- Successful full commercial launch immediately prior to 2021
fiscal year end.
- Billings commenced in Q4 of fiscal 2021.
- Sales pipeline growing and identified opportunities moving
through sales cycle.
- Business momentum in keeping with management
expectations.
Arqit Quantum Inc
(NASDAQ: ARQQ, ARQQW), a global leader in quantum encryption
technology, today announces its financial results for the fiscal
year ended 30 September 2021. The financial results follow closely
on the closing of Arqit’s NASDAQ listing on 7 September 2021.
David Williams, Arqit’s Founder, Chairman and CEO,
commented: “Our 2021 fiscal year was transformational for
Arqit. We launched our business after four years in development,
during which time we refined transformational technology that
solves the current problems of public key encryption and the larger
near-term threat posed to everyone by the arrival of full-scale
quantum computers.
The Company’s listing on NASDAQ in September provided Arqit with
sufficient capital to fund our business plan and launch full
commercial service following a period of testing and live
integration into operational environments since July. Customer
billings commenced as expected in the fourth quarter. Over $130m of
revenue contracts were announced with a cohort of significant
global corporations and governments. These events have had a
profound effect in accelerating marketing and draws significant
difference between Arqit and aspiring competitors.
Whilst our potential market is every connected device in the
world, we are focusing initially on a channel strategy designed to
deliver early revenues in defence, financial services, telecoms and
IoT. We have now secured a significant number of contracts and
partnership agreements across these core areas of focus. Our
success to date, combined with our growing pipeline of revenue
opportunities, gives us confidence that we are tracking to our
half-year plan as expected.
It is now apparent that the governments and large enterprises of
the world are very focussed on understanding and mitigating the
quantum threat. We have demonstrated that alternative approaches
are not adequate and are finding strong global demand for our
unique solution.”
Fiscal Year 2021 Operational highlights
- QuantumCloud™ Release 1.0 launched in July with full
commercialisation in September.
- Signed high-profile agreements and contracts during the period
with leading global organisations, including:
- BT Group plc. – agreement to become Arqit’s partner in
the UK with a long-term revenue commitment, incorporating our
product into its portfolio offering to customers in the UK.
- Sumitomo – signed a long-term contract with revenue
commitment to sell Arqit’s technology to the Japanese government,
enterprises, and citizens. Sumitomo also invested in the private
placement transaction that formed part of Arqit’s business
combination with Centricus Acquisition Corp (“CAC”).
- Northrop Grumman – agreement to develop quantum
encryption for potential use in defence and national security
settings.
- Dentons (London) – agreement to co-develop a quantum
safe, self-sovereign identity system (“SSI”) with broad application
within the legal/financial communities and beyond.
- Juniper Networks – agreement to explore network security
technology that will protect against quantum security threats.
- Babcock – agreement utilising Arqit’s QuantumCloud™
encryption capabilities to test a range of use cases and practical
applications for government and defence customers.
- Formed an international federation of G7 companies and
government organisations to provide end-to-end “private instances”
of Arqit’s technology stack which will be under the command and
control of each federation customer. Federated Quantum Systems
(“FQS”) represents a significant opportunity for Arqit, and we have
seen material commercial progress with this campaign post year
end.
- Increased Arqit’s filed patent portfolio to 1,435 patent claims
on 21 pending or allowed patents - strengthening the intellectual
moat around the business. Our patent portfolio continuesto grow
post fiscal year end.
Fiscal Year 2021 Financial highlights
- Net proceeds of c. $96m raised from our NASDAQ listing and
combination with CAC.
- Cash and cash equivalents of $86.9m.
- Loss before tax of $271.7m; Adjusted loss before tax of $15.6m1
which in management’s view reflects the underlying business
performance once one-time, non-cash expenses associated with the
combination with CAC, non-cash change in warrant value and one-time
NASDAQ listing expenses are netted from Loss before tax.
Fiscal Year 2022 Outlook and Recent Developments
- The trends which underpin the need for Arqit’s products
continue to strengthen. Instability of the current PKI
infrastructure persists. The acceleration of the development and
capabilities of quantum computers is profound (e.g. IBM recent
announcement of a 127-qubit quantum processor).
- As a result, we find that every major potential customer is now
well aware of the scale of the problem and the unsuitability of
alternatives. So-called Post Quantum Algorithms are not
definitively quantum safe, are too burdensome for operations on
small devices and will take a decade to implement. By contrast,
Arqit’s lite software agent inserts keys into the AES256
architecture which is already standardised in all of the world’s
major software systems, making our product not only quantum safe
but also simple to deploy.
- QuantumCloudTM Release 1.0 has been launched live for services
and some channel partners are already promoting it to their
customers. Release 1.1 is due for launch in February 2022 and will
introduce all remaining features. Release 1.2 will launch by the
end of 2022 to allow the automated cloud fulfilment of all
features. The service currently uses a simulated satellite for the
provision of the root source of quantum randomness in data centres.
The first satellite is scheduled for launch in 2023, delivering
full end to end quantum safety for the entire tech stack.
- Arqit’s QuantumCloudTM was fully commercialised in September
2021. Revenue billings commenced in our 2021 fiscal year.
- Identified contract opportunities, both in terms of the number
of opportunities and the cumulative dollar volume of opportunities,
continues to grow. Importantly, many previously identified
opportunities are progressing through the sales cycle (see below)
and, while timing remains uncertain, we expect an acceleration of
announced contracts.
- Since the close of our fiscal 2021 year end, we have announced
the following additional contracts and agreements:
- Blue Bear Systems Research Ltd. – agreement to trial
Arqit’s quantum encryption capabilities on Blue Bear unmanned
systems in the critical land, maritime and aerospace domains,
- NEOM – agreement to build and trial a ‘Cognitive City’
quantum security system,
- It is our expectation to announce additional awarded contracts
in the near term,
- Arqit’s confidence in the demand for its products has been
bolstered by technical and commercial success since the fiscal year
end.
-ends-
Use of Non-GAAP Financial Measures
The Company presents adjusted loss before tax, which is a
financial measure not calculated in accordance with IFRS. Although
the Company's management uses this measure as an aid in monitoring
the Company'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 reverse acquisition expense
and Nasdaq listing expense, which are non-recurring items that are
considered by management to be outside the Company’s standard
operation, and change in fair value of warrants, which is a
non-cash expense. 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. The Company 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-GAAP loss before tax
The Company presents its consolidated statement of comprehensive
income according to IFRS and in line with SEC guidance.
Consequently, the Company’s charges and costs relating to the
business combination with CAC are included as costs within that
statement in arriving at loss before tax. The reverse acquisition
expense and the changes in warrant values are non-cash expenses. In
addition, the reverse acquisition expense and Nasdaq listing
expense related to the business combination are non-recurring.
After these adjustments are made to the Company’s IFRS loss before
tax of $271.7m, the Company’s non-IFRS loss before tax is $15.6m,
as shown in the reconciliation table below.
Year ended 30
September
2021
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 the difference between the
fair value of the deemed consideration and the fair value of the
net assets acquired. It represents the premium paid for obtaining
the public listing. It is non-cash and non-recurring.
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.
The NASDAQ listing expenses reflects certain fees incurred in
connection with our listing. They are non-recurring.
Other Accounting Information
As of September 30, 2021, we had $148 million of total
liabilities, $128 million of which related to our outstanding
warrants, which are classified as liabilities rather than equity
according to IFRS and SEC guidance. The warrant liability amount
reflected in our consolidated statement of financial position is
calculated as the fair value of the warrants as of September 30,
2021. Our liabilities other than warrant liabilities were $20
million, and we had total assets of $114 million including cash
proceeds from the business combination of $87 million.
About Arqit
Arqit supplies a unique
quantum encryption Platform-as-a-Service which makes the
communications links of any networked device secure against current
and future forms of attack – even from a quantum computer. Arqit’s
product, QuantumCloud™, enables any device to download a
lightweight software agent, which can create encryption keys in
partnership with any other device. The keys are computationally
secure, optionally one-time use and zero trust. QuantumCloud™ can
create limitless volumes of keys in limitless group sizes and can
regulate the secure entrance and exit of a device in a group. The
addressable market for QuantumCloud™ is every connected device.
Caution About Forward-Looking Statements
This communication includes forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995. All statements, other than statements of historical facts,
may be forward-looking statements. These forward-looking statements
are based on Arqit’s expectations and beliefs concerning future
events and involve risks and uncertainties that may cause actual
results to differ materially from current expectations. These
factors are difficult to predict accurately and may be beyond
Arqit’s control. Forward-looking statements in this communication
or elsewhere speak only as of the date made. New uncertainties and
risks arise from time to time, and it is impossible for Arqit to
predict these events or how they may affect it. Except as required
by law, Arqit does not have any duty to, and does not intend to,
update or revise the forward-looking statements in this
communication or elsewhere after the date this communication is
issued. In light of these risks and uncertainties, investors should
keep in mind that results, events or developments discussed in any
forward-looking statement made in this communication may not occur.
Uncertainties and risk factors that could affect Arqit’s future
performance and cause results to differ from the forward-looking
statements in this release include, but are not limited to: (i)
risks that the business combination disrupts Arqit’s current plans
and operations, (ii) the outcome of any legal proceedings that may
be instituted against the Arqit related to the business
combination, (iii) the ability to maintain the listing of Arqit’s
securities on a national securities exchange, (iv) changes in the
competitive and regulated industries in which Arqit operates,
variations in operating performance across competitors, changes in
laws and regulations affecting Arqit’s business and changes in the
combined capital structure, (v) the ability to implement business
plans, forecasts, and other expectations after the completion of
the business combination, and identify and realize additional
opportunities, (vi) the potential inability of Arqit to convert its
pipeline or orders in backlog into revenue, (vii) the potential
inability of Arqit to successfully deliver its operational
technology which is still in development, (viii) the risk of
interruption or failure of Arqit’s information technology and
communications system, (ix) the enforceability of Arqit’s
intellectual property, and (x) other risks and uncertainties set
forth in the sections entitled “Risk Factors” and “Cautionary Note
Regarding Forward-Looking Statements” in Arqit’s annual report on
Form 20-F, filed with the U.S. Securities and Exchange Commission
(the “SEC”) on December 16, 2021 and in subsequent filings with the
SEC. While the list of factors discussed above and the list of
factors presented in the final prospectus are considered
representative, no such list should be considered to be a complete
statement of all potential risks and uncertainties. Unlisted
factors may present significant additional obstacles to the
realization of forward-looking statements.
1 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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20211216005542/en/
Media relations enquiries: Arqit: Julie Moon T:
+44 7825 503 950 E: julie.moon@arqit.uk SEC
Newgate: arqit@secnewgate.co.uk
Investor relations
enquiries: Arqit: E: investorrelations@arqit.uk
Gateway: arqit@gatewayir.com
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