Why the Archtis (ASX:AR9) share price opened 17% higher today

Archtis Ltd (ASX: AR9) shares were on the move today following the company’s release of its financial results for the half year ending 31 December (H1 FY21). On market open, the Archtis share price surged 16.67% to an intraday high of 35 cents. However, at the time of writing, Archtis shares have retreated back to 30 cents, flat for the day so far.

Today is also the first day of trading for Archtis shares since the company requested a trading halt on 22 January. This was pending the release of the outcome of its proposed application to the Supreme Court of Western Australia. The application was related to Archtis’ “inadvertent failure to lodge cleansing notices … in relation to various issues of shares during the period from September 2020 to January 2021”.

Let’s take a look at what the cyber security software solutions provider reported today. 

What did Archtis report?

The Archtis share price rocketed higher in the opening minutes of trade after the company reported total revenues for the half year of $1.11 million. That’s up 358% from the $242,00 reported in the first half of the 2020 financial year. Recurring revenues ramped up 355% to reach $459,000.

Earnings before interest, tax, depreciation and amortisation (EBITDA) came in at negative $941,000, an improvement on the negative $1.80 million reported in the prior corresponding half.

The company reported a 585% increase in its gross margin to $810,000, up 585%. Its cash balance, following an $8.4 million capital raising during the half, stood at $12.1 million as at 31 December, up 398% from H1 FY20.

Looking ahead, Archtis said its recently finalised merger with Nucleus Cyber as well as its $4.2 million Australia Defence contract win have helped position it well for additional revenue and licencing growth in the year ahead.

Commenting on the results, Archtis CEO Daniel Lai said:

Our prior half year successes will allow us to leverage and drive significant investments towards the expansion of sales distribution and identified market growth opportunities across the next six months and beyond. Our global mission to safeguard the world’s most valuable information is playing out in all regions.

Archtis Chair Miles Jakeman added:

We are well positioned to execute on the Board strategy of increasing customer adoption on a global basis through an annual recurring revenue / software licensing model that drives significant margin and predictability over the coming quarters to create shareholder value.

Among the company’s leading goals for the remainder of the 2021 financial year is to create a United States-based federal and defence-focused business unit.

Archtis share price snapshot

The Archtis share price reached an all-time closing high on 24 August of 52 cents. Whilst having dropped to today’s level since then, the Archtis share price remains up around 205% over the past 12 months. By comparison, the All Ordinaries Index (ASX: XAO) is flat over that same time.

Year to date, Archtis shares are down 3.23%.

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Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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