archTIS Reports 38% Revenue Drop, 17% ARR Growth, and $3M Positive Cash Flow
archTIS Limited reported a 38% revenue decline and an 11.8% rise in net loss for FY2025, yet achieved positive operating cash flow and secured $7.5 million in new capital to accelerate international expansion.
- Revenue down 38% to $6.07 million
- Net loss increased 11.8% to $4.76 million
- Annual Recurring Revenue (ARR) up 17% to $4.8 million
- Gross margin improved to 76%, up 16 percentage points
- Raised $7.5 million post-year-end for global expansion
Financial Performance Overview
archTIS Limited (ASX – AR9), a cybersecurity specialist focused on data-centric security solutions, released its audited results for the year ended 30 June 2025. The company reported a 38% drop in revenues to $6.07 million, reflecting a strategic shift away from lower-margin services towards high-margin licensing. Despite this revenue contraction, archTIS increased its net loss by 11.8% to $4.76 million, a figure tempered by improved operational efficiencies and a strong focus on recurring revenue streams.
Notably, archTIS achieved a 17% increase in Annual Recurring Revenue (ARR), reaching $4.8 million, underscoring the resilience and stickiness of its core licensing products. Gross margins expanded significantly by 16 percentage points to 76%, driven by a deliberate pivot to licensing revenue and selective, margin-accretive service engagements. Services revenue declined by 62%, consistent with the company’s strategy to exit lower-margin consulting work.
Cash Flow and Capital Position
Amidst the challenging revenue environment, archTIS generated positive operating cash flow of $3.0 million, an 88% increase over the prior year. This cash generation was achieved alongside a 6% reduction in operating expenses and a 13% decrease in underlying costs excluding share-based payments, highlighting disciplined cost management.
Post-year-end, archTIS successfully raised $7.5 million through the issuance of 50 million shares at $0.15 each. This capital injection, supported by both new and existing institutional investors and key executives, boosts the company’s pro-forma cash balance to $10.24 million. The funds are earmarked to accelerate international market expansion, deepen strategic partnerships, and invest in product innovation.
Strategic Growth and Market Expansion
archTIS made significant strides in expanding its global footprint during FY2025. Key contract wins included an initial deployment of 1,000 user licenses of its NC Protect product to a prime contractor serving the U.S. Department of Defense, with potential for a broader rollout exceeding 150,000 licenses. The company also secured a three-year contract with a major U.K. aerospace and defense conglomerate and its first sale of the Trusted Data Integration (TDI) platform to a Japanese multinational IT and electronics corporation, marking entry into a critical QUAD alliance market.
The acquisition of Direktiv in March 2025 added cloud-agnostic, event-driven orchestration capabilities to archTIS’s portfolio, enhancing its zero trust architecture and accelerating product innovation. This move strengthens archTIS’s ability to address complex data security challenges across hybrid and multi-cloud environments.
Leadership and Risk Considerations
Leadership appointments during the year included Major General (Ret’d) Dr Marcus Thompson AM joining the board and Gerard Foley assuming a senior leadership role focused on government and national security markets. These additions bring deep defense and cybersecurity expertise, supporting archTIS’s strategic ambitions.
However, the company faces material risks, including customer concentration; particularly reliance on Australian and U.S. defense contracts; cybersecurity threats, and geopolitical uncertainties that could impact procurement and market access. archTIS is actively pursuing diversification and expanding its partner ecosystem to mitigate these risks.
Outlook
With a strengthened balance sheet, positive cash flow, and a clear strategic roadmap, archTIS is positioned to capitalize on the rapidly growing data-centric security and Data Security Posture Management (DSPM) markets. The company’s focus on high-margin licensing, international expansion, and continuous innovation sets the stage for potential accelerated growth in FY2026 and beyond.
Bottom Line?
archTIS’s FY2025 results reflect a company in transition; balancing near-term losses with strategic investments and a robust capital raise to fuel global growth in a booming cybersecurity niche.
Questions in the middle?
- How quickly will archTIS convert its expanded pipeline and international contracts into sustained revenue growth?
- What impact will customer concentration, especially reliance on defense contracts, have on future financial stability?
- How will geopolitical tensions and regulatory changes affect archTIS’s global expansion plans?