Fiscal Year 2021 Results Overview [Management Commentary](index=1&type=section&id=Management%20Commentary) Arqit's FY2021 was transformative, marked by commercial launch, NASDAQ listing, and over **$130 million** in revenue contracts - The company launched its business after four years of development, creating technology to solve current and future encryption problems posed by **quantum computers**[2](index=2&type=chunk) - The NASDAQ listing in September provided Arqit with **enough capital** to fund its business plan and launch its full commercial service[2](index=2&type=chunk) - Customer billings commenced in Q4 2021, and over **$130 million in revenue contracts** were announced with significant global corporations and governments[2](index=2&type=chunk) - The company is initially focusing on a channel strategy targeting defence, financial services, telecoms, and IoT to generate early revenues[3](index=3&type=chunk) [Fiscal Year 2021 Operational Highlights](index=1&type=section&id=Fiscal%20Year%202021%20Operational%20Highlights) Arqit achieved significant FY2021 operational milestones, including QuantumCloud™ launch, key agreements, and expanding its IP portfolio - **QuantumCloud™ Release 1.0** was launched in July with **full commercialization in September**[4](index=4&type=chunk) - Signed **key agreements and contracts** with leading global organizations, including BT Group, Sumitomo, Northrop Grumman, Dentons, Juniper Networks, and Babcock[4](index=4&type=chunk)[5](index=5&type=chunk) - Formed an **international federation of G7 companies and government organizations** to provide private instances of Arqit's technology stack[5](index=5&type=chunk) - Increased its filed patent portfolio to **1,435 patent claims** on 21 pending or allowed patents[6](index=6&type=chunk) [Fiscal Year 2021 Financial Highlights](index=2&type=section&id=Fiscal%20Year%202021%20Financial%20Highlights) Arqit's FY2021 financial highlights include significant NASDAQ proceeds, substantial cash, and a reduced adjusted loss before tax Key Financial Metrics for Fiscal Year 2021 | Metric | Value (USD) | | :--- | :--- | | Net proceeds from NASDAQ listing | c. $96 million | | Cash and cash equivalents | $86.9 million | | Loss before tax (IFRS) | $271.7 million | | Adjusted loss before tax (Non-IFRS) | $15.6 million | [Fiscal Year 2022 Outlook and Recent Developments](index=2&type=section&id=Fiscal%20Year%202022%20Outlook%20and%20Recent%20Developments) Arqit anticipates strengthening demand in FY2022, with planned QuantumCloud™ releases, a 2023 satellite launch, and recent new agreements - The company believes its product is **superior to alternatives** like Post Quantum Algorithms, which are **not definitively quantum safe** and are **difficult to implement on small devices**[8](index=8&type=chunk) - **QuantumCloud™ Release 1.1** is scheduled for **February 2022**, and **Release 1.2** will launch by the **end of 2022**. The **first satellite** is planned for a **2023 launch**[10](index=10&type=chunk) - Since the fiscal year-end, Arqit has announced **new agreements** with Blue Bear Systems Research Ltd. and NEOM, with **more contract announcements expected** in the near term[11](index=11&type=chunk) Financial Disclosures and Reconciliations [Use of Non-GAAP Financial Measures](index=3&type=section&id=Use%20of%20Non-GAAP%20Financial%20Measures) The company uses 'adjusted loss before tax,' a non-IFRS measure, to monitor ongoing financial performance by excluding non-recurring and non-cash items - Adjusted loss before tax is a **non-IFRS measure** used by management to monitor **ongoing financial performance**[12](index=12&type=chunk) - This measure **excludes non-recurring items** (reverse acquisition expense, Nasdaq listing expense) and a **non-cash expense** (change in fair value of warrants) to **better reflect standard operations**[12](index=12&type=chunk) [IFRS and Non-GAAP Loss Before Tax Reconciliation](index=4&type=section&id=IFRS%20and%20Non-GAAP%20Loss%20Before%20Tax%20Reconciliation) The company reconciles IFRS loss before tax to non-GAAP adjusted loss, adjusting a **$271.7 million** IFRS loss to a **$15.6 million** adjusted loss Reconciliation of IFRS to Non-GAAP Loss Before Tax (Year ended 30 September 2021) | Description | Amount (USD) | | :--- | :--- | | **Loss before tax on an IFRS basis** | **(271,729,101)** | | Reverse acquisition expense | 155,459,939 | | Change in fair value of warrants | 98,090,070 | | NASDAQ listing expense | 2,589,611 | | **Adjusted loss before tax** | **(15,589,481)** | - The reverse acquisition expense is a **non-cash, non-recurring charge** representing the premium paid for obtaining the public listing[14](index=14&type=chunk) - The change in fair value of warrants is a **non-cash expense** required by IFRS, and NASDAQ listing expenses are **non-recurring**[15](index=15&type=chunk) [Other Accounting Information](index=4&type=section&id=Other%20Accounting%20Information) As of September 30, 2021, Arqit reported **$114 million** in assets, **$87 million** cash, and **$148 million** in liabilities, with **$128 million** from warrants Balance Sheet Summary (as of September 30, 2021) | Item | Value (USD) | | :--- | :--- | | Total Assets | $114 million | | Cash (included in Total Assets) | $87 million | | Total Liabilities | $148 million | | Warrant Liabilities | $128 million | | Other Liabilities | $20 million | Company Information and Disclaimers [About Arqit](index=5&type=section&id=About%20Arqit) Arqit provides QuantumCloud™, a quantum encryption Platform-as-a-Service, enabling networked devices to create secure, zero-trust encryption keys against cyberattacks - Arqit supplies a **quantum encryption Platform-as-a-Service (PaaS)** named **QuantumCloud™**[17](index=17&type=chunk) - The product enables any networked device to download a software agent to create **secure, one-time use, zero-trust encryption keys** to protect against attacks, including from **quantum computers**[17](index=17&type=chunk) [Caution About Forward-Looking Statements](index=5&type=section&id=Caution%20About%20Forward-Looking%20Statements) This section contains a standard legal disclaimer on forward-looking statements, highlighting risks and uncertainties that could cause actual results to differ materially from expectations - The communication includes **forward-looking statements** that involve **risks and uncertainties**, and **actual results may differ materially** from current expectations[18](index=18&type=chunk) - **Key risk factors** include disruption from the business combination, ability to maintain stock listing, converting pipeline to revenue, successful delivery of technology, and enforceability of intellectual property[18](index=18&type=chunk)