Arqit Quantum Inc.

Arqit Quantum Inc. is an early-stage company providing encryption analytics and software to protect data and communications against current cyber threats and future risks from quantum computers ¹. The company's core business model revolves around its symmetric key agreement encryption solution, SKA-Platform™, which is software-based, globally scalable, and provably quantum-safe ¹. Arqit generates revenue primarily through the sale of SKA-Platform™ and related services, with a strategic shift in December 2022 from an enterprise license model to distribution through channel partners, aiming for growing annual recurring revenue as software consumption increases ¹. The company's solutions are applicable to any organization seeking to understand its encryption landscape and migrate to quantum-safe encryption, with a current focus on government, defense, telecom, and confidential computing markets ¹.

Arqit's product portfolio includes "Encryption Intelligence," a data-driven risk advisory service that helps organizations understand their encryption landscape, detect cryptographic weaknesses, and prepare for migration to post-quantum cryptography (PQC) ¹. This service provides visibility of application traffic, identifies encryption weaknesses, offers actionable plans for quantum-safe migration, and enables continuous monitoring of encryption risks ¹. The "Protect" segment features SKA-Platform™ and NetworkSecure™, which deliver symmetric key cryptographic solutions ¹. SKA-Platform™ operates through lightweight software agents for dynamic encryption key creation, offered in SKA Edge Controller (SKA-EC) for simple installation and SKA Central Controller (SKA-CC) for large-scale network communications ¹. NetworkSecure™ is a lightweight software application designed to strengthen VPN communications against current and "Store Now, Decrypt Later" (SNDL) quantum attacks, integrating with various OEM firewalls, routers, and open-source VPN technologies ¹. The "Comply" aspect combines Encryption Intelligence with the protection products to help organizations meet and monitor compliance with leading security agency guidance for post-quantum cyber security ¹.

For the fiscal year ended September 30, 2025, Arqit reported total revenue of $0.530 million ¹⁰, an increase of 81% from $0.293 million in the prior year ¹⁰. Other income significantly increased by 315% to $1.628 million in 2025 from $0.392 million in 2024, primarily due to a $1.379 million gain on extinguishment of a liability ¹⁰. Administrative expenses rose by 37% to $34.697 million in 2025 from $25.414 million in 2024, largely influenced by a reduction in foreign exchange gain and an increase in share-based compensation ¹⁰. The company incurred an exceptional item of $6.000 million in 2025 related to a provision for a legal settlement ¹⁰. Operating loss for continuing operations widened to $38.539 million in 2025 from $26.927 million in 2024 ¹⁰. The change in fair value of warrants resulted in a non-cash loss of $0.261 million in 2025, compared to a non-cash profit of $0.006 million in 2024 ¹⁰. Finance costs decreased by 78% to $0.048 million in 2025 from $0.223 million in 2024 due to expiring IT equipment leases ¹⁰. Finance income increased by 32% to $1.232 million in 2025 from $0.930 million in 2024, driven by higher cash balances ¹⁰. The company recognized an income tax credit of $2.186 million in 2025 from the Research and Development Expenditure Credit (RDEC) program ¹⁰. Loss from discontinued operations decreased significantly to $0.087 million in 2025 from $30.604 million in 2024 ¹⁰. The net loss for the financial year attributable to equity holders was $35.343 million in 2025, an improvement from a loss of $56.818 million in 2024 ¹⁰. Basic and diluted EPS from continuing operations were both $(2.57) in 2025, compared to $(5.18) in 2024 ¹⁰. Cash and cash equivalents stood at $36.978 million as of September 30, 2025 ¹¹.

Year-over-year, revenue from SKA-Platform™ services increased from $0.293 million in 2024 to $0.530 million in 2025, with revenue recognized over time increasing from $0.293 million to $0.491 million, and revenue recognized at a point in time appearing at $0.039 million in 2025 ¹². Geographically, UK revenue decreased from $0.293 million in 2024 to $0.081 million in 2025, while revenue from other countries increased from $0 million to $0.449 million ¹². Administrative expenses saw a notable shift in components, with staff costs decreasing by 9% to $18.079 million in 2025 from $19.775 million in 2024, and share-based compensation increasing by 832% to $5.604 million in 2025 from $0.601 million in 2024 ¹⁰. Depreciation decreased by 87% to $0.417 million in 2025 from $3.188 million in 2024, and foreign exchange impact shifted from a gain of $12.248 million in 2024 to a gain of $1.004 million in 2025 ¹⁰. The impairment loss on intangible assets of $2.032 million in 2024 related to the discontinuation of the TradeSecure product was not present in 2025 ¹⁰.

During fiscal year 2025, Arqit joined the 2025 cohort of Tomorrow Street’s Scaleup X program in August 2025, gaining access to Vodafone’s global network ¹. In June 2025, the company was selected as a member of the newly established Oracle Defense Ecosystem ¹. Arqit won the Endpoint Security Solution Award at the Computing (UK) Security Excellence Awards in May 2025 ¹. Also in May 2025, Arqit announced the acquisition of Ampliphae’s product portfolio IP and innovations team, specializing in encryption risk advisory and AI analytics ¹. In November 2025, Arqit and Sparkle won the NaaS Innovation Award at the Global NaaS event ¹. The company also executed a term sheet on October 20, 2025, to settle a putative class action lawsuit for $7 million ¹⁰.

Management anticipates significant market opportunities for its products due to an expected transformation in the cyber encryption industry over the next decade, driven by the vulnerability of "public key infrastructure" to quantum computer attacks and the expectation that a quantum computer at scale will break symmetric cryptography quickly ¹. New opportunities for growth in demand are expected in government, defense, telecom, and confidential computing markets ¹. The global enterprise key-management/discovery market is projected to reach nearly US $7.74 billion by 2033, up from approximately US $2.40 billion in 2024 ¹. The global confidential-computing market is forecasted to extend to about US $153.84 billion by 2030, from an estimated US $5.46 billion in 2023 ¹.

Key growth vectors for fiscal year 2026 include increased global focus on quantum-safe architectures, driven by security agency mandates or recommendations for government and enterprises to migrate to a post-quantum cyber security posture ¹. Arqit expects increased engagement from the government, defense, telecom, and confidential computing markets to result in increasing tests and demonstration activity and ultimately more revenue licenses ¹. Greater integration with existing channel partners and the addition of new channel partners will be critical, with the company expecting to announce additional product or service offerings through existing partners, such as Intel, and new partners in fiscal year 2026 ¹.

From an operational perspective, Arqit believes it has the opportunity to establish high margin unit economics when operating at scale, as its cloud-fulfilled software automatically creates keys in infinite volumes at minimal cost, leading to low capital expenditure once deployed ¹. The business model is positioned for scalability due to low software distribution costs, the ability to leverage the same product platform across its partner base, and limited personnel costs ¹. Personnel costs are limited to maintaining core infrastructure, marketing, and customer support, as no human analysis or information processing is required by the product ¹. The achievement of cash flow generation is dependent on order volume, which will dictate pricing and margin, and achieving this scale is further dependent on successful adoption of Arqit’s products and expansion of contracts with existing customers ¹.

The company will require additional capital to fund its operations, and there is no assurance that revenues from commercialization will be sufficient or that additional funds will be available on acceptable terms ¹. Arqit has an at-the-market equity offering program (ATM Program) allowing it to issue and sell ordinary shares with an aggregate offering price of up to $75.0 million, with net proceeds intended for general corporate purposes ¹¹.

Arqit faces several material risks, including its early-stage nature with a history of operating losses of $76.1 million, $68.0 million, and $36.4 million for the years ended September 30, 2023, 2024, and 2025, respectively, and its reliance on a significant increase in sales and marketing activity to achieve profitability ¹. The market adoption of its product is not fully proven and may develop slower or differently than expected, with future success dependent on market growth and the company's ability to adapt ¹. Arqit's primary distribution channel is through channel partnerships, making it dependent on maintaining and increasing these relationships and developing annual recurring revenues through them ¹. The company will require additional capital to fund operations, and as of September 30, 2025, had cash and cash equivalents of approximately $36.978 million ¹. The complexity of its products could lead to unforeseen delays or expenses from undetected defects, errors, or reliability issues, potentially damaging its reputation and exposing it to claims ¹. Arqit may not be able to adequately protect or enforce its intellectual property rights, with 28 granted patents and 17 pending patents in the UK as of the filing date, and relies on unpatented proprietary technology and trade secrets ¹. Third-party claims of intellectual property infringement could result in costly litigation or expensive licenses ¹. The company's products contain third-party open-source software, and non-compliance with licenses could restrict sales or expose it to risks ¹. Rapid technological change in the markets could adversely affect market adoption of its products ¹. Arqit's business depends substantially on its executive officers and highly skilled personnel, and failure to attract or retain them could disrupt operations ¹. Non-compliance with governmental trade controls, including export and import laws and sanctions, could lead to liability, loss of contracting privileges, or harm to reputation ¹. Failures to comply with evolving privacy, data protection, and information security requirements may adversely impact the business ¹. Fluctuations in currency exchange rates, particularly between GBP and USD, may adversely affect results of operations ¹. The Business Combination Warrants are accounted for as liabilities, and changes in their fair value could materially affect financial results ¹. Interruption or failure of IT and communications systems, or breaches of internal or third-party systems, could harm public perception, lead to business loss, and incur liabilities ¹. If its network and products do not interoperate with customer internal networks or third-party products, its competitiveness and results of operations may be harmed ¹.

Management's message to shareholders emphasizes Arqit's position as a leading provider of encryption analytics and software, designed to protect against current and future cyber threats, particularly those posed by quantum computers. They highlight the uniqueness of Arqit's symmetric key agreement encryption solution, SKA-Platform™, as software-based, globally scalable, and provably quantum-safe, with independent validation and compliance with leading security agency guidance, including the National Security Agency’s Commercial Solutions for Classified Symmetric Key Management Requirements Annex 3.0 ¹. The company's strategic priorities for the period ahead include capitalizing on the expected transformation in the cyber encryption industry, driven by the vulnerability of public key infrastructure to quantum computer attacks, and focusing on new growth opportunities in government, defense, telecom, and confidential computing markets ¹. Management also stresses the importance of increasing engagement in these key markets to drive more tests, demonstration activity, and ultimately, revenue licenses, alongside greater integration with existing channel partners and adding new ones ¹. The company has an ATM Program to issue and sell ordinary shares with an aggregate offering price of up to $75.0 million for general corporate purposes ¹¹.