A nice contract win for Archtis.
The contract is to be delivered this financial year.
There are a couple of important aspects to this contract.
Obviously a nice win and they are clearly strong in AUS Defence. It's a bit of a stretch to include GST and the ARR is over 2 years - so the ARR kick is $1.56M - which is a really good boost.
I think the future of the company is with their NC Protect in the US. They have a partnership agreement with Microsoft for joint marketing and MS have introduced them to sales. That product now on a general purchase list for US Govt. No significant announcements for sales for a while though.
Archtis provide software to protect data. They are a small company with a growing list of clients. The software can be used for internal staff and also for sharing with data securely with external organisations.
They have two products. NC Protect and Kojensi. NC Protect was recently acquired. From their website "NC Protect provides advanced data-centric security collaboration applications including Microsoft Office 365, SharePoint Online and on-premises, OneDrive, Teams, Yammer and Exchange emails, as well as Nutanix Files, Dropbox and Windows File Shares. It discovers, classifies and secures unstructured data including files, messages and chat content. Access and security are dynamically adjusted based on real-time comparison of user context and file content to make sure that users access, use and share files according to your business regulations and policies."
Archtis have partnership agreements with Microsoft. One of their rececnt sales was on the back of this partnership. Microsoft IP Co-sell
Archtis have developed Kojensi themselves. From their website "Sensitive and Classified Information Shared Securely. For Defence, Defence Industry and Intelligence who need the ability to share sensitive and classified information internally and with partners and clients, Kojensi is a proven and accredited platform for classified information collaboration and sharing that allows productivity while managing the compliance and security of information."
The company is founder led, although they aren't large. The CEO has 4.5%.
I've attached an image that shows the product overview and the revenue growth issued after q3.
I've been watching the business for a while not really knowing whether their product was resonating. The NC Protect purchase looks like a particularly astute one. It gives them a much lower entry point sale and takes them more mainstream.
Recent developments that have given me a greater confidence are the increasing sales, the increasing amounts and what I expect to be even more because of the consulting projects they have won. They won a cotract with Defence in May for $300k that is to finish before June 30 to help to help expand the use of NC Protect.
The most recent sale, announced last week, was for Kojensi with Dept Defence. "Total contract value is A$578,000(inc. GST)which includes$264,000 for an annual licenseand $314,000 for hardware and services. ". There's a good chance this will be long-lived since it includes hardware which I assume means it is on-premise. The risk is that this is small change for Defence and they could well be doing it as trial.
Huge tail winds for spending on security. Has contracts with 5 Aus Depts including Defence, Home Affairs and Health. Aus Govt cyber security strategy has $1.67B over 10 years. Defence has 15B over 10 yeaers for cyber and information warfare.
Last qtr they were $700k cash negative on $1.5M revenue. Expected revenue for q4 is $2.25M so that will make them break even without any increase in overheads. Management have not said anything about breakeven so perhaps costs will expand. But this means they are close. They have $12M cash in the bank.
I'm cautiously excited about their prospects. They have a $50M market cap. This is high for their current revenue but it is growing fast. I expect growth to be a bit lumpy.
I recently bought some.
archTIS Continues to Expand Customer Base with Key Global Wins
archTIS Delivers Strong 1H FY2021 Results
1H FY2021 Financial Performance and Operating Highlights
June 2020 Quarterly Report
The quarterly wasn't spectacular. But in comparison to other previous quarterlies, it wasn't too bad either given they are in a transition phase.
It seems maybe people have looked past this and the share price has rallied.
Still thinking long term given the high level security clearances they have obtained for the platform.
Also directors have been buying back in March so they have skin in the game.
ABC article on Archtis
Australian cloud company archTIS has also seen its share price rise during the pandemic.
Its secure online platform Kojensi is accredited by both the US National Security Agency and Australian Signals Directorate for top-secret information sharing online.
It was commercialised last year.
"We've had a number of early adopters, including the Attorney-General's Department, the Commonwealth Ombudsman, and we made a sale to the Australian Criminal Intelligence Commission as well," archTIS chief executive Daniel Lai said.
Its share price dipped from 13 cents at the start of the year to 5 cents in March, but traded as high as 20 cents earlier this month after signing a deal with American global aerospace and defence technology company Northrop Grumman.
"COVID-19 has seen that challenge of the workforce move from an office environment to a remote environment, of course Kojensi is a software-as-a-service cloud platform for secure content collaboration, so it fits that bill from moving to that work-from-home environment," Mr Lai observed.
He said his company's share price growth had not just been caught up by the broader momentum.
"The geopolitical situation, with the tension between China and Australia, has also affected that and the announcement from the Prime Minister of the unprecedented amount of hacking that's been going on in Australia also highlights that that there's a real need for these sorts of platforms of technologies," Mr Lai added.
They were also featured on ABC The Business last week.
I managed to get a few on the dip at 17c after the contract renewal announcement which probably was expected given the value of the renewal, but I'm looking long term towards the cybersecurity space and the accreditations they've obtained.
* archTIS’ has successfully renewed two software maintenance and services contracts with the Commonwealth worth $400,290.
*The renewal of these contracts demonstrates the continued value and recurring nature of software services to the Commonwealth government.
*These two sales follow archTIS’ recent sale of Kojensi to Northrop Grumman for its pilot with Curtin University as part of a new sales channel into large non-Government enterprises managing sensitive data.
archTIS extends services contracts to Commonwealth National Security agencies
archTIS Limited (ASX:AR9) is pleased to announce that it has renewed a software maintenance and service contract with a Commonwealth national security agency valued at $141,200. This contract is to provide maintenance and support services for an existing Kojensi platform for a further 12 months. archTIS has also renewed a separate 12-month services contract with a national law enforcement agency valued at $259,090.
Daniel Lai, archTIS CEO, said: “archTIS is pleased by the renewals, which demonstrate that our services are valued by the national security and law enforcement communities. We look forward to continuing to support such crucial services and building further on these opportunities as awareness of the importance of strong cybersecurity grows, particularly in other large enterprises that also manage and share sensitive commercial information.”