archTIS Reports 231% ARR Growth and Completes U.S. DoD Project in Q3 FY26
archTIS delivers U.S. DoD project and reports 231% ARR growth in Q3 FY26
In its Q3 FY26 quarterly report, archTIS (ASX: AR9) detailed the completion of a custom development project for the U.S. Department of Defence, now production-ready in DoD365, alongside annual recurring revenue (ARR) reaching approximately $15.1 million, up 231% on the prior comparative period. Total revenue for the quarter came in at $3.5 million, representing 143% growth year-on-year, with a gross margin of 71% for the quarter and 74% year-to-date. The company reported a cash position of $8.0 million as at 31 March 2026.
The combination of defence contract execution and triple-digit ARR growth demonstrates commercial traction in high-security government markets. Management highlighted that the DoD project is fully delivered and technically aligned with the DoD365 roadmap, while procurement timelines have been extended by heightened military activity, with backlog conversion expected as funding normalises.
| Metric | Q3 FY25 | Q3 FY26 | Change |
|---|---|---|---|
| ARR | $4.6M | $15.1M | +231% |
| Total Revenue | $1.4M | $3.5M | +143% |
| License Revenue | $1.0M | $3.4M | — |
| Service Revenue | $0.5M | $0.1M | — |
| Gross Margin | 74% | 71% | -4 bps |
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Financial performance breakdown
The quarterly report revealed a compositional shift in revenue sources. License revenue increased from $1.0 million in Q3 FY25 to $3.4 million in Q3 FY26, while service revenue decreased from $0.5 million to $0.1 million over the same period. Operating expenses for the quarter totalled $4.9 million, excluding $1.0 million in one-off costs. Operating cashflow was reported at negative $3.7 million.
The shift toward license revenue indicates growing product adoption over services-based engagements, which typically supports higher margin scalability as the business transitions to a recurring revenue model. The gross margin of 71% for the quarter reflects the product-led revenue mix, with year-to-date margins maintained at 74%.
What is Data Security Policy Orchestration?
Data Security Policy Orchestration (DSPO) functions as a control layer that enforces data access policies in real-time across multiple platforms and cloud environments. Unlike point solutions that discover or classify data without enforcing access decisions, DSPO acts as a policy orchestration control plane that evaluates who can access what data, when, and under what conditions.
The technology relies on attribute-based access control (ABAC), a mechanism that evaluates user, device, and data attributes before granting access. ABAC assesses contextual factors such as user role, device security posture, data classification, and environmental conditions to make dynamic access decisions. This contrasts with traditional role-based access control (RBAC), which grants permissions based solely on static user roles.
Data Security Posture Management (DSPM) is projected to grow from $2.05 billion today to $10.4 billion by 2030, representing a 38% compound annual growth rate according to MarketsandMarkets. archTIS positions itself to capture the enforcement and orchestration segment of this market, differentiating from discovery-only or classification-only vendors.
How archTIS fits the Microsoft Zero Trust framework
Microsoft launched its ZT4AI framework at RSA 2026, introducing 700 controls and an expanded Zero Trust framework that includes a new AI pillar. archTIS positions its technology as complementary to Microsoft’s framework: Microsoft provides the architectural blueprint, while archTIS delivers fine-grained, real-time ABAC enforcement across multi-cloud, classified, and sovereign environments. The company describes this as “the gap Microsoft left for partners.”
| Microsoft Principle | archTIS Solution | Function |
|---|---|---|
| Verify Explicitly | NC Protect | ABAC evaluates user + agent + data attributes in real time |
| Least Privilege | DSPO | Dynamic policy orchestration enforces least privilege across environments |
| Assume Breach | Circuit Breaker | Real-time enforcement stops compromised agents mid-action |
Defence and enterprise contract momentum
The quarterly report detailed several commercial wins and operational milestones:
- Allied defence contract: A U.S.-European military alliance NC Protect deployment valued at approximately A$1.22 million, covering 2,500+ users with two-year extension options
- U.S. DoD project status: Custom software development fully delivered and production-ready in DoD365, with technical roadmap alignment established
- Spirion new customer win: Approximately $145,000 contract closed on a 60-day sales cycle with a global IT provider operating across the U.S. and UK
- NC Protect AI integration: Real-time attribute-based access controls integrated for a global manufacturing customer, enabling enforcement within AI-powered search and knowledge discovery workflows
- UK aerospace and defence: Engagement secured with the UK division of a global aerospace and defence organisation
The allied defence win and DoD delivery demonstrate archTIS’s credibility in Five Eyes and NATO-aligned procurement environments. Management noted that while procurement timelines have been extended due to heightened military activity, the engagements remain active with backlog conversion expected as funding cycles normalise.
Three-horizon growth strategy
Management outlined a three-horizon growth framework operating across overlapping 0-18 month timeframes:
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Horizon 1 — Defend and extend the base: Focus on existing product sales in defence and regulated industries while expanding strategic accounts through U.S. DoD engagements, NATO opportunities, Microsoft co-sell partnerships, and Spirion cross-sell initiatives
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Horizon 2 — Platform solution and policy orchestration: Market expansion through an integrated product platform targeting U.S. DoD expansion, NEC, UK Ministry of Defence, defence industrial base supply chain, and regulated industries
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Horizon 3 — DSPO and innovation: Commercialisation and scaling of the platform control plane while leveraging AI, supported by the modular product architecture built on a single platform with module structures designed to increase total addressable market and improve margins
The modular product architecture supports TAM expansion and margin improvement as customers adopt additional capabilities across the NC Protect, Spirion, and TDI product suite.
Near-term priorities
Management stated four 60-day operational priorities:
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Progress and convert U.S. DoD engagements while advancing strategic pipeline opportunities across defence, government, and priority enterprise accounts
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Drive cost efficiencies through operational optimisation, improved resource alignment, and disciplined expense management
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Expand U.S. operational focus, strengthening market presence and broadening access across government, defence, and regulated commercial sectors
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Advance delivery of core product capabilities and AI-driven features to the market
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Market positioning and outlook
The company stated that the DSPO category is forming in real-time, citing observations from RSA 2026 where CrowdStrike, Palo Alto Networks, Netskope, and Check Point all entered AI governance between 2025 and 2026. archTIS referenced analyst commentary from William Blair:
William Blair (RSA 2026)
“Orchestration layer is the new center of gravity.”
archTIS positions itself as Microsoft-native with deterministic ABAC, defence-cleared credentials, and the only vendor combining discovery, enforcement, and orchestration in the customer’s own tenant. Management identified three primary revenue opportunities:
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Cross-platform DSPO: Government customers operating across Azure, AWS, and on-premises classified environments require a unified policy engine that can enforce controls across all platforms. Characterised as large-scale, recurring, and sticky revenue
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ABAC for AI agent governance: Real-time data-level access control for AI agents, positioned as complementary to Microsoft’s identity-centric (Entra) and network-centric (Defender) controls. Identified as high-growth, greenfield opportunity
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Sovereign compliance and audit: Five Eyes, defence, and intelligence community requirements for Kojensi and NC Protect credibility that Microsoft can reference but cannot replicate. Characterised as premium, high-margin revenue
If archTIS establishes category leadership in DSPO during the stated 12-18 month window, it could capture significant share of the $10.4 billion projected DSPM market by 2030. The company noted that chief information security officers are consolidating to trusted platforms rather than best-of-breed point solutions, creating an opportunity for integrated DSPO offerings.
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