MARTELLO TECHNOLOGIES GROUP INC. /NOT FOR DISTRIBUTION TO
Renewed discipline on business priorities and operational excellence focused on driving revenue growth, positive cash flows and earnings. Disciplined management of operating expenses and working capital have created a stable foundation for investment in growth.
- Technology leader
Paul Butcher joinsMartello's Board of Directors, bringing a track record of driving innovation and catalyzing transformative business changes. - Interim CEO
Jim Clark to prioritize disciplined execution ofMartello's strategic plan within revamped business management constructs. - FY23 actions to reduce costs and Q2 FY24 re-engineering of long-term debt have improved
Martello's adjusted EBITDA by 88% in Q2 FY24 and increased working capital. - As partners leverage Vantage DX to expand their service offerings and revenue streams,
Orange Business Services , a Microsoft partner, added Vantage DX to its managed service offering. The solution helpsOrange Business Services proactively measure and manage their customer's experience of Microsoft Teams. - The Mitel business line continues to provide a stable and profitable recurring revenue base with a 2% increase in Q2 FY24 to
$1.76M .Martello is also demonstrating Vantage DX to interested Mitel partners inthe United States andUK for the large number of Mitel users who also use Microsoft Teams. The recent acquisition of Unify by Mitel brings long-term upside potential. - Chairman
Terence Matthews demonstrated his continued confidence inMartello by providingUSD$3M in additional debt financing throughWesley Clover International Corporation to repay the remaining Vistara debt in full, extending the maturity date to 2026.
"I am pleased to report that the business opportunities for
"In my expanded role as Interim CEO, my foremost objective is to drive increased sales and profitability through a revitalized focus on operational excellence," said
Financial Highlights | |||||||||
(in 000's) | 2023 | 2022 | 2023 | 2022 | |||||
(Three months ended) | (Six months ended) | ||||||||
Sales | $ | 3,982 | 3,840 | 7,986 | 8,018 | ||||
Cost of Goods Sold | 506 | 491 | 987 | 954 | |||||
Gross Margin | 3,476 | 3,349 | 6,999 | 7,064 | |||||
Gross Margin | % | 87.3 % | 87.2 % | 87.6 % | 88.1 % | ||||
Operating Expenses | 4,158 | 4,689 | 8,444 | 9,713 | |||||
Loss from operations | (683) | (1,340) | (1,445) | (2,649) | |||||
Other income/(expense) | (885) | (1,168) | (1,447) | (1,006) | |||||
Loss before income tax | (1,568) | (2,508) | (2,892) | (3,655) | |||||
Income tax recovery | 2 | 87 | 119 | 8 | |||||
Net loss | (1,566) | (2,421) | (2,773) | (3,647) | |||||
Total Comprehensive loss | $ | (1,653) | (2,661) | (2,809) | (4,604) | ||||
EBITDA (1) | $ | (358) | (1,431) | (646) | (2,590) | ||||
Adjusted EBITDA (1) | $ | (99) | (850) | (2,513) | (2,860) | ||||
(1) Non-IFRS measure. See "Non-IFRS Financial Measures". | |||||||||
- Revenue of
$3.98M represented a 4% increase compared to Q2 FY23. Vantage DX revenue grew year-over-year and Mitel revenue remained stable. Sunsetting legacy product revenue declined at a slower pace as increased budget scrutiny delayed software vendor changes for many of these businesses. - Vantage DX is
Martello's key Microsoft modern workplace optimization business. In Q2 FY24 Vantage DX monthly recurring revenue ("MRR") grew by 142% compared to Q2 FY23, both from net new clients and conversion of clients from legacy products to Vantage DX. Total Vantage DX revenue in Q2 FY24 was$0.61M , compared to$0.24M in Q2 FY23.Martello won large enterprise clients for Vantage DX in the twelve months endingSeptember 30, 2023 , including a government department with more than 100,000 users and a former legacy product client in the professional services sector with more than 400,000 users. - Sunsetting legacy product revenue declined by 13% or
$0.25M in Q2 FY24 compared to Q2 FY23. The ongoing decline of legacy product revenue is proceeding as planned. The Company is executing a strategy to convert certain legacy customers to the Vantage DX platform. - The Mitel business remains a stable and profitable source of recurring revenue and cash, with a 2% increase in revenue from this segment in Q2 FY24. The Mitel business represented 44% of total revenues in Q2 FY24 (45% in Q2 FY23).
- Revenue was 98% recurring in Q2 FY24 compared to 99% in Q2 FY23.
- Gross margin as a percentage of revenue was 87% in Q2 FY24, consistent with the comparative period in FY23. Gross margin included lower software hosting costs year-over-year, offset by an increase in the cost of third-party software resale. Management continues to execute a strategy to reduce hosting costs.
- MRR increased by 3% to
$1.31M in Q2 FY24 compared to$1.27M in the prior year. The increase is primarily attributable to favourable foreign exchange. Normalized for foreign exchange, MRR in Q2 FY24 declined by 2% year over year. MRR is impacted by the decline in maintenance and support subscriptions for legacy products. MRR is a non-IFRS measure, representing average monthly recurring revenues earned in a fiscal quarter. - Operating expenses decreased 11% to
$4.16M in Q2 FY24, also decreasing 3% sequentially since Q1 FY24. The decrease is attributable to the cost optimization exercise launched in Q2 FY23, which included headcount reductions combined with lower vendor spend. - The Q2 FY24 loss from operations of
$0.68M represented a 49% improvement compared to$1.34M in Q2 FY23. The improvement is primarily attributable to the cost optimization exercise initiated in Q2 FY23 as described above. - The Adjusted EBITDA (a non-IFRS measure) loss improved by 88% to
$0.10M in Q2 FY24 compared to$0.85M in Q2 FY23. This is primarily attributable to the cost optimization exercise described above. - The Company's cash and short-term investments balance was
$4.17M as ofSeptember 30, 2023 (compared to$2.23M atMarch 31, 2023 ). Working capital improved as a result of the discharge and refinancing of the Vistara loan, with the extension of theWesley Clover International Corporation loan toAugust 28, 2026 .
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
This press release does not constitute an offer of the securities of the Company for sale in
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.
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 the execution of a strategy to reduce hosting costs, the long-term upside potential and avenue for future growth from the recent acquisition of Unify by Mitel, the aim to drive customer satisfaction and sustainable profitable growth for shareholders, the aim to drive increased sales and profitability through a revitalized focus on operational excellence, the expectation that significant improvements to our sales and demand generation processes will drive sales pipeline, and the execution of a strategy to convert certain legacy customers to the Vantage DX platform.
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 datedJanuary 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.
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