Industry Overview - The quantum computing market was valued at $713.4 million in 2022 and is projected to grow to $6.5 billion by 2028, with a compound annual growth rate (CAGR) of 48.1% [1] - Significant investments have been made by governments, including €100 million by the European High Performance Computing Joint Undertaking and $844 million by the National Science and Technology Council in the U.S. for FY23 [1] Company: Honeywell International Inc. (HON) - Honeywell has developed the world's most powerful quantum computer with a quantum volume of 64, which was twice as powerful as alternatives at the time of its announcement [3] - The company utilizes Microsoft's Azure Quantum to enhance its applications in materials and chemistry sciences [3] - In January 2024, Honeywell raised $300 million for its quantum computing subsidiary, Quantinuum, which is valued at $5 billion [4] - For Q4 2023, Honeywell reported earnings per share (EPS) of $2.6 and revenues of $9.44 billion, aligning with market forecasts [4] Company: Arqit Quantum Inc. (ARQQ) - Arqit focuses on encryption services and offers platform-as-a-service (PaaS) for secure communications using quantum computing [5] - The quantum cryptography market is expected to grow from $128.9 million in 2023 to $455.3 million by 2030, at a CAGR of 19.8% [5] - For FY23, Arqit reported an operating loss of $84.4 million and had $44.5 million in cash, a 9% decrease from 2022 [5] - The stock is up 60% year-to-date, boosted by a reseller agreement with Total Computers [6] Company: IonQ, Inc. (IONQ) - IonQ has advanced the commercialization of quantum computing by offering hardware, software, licensing, training, and leasing services [7] - The company reported $22 million in revenue and $65.1 million in bookings for Q4 2023, representing a 166% annual growth [7] - IonQ experienced a net loss of $157.8 million and ended the period with $455.9 million in cash [8] - The stock is down 21% year-to-date, with an average price target of $16.63 compared to the current price of $9.54 [8]

LONDON, March 05, 2024 (GLOBE NEWSWIRE) -- Arqit Quantum Inc. (NASDAQ:ARQQ, ARQQW))) (Arqit), a leader in quantum-safe encryption, today announced a reseller agreement with Total Computers (Total), the digital transformation experts, for Arqit's Symmetric Key Agreement Platform and NetworkSecure™ Adaptor. In an ever-connected world, enterprises need to take urgent action to strengthen their encryption to counter the growing threats from cyber adversaries. Compliant with NSA standards, Arqit's Platform as a ...

LONDON, Feb. 29, 2024 (GLOBE NEWSWIRE) -- Arqit Quantum Inc. (NASDAQ:ARQQ, ARQQW))) (Arqit), a leader in quantum-safe encryption was honoured to receive two Glomo awards at Mobile World Congress on February 28, 2024. The company took home the top honour in the CTO Choice: Outstanding Mobile Technology Award category, which was voted on by CTO's across the industry, including those from the world's major mobile phone companies, along with the award for Best Mobile Security Solution. David Williams Arqit Foun ...

LONDON and RESTON, Va., Feb. 05, 2024 (GLOBE NEWSWIRE) -- Arqit Quantum Inc. (NASDAQ:ARQQ, ARQQW))) (Arqit), a leader in quantum-safe encryption, and Carahsoft Technology Corp., The Trusted Government IT Solutions Provider®, today announced a partnership. Under the agreement, Carahsoft will be Arqit's Master Government Aggregator®, making Arqit's unique Symmetric Key Agreement Platform available through Carahsoft's reseller partners and NASA Solutions for Enterprise-Wide Procurement (SEWP) V, Information Te ...

LONDON, Jan. 23, 2024 (GLOBE NEWSWIRE) -- Arqit Quantum Inc. (NASDAQ:ARQQ, ARQQW))) (Arqit), a leader in quantum-safe encryption, and Ampliphae Ltd (Ampliphae), a leader in network cyber security solutions, have today announced successful completion of a project that will deliver enhanced quantum-safe security for Private 5G networks. The Security Enhanced Virtualised Networking for 5G (SEViN-5G) project, funded by Innovate UK, the UK Government's innovation agency, leveraged Ampliphae's network security an ...

LONDON, Jan. 10, 2024 (GLOBE NEWSWIRE) -- Arqit Quantum Inc. (NASDAQ:ARQQ, ARQQW))) (Arqit), a leader in quantum-safe encryption, today announced a reseller agreement with Phalanx Solutions (Phalanx), a trusted provider of security, compliance and technology solutions, for Arqit's Symmetric Key Agreement Platform and NetworkSecure™ Adaptor. Enterprises face growing threats from cyber adversaries and need to take urgent action to strengthen their encryption in the ever-connected world of devices. Easily inte ...

Financial Data and Key Metrics Changes - For fiscal year 2023, the company generated $5.6 million in revenue, a decline from $20.0 million in 2022 [18] - Operating loss for fiscal year 2023 was $84.4 million, compared to a loss of $63.8 million in 2022 [21] - The cash balance at the end of fiscal year 2023 was $44.5 million, down from $48.9 million at the end of fiscal year 2022 [22] Business Line Data and Key Metrics Changes - Revenue from the QuantumCloud product totaled $639,968 for the period, generated through 7 contracts with 6 different channel partners [18] - The company generated revenue from all four products available for sale, including multiple sales of QuantumCloud Private Instance and NetworkSecure [14] - The transition to a software-only model has resulted in limited revenues, but there is positive momentum with sales across multiple channels [9][10] Market Data and Key Metrics Changes - The company has expanded its channel partnerships from 5 to 15, including leading technology OEMs, distributors, and resellers [7] - The TradeSecure product has gained traction due to regulatory progress with the Electronic Trade Documents Act in the UK [12] - The company is optimistic about the market for its products, particularly in government and commercial sectors [16] Company Strategy and Development Direction - The company has pivoted to focus on an exclusively software product sold through channel partners, moving away from direct enterprise sales of hardware [5][6] - The strategy includes the development of specialized applications for its core symmetric key agreement product, such as NetworkSecure, TradeSecure, and WalletSecure [10][13] - The company aims to translate partnerships into meaningful revenue growth and is optimistic about achieving cash flow breakeven in the near term [25] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the scalability of channel partnerships and their potential to drive revenue growth [25] - The company is actively pursuing additional partnerships with large technology firms to enhance its market presence [27] - Management acknowledged the challenges of transitioning to a new business model but remains optimistic about future performance [16] Other Important Information - The company raised $47.7 million in gross proceeds from stock offerings during fiscal year 2023 [22] - Significant cost-saving measures were implemented, including a reduction in headcount from 170 to 147 employees [21] - The company is exploring various strategic opportunities to monetize its satellite technology, although outcomes remain uncertain [29] Q&A Session Summary Question: Anticipated ramp in revenue in '24 and current cash balance - Management is confident that the scale and maturity of channel partnerships will help achieve cash flow breakeven within a modest timeframe [25] Question: Discussions with potential partners - Management confirmed ongoing discussions with several large technology companies for potential partnerships, with announcements expected soon [27] Question: Strategic opportunities for satellite business - Management is exploring various options to monetize satellite technology and is working with interested partners [29]

Cash Flow Activities - Arqit's cash used in operating activities was $32.825 million for the year ended September 30, 2023, primarily due to a net loss of $74.049 million and non-cash adjustments of $37.708 million[311] - Net cash used in investing activities was $16.082 million for the year ended September 30, 2023, a decrease from $24.432 million in 2022 due to lower capital expenditure and staff costs[313][315] - Net cash generated from financing activities was $44.853 million for the year ended September 30, 2023, primarily from share issuances under the ATM Program and registered direct offerings[316][318] Share Issuances and Offerings - Arqit issued 7,814,459 shares under its ATM Program in 2023, generating proceeds of approximately $11.5 million before fees and expenses[306] - In February 2023, Arqit completed a registered direct offering, selling 10,000,000 ordinary shares and warrants, generating proceeds of approximately $20.0 million[307] - In September 2023, Arqit completed another registered direct offering, selling 20,755,677 ordinary shares and warrants, generating proceeds of approximately $16.2 million[309] Financial Instruments and Risk Management - Arqit's financial instruments primarily consist of cash and cash equivalents, with no significant exposure to interest rate risk or credit risk[295][296][297] - Arqit is exposed to foreign exchange risk primarily with respect to British pounds sterling and Euro, and manages this risk by holding multi-currency bank accounts[298] Regulatory and Reporting Status - Arqit qualifies as an "emerging growth company" under the JOBS Act, allowing it to rely on reduced reporting requirements until September 3, 2026[302][303] Research and Development Costs - Arqit's research costs are expensed as incurred, while development costs are capitalized after technical and commercial feasibility are established[319] - Capitalized development costs as of September 30, 2023, were $3.414 million, down from $40.291 million in 2022 and $18.235 million in 2021[327] Compensation and Valuation Models - Share-based compensation fair value is estimated using the Black Scholes model, with assumptions disclosed in audited financial statements[328] - Compensation expense for RSUs is based on the market price of shares at grant date and expensed over a one to five-year vesting period[329] Tax and Asset Valuation - Deferred tax assets recognition depends on the likelihood of generating sufficient taxable earnings in future periods[330] - Assets held for sale are recognized at fair value less costs to sell, with potential revisions due to changes in the economic environment[331]

Financial Performance - Arqit generated $5.6 million in revenue and other operating income from discontinued operations for fiscal year 2023, down from $20.0 million in fiscal year 2022[12]. - QuantumCloud revenue totaled $639,968 for fiscal year 2023, significantly lower than $7.2 million in fiscal year 2022[12]. - The operating loss for fiscal year 2023 was $84.4 million, compared to a loss of $63.7 million in fiscal year 2022[15]. - For the year ending September 30, 2023, Arqit reported an IFRS loss before tax of $74.0 million, compared to a profit of $53.4 million for the same period in 2022[24]. - The adjusted loss before tax for the same period was $84.7 million, an increase from $64.0 million in the previous year, reflecting a year-over-year increase of approximately 32.5%[24]. - Cash and cash equivalents at the end of fiscal year 2023 stood at $44.5 million, down from $48.9 million at the end of fiscal year 2022[16]. - Total assets were reported at $99.8 million, which included cash reserves of $44.5 million[25]. - As of September 30, 2023, total liabilities amounted to $33.1 million, with $6,519 related to outstanding warrants classified as liabilities[25]. - The change in fair value of warrants was a loss of $10.6 million for the year ending September 30, 2023, compared to a loss of $117.4 million in the previous year[24]. - Arqit emphasizes that the adjusted loss before tax is a non-IFRS measure and should be considered alongside IFRS measures for a comprehensive view of financial performance[23]. - The company acknowledges the limitations of non-IFRS financial measures, which may not be comparable to similar measures used by other companies[22]. Operational Developments - The company signed 13 channel partnerships in fiscal year 2023, with 8 established in the second half, leading to revenue generation through 6 of these partnerships[1]. - Arqit introduced three specialized applications: NetworkSecure™, TradeSecure™, and WalletSecure™, targeting specific vertical markets[4]. - Arqit aims to fully activate its channel partnerships to drive product adoption and revenue growth[11]. - Arqit expects to announce additional channel partner relationships to further expand its market reach[2]. - The company has reclassified its satellite assets as "held for sale," impacting the reporting of income and expenses[6]. Risks and Forward-Looking Statements - Forward-looking statements indicate potential risks including legal proceedings, competitive industry changes, and operational performance variations[26]. - The company does not intend to update or revise forward-looking statements after the date of issuance, highlighting the inherent uncertainties[26]. - Arqit’s financial performance is subject to various risks that could materially affect future results, as outlined in their annual report filed with the SEC[26]. Expense Management - Administrative expenses decreased to $55.2 million in fiscal year 2023 from $71.0 million in fiscal year 2022, primarily due to lower share-based compensation[14].

Arqit Quantum's (NASDAQ:ARQQ) Q2 2023 Earnings Conference Call May 17, 2023 11:00 AM ET Company Participants David Williams - Founder, Exec. Chairman & CEO Nick Pointon - CFO & Exec. Director Conference Call Participants Scott Buck - H.C. Wainwright Jim Shelton - Deutsche Bank Operator Good day, ladies and gentlemen. Thank you for standing by. On today's call, we will be referring to the press release issued this morning that details the company's first half of fiscal year end 2023 results, which can be dow ...