Martello Technologies’ revenue growth continued to stall in the last quarter as sales of its legacy products and software aimed at Mitel customers declined compared with the previous year.
The Kanata-based network troubleshooting software company said Wednesday it booked revenues of $4.46 million for the three-month period ending Dec. 31, down from $4.63 million a year earlier.
Martello, which helps customers detect and repair problems in their high-speed communications networks, earns its income from two main sources: performance-analytics software aimed at Mitel customers and analytics and network-monitoring platforms for Teams and other Microsoft products.
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While sales of Martello’s Microsoft products rose by about $31,000 in the third quarter of fiscal 2022 compared with a year earlier, those gains were more than offset by a drop of more than $160,000 in revenues from the Mitel sales channel.
After a long stretch of virtually uninterrupted growth, Martello has hit a bit of a speed bump in recent months. The latest results follow a second quarter in which Martello’s revenues were flat compared with the previous fiscal year.
It marks a stark contrast to the earlier stages of the pandemic, when the company’s revenues skyrocketed as the shift to remote work, the rise of streaming services such as Netflix and a host of other factors combined to put more strain on wireless networks.
That hockey-stick trajectory has levelled off in recent months as sales of Martello’s legacy products fell and the company shifted more of its marketing and R&D resources toward new software such as its Vantage DX platform aimed at Microsoft users.
After trading as high as 24 cents in early 2021, Martello’s stock has been on a steady slide for most of the past 12 months. The company’s shares were down half a cent to five and a half cents late Wednesday afternoon on the TSX Venture Exchange.
CEO John Proctor tried to put a positive spin on the latest earnings report, noting that the company is seeing growing demand for Vantage DX, which was launched in the previous quarter.
“Though Martello’s performance over the last year has been challenging amidst longer sales cycles related to COVID-19 and efforts on the new product offering, this significant increase in commercial activity since the launch of Vantage DX is very encouraging,” Proctor said.
Martello said more than 70,000 paying customers were using Vantage DX by mid-January, while another half a million users were engaged in trials. The company said its focus in the fourth quarter will be converting those trials into paid subscriptions.
Martello posted a net loss of $2.17 million in the third quarter, up from $1.46 million in the same period in fiscal 2021. The company attributed the additional losses to increased spending on sales, marketing and R&D, the return to full salaries after employees’ pay had been cut earlier in the COVID-19 crisis and higher losses on foreign exchange.
The company had $5.1 million in cash on hand at the end of the quarter, down from $8.52 million last March, along with net working capital of $2.31 million.
Martello said a recent insider private placement that generated net proceeds of $2.4 million should provide it with “sufficient cash to fund ongoing organic growth.”