archTIS Ltd (ASX:AR9, OTCQB:ARHLF) reported continued momentum in the US defence market during the December 2025 quarter, with its NC Protect platform successfully deployed into a live Microsoft DoD365 production environment for the US Department of Defense.
During the period, the DoD’s systems integrator renewed 1,000 NC Protect production licences for a six-month term, moving the platform from pre-production evaluation into sustained operational use. archTIS also continued delivery of contracted development and integration services to support mission-specific capabilities within secure DoD365 environments, reinforcing its position within active defence workflows.
Enterprise licensing discussions, which had been temporarily delayed by the US federal government shutdown, restarted late in the quarter, with future licensing expected to occur in larger user blocks as procurement processes progress.
Revenue growth accelerates following Spirion acquisition
Following completion of the Spirion acquisition on October 1, 2025, archTIS reported Annual Recurring Revenue of $16.3 million at December 31, representing a 308% increase on prior comparison periods.
Quarterly revenue totalled $4.6 million, comprising $1.5 million from Australian operations and $3.1 million from US operations, including contributions from Spirion. Software licensing accounted for $3.8 million of revenue, with services and equipment contributing $0.8 million. Gross margin improved to 76%, reflecting the company’s continued shift toward higher-margin proprietary software licensing.
Operating expenses increased to $5.9 million, excluding one-off acquisition and integration costs, as archTIS expanded its operating capability to support U.S. growth. As part of the Spirion integration, the company completed a global workforce and cost-synergy realignment expected to deliver about $4.5 million in annualised savings.
Funding supports US expansion strategy
Operating cash outflow for the quarter was $4.1 million, reflecting a temporarily elevated cost base associated with the Spirion acquisition, U.S. market expansion and timing delays in US government contract cycles. archTIS closed the quarter with a cash balance of $6.5 million and total available funding of $7.0 million.
Subsequent to quarter end, the company progressed a non-dilutive senior secured debt facility of up to $8 million to provide additional flexibility while awaiting U.S. Department of Defense decision cycles and to support ongoing U.S. expansion initiatives.
Looking ahead, archTIS said it remains focused on defence, government and regulated industries, with product development, customer deployments and cross-sell initiatives underpinning its data-centric security strategy as zero-trust requirements move toward operational implementation.