Martello Technologies reported a 63 per cent jump in second-quarter revenues Wednesday as the company continues to add new income streams and grow its customer base beyond its traditional Mitel sales channels.
The Kanata-based software firm (TSX-V:MTLO) posted revenues of $4.4 million for the three-month period ending Sept. 30, up from $2.69 million a year earlier. Monthly recurring revenue – a key metric for a company that sells much of its software on a subscription basis – also rose 63 per cent year-over-year to $1.42 million.
The work-from-home trend continues to pay dividends for Martello, which makes products that help customers detect and troubleshoot problems in their high-speed communications networks.
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As teleworkers increasingly connect with each other through platforms such as Zoom and Slack, the push for secure, reliable network traffic has also accelerated.
“We’ve come in at a perfect time,” CEO John Proctor told analysts on a conference call Wednesday morning. “This is great timing for us from a growth perspective.”
GSX acquisition driving growth
A hefty chunk of that growth is a direct result of Martello’s acquisition of Geneva-based GSX Participations in May.
GSX – which specializes in managing communications networks for users of Microsoft applications such as Teams and other office products – accounted for $1.7 million of Martello’s revenues in Q2, including $560,000 in monthly recurring revenues.
Martello said bringing GSX into the fold has added more than 450,000 Microsoft 365 users to its Gizmo platform, boosting the total number of users to two million. The company said skyrocketing usage of Teams and other Microsoft products during the COVID-19 crisis bodes well for future growth.
“Keeping employees productive while working remotely with cloud suites such as Microsoft 365 is critical to businesses and has elevated insight into the user experience from ‘nice to have’ to ‘must have,’” it said in a statement.
As GSX’s share of revenues expands, Proctor said the firm is becoming less reliant on sales from its traditional Mitel channels to fuel growth. Mitel customers and partners contributed 42 per cent of Martello’s revenues in the quarter compared with 58 per cent during the same period in 2019.
“Our overall revenue base continues to diversify,” he said. “I like what I’m seeing here.”
Net loss trimmed to $940K
The firm’s overall operating expenses increased by $1.45 million to $4.76 million in Q2, in large part due to the extra costs of integrating GSX’s European operations.
Meanwhile, Martello slashed its net loss to $940,000, down from $1.5 million a year ago. The company attributed the turnaround to its decision to divest its money-losing Elfiq division, a deal that was finalized in July.
Proctor told analysts Martello will continue to invest heavily in sales, marketing and R&D as it looks to expand its customer base and add new capabilities to its platforms, such as integrating software such as Salesforce into its dashboard data displays to help give customers a more complete picture of their operations.
“You need to understand what is going on, and without our tool you can’t do that,” he said. “I believe we have the kind of market opportunity that companies rarely see.”
Also Wednesday, Martello announced that Antoine Leboyer, the former chief executive of GSX, has been appointed to the company’s board of directors. He replaces Martello co-founder Niall Gallagher, who retired in September.
Martello shares were down six cents to 22 cents in mid-afternoon trading on the TSX Venture Exchange.
