Monthly Recurring Revenue grows by 15% over
previous period and adjusted EBITDA loss decreases 15% quarter over
quarter.
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OTTAWA, Feb. 26, 2020 /CNW/ - Martello Technologies
Group Inc., ("Martello" or the "Company") (TSXV: MTLO), a leading
provider of technology solutions that deliver clarity and control
of complex IT environments deployed in thousands of locations
around the world, today released financial results for the three
and nine months ended December 31,
2019. Martello's fiscal year end is March 31.
"I'm pleased that as Martello's investments in developing our
growth platform near completion, recurring revenue remains strong
and adjusted EBITDA loss has decreased quarter over quarter", said
John Proctor, President and CEO of
Martello. "We now have a solid foundation from which to accelerate
recurring revenue growth with the development of digital experience
monitoring and optimization solutions, to address what we believe
is a significant future growth market for Martello. We continue to
make progress on this strategy, and appreciate the support of our
investors, who recognize Martello's competitive advantage".
Q3 FY2020 Financial Highlights
- The Monthly Recurring Revenue ("MRR") was $.99M in Q3 FY2020, an increase of 15% compared
to the same quarter during the prior year. In December 2019, recurring revenue reached
$1.0M. MRR is a measure which offers
insight into the predictability of Martello's recurring revenue
stream on an annual basis, which is now tracking to $12.0M.
- Total revenue in the third quarter of FY2020 was $3.4 million, a 9% increase over the same period
in FY2019.
- The recurring portion of total revenue was 88% in the third
quarter of FY2020, compared to 75% in Q3 FY2019. This was primarily
driven by growth in unified communications (UC) performance
analytics software revenue and IT operations analytics software
(ie: the Savision acquisition with 85% recurring revenue in Q3
FY20).
- Organic revenue from sales of UC Performance Analytics software
to the Mitel channel in the nine months ended December 31, 2019 grew 25% compared to the same
period in FY2019, which remains in line with management
expectations.
- Gross margin remained strong and consistent at 92.8% for the
third quarter of FY2020, compared to 93.9% in Q3 FY2019.
- The loss from operations was $1.4M compared to a loss of $1.3M in the same period of FY2019. This is a
decrease from the Q2 FY20 operating loss of $1.45M.
- Adjusted EBITDA, a non-IFRS financial measure which assesses
operating performance before the impact of one-time costs
associated with acquisition activity and non-cash costs, was a loss
of $.84M, compared to a loss of
$.27M in the same period of FY2019.
This is a decrease of 15% from the Q2 FY20 adjusted EBITDA loss of
$.99M, representing a sequential
improvement.
- The loss from operations and adjusted EBITDA loss are the
result of investments made to date in sales, sales operations,
marketing and support services, to create the foundation for future
growth.
- Martello is focused on leveraging its gross margins,
predictable revenue streams, and stabilizing expense base to move
towards positive adjusted EBITDA. While there is now greater
predictability to Martello's revenue and operating expenses,
certain one-time and acquisition-related costs could from time to
time disrupt this progress. The Company will continue to seek
efficient growth of recurring revenue.
- The Company's cash and short-term investments balance was
$6.3M at December 31, 2019, compared to $6.6M at March 31,
2019. The Company believes that it retains sufficient
available cash and working capital to fund organic growth over the
next year as the company focuses on moving towards positive
adjusted EBITDA.
Q3 FY2020 Operational Highlights
- Martello won significant deals in Q3 FY 2020 from a
multi-billion dollar global media and telecommunications company,
the municipal government of one the largest counties in the US and
a US energy company serving more than a million customers.
- New channel partners were onboarded in Q3 FY20, including
SecureServ in Australia and
Foresec in Egypt.
- In November 2019, Martello
announced key partnerships with WatchGuard® Technologies, Inc., a
global leader in advanced network security solutions, and Microsoft
which provides opportunities to sell Martello's iQ product bundled
together with Microsoft solutions.
- In December 2019, Martello
announced that it is among the first SD-WAN vendors in Canada to pursue 5G certification on the
ENCQOR 5G testbed.
Outlook
Martello has built a stable, robust and scalable platform upon
which to accelerate revenue growth. The Company is focused on
moving towards positive adjusted EBITDA as operating expenses
stabilize, recognizing that certain one-time and
acquisition-related costs could disrupt this progress from time to
time. At the same time, Martello is investing in the development of
integrated digital experience monitoring and optimization
solutions, which the Company expects will drive new recurring
revenue in the future.
Progress on Integrated Solutions and Market
Opportunity
As services such as unified communications and enterprise office
suites move onto cloud-hosted infrastructures, businesses have less
control over their performance and the user's experience.
Martello's solutions help businesses control the performance of
their most critical cloud services – from Office 365 to unified
communications, to deliver a superior digital user
experience.
The opportunity in Martello's key growth market, the
$650-$850
million digital experience monitoring and optimization
segment, is significant. For example, Office 365 now has 200
million monthly active users, growing the service at a pace of 3
million users per month.1 Gartner has reported
that 42% of problems with Office 365 (as reported by users) can be
attributed to network performance.2 Martello's
technology addresses these underlying network performance
problems.
Martello has competitive advantages in this market. First, its
10 years of experience monitoring millions of Mitel IP Telephony
users, and access to hundreds of channel partners that are already
clients of Martello's products. Second, by building a unique,
vertically integrated technology stack, Martello can offer in a
single platform benefits that would otherwise require multiple
products from multiple vendors. The first trials of
Martello's integrated solutions are expected to be completed later
in calendar 2020. For a more detailed progress update on these
integrated solutions, consult the Outlook section of the Q3 FY 2020
Management Discussion and Analysis ("MD&A").
- Microsoft Q1 FY2020 Financial Results (23 October 2019)
- Gartner: Network Design Best Practices for Office 365
(22 March 2018)
Sales and Channels
Martello is prioritizing a channel sales organization, and made
resourcing decisions in Q3 to support this focus. While this
shift in the Company's sales strategy was underway in Q3 fiscal
2020, it is expected that the upcoming addition of a Senior VP of
Channel Sales will help accelerate Martello's opportunity in the
channel. The Company will continue to focus on strategic
partnerships and channel development, in its drive to grow
recurring revenue. These partnerships include Mitel, a channel in
which Martello already has thousands of customers, Paessler and
Microsoft.
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 have initiated research
coverage of Martello. The Company does not endorse the research of
third-party institutions.
Conference Call Details
Martello will host a conference call and audio webcast with
John Proctor, President & CEO
and Erin Crowe, CFO at 8:00 AM Eastern Time on February 26, 2020.
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 simply ask to join the Martello call. An audio recording
of the call will be available on February
26, 2020 at
https://martellotech.investorroom.com/quarterly-results.
About Martello Technologies Group
Martello Technologies Group Inc. (TSXV: MTLO) is a technology
company providing digital experience monitoring and optimization
solutions that monitor, analyze and optimize the performance of
real-time cloud services. Martello's products include SD-WAN
technology, unified communications (UC) performance analytics
software, and IT analytics software. Its partners include Mitel,
Microsoft and Paessler. 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