Martello Reports Financial Results for the First Quarter of the 2025 Fiscal Year

Vantage DX revenue grows as the Company focuses on product innovation, generating demand and developing partner channel sales, including new opportunities in the Mitel channel.

• Vantage DX achieved 18% year-over-year revenue growth and a 15% increase in monthly recurring revenue (MRR).
• Martello launched user experience management for Copilot for Microsoft 365 in June 2024, as part of a drive to help businesses safeguard their investment in costly premium Microsoft services such as Teams Rooms and Teams Phone.
• The Company is investing in H1 FY25 to increase market demand for Vantage DX and acquire, onboard and activate channel partners.
• Mitel channel is a stable source of recurring revenue with upside from Mitel's acquisition of Unify and growing interest in Vantage DX from Mitel and Mitel partners.
• Legacy products are sunsetting as planned.

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OTTAWA, ON, Aug. 15, 2024 /CNW/ - Martello Technologies Group Inc., ("Martello" or the "Company") (TSXV: MTLO), a provider of user experience management solutions purpose-built for Microsoft Teams and Mitel unified communications, today released financial results for the three months ended June 30, 2024. Martello software provides businesses with actionable insights on the performance and user experience of cloud services such as video conferencing and voice calls, with a focus on Microsoft 365, Microsoft Teams and Mitel unified communications.

Terence Matthews, Chairman of Martello is pleased with the pace of Vantage DX product innovation and its potential to create opportunities in the Mitel ecosystem: "Businesses are investing significantly in premium Microsoft services such as Copilot, Teams Rooms and Teams Phone. It's absolutely critical that they provide an exceptional experience and high uptime for users," said Mr. Matthews. "Partners have an increasingly important role to play in providing these services to customers, and I'm pleased that many have turned to Martello, already a trusted partner, for their experience management solution."

"Martello is rapidly executing on significant change and improvement initiatives to drive Vantage DX growth", said Jim Clark, Chief Executive Officer of Martello. "Together with the management team and board of directors, I am monitoring the impact of these improvements closely to ensure they drive value for customers and shareholders. We continue to look deeply at every step of the value chain to find opportunities for improvement. We are making targeted investments and repurposing resources in H1 FY25 to develop our channel business and to increase market demand, which we believe will have the most meaningful impact on Vantage DX revenue growth".

Q1 FY25 Financial Highlights

Financial Highlights			June 30,		June 30,
(in 000's)			2024		2023
			(Three months ended)
Sales		$	3,797		4,004
Cost of Goods Sold			496		481
Gross Margin			3,301		3,523
Gross Margin		%	86.9 %		88.0 %
Operating Expenses			4,047		4,285
Loss from operations			(746)		(762)
Other income/(expense)			(407)		(562)
Loss before income tax			(1,154)		(1,324)
Income tax recovery			115		117
Net loss			(1,038)		(1,208)
Total Comprehensive loss		$	(1,093)		(1,156)
EBITDA (1)		$	(268)		(288)
Adjusted EBITDA (1)		$	(192)		(201)

(1) Non-IFRS measure. See "Non-IFRS Financial Measures".

• Revenue in Q1 FY25 was $3.8M representing a 5% decrease compared to Q1 FY24. Vantage DX revenue grew 18% year-over-year and Mitel revenue declined slightly. Sunsetting legacy product revenue declined as expected.
• Vantage DX monthly recurring revenue ("MRR") increased by 15% in Q1 FY25 compared to Q1 FY24, both from direct sales and activities with partners. Vantage DX is the experience management solution that is purpose-built for Microsoft Teams. Vantage DX contributed $0.60M in revenue in Q1 FY25, an 18% increase compared to the same period in the prior year.
• Sunsetting legacy product revenue represented 39% of total revenue in Q1 FY25 and declined by 12% or $0.21M in Q1 FY25 compared to Q1 FY24. The ongoing decline of legacy product revenue is proceeding as expected.
• The Mitel business remains a stable source of recurring revenue and cash, with a 5% decrease in revenue from this segment in Q1 FY25 compared to the same period in the prior year (8% decrease when normalized for foreign currency exchange). This decrease is attributable to a minor variance in the mix of revenue from various Mitel Performance Analytics offerings, partially offset by favourable foreign currency exchange rates (USD-CAD). The Mitel business represented 45% of total revenues in Q1 FY25 and Q1 FY24.
• Revenue was 98% recurring in both Q1 FY25 and Q1 FY24.
• Gross margin as a percentage of revenue was 87% in Q1 FY25, compared to 88% in Q1 FY24. This nominal decrease is attributable to the higher cost of hosting software products on the cloud. Management continues to execute a strategy to reduce hosting costs.
• MRR decreased by 6% to $1.24M in Q1 FY25 compared to $1.31M in the prior year. The decrease is primarily attributable to expected declines in legacy product revenue. MRR is a non-IFRS measure, representing average monthly recurring revenues earned in a fiscal quarter.
• Operating expenses decreased 6% to $4.05M in Q1 FY25 compared to $4.29M in Q1 FY24. These reductions in operating expenses represent a continued focus on value for spend in all functions of the value chain, including lower headcount costs.
• The Q1 FY25 loss from operations of $0.75M represented a 2% decrease compared to $0.76M in Q1 FY24, due to the items outlined above, partially offset by lower gross margin.
• The Adjusted EBITDA (a non-IFRS measure) was a loss of $0.19M in Q1 FY25, a 4% improvement compared to the same period of FY24, attributable to the items described above.
• The Company's cash and short-term investments balance was $6.36M as of June 30, 2024 (compared to $7.72M at March 31, 2024).

The financial statements, notes and Management Discussion and Analysis ("MD&A") are available under the Company's profile on SEDAR+ at www.sedarplus.ca, 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.

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.

About Martello Technologies Group

Martello (TSXV: MTLO) is a technology company that provides user experience management solutions purpose-built for Microsoft Teams and Mitel unified communications. The Company's Vantage DX solution enables IT teams to deliver a frictionless Microsoft Teams experience to their users. With Vantage DX, IT can move from reactive to proactive by detecting potential performance issues before they impact users, and speeding resolution time from days to minutes.  This leads to increased productivity, realizes efficiencies, and allows businesses to harness the full value of Microsoft Teams. 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

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 Information

This news release contains "forward-looking information" within the meaning of applicable Canadian securities legislation. Forward-looking information 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 and " includes, but is not limited to, statements with respect to activities, events or developments that the Company expects or anticipates will or may occur in the future, including the aim to accelerate Vantage DX growth in FY25 to drive customer and shareholder value, growth opportunities presented by Mitel's acquisition of Unify and partner engagement, the aim to increase market demand and acquire, onboard and activate channel partners with investments in H1 FY25 and the plan to reduce hosting costs.

Forward-looking information is neither a statement of historical fact nor assurance of future performance. Instead, forward-looking information is 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 information relates to the future, such statements 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 information. Therefore, you should not rely on any of the forward-looking information. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking information include, among others, the following:

• Continued volatility in the capital or credit markets and the uncertainty of additional financing.
• Our ability to maintain our current credit rating and the impact on our funding costs and competitive position if we do not do so.
• Changes in customer demand.
• Disruptions to our technology network including computer systems and software, as well as natural events such as severe weather, fires, floods and earthquakes or man-made or other disruptions of our operating systems, structures or equipment.
• Delayed purchase timelines and disruptions to customer budgets, as well as Martello's ability to maintain business continuity as a result of COVID-19.
• and other risks disclosed in the Company's filings with Canadian Securities Regulators, including the Company's annual information form for the year ended March 31, 2021 dated January 7, 2022, which is available on the Company's profile on SEDAR at www.sedar.com.

Any forward-looking information provided by the Company in this news release is based only on information currently available 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 information, 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 Inc.

CONTACTS: Tracy King, Vice President, Communications and Regulatory, [email protected], 613.410.7636; Jim Clark, CEO, [email protected], 613.271.5989