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Martello Reaches $1.5M in Monthly Recurring Revenues and Positive Adjusted EBITDA in First Quarter of Fiscal 2021

Martello reaches $1.5M in monthly recurring revenues and positive adjusted EBITDA in first quarter fiscal 2021
August 27, 2020

OTTAWA, ONAug. 27, 2020 /CNW/ – Martello Technologies Group Inc., (“Martello” or the “Company”) (TSXV: MTLO), a developer of enterprise digital experience monitoring (“DEM”) solutions that improve the user experience for cloud applications and services such as video conferencing and telephony for more than 5,000 customers around the world, today released financial results for the three months ended June 30, 2020. Note that Martello acquired GSX Participations SA (“GSX”), a provider of end-user experience monitoring solutions for Microsoft 365 on May 29, 2020, therefore these results include one month of GSX financial information.

“We’re very pleased with the revenue growth reported in this quarter’s results. After initial customer caution early in the fiscal quarter related to COVID-19, demand for remote cloud collaboration and productivity services accelerated throughout the remainder of the quarter, bringing Martello new DEM deals”, said John Proctor, President and CEO of Martello. “With our growing technology advantage, Martello is well positioned to become the dominant player in the emerging DEM market as adoption of cloud applications and services grows. We will maximize this opportunity going forward, balancing profitability with key investments to expand high margin monthly recurring revenue, which we believe will maximize shareholder value”.

Q1 FY2021 Highlights

  • Q1 FY2021 was an active and transformative quarter. To exploit DEM market opportunities, the Company strengthened its balance sheet through various transactions and initiatives: Martello acquired GSX, completed a $6.9M bought deal, closed two new financing arrangements, and made the decision to divest its Network Performance Management (SD-WAN) segment (“NPM segment”). Substantially all of the net assets of this segment were sold to Adaptiv Networks subsequent to Q1 FY2021.
  • The Company achieved positive adjusted EBITDA of $0.20M in Q1 FY2021, compared to a loss of $.50M in the same period of FY2020. Adjusted EBITDA is a non-IFRS financial measure which assesses operating performance before the impact of one-time costs associated with acquisition activity, impairment losses, other non-cash costs as well as the impact of discontinued operations in Q1 FY2021.
  • Results from the NPM segment are presented as discontinued operations in the Q1 FY2021 and Q1 FY2020 statements of loss and comprehensive loss, and the net assets sold to Adaptiv Networks are presented as assets and liabilities held for sale in the statements of financial position as at June 30, 2020. The comparative information presented herein excludes results of operations of the NPM segment, except where indicated.
  • Q1 FY2021 revenues demonstrate growing industry demand for digital workforce solutions, related to the global shift to remote work. Although initial spending was cautious in April and May as CIOs dealt with budget uncertainty related to COVID-19, in June increasing demand for remote cloud collaboration capabilities resulted in new DEM deals.
  • At the close of Q1 FY2021, monthly recurring revenue reached $1.46M, an increase of 59% compared to $.92M in the same quarter during the prior year, which includes MRR from the NPM segment.
  • Total revenue was $3.33M in Q1 FY2021, compared to $2.76M in the same period of fiscal 2020, representing a 21% increase year over year.
  • Operating expenses were $4.2M in Q1 FY2021, as compared to $3.2M in Q1 FY2020. The increase of $1.0M related to one-time acquisition-related costs of $0.8M, acquisition of GSX intangibles of $0.13M, and $0.55M in GSX operating expenses. Excluding these items, operating expenses decreased by $0.47M compared to the same quarter last year. The decrease in expenses is related to COVID-19 reductions in travel and marketing activities, as well as temporary reductions in base salaries, and reduced headcount.
  • The recurring portion of total revenue was 98% in Q1 FY2021, compared to 93% in Q1 FY2020.
  • Revenue from sales of UC Performance Analytics software through the Mitel channel in the three months ended June 30, 2020 increased by 6% to $1.9M compared to $1.8M reported for the same period in FY2020.
  • Gross margin remained strong and consistent at 94.2% in Q1 FY2021, compared to 93.8% in Q1 FY2020.
  • Positive adjusted EBITDA in Q1 FY2021 reflects Martello’s prudent response to COVID-19 related uncertainty in the quarter, as the Company implemented temporary risk management measures including decreased headcount, salary reductions, reduced travel and other expenses and reduced its focus on the NPM line of business. As Martello exploits its growing market opportunity in fiscal 2021, the Company will review these measures and balance profitability with key investments for high-margin, high quality revenue growth, to maximize shareholder value.
  • The loss from operations was $1.1M in Q1 FY2021, compared to a loss of $0.6M in Q1 FY2020. Costs associated with discontinued operations of the NPM segment, which was divested subsequent to Q1 FY2021, were $0.4M ($0.2M in Q1 FY2020), and one-time transactional costs associated with the acquisition of GSX were $0.8M.
  • The Company’s cash and short-term investments balance was $6.7M at June 30, 2020, compared to $5.9M at March 31, 2020. In Q1 FY2021, Martello raised $6.9 million in a bought deal offering, which funded a portion of the purchase price of GSX, with the remainder used for working capital and general corporate purposes. In addition, Martello completed a term loan financing with Vistara Capital Partners for USD$8 million, which funded a portion of the purchase price of GSX, and closed an MRR-based revolving facility of up to $7.5 million with National Bank of Canada. The National Bank revolving facility remains undrawn. The Company is confident, subject to risk factors associated with the ongoing COVID-19 crisis that it retains sufficient available cash and working capital to fund organic growth plans going forward.

Business Highlights

As workplaces became increasingly digitized and distributed in response to COVID-19, adoption of Microsoft 365 accelerated. This growth, which included a 70% increase in daily active users of Microsoft Teams video conferencing, increased demand for GSX Gizmo. GSX Gizmo monitors the user experience for Microsoft 365, which includes Microsoft Teams. In Q1 FY2021 Gizmo added 10% more users than the same quarter of the previous year, as customers migrated Microsoft 365 solutions to the cloud from on-premise to support remote work initiatives.

For example, in June 2020, GSX won business from a large governmental organization with more than a million employees. COVID-19 accelerated the timing of this deal, as the organization responded to global work from home directives.

GSX Gizmo displaced a key competitor in Q1 FY2021 to win a six-figure enterprise deal with one of the world’s most recognizable Fortune 500 brands, as they migrated from on-premise to cloud to support remote workers.

Early in Q1 FY2021, usage of the remote access capabilities in Martello’s Mitel Performance Analytics (MPA) software doubled, as its customers sought solutions to troubleshoot on-premise systems remotely. Usage of the Company’s web-based tool was made widely available during COVID-19 to anyone who wished to test their home network’s fitness for voice and video calls, and this resulted in a 34% increase in tests during Q1 FY21. Among MPA renewals in Q1 FY2021, 65% of IPT users were in the healthcare, education or government sectors.

Martello’s partnership with Paessler resulted in incremental sales wins at the close of the quarter.


Martello’s mission is to provide the industry’s clearest picture of the digital user experience, as a leading vendor in the enterprise DEM market.

Remote work has become the ‘new normal’ in response to COVID-19, and has marked an inflection point in the shift towards a true digital era for the workplace, giving digital workplace tools and strategies a ‘must-have’ status, rather than ‘nice to have’. With global workforces increasingly distributed, it is expected that digital workplace trends will continue to accelerate, as businesses look to implement digital replacements for in-person activities. In the Martello business, rapid growth in the user base for Microsoft Teams this spring and an accelerated move to cloud-based tools by enterprises has increased demand for digital experience monitoring solutions, as businesses seek better control and insight into how their users are experiencing these tools.

Third-party research released by Gartner in July 2020 validates the important role that DEM solutions play in accelerated digital workplace activities. In three reports, GSX/Martello is recognized as a key DEM vendor. On the need for DEM solutions, the Hype Cycle for the Digital Workplace, 2020 report noted that “Organizations that implement DEM tools can not only benefit from better application performance and improved user experience, but also ultimately improve business outcomes in support of digital transformation.”

Martello has several competitive advantages as it pursues dominance in this emerging growth market for DEM, including the capacity to correlate multiple data points to provide insight into performance problems and the user experience in a way that is deeper and more proactive than competitors, as well as the industry’s most comprehensive approach to Microsoft 365 user experience monitoring.

Integration of GSX

In May 2020, to expand its DEM offering into the rapidly growing Microsoft 365 space, Martello completed the acquisition of Swiss-headquartered GSX, a Gartner-recognized DEM vendor that specializes in Microsoft 365. This strategic acquisition adds significantly to Martello’s MRR and further diversifies Martello’s revenue stream, while offering access to an addressable market of 200 million monthly active users of Microsoft 365.

The integration of GSX into the Martello business is a critical and complex factor in the success of this acquisition. As such, Martello has an integration team in place driving core initiatives and investments, particularly in product development and sales. The Company is focused on these core integration objectives, guided by a mandate to maintain and grow existing monthly recurring revenue streams.

Martello upgraded its senior sales capacity in June 2020, appointing Mike Danforth as VP, Global Sales and Partnerships, to drive growth for our DEM solutions in both the Mitel and Microsoft channels with global partners and through direct sales. Mr. Danforth has strong relationships with industry players like PWC, Salesforce, Accenture, Deloitte and Microsoft, and a proven track record of bringing value to customers and partners.  Mr. Danforth is leading an integrated sales team that is focused on driving monthly recurring revenue through large direct and indirect deals with global systems integrators and managed service providers, including cross-selling iQ and Gizmo in the Microsoft ecosystem.

Product development activities are focused on driving value for customers of Martello’s DEM products, while expanding the addressable market for iQ and Gizmo into small and medium sized businesses (SMBs) and managed service providers with the development of cloud-based multi-tenancy for these products.

Martello continues to work closely with Mitel, to drive growth in MPA sales through both Premium Software Assurance attachment and the support of Mitel’s cloud-hosted unified communication solutions, such as MiCloud Flex on Google Cloud. Martello earns a royalty on Mitel Premium Software Assurance and MiCloud Flex on Google Cloud Platform.

Although there is significant global economic uncertainty resulting from COVID-19 which may further impact operations, at this time the Company is confident that it retains sufficient available cash and working capital to fund organic growth over the next year.

The financial statements, notes and Management Discussion and Analysis (“MD&A”) are available under the Company’s profile on SEDAR, and on Martello’s website. 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.

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 Thursday, August 27, 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 August 27, 2020 at

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 unified communications performance analytics, Microsoft 365 end user experience monitoring and IT service monitoring and analytics. Martello Technologies Group is a public company headquartered in Ottawa, Canada with offices in AmsterdamGeneva, Nice, ParisDallas and New York. Learn more at

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 statements include, among others, statements we make regarding accretive monthly recurring revenues and effect of closing on the Company’s gross margins.

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.

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

For further information: Contacts: Tracy King, Vice President of Marketing,, 613.410.7636; John Proctor, President & CEO,, 613.271.5989


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