Martello's Q1 revenues surge 21% as software gains 'must-have' status in COVID-19 era, Kanata firm says

John Proctor
Martello CEO John Proctor says the global shift to remote work is paying major dividends for the Kanata software firm. File photo

Kanata-based software-maker Martello Technologies says it expects demand for its products to ramp up as the surge in working from home during the COVID-19 pandemic accelerates the shift towards a “true digital era for the workplace.”

In a statement Thursday in which the firm announced that its first-quarter revenues had jumped more than 20 per cent compared with a year earlier, Martello said the sales increase reflects “growing industry demand for digital workforce solutions, related to the global shift to remote work.” 

The work-from-home trend has translated into big business for Martello, which makes products that help customers detect and troubleshoot problems in their high-speed communications networks. As teleworkers increasingly connect with each other through platforms such as Zoom and Slack, the push for secure, reliable network traffic is also growing rapidly.

“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,’” the company said. 

Martello CEO John Proctor said the firm continued to sign new customers in the first quarter despite the global economic downturn triggered by the pandemic.  

“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,” he said in a statement, adding the company is “well positioned to become the dominant player” in the emerging digital experience monitoring space.

Martello (TSX-V:MTLO) reported revenues of $3.33 million in the first quarter of fiscal 2021, up 21 per cent from a year earlier. Meanwhile, monthly recurring revenues ​– a key metric for a company that sells much of its software on a subscription basis ​– rose 59 per cent year-over-year to $1.46 million in the three-month period ending June 30.

It was an eventful quarter on the M&A front for the Kanata firm, which took a significant hit to its bottom line as a result. 

Rise in operating expenses

The firm bought Geneva-based GSX Participations, which specializes in managing communications networks for Microsoft users, in late May in a bid to bolster its market presence across the Atlantic. The company also decided to divest Elfiq, its money-losing network technology division, most of which was ultimately sold to Gatineau-based Adaptiv Networks in a deal that was finalized in late July.

The combination of those events helped drive up Martello’s Q1 operating expenses to $4.2 million from $3.2 million a year earlier, thanks largely to costs related to the GSX acquisition. The firm posted a loss of $1.1 million, compared with $600,000 in the first quarter of fiscal 2020.

Martello also moved to shore up its balance sheet in the first quarter, raising more than $20 million through loans and bought-deal offerings to help finance the GSX acquisition and further expansion. 

“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,” it said.

Martello shares were up half a cent to 22 cents in midday trading on the TSX Venture Exchange.