archTIS Ltd, a provider of zero-trust, data-centric security solutions, reported a strong March 2025 quarter, achieving a record annual recurring revenue (ARR) of A$4.6 million – up 27% year-on-year – alongside continued operational efficiencies and strategic customer wins.
The March quarter performance was marked by a deliberate shift toward high-margin, proprietary licensing revenue.
“Despite seasonal headwinds from the Australian holiday period, election activity and ongoing global uncertainty, archTIS delivered growth in annual recurring revenue, strong gross margins, and continued reductions in operating expenses – all while maintaining a solid cash position,” archTIS managing director and CEO Daniel Lai said.
“A key quarter highlight was the completion of the Direktiv acquisition and the rapid commercial validation through a subsequent sale to a Japanese partner, which incorporated Direktiv’s technology.
“We believe this acquisition meaningfully strengthens archTIS’ competitive positioning and lays the foundation for long-term shareholder value through enhanced capabilities, expanded global reach, and deeper customer engagement.”
Big rise in gross margin
Total revenue for the period came in at A$1.4 million, comprising A$1.0 million in licensing and A$0.4 million from services.
Gross margin rose to 75%, supported by the company’s ongoing move away from third-party software and lower-margin services.
Operating expenses decreased to A$1.7 million – an 18% reduction compared to the prior corresponding period – reflecting disciplined cost control and improved scalability.
The company closed the quarter with A$2.6 million in cash and A$4.4 million in total available funding. A further A$2.0 million in customer receipts were recognised post-quarter end.
A major strategic development during the period was the completed acquisition of Direktiv’s technology assets, personnel, and customer relationships.
The integration of Direktiv’s attribute-based access control and orchestration platform into archTIS’ Trusted Data Integration (TDI) solution was quickly validated through the company’s first sale into the Japanese market – a deal worth A$390,000 annually.
This was facilitated through a Microsoft Defence and Intelligence partnership.
Customer wins during the quarter reflected expanding global traction. Notable contracts included:
- A sole-source Kojensi contract renewal and expansion with the Australian Department of Defence, valued at A$1.3 million, along with a separate A$410,000 services agreement;
- A US-based global science manufacturer renewing NC Protect for research data protection;
- A major South Korean defence firm adopting Kojensi SaaS under a three-year agreement;
- An Australian university licensing Kojensi SaaS for secure Defence-academic collaboration; and
- A prominent US law firm expanding NC Protect use to support document security and regulatory compliance.
These wins highlight growing demand for secure information sharing tools across critical sectors, including defence, aerospace, legal, and research.
The integration of Direktiv also brings together development teams across Australia and Europe, supporting further innovation and cross-sell opportunities within the company’s expanding product suite.
Growth ahead, particularly in defence
Looking ahead, archTIS expects continued growth momentum in ARR and increased engagement across its target sectors, particularly in the global defence and defence industrial base.
The company’s Global chief operating officer and US president Kurt A. Mueffelmann said: "Amid a turbulent quarter for global markets, archTIS delivered a solid financial performance, which included a record-level of ARR being achieved.
“We are witnessing growing momentum and heightened interest in our zero-trust, data-centric security solutions, particularly for the scanning, tagging, enforcement and governance of sensitive information.
“While sales did not reach our desired levels, the surge in engagement serves as a strong leading indicator of increased sales commitments and a growing pipeline, especially within the global defence and defence industrial sectors."
