Legal Dispute Over Sale Clouds Gathid’s Strong Revenue Growth and Market Wins

Strong Revenue Growth and Customer Expansion

Gathid Ltd has delivered a robust quarterly update for Q2 FY25, highlighting a significant uplift in its Annual Recurring Revenue (ARR) to $1.55 million, representing a 92% increase since the end of FY24. This growth is underpinned by the addition of two new customers during the quarter, bringing the total customer base to 18. Notably, these new contracts span new market verticals, signaling the broadening appeal and adaptability of Gathid's SaaS identity management platform.

Sales revenue rose to $390,000 in Q2, up from $272,000 in Q1, reflecting both the impact of new contracts and increased services revenue from existing clients. The company also maintained a high subscription renewal rate, with one customer renewing their annual contract during the quarter, reinforcing the platform's value proposition.

Industry Recognition and Market Positioning

In a notable endorsement of its innovation and market presence, Gathid was awarded the Start-up of the Year at the 2024 Australian Information Security Association (AISA) Cyber Security Awards. This accolade not only elevates Gathid’s profile within the cybersecurity community but also validates its unique approach to identity governance, which the company describes as setting new industry standards.

Gathid’s marketing efforts have cultivated a promising sales pipeline across key geographies including Asia, Australia/Oceania, the UK, and the USA. The company is actively engaging prospects and progressing negotiations, supported by recent strategic hires aimed at accelerating product development and customer support.

Financial Position and Cost Management

Despite the positive revenue trajectory, Gathid’s cash balance decreased to $5.64 million from $6.78 million in Q1, reflecting increased operating outflows. The rise in expenses is attributed to business-critical staff hires, annual insurance premiums, audit and tax fees, and ongoing costs related to the divestment of its physical security business. The Board remains confident that spending is well-managed and aligned with the FY25 budget.

Ongoing Legal Dispute Clouds Sale Completion

Since the sale of its physical security business in September 2023, Gathid has been embroiled in a dispute with the buyer, Bloom, over the final completion statement and consideration amount. The disagreement escalated to expert determination and now court proceedings, with Bloom claiming Gathid owes $666,891, a figure Gathid disputes. This unresolved matter introduces uncertainty around the finalisation of the transaction and its financial impact.

The Board is actively pursuing all avenues to resolve the dispute satisfactorily but cannot provide a definitive timeline. This legal uncertainty also affects Gathid’s ability to meet ASX requirements for relisting, pending resolution and audit outcomes.

Looking Ahead

CEO Peter Hill emphasised the company’s strategic momentum despite legacy challenges, highlighting the ARR growth, new market penetration, and industry recognition as key milestones. With a solid sales pipeline and ongoing product enhancements, Gathid is positioned to continue its growth trajectory. However, the resolution of the physical security business sale dispute remains a critical factor for the company’s financial clarity and market confidence.