Martello Reports Financial Results for the Third Quarter of the 2026 Fiscal Year

Executive Summary

• Martello Technologies Group Inc. reported financial results for the third quarter of fiscal year 2026 (ended December 31, 2025), highlighting a significant decline in revenue and profitability driven by the sunsetting of legacy products and operational restructuring.
• The company reported a net loss of $3.56 million for the quarter, with adjusted EBITDA showing a slight improvement to a loss of $0.04 million, primarily due to lower compensation costs following workforce reductions.
• Liquidity was strengthened by a $2 million loan agreement with Wesley Clover International, while cash and short-term investments decreased to $3.48 million due to operating cash burn and restructuring payouts.

Key Details

• Revenue: Total sales were $2,988,000 for the three months ended December 31, 2025, a 20% decrease from $3,718,000 in the same period of the prior year.
• Legacy Product Decline: Revenue from sunsetting legacy products declined by 34.2% ($0.46 million) year-over-year.
• Mitel Business Segment: Revenue from the Mitel segment decreased by 7% year-over-year due to a shift in revenue mix. This segment represented 52% of total revenues in Q3 FY26 (up from 45% in Q3 FY25).
• Recurring Revenue: 98% of total revenues were recurring.
• MRR: Vantage DX monthly recurring revenue (MRR) declined 22% year-over-year. Overall MRR fell 20% to $0.98 million from $1.22 million in the prior year, driven by customer attrition and expected declines in legacy renewals.
• Gross Margin: Gross margin was 83.9% (down from 85.8% in Q3 FY25). Mitel gross margin remained consistent with the prior year.
• Operating Expenses: Increased by 33% to $5,557,000 (from $4,175,000), including $2,714,000 in termination costs associated with global workforce reductions from the October 2025 operational restructuring.
• Net Loss: Net loss was $3,564,000 for the quarter, compared to a net loss of $1,799,000 in the same period of FY25.
• Adjusted EBITDA: Reported a loss of $39,000, an improvement from a loss of $427,000 in Q3 FY25, attributed to lower compensation costs offset by lower sales.
• Cash Position: Cash and short-term investments were $3,480,000 as of December 31, 2025, down from $6,690,000 at March 31, 2025.
• Financing: The company received a $2,000,000 loan from Wesley Clover International in Q3 FY26 to strengthen liquidity.
• Nine-Month Comparison: For the nine months ended December 31, 2025, sales were $9,075,000 (down from $11,155,000), and net loss was $13,151,000 (up from $4,089,000).

Notable Quotes

• "Following the Q3 FY26 operational restructuring, management remains committed to establishing a strong foundation for future growth... we continue our dialogue with Mitel, channel partners and enterprises through our ongoing market engagement, to identify innovation opportunities that will bring them value." — Jim Clark, Chief Executive Officer
• "Mitel is a key strategic partner for Martello, and MPA is an important part of the Mitel product strategy... I look forward to further discussions on future initiatives in this strategic partnership." — Terence Matthews, Chairman