Arqit Quantum Inc. Q4 FY2024 earnings call

• Andy Leaver stepped into the CEO role and provided an overview of the company's position in the market for enhanced encryption, noting the market is moving towards Arqit. - The market for quantum computing and encryption is gaining traction, with recognition from entities like Gartner and IDC. - Arqit has engaged with eight leading telecom network providers and has a partnership with Sparkle for a Quantum-Safe network-as-a-Service. - The company secured a seven-figure multi-year contract with a governmental agency in the Middle East, expecting to book revenue in the current fiscal year. - Arqit reduced administrative expenses, with budgeted monthly operating costs for fiscal 2025 at $2.15 million per month, and headcount reduced to 82 from 147. - Focus is on converting current engagements with prospective customers to operating licenses, particularly in telecom, government, military, financial services, and IP-rich industries.

Arqit's revenue for the fiscal year was $293,000, down from $640,000 in the previous year. The revenue came from Arqit's SKA platform, with $293,000 total, where $102,000 was professional services. Most contracts were limited licenses for demonstration and integration testing of Arqit's symmetric key agreement software. Arqit's SKA platform revenue in 2023 was $640,000 from seven contracts, mostly from two perpetual licenses.

• Focus on key markets like telecom, government, military, financial services, and IP-rich industries. - Aim to convert current engagements with prospective customers to operating licenses. - Budgeted monthly operating costs for fiscal 2025 are $2.15 million per month, with cost savings initiatives ahead of budget. - Expect to commence booking revenue from the Middle East contract in the current fiscal year.

• Large counterparties with sophisticated technological requirements take time and significant interaction to reach commercial acceptance. - Completion of documentation for contracts can take longer than expected, though the seven-figure Middle East contract was executed prior to fiscal year end. - Need to ensure proper customer fulfillment and support while converting engagements to licenses.

Q: Can you discuss the revenue cadence for the 7-figure Middle East deal?

A: The deal is taken ratably and should start being led in during the reporting period.

Q: How is AI playing a part in the Quantum-Safe story?

A: AI is being looked at for the remediation story, to suggest conversational manner to fix network issues and apply Arqit's technology.

Q: What other verticals are coming into focus in 2025?

A: Financial services, IP-rich organizations, and others where there's a need for quantum-safe information, with AWS and others leaning into the space.

Q: How quickly will infrastructure costs be added back as revenue ramps?

A: Very little leverage is expected in the current fiscal year as the model suggests delivering expected revenue with the current cost base.

Q: Is the recent raise included in the cash balance?

A: A little over $1.8 million landed in early October but missed the cutoff for recognition in the FY '24 financial period