Arqit Quantum Inc.

Arqit Quantum Inc. is an early-stage provider of encryption analytics and software, focused on protecting data and communications from current cyber threats and future risks posed by quantum computers. The company's core offering is its symmetric key agreement encryption solution, SKA-Platform™, which it asserts is software-based, globally scalable, capable of securing any number of endpoints, and provably quantum-safe. Arqit's security proof has been independently validated by GCHQ Accredited Centre of Excellence in Cyber Security at the University of Surrey and PA Consulting, and it complies with National Security Agency guidance for post-quantum cyber security preparedness ¹. The company's business model primarily relies on channel partnerships, integrating its solutions with leading IT hardware vendors, value-added solution resellers, and system integrators, while also engaging in selective direct sales ².

The company's product portfolio is segmented into "Detect" (Encryption Intelligence), "Protect" (SKA-Platform™ and NetworkSecure™), and "Comply" offerings. Encryption Intelligence is a data-driven risk advisory service utilizing software-based network probes and analytical tools to identify cryptographic weaknesses and prepare migration plans to quantum-safe encryption ³. The "Protect" segment includes SKA-Platform™, which dynamically creates encryption keys through lightweight software agents, and NetworkSecure™, a software application strengthening VPN communications against current and "Store Now, Decrypt Later" (SNDL) quantum attacks ⁴. These protection products are compliant with existing communication and security protocols like AES-256, IPsec, and TLS, and align with NSA's Commercial Solutions for Classified Symmetric Key Management Requirements Annex 3.0 ⁵. The "Comply" offering leverages Encryption Intelligence and protection products to help organizations understand, implement, and continuously monitor adherence to leading security agency guidance for post-quantum cryptography ⁶.

For the fiscal year ended September 30, 2025, Arqit reported total revenue of $0.530 million ⁷, an increase of 81% from $0.293 million in the prior year ⁸. Other income significantly increased by $1.236 million to $1.628 million ⁹, primarily due to a gain on extinguishment of a $4.0 million payable to Deutsche Bank ¹⁰. Administrative expenses rose by $9.283 million, or 37%, to $34.697 million ¹¹, largely driven by a reduction in foreign exchange gain and an increase in share-based compensation ¹². The company recognized an exceptional item of $6.000 million related to a provision for a legal settlement ¹³. Operating loss for the year was $38.539 million ¹⁴, widening from an operating loss of $26.927 million in the prior year ¹⁵. The change in fair value of warrants resulted in a non-cash loss of $0.261 million ¹⁶. Finance costs decreased to $0.048 million ¹⁷, while finance income increased to $1.232 million ¹⁸ due to higher cash balances. The company reported an income tax credit of $2.186 million ¹⁹ from the Research and Development Expenditure Credit (RDEC) program. Loss from continuing operations was $35.430 million ²⁰. Profit from discontinued operations, net of tax, was $0.087 million ²¹, a significant improvement from a loss of $30.604 million in the prior year ²². The net loss for the financial year attributable to equity holders was $35.343 million ²³, compared to a loss of $56.818 million in the prior year ²⁴. Basic and diluted EPS from continuing operations were both $(2.57) ²⁵, while total basic and diluted EPS were both $(2.56) ²⁶. Cash and cash equivalents stood at $36.978 million ²⁷ as of September 30, 2025. Total equity was $27.236 million ²⁸.

Comparing fiscal year 2025 to 2024, revenue from SKA-Platform™ services increased from $0.293 million to $0.530 million ²⁹. Geographically, UK revenue decreased from $0.293 million to $0.081 million, while revenue from other countries increased from $0 to $0.449 million ³⁰. Revenue recognized over time increased from $0.293 million to $0.491 million, and revenue recognized at a point in time was $0.039 million in 2025 compared to $0 in 2024 ³¹. Administrative expenses increased by 37% to $34.697 million ³². Staff costs decreased by 9% to $18.079 million ³³, while share-based compensation increased by 832% to $5.604 million ³⁴. Depreciation decreased by 87% to $0.417 million ³⁵, and foreign exchange gain decreased by 92% to $(1.004) million ³⁶. The loss from discontinued operations significantly improved from $(30.604) million to $0.087 million ³⁷, primarily due to the full impairment of satellite assets in the prior year and the novation of satellite construction contracts in September 2024 ³⁸.

During fiscal year 2025, Arqit joined Tomorrow Street’s Scaleup X program in August 2025, gaining access to Vodafone’s global network ³⁹. In June 2025, the company was selected as a member of the newly established Oracle Defense Ecosystem ⁴⁰. Arqit also won the Endpoint Security Solution Award at the Computing (UK) Security Excellence Awards in May 2025 ⁴¹. A significant operational development was the acquisition of Ampliphae’s product portfolio IP and innovations team in May 2025, which specializes in encryption risk advisory and AI analytics, enhancing Arqit's comprehensive offering to identify and mitigate cyber risk ⁴².

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 ⁴³. The global enterprise key-management/discovery market is projected to reach nearly US $7.74 billion by 2033, growing from approximately US $2.40 billion in 2024 ⁴⁴. Additionally, the global confidential-computing market is forecasted to extend to about US $153.84 billion by 2030, up from an estimated US $5.46 billion in 2023 ⁴⁵.

New opportunities for growth in demand for Arqit's products are expected in government, defense, telecom, and confidential computing markets ⁴⁶. The company has observed increased engagement from these sectors, which it expects to translate into more tests, demonstration activity, and ultimately, increased revenue licenses ⁴⁷. Arqit's solutions are applicable to any organization seeking to understand its encryption landscape and migrate to quantum-safe encryption, with a current focus on early movers in post-quantum security and large potential revenue opportunities ⁴⁸.

A key growth vector involves greater integration with existing channel partners and the addition of new channel partners ⁴⁹. For instance, Arqit has announced multiple lines of activity in partnership with Intel and expects to announce additional product or service offerings through existing and new partners in fiscal year 2026 ⁵⁰. The company's channel partnership model, where it sells licenses to partners who then integrate Arqit's solutions into their products, is a "B-2-B-2-B" model that leverages partners' reputations, customer relationships, and scale ⁵¹.

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 ⁵². 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, as there is no human analysis or information processing required by its product ⁵³. The company's future performance and achievement of cash flow generation are dependent on order volume, which will influence pricing and margin, and successful adoption of its products and expansion of contracts with existing customers ⁵⁴.

Arqit's capital allocation plans include using net proceeds from its at-the-market (ATM) equity offering program for general corporate purposes ⁵⁵. In the year ended September 30, 2025, Arqit issued 1,959,420 shares under the ATM Program, generating proceeds of approximately $37.180 million before fees and expenses ⁵⁶. The company has an aggregate pool of 2.5 million ordinary shares available for issuance under its Incentive Award Plan ⁵⁷.

Arqit faces several material risks, including its early-stage nature with a history of operating losses of $36.4 million for the year ended September 30, 2025, and reliance on a significant increase in sales and marketing to achieve profitability ⁵⁸. The market adoption of its product is not fully proven and may develop slower than expected, impacting future success ⁵⁹. The company is highly dependent on maintaining and increasing channel partnerships to develop annual recurring revenues ⁶⁰. Arqit will require additional capital to fund operations, and an inability to obtain such capital would hinder business development and product commercialization ⁶¹. The complexity of its products could lead to unforeseen delays or expenses from undetected defects, errors, or reliability issues, potentially damaging its reputation and increasing operating costs ⁶². The company may not adequately protect its intellectual property rights, with 28 granted patents and 17 pending patents in the UK as of the Annual Report date, and efforts to enforce these rights may be costly ⁶³. Third-party claims of intellectual property infringement could lead to costly litigation or expensive licenses ⁶⁴. The use of third-party open-source software components in its products carries risks of non-compliance with licenses, potentially restricting sales or requiring public release of proprietary code ⁶⁵. Rapid technological change in the markets it competes in could adversely affect market adoption of its products ⁶⁶. The business is substantially dependent on its executive officers and highly skilled personnel, and failure to attract or retain them could disrupt operations ⁶⁷. Non-compliance with governmental trade controls, including export and import laws and sanctions, could result in liability, loss of contracting privileges, and reputational harm ⁶⁸. Failures to comply with evolving privacy, data protection, and information security requirements may adversely impact the business ⁶⁹. Fluctuations in currency exchange rates, particularly between GBP and USD, may adversely affect results of operations due to translational remeasurements ⁷⁰. The Business Combination Warrants are accounted for as liabilities, and changes in their fair value could materially affect financial results ⁷¹. Interruption or failure of information technology and communications systems could impact service provision ⁷². Breaches of its or third-party systems, or unauthorized access to data, could harm public perception, lead to business loss, and incur liabilities ⁷³. Failure of its network and products to interoperate with customer internal networks or third-party products could reduce competitiveness ⁷⁴.

Management's message to shareholders emphasizes the company's position as a leading provider of encryption analytics and software, enabling organizations to protect data against current and future quantum cyber threats. They highlight Arqit's unique 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 ⁷⁵. Management is focused on the significant market opportunities arising from the expected transformation in the cyber encryption industry, particularly the vulnerability of public key infrastructure to quantum computer attacks ⁷⁶. They project the global enterprise key-management/discovery market to reach nearly US $7.74 billion by 2033 and the global confidential-computing market to extend to about US $153.84 billion by 2030 ⁷⁷. The three strategic priorities for the period ahead include capitalizing on new growth opportunities in government, defense, telecom, and confidential computing markets, which are showing increased engagement ⁷⁸; driving additional revenue opportunities through greater integration with existing channel partners and adding new ones, with expected announcements of new product or service offerings in fiscal year 2026 ⁷⁹; and achieving high margin unit economics at scale due to the low cost and scalability of its cloud-fulfilled software ⁸⁰.