Call it a work in progress. Eight Capital analyst Christian Sgro gave first impressions on Wednesday on the latest quarterly results from Martello Technologies (Martello Technologies Stock Quote, Charts, News, Analysts, Financials TSXV:MTLO), saying the Canadian digital experience monitoring company could be in for a turnaround — it’s just we don’t know when that could occur or how substantial it might be. Ottawa-based Martello, which has software to optimize Microsoft’s Modern Workplace environment, announced on Tuesday its second quarter fiscal 2023 financials for the period ended September 30, 2022. The company saw revenue fall year-over-year from $4.4 million to $3.8 million and adjusted EBITDA was a loss of $0.8 million compared to a loss of $0.3 million a year earlier. "Vantage DX continues to drive our growth strategy, with new deals closing in Q2 FY23 and subsequent to quarter-end, and the unification of our technology into a single platform creating efficiencies," said John Proctor, President and CEO of Martello. "While the continued and expected sunsetting of certain legacy product revenue has offset the growth in revenue from Microsoft Teams monitoring and optimization, I am confident that our integration with Microsoft and accelerating sales programs with Orange Business Services, Datacom and other partners will continue to drive Vantage DX growth alongside our direct business,” he said. Looking at the results, Sgro said Martello’s topline of $3.8 million was under his estimate at $4.3 million, while gross margin at 87.2 per cent was behind his forecast at 88.9 per cent. The adjusted EBITDA loss of $0.8 million was also a miss of Sgro’s negative $0.4 million estimate. The company’s Vantage DX product was a high note on the quarter, Sgro said, pointing to its sales contribution of $239,000, which was up 56 per cent sequentially, and its user numbers which climbed 35 per cent sequentially to 474,000. Looking ahead, Sgro has his reservations, saying in his report, “We expect increasing partner channel sophistication and Vantage DX traction to drive subscription growth, however have limited clarity on the timing and magnitude of this turnaround.” “With respect to profitability, adj. EBITDA fell below expectations but the company expects cloud and other cost optimizations to benefit the bottom line. With constricting IT budgets and a slowdown in DX user growth, we remain cautious on the demand environment as legacy churn stabilizes and Martello proves out its evolving product and go-to-market strategies,” he said. With the update, Sgro reiterated a “Neutral” rating on MTLO and a price target of $0.10 per share, which at press time represented a projected one-year return of 233 per cent.