/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./
Microsoft-recommended Vantage DX product achieves sustained
double-digit quarter over quarter monthly recurring revenue growth
in FY23 as the platform surpassed 1M
Microsoft users in Q4.
- Having achieved strong Vantage DX growth in FY23, the
Company expects a channel-based strategy led by the Microsoft
partnership will accelerate Vantage DX growth in the
future.
- Mitel business line continues to provide a stable and
profitable recurring revenue base of $7.15M. Mitel acquisitions have the potential to
increase the client and revenue base.
- Sunsetting Legacy product revenue declined more rapidly than
expected in FY23 due to the offboarding of a large legacy partner.
This caused Martello's total revenue to decline year over
year.
- Adjusted EBITDA loss improved by 23% in FY23 as a result of
the cost optimization exercise undertaken in Q2 FY23.
- Martello Chairman Terence
Matthews continues to demonstrate confidence in the
Company's market fit and performance. The final tranche of a
$2.4M private placement was completed
in June 2023 and the Wesley Clover
International subordinate debt was extended to 2024.
- Having won one of the world's largest food manufacturers as
a customer in FY23 through its partnership with Orange Business
Services, Martello has developed a pipeline of sales opportunities
driven by channel partners including Orange Business Services and
Microsoft.
OTTAWA,
ON, June 27, 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 and twelve months ended March 31,
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.
"In my many conversations with large enterprise and government
executives, it is evident their focus is on improving business
productivity, customer experience and employee satisfaction," said
Terence Matthews, Chairman of
Martello. "These are all areas where the Martello Vantage DX
software has a positive impact optimizing the environment that
Microsoft Teams operates in. The timing is right for this product,
and I remain confident that the Martello team can accelerate client
and sales opportunities as well as identify productive
partnerships."
"While Legacy product decline continues to be a headwind
impacting top line revenue, I am very pleased with the double-digit
Vantage DX monthly recurring growth quarter over quarter
through fiscal 2023", said John
Proctor, President and CEO of Martello. "This growth was the
result of our partnerships with Microsoft and Orange Business
Services, continued Vantage DX product innovation, the unwavering
support of Martello's Chairman and the hard work of our people.
Getting to over one million Vantage DX user licenses in the first
year is a great sign of market demand."
"Martello is exiting fiscal 2023 with a strong base of more than
one million Vantage DX user licenses, a focused strategy for fiscal
2024 and an annual operating plan which will deliver sought after
enhancements for our three stakeholder groups: Employees, Customers
and Shareholders", said Jim Clark,
Chief Financial Officer of Martello. "The improvements in financial
performance in fiscal 2023 reflect management's deepening focus on
delivering value to the front of our client's businesses."
Q4 and FY23 Financial Highlights
|
|
|
|
|
|
|
|
|
|
Financial
Highlights
|
|
March 31,
|
|
March 31,
|
|
March 31,
|
|
March 31,
|
(in 000's)
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
|
|
(Three months
ended)
|
|
(Twelve months
ended)
|
Sales
|
|
$
|
4,027
|
|
4,271
|
|
16,099
|
|
17,540
|
Cost of Goods
Sold
|
|
452
|
|
423
|
|
1,854
|
|
1,632
|
|
|
|
|
|
|
|
|
|
|
Gross Margin
|
|
3,575
|
|
3,848
|
|
14,246
|
|
15,907
|
Gross Margin
|
%
|
88.8 %
|
|
90.1 %
|
|
88.5 %
|
|
90.7 %
|
Operating
Expenses
|
|
4,685
|
|
5,363
|
|
37,762
|
|
21,721
|
Loss from
operations
|
|
(1,110)
|
|
(1,515)
|
|
(23,517)
|
|
(5,813)
|
Other
income/(expense)
|
|
(438)
|
|
(537)
|
|
(1,811)
|
|
(2,414)
|
Loss before income
tax
|
|
(1,548)
|
|
(2,052)
|
|
(25,328)
|
|
(8,227)
|
Income tax recovery
(expense)
|
|
213
|
|
(109)
|
|
138
|
|
8
|
Net loss
|
|
|
(1,335)
|
|
(2,161)
|
|
(25,190)
|
|
(8,219)
|
Total Comprehensive
income (loss)
|
$
|
(1,236)
|
|
(2,917)
|
|
(24,454)
|
|
(9,652)
|
|
|
|
|
|
|
|
|
|
|
EBITDA (1)
|
|
$
|
(522)
|
|
(1,045)
|
|
(21,950)
|
|
(3,840)
|
Adjusted EBITDA
(1)
|
$
|
(549)
|
|
(830)
|
|
(2,213)
|
|
(2,860)
|
|
|
|
|
|
|
|
|
|
|
(1) Non-IFRS measure.
See "Non-IFRS Financial Measures".
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- Revenue in FY23 was $16.1M
representing an 8% decrease compared to FY22. Q4 FY23 revenue of
$4.03M represents a 6% decrease
compared to $4.27M in Q4 FY22. As
Vantage DX revenue grew year over year and Mitel revenue remained
stable, sunsetting Legacy product revenue declined more rapidly
than anticipated in FY23, causing the decline in total
revenue.
- Vantage DX is Martello's key growth business. In FY23 Vantage
DX MRR grew by 612% to $0.16M and
there were more than 1.1M Microsoft
users monitored by the Microsoft-recommended platform. Total
Vantage DX revenue in FY23 was $1.25M, compared to $0.08M in FY22.
- Sunsetting legacy product revenue declined by 25% or
$2.51M in FY23 and $0.07M in Q4 FY23 compared to Q4 FY22. The
ongoing decline of Legacy product revenue is proceeding as planned,
with the exception of the offboarding of a large legacy partner,
which is now complete. The Company is executing on a strategy to
convert certain Legacy customers to the Vantage DX platform.
- The Mitel business line remained a stable and profitable source
of recurring revenue, increasing in Q4 FY23 by 1% to $1.80M compared to $1.78M in Q4 FY22. The increase is attributable
to favourable currency conversion. Mitel revenue in FY23 was
$7.15M, a 1% decrease compared to
$7.25M in FY22. The Mitel business
line represented 44% of total revenues in FY23 (41% in FY22).
- Revenue was 99% recurring in FY23 compared to 98% in FY22.
- Gross margin as a percentage of revenue was 88.5% in FY23,
compared to 90.7% in FY22. The small 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. Hosting costs continue to improve as
the Company executes a multi-year action plan.
- In Q4 FY23, monthly recurring revenue (MRR) was $1.33M compared to $1.41M in the prior year, a 6% decrease
attributable to declining maintenance and support and subscriptions
on sunsetting Legacy products as described above. MRR is a non-IFRS
measure, representing average monthly recurring revenues earned in
a fiscal quarter.
- Operating expenses, normalized for an asset impairment loss of
$19.16M in Q3 FY23 decreased to
$18.60M in FY23 compared to
$21.72M in FY22. The decrease is
primarily attributable to the cost optimization exercise in Q2
FY23.
- The Q4 FY23 net loss of $1.33M
represents a $0.83M or 38%
improvement compared to a net loss of $2.16M in Q4 FY22. In FY23, excluding impairment
losses, the net loss decreased by $3.12M. The improvement in net loss is
attributable to the items discussed above.
- The Adjusted EBITDA (a non-IFRS measure) loss has decreased by
23% to $2.21M in FY23 compared to
$2.86M in FY22. This is attributable
to the cost optimization exercise undertaken by management in Q2
FY23 as noted above.
- The Company's cash and short-term investments balance was
$2.22M at March 31, 2023, compared to $5.02M at March 31,
2022. Working capital of minus $8.24M at March 31,
2022 compared to $2.27M at
March 31, 2022 reflects the Vistara
loan of $6.39M being reclassified to
current liabilities plus the addition of the $2.23M Wesley Clover International (WCI)
subordinate loan being added to current liabilities. On
May 26, 2023, the Company announced
an extension of the Vistara loan. Under the terms of the extension
Martello will make a series of payments to Vistara which will pay
off the debt in its entirety by September
28, 2023. The Company also announced the extension of the
WCI subordinate loan to May 24,
2024.
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, June 28, 2023
to discuss the Q4 and 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 June 28,
2023 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 products to Vantage DX, the expectation of a decrease in the
cost of hosting instances in the future, the aim to
accelerate Vantage DX growth through a channel-based strategy,
and the potential for Mitel acquisitions to increase the client and
revenue base.
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.