Mr. Terence Matthews reports

MARTELLO REPORTS FINANCIAL RESULTS FOR THE THIRD QUARTER OF THE 2024 FISCAL YEAR

Martello Technologies Group Inc. today released financial results for the three and nine months ended Dec. 31, 2023. 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 Technologies, expressed confidence in the upside potential for the company: "In a global era where enterprises, managed service providers and channel partners face escalating challenges in delivering seamless and reliable user experiences for real-time communications and collaborations systems, Martello stands as a beacon of expertise," said Mr. Matthews. "This unique expertise has strategically positioned the company within the rapidly growing Microsoft Teams market and the Mitel global ecosystem, which has notably expanded with the recent acquisition of Unify. Vantage DX continues to capture significant client activity and the Martello technology allows for a substantial reduction in tech support personnel. I remain a strong supporter of Martello and confident in the capabilities of the Martello team as they prioritize customer satisfaction, revenue growth and shareholder value."

"As we pursue operational excellence with alignment and focus on core objectives across the Martello team, I am optimistic about the significant improvements we've made to our sales and demand generation processes," said Jim Clark, interim chief executive officer and chief financial officer of Martello. "We expect these improvements to drive growth in our sales pipeline for Vantage DX, bringing sustainable shareholder value in the future. There is growing recognition that Microsoft Teams performance problems have a significant impact on organizational productivity and bottom line. Vantage DX provides these organizations with the tools needed to deliver a seamless and reliable user experience."

Q3 fiscal year (FY) 2024 financial highlights:

• Revenue of $3.98-million represented a 2-per-cent decrease compared with Q3 FY 2023. Vantage DX revenue grew year over year and Mitel revenue remained stable. Sunsetting legacy product revenue declined as expected.
• Vantage DX is the experience management solution that is purpose built for Microsoft Teams. In Q3 FY 2024, Vantage DX monthly recurring revenue (MRR) grew by 69 per cent compared with Q3 FY 2023, both from direct sales and activities with partners. Total Vantage DX revenue in Q3 FY 2024 was $670,000, compared with $380,000 in Q3 FY 2023.
• Sunsetting legacy product revenue declined by 15 per cent or $270,000 in Q3 FY 2024 compared with Q3 FY 2023. The continuing decline of legacy product revenue is proceeding as expected.
• The Mitel business remains a stable source of recurring revenue and cash, with a 5-per-cent decrease in revenue from this segment in Q3 FY 2024. This marginal decrease is attributable to a decrease in the number of subscribers to Mitel's software assurance program. The Mitel business represented 44 per cent of total revenues in Q3 FY 2024 (46 per cent in Q3 FY 2023).
• Revenue was 98 per cent recurring in Q3 FY 2024, compared with 99 per cent in Q3 FY 2023.
• Gross margin as a percentage of revenue was 88 per cent in Q3 FY 2024, compared with 89 per cent in Q3 FY 2023. The slight decrease was primarily driven by higher hosting, installation and delivery costs, partially offset by a decrease in the costs of third party software subscription resale. Management continues to execute a strategy to reduce hosting costs.
• MRR decreased by 3 per cent to $1.30-million in Q3 FY 2024, compared with $1.34-million in the prior year. The decrease is primarily attributable to a decrease in the number of subscribers to Mitel's software assurance program and the decline in maintenance and support subscriptions for legacy products. MRR is a non-IFRS (international financial reporting standards) measure, representing average monthly recurring revenues earned in a fiscal quarter.
• Operating expenses decreased 81 per cent to $4.41-million in Q3 FY 2024, compared with $23.36-million in Q3 FY 22023. The significant decrease is primarily due to the impairment of goodwill and intangible assets in the comparative period, partially offset by severance costs. On a normalized basis, excluding impairment losses, operating expenses increased by 5 per cent.
• The Q3 FY 2024 loss from operations of $910,000 represented a 95-per-cent improvement compared with $19.76-million in Q3 FY 2023. Normalized to exclude Q3 FY 2023 impairment losses, loss from operations improved by 14 per cent in Q3 FY 2024 compared with the prior year.
• The adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) (a non-IFRS measure) loss increased by $230,000 in Q3 FY 2024, primarily attributable to interest expenses.
• The company's cash and short-term investments balance was $5.63-million as of Dec. 31, 2023, (compared with $2.23-million at March 31, 2023).

The financial statements, notes, and management's discussion and analysis (MD&A) are available under the company's profile on SEDAR+ and on Martello's website. The financial statements include the wholly owned subsidiaries of Martello. All amounts are reported in Canadian dollars.

About Martello Technologies Group Inc.

Martello is a technology company that provides digital experience monitoring (DEM) solutions to optimize the modern workplace. The company's products provide actionable insight on the performance and user experience of cloud business applications, while giving information technology teams and service providers control and visibility of their entire IT infrastructure. Martello's software products include Vantage DX, which provides Microsoft 365 and Microsoft Teams end-user experience monitoring and optimization. Martello is a public company headquartered in Ottawa, Canada, with employees in Europe, North America and the Asia-Pacific region.

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