Arqit Quantum Inc. Q2 FY2024 earnings call

• Revenue for the first half was $0.1 million, but engagements with customers are strong with contracts announced post year-end.
• 100% renewal rate of expiring contracts for Symmetric key agreement platform, network secure firewall products, and professional services.
• Three additional major telcos launched initial test installations of Arqit's SKA products, with six major telcos engaged.
• Established reseller/partnership arrangements in government, defense, enterprise, and trade finance markets.
• Assisted Intel in integrating and launching software into Xeon-based servers.
• GSMA paper and CTO Choice Award validated Arqit's technology; SKA platform meets NSA requirements and is integrated into NIAP validated CSfC components.

For the six-month period ended 31 March 2024, Arqit generated $119,000 in revenue, compared to $19,000 in the comparable period of 2023. Revenue was from the sale of Arqit's Symmetric Key platform as a service, network secure firewall product, and professional services. The satellite division, previously a discontinued operation, had no other operating income for the period. Administrative expenses for the six-month period were $16.8 million versus $25.4 million in the comparable period of 2023, driven by lower employee costs from headcount reductions. Operating loss was $16.6 million versus $25.4 million in the first half of fiscal year 2023.

• Expect revenue from new government contracts, live telco business, and RFPs involving OEM partners.
• Anticipate revenue from initial one-off integration licenses for SKA Private Instance product with subsequent endpoint license bundles becoming recurring.
• Progressing contract opportunities with defense prime contractors and expect to announce first transactions for trade secure and wallet secure products during the current period.

Q: On the award in the Middle East, could you give more color on timing from here through the end of fiscal 2024 and immediate opportunity in the region?

A: The EMEA multi-year seven-figure contract is anticipated to generate first revenues during the current half year, with other contracts and telecom rollouts also expected. Work with Intel has global reach for revenue generation.

Q: Qualitative feedback from partners on the product?

A: Feedback is the product is easy to use, quick to deploy, very stable with 100% uptime in recent contracts. It has strong competitive advantage in performance and reliability as other methods suffer performance lags.

Q: How quickly may need to add back to cost infrastructure as revenues scale?

A: Cost cuts include exiting satellite business and scaling back software investment. Adequate pre and post sales engineering resources for current contracts, with modest additions likely in customer support/service into next financial year