Gearing up for more sophisticated cyber attacks in the years to come, Australia’s Department of Defence has beefed up their preventative measures by engaging cybersecurity company archTIS (ASX: AR9) on a 2-year deal.
The contract is an extension of existing services archTIS provides the DOD but as a $7.03m deal over those two years, it represents the single biggest contract in archTIS’ history.
Revenue will be split as an initial $3.59m payable on delivery of on-premise Kojensi hardware which will then be followed by a total of $3.44m in recurring revenue for support and maintenance over the 2-year term.
“We are pleased to close the largest sale in the Company’s history for $7.03M. Over the past 18 months we have been actively targeting global defence agencies and the broader defence industry due to their compelling need to secure highly sensitive information,” said archTIS Managing Director, Daniel Lai.
“This target market strongly aligns with the unique value proposition our products offer.
“Kojensi and NC Protect are filling a critical need for zero-trust information security in the well-funded, defence and intelligence market and the industries that support them.”
The extension of the DoD’s contract is a strong show of confidence in archTIS’s capabilities with the Company’s cybersecurity services also marketed across the lucrative US Defense sector*.
NC Protects in particular has been one of the best sellers for archTIS with its focusing on the Defence Information Environment (DIE) to have emerged as the premier Data Centric Security and Policy Enforcement company in Defence.
While these Government contracts are the headline business in terms of size for archTIS, the Company has continued to grow other revenue streams which have seen increased cybersecurity needs due to the prevalence of white collar workers now working from home more.
For the quarter ended 31 March 2022, archTIS reported its highest quarterly licensing revenue of $783k which represented a 92% increase on the previous corresponding quarter. Gross margin also increased from 68.2% to 78.5% over that period.
Beyond the defence industry, archTIS also has key partnerships with Microsoft, Thales and Raytheon for cybersecurity services.
Following news of this 2-year DoD contract, AR9 shares surged to a high of $0.165 in morning trade, a 65% rise on their previous $0.10 close.
*Editor Note: A previously published version of this article stated that archTIS had been engaged by the US Department of Defense which was incorrect. At the time, archTIS had only entered the US Defense market.
Alfred Chan is an Analyst at Emerald Financial, specialising in ASX-listed small cap companies.
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