archTIS Limited

Right. Good morning.

Today, I'm here with archTIS Limited, a leading global provider of data-centric software solutions for the secure collaboration of sensitive information based here in Australia, but with significant operations developing overseas, including the United States. Q1 for FY 2026 has been a significant period for the company with major operational milestones, including the successful acquisition of the assets of Spirion based in the U.S.

And today, I am joined by archTIS CEO and Managing Director, Mr. Daniel Lai; as well as archTIS Global COO and U.S.

President, Mr. Kurt Mueffelman, both of whom are here today to discuss the company's results for the quarter.

Good morning, gentlemen. Kurt, I'm going to hand over to you to kick things off.

Great. Thank you.

Good morning, Jane, and good morning, everybody. Thank you for attending today's presentation.

I just want to give a couple of comments that we're going to focus on the financial performance and key growth drivers in the U.S. around Spirion and our expanding engagement within the U.S.

Department of Defense. We'll also outline the go-to-market strategies that are underpinning each initiative and how they align with our broader plan to accelerate growth, strengthen profitability and create longer-term shareholder value as we drive the business forward.

So I'd like to start by having Dan take us through the quarterly updates. Dan?

Thanks very much, Kurt, and welcome, everybody, to our quarterly webinar. We've got quite a range of information to go through.

So we'll do this as best we can. But there's a lot of information to share with you on where we are in the market.

But the highlights have been really the focus and pivot to the U.S. marketplace.

And that's, of course, one of the great things that we've announced recently was the additional U.S. DoD contract for services about enhancing our product, NC Protect to be able to be integrated and expanded into that environment.

That's complementary to the licenses deal that we announced earlier. That's a really confidence building initiative, particularly for us in the market, and it gets us more strongly engaged on a daily basis with that client.

The Spirion asset acquisition, that's complementary as well. It's all about us pivoting the business into that U.S.

market, which is 40% of the data-centric security market and is the largest market in the world. The acquisition of Spirion gives us other data-centric experience and capability as well as a new client base to cross-sell in the commercial space, which is fantastic as well.

That 150 customers is something that we're looking to leverage and grow off. Of course, this acquisition means that we've jumped from an ARR all the way up to $19 million from a $4.2 million licensing revenue of 78%, gives us a solid cash balance after we've done those capital raises and put that acquisition to bed of $13.8 million available funding.

Margins are still high at 75% growth. We have, obviously, with that increase in doubling the size of the organization, increased our operating expenses, but a large chunk of that was also one-off costs associated with the acquisition.

So I'll get Kurt to jump into some of those financials in more detail.

Yes. Great.

And so remember, most of these numbers that we're providing are exclusive of Spirion. We closed the deal September 30.

So following the completion of the acquisition, the company's ARR increased to just under $19 million at $18.9 million, represents a 377% increase from the prior corresponding period. On a pro forma basis, including in-quarter Spirion revenue, the combined entity would have recognized around $5 million in total revenue.

So you can really see the scale that we're driving. For reporting purposes, archTIS itself as a stand-alone, the revenue was $1.5 million, representing a slight increase from PCP.

So you really see the scale of the revenue that we're really trying to take under as part of the business. I think the interesting part was as stand-alone, notably, the licensing revenue for archTIS accounted for 78% of the total revenue, up from 64% from the previous period.

The high proportion of licensing revenue contributed to our continued strong margins of 75%, highlighting the company's continued strategic transition away from lower-margin services, equipment and third-party software towards the higher-value proprietary licensing solutions and supporting services. Our operating expenses as stand-alone, excluding one-off transaction costs, were up 20% to $2.3 million.

This reflected a rise in the headcount that we're predicting as we go into building out the U.S. DoD expansion and the strategy behind that as well as partnership opportunities.

The increase also includes the expansion of our product team over in Germany for the development of the acquisition of Direktiv, which Dan will talk about as part of our strategy going forward a little later on in the presentation. We continue to work through synergies toward clear and concise total operating expense levels as we continue to operate from a cost synergies basis and putting together the overall go-forward plan with Spirion standing [indiscernible] inside of archTIS, $5 million, and they're primarily cyclical.

We go very cyclical in our cash receipts over the first quarter. I believe the prior quarter was $3.2 million.

We got some cash in a little bit earlier that we expected to roll into this quarter. So we'd rather have the cash in the bank a little bit earlier.

And despite this, archTIS still ended with a strong $13.8 million in total available funds. So again, good growth balance sheet going forward, really exceptional revenue that we're able to drive and scale the business going forward and really working on where we can keep that operating expense under our control from a management standpoint like we have in the past.

So Dan, I think one of the things that we're driving and the key message, I believe, for this quarter was really about supporting the U.S. scalability and growth.

So maybe you can take us through the -- both opportunities ahead of us.

Yes. You're starting to see the traction here.

We initially announced the 1,000 licenses for the ongoing deployment across the broader DoD and the new and expanded features that we've been -- got the services contract for are about making sure that, that agency can service other agencies as well within that DoD environment and make sure that it's tightly integrated. But these features are very specific to the U.S.

defense environment and particularly the M365 deployments. And we've talked about how that can create a cornerstone for the inflection point for the company in the U.S.

And why is that? Well, defense is an amazingly big reference for the rest of the Microsoft ecosystem.

You know and we work very hard with the Microsoft ecosystem to do that. And that also leverages that asset acquisition of Spirion.

And of course, that Spirion gives us not only the footprint to expand and grow with that cornerstone DoD business, but enter new verticals to make sure that we can, I guess, look at those verticals earlier in terms of health, in terms of finance, in terms of manufacturing that we can get into in the world's largest market. That's what they've specialized in that data discovery and our enforcement products run off the back of that.

This really -- so for us, those 2 key elements really set us up as a springboard in the world's largest market and that we -- that's the high-growth market that we're targeting. And I think the timing is right because if we've done that earlier, without an opportunity like the U.S.

DoD, this will make it a lot more easier for us to get that traction that we want to and play with some really big people, big organizations in terms of competitors and be able to hit a wedge which we can defend and exploit in the market.

Yes. I think, Dan, a couple of other things on that.

When we look at the U.S. DoD, the services engagement really extends NC Protect and really drives functionality that's not previously in the world's largest Microsoft DoD environment.

So for the DoD to come back to us and say, hey, we need these capabilities in this environment, it makes it very sticky. And so by coming in and doing this development, I think it really drives home the need for DoD to really have that broader license across the entire enterprise.

Unfortunately, being a citizen over here in the U.S., we've been shut down for the last 30 days. So the larger licensing rollout has been delayed by the U.S.

government shutdown, but engagement remains really high and active through the technical validation. We're continuing to work on the statement of work and the underlying technical development on a daily basis with people that have not been deferred.

The military people that are still in uniform are still working, and we're working with them day in and day out as well as the commercial people such as Copper River and GDIT. So things are still moving along.

But again, we're at the kind of -- the way the DoD goes right now, we're at the government shutdown's will.

Yes. And I think the other aspect of that is we've got Spirion at a very good price.

It's got $15 million ARR, and we paid for it 0.9x of that ARR. It adds a multifaceted, not just the client base, the technology and a really good team there that we can pivot into the space and augment what we have to really compete in the world's largest market.

I think that's critical. And as you said, the U.S.

DoD deal services keeps us engaged with them on a daily basis. I know there's a lot of speculation in the market about these things, and it has been affected by the shutdown.

But we are in contact with them, as I said, regularly, and we know what they're committed to and where their strategy is going and where we fit into that strategy, which gives us confidence.

So we talk about a little bit about DoD and NC Protect and what we're doing. Why is this so important to the DoD and to the broader Allied Coalition Forces?

Yes. Really great question.

And this is the other part that gives us great confidence. Zero Trust and particularly data-centric security has been mandated.

It's not like this is optional for these organizations. Why is that?

Well, it's really simple. That old system of network security where we put everything inside a boundary doesn't exist anymore.

I said recently on the Ord Minnett conference, a Thales report identified that most organizations now have 29 different domains where their data is spread out. Why?

Because we've got moving to SaaS platforms and services. We're moving to cloud brokers and SASE and DLP in the cloud in terms of security.

We're moving to collaboration tools. We are doing Work from Home.

We've got multi-cloud environments where we've got S3 buckets in AWS and M365 out there. This -- all of these different organizations now, how do we secure data and know where our data is to secure it becomes very problematic for the client.

And that is no different for the U.S. Department of Defense when it has allied engagements and it's trying to build alliances at the strategic operational and tactical layer.

And that's what we're trying to solve for these government agencies and defense departments. It's been mandated.

There's standards out there, and we're pushing into this space very quickly, probably not as quickly as a lot of our shareholders want us to. But this is a big market and it's a revenue-rich market.

We get it right and we've built a company that's going to be sustainable for a long time and a high-growth company. So mandated compliance requirements by 2027.

That's why the U.S. is doing this particular deal.

That's why it's so important. We get this right, there is a network growth effect.

Yes. And you look at that, right, the alignment positions archTIS to enable that interoperability across all allied defense networks.

So whether it's Five Eyes, the QUAD, AUKUS and what have you, it's -- you can pick them off as the network effect across Coalition Forces, but let's look at what we have in front of us today just from a DoD standpoint. And when you start to look at that, this slide really maps the potential scale for DoD adoption or that network sales effect.

So from where we are within the COCOMs on the right-hand side where we're selling into today for the Warfighter Network, that carries across all the other areas, whether it's Office of Secretary of Defense, Office of the President, all of the DoD agencies. So our initial 1,000 user deployment is really that entry point, the validation of the security and operational performance we expect will be rolled out the command, the services and that multiyear expansion potential.

And so the network effect really stems from the initial license and services today, projected as we discussed back in, I believe, last quarter, to reach 150,000 users, ultimately 450,000 across the Warfighter Network. And then if you start to do the math, this provides a foundation and selected product awards for defense-wide deployments supporting up to 4.3 million users across not only defense, but then entering into the civilian space.

Then on top of it, you can start to add Allied Forces. So you see the excitement.

So although it's taking longer than what I'm sure everybody would like, it's building that basic foundation that will give us the ability to really do it right and really provide that network effect as we go further into it.

Scary numbers, right, Kurt?

Yes, it is. And scary numbers, my compute there we go.

All right.

Okay. So how does that then fit in with the archTIS strategy here.

Well, really, as our offerings are adopted by the U.S. DoD and NATO and look, we have already announced where we are in some of these deals.

NEC deploying us to be demonstrated to JMOD to be their partner of choice. NEC are also engaged with MHI for the future [indiscernible] stuff, which was recently announced here in Australia.

But also, we've talked about our engagements over in the U.K. and obviously, this U.S.

deal. But that then also has ramifications for the Defense Industrial Base.

We have Kojensi here, which is already being used as the shared platform of choice by defense industry. We're partnered with Microsoft.

We're trying to solve this in a global way across multiple supply chains. And that means that the Defense Industrial Base is still an opportunity for us, large clients, large revenues, high levels of compliance required, we still look at how we do that.

But that also then opens up not just from the Raytheons and Andurils and Kratos and all of those sorts of things, the opportunities for CMMC, which is a standard there in the U.S. Department of Defense for labeling, but that also then opens up that opportunity for those SMB ecosystem.

And you can see the numbers that we're talking about in that. It's not a new slide, but what we're really saying here is we've been consistent in our strategy, and we are executing it.

But it's the timing and execution of that strategy, which leads to success and the tactical execution to get to those sort of scary numbers that we're talking about. We need to go at the pace where we can sustain this, and we need to build to be able to scale it.

So that sort of leads on to the Spirion acquisition there. Kurt, would you like to talk about that?

Yes. So Spirion, what a funny name it is, right?

And so Spirion is actually SPI for Sensitive Personal Information and Rion or Rion, which derives for ri for meaning King in the Celtic language. So it symbolizes leadership and authority really around that discovery and classification.

So when we hear people talk about, well, how could you have stopped that breach? Previously, we couldn't have.

Now with the Spirion, we can go in and look at the various breaches of personal information that has taken place, whether it's in Australia, the U.S. or across the globe and play a part in helping to avert those breaches from taking place.

So it adds us into a different -- a little bit different part of the market opportunity that's out there today. Slides, they're just going.

So Dan, maybe you can take everyone through the acquisition and the reasons for the acquisition itself.

Well, the key reason for the acquisition is that springboard to leverage our market entry into the U.S. We could have invested a lot in Australia and done it all here.

But the high-growth market, as I said, is the U.S. and Europe.

Between them, they own 70% of the data-centric security market. That's where we need to be for high growth.

So Spirion was in the right place at the right time. Most critically, it expands on several fronts.

We've talked about the customer base, the blue-chip cross-sell. We've already commenced that.

We also have the opportunity. And what's great about those clients is they're already investing in data-centric security.

So you don't have to educate these guys from scratch. Now not all of them will convert, and that's great, but some of them will.

And some of them will then go on the journey and do that cross-sell up. The other great thing about it is if I'm looking at data-centric security and my data is everywhere in SaaS platform, legacy on-prem, Work from Home, how do I do discovery across all of that plane to understand where my data is, be able to label it, which is a critical point for us to be able to enforce it with our ABAC products.

And so it really hits that sweet spot. Now that to us is a reason to start to exploit and push into that marketplace along with that U.S.

DoD deal. So critical for us from all of those synergies and we see that as something that we're going to execute and leverage for as an inflection point for the business.

So really transformative.

Yes. And I think what's really strong about it, it adds a whole new dimension to what we do in our go-to-market around that end-to-end data protection.

So Dan, maybe you can go through our thinking from that from a strategic standpoint.

Yes, absolutely. So this is where all these parts start to come together.

The first there is the -- where is my data? Is it sensitive?

Intellectual property? Is it classified?

Who has access to it? What should we do with it?

Now what we should do with that and how it should be protected becomes that classification and that label. Then we need to put in policies for who should have access to that, how it gets protected, when it leaves this environment, how is it encrypted, who carries permissions to do what to it.

And of course, that enforcement of those policies becomes critical. You've got an end-to-end life cycle here.

Our massive differentiator is we connect to the data. So as it transfers from one environment to the other to the other, it's always consistent in terms of the protection and the controls on it.

And none of our competitors can do that. That's really critical.

So the purchase here is and the competitive advantage is this product and platform is agnostic. Yes, Purview, you can do some of that.

Only if all your information is in the Microsoft 365 environment. And there aren't many organizations that have all of their information in an M365 environment or can afford it.

That's where we see the real key to success. Over to you, Kurt.

Yes. I think though, there'll be -- when we look at the deeper dive into the technology, Spirion's product is a sensitive data platform.

It shares a number of similarities with our archTIS offerings. It's agnostic, as you said, to data-centric products.

It's feature-rich, similar to the NC Protect, Kojensi and TDI. And our use cases and even more importantly, kind of the stakeholders that we are targeting mirror one another.

So when we start to look at the integration of the products, which I saw a demo of the integration today, and it looks fabulous, they really become a great opportunity for not only upsell, but cross-sell. And I had the pleasure to be up in New York City 2 weeks ago with Kevin Coppins, our new EVP of Commercial Enterprise, who is the CEO of Spirion.

We spoke to probably half a dozen different existing Spirion customers to bring to them the message around archTIS and specifically how NC could protect and add those layers of governance and enforcement to the data-centric security policy. And one of the customers I wanted to share is one of the largest media companies in the world, only 2 days earlier, I had a conversation with their internal team around how do you secure documents around ABAC technology.

And the timing was just amazing because we walked in. Kevin did a great job in talking about what archTIS brings to the Spirion product side and how the technology is going to be supported going forward and the great job, and I believe it was close to $0.5 million renewal that's counting towards ARR and everything.

And then all of a sudden, he drops on us that he needs ABAC technology. I think I had the biggest smile, and I don't think I needed a plane to fly home from Florida -- from New York to Florida.

I floated home after hearing that because it validated our underlying strategy. It really validated it.

And when it goes to the next phase, I want to take everybody through another one on a call that I was similar, a very similar story that they're looking -- all right, you guys identify and classify the data, but how do you really protect it? So one of these discussions was all around this large university medical center.

This is an $8.5 billion medical network required a full scan of 50,000 mailboxes and over 500 terabytes of data to identify and remove PHI, which is Personal Health Information. And Spirion's sensitive data platform executed at a scale with 98% accuracy, which is just off the charts.

We were on a Gartner analyst briefing the other day, and they thought that was a typo. They thought it was 89% that we did the inverse the numbers.

We talked about the 98%. It's a fabulous industry-leading metric.

And there were near false -- 0 false positives, which really prove the ability to manage all this regulated data within the environments. And this type of enterprise just validates the credibility for government, defense, education and other regulated industries that we start to look to branch out to.

But I thought what was really neat was I sat down with Ryan Tully, our new Chief Product Officer, and we really got into the guts of this, and we really wanted to share with the analysts really how much of the base scan we can really perform. So as I said, we were analyzing over 50,000 accounts, 500 terabytes of data, and we took 215 days to time to completion of scanning all of that, which seems like a lot, but that's a lot of data.

We analyze, Spirion did the SDP product, 45 million total e-mails. And within that, we found PHI or Personal Health Information and 36 million.

So any one of those e-mails that was leaked or breached would have been a breach announcement back out to the public. So you start to look at the value that we're providing.

These numbers are just off the charts. You start to look at data birth, 46 million instances, medical record notices, 136 million, U.S.

social security numbers, 130 million identified by Spirion. It's just crazy the amount of data that's out there that people just don't know exists.

And so that's what we're really providing to the market. We're identifying it, but then using the NC Protect, TDI or even Kojensi, we'll have the ability to govern and then lock that stuff down so we can't see the light of day.

So it's really fun stuff to actually look at and see how you can protect that. And that brings us over to the portfolio, which when you start to combine it, we really start to build out a platform.

So Dan, why don't you go through the products themselves as they stand today?

Yes. And I guess what we're really trying to say here is to give the shareholders and those interested investors a view of what we have done and how we're building this up.

We've spoken about now we've got products that range right across the data security life cycle from that discovery to labeling to enforcement and governing. Now really what this is about is making sure that ABAC is at the center of it, Attribute-Based Access Control dynamic policy, which then gives you that complete Zero Trust architecture at the data layer, which is very fundamental to people being able to secure their information and particularly sensitive information.

And that's what differentiates us in the market. The first one, obviously, that discovery and labeling with Spirion products, NC Protect is an enforcement point for SharePoint Online and the M365 environment.

TDI, which was the Direktiv acquisition back in March. Now this is really special because it enables us to be able to glue together the ecosystems, your Varoniss, your Splunks, so your big datas, how do we bring all of those components together to get a view across all of the hybrid and disparate environments, which organizations are struggling with today.

So what that gives archTIS the ability to do, and of course, is become the fabric, the Zero Trust fabric between all of these elements and changes us from a direct competitor to an enabler and a partner of all of those bigger companies, and that's the strategy that we're taking across to the U.S. It's something that we've got a competitive advantage in.

We're leading in and the referenceability from our defense clients gives us a real sweeping uplift in terms of what the conversation that we're having with our commercial clients as well as our national security clients. And all of that learning about how to do this has come from building Kojensi and being in those classified spaces and understanding the use cases and the problem space with our customers and bringing that back into the design of this.

But what we have now is a suite of products that we can turn into a global leading platform for Zero Trust data-centric security. That's what's critical about this journey.

And so what does that look like? Well, this slide really tells you that story.

We have our own world-class products in NC Protect and then we have competitors for policy enforcement, Axiomatics, NextLabs, Seclore, but we also have those hyperscalers. How do we work with those hyperscalers for the customer to integrate to their multi-cloud.

We have the SIEMs, the Splunks, the SaaS services, which they've got to send information out from their environment and get back in or from one of the hyperscalers back into that SaaS service. CASBs, how do they protect that?

How do we use the best of breed there, not compete with them, but leverage them. And collaboration tools, including Kojensi, identity sources that need to be trusted, okay?

And DLPs and discovery tools such as Spirion and Microsoft Purview. This is the layer which also integrates to the on-premise data that is becoming critical, and that's the excitement.

And you need these type of capabilities to solve those defense alliance problems we've discussed, Defense Industrial Base problems. Most importantly, in terms of manufacturing, health, this is now the digital ecosystem and the problem that they're trying to solve.

And we believe we can be the world leader and dominate that space, and that's what we're trying to do, build a company up of substance from $4.2 million to $20 million ARR to having a presence in the right marketplace to exploit and expand and to base that off the opportunities, do it when the opportunities arise, such as the U.S. DoD to exploit that.

And that becomes this. And Kurt, talk to about the go-to-market strategy we get this year.

Yes, it's kind of funny because those who have followed us over the last 4 years, you'll recognize this slide. I think in one of my first quarterly presentations, I presented a version of this slide.

We've always seen the value in serving multi-markets, but really needed the right timing, scale, geographic focus and capital to effectively execute on it. And I think with the addition of Spirion and major U.S.

Department of Defense engagements, we're now positioned to expand vertically across defense and other highly regulated industries. Our focus remains on organizations managing sensitive and classified data.

The Spirion acquisition really strengthens our U.S. footprint, broadens the portfolio and opens up new market segments, as you can see today.

When we start to expand beyond government and defense into DIB, that leads into further manufacturing that's out there and then some of the sensitive regulated information you saw one of the educational institutions that I used as an example, financial services, the number of banks that Spirion has is very strong looking for banking information, pharmaceutical and life sciences. Now they start to really understand how we expand that.

And so combined, the leadership in ABAC and data-centric security, we're really well positioned to capture these opportunities. With the additional M&A under evaluation, further accelerating growth, you can really see where we're taking the business as we drive it forward.

Combine this with the product slide, combine this with the market -- go-to-market slides that we put up about identify, discover, classify, govern and enforce, you can start to see the business model coming together. Now if the U.S.

government opens up, we can put a nice deal behind that and push everything else forward and make everyone else happy going forward. So we really see and understand the need to focus on defense and government where we were.

But as we drive into new market opportunities with Spirion, we really can see how we can broaden that opportunity going forward.

And how we have to grow. So that's really important, too.

We're not denying we have to grow and we have to grow strongly, and that brings us to the strategy. But most importantly, about the strategy, this strategy shifts the conversation completely about archTIS from a best-of-breed player to a strategic layer in a category-defining way and to be that leader in that space.

It signals partnership, not replacement. We're not threatening the existing ecosystem and the existing companies out there that have messaging that's similar to us.

We're enhancing them and we're enabling them. It clarifies our total addressable market and gives our sales teams a spearhead in which to go to with a message which is compelling and credible to our customers.

That's what this is about. And so finally, then on the growth strategy, what does that mean?

We're going to -- how do we tactically do that? That's all fantastic.

But how do we tactically do that? It starts with winning defense.

The U.S. DoD, we can't do anything about that until they open up for business again, and I apologize for that, but we have been trumped and we will wait for Donald Trump to un-trump us in that opening up the government for us to liaise with.

But the signs are very positive there, and we are very confident, and that's the indicator from that services deal. You don't invest in a product unless you intend to go and deploy it into that environment.

That's the message. The U.S.

government has access to all of their products in the world, they're still investing in us. That's the point.

Take that, run with it. Second thing there is cross-sell to the Spirion audience who are already investing in this and grow them in a way that is expanding their capability -- DCS capability as we take these products and merge them into a platform to take that longer-term advantage of being that leader in that defined space.

And that creates network growth, network growth. And that's really what we want to do, scale and grow.

Of course, we continue to have to invest in products. One thing about Spirion and the Direktiv acquisitions, we now have a global presence for not only product development but product support which again, that gives us a base to leverage into the U.K.

market once we've established this U.S. market presence and honed our skills and execution.

And of course, that's targeting global markets and we also need to look at how do we accelerate that through inorganic growth similar to the pattern that we've just demonstrated with Spirion. We're not afraid of taking this opportunity on.

It is a difficult challenge. It is going to be hard.

It's going to have its ups and downs. And of course, what we're hoping by this presentation is you get very clear on the strategy that we're executing and come along for the ride because we think it's going to be worthwhile.

Kurt, over to you.

Yes. Great, Daniel.

I appreciate that. So I guess a couple of questions popped up right away.

When you showed the TDI slide, a question popped up about, can you talk a little bit about opportunities outside of the U.S. particularly around Japan and the U.K.

So I think if you talk a little bit about our POCs with Japan and what we're doing in the U.K., that would be beneficial.

Absolutely. So let me start with Japan.

Japan is really -- it has been really exciting for us. I know we don't give out a lot of information on where we are with that.

But essentially, this is it. NEC sought us out.

They knew that they were part of -- did a worldwide vetting for what data-centric security products they were going to take into the Japanese Ministry of Defense to enable them to join that alliance framework, which we saw in one of those earlier slides and that is part of the QUAD. They also then doubled down when Mitsubishi Heavy Industries won that shipbuilding award here in Australia.

Why? Because NEC are already engaged as the IT provider for those ships.

Yes. Okay.

So they've now got a license, which they engage with us to build those data-centric security products to demonstrate in the -- for the next 5-year budgetary life cycle for the Ministry of Defense. They're going to take that in and they're going to demonstrate that they're hoping to win business in that form.

We will know the outcome of that probably in the last quarter of this year. But that's what we're targeting and we have been heavily investing in that.

And now Fujitsu have come knocking on the door for -- we're seeing some fruition in terms of that environment as well. So that's fantastic.

We obviously have had a global relationship with Fujitsu for some time. Also, Fujitsu in the U.K., a bit of a different story.

We were introduced to the U.K. by the Australian Department of Defense.

Most recently, a Talisman Sabre exercise demonstrated collaboration proof of concept. They want to now take that proof of concept and rebuild their networks in a data-centric security way.

That will come out to tender probably sometime in the first quarter -- third quarter -- our third quarter financial year, so anywhere between January and March. And we are obviously liaising with our partners over there to position ourselves into that space.

But we are also being referenced again, as I said, by the Australian DoD. So you can start to see these connections and particularly with AUKUS and supply chain management.

So that's why we're confident about this space. And that's why it's really important to get that referenceability from the U.S.

and Australia and you come the default. So that's what the activities that we're doing going on in that space.

But they're also bringing us other clients. Our SI partners are saying, well you know, Computershare could use this.

O2 could use this. And we are seeing that network growth into those commercial spaces.

Great. I'll answer the next one because it's actually a pretty good question pretty much for an Australian audience.

But given the U.S. DoD is now the U.S.

Department of War, is there any reason why archTIS continues to refer to the DOW as DoD, knowing the sensitivity of those leaders? Well, I was up in Washington, as I said, 2 weeks ago, and I was sitting with a couple of military uniform people, and I asked that exact question because when dealing with the military, you want to make sure that you're respectful of what titles are and what the appropriate department names are.

So it came down to this that the politicians and nonmilitary are generally considering themselves Department of War, but the actual military and uniform personnel are considered as part of the Department of Defense. Someone got up in front of people and started talking about the Department of War, and you could see the military uniform kind of snicker at it.

So it's an interesting breakdown. The official title according to the U.S.

government is still Department of Defense. And so that's where procurement contracts and everything come in.

Right now, Department of War is kind of a secondary title. So we'll continue to use what procurement uses as Department of Defense until the U.S.

government changes that or stipulates to be used in a different manner. We want to make sure we keep the people that are buying the products happy at all times.

Yes. I guess, Kurt, as a politician, they're not the ones that actually go to war are they.

So move on.

Yes. Dan, I guess one of the questions, a good question.

I'm not sure how far we can get into the specific answer. But when you made the strategic decision to acquire the business, Spirion, what metrics do you look at?

I don't think we can get into specific metrics of where is revenue going to go next year or where is operating expenses. But talk about the philosophy around the metrics that we're trying to achieve at a high level.

Okay. We've got this fantastic opportunity with the U.S.

DoD, transformational opportunity. How do we grow in the U.S., which is the world's largest market.

We know we want to pivot to the world's largest market where the biggest opportunities are for growth. That's good for our shareholders.

We can grow organically, start going out and trying to find the right people and employ them and maybe they won't work out in 6 months, you try looking for a new or we can go and acquire a company that already understands what we do and complements us from technology, introduces new verticals and skill sets for commercial selling and customer base and has ARR, which we can also build significance because you need to be of a certain size to take on the U.S. marketplace.

So behind all of that then becomes the metrics. What do they do?

How well as an organization are they running? What's the renewal rate?

We go through all of those sorts of things in the due diligence. But really, it becomes what is the strategic value and how fast can I get to where we want to go with buying this company as opposed to building a company.

And I think that was the general philosophy behind it. And this one just, as I said, tick all the boxes.

It's a data-centric security company. It augments.

It has clients investing in data center, here we can leverage and cross-sell and we add value to it from our product suite and they add value to us. And they're in the right marketplace, which we want to address and growing.

So that's the philosophy behind it.

That's great. Thank you.

Let's see. How about this one?

We can kind of tag team this. Where does AI enter into the archTIS story?

Well, this is something Kurt and I have been obviously heavily focused on. Look, one of the stories of -- one of the interesting things about what we did with the acquisition of Direktiv to build TDI is to be able to secure generative and agentic AI.

It already is in some companies, but it provides a new way of looking at that and provides new controls around how AI is managed. So for as an example, and we are also looking at how we extend NC Protect to policies to generative and agentic AI.

So yes, we are looking at that critically. It is a massive question.

We believe that we've got a real answer to that problem and it's about scaling up into that space. And if you become the central policy control plane for hybrid environments, including agentic AI services by restricting what tools and products and data it can call to respond to an answer based upon the individual asking the question, that's a really powerful story.

Yes, it's interesting. You see when I was up in Boston meeting with Ryan, our Chief Product Officer, you could see the expression just light up when you start to talk about AI, right?

It is what NC Protect can do to things like Copilot. You can look at what it can do that TDI can do with some of the existing customers we have today and look at the scope that it has.

And as Dan said, it's really about the policies and controlling it. So I think we'll have something pretty exciting in the very near future around that, which really makes, I think, an even fuller suite of offerings that we have to market.

Let's see. Where else do we go?

Why do we see a large increase in admin and corporate expenses? Well, let me tell you, I live hour south of Tampa, where Spirion is located.

And I can't tell you the number of times I saw accountants, attorneys and third parties that are helping us through due diligence for one-off acquisition and integrations of Spirion. It's not cheap to acquire companies.

You want to make sure you do it correctly, make sure you have the right people and more importantly, make sure you have correct information and not just make dismissive assumptions into M&A or listen to the bankers that are trying to sell you the deal. They can be very persuasive, but you really have to dig behind the covers, go deep, deep into the onion and peel it back.

And so yes, there's going to be one-off expenses. We'll see that coming into this quarter as well.

But really, what we're trying to do is what we've shown and I think demonstrated to the market previously is be very cost conscious from a capital expenditure standpoint to make sure that operating costs are in line with revenue. We want to grow top line revenue, but it has to grow at a pace that keeps up with things such as cash and the way that we're spending cash on a regular basis.

We can't go out like some of these organizations that have raised hundreds of millions of dollars, but they're spending hundreds of million dollars a year on maybe $50 million in revenue. That just doesn't work for a company like archTIS that's in the public markets, that's a microcap.

We need to be very capital efficient. So yes, you'll see increases in operating expenses.

And our CFO, Andrew Burns, is over here working with Kevin and myself right now, working on what those synergies are, and we're really finding some really strong synergies, whether it's consolidating CRM systems that cost hundreds of thousands of dollars a year or looking at ways that we can leverage existing systems and really get rid of some existing contracts that may be in place for third-party internal systems, accounting systems, CRM, what have you, consolidating other systems. We're looking after under every nook and creating every rock to find every single dollar we can to either bring it back as capital savings or to push it into growing the market even stronger.

Yes. And thank God, those legal fees have stopped.

If I have to have a second life, it might be as a commercial lawyer in the U.S., but you have to have [ a degree ].

We really did do a good job on that career decision, did we. All right.

I think one more question, Dan. It's a valid question.

For a number of years, the Australian defense led every year at year-end and we saw deals. What happened to the Australian defense market?

Look, it's a great question, and I'm happy to answer it. I think there was 2 things that really have impacted the Australian market.

I think the -- let me explain. The first one was, obviously, we had the defense white paper a few years ago, which stopped some spending and then they were talking about projecting force and restructuring and all of that, that affected spending.

And then they started to open up the coffers again and we've got some good work back in. We extended licensing in there from NC Protect as well as Kojensi in those classified environments.

And then what happened was AUKUS came along. That's great.

It's another opportunity. But all the generic or surplus spending or dollars got sucked straight into AUKUS.

Establishing an agency that needs to deal with nuclear submarines and getting everybody available and that caused disruption. So obviously, we naturally targeted that space.

And we have had some success in that space, which -- but obviously, it's classified and we can't talk about it. But however, what happened next?

Donald Trump turned up and said, let's do a review of AUKUS. What do you think happens then?

No one spends any money until they find out what the result of the AUKUS agreement is going to be. So that is the natural thing that happens.

When these organizations get -- don't have certainty of the way forward, they stop spending, right? And now that AUKUS has now been given the green light again, we have some certainty about what's going to happen.

And I expect some of those opportunities are going to open up again. Now -- but that's what's been affecting that marketplace.

And in some ways, that's disappointing, but in some ways, that's good. Why?

Because it just means that we're more committed to moving into those high-growth markets, which Australia will never be, and there's a risk of dependency in a concentrated form here in Australia. So let's go to those markets where they're bigger, they're better, the revenue can be stronger and there's more opportunity.

But let's do it in a way where we can be of a size which can compete, have a strategy that we can exploit, defend and have a message which we can cut through with the white noise. And that's what I think we have now and that's what's exciting about the future.

So Dan, I'm going to roll up a couple of questions. So this will be our last question.

I'm going to roll up a couple of them into one and then I'll turn it back to you for some closing comments. So there's been a couple of questions around employees, how do you align the acquisition with shareholder interest and what have you.

So having done 20-plus buy-sell M&A deals in my career, the employees that you bring on are the lifeblood of the business. We can talk about the technology.

We can talk about the customers. But if the employees that we bring across aren't there or they're not motivated or they're not culturally fitting into where we are, the business or the acquisition will fail.

So what we've done is we put together a really strong program. I think in the announcement, we talked about an employee incentive program.

That actually does a couple of things. One, it allows employees to feel, hey, I did a great job at Spirion.

We're really happy to be with archTIS. So over a period of time, people will get retention bonuses.

It shows the appreciation that they're valued. We show that they're good to be here and it helps us keep continuity across the entire employee base.

We also put equity options in place as well. And it's important to align particularly people that haven't had equity before, align those interests of shareholders with the employees.

We make sure that almost every employee has some type of equity in the business itself. We sit down and next week, we'll go through what this 4C was to our entire employee base.

We get questions just as difficult questions from employees about where is the share price going? How come it's doing this?

How come it's doing that? Why did it go down this much one day, but up the next day?

What does volume mean or where is my strike price? So we need to really make sure the employees are aligned to where we need to take the business from a shareholder standpoint to keep everybody on the same page.

If you look at it, management right now, we believe we own 15% of the outstanding shares within the business, that's management directors and founders. So that's tight alignment between the shareholders and where we want to go.

We feel the pain just as much as everybody else that every tick the share price goes down and we feel related every tick the share price goes up. So we want to see it go up as well.

But we want to make sure that we bring the employees on a good ride to make sure that they're compensated properly at a fair market value, give them the ability to bring across their domain expertise and knowledge into the company and then provide that equity incentive where if they win, everybody wins from the shareholders, the employees, the management and the Board. So that's kind of our underlying philosophy around it.

Dan, anything you want to add to that?

Yes. Look, in the end, if we can execute and build a sustainable, high-growth company, with a competitive advantage and a technology platform that can execute and solve critical high-value problems, the rest will take care of itself.

That's what we have to do. We're on the -- and that's where we start with where we are today.

And now we just tactically exploit, I have to execute what we need to do and it starts with this winning this U.S. DoD deal and getting Spirion integrated and moving forward and cross-selling.

So Dan, I'm going to ask you to roll your closing comments into one last question. I think it's fair to say that we've heard in other quarters that the future is bright.

Why -- what makes this quarter different specifically? So if you can roll that answer into your closing comments --.

One word, progress. We are progressing.

The last quarter, $4.2 million ARR, this quarter, $20 million ARR. Yes, a lot of that's been through an acquisition.

Where is that acquisition? I think we've explained that and why it's important and where we see the future.

If as a shareholder, you can't see that growth, then either we are explaining it wrong or we are doing something wrong, but -- or you're just not getting it. The issue here is, I think it's progress.

We have made an enormous amount of progress to where we want to be in the world's largest market to execute what we think we've got a competitive advantage and we can generate strong network growth revenues. That's -- we are a microcap taking on the biggest organizations in the world with the largest companies in the world.

That's not an easy thing to do. So that's my answer.

And I hope you can see that there is real genuine progress that we've outlined the strategy, and we're executing against it.

Great. Well, thank you, everybody for your comments.

And I'll turn it back over to Chloe.

Thank you.

Thank you.