Martello shares its cut as software company reports year-over-year revenue decline

Martello Technologies’ revenue growth continued to stagnate last quarter as sales of its legacy products and software to Mitel customers declined from a year earlier.

The Kanata-based network troubleshooting software company said Wednesday it posted revenue of $4.46 million for the three months ending Dec. 31, up from $4.63 million a year earlier.

Martello, which helps customers detect and repair problems in their broadband communications networks, derives its revenue from two main sources: performance analysis software for Mitel customers and analysis platforms and network monitoring for Teams and other Microsoft products.

While sales of Martello’s Microsoft products increased by approximately $31,000 in the third quarter of fiscal 2022 compared to the prior year, these gains were more than offset by a decline of more than $160,000 in revenue from the Mitel sales channel.

After a long period of virtually uninterrupted growth, Martello has experienced some downturn in recent months. The latest results follow a second quarter in which Martello’s revenue was flat compared to the prior year.

This marks a stark contrast to the early stages of the pandemic, when company revenues skyrocketed with the shift to remote working, the rise of streaming services such as Netflix and a host of other factors. have combined to put more pressure on wireless networks.

This hockey stick trajectory has stabilized in recent months as sales of Martello’s legacy products have plummeted and the company has further redirected its marketing and R&D resources to new software such as its Vantage DX platform. for Microsoft users.

After trading as low as 24 cents at the start of 2021, Martello’s stock has been steadily declining for most of the past 12 months. Shares of the company were down half a cent to five and a half cents late Wednesday afternoon on the TSX Venture Exchange.

CEO John Proctor tried to put a positive spin on the latest earnings report, noting that the company is seeing growing demand for Vantage DX, which launched in the previous quarter.

“While Martello’s performance over the past year has been challenging amid longer COVID-19 related sales cycles and new product offering efforts, this significant increase in business activity since the launch of Vantage DX is very encouraging,” said Proctor.

Martello said more than 70,000 paying customers were using Vantage DX as of mid-January, while another half million users were engaged in trials. The company said its fourth-quarter goal would be to convert those trials to paid subscriptions.

Martello reported a net loss of $2.17 million in the third quarter, compared to $1.46 million in the same period of fiscal 2021. The company attributed the additional losses to increased spending on sales, marketing and R&D, to the return to full salaries after employee compensation. had been reduced earlier in the COVID-19 crisis and higher currency losses.

The company had $5.1 million in cash at the end of the quarter, up from $8.52 million last March, as well as net working capital of $2.31 million.

Martello said a recent insider private placement that raised net proceeds of $2.4 million should provide it with “sufficient liquidity to fund continued organic growth.”