Martello looks to beef up investment in Microsoft sales channel as Q3 revenues soar 60%

John Proctor
John Proctor

Martello Technologies continued to reap the benefits of its growing Microsoft sales channel last quarter as its revenues rose 60 per cent year over year, the company said Thursday.

The Kanata-based software firm (TSX-V:MTLO) posted revenues of $4.63 million for the three-month period ending Dec. 31, up from $2.88 million a year earlier. Monthly recurring revenue – a key metric for a company that sells much of its software on a subscription basis ​– grew 64 per cent to $1.49 million.

Martello, which makes products that help customers detect and troubleshoot problems in their high-speed communications networks, gets its income from two main sources: performance-analytics software aimed at Mitel customers and analytics and network monitoring  platforms for Microsoft 365 users.

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While both segments grew in Q3, the Microsoft channel is clearly emerging as Martello’s star performer. 

A major reason for that is the firm’s acquisition of Geneva-based GSX Participations last May.

GSX – which specializes in managing communications networks for users of Microsoft applications such as Teams and other office products – accounted for more than $1.9 million of Martello’s revenues in Q3, or 41 per cent. 

Nearly 2.2 million Microsoft users are on Martello’s platform, a number the Kanata firm hopes to grow by 60 per cent before the end of the next fiscal year as more remote workers turn to products like Teams to connect with colleagues.

“Having completed the integration of GSX in Q3 FY21, Martello is well positioned to accelerate Microsoft user growth in FY22,” the company said in a statement, noting it’s one of just three software-makers that focus on monitoring the tech giant’s signature 365 suite of products.

“To drive this growth … Martello will continue to make the necessary investments in product development, customer success and indirect sales channel development.”

In addition, Martello said it’s working on updates to its platform that will help IT teams quickly pinpoint whether problems with Microsoft 365 software are related to the cloud provider, ISP or the user’s network.

Mitel revenue share drops

“As more enterprises deal with the challenges of remote workers, the addition of these capabilities is expected to increase the number of Microsoft users on Martello’s … platform and increase the average cost per user over time,” the company said.

Meanwhile, Martello’s revenue from the Mitel channel grew just five per cent in Q3. It now makes up 42 per cent of the firm’s total revenues, down from 56 per cent a year ago. IT services account for the rest of the company’s income.

Martello reported a net loss of $1.46 million, or one cent per share, in the third quarter, up from a loss of $1.33 million in the same period a year ago. The company said this was mainly due to increased operating expenses as a result of its acquisition of GSX.

Martello shares were down two cents Thursday, finishing the day’s trading at 21 cents on the TSX Venture Exchange.

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