Amid the global boom in demand for cybersecurity solutions brought upon by increased connectivity, Canberra-based tech company archTIS (ASX: AR9) is set to instantly expand to North America through the acquisition of Nucleus Cyber.
The acquisition will be funded solely by issuing AR9 shares with initial consideration of $6.25 million in stock and then a further $3.5m in AR9 shares if revenue milestones are met.
“This acquisition is transformative for archTIS. The acquisition of Nucleus Cyber expands our offering into the Microsoft business product suite and opens up new global sales and distribution channels and provides significant new revenue streams to the business,” said archTIS CEO, Daniel Lai.
“This forms a critical component of our global strategy of being the world’s premier provider of policy enforced access control platforms for securing and sharing digital information.
“We have known and worked with the Nucleus Cyber team for an extended period, and we look forward to welcoming them to the archTIS business and continuing to facilitate secure collaboration and information protection for our clients.”
Nucleus Cyber’s revenue is primarily generated by high-margin software subscriptions with a wide range of customers across government, financial services,healthcare and manufacturing industries. Making Nucleus attractive as an acquisition target was their recently-entered co-sell agreement with Microsoft where the tech giant will actively promote and sell Nucleus Cyber’s Protect. With the agreement having just started, archTIS expects significant growth in this revenue stream from 2021 where new customers will be secured via Microsoft.
Nuclear Cyber Protect offers security against insider threats across the Microsoft software suite, of which there are more than 100 million users of Microsoft Teams. It’s cloud functionality further protects business-critical content in cloud collaboration tools Microsoft Office 365 – SharePoint, Teams, OneDrive, Exchange, and Yammer, plus Dropbox, Nutanix Files and Windows file shares.
The newly accretive business-to-customer revenue will be independent of archTIS foundation services which provide Government security platforms, including a recently won $4.2m contract with the Australian Department of Defence.
Alfred Chan is an Analyst at Emerald Financial, specialising in ASX-listed small cap companies.
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