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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Arqit Quantum Inc | NASDAQ:ARQQ | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
-1.80 | -5.82% | 29.13 | 29.30 | 29.49 | 30.80 | 26.10 | 29.27 | 616,000 | 22:00:00 |
Recent Operational Highlights
Management Commentary
There is increasing market awareness of the need for Post Quantum Cryptography by cyber security technology vendors and customers. Arqit’s technology has been selected by several important OEM partners and customers and has been well received in on-going government evaluations. Important new industry voices are amplifying the suitability of Arqit’s Symmetric Key Agreement Platform:
Independent market research suggests that around a third of respondents are actively implementing post-quantum cryptography or are planning to do so in the next twelve months. Although the pace of market adoption has lagged our expectations, the traction we are seeing in defence and telcos is supportive of this research.
As a result of growing market adoption and improving customer engagement, Arqit expects to begin generating more significant and consistent revenues by the end of the first half of the 2025 fiscal year.
The imperative for stronger encryption emanating from organizations such as The White House and NSA is resonating with the marketplace. The benefits of symmetric key agreement encryption versus alternative methods of enhanced encryption are being recognized as well. Increased market awareness and recognition of the efficacy of SKA are favourable to prospective demand for Arqit SKA Platform™.
Arqit’s collaboration with Intel and awarding of the CTO Choice: Outstanding Mobile Technology Award at the Mobile World Congress support our belief in the prospective demand for Arqit SKA Platform™. Initial discussion to public announcement of integration with Intel Xeon Scalable processors occurred in less than three months – which Arqit believes demonstrates belief and intent by a market leader in chip technology in the need for and the efficacy of Arqit SKA Platform™.
As previously announced, Arqit is focusing its resources on delivering its applications NetworkSecure™, TradeSecure™ and WalletSecure™. The end customers for these products are broadly governments, network operators (e.g. telcos) and financial institutions. Each end customer base is of scale and financial wherewithal. However, these organizations also are deliberate in matters of adopting new technology solutions. Our revenue generation for the first half of fiscal 2024 is not reflective of the depth and breadth of engagements which Arqit has with numerous potential end customers. Several expected upgrades to existing contracts and several expected new contracts, all meaningful to revenue growth, which were expected in the period slipped into the second half of the fiscal year. We take comfort from the renewal of all contracts that were due to expire during the period and increased commitments by several of our existing customers.
Arqit continues to focus on minimizing its cost structure as we work toward increased revenue generation. The additional cost reduction initiatives commenced in early May reflects management’s commitment to taking necessary measures to give Arqit the runway to succeed.
Commenting, David Williams, Arqit Founder, Chairman and Chief Executive Officer said: “While revenue generation lagged our expectations, Arqit has made significant progress in the period in making new installations with government, telcos and financial services customers. Conversion of these engagements to significant revenue is our relentless focus.
We see additional opportunities for end customers to consume our product through our collaboration with Intel. We are excited about this recent development which builds upon our other OEM integrations, distribution and reseller relationships.
My conviction in the prospects for Arqit remains high. The purchase of shares by D2BW Limited, an entity I own along with my co-founder, David Bestwick, in April reflects our conviction that Arqit’s SKA Platform™ is the solution for stronger, simpler encryption.”
First Half of Fiscal Year 2024 Financial Highlights
The following is a summary of Arqit’s operating results for the six month period ended 31 March 2024. Comparison is made, where applicable, to the comparable period ended 31 March 2023.
________________________1 Administrative expenses are equivalent to operating expenses.2 Adjusted loss before tax is a non-IFRS measure. For a discussion of this measure, how its calculated and a reconciliation to the most comparable measure calculated in accordance with IFRS, please see “Use of Non-IFRS Financial Measures” below.
Conference Call Information
Arqit will host a conference call at 11:00 a.m. ET / 8:00 a.m. PT on 20 May 2024 with the Company’s Founder, Chairman and CEO, David Williams, and CFO, Nick Pointon. A live webcast of the call will be available on the “News & Events” page of the Company’s website at ir.arqit.uk. To access the call by phone, please go to this link (registration link) and you will be provided with dial in details. To avoid delays, we encourage participants to dial into the conference call fifteen minutes ahead of the scheduled start time. A replay of the webcast will also be available for a limited time at ir.arqit.uk.
About Arqit
Arqit Quantum Inc. (Nasdaq: ARQQ, ARQQW) (Arqit) supplies a unique encryption software service which makes the communications links of any networked device, cloud machine or data at rest secure against both current and future forms of attack on encryption – even from a quantum computer. Compatible with NSA CSfC Components and meeting the demands of NSA CSfC Symmetric Key Management Requirements Annexe 1.2. and RFC 8784, Arqit’s Symmetric Key Agreement Platform uses a lightweight software agent that allows end point devices to create encryption keys locally in partnership with any number of other devices. The keys are computationally secure and facilitate Zero Trust Network Access. It can create limitless volumes of keys with any group size and refresh rate and can regulate the secure entrance and exit of a device in a group. The agent is lightweight and will thus run on the smallest of end point devices. The product sits within a growing portfolio of granted patents. It also works in a standards compliant manner which does not oblige customers to make a disruptive rip and replace of their technology. Arqit is winner of two GSMA Global Mobile Awards, The Best Mobile Security Solution and The CTO Choice Award for Outstanding Mobile Technology, at Mobile World Congress 2024, recognised for groundbreaking innovation at the 2023 Institution of Engineering and Technology Awards and winner of the National Cyber Awards’ Innovation in Cyber Award and the Cyber Security Awards’ Cyber Security Software Company of the Year Award. Arqit is ISO 27001 Standard certified. www.arqit.uk
Media relations enquiries:
Arqit: pr@arqit.uk
Investor relations enquiries:
Arqit: investorrelations@arqit.uk Gateway: arqit@gateway-grp.com
Use of Non-IFRS Financial Measures
Arqit presents adjusted loss before tax, which is a financial measure not calculated in accordance with IFRS. Although Arqit's management uses this measure as an aid in monitoring Arqit's on-going financial performance, investors should consider adjusted loss before tax in addition to, and not as a substitute for, or superior to, financial performance measures prepared in accordance with IFRS. Adjusted loss before tax is defined as loss before tax excluding change in fair value of warrants, which is non-cash. There are limitations associated with the use of non-IFRS financial measures, including that such measures may not be comparable to similarly titled measures used by other companies due to potential differences among calculation methodologies. There can be no assurance whether (i) items excluded from the non-IFRS financial measures will occur in the future, or (ii) there will be cash costs associated with items excluded from the non-IFRS financial measures. Arqit compensates for these limitations by using adjusted loss before tax as a supplement to IFRS loss before tax and by providing the reconciliation for adjusted loss before tax to IFRS loss before tax, as the most comparable IFRS financial measure.
IFRS and Non-IFRS loss before tax
Arqit presents its consolidated statement of comprehensive income according to IFRS and in line with SEC guidance. Consequently, the changes in warrant values are included within that statement in arriving at loss before tax. The changes in warrant values are non-cash. After this adjustment is made to Arqit’s IFRS loss before tax of $16.1 million, Arqit’s non-IFRS adjusted loss before tax is $16.1 million, as shown in the reconciliation table below.
Six month periodended 31 March2024$’000 | Six month periodended 31 March2023$’000 | |||||
Loss before tax on an IFRS basis | $ | (16,105 | ) | $ | (21,836 | ) |
Change in fair value of warrants | $1 | $(12,910 | ) | |||
Adjusted loss before tax | $ | (16,104 | ) | $ | (34,746 | ) |
The change in fair value of warrants arises as IFRS requires our outstanding warrants to be carried at fair value within liabilities with the change in value from one reporting date to the next being reflected against profit or loss in the period. It is non-cash and will cease when the warrants are exercised, are redeemed, or expire.
Other Accounting Information
As of 31 March 2024, we had $26.5 million of total liabilities, $8 thousand of which related to our outstanding warrants, which are classified as liabilities rather than equity according to IFRS and SEC guidance. The warrant liability amount reflected in our consolidated statement of financial position is calculated as the fair value of the warrants as of 31 March 2024. Our liabilities other than warrant liabilities were $26.5 million, and we had total assets of $41.8 million including cash of $23.3 million.
Caution About Forward-Looking Statements
This communication includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical facts, may be forward-looking statements. These forward-looking statements are based on Arqit’s expectations and beliefs concerning future events and involve risks and uncertainties that may cause actual results to differ materially from current expectations. These factors are difficult to predict accurately and may be beyond Arqit’s control. Forward-looking statements in this communication or elsewhere speak only as of the date made. New uncertainties and risks arise from time to time, and it is impossible for Arqit to predict these events or how they may affect it. Except as required by law, Arqit does not have any duty to, and does not intend to, update or revise the forward-looking statements in this communication or elsewhere after the date this communication is issued. In light of these risks and uncertainties, investors should keep in mind that results, events or developments discussed in any forward-looking statement made in this communication may not occur. Uncertainties and risk factors that could affect Arqit’s future performance and cause results to differ from the forward-looking statements in this release include, but are not limited to: (i) the outcome of any legal proceedings that may be instituted against the Arqit, (ii) the ability to maintain the listing of Arqit’s securities on a national securities exchange, (iii) changes in the competitive and regulated industries in which Arqit operates, variations in operating performance across competitors and changes in laws and regulations affecting Arqit’s business, (iv) the ability to implement business plans, forecasts, and other expectations, and identify and realise additional opportunities, (v) the potential inability of Arqit to successfully deliver its operational technology, (vi) the risk of interruption or failure of Arqit’s information technology and communications system, (vii) the enforceability of Arqit’s intellectual property, and (viii) other risks and uncertainties set forth in the sections entitled “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements” in Arqit’s annual report on Form 20-F (the “Form 20-F”), filed with the U.S. Securities and Exchange Commission (the “SEC”) on 21 November 2023 and in subsequent filings with the SEC. While the list of factors discussed above and in the Form 20-F and other SEC filings are considered representative, no such list should be considered to be a complete statement of all potential risks and uncertainties. Unlisted factors may present significant additional obstacles to the realisation of forward-looking statements.
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