TMCnet News
Microsoft DEM Revenue Grows by 17% Sequentially over Q2 as Martello Reports Third Quarter Fiscal 2021 Results40% of the Company's $4.6 million in total revenues in Q3 FY21 was generated by the Microsoft DEM business, demonstrating growing customer demand. /NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR RELEASE, PUBLICATION, DISTRIBUTION OR DISSEMINATION DIRECTLY, OR INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO THE UNITED STATES./ OTTAWA, ON, Feb. 17, 2021 /CNW/ - Martello Technologies Group Inc., ("Martello" or the "Company") (TSXV:MTLO), a leading developer of enterprise digital experience monitoring ("DEM") solutions for thousands of customers around the world, today released financial results for the three months and nine months ended December 31, 2020. Martello software makes the user experience for cloud applications and services such as video conferencing and unified communications (UC) both reliable and productive. Most of Martello's revenue is derived from two market segments, UC performance analytics for Mitel customers, and DEM solutions primarily for Microsoft 365 users. Martello's DEM solution suite includes Microsoft user experience monitoring software (Gizmo) and digital experience analytics software (iQ), which combined, are defined herein as Martello's Microsoft DEM revenue. Martello's legacy product revenue is derived from its Live Maps and Domino products. "As Martello completed the integration of GSX, we saw growth in our Microsoft DEM business in the third quarter of fiscal 2021, and we continued to generate high margin recurring revenue", said John Proctor, President and CEO of Martello. "Our previously described focus on the growing market for Microsoft DEM solutions resulted in growth both in Microsoft users on our platform and Microsoft DEM revenue, compared to the second quarter of fiscal 2021. With more than 2 million Microsoft users relying upon Martello DEM in Q3 FY21 to stay productive whether at home or the office, we are making product investments to address the IT challenges of remote work. These investments, as well as those to enhance product scalability, are expected to create valuable competitive differentiators for Martello and access to new indirect sales channels for our DEM solutions." Q3 FY21 Highlights
Outlook Martello's mission is to be a leading vendor in the enterprise DEM market, making every user's digital experience exceptional and productive. The Company's DEM solutions give IT teams actionable intelligence to proactively deliver a positive digital experience for users. Martello had 2.17 million Microsoft users on its platform as of December 31, 2020. In Q2 FY21, the Company reached 2 million Microsoft users and is targeting to increase this number by 60% by the end of FY22. Having completed the integration of GSX in Q3 FY21, Martello is well positioned to accelerate Microsoft user growth in FY22. According to Gartner in a July 2020 report, more than 50% of enterprises using Microsoft 365 will use a third-party monitoring tool to manage the user experience by 2024, up from just 10% today. The report recognizes Martello among just three companies that provide this solution today with a focus on Microsoft 365. To drive this growth and support the initiatives outlined herein, Martello will continue to make the necessary investments in product development, customer success and indirect sales channel development. Product Development Martello recognizes that product innovation is important to the Company's successful growth in FY22 and beyond. Projects in development through Q3 FY21 were focused on improving the scalability and differentiation of Martello's DEM solution, to expand the Company's addressable market. Cloud-Based Multitenancy - The latest evolution of cloud-based multi-tenancy capabilities for Microsoft DEM will be available in Q2 FY22, unlocking the indirect channel of MSPs, and their small and medium sized enterprise clients. Multi-tenancy allows a Martello managed service provider ("MSP") to view and manage multiple customers from a single instance of Martello's software, rather than logging into multiple instances. As a result, Martello can onboard MSPs and their customers easily and cost-effectively in the future, to drive additional revenue growth in FY22 and beyond. Work from Anywhere Solutions (Real User Monitoring and End to End Network Path Visualization) - Recognizing the increasingly distributed nature of today's workforce, Martello's Microsoft DEM product program is focused on meeting the demands of the 'work from anywhere' digital workforce. By adding Real User Monitoring, expected to be released in Q2 FY22 and end-to end network visualization capabilities, expected to be released in Q1 FY22 to its DEM platform, IT teams can quickly pinpoint whether problems are related to the cloud provider, ISP, or the user's network. This allows for better IT support of remote workers. These new capabilities, when combined with Martello's existing synthetic monitoring and digital experience analytics, differentiate Martello's DEM platform from competitors' offerings. 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 DEM platform and increase the average cost per user over time. Sales Activity Martello's DEM platform improves the Microsoft 365 user experience for its customers, with a set of solutions that combine acquired products (Gizmo, iQ) with new product capabilities developed organically. Martello's total addressable market for its DEM solution includes the more than 200 million global users of Microsoft 365, representing approximately a million enterprises worldwide (Statista, April 2020). Martello's sales strategy is focused on winning large enterprise sales deals, cross-selling and upselling its DEM solutions to its existing customer base and developing the Company's indirect sales network. In Q3 FY21, Martello announced the following enterprise sales deals:
Both Savision BV (Vantage Dx Analytics - IT Service Analytics) and GSX (Vantage Dx Monitoring – Microsoft 365) were acquired by Martello with certain products which support legacy third-party technology. As a result, Martello is seeing declines in these revenue streams with some customers migrating to Martello's newer software platforms on renewal. In Q3 FY21, this amounted to a 16% decline in this legacy revenue stream from the prior quarter. In the short-term, Martello's overall growth rates will continue to be partially offset by a decline in the revenue related to these legacy products. There are minimal expenses related to this revenue. Partnerships and Indirect Sales Channels Martello has developed indirect sales channels for its products and is focused on expanding its MSP network. Having onboarded one of Microsoft's largest MSPs in 2020, the Company is actively recruiting new MSPs for its Microsoft 365 DEM solution. As these new MSPs are onboarded, the Company expects meaningful growth in the number of Martello DEM users. Sales from the OEM relationship with Paessler have remained strong, with organizations from a broad range of industries such as healthcare, government and telecommunications choosing their unique large enterprise monitoring and analytics solution, in subscription deals from 1-3 years in length. Via the Microsoft Co-Sell program, the Company's Microsoft Gold partner status and other initiatives with Microsoft, Martello is further extending its reach across Microsoft globally. Martello's Co-Sell Prioritized status, provided to a select subset of Co-Sell vendors, entitles Martello to promote and showcase its solutions to millions of customers in Microsoft's commercial marketplace, access Microsoft marketing channels, and jointly sell innovative solutions to create valuable customer relationships. This provides greater access to Microsoft's enterprise, corporate and small and medium accounts, to grow Martello's partner and customer base and increase users on the Martello platform. The Company's relationship with Mitel remains strong, with activities focused on growing Mitel Performance Analytics (MPA) sales in several key Mitel offerings. Martello is also working on strategies to sell iQ and Gizmo to Mitel customers and partners. Many of Mitel's channel partners also provide Microsoft 365 to their customers and can benefit from Martello's single vendor solution that monitors the performance of a customer's unified communications and productivity tools, maintaining the reliability of both. The early DEM solution that Martello has delivered to thousands of Mitel customer networks globally since 2010 has given Martello in-depth knowledge of and insight into managing the performance and user experience of real-time cloud services. This has provided the Company with a competitive advantage as it pursues its goal of DEM market leadership. Conference Call Details Martello will host a conference call with John Proctor, President & CEO and Erin Crowe, CFO at 8:00 AM Eastern Time on Thursday, February 18, 2021. Canada/USA Toll Free: 1-800-319-4610 International Toll: +1-604-638-5340 Callers should dial in 5 – 10 min prior to the scheduled start time and simply ask to join the Martello call. An audio recording of the call will be available on February 18, 2021 at https://martellotech.investorroom.com/quarterly-results. The financial statements, notes and Management Discussion and Analysis ("MD&A") are available under the Company's profile on SEDAR at www.sedar.com, and on Martello's website at www.martellotech.com. The financial statements include the wholly-owned subsidiaries of Martello. All amounts are reported in Canadian dollars. Three institutional investment firms provide research coverage of Martello. The Company does not endorse the research of third-party institutions. Upcoming Activities The second issue of Martello's quarterly Investor Newsletter will be sent to subscribers in March 2021. To join the mailing list, complete the Subscribe form on Martello's website. About Martello Technologies Group Martello Technologies Group Inc. (TSXV: MTLO) is a technology company that provides digital experience monitoring (DEM) solutions. The company's products provide monitoring and analytics on the performance and user experience of critical cloud business applications, while giving IT teams and service providers control and visibility of their entire IT infrastructure. Martello's software products include Microsoft 365 end user experience monitoring, unified communications performance analytics, and IT service analytics. Martello is a public company headquartered in Ottawa, Canada with employees in Europe, North America and the Asia Pacific region. Learn more at http://www.martellotech.com This press release does not constitute an offer of the securities of the Company for sale in the United States. The securities of the Company have not been registered under the United States Securities Act of 1933, (the "1933 Act") as amended, and may not be offered or sold within the United States absent registration or an exemption from registration under the 1933 Act. This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in any state in which such offer, solicitation or sale would be unlawful. Neither the TSXV nor its Regulation Services Provider (as that term is defined in the policies of the TSXV) accepts responsibility for the adequacy or accuracy of this news release. Cautionary Note Regarding Forward-Looking Statements This news release contains "forward-looking statements". Forward-looking statements can be identified by words such as: "anticipate," "intend," "plan," "goal," "seek," "believe," "project," "estimate," "expect," "strategy," "future," "likely," "may," "should," "will" and similar references to future periods. Examples of forward-looking information contained in this news release include, among others, statements with respect to accelerating user growth by providing performance and user experience monitoring; and the expectation to increase the number of Microsoft end users by 60% during fiscal 2022. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, the following:
Any forward-looking statement made by us in this news release is based only on information currently available to us and speaks only as of the date on which it is made. Except as required by applicable securities laws, we undertake no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise. SOURCE Martello Technologies Group |