Arqit Quantum Inc. (Nasdaq: ARQQ, ARQQW) (“Arqit” or the
“Company”), a leader in quantum safe encryption, today announced
its operational and financial results for the fiscal year ended 30
September 2024.
Operational Highlights for fiscal year
2024
- Arqit reported revenue of $293,000
for the fiscal year. The company executed on contracts during the
period for 13 customers. Most contracts were limited licenses for
demonstration and integration testing of Arqit’s symmetric key
agreement software. Arqit saw an increase in the number of
customers executing such contracts through the period. The company
believes this is a positive indicator of product momentum.
- As previously announced, Arqit was
awarded a multi-year enterprise license contract in the EMEA region
for a government end user that is expected to result in seven
figures in annual recurring revenue in total. Prior to the end of
the 2024 fiscal year, the contract was finalized. Revenue
generation is expected to commence in the current fiscal
period.
- Previously, Sparkle, a top global
telecommunications service operator, announced it completed
demonstrations of a fully automated implementation of an
on-demand MEF Internet Access Service secured by
post-quantum cryptography It is the second Network-as-a-Service
(“Naas”) quantum safe internet use case completed by Sparkle. Its
first use case was an Arqit secured international VPN between Italy
and Germany. Sparkle’s stated roll out this year of its quantum
safe NaaS offerings continues apace supported by Arqit. Take up of
Sparkle’s NaaS offerings by end customers requires licenses for
Arqit’s SKA software which would result in revenue to Arqit.
- The company engaged in
demonstration and integration activity with eight telecom network
operators during the period. Engagements increased from three in
the first half of the fiscal year to an additional five in the
second half.
- Arqit joined Intel Partner Alliance
working in cooperation to develop and execute go-to-market activity
targeting muti-vertical customers across the Telco, Enterprise and
Government customer landscape.
- In September, Arqit was named a
2024 International Data Corp (IDC) Innovator for post quantum
cryptography. The company is one of only five vendors recognized by
IDC that are providing transformative solutions which enterprises
can use to protect classical data and infrastructure with a long
shelf value from the risk of a potential quantum cyberattack.
- On 27 September 2024,
Arqit announced Andy Leaver, a seasoned software company
executive and Operating Partner from Notion Capital, has been
appointed as Chief Executive Officer. Mr. Leaver brings a wealth of
experience to the Chief Executive role having held senior executive
roles at leading software companies including: Ariba, Bazaarvoice,
Hortonworks, SuccessFactors and Workday as well as having been an
adviser to several successful private software scale ups. He has
expertise in driving sustainable revenue growth and scaling
businesses. Notion Capital is a leading European venture capital
firm and early backer of Arqit. Mr. Leaver will act independently
of Notion Capital in his role as CEO.
- Nicola Barbiero was appointed as a
Class I Director on 26 November 2024. Mr. Barbiero has nearly two
decades of experience in investment management and financial
operations. He has been Investment Director of the Heritage Group
since 2020. From 2013 to 2020, he held the positions of CFO and CIO
at Solidarietà Veneto, one of Italy’s largest pension plan
companies. Mr. Barbiero holds a Master’s degree in Economics and
Finance from Ca’ Foscari University of Venice.
- The company previously announced
cost reduction initiatives. Operating costs for the last three
months of fiscal year 2024 averaged $2.3 million per month. Pro
forma for additional operating cost saving which have or will be
actioned shortly, budgeted average monthly operating costs for
fiscal year 2025 are expected to be approximately $2.15
million.
- On 30 September 2024, Arqit entered
into a securities purchase agreement pursuant to which it sold
5,440,000 ordinary shares (on a post reverse share split basis) at
an offering price of $2.50 per share in a registered direct
offering. Gross proceeds to the company were approximately $13.6
million. In a concurrent private placement, Arqit issued
unregistered warrants to purchase up to 5,440,000 shares (on a post
reverse share split basis) with an exercise price of $2.50,
exercisable upon the later of (i) one year from the issuance date,
(ii) the date of the approval by the Arqit’s shareholders of an
increase in authorized capital sufficient to permit the issuance of
shares upon the exercise of the warrants and (iii) the date that
the closing trading price of Arqit’s ordinary shares has exceeded
$5.00 for 60 consecutive trading days. The purchasers were Heritage
Assets SCSP (Arqit director Manfredi Lefebvre d’Ovidio has shared
investment and voting power over the shares held by Heritage Assets
SCSP), existing Arqit shareholder Notion Capital, the beneficial
owner of the Arqit shares held by Ropemaker Nominees Limited, and
Carlo Calabria and Garth Ritchie, each a director of the
Company.
- As of 30 September 2024, Arqit had
$18.7 million of cash and cash equivalents.
- On 25 September 2024, Arqit
effected a 25:1 reverse share split consolidating its authorized
share capital. The Company effected the reverse share split
in an effort to regain compliance with Nasdaq’s minimum $1.00 bid
price per share requirement. The Company was first notified by
Nasdaq of its failure to maintain a minimum bid price of $1.00 per
share for 30 consecutive trading days under Nasdaq Listing Rule
5550(a)(2) on 19 October 2023. Arqit was notified on 18 October
2024 by Nasdaq that it had regained compliance with Nasdaq’s
listing standards. The Company previously disclosed that the par
value of its ordinary shares following the reverse share split was
$0.000004, however the par value of the Company’s ordinary shares
following the reverse share split is $0.0025.
- In December 2022, Arqit established
an at-the-market equity offering program (the “ATM Program”)
pursuant to which it may issue and sell ordinary shares with an
aggregate offering amount of up to $50.0 million. Effective 15
April 2024, Arqit amended its ATM Program reducing the aggregate
offering amount to $29.0 million. Effective 8 September 2024, Arqit
amended its ATM Program further reducing its offering amount to
$16.0 million. As a result, the remaining balance available for
issuance, net of amounts issued in previous periods, is $4.1
million. Arqit issued 48,803 shares (on a post reverse split basis)
under the ATM Program during fiscal year 2024.
Management Commentary
Fiscal year 2024 was marked by progress across a
number important vectors for the company. From market appreciation
of the need for enhanced encryption to protect against the threats
of today and tomorrow, to important new OEM and network operator
relationships.
Arqit was early in understanding the weaknesses
of today’s legacy public key cryptography architecture and the need
for enhanced encryption, specifically symmetric key agreement
solutions, to combat the pending threat posed by quantum computing
to cyber security. Important governmental and national security
organizations, including the U.S. White House and the National
Security Agency (May 2022), have emphasized the imperative to
upgrade security of critical governmental and enterprise cyber
infrastructure with a bias toward symmetric key agreement
solutions.
2024 has been a year of increasing market
awareness of the need to enhanced cryptography. In October, Gartner
named post quantum cryptography as one of the most important
technology trends for 2025 which represents “a strategic imperative
that requires thoughtful consideration and decisive action.”
International Data Corp (IDC) echoed this theme in its recent IDC
Innovators - Post Quantum Cryptography report. IDC named Arqit one
of the leading vendors addressing the need for enhanced
security.
Arqit has seen a tangible benefit from increased
market awareness. Winning the CTO Outstanding Technology Award for
secure 5G solution at the Mobile World Congress in February 2024
and The Cyber Defense Product of the Year award at the 2024
National Cyber Awards elevated Arqit’s profile as a leading
provider of next generation symmetric key agreement cryptography.
Direct inquiry from OEMs, network operators and government
organizations increased materially during the fiscal year. For the
period, Arqit executed or was engaged in demonstration and testing
initiatives with 13 organizations or enterprises.
As a result, Arqit is moving into a revenue
growth and customer fulfillment phase of its development. Through
its EMEA distribution partner Arqit executed a seven figure,
multi-year annual recurring revenue contract for a significant
governmental end customer. The company believes that additional
governmental and enterprise customer opportunities will result
in-country as result of this marquis end customer engagement.
The rapid development of Arqit’s relationship
with Sparkle reflects a recognition of the cyber threats facing
network operators and their customers. Arqit is working closely
with Sparkle at pace in support of its rollout across its
international fiber network. Other network operators are similarly
cognizant of the threats and, as a result, Arqit has or is engaged
with eight telecom network operators regarding the Arqit
SKA-PlatformTM solution.
In short, the end market is moving toward the
company. Recognition of the need for enhanced cryptography and the
efficacy of Arqit’s symmetric key solution has increased during the
fiscal year. Arqit is beginning to see the benefit in contract wins
and annual recurring revenue backlog. The company enters fiscal
year 2025 with positive momentum.
Internally the company is focusing its resources
and efforts to match the current moment:
- Focusing on the
biggest and most actionable opportunities which reside in telecom,
government and defense
- Executive
changes to meet the phase of development
- Internal
resources and processes refined to meet customer fulfillment
- Reducing costs
to strength operating position
- Increasing its
capital position to close its business case
Commenting, Andy Leaver, Arqit Chief Executive
Officer said: “I am pleased to join Arqit at this important moment
in its development. The company’s symmetric key agreement software
is proven and we are beginning to see market take-up as evidenced
by the important announced contract wins and developing
relationship with network operators. We enter fiscal 2025 on firm
footing.
The focus for this fiscal year is on seamless
execution of executed contracts and closing additional
opportunities with existing customers as well as converting
demonstration and testing engagements into fulsome contractual
relationships.
Arqit has taken the necessary operational steps
to capitalize on the market moving in our direction and our proven
solution to meet the market’s need for stronger encryption. Focus
and execution are the operative words for the fiscal year
2025.”
Fiscal Year 2024 Financial
Highlights
The following is a summary of Arqit’s operating
results for the twelve month period ended 30 September 2024.
Comparison is made, where applicable, to the comparable period
ended 30 September 2023.
- Generated
$293,000 in revenue for fiscal year 2024 as compared to $640,000 in
revenue for the comparable period in 2023. The decrease was due to
no significant perpetual enterprise licenses sold in fiscal year
2024. In fiscal year 2023, the company sold two such licenses with
high upfront revenue which represented a significant portion of
revenue during that period. Arqit has intentionally moved from
perpetual licenses toward operational licenses with prospective
annual recurring revenue. The transition results in lower upfront
revenue associated with a perpetual license. While generating lower
upfront revenue, operational licenses are expected to result in
growing annual recurring revenue as consumption of our symmetric
key agreement software increases.
- Arqit
SKA-Platform™ contract revenue totaled $293,000 of which $102,000
was professional services in support of contract activity. Most
contracts were limited licenses for demonstration and integration
testing of Arqit’s symmetric key agreement software.
- Arqit
SKA-Platform™ revenue for fiscal year 2024 was generated from
contracts with 13 customers.
- Six contracts
represented a license for Arqit SKA-PlatformTM as a Service
- Four contracts
represented licenses for Arqit NetworkSecure™
- Three contracts
were for professional services
- Arqit
SKA-Platform™ revenue for fiscal year 2023 was $640,000 from seven
contracts, the bulk of which was from two perpetual licenses.
- Administrative
expenses1 for the period were $23.5 million versus $55.2 million
for fiscal year 2023. Lower share based compensation, employee
expenses and legal and professional fees were the largest drivers
of the variance between periods. Arqit’s headcount as of fiscal
year end was 82 as compared to 147 as of fiscal year end 2023.
Administrative expense for the period includes a negative $1.6
million non-cash charge for share based compensation versus a $14.1
million charge for the comparable period in 2023.
- Operating loss
for the period was $24.6 million versus a loss of $54.5 million for
fiscal year 2023. The variance in operating loss between periods
primarily reflects lower administrative expenses for fiscal year
2024.
- Loss before tax
from continuing operations for the period was $23.9 million.
Adjusted loss before tax for the period was $23.9 million2 which in
management’s view reflects the underlying business performance once
the non-cash change in warrant value is deducted from loss before
tax. For fiscal year 2023, loss before tax from continuing
operations was $44.1 million and adjusted loss before tax was $54.7
million. The variance between periods is primarily due to lower
administrative expenses, impairment losses on trade receivables,
impairment losses on intangible assets and the change in fair value
of warrants.
- During the
fiscal year 2024, Arqit determined that its satellite assets were
no longer considered as “held for sale”. As a result, the satellite
assets have been fully impaired, and an impairment loss was
recognized as part of “loss from discontinued operations, net of
tax”.
- Arqit ended
fiscal year 2024 with cash and cash equivalents of $18.7 million
versus a cash balance of $44.5 million as of Arqit’s 2023 fiscal
year end.
- During the
period 180,106 restricted share units were granted under Arqit’s
equity incentive plan. A total of 87,319 restricted share units and
25,306 options were granted to employees, officers and directors
under the plan were outstanding at 30 September 2024.
______________________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
Arqit will host a conference call at 11:00 a.m.
ET / 8:00 a.m. PT on December 5, 2024 with the Company’s CEO, Andy
Leaver, 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
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 $23.9 million, Arqit’s non-IFRS
adjusted loss before tax is $23.9 million, as shown in the
reconciliation table below.
|
Year end 30Sept.
2024$’000 |
Year end 30Sept.
2023$’000 |
Loss)/profit before tax from continuing operations on an IFRS
basis |
$ |
(23,977 |
) |
$ |
(44,113 |
) |
Change in fair value of warrants |
$(6 |
) |
|
$(10,638 |
) |
Adjusted loss before tax |
$ |
(23,983 |
) |
$ |
(54,751 |
) |
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 30 September 2024, we had $14.9 million of
total liabilities, of which none was related to our outstanding
warrants, which are classified as liabilities rather than equity
according to IFRS and SEC guidance, the warrant liability is
calculated as the fair value of the warrants as of 30 September
2024. We had total assets of $26.7 million including cash of
$18.7 million.
Grafico Azioni Arqit Quantum (NASDAQ:ARQQ)
Storico
Da Nov 2024 a Dic 2024
Grafico Azioni Arqit Quantum (NASDAQ:ARQQ)
Storico
Da Dic 2023 a Dic 2024