Martello sales tumble in second quarter as software company phases out legacy products – Ottawa Business Journal

Martello Technologies’ ongoing bid to phase out legacy software platforms and shift resources to its next generation of products continued to eat into revenue in the second quarter.

The Kanata-based company that makes wireless network troubleshooting software reported sales of $3.8 million in the three months ending Sept. 30, down 13% from 4 .4 million a year earlier.

The drop comes as Martello steps up its efforts to wean existing customers off its legacy products in favor of its new Vantage DX platform for Microsoft Teams and 365 customers.

While the company brought in $240,000 from its Vantage sales channel in the third quarter, up 56% from the previous quarter, those gains were offset by a $400,000 drop in sales of its legacy products in end of life.

Martello’s monthly recurring revenue was also impacted as subscription, maintenance and support revenue from these soon-to-be-retired platforms continued to decline. The company posted an MRR of $1.26 million in the quarter, compared to $1.44 million in the second quarter of last year.

Still, the company said it is seeing steady growth in its Vantage channel as new customers sign up and existing customers switch to the new platform.

Martello said Vantage DX subscribed to 473,000 users at the end of September, a 33% increase from three months earlier and a 117% jump from the end of its fourth quarter of the year. fiscal year 2022 in March.

At the same time, however, Microsoft’s total number of users across all of the company’s products fell to 2.2 million from 2.9 million a year earlier, a drop that Martello attributed to “offshoring of a vanishing former partner.

“The company is focused on growing Microsoft users through sales of Vantage DX to new customers and transitioning customers from Microsoft-focused legacy products to the new Vantage DX platform,” Martello said in a statement. Wednesday.

The company managed to reduce its operating expenses by 9% year-over-year to $4.69 million thanks to cost-cutting measures, including lay off 15% of its workforce in August. But its net loss of $2.42 million was 41% higher than a year earlier, which Martello said was mainly due to lower revenue and unfavorable currency conversion rates.

Martello’s products help customers detect and resolve problems in their broadband communications networks. The publicly traded company derives its revenue from two primary sources: performance analytics software for Mitel customers and network analytics and monitoring platforms for Microsoft 365 and Teams users.

While Martello began serving primarily Mitel customers, Microsoft’s sales channel quickly gained traction as the number of Teams users soared during the pandemic.

CEO John Proctor acknowledged the past few quarters have been bumpy as Martello went all-in on Vantage. But he said the change is poised to pay long-term dividends as more deals close and unifying the company’s technology into a single platform creates operational efficiencies.

“While the continued and planned discontinuation of certain legacy product revenue has offset the growth in Microsoft Teams monitoring and optimization revenue, I am confident that our integration with Microsoft and acceleration of sales programs with Orange Business Services, Datacom and other partners will continue to drive Vantage DX’s growth alongside our direct business,” Proctor said in a statement.

“I am delighted that a number of Mitel partners have also engaged with us to bring Vantage DX to their customers, to manage the performance and user experience of Mitel and Microsoft Teams.”

Martello was trading at two and a half cents on the TSX Venture Exchange on Wednesday afternoon, down half a cent on the day. Its stock has fallen six cents since the start of 2022 and is down significantly from its 52-week high of 11 cents set last November.