Martello moves closer to break-even mark as yearly revenues surge

John Proctor
Martello Technologies CEO John Proctor says the Kanata software company is close to breaking even. File photo

Kanata-based software firm Martello Technologies says it’s nearing the break-even point as monthly recurring revenues continue to rise and the company capitalizes on growing demand for its services in the COVID-19 era.

Martello (TSX-V:MTLO), which makes products that help customers detect and troubleshoot problems in their high-speed communications networks, reported revenues of $13.1 million in fiscal 2020, up 27 per cent from a year earlier. 

Revenues for the three-month period ending March 31 were down slightly to $3.3 million, but Martello said its monthly recurring revenues ​– a key metric for the software-as-a-service firm ​– rose 13 per cent year-over-year in the final quarter of fiscal 2020. 

Ninety per cent of Martello’s revenues in the period were recurring, up from 78 per cent in the fourth quarter of 2019, as the company continues its shift from one-time licensing fees toward a subscription-based sales model.

In a statement Tuesday, CEO John Proctor said the firm is poised for greater growth in the months ahead as teleworking becomes more entrenched.

“As COVID-19 has disrupted the global economy, it has also accelerated digital transformation, creating greater urgency for organizations to deliver reliable remote collaboration services such as video conferencing and office productivity solutions,” Proctor said.

“As we focus on addressing this challenge, I'm pleased that … Martello has achieved monthly recurring revenue growth and cut adjusted EBITDA losses dramatically to move close to breakeven.”

While Martello’s net loss jumped substantially in fiscal 2020 – it finished the fiscal year $4.6 million in the red, up from a loss of $1.3 million in 2019 – the company said those figures were skewed by $3.4 million in impairment charges relating to goodwill and intangible assets at Elfiq, its money-losing network technology division. 

Martello acquired Elfiq, which focuses on troubleshooting and fixing issues in cloud-based systems, in 2018. Elfiq’s revenues plummeted in the wake of the pandemic, and earlier this year Martello said it plans to sell off the division’s assets and IP. The company said Tuesday that discussions with a potential buyer for Elfiq “continue to progress.”

The end of Martello’s fiscal year roughly coincided with the escalation of the COVID-19 pandemic in North America. In early April, CEO John Proctor said the company was seeing a “huge surge in demand” for its technology as the massive increase in people working from home strained wireless networks.

Martello also recently acquired Geneva-based GSX, a vendor that specializes in managing communications networks for Microsoft users, in a bid to expand its product lines and deepen its market penetration in Europe. On Tuesday, Proctor said Martello hopes to cash in on the “rapidly growing market” for Microsoft’s Teams and 365 suite of products.