Acquisition strengthens digital experience monitoring opportunity and adds to monthly recurring revenue.

Martello Technologies logo for article detailing Martello acquisition of GSX and related financing.

Ottawa, Ontario (May 28, 2020) Martello Technologies Group Inc., (“Martello” or the “Company”) (TSXV:MTLO), a provider of digital experience monitoring (DEM) solutions deployed in more than 5,000 enterprise networks around the world, today announced that it has completed the acquisition of GSX Participations SA (“GSX”), a provider of end-user experience monitoring for Microsoft Office 365. Martello has received final approval from the TSX Venture Exchange (TSXV) and has met all other conditions of closing for this transaction

Further to its press release dated April 28, 2020, Martello has acquired 100% of the shares of GSX, which is headquartered in Geneva, Switzerland with more than 400 enterprise customers globally. The consideration for the acquisition is 22,000,000 common shares and CDN$13,860,000 cash for an aggregate purchase price of $18,700,000, (the “Purchase Price”).

The acquisition of GSX, recognized by Gartner as a digital experience monitoring vendor, extends Martello’s DEM capabilities into the Microsoft Office 365 market, which has approximately 200 million monthly active users. Based on unaudited financial statements prepared by GSX for the year ended December 31, 2019, GSX generated FY2019 revenues of €4.4M (approximately CDN$6.6M), 89% of which were recurring, while billings from sales of Microsoft Office 365 digital experience monitoring increased by 34% in FY2019.

Martello has closed debt financings concurrent with the closing of the Transaction. A US$8M subordinated secured term loan provided by Vistara Capital Partners has partially funded the acquisition of GSX, while a CDN$7.5 million secured revolving credit facility from National Bank of Canada has been made available to Martello to draw upon from time to time to finance its day to day operations, and is currently undrawn. Additional information about the transaction and the debt financings above are detailed in the press release dated April 28, 2020.

In addition, on May 26, 2020, Martello closed a $6.9 million bought deal public offering led by PI Financial Corp. and Eight Capital as co-lead underwriters and Paradigm Capital Inc. on behalf of a syndicate of underwriters (collectively the “Underwriters“). This was pursuant to a short-form prospectus filed on May 20, 2020, which is available on SEDAR. More information on the bought deal is detailed in the press releases dated May 6, 2020 and May 26, 2020.

“GSX brings a technology and business that is accretive to Martello’s objectives of increasing monthly recurring revenue and investing in digital experience monitoring solutions”, said John Proctor, President and CEO of Martello. “As global businesses shift to a remote work model, the performance of cloud digital services like Microsoft Office 365 has become even more critical. I appreciate the vision of our lenders, Vistara Capital and National Bank, who have recognized this significant opportunity and provided financing despite uncertain market conditions. As we begin the integration process, I’m pleased to welcome the GSX team to the Martello family”.

Oak Hill Financial received a fee of $175,000 for advisory services in connection with the debt financing from Vistara Capital Partners and National Bank.

About Martello Technologies Group
Martello Technologies Group Inc. (TSXV: MTLO) is a technology company that provides digital experience monitoring (DEM) solutions. The company develops products and solutions that provide monitoring and analytics on the performance of real-time applications on networks, while giving IT teams and service providers control and visibility of their entire IT infrastructure. Martello’s products include unified communications performance analytics software, and IT analytics software. Martello Technologies Group is a public company headquartered in Ottawa, Canada with offices in Montreal, Amsterdam, Paris, Dallas and New York.

Learn more at http://www.martellotech.com

About Vistara Capital Partners

Headquartered in Vancouver BC, Vistara Capital provides highly flexible and less dilutive growth debt and hybrid debt-equity financing solutions for mid-late stage technology companies across North America. Founded, managed, and funded by seasoned technology finance and operating executives, “Vistara” (Sanskrit for “expansion”) is focused on enabling the growth and expansion of its portfolio companies.

Additional information is available at: vistaracapital.com