archTIS Hits Record $4.6M ARR, Boosts Margins, and Expands Global Reach
archTIS has reported a standout March quarter with record annual recurring revenue, improved gross margins, and strategic growth through the Direktiv acquisition and new international contracts.
- Annual recurring revenue (ARR) surged 27% year-over-year to $4.6 million
- Gross margin improved to 75%, reflecting a shift to proprietary software
- Operating expenses reduced by 18%, demonstrating disciplined cost control
- Completed acquisition of Direktiv, enhancing product capabilities and market reach
- Secured significant new contracts including first sale in Japan and expanded Defence agreements
Strong Financial Momentum Amid Strategic Repositioning
archTIS Limited (ASX:AR9) delivered a robust quarterly performance for the period ending 31 March 2025, highlighted by a record annual recurring revenue (ARR) of $4.6 million. This 27% increase year-over-year underscores the company’s successful pivot towards higher-margin proprietary licensing and services, even as total revenue of $1.4 million reflects a strategic reduction in lower-margin third-party software engagements.
Gross margins rose to a healthy 75%, up 6 basis points from the prior corresponding period, signaling improved operational efficiency and a deliberate focus on scalable, data-centric security solutions. Meanwhile, operating expenses fell by 18% to $1.7 million, a testament to archTIS’ disciplined cost management during a period marked by global economic uncertainty and seasonal headwinds.
Direktiv Acquisition Accelerates Innovation and Market Expansion
A pivotal highlight of the quarter was the completion of the Direktiv asset acquisition, which brought advanced event-driven orchestration and attribute-based access control (ABAC) technology into archTIS’ portfolio. This strategic move not only strengthens the company’s zero-trust security offerings but also expands its development capabilities across Europe and Australia.
The acquisition quickly translated into commercial success, with archTIS securing its first sale in Japan for the Trusted Data Integration (TDI) platform, now integrated with Direktiv technology. This deal, sourced through Microsoft’s Defence and Intelligence team, marks a significant milestone in archTIS’ international expansion and validates the enhanced value proposition of its integrated solutions.
Broadening Customer Base Across Key Verticals
archTIS continued to deepen its footprint across defence, manufacturing, higher education, and legal sectors globally. Noteworthy contracts include a substantial renewal and expansion with the Australian Department of Defence, increasing user licenses by 75% and adding a new services contract worth over AUD $410,000.
Additional wins span a US multinational science manufacturer renewing NC Protect licenses, an Australian university adopting Kojensi SaaS for secure collaboration, a South Korean aerospace and defence firm licensing Kojensi SaaS for three years, and a leading US law firm expanding its NC Protect usage. These diverse engagements highlight the growing demand for archTIS’ zero-trust, data-centric security solutions in sensitive and regulated environments.
Financial Position and Outlook
archTIS closed the quarter with $2.6 million in cash and $4.4 million in total available funding, including unused financing facilities, providing a runway of over eight quarters at current operating cash burn rates. Despite a cash outflow from operations of $0.5 million, the company’s strong balance sheet and recent customer receipts post-quarter-end support ongoing growth initiatives.
Management remains cautiously optimistic, noting that while sales volumes have yet to fully rebound from global uncertainties, the surge in customer engagement and pipeline development, especially within defence sectors, positions archTIS well for future revenue growth and shareholder value creation.
Bottom Line?
archTIS’ record ARR and strategic acquisition set the stage for accelerated growth, but market uncertainties warrant close monitoring of sales momentum.
Questions in the middle?
- How will archTIS sustain revenue growth amid its strategic shift away from third-party software?
- What integration challenges and cross-selling opportunities will arise from the Direktiv acquisition?
- Can archTIS convert its growing pipeline and customer engagement into consistent sales increases?
