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Martello Reports Third Quarter Fiscal 2020 Financial Results

image press release
February 26, 2020

Monthly Recurring Revenue grows by 15% over previous period and adjusted EBITDA loss decreases 15% quarter over quarter.


Ottawa, Ontario (February 26, 2020) 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.


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”).

  1. Microsoft Q1 FY2020 Financial Results (23 October 2019)
  2. 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, and on Martello’s website at 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.

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

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.


Tracy King
Vice President of Marketing
613.271.5989 x 2112

John Proctor
President & CEO

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