICATION,
DISTRIBUTION OR DISSEMINATION DIRECTLY, OR INDIRECTLY, IN WHOLE OR
IN PART, IN OR INTO THE UNITED
STATES./
OTTAWA, ON, Feb. 15, 2022 /CNW/ - Martello Technologies
Group Inc., ("Martello" or the "Company") (TSXV: MTLO), a leading
developer of enterprise digital experience monitoring ("DEM")
solutions for thousands of customers around the world, today
released financial results for the three months ended December 31, 2021. Martello software provides
businesses with actionable insights on the performance and user
experience of cloud services such as video conferencing and unified
communications (UC), with a focus on Microsoft 365 and Microsoft
Teams.
"Momentum continues to grow for our Vantage DX product, with
more than half a million users trialing or having purchased the
product, over half of which represent new potential customers for
Martello which gives us confidence that Vantage DX meets market
needs and is differentiated competitively", said John Proctor, President and CEO of Martello. "We
are also working with Microsoft to identify the partners in their
ecosystem best positioned to bring Vantage DX to enterprises, in
order to optimize their Microsoft Teams user experience, lowering
their total cost of ownership and improving productivity. Though
Martello's performance over the last year has been challenging
amidst longer sales cycles related to COVID-19 and efforts on the
new product offering, this significant increase in commercial
activity since the launch of Vantage DX is very encouraging."
Q3 FY22 Financial Highlights
Martello
Technologies Group Inc.
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Unaudited
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(in Canadian
dollars)
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Financial
Highlights
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December
31,
2021
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December
31,
2020
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December
31,
2021
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December
31,
2020
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(in 000's)
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(Three months
ended)
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(Nine months
ended)
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Sales
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$
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4,455
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4,633
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13,269
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12,355
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Cost of Goods
Sold
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433
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309
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1,209
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716
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Gross
Margin
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4,021
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4,324
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12,059
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11,639
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Gross
Margin
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%
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90.3%
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93.3%
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90.9%
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94.2%
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Operating
Expenses
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5,526
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5,449
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16,357
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14,436
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Loss from
operations
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(1,505)
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(1,125)
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(4,298)
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(2,797)
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Other
income/(expense)
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(742)
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(240)
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(1,877)
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(1,244)
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Loss from
continuing operations before income tax
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(2,247)
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(1,365)
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(6,175)
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(4,041)
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Income tax
recovery
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75
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(94)
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116
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(113)
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Net loss from
continuing operations
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(2,173)
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(1,459)
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(6,059)
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(4,154)
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Loss from
discontinued operations, net of tax
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-
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-
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-
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(320)
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Net
loss
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(2,173)
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(1,459)
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(6,059)
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(4,474)
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Total
Comprehensive loss
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$
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(2,794)
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(985)
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(6,735)
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(3,181)
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EBITDA
(1)
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$
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(1,069)
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(223)
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(2,796)
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(1,093)
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Adjusted
EBITDA(1)
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$
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(777)
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(262)
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(2,030)
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241
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(1) Non-IFRS
measure. See "Non-IFRS Financial Measures".
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- Revenue of $4.46M in Q3 FY22
represents a slight decrease compared to $4.63M in the same quarter of FY21, reflecting
growth in Microsoft 365 monitoring offset by declines in legacy
product revenue and a decrease in Mitel UC monitoring revenue
(lower perpetual revenue and impact of foreign currency
conversion).
- Revenue quality continues to be strong. The recurring portion
of total revenue was 97% in Q3 FY22 (96% in Q3 FY21). Gross margin
was 90% in Q3 FY22, compared to 93% in Q3 FY21. The decrease was
primarily the result of lower gross margins on Microsoft 365
Monitoring due to higher hosting costs and sales and distributor
commissions.
- In Q3 FY22, MRR (monthly recurring revenue) was $1.45M, a decrease of 3% compared to Q3 FY21 MRR
of $1.49M. This slight decrease in
MRR is due to a decline in royalties from Mitel UC monitoring
(impact of foreign currency conversion) and a decrease of
maintenance and support revenue partially offset by an increase in
subscription licenses in Microsoft DEM. MRR is a non-IFRS measure
and represents average monthly recurring revenues earned in a
fiscal quarter.
- The proportion of Martello's revenue driven by sales of
Microsoft DEM continues to grow, reaching 48% of total revenues in
Q3 FY22, up sequentially from 47% in Q2 FY22. The remaining revenue
streams are Mitel UC monitoring, which contributed 41% of revenues
and is steady sequentially compared to Q2 FY22. The sunsetting
Legacy products revenue stream contributed 11% of revenues in Q3
FY22, down sequentially from 12% in Q2 FY22.
- Operating expenses of $5.53M were
1.4% above the $5.45M reported in Q3
FY21. In the prior year, the Company implemented a strategic cost
reduction initiative in view of COVID-19 related uncertainties,
including delays in filling vacant positions, and temporary
reductions in compensation until part-way through Q3 FY21.
Increases in spending in Q3 FY22 related to increased R&D and
sales investment, compensation costs associated with return to full
salaries, market research, office equipment and software, and
professional fees as well as lower government incentives (IRAP and
COVID related). These were partially offset by a decrease in
G&A costs related to optimization of support functions.
- Adjusted EBITDA (a non-IFRS measure) in Q3 FY22 is a loss of
$0.78M, compared to a loss of
$0.26M in the same period of FY21.
The decrease in Adjusted EBITDA is due to higher operating losses
associated with the return to normalized operations following
COVID-19 related strategic cost reduction initiatives in FY21.
- The Q3 FY22 net loss of $2.17M
has increased from the same period in FY21 ($1.46M) as a result of the items outlined above
and higher losses on foreign exchange partially offset by lower
financing fees.
- The Company's cash and short-term investments balance was
$5.10M at December 31, 2021, compared to $8.52M at March 31,
2021. Net working capital was $2.31M at December 31,
2021 compared to $4.50M at
March 31, 2021. Following the recent
insider private placement with aggregate gross proceeds totaling
$2.4M, the Company believes it has
sufficient cash to fund ongoing organic growth.
Q3 FY22 Business and Segment Highlights
- Demand for Vantage DX increased in Q3 FY22, driven by the
complexity of managing cloud service delivery in hybrid workplaces.
Just one fiscal quarter following the product's launch, as of
January 19, 2022 customers
representing more than 70,000 Microsoft 365 users had purchased
Vantage DX, with over 500,000 users engaged in trials. Martello's
focus in Q4 FY22 is on converting these trials into paid Vantage DX
subscriptions.
- Achieved a key milestone in the Company's initiatives, as part
of the Microsoft Global Solutions Alliance program, with the
addition of Vantage DX to the Microsoft Azure Marketplace in
December. The ability to transact Vantage DX on the Microsoft Azure
Marketplace means that Microsoft sellers are incented to sell
Vantage DX and creates a new sales channel for Martello.
- To further expand sales channels, Martello is actively working
with Microsoft to identify those partners in their ecosystem that
are uniquely positioned to accelerate Microsoft Teams adoption and
optimization. These partners (global systems integrators, telcos,
managed service providers and cloud service providers) recognize
the value Vantage DX can bring to their customers, who are managing
a UCaaS (unified communications as a service) and Microsoft Teams
environment in hybrid workplaces.
- The number of Microsoft users on Martello's DEM platform
decreased slightly to 2.84M in Q3
FY22, from 2.90M in Q2 FY22,
reflecting a decrease in Microsoft 365 Monitoring subscriptions.
The Company is focused on driving Microsoft user growth through
sales of Vantage DX. This includes upgrading Microsoft 365
Monitoring customers and converting trials to paid
subscriptions.
Conference Call Details
Martello will host a conference call with John Proctor, President & CEO and
Kim Butler, Interim CFO at
8:00 AM Eastern Time on Wednesday,
February 16, 2022 to discuss the Q3 FY22 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 February 16,
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.
Three institutional investment firms provide research coverage
of Martello. The Company does not endorse the research of
third-party institutions.
Upcoming Activities
The next issue of Martello's quarterly Investor Newsletter will
be sent to subscribers in March 2022.
To join the mailing list, complete the Subscribe form on Martello's
website.
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. The company's products provide monitoring and analytics
on the performance and user experience of critical 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 analytics.
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
reducing the time that prospects spend in trials to accelerate
bookings and the conversion of Vantage DX trials into paid
subscriptions.
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.