Martello raises $2.5M in private placement after revenues fall 8% in fiscal 2023

Martello Technologies has sold $2.5 million worth of stock to Wesley Clover International to help the Kanata firm fund its operations as it shifts its focus to a new software platform. In a statement this week, the company said it has issued 50 million common shares at a price of five cents per share in a non-brokered private placement, subject to approval from the TSX Venture Exchange. Wesley Clover, a venture capital firm founded and chaired by serial tech entrepreneur Terry Matthews, is the sole subscriber in the private placement. Martello says it plans to use the proceeds from the offering from the sale for “general corporate and operational purposes.”   Martello’s troubleshooting technology helps customers detect and fix problems in their high-speed wireless communications networks. The publicly traded firm generates its income from two main sources: performance-analytics software targeted at Mitel customers and analytics and network-monitoring platforms for Microsoft 365 and Teams users. Martello started out serving mainly Mitel customers, but the Microsoft sales channel has gained ground as the number of Teams users soared during the pandemic. Over the past year, the firm has been gradually phasing out its legacy products in favour of a new platform, called Vantage DX, aimed at Microsoft customers. The transition hasn’t been completely smooth. Last month, Martello announced that its fiscal 2023 revenues were down eight per cent compared with a year earlier to $16.1 million, a drop the company attributed to the “offboarding of a large legacy partner.” At the same time, company officials said the Vantage DX channel is gaining traction. Sales of the product rose from $80,000 in fiscal 2022 to $1.25 million last year, and Martello said more than 1.1 million users were subscribed to the new platform at the close of the fiscal year on March 31. CEO John Proctor conceded that declining sales of Martello’s older products continue to be “a headwind impacting top-line revenue.” But he noted that Vantage DX subscription sales achieved double-digit quarter-over-quarter growth throughout fiscal 2023, due largely to Martello’s partnerships with Microsoft and French enterprise services company Orange Business.  “Getting to over one million Vantage DX user licenses in the first year is a great sign of market demand,” Proctor said in a statement. Matthews, who is also chairman of Martello, said in statement last month he believes the company is on the right track. “The timing is right for this product, and I remain confident that the Martello team can accelerate client and sales opportunities as well as identify productive partnerships,” he said. Martello posted a net loss of $25.2 million in fiscal 2023, more than triple the $8.2-million loss it recorded the previous year. The company said most of the increased losses resulted from a $19.3-million non-cash impairment charge for writing off goodwill related to the high cost of capital. Martello’s share price remained unchanged at two and a half cents this week on the TSX-V. Its stock has been steadily falling since rising to 28 cents in November 2020, when sales of its products boomed as the volume of traffic on wireless networks soared during the pandemic. Last August, the company laid off 15 employees, or more than 15 per cent of its workforce, and began slashing spending in an effort to right its financial ship.