Martello Reports Financial Results for the Second Quarter of Fiscal 2022 - Yahoo Finance

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Microsoft DEM revenue increases for a second consecutive quarter, reaching nearly 50% of total revenues.

• Total revenue of $4.41M, with 98% recurring and gross margins of 92%.

• Microsoft DEM revenue grew sequentially by 7% from Q1 to Q2 FY22, reaching $2.06M and 47% of total revenue.

• Adjusted EBITDA loss of $0.30M improved from Q1 FY22 adjusted EBITDA loss of $.96M.

• The number of Microsoft users on Martello's DEM platform reached 2.9M, up from 2.8M in Q1 FY22.

• Vantage DX launch accelerated sales activity for the Microsoft DEM business.

• Microsoft Global Solutions Alliance program provides new channels to market for Vantage DX.

OTTAWA, ON, Nov. 23, 2021 /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 September 30, 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.

Logo: Martello Technologies Group (CNW Group/Martello Technologies Group Inc.)

"Martello sharpened its competitive edge with the launch of Vantage DX in Q2 FY22, while we deepened our engagement with Microsoft by joining the Global Solutions Alliance program," said John Proctor, President and CEO of Martello. "Vantage DX is a game-changer for Martello, integrating a unique set of capabilities that are the result of our investments in acquisitions and product development. Working closely with Microsoft, large channel partners and enterprise IT, we are building Vantage DX momentum as businesses increasingly seek solutions to manage the complexity of Microsoft Teams performance for a hybrid workforce."

"I'm pleased that Martello has achieved sequential growth in the Microsoft DEM segment for a second consecutive quarter," said Erin Crowe, Martello's Chief Financial Officer. "Our investments in Microsoft DEM continue to bring revenue growth in this segment as it reaches nearly 50% of our total revenue in Q2 FY22. We've seen encouraging sales activity since the launch of Vantage DX, which we believe reflects new demand for Microsoft Teams performance management related to the IT complexity of hybrid work models."

Q2 FY22 Financial Highlights

(in Canadian dollars)
Financial Highlights			September 30,		September 30,		September 30,		September 30,
(in 000's)			2021		2020		2021		2020
			(Three months ended)				(Six months ended)
Sales		$	4,413		4,395		8,814		7,722
Cost of Goods Sold			348		215		776		407
Gross Margin			4,065		4,180		8,038		7,315
Gross Margin		%	92.1%		95.1%		91.2%		94.7%
Operating Expenses			5,135		4,762		10,831		8,987
Loss from operations			(1,070)		(583)		(2,793)		(1,672)
Other income/(expense)			(626)		(390)		(1,135)		(1,004)
Loss from continuing operations before income tax			(1,695)		(973)		(3,928)		(2,676)
Income tax recovery			(23)		(68)		42		(20)
Net loss from continuing operations			(1,719)		(1,040)		(3,886)		(2,695)
Loss from discontinued operations, net of tax			-		103		-		(320)
Net loss			(1,719)		(937)		(3,886)		(3,016)
Total Comprehensive loss		$	(1,780)		(69)		(3,940)		(2,196)
EBITDA (1)		$	(601)		400		(1,727)		(870)
Adjusted EBITDA(1)		$	(297)		304		(1,253)		504
(1) Non-IFRS measure. See "Non-IFRS Financial Measures".

• Revenues of $4.41M increased by $0.01M compared to $4.40M in the same quarter of FY21, reflecting growth from the acquisition of GSX which was partially offset by legacy product revenue declines and the impact of foreign currency conversion in Martello's Mitel UC Monitoring segment.

• Revenue quality continued to be strong:

• In Q2 FY22, MRR (monthly recurring revenue) was $1.44M, an increase of 1% compared to Q2 FY21 MRR of $1.42M. The increase in MRR is due to an increase in subscription licenses in IT Service Analytics and Microsoft 365 (GSX), partially offset by a decrease in royalties from Mitel UC Monitoring (decrease in USD-CAD exchange rate) and a decrease in maintenance and support revenue. MRR is a non-IFRS measure and represents average monthly recurring revenues earned in a fiscal quarter.

• Operating expenses of $5.14M were 7.8% above the $4.76M reported in Q2 FY21. Investments in sales, marketing and R&D have contributed to the year over year increase, in addition to a return to full salaries compared to the same period in the prior year, when measures were implemented to manage operational risks and uncertainties related to the COVID-19 pandemic. Other increases include spending on market research, software and other office costs and professional fees, as well as lower government incentives.

• Adjusted EBITDA (a non-IFRS measure) in Q2 FY22 is a loss of $0.30M, compared to a gain of $0.30M in the same period of FY21. The decrease in Adjusted EBITDA is due to higher operating losses associated with the return to normalized operations.

• The Q2 FY22 net loss of $1.72M has increased from the same period in FY21 ($0.94M) as a result of the items outlined above and higher losses on foreign exchange partially offset by lower financing fees, adjustments to interest expense on the Vistara term loan and a gain from discontinued operations in the prior year.

• The Company's cash and short-term investments balance was $4.83M at September 30, 2021, compared to $8.52M at March 31, 2021. Net working capital was $2.70M at September 30, 2021 compared to $4.50M at March 31, 2021. The Company believes it has sufficient cash to fund ongoing organic growth.

Q2 FY22 Business and Segment Highlights

• In Q2 FY22 and subsequent to the quarter, businesses shifted their focus from rapidly deploying Microsoft Teams to optimizing and managing its performance. Dependence on Microsoft Teams for organizational productivity has grown while the popularity of hybrid work models has created new complexity for IT departments. As a result, Martello has seen increased demand for Vantage DX for Microsoft Teams since the solution's launch in September 2021.

• After joining the Microsoft Global Solutions Alliance program in August 2021, Martello has made progress towards key milestones such as reaching transact-ready status on the Microsoft Azure marketplace. Becoming transact-ready means that Microsoft sellers will be incented to sell Vantage DX via the Azure marketplace.

• Increased engagement with Microsoft has helped Martello identify the highest value and most strategic partnerships to pursue, with Microsoft's support. The Company's focus in Q2 FY22 and subsequent to the quarter has been on developing and advancing relationships with these prospective partners, as well as value added resellers and MSPs.

• The number of Microsoft users on Martello's DEM platform increased to 2.9M in Q2 FY22, from 2.8M in Q1 FY22. Based on FY22 YTD results, Martello is currently targeting to reach 3.5M Microsoft users on its platform in the first half of the next fiscal year.

• Regarding the sequential growth of Martello's Microsoft DEM revenue, excluding the impact of legacy products:

Conference Call Details

Martello will host a conference call with John Proctor, President & CEO and Erin Crowe, CFO at 8:00 AM Eastern Time on Wednesday, November 24, 2021, to discuss the Q2 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 simply ask to join the Martello call. An audio recording of the call will be available on November 24, 2021 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 December 2021. To join the mailing list, complete the Subscribe form on Martello's website.

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 Microsoft 365 end user experience monitoring, unified communications performance analytics, and IT service 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

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

This news release contains "forward-looking statements". Forward-looking statements 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. Examples of forward-looking information contained in this news release include, among others, statements with respect to increasing Microsoft users on Martello's DEM platform to 3.5 million in the first half of fiscal 2023.

Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are 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 statements relate to the future, they 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 statements. Therefore, you should not rely on any of these forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, the following:

• Continued volatility in the capital or credit markets.

• 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, 2020 dated December 24, 2020, which is available on the Company's profile on SEDAR at www.sedar.com.

Any forward-looking statement made by us in this news release is based only on information currently available to us 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 statement, 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.

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