• Annual recurring revenue (ARR) of $4.8M, up 17% year-over-year
• Revenue of $1.9M, a 24% improvement over prior year
• Gross margin increased to 81%, reflecting strategic shift to high-value licensing solutions

archTIS Limited (ASX:AR9, OTCQB:ARHLF) reported its Quarterly Activities Report and Appendix 4C Cash Flow Report for the quarter ended 30 June 2025. The company achieved several key highlights, including: Annual recurring revenue (ARR) of $4.8M, up 17% on the prior corresponding period (PCP); revenue of $1.9M, a 24% improvement on PCP, comprising $1.3M from licensing and $0.6M from services and equipment; and a gross margin increase to 81%, reflecting the company's strategic shift away from lower-margin services, equipment, and third-party software in favour of its own high-value, proprietary licensing solutions. Operating expenses increased 11% to $1.9M, primarily due to the expansion of headcount and travel to support the company's international growth. The company delivered $1.4M in positive operating cash flow and ended the quarter in a strong financial position with $4.9M in available funds. Subsequent to quarter-end, archTIS raised $7.5M (before costs) through the issuance of new shares, bringing pro-forma cash and cash equivalents to $10.24M. The company achieved several major customer wins during the quarter, including a contract with the U.S. Department of Defense, an initial 3-year contract with a U.K. aerospace and defence conglomerate, and the first sale of its Trusted Data Integration (TDI) platform in Japan. The company also secured a $1.3M annual software subscription renewal with Australia's Department of Defence. Overall customer churn remains low, with net revenue retention exceeding 115%, underscoring strong future revenue growth driven by effective cross-sell and upsell expansion within the existing customer base.

The company expects future operating cost increases to remain closely aligned with revenue-generating opportunities.

The company is well-positioned to capitalize on the demonstrated global demand for secure information sharing, with important wins in Australia, the U.S., coalition forces, and defence suppliers, and is focused on scaling into international markets, expanding strategic alliances and partnerships, and continuing to deliver innovative, zero-trust data-centric solutions.