archTIS Limited

Good morning and welcome everyone. My name is Jane Morgan and thank you for joining us today for this webinar with Arctis Limited, a global provider of data-centric security solutions for the secure collaboration of sensitive information. listed on the ASX under the ticket code AR9. Just this morning, the company has lodged their quarterly report for Q2 FY2026, and today I am joined by both Daniel Lai, who is Arctis' CEO and Managing Director, as well as Mr. Kirk Muffelman, who is Arctis' Chief Strategy Officer and the U.S. President. Both presenters will be covering off the quarter's activities, the ongoing strategy and developments in the US market, and they're here to guide us through what's ahead for the 2026 calendar year. Following the presentation, we will have time for questions, so please use the Q&A function, which can be found at the bottom of your screen. Kurt, I'll hand to you.

Yeah, great. Thank you, Jane, and good morning, everybody. We're really excited, and thank you for attending today's presentation. And during today's session, we'll update you on some great happenings around our quarterly performance, provide an in-depth financial review, update the U.S. DoD opportunity, obviously the Sperion integration and how that's really progressing in a wonderful manner, and further discuss the go-to-market strategy around how we're growing and where we see the markets going into the future. So what I'd like to do initially is send it over to Dan and start off with some of the Q2 FY26 quarterly highlights. Dan?

Thanks very much, Kurt. Welcome, everybody, and thanks for attending this webinar. So I'm going to start from the bottom and then work my way around. Obviously, the big elephant in the room is updating you on the USDOD deal. The first thing that we announced this week was the USDOD custom development milestone was achieved. Now, that was work that the US Department of Defence requested for us to make amendments to our software so that it could be more deeply integrated into their environments and expanded to a broader customer base. We finished that software custom development and we've provided that back on time to the USDOD for their acceptance and evaluation. So we're very happy about that. We have one component left to do, which is a piece of integration with the third-party software, which is more configuration work. So we expect that to go fine through with flying colours. And that's all on track to be delivered as well. So the next step there, which I think is a great milestone, is that NC Protect has been deployed into the USDOD 365 environment. That is a... production trial so that the system integrator can make sure that it can manage that software in multiple different locations across the USDOD environments, which are located around the world. We have expanded the client base there for more trials in that sense to be done. We expect that to be a 30-day deployment trial with real live data. And that's really important because this is the final milestone before that we would see a license for largest users to be issued. So that's critical. It's something that we've been expecting and it's something that we see as an extremely positive sign. That combined with the software development gives you a very clear indicator that we have great confidence in this deal. The ARR for the company, obviously with the integration of Spherion, we've increased that ARR. It's up 308%, 16.3 million, a strong performance. And what's really important about that now is that our gross margins are still above 75%, which gives us good cash back into the business. But licensing revenue sits at around 83% of total revenue, which is good as well. Total funds available, $7 million, and we also announced that we had agreed to terms with an $8 million debt facility to make sure that we've got that runway with any variants of expectations of the delivery of this USDOD licensing deal that we're expecting. 76% gross margins, as I said. And, of course, the main activity for the last quarter has not just been USDOD, but other deals as well, and working out how we're going to cross-sell to that 150 clients in the US that we have acquired with the Sphere and Acquisition, integration of their teams, standardisation of the software development life cycles, and working through how we integrate the products as well to take this forward in a very strategic manner to pivot into this US market, which is 40% of the data-centric security market globally, and really start to ramp the business up. And, of course, that's what we're trying to achieve strategically, and we're looking for those short, medium, and long-term results. Over to you, Kurt.

Yeah, you know, I think the main financial aspects were really revolving around Spirion. And so when we look at that acquisition, it was really October 1st. It was the first quarter of operating together. And I've done 20, 25 different M&As, and actually it was one of the smoother ones that we've done. And if you look at the 4C, you'll see generally staffing costs are generally high in the first or second quarters that come out of such deals like this. And so we were fortunate enough to have a really good pre-acquisition understanding of where the business was. And as we'll talk about, we were able to cut some real solid expenses out of the business and start to look at where we get to a real runway of the business as we go forward. So if we dive a little deeper... ARR in the December quarter was 16.3, 308% increase over the prior comparative period. We know that ARR did drop from the prior quarter. We understand that there was churn from the superior on acquisition. We did a really good job at really digging into our understanding from a due diligence standpoint, and we knew what churn was forecast and what was taken into consideration and where we needed to be from the purchase price. So our purchase price is still under 1.25 of the current revenue, which is really attractive by any market analysis that's out there today. So we feel really good that we have our hands around where the churn rate goes on Spirion and where the go-forward revenue is coming from. Total revenue for the quarter was $4.6 million, and that was comprised of 1.5 from Australian operations, which is in line from the prior comparative period, and $3.1 million from U.S. operations, including U.S. Arctis and Spirion. And we continue to see really software licensing being really strong as a percentage of overall revenue. Software revenue was $3.8 million, and services and equipment was only $800,000. So, again, it's a real focus on where we want to take the business. Gross margin for the quarter, which is really showing where that strategy around driving software licenses came, really came in strong at 76%, a bit of an improvement of 73% from the prior corresponding period. And, again, it's that transition away from lower margin services, equipment, third-party software, and really driving the licensing that Arctis has from a proprietary standpoint. Operating expenses for the quarter, excluding one-off transactions and integration costs, yes, it did increase to $5.9 million for 1.5 in the December 2024 quarter. This increase, as I said, was anticipated. A lot of staffing in there reflects expanded headcount and operating capability aligned with the U.S. market expansion. Our one-off costs were a little bit over a million dollars and included the Spirion transaction and integration costs. However, at the end of the quarter and as part of the global integration plan to include Spirion, we really implemented a workforce and cost synergy realignment initiative, which expects to deliver over $4.5 million in operating efficiencies on an annualized basis. So we're really being strongly driven by where our operating cash flow goes. what our cash runway is and where we drive the business forward from an overall cost standpoint. Operating cash flow for the quarter was negative 4.1, reflecting the temporary elevated costs aligned with the Spiron acquisition, further U.S. market expansion, and the timing delays from the U.S. government delays from the government shutdown. The company closed the quarter, as Dan mentioned, with cash balance of $6 million and a total available funds of little over $7 million, and that does exclude the $8 million Regal Debt Facility. So overall, we feel that we have a really good handle on where our costs are going. We have a strong understanding of where our total ARR is going and locking that in to limit the churn and the loss of any customers as we move forward and really drive where we need to go from a strategic standpoint. So let me just turn it back to Dan to talk a little bit about how we're pushing the supporting the global scalability and growth of the business for the coming quarters.

And look, we've seen some Good traction, obviously. We discussed the momentum in the US. They renewed that 1,000 licenses. It had expired. They needed to do that to do a production trial for deployment of the product into a different co-cons as we call them, and that has happened. That's underway and we expect that to last approximately 30 days for that period of time for that trial to be done. And it's more so about how they manage it, what audit logs they can get back and make sure that they can maintain that software. Opposed to that, we expect to see some sort of licensing deal come through for the organisation. Importantly, what was really... an impressive milestone was not only seeing it being deployed, but the fact that they had such confidence in it, they were expanding those commands for it to be trialled across. And we were very happy to hear that. So we feel that there's strong indicators coming out of the USDOD at this point in time. In terms of the US expansion, the cost of synergies, Kurt's already been across that. I think that it's really important to understand that we're taking it very seriously, that we found more synergies than we expected, we acted upon them, and we're taking those type of actions to make sure that we're looking after that capital very tightly. Of course, the other aspect there is the cross-sell aspect. and upsell that we are looking at with these customer bases. We've already identified $2 million worth of opportunities in the first three months, which we have commenced starting to execute and engage, start to demonstrate. Obviously, there's a process there of training the US team into our product suites, how to present that, where it fits, and, of course, also that but vice versa. the opportunities that we're now finding in Australia where we can pitch the Spherian products, which is that discovery of that information and that labeling of the information for NC Protect then to be able to enforce that data-centric security process. And of course, out of that 150 global blue chip, it's really important that we market to them and the branding to them and they see a strategy not from a best of breed, but to an integrated platform future, that this is a long-term investment and we are their partner of choice for data-centric security along that journey to continue that growth. Kurt?

Yeah, I think what was interesting, so I spoke to our partners over at Copper River, and they were blown away that we were able to actually commit and deliver to the January 16th delivery of the customized software development. It was over the holidays, and they said we were one of the few vendors that had the ability to actually say we were going to do something and get it done. So that builds huge credibility. And that goes straight up the chain right up to the U.S. DOD. I know we were presented by one of our other partners associated with Copper River right up to the number two person at U.S. DOD that handles this within the IT operations. And, again, they pass down their thanks down to the level of individuals within Arctis for performing and getting that done. And that just doesn't stretch into the U.S. It stretches back into the development teams and the project management teams and everybody across the Arctis, you know, employee base in delivering that. It's a true team effort, which is really nice to see. It's nice to get those accolades when you're in the trenches. The other nice thing about being in the trenches was when you start to talk about that $2 million of cross-sell and up-sell, you start to look at what the scope and the breadth of that is. In looking at our pipeline and looking at the individual opportunities, there's one opportunity in there that has 30,000 users, which is fantastic. That's a significant opportunity for us to do. We're really tied into that. I think we did our fourth or fifth demo on that over the last month. So you really see the excitement around where you take that to the next step around going from discovery and classification up to enforcement and governance that NC Protect provides. But on the other side, we also had smaller organizations. We had a couple of small educational institutions that had 1,000 users. We had a small manufacturer of 500 users. So we really go up and down the scale of the Sperion 150 customers that Dan talked about and really driving that cross-sell, up-sell opportunity. So we see tremendous opportunity there as we continue to move forward. So, Dan, as we look at kind of kicking off calendar 2026, let's talk a little bit about where we're going with the market and where's the market going, you know, because it's still continuing to boom from a cybersecurity perspective. And, you know, when you start to look at the scope and the scale of the number of vendors and, you know, where we are in the market, you know, it sometimes becomes a little mind boggling. So I think it's good at the beginning of the calendar year to bring it back in to say, where are we and where do we compete and how do we differentiate ourselves in the market?

Yeah, well, this could be somewhat terrifying if you didn't have a plan. Luckily, we've got a plan. So, you know, there's probably about 12 major organizations out there which dominate the cybersecurity market. There's your CrowdStrikes, your Varonises, Microsoft, AWS, Cisco's, Palo Alto's, and so on. They're the big guys, the big dogs, as we like to call them. They control a vast amount of that security budget. But there's about 4,500... other vendors out there buying for visibility and usually filling a gap or is the best of breed product which has been adopted over time and is working it. And I think the real question that you've got to look at from your strategy is how do we differentiate? How do we partner and value add to those big players in a space where they don't have that capability and we can extend their value propositions to their customer bases as well as for us exploit their customer base for selling? And I think that that's really, really critical to have those differentiations. in your strategy. And I think with data-centric security, we're extremely well-placed to do that. And most importantly, leverage that, as I said, that cooperation in terms of selling and structures. And again, I think that we're well-placed to do that, but we'll go through a bit of a detail here. So why don't you talk a little bit about that strategy, Chief Strategy Officer Kurt Muffelman.

Yeah, so I think what's really interesting, though, is when you start to look at what's around us, right, and there's a lot of activity going on, right? There's a lot of M&A. There's a lot of roll-ups. There's a lot of money coming into the space. And of the $300 billion that are out there today, you know, as an Australian micro-cap, we can't compete with that. We can't be all things to all people. So we really look at where we target our business and market opportunity around data-centric posture management data loss prevention and data access governance. That's about an $11 billion market that's out there today. So we're trying to really scope down of where we compete and how we do that. And when we start to look at where that M&A activity, where market valuations come in and everything, you know, companies that are driving, you know, right around $100 million of U.S. in revenue, you know, there's some massive transactions that are out there today. One of them includes the Israeli firm, Syera. They just received $400 million in a December raise, and that's implied valuation of $9 billion. They They sound just like huge numbers, but again, $9 billion valuation for $100 million in revenue. You do that multiple of revenue, and it's just mind-boggling. Big ID, U.S. firm, $1.25 billion valuation, $100 million in revenue. Security AI, they just got acquired by Veeam for $1.8 billion. So that reinforces really that institutional conviction and scalable data-centric platform. And we need to continue to execute our strategy, expand, obviously, where we're going with the U.S. DOD and the government, enterprise adoption, and really create that pathway towards where we believe we can drive the business. Ultimately, our available market opportunity is not defined by how many feature sets we can build or how many adjacent categories we can claim. It's really all about how we focus on complementing that hyperscaler platform, remain essential to large market consolidation, and really drive those partnerships in building what we think is really strong in the message that's out there today. And so from a strategy standpoint, we start to focus on that modern data fragmentation that, you know, the DSPM, the DLP, and the DAG markets, they're still big at $11 billion. So we're trying to even be really focused on that center intersection of all those three. And, Dan, you want to talk a little bit about what that entails?

What that's really about is that as a business today, I exist in a hybrid environment. I've got AI driving my data usage. I've got IoT. I've got data analytics. I'm using SaaS platforms such as Salesforce, which is taking my information from my on-prem to the cloud. I might be using different cloud vendors for different infrastructure purposes or different services, digital services. So I exist in a hybrid world. And what's really difficult about this is how do I extend my current investments to maximize those investments without having to replace all the functions that I've already got and the capability that already exists? And the way of doing that... is essentially about creating a fabric between all of those points. How do I get visibility of my data? What are the threats? What is sensitive? How do I label that? How do I protect it? How do I prevent data loss prevention? And how do I do access and governance? And most organizations, they have a myriad of different products and aren't consolidated into any one vendor because, quite simply, not one vendor can do it all. And where they've all got vulnerabilities is they do that at the application layer, the network layer, but they don't do it to the data object. And this is where our competitive advantage is. And with the introduction of TDI, Trusted Data Integration Platform, from the acquisition of Directive, we now can become that fabric which enhances that value for the customer and provides a single point to manage and control and orchestrate policies across their entire security ecosystem to give them a zero-trust fabric. That's really key.

And I think the way we really drive that across the product lines is through policy. We've always talked about policy-based orchestration. And so when you look at data-centric policy orchestration, it really unifies these three different markets through a data control plane, as Dan talks about. It really abstracts the business and regulatory intent in the policy, evaluates the policy in real time. It drives that attribute-based access controls that we know we have out there. And the result is really this closed-loop security in real time, consistent decisions, and really turned fragmented controls into a single operating control plane across all data, not just unstructured that we've been historically, but across all types of data that are out there today. So, Dan, can you talk a little bit about and explain maybe what the control plane is? Because that will be a big vernacular aspect that we bring into the business as we move forward.

Well, we see this race from all of these companies, Microsoft included, to be what they call the control plane. We see it with Varonis. We see it with BigID. We see it with Sayera. We see it with Zscale. However, what they're really talking about is if you put all of your information into my cloud or my product suite, you can have a control plane. And as I just said, we're living in a hybrid environment, and what they're not doing is that to the data. That's really hard to do. So we're not going to go out there and compete with CyberArk or Palo Alto or Sierra. What we're going to do is integrate with them and extend their capabilities across that hybrid environment by providing that policy. But if you're in a Microsoft environment, our platform might call and produce a policy to run NC Protect. or it might take the CyberArk identity as a trusted identity and then put that into that process for SharePoint Online protection, but also then extend that out to a data set in an AWS cloud environment. So we become the fabric that integrates all of those products that already exist to leverage that investment for our clients, but also has the ability to integrate into any data source any device, any structured data source, AI particularly, which is really important with the advent of agentic AI and the usage of that. We're seeing now employees coming to the table and bringing their digital twin as part of the interview. So this is changing very rapidly. And how do we protect that intellectual property and also share that information with other organisations and still protect it? That's the play here. And I think we've got a very strong play.

And I think what that does is it takes kind of where we are with best-of-breed products that are out there today across a number of different areas and pulls it into this data-centric or data security policy orchestration, the control plane. And the individual point solutions, we address individual discrete problems such as data discovery, classification, enforcement, customers looking at ways of requiring unified layers, translating security, looking at what the business intent is and how you pull that all together. And really this transition expands Arcus' addressable market, strengthens our strategic relevance within the hyperscaler without competition. It drives further government ecosystems across, you know, playing well and nicely in the same sandbox and creates that foundation for that durable platform level creation over time. And Dan, maybe you can talk a little bit about how the move from best of breed to platform, you know, is something that as we start to look at where we go over, you know, the coming horizons of the business itself.

Well, all of this sounds very highfalutin and, you know, when will that be? It sounds a bit like it's far out. It's actually not. What we've been doing is collecting companies that give us a best-of-breed solution, and we've done that for any data-centric security problem. So we can now discover data, we can label data, we can actually then integrate it and provide enforcement controls, which is where our competitive advantage is. We can do that using directive as the foundation and adding our policy-enforced ABAC controls into that platform. We now have the foundations to rapidly build out a platform offering for our customers. And, you know, the use cases that we did for BAE about integrating multiple parties and consolidating that information for manufacturing supply chain, the deployments that we're doing currently in the military for allied force integration, they're all providing the input into this and the referenceability for the market. The acquisition of Spheron also gives us commercial clients to explore with these synergies and strategies. And we're expecting before the end of the financial year that we're going to have a minimum viable product for that platform to exist off and integrated with things like MC Protect and Spherion. Now, what does that mean for execution for short-term revenue, medium-term revenue, and long-term revenue where we believe we can really disrupt the market and become, you know, coexist with the big dogs and provide value add? and really ramp up the ARR. Well, really, that comes down to these three horizons. And, Kurt, you can talk about some of the opportunities here, but it starts with things like the USDOD, winning NATO and Japan to get that referenceability and build along with them solutions to implement that strategy with them. Kurt?

Yeah, I think, you know, what you find is that, you know, a lot of companies come out with these grandiose strategies, but they forget where they need to be and where they are, right? We're a public company. We need to report back to shareholders. We need to be very concerned about where our expenses go, our total cash runway. And, you know, our strategy, we're structuring it across these three horizons that really address immediate needs around, number one, defending and extending the base. We now have 200 customers that we can go in. We can do upsell, cross-sell. We obviously have some strong opportunities with the U.S. DOD, NATO, and other coalition forces. So we feel like we can continue to drive really aggressive top line, be very conservative from an expense standpoint, and really try to drive where we need to be in a business. Being in a competitive sector that we are, we need to look out where we go. And that next stage or next horizon is really taking that and building, as Dan said, the TDI into a policy orchestration engine, but going through not only that from a technology standpoint, because it's easy to get lost in that, but taking what we've learned and taking it to the next level, expanding where we're going, taking that initial USDOD opportunity and expanding it broadly into a broader 3 to 4 million USDOD licenses that are possibly out there today, continuing to work with the Microsofts, continuing to work with organizations that are coalition partners. We've had prior successes in the global div supply chain. How do we take that and drive that together? And then Spirion brings a whole different opportunity around regulated industries across state and local education, across healthcare, which is where one of our big pipeline opportunities is coming up. When we take that and take that into financial services and regulated industries there, you start to see where we can take that over the next, between now and the next 18 months, and then work towards that repeatability and commercialization that takes us to scale across the platform of where we drive that. So we think that there's some good opportunity, there's some good tailwinds behind us around zero trust mandates, driving that urgency, the compelling events around what customers are looking for. You know, we're hearing that all the time. We're looking at how we take that and bring this to a simplified market opportunity that really leverages where we want to go, be strong today, but drive towards the future to where we can start to look at and expand some of those market opportunities of valuation and Driving shareholder value, which is one of the key opportunities that we need to consider on a daily basis. Wake up every day and say, what are we going to do to drive shareholder value and build the business, and how do we maximize where our shareholders need to be as we go forward? Dan, any summaries on that?

No, look, I think that Horizon 1 is sell what we've got today. We're selling those best of breeds. We're doing that cross-sell. Horizon 2 is really about that orchestration, TDI sales. We know we've got a number of opportunities in the market, and it pays the way for that to become Horizon 1 pretty quickly. And that's really the progress that we want to make. And, of course, this Horizon 3 is about that interfacing to those large big dogs we've talked about, your Bronises, your Sierras, your Zscalers. And, of course, we've already got that relationship with Microsoft. So we see that as fueling the fire, not only across defence and intelligence, but also expanding us back into those commercial environments. Once we get that success there, I think it's going to really start to roll. So really important that we get the foundations right now, we get the strategy and the focus right now. I think the other part of this strategy is it really keeps you clear on what you're not developing, where you're not competing. and where you do have to compete and win. And I think that that brings us back to the focus that Kurt talked about, which is going to be key for our success as a small player and growing to get that growth strategy really, really running.

Great. Why don't we turn it over to some Q&A, Dan. So, you know, we were talking a little bit about product strategy. And, you know, the big thing that's on everybody's, you know, front of mind is AI. So, can you talk a little bit about, you know, how Arctis is using AI in product development? So, I think this is a two-phase question. How are we using it in product development, I think, to become more efficient? And how can we use that as market opportunities to sell more product and where we would be securing AI into the future?

Okay, I can do that very quickly. So part of the integration with Spheron was to get a corporate AI from the development platforms and increase productivity from our developers, but also particularly in making sure that our testing and quality assurance is being, you know, Higher productivity and higher levels of assurance in that particularly against security frameworks and security code and all of that sort of thing So we're not only just using it in the business at all levels We're experiencing that levels of how do we integrate this securely and we are eating our own dog food first So, you know one of the great things about directive. It was a really early product to secure let's just say, code from AI, particularly for defence environments. So it has been deployed to do that, exactly that. So we have our demonstration being built today for how it would work with agentic AI. And the big challenge for adoption in most organisations are twofold for AI. The first one is compute capacity, and the second one obviously is security. There's no questions about the productivity gains people get. It's about how do I make sure that the productivities I get don't undervalue the business through a data spill. and that's the challenge that companies are looking at from the adoption. We certainly have already adopted it in our innovation frameworks, and we are building demonstrators much faster than we have ever done before to demonstrate the value of our products using AI.

Great. Why don't we jump into this? A couple of questions around cash flow and the raise potential and what Regal facility adds to that. Could you interpret the Regal facility, because you talk about non-dilution funding and where that goes and how does that come across versus what a traditional cap raise may look like?

Yeah, look, I think we always keep all options as a board on the table for making sure that we have runway as people, as shareholders are referring to. Obviously, when we close some of these big deals that are in the pipeline, it's fantastic that you get a lot of cash in. You can do multi-year deals, you get a lot more cash in and you solve those issues and you don't dilute the shareholders through any raises. There are a number of non-dilutionary options out there, including the Regal Debt Facility, which we've agreed to terms on, and there's also other options as well. So we're looking at to balance dilution versus strategic investment from raisers, and if we have a partner that really wants to come and is going to be a long-term shareholder and can help us grow the businesses, we'll obviously look at that too. But at this point in time, we've announced that debt facility because it is a non-dilutionary way of extending our runway and ability to And we are just as frustrated as shareholders trying to pin down the U.S. DOD in a country. And I think everyone is clearly aware of the turmoil that's going on in the U.S. at the moment. And a different day changes a different decision from a president which can back flip on a decision. It creates uncertainty. The business environment has uncertainty. That's the nature of the beast. So we're looking to protect that runway. However, the indications that we are getting from our customer is that this is the timeframes that we're – and that's all we can relay to you, and that's the expectation from us in terms of when we will get this deal done.

So when we talk about the USDOD, there was a question about, do you see any licensing in the next 30 days? Because you talked about – different commands adding on and using some of the custom code that was delivered just recently and how they're going to go out and test it. What does it look like over the coming weeks or months from a licensing standpoint in your estimation?

I'll talk people through that whole actual life cycle, if you like. You know, the first thing that you do with your customer is socialisation and problem identification. Tick, we've done that. Compelling event established. Tick, we've done that. In fact, not only has the President mandated zero trust across the federal government, the Department at War CIO has mandated and provided a date that this must be accomplished by, which is 2027. So they've got real motivators to solve this problem. We know that our product has got a sponsor who has got budget and that we have defined the use case. We've done the proof of concept. We've done the customer identification. And in this case, that customer identification are those commands. We've done the security accreditation process. We've done the custom software development. We've done the licensing purchase for the trial. And that is where we are today. a 30-day production deployment exercise to those different commands, and that's what is being conducted. So do I see licenses happening in the next 30 days? No, I don't, because we've got 30 days of that process to go through. I expect something to happen shortly after that. And, of course, given that there's stability in the US environment, the political environment, I'm saying there, and then I expect us to be deployed, and then I expect us to be able to commence conversations on that 120,000 licences that we expect to come through.

Yeah, and I think, you know, having feet on the ground here in the U.S. and having a little bit more, I think, insight, you know, you hear these stories about a second government shutdown and what have you. The first government shutdown, it hurt more around the timing of getting things such as security certifications or what they call the STIG finalized. All of that blocking and tackling and ticking of boxes is done. The government shutdown should not affect any funding because we're dealing with frontline warfighter networks. We are actually right in the COCOMs themselves, and those don't get affected by government shutdown from a funding perspective. Where a government shutdown could affect something is if someone needs to come back and said, hey, you need to revalidate this, what have you, and the person that's doing that revalidation is furloughed because of the government shutdown. I don't expect that to happen. Now, again, sillier things will and have taken place before around government shutdowns. But number one, I think it's a stretch to have another shutdown. I don't think the politicians within the U.S. can go through that. They can't go through that for their constituents on either side of the aisle, so I think that will be a big challenge for them. And we've gone through a lot of the administrative stuff that would not be affected by a second government shutdown, and we know that the funds are there from a flow-down standpoint. We've seen them, and that's what we've been looking at as we move forward around the purchase around extending the licenses themselves. So I guess, Dan, last question I thought would be good, and this is kind of an interesting one. So we're at the beginning of 2026. Where do you see or hope to see Arcus at the end of 2026? Look, you know, I...

Obviously, where I see the business is that we're cash flow positive. We're starting to build that EBITDA up. I would love to see very, very strong new logos in that business with strong, sticky ARR, all the things that you're looking for, high gross margins, all of that sort of stuff. But I really think that what we want to be able to do is move out of that really... survive phase where we sort of have been burning some capital for the opportunity to arrive and i think we'll have transcend that into that we've got our own destiny in our hands because we have had that success of those deals driving and expanding the growth of the business so so really that that's where i see the business at the end of this 12 months you know you've seen the plan that we've just put up it is an 18-month strategy these are not long time frames Technology moves far too quickly for us to have big five-year plans and all the rest of it. AI is moving quickly. These are organizations moving quickly. And part of this is that exploitation of those strategic alliances. And that's something by the end of the year that I really want to see, that we have this platform base. and we're starting to be being sold and referenced by our alliance partners, those big dogs, and we're starting to access their customer base. And then I think in 2027, it's about that growth story, a really strong growth story. And that's where I hope to see the business.

No, great. Yeah, I think it's, you know, the industry is moving very quickly. You see a lot of consolidation. You see a lot of money coming into the business. So we need to stay ahead of that curve. We need to drive, you know, this recurring ARR. We need to get ARR moving in a much more aggressive fashion. We can't be solely dependent on the U.S. DOD deal, right? We know that 8,000 users is not going to move the needle. That's not our expectation. What we do expect 8,000 users from a licensing standpoint is lead into a broader enterprise agreement. It also brings us back into how do we address what we're doing at the Australian DoD? Where do we go with other coalition forces, whether it's in the UK, Japan, Taiwan, Korea, across Western Europe and what have you? Going back and leveraging that back into the various defense industrial base partners that we have and look at the primes of the Lockheeds, the Boeings, the Raytheons, and carry that across into some of the prime delivery vehicles that are out there from a partnering standpoint. And then remember, we still have Microsoft out there. And there's been a lot of great meetings going on with them. We need to continue to drive that and really push that. I think if we can accomplish those kind of areas across 2026, maintain costs, drive towards where we're going to be from a strong business perspective around cash, making sure our investments are providing returns, making sure that we have an understanding of where we're going from our overhead and operating standpoint, I think that would be a good year and continue to drive that forward.

So, Dan, any closing comments? I want to be in that top right-hand quadrant where people who go to those research organisations such as Gartner and Foster, they're saying, these are the guys. And you want your customers to be saying, these are the guys. And if we can get that by the end of 2026, happy days. No, I'd just like to thank everybody for attending. It's been a really dynamic last three months in terms of the integration and the repositioning, formulating a combined strategy, setting the sales targets and making sure that the sales force is executing and that being supported by the technical resources involved. and then getting up to speed on the whole, I guess, the suite of the products that we now have. It's now going to be probably all about focusing on that Horizon 1 and generating that ARR and revenue and setting the foundations with that Horizon 2 for that control plane to be established.

Great. Well, thank you, everybody, for attending. I know Jane from JMM will have the recording available, and we're going to distribute that out. And so we'll be able to follow up on that. And please feel free to reach out to us through investors at Arctis.com. So at this point, I'll turn it back to Jane for any closing comments.

Absolutely. Again, thank you, gentlemen, for the insights today, and thank you, everybody, for joining us. As Kurt and Dan have just mentioned, if we do miss any of your questions, reach out via the contact details, which can be found on the bottom of our ASX releases. But we look forward to hosting you again next time.

Thanks very much. Thank you. Have a good day.