archTIS Ltd (ASX:AR9, OTCQB:ARHLF) has released its Quarterly Activities Report for the quarter ended June 30, 2025. The company highlighted a step-change in scale from a US acquisition, expanded US Department of Defense (DoD) work and a strengthened cash position.
Key points
- Spirion acquisition: archTIS acquired US-based Spirion LLC, adding a diversified base of 150+ enterprise and government customers and a US team of data-security specialists. The combined business reports ~A$19 million in annual recurring revenue (ARR). Purchase consideration was A$15.75 million, implying ~0.9x FY25 ARR.
- Equity raise completed: The company secured A$20.5 million via a placement and fully underwritten entitlement offer to fund the Spirion acquisition and support US DoD expansion.
- DoD contract win: archTIS landed an additional DoD contract, building on existing engagements and supporting pursuit of larger enterprise licensing opportunities.
- Higher-margin mix: Licensing accounted for 78% of total revenue for the period, delivering a 75% gross margin as the company continues its shift toward a higher-margin model.
- Balance sheet: Cash and equivalents totalled A$13.8 million at quarter end, earmarked for US expansion, product development and ongoing operations.
The company said these initiatives position it with a broader customer footprint, deeper US presence and improved operating leverage heading into subsequent quarters.
“The September quarter marked the most transformative period in the company’s history, one defined by disciplined execution and the strategic expansion of our footprint in the United States through a significant asset acquisition and continued momentum on a key US DoD license,” CEO and MD Daniel Lai said. “The completion of the Spirion acquisition has not only added significant scale in ARR and customer reach but also brought complementary technologies and US vertical market depth to our company.
“This transaction and subsequent US DoD order cement archTIS as a leader in data-centric security solutions, combining discovery, classification, and policy-based enforcement into a unified offering. Our strengthened balance sheet, scalable revenue, and global partner ecosystem position us to capture the growing demand for secure collaboration and zero trust solutions across defence, government, and enterprise markets.”
Expansion agenda
archTIS entered the September quarter with a clear US-led expansion agenda while advancing its global operations. Market conditions in the US were complicated by a federal government shutdown, which slowed procurement activity and delayed contract awards and approvals across defence and zero-trust data-security programs. Despite this temporary pause in deal velocity, the underlying demand environment remained intact.
The quarter’s strategic centrepiece was the acquisition of Spirion LLC. Announced on August 27, 2025, and completed on October 1, 2025, the A$15.7 million asset purchase — valued at ~0.9× FY25 ARR — brought across Spirion’s intellectual property, product portfolio, and more than 150 enterprise, education, healthcare, and financial services customers, together with its US workforce.
Funding was secured via a A$20.5 million capital raise comprising a A$3.5 million institutional placement and a fully underwritten A$17 million entitlement offer. Post-completion, Spirion CEO Kevin Coppins joined archTIS as EVP and GM Americas, and Ryan Tully became chief product officer, providing continuity for integration and product execution.
Operationally, archTIS continued to build its North American capability. On July 21, 2025, the company appointed former Microsoft North American Defense & Intelligence leaders Erik Hanson (Director, Strategic Programs) and Darroll Walsh (Director, Technical Programs), strengthening its US defence presence and supporting a growing government pipeline.
After quarter end, archTIS also secured a A$250,000 US DoD services contract through Copper River Technologies to develop NC Protect features tailored for Microsoft DoD365 — complementing work toward a larger enterprise licensing agreement flagged on June 16, 2025. To accelerate US growth further, the company raised an additional A$7.5 million via a placement of 50 million shares at A$0.15 (a 17.4% discount to the 7-day VWAP).
Financial strength
Financially, the company reported ARR of A$18.9 million following the October 1 Spirion completion, with underlying archTIS ARR steady at A$4.1 million — up 377% on the prior corresponding period. On a pro forma basis including in-quarter Spirion revenue, combined revenue would have been about A$5 million; reported stand-alone archTIS revenue was A$1.5 million, slightly higher year on year. Licensing revenue rose to 78% of total (from 64% in the PCP), sustaining a 75% gross margin as the company continued shifting away from lower-margin services, equipment and third-party software toward proprietary licensing and support.
Costs and cash tracked the expansion. Operating expenses (excluding one-offs) increased 20% to A$2.3 million, reflecting US hiring and the enlarged product development team after the April 2025 Direktiv acquisition. Operating cash flow was negative A$2.5 million, influenced by cyclical delays in government spend, and archTIS ended the quarter with A$13.8 million in total available funds.
Overall, the company exited the period with an expanded US footprint, a larger recurring revenue base and a pipeline geared to defence and enterprise customers once procurement normalises.