Kurt Mueffelmann: Log in. We will be with you momentarily. All right, why do we get going? Well, good morning and welcome to archTIS' Q1 FY 2027 quarterly report for the period ending 30 September 2026. My name is Kurt Mueffelmann, I am joined by our CEO, Mr. Daniel Lai. This morning we will be reporting on how the business became leaner with higher margins following the Spirion integration. We will cover the financials, our US DoD and broader defense momentum update, some product direction, FY 2027 priorities, and then take some questions. Dan, why do I turn it over to you for some introductory comments and observations?
Daniel Lai: Thanks, Kurt, and welcome everybody to the quarterly webinar. Look, it is a strong result. Annual recurring revenue is AUD 13.3 million. That is three times our previous comparative period. Revenue was up 140%. Gross margin is higher on 79%. Operating expenses fell 17%, taking us close to an operating cash flow break even. Record receipts there of AUD 5.3 million. And of course, operationally, we have had some success there as well.
Daniel Lai: Obviously, with the US DoD closing the services contract. Another great confidence builder there that the US DoD is moving forward with us in looking towards that enterprise license deal. Australian Defence, AUD 3.2 million Kojensi renewal with services for them to embed that further within their ecosystem and expand their licenses there over the next few years. Our US EU alliance continues to be delivered. They are all obviously just coming back to work from their summer holidays, and that progresses well.
Daniel Lai: We also did a partnership agreement with Pexip, and for those of you that are following this more deeply, will understand where they are placed in that defense ecosystem, for collaboration products. That is a very good partnership arrangement, and we are expecting to turn that dial and some revenue-generating opportunities in the near future. We got FIPS 140-3 validation, and so that just removes an encryption obstacle for operating with defense clients. And of course, another award, Cyber Business of the Year and Security Innovation of the Year for the way that we approach AI. Last but not least, of course, the CBA extension, which we announced this morning, moving that AUD 4 million tranche from 31 October to 30 April 2027. So overall, they are the highlights for the quarter, and I think it has been a strong quarter.
Kurt Mueffelmann: Yeah. I loved how you slipped in the CBA extension, last but not least. Let me run through the financial summary. Against the prior quarter, it is really about efficiency. Gross margins are up to 79%, and we continue to see that being really the point that we want to target for. We would love to break an 8 as the first digit, but we are really happy with 79%. Operating expenses fell for the third consecutive quarter from AUD 6.9 million to AUD 4.4 million, so you can see how we are operationalizing the business.
Kurt Mueffelmann: Receipts at the AUD 5+ million really benefited from our annual seasonal renewals that fall in this quarter. The customer receipts were AUD 5.3 million, which is a record. We more than doubled the June quarter. That is the first receipts that exceeded operating payments since the Spirion acquisition. So we feel really good about where that is. Again, seasonality behind that. The quality of the receipts is important really as well, as the receipts came entirely from customers.
Kurt Mueffelmann: There was no R&D tax incentives, grant income, or anything else. It was just straight customer receipts. Those receipts came from AUD 1 million of the renewed US DoD, with Kojensi contract that Dan talked about in his opening statements, and the renewals across all our product lines, including some growing enterprise customers, which we really will talk about in a little bit. Revenue for the quarter was AUD 3.6 million, up 242% of AUD 1.4 million, reflecting our continued shift in revenue mix. We are really pushing hard on high-value proprietary licensing, and that is pushing that almost 80% gross margin, which is up over 4% from 75% in Q1 of FY 2027. So you can really see where we are pushing that. The growth has been accompanied by a cost discipline.
Kurt Mueffelmann: I think that is really what we want to push. We have talked about it, and you are starting to see the results of that. Our operating expenses declined each quarter since December 2025, following our cost reduction initiatives. Now we are at AUD 4.4 million in Q1, 17% below last quarter and 25% below December 2025, which was the first fully integrated quarter within Spirion. I think you can also tell that by looking at where we are from staffing costs. Staffing costs fell 46% over the same period from AUD 5.7 million to AUD 3.1 million. We really expect that to continue to climb.
Kurt Mueffelmann: We are looking at ways of continuing to operationalize technology that is out there in the market to become more efficient and leaner, as well as looking at ways to continue to make sure that we have the proper synergies in place as we continue to evolve from the Spirion acquisition and the way that we position it. ARR was AUD 13.3 million as of 30 September, more than three times the multiple of the prior comparative period, building up on that recurring base of 150 enterprise customers. We are really focused on ARR through our US defense, our federal licensing, including the pending US DoD that Dan will talk about in a few minutes, new and cross-sell Spirion customers, which we have announced over the last couple of months, and through our new partnerships that are leveraging TDI, including Mattermost and Pexip.
Kurt Mueffelmann: The company ended the quarter with cash of AUD 2.3 million and unused facilities of AUD 0.5 million for a total available funding of AUD 2.8 million. I guess what I want to do is, Dan, I will have you chime in in a few seconds, but we look at 1 October being the one-year anniversary since the acquisition of Spirion. Obviously it comes with growing pains. I have done 20 M&A deals previously, and every one has its own special growing pains alongside, and this one was no different. But the December quarter was really our full first quarter with Spirion, so it is really the right baseline that we can do this analysis. As we can see, receipts are up 236%, operating payments or cash going out the door is down 29%, and as I said before, staff costs are down 46%.
Kurt Mueffelmann: Those are some really good numbers that we are starting to really build the foundation off of. Operating expenses are a quarter lower, and gross margins again moved up to 79%. Really the integration has done what it was meant to do. We created a larger customer base on a smaller, more efficient cost structure while adding a stronger US presence that will help support us in the US DoD opportunity coming forward. Dan, with that being the happy anniversary of Spirion, why do not you talk a little bit about what your thoughts on Spirion has been over the past year?
Daniel Lai: Yeah, look, it has been one really of opportunity, but what I would say is that it demonstrates that we are executing the strategy that we had told the market that we would execute. You have mentioned really about the diversification of the cost base, which is one of the reasons we acquired them. We wanted to take that lumpiness and some risk out of that revenue stream and that annual recurring revenue. We wanted an opportunity to cross-sell to customers that already have been investing in the data-centric security lifecycle and are looking for enforcement opportunities in their businesses.
Daniel Lai: We also looked at it from the position of complementary technology, which would help us build out a roadmap for our products into a platform to take to market that becomes a control plane for policy enforcement and ABAC, and really put ourselves in a leadership position within the market, not just in Australia, but in the US, which of course is the last part that you mentioned, which is we have now pivoted to the US in a meaningful way with an ARR engine room, which can sustain the way that we reshape this business and execute within that market, which is, again, a huge market.
Daniel Lai: I guess springboard of that US DoD opportunity and into the diversified verticals, with a common story in terms of a technology platform that is leading in its category. That is really what we have been about. We have been very focused on it. The acquisition of Spirion has given us an opportunity to reassess how we do that and bring in new technologies, to invest in the way that we do our product development and integrate that best of breed into a platform and have the customer-led drive from people within the US DoD to make sure our products are market-ready, which is fantastic. Interesting.
Kurt Mueffelmann: As you mentioned, the springboard into the US DoD, I am sure that 95% of the people here are interested in learning more about where we stand with the opportunity moving forward.
Daniel Lai: Well, most of them know that I also recently came and visited you, Kurt, and the customer over there in the US, in mid-October. Look, what I can say is this, the US Department of Defense with that 315K services contract is about getting us ready for being implemented and having the features and functions that they desire as they go through this process. We have already been tested.
Daniel Lai: These are additional things that they have asked for, and it is the second time they have done it. That gives me, and it should give our investors, great comfort that you do not go through this entire process over 2 years and continue to invest in a company that you are not going to support through a licenses agreement. Unfortunately, that is still with our partner, Copper River and DISA. What I can say is this, we are definitely across that bridge where DISA is the one now demanding. I mean, US DoD is now demanding that actually contract gets moving.
Daniel Lai: I am reasonably confident that we will see this license come through in a reasonable time period. We have also executed across international defense. We are still incumbent within Australian Department of Defence. We have seen expansion opportunities there. I think that is really important. Of course, the US-EU military alliance with that deployment over there. We are starting to demonstrate that we are the go-to company for collaboration and sharing of classified information amongst the allies. I think that is a really important theme and work, in terms of that investment story. We are executing what we said we would execute. It takes time to win these deals. They are large, complex deals. We are not always in charge of them. But, in terms of a value proposition for the company and the share price, it is a very strong story. We are excited about that.
Kurt Mueffelmann: I was up in Washington last week as well, meeting with the customer. There is just great excitement around it. As Dan says, a little bit of this outside of our reach, being the subcontractor, particularly around the technology. We are dealing with large tier 1 contractors and primes that have $4.5 billion of contracts associated with the US DoD that are tied around data-centric security and where we go. So, we are a piece of the cog, but we are an important piece of the cog, which is nice. When you start to hear things such as, the out of 60 war fighter command production tests passed. I know we have talked about that the last few quarters, but that was brought up on the meeting last week, that people are really impressed by that, and organizations have not even come close to that 100% achievement.
Kurt Mueffelmann: We feel really good about it is not a question of if, it is a question of when. We are really happy about that. One of the things we want to talk about is, talk a little bit about where we are going from a product standpoint. It is great to talk about the deals and the opportunities, but you hear a lot of what we are doing, and as we have come across 1 year of Spirion, we have come across a year and a half of Direktiv. We are coming up, I cannot believe it, on 6 years of NC Protect. You start to look at where we are as a business from a product standpoint. We do not want to be positioned as a bunch of legacy products sitting in an environment.
Kurt Mueffelmann: Most organizations across the enterprise have 85 different security products that they use in and out of their organization today. Can you imagine that functionality or dysfunction that comes across a business? When we look at what we do, we look at how we become moving from best of breed, of even a little bit of a legacy, given where we are, into this control plane that Dan mentioned, particularly around DSPO. We are calling that Data Security Policy Orchestration. It is really about pulling together the solutions into a complete policy orchestration control plane that manages that across the entire environment of an organization. We will talk a little bit about that as we push through.
Kurt Mueffelmann: When we start to look at it, we start to look how we can actually bring the products together to build, again, this control plane that is built around the methodology of TDI. We look at DSPM or Data Security Posture Management, and that is a multi-billion dollar market out there today. You look at the likes of BigID, Cyera. Cyera has raised billions of dollars already and billions of dollars of market valuation in DSPM. We think we can take that to the next level, and TDI as the core, as that one policy engine. Dan, can you talk a little bit about the structure and the solution sets that we are bringing to market around that?
Daniel Lai: Look, I think previously, we have simplified the data lifecycle to a few elements. That is the discovery, the labeling, the enforcement, and the governance of data wherever it resides. Obviously, with the advent and uptake of AI, compartmentalizing information and making sure it is context-aware so that when I ask a question into AI engines, I get back the data sources that I am entitled to see, and it builds that up into a response that is context-aware of who I am, what my security clearance is, where I am accessing it from, and what I am entitled to see, and it removes the rest.
Daniel Lai: That is the sort of stuff that we are now capable of doing in the data ecosystem for our customers, and that is certainly something that we see as a really bright future. We do not think that, as Kurt said, people will want multiple different products. We think that they will want one product to do all of that and connect those various data sources through to those various identities and manage that system.
Daniel Lai: That is really what we are building in the simplest of terms. How that goes to market is really there are those areas that customers that need to solve that problem for data integration. We have lots of data sets. We want to bring them together, then we want to apply some sort of form of security around it. Then there is that market which is we have some data, we want to share it, either internally within our systems or externally to our other supply chain or our other partners. Of course, then there is that example that I just gave you, which is something that we already do with a customer such as Viasat.
Daniel Lai: Those AI Guardrails about contextually where I can publish this information, what data sources I can go to, of course, that integration services about how we can do that for products such as Pexip, just OEM that out, and wrap it out as a little solution set so they can do that for their products. That is really our go-to market strategy. Now you can probably get a little bit of a better understanding of how those products come together to solve each one of those problems and how we take that to market. Of course, all of those issues are something that defense departments and supply chains have today, and we will see that are coming up more and more in the general commercial activities.
Kurt Mueffelmann: Yeah, I think what it really does also is it starts to pull together a message that we can really bring to market around the core of TDI, around policy orchestration. What we are doing is we are really bringing four, I would call, I am not calling modules, but solution sets where we know what data-centric security is through what we are doing with US DoD. You have heard some of the components that we are talking about with secure collaboration across Microsoft Teams, sovereign platforms with Pexip and Mattermost.
Kurt Mueffelmann: We will talk a little bit about AI in a second. I think the real key thing to partnering is this integration services. TDI is a very open architecture for us to work, and we really tie in things such as industry standards such as ACP 240. We look at ZTDF and a couple of the others that are out there today. We have the building block to really resolve a lot of these challenges that just are not being solved out in the market today.
Kurt Mueffelmann: So we look at this architecture as a policy control plane, really being the ability for us to play with anybody that is out there in the security market in interacting and being that trusted data integration across the enterprise. So one of those examples that we are talking about is the Spirion AI Guardrails. As Dan mentioned, we won award a couple weeks ago as Data Security Innovation of the Year. With all the AI products out there today, to actually be named a Data Security Innovation of the Year product is quite, I thought that was a really good tip of the cap to us, Dan. Can you take everyone through kind of the AI guardrails as how we look at it today?
Daniel Lai: Well, typically, and I do not want to get too technical here, but AI is built up of principle three components. There are the large language models, which everybody knows about your OpenAI, ChatGPT, your Claude. There are the MCP and the RAG, which are two components. One is called the retrieval augmentation and generating. That is where it pulls the data from multiple different data sources, generates it into an answer, and then applies it back to the LLM. The MCP is just what services can I call to actually do this? Do I need to use Word? Do I need to write a script? When you bring all those components together, it is about where you inject yourself to provide that contextual access. TDI can do that. I think that what that means is we act as a gateway between those components.
Daniel Lai: We inject ourselves either as the MCP or the RAG, and effectively, we can become context-aware. So before, when Daniel A asks the question, it says, "Who is Daniel A? What is he entitled to? What do I know about him? He is Australian citizen, he is security cleared up to this level, and he is accessing it from his office." It then goes down and says, "Well, what information sets is he entitled to? What is the question he has asked? I will build the answer only from those entitlement sets. Where should I publish this information? Do I take it out into a public forum, or do I only store it in a location that is secure?" That is an incredibly powerful opportunity in the market today. We have already seen issues of security in terms of AI.
Daniel Lai: We have got calls for guardrails to be implemented, and we have organizations that are already deploying this. So when archTIS looks at AI in total, we look at how can it increase our productivity, and you are seeing that through our cost management structures and what we are doing there to reduce our cost base and our people costs and how we increase productivity. We look at it, where does it need to be within our products to improve the users? The last one is, what is the opportunity in the market? This is our opportunity in the market. We have already initiated several proof of concepts for different commercially available LLMs that we want to look at in terms of how we can do this and take this to market early in the next year.
Daniel Lai: So this to us is a very exciting area, but it is stepping stones and we will build up on this base upon it. We talked a little bit about our customer journey earlier, and we are seeing that most customers' journeys start with: Where is my sensitive information? What have I got? What should I be doing with it? It often starts with implementing that through Microsoft in my Microsoft environment, my M365, my SharePoint Online, my Teams.
Daniel Lai: Then often these organizations have already leveraged Copilot in that framework and in their enterprise licenses, and they start enterprise-wide spreading out Copilot. We are seeing that in government, we are seeing that in corporations. And of course, then they are supplementing that with others such as Copilot and ChatGPT. But what we are seeing is they need one place to put a policy to control it and control it. That is the control plane that we are currently building. That is the opportunity we see in the marketplace. I hope that will be pretty cool.
Kurt Mueffelmann: Yeah, and that is the exciting part because it leverages off of TDI, right? It uses that as the core foundation, very similar to what we are doing with Pexip these days. I was up last week up in Washington, not only meeting with the US DoD, but I was fortunate enough to attend Advantage 26, which is put on by Everfox, which is a cross-domain provider. I met with Dave Rogers, their CEO. There are about 300 different people there, offices from every piece of the armed forces there. I will tell you, most people were very familiar with who we were. It was interesting to walk around with the archTIS shirt on, people saying, "Hey, I know you guys. You are the ABAC guys." We are known as the ABAC guys in US Defense. It is pretty neat to be walking around.
Kurt Mueffelmann: I also met with one of my old buddies, Teresa Carlson. Teresa used to run Microsoft Public Sector way back when. She is now the Corporate Vice President of Public Sector for Anthropic. We had a really good discussion around what TDI can do in the Anthropic markets and where that fits. Again, it goes to this extending the reach through partners. The two most recent announcements have been Mattermost and Pexip, which were really around securing collaboration within the MPE, or the Mission Partner Environment. It is a sovereign environment that really focuses on how do you take clearance-based video and chat and apply ABAC technology using TDI to see who can have permission into a meeting, or actually if some sort of security clearance changes during a meeting, who gets bounced for the meeting.
Kurt Mueffelmann: Very simple use case around who can see and who can't, but it's very difficult to execute at a real-time dynamic aspect. That's why we're looking at these partnerships, because we add that piece of policy control that leverages across the enterprise that really provides that trusted level of data integration for that. Alongside of that, we mentioned ACP 240 and ZTDF. One of the things we look at is one of the reasons we also went down for our NIST and FIPS certification, just starting to look to validate some of the encryption technologies that we have out there, looking at ways of continuing to further partner to bring more solution opportunities into the market that when we look at securing the US DoD, if we can bring NC Protect, that's great.
Kurt Mueffelmann: There's cross-sell opportunities into Spirion, talking to them about other solution sets around TDI and policy controls and the way that we handle that, talking about ACP 240 and FIPS, and ZTDF and everything. So it's how do you build off the existing account that's out there, and it's through the extension with partners and what have you. I think that's really exciting the way we drive that. With that, Dan, I think why don't we finish up with some priorities for FY 2027, and then we can open it up for questions.
Daniel Lai: Yeah. Look, obviously, the priority is to close the US DoD deal. It's a transformative deal. It's why we've invested where we've invested. Of course, it springboards that sort of accelerated growth model that we are looking for, and into those alliances that we know we want to achieve and we're already penetrating. We also need that continued growth here in Australia and in Europe. We are doing that through partnerships in Europe, and we've seen lots of activity there and interest based off the implementation that we've currently got with that alliance partner over there. We need to continue to invest in our roadmap. Obviously, TDI is the foundation of that and how we bring transform from a best-of-breed to a platform company with a control plane in it, which has a niche market and really provides value to those competitors in the marketplace.
Daniel Lai: If we can do that, we have a space which we can really push through in terms of that growth. Of course, we need to make sure that the Spirion product with our existing customer base, we start executing that cross-sell and upsell, which we've started to demonstrate that we can do. Of course, we need to obviously maintain our fiscal discipline as we move forward. The big news, of course, for this morning was that funding extension. I think that's been well-received in the market. I think people have had a positive response to that. Let's jump across to the Q&A for, again, our pretty strong quarter results.
Kurt Mueffelmann: Yeah. It was funny. The first question is: With a CBA loan deferral to April, what was the catalyst for the decision process? Why did it take the bank so long to confirm? As I looked at my iPhone at 4:00 a.m. this morning to make sure we had the notification from CBA as I finalized the 4C.
Daniel Lai: Well, it is really simple. Banks work at bank pace. They do not work at your pace. So, that is really the answer. Obviously, we always look at all of the things that we need to do, but we have those in motion. It is not necessarily something we can just go out to the market and tell you until these things have been confirmed, and that was unfortunately the process. Would I have liked it to have happened several weeks earlier? Of course.
Kurt Mueffelmann: Great. Let us see. Here is an AI question: Australia in particular wants AI guardrails. What is preventing them from integrating archTIS sooner than later? Is it a bureaucratic process, simply too slow, or the underlying technology?
Daniel Lai: It is a little bit of all of those things. I think that people are still coming to grips with what the risks are. It has certainly been highlighted over the past three months, and now they are starting to educate themselves about what is the best way of implementing those guardrails and how do they do that. I think that this is not going away anytime soon and that we are going to see investment in this over the next 12 months. But it is not something that a department can turn around and just click their fingers and get out there for an acquisition. They have formal processes.
Daniel Lai: They have to have formal statements of requirements, risk statements, and go through budgetary processes. Look, it is not like the commercial world, where someone is in charge, and they can have a budget to spend. It is a process. But what you do know from all the market indicators is they are now looking for guardrails on how to maintain and do contextualized access and control that AI implementation, so they get both productivity and security.
Kurt Mueffelmann: All right. Let's talk a little bit about the US DoD. Have you had any engagement with tier 1, 2, 3 contractors and suppliers to the US DoD, and you see them as an opportunity you will pursue over the next 12 months? I will take that one, because I have been up in DC three out of the last six weeks, and those are the exact people that I am meeting with on a daily basis. Last week, it was not only the Everfox Advantage meeting with some of the brass and some of the larger data-centric security companies that are out there, but you see the tier 1 primes out there. We call them the Beltway Bandits. You have to do business with them in order to succeed that are out there.
Kurt Mueffelmann: When Dan was up in the middle of October, beginning of the middle of October, we had quite a few meetings with the contractors. Again, typical meeting with the likes of the Microsofts, the Everfoxes, the large primes that are out there, the Pexips, the Mattermosts, the Copper Rivers. Just making sure that the relationships are sound, but also setting those breadcrumbs for what's next. People understand and see what's happening with the DoD. There was a good buzz when we walked around about that. People want to know what's next.
Kurt Mueffelmann: If we have those relationships in place, I think we can start to procure those next steps much faster, with a better foundation. Again, goes back to why we acquired Spirion. It provides a little bit of a foundation, a little bit more awareness, a little bit more of depth and breadth, into the market with US developers, US engineers, and US team members here, that help us bring that real strong presence of what we have in Canberra and archTIS in Australia over to the US itself.
Daniel Lai: Kurt, I might just add to that. Obviously, through this process, we have worked with the incumbents, system integrators in the US DoD and educated them on the product, trained them up. We had a license agreement some time ago to train them in the deployment of the product so they could prepare for deployment within the US DoD. That doesn't get unnoticed. Those large service providers such as Leidos and GDIT also have quite significant accounts outside of the US DoD, such as the Department of State, FBI, et cetera. This is an incremental program of once you are successful and you have started to build up a reputation within there, that network growth effect can come quite smoothly because people want to know what you've done in which department. They reference each other, and they have very similar environments and IT ecosystems.
Kurt Mueffelmann: As it relates to Spirion, do the people cost reductions create risk for scaling if you cannot find the right skills when needed?
Daniel Lai: Look, it's always a challenge. For us, what we've done over the past 12 months with the Spirion acquisition is cross-train everybody within the organization on the product, how they get implemented. We also are training our staff on the ecosystems that these things go into, such as Microsoft Azure, et cetera. That bit is building up a knowledge base of training material so that as we bring partners and service providers on board, we have the material to help them scale up and provide them with the training around the product so that we have a scale and growth pathway in the ecosystem. We're acutely aware of that.
Kurt Mueffelmann: Yeah, I don't think there'll be difficulty finding the right skills that are out there. Microsoft just offered exit packages to 65,000 people. We look at the business, obviously not at the Microsoft scale, but very similar. How do we leverage some of the AI technology to optimize some of the roles and responsibilities that are out there today within archTIS? We've done that across development and had some great success and seen really strong improvements in the productivity of the development team and the amount of just sheer code they can push out and the quality of code that can be reviewed by QA people that we don't need as many QA people anymore because AI is covering that off. We have that in the factory. When you look at synergies across Spirion, you don't need four or five IT people.
Kurt Mueffelmann: You don't need four or five accountants. We can start to leverage that and really start to tighten up how we really create efficiencies across the business through technology as well as synergies themselves. We need to scale in the right place. It's looking at how do we look at partners, people that understand partnerships, how they understand integrations into third parties, things that are going to advance our DSPO from a policy orchestration perspective, that's going to advance where we go from AI, that's going to advance the relationships across US DoD that we bring to the market. Again, it's the right people, and I think we will find the skills when and if needed. All right, Dan, let's see. Let's give you a technical one. How's that? Can archTIS protection be spun up on virtual machines, images, dev, test instances, et cetera?
Daniel Lai: Yes. That's the beauty of TDI being the foundation. It's a macro, micro platform, can work on a Raspberry Pi, can work in a deployed state. The beauty of being around for so long in the US Department of Defense ecosystem and how they have every use case under the sun, by understanding those use cases, you look for technologies that can address those use cases. You're not building technology looking for a problem. You're looking for technology that solves the problem and has that diversified ability to be deployed.
Kurt Mueffelmann: All right. I think we addressed this, but there are two questions about what evidence is there that cross-selling via Spirion is occurring.
Daniel Lai: Yeah, look, well, I think we've done that. We've put out a couple of announcements. I'm hoping we'll put out a couple more before the end of the year of demonstrations of that. Now, look, it's really easy to say we're just going to cross-sell and upsell. I think that's at the heart of the question. It's really hard to do. When you take on an acquisition, the first thing that you've got to do is make sure that your customer base has confidence in the new owners, that they're going to continue to invest in their investments. That's something that we've been very strong on, and we have engaged with them. We have also had to make sure that we're investing in that Spirion product to meet their needs.
Daniel Lai: Because they are not going to buy archTIS's NC Protect unless we can demonstrate that we are still investing in the Spirion product and how they integrate together. It is about building that program, that partnership with the customer, and being customer-led in all of those activities. That takes a little bit of time. We have been through, had 12 months to put ourselves into that position, and I think we have just started to see the seeds of us executing that.
Daniel Lai: A long way to go. But, we believe that the acquisition of that customer base that is already investing in this has done it for a reason, and that we can demonstrate to them that we are the right partner on that journey. Hence that strategy that Kurt has been talking about, where are you going, and what are you building with these products? That is a really important story. How do you help me as I evolve and adapt my business and also adopt AI? It is important that we tick all those boxes along that story and that we continue to execute and deliver to keep them and maintain that faith.
Kurt Mueffelmann: All right. There are a couple of other technology questions. I do not really want to go into those because they get a little bit too deep. If your question is not answered, please feel free to reach out to either Dan or me, and we are more than happy to respond. The last question of the night, Dan, or the morning, I should say, why do not investors understand or what do investors not understand most commonly about archTIS?
Daniel Lai: Look-
Kurt Mueffelmann: I think it is a great question.
Daniel Lai: It is. Look, there is a difference between, I think, potential and execution. I think we are now on the pathway of that execution. As we execute, we reduce that risk of potential. I think there is an apprehension in the market waiting for this big fish to drop. When that drops, that is the validation that I think a lot of investors will be looking at. That is something that is one of the reasons the US DoD is on our priority list to close. Because that level of validation gives confidence in the market for investors to look at us in a completely different light, particularly being in the US, in the world's largest defense department with that opportunity. Some of you would have already done your own research. The number of licenses that we close with this deal is only the beginning.
Daniel Lai: Once you are actually inside the US DoD and have been through that entire accreditation process, the testing, the use cases, and build up that sort of reputation and value, you are on the pathway. That is really important because you now have a moat against competitors coming in and trying to get you out. So it is a long lifetime value of the contract, and it is a significant growth pathway.
Daniel Lai: We know that we have spoken about the number of licenses being around that 100,000 mark, that the potential there is up to 1 million, 2 million, 3 million, 4 million. It just goes on. Of course, then outside of that, then there are those other departments that I have talked about that reference the US DoD for being a secure environment and what products do they use to secure their own M365 environments. It goes on. I really think that they are waiting for that validation point.
Kurt Mueffelmann: I think from an investor perspective, one of the interesting things is we may be known amongst the couple of hundred shareholders that participate in these types of discussions and respond or what have you. But in the global economy, people really are not aware of who archTIS is. That is no fault of investors or even Dan and I. It is a true fact that it is just very difficult and very costly as a micro-cap company to get the name out there. We have looked at taking a more aggressive approach by, again, getting on planes and going out and meeting with people, and it is starting to take effect. But again, it is a big world out there. We are starting to really get some good traction in the US from a defense standpoint within the confines of the Washington Beltway. We need to get further out there.
Kurt Mueffelmann: That takes time, effort, and money. We want to make sure that we do it right. We want to make sure that we have the right referral and references in place before we just go out and spend money. We want to be very capital efficient about the way we do that, and that is just a natural effect of being an Australian micro-cap company. Same thing in Europe, right? We have very little footprint in Europe. We are just not going to get there until we get some traction in the US itself, right, and get some validation. We have won at home, within Australian Defence. We feel like we are very strong there. Could we do more? Sure. There is a matter of technology changes, geopolitical type of government, what have you. But we are pretty well known in where we are within Aus.
Kurt Mueffelmann: We are getting better in the US, and that will just take the next step that we continue to take. From an investor standpoint, to me, it is all around awareness and what archTIS can bring to the market. By making these results that we have shown over the last quarter, making the headway from a revenue, an ARR, and from a capital perspective, that is how we build the business going forward.
Daniel Lai: Thank you.
Kurt Mueffelmann: With that, Dan, why do not I pass it to you for some closing comments?
Daniel Lai: Yeah, look, again, I am going to reiterate, we have had a very strong quarter. We have been very expense efficient. We continue those trends. We are starting to show you, to demonstrate the evidence that we are executing the strategy, and we do expect that to pay dividends. Now it is really about focusing on closing that US DoD deal and making sure that we all have a pathway going forward to transform the company and really tackle that US marketplace across the next 12 months.
Kurt Mueffelmann: Fantastic. For everyone, we have our annual shareholder meeting on 13 November. That will be virtual. You should have everything from an email as well as posted on the ASX. We will not be speaking to you until after the holidays. So Dan and I wish you and your family a happy holidays. Let us hope we have a nice Christmas present before the holidays. Great. Thank you very much. Have a great day. Thank you.
Daniel Lai: Thanks, everyone.
Operator: Goodbye
