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Arqit Quantum Inc. (ARQQ)
:ARQQ
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Arqit Quantum
(NASDAQ:ARQQ)
43Neutral
Positive Factors
Revenue Growth
The company is positioned to deliver more significant revenue beginning with F1H25 results due to a signed contract in the EMEA region.
Stock Performance
Shares of Arqit Quantum Inc. have increased 265.6% versus an increase of 9.9% for the Russell 2000, indicating strong performance.
Negative Factors
Revenue Expectations
Revenue expectations for FY24 and FY25 have been lowered, reflecting lighter than previously modeled revenue.
Revenue Performance
Revenue was down year over year as the company strategically shifted away from perpetual licenses.
Arqit Quantum (ARQQ) vs. S&P 500 (SPY)
Market Cap
$213.13M
Dividend YieldN/A
Average Volume (3M)491.26K
Price to Earnings (P/E)―
Beta (1Y)3.38
Revenue Growth-54.22%
EPS GrowthN/A
CountryUS
Employees82
SectorTechnology
Sector Strength50
IndustrySoftware - Infrastructure
Share Statistics
EPS (TTM)-7.76
Shares Outstanding12,746,713
10 Day Avg. Volume879,422
30 Day Avg. Volume491,262
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)319.91
Price to Cash Flow (P/CF)N/A
P/FCF Ratio0.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$52.00Price Target Upside245.29% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering1
Arqit Quantum Business Overview & Revenue Model
Company DescriptionArqit Quantum Inc. provides cybersecurity services through satellite and terrestrial platforms in the United Kingdom. It offers QuantumCloud that enables any device to download a lightweight software agent, which can create encryption keys in partnership with any other device. The company is based in London, the United Kingdom.
How the Company Makes MoneyArqit Quantum makes money primarily through the licensing and sale of its QuantumCloud™ platform to businesses and government organizations seeking advanced cybersecurity solutions. The company's revenue model includes subscription fees for access to its cloud-based encryption services, as well as potential one-time licensing fees for customized solutions. Additionally, Arqit may engage in strategic partnerships with technology firms and telecommunications companies to expand the reach and application of its encryption technology, thereby increasing its revenue streams. These partnerships can lead to joint ventures or collaborative projects that further enhance the company's market position and financial performance.
Arqit Quantum Financial Statement Overview
Summary
Arqit Quantum is experiencing significant financial difficulties. The income statement shows declining revenue trends and poor profitability, with negative EBIT and net profit margins. The balance sheet reveals manageable debt but shrinking stockholder equity. The cash flow statement highlights severe issues with negative operating and free cash flows, indicating unsustainable operations.Income Statement
Arqit Quantum's income statement reveals significant challenges. The company experienced substantial declines in total revenue compared to previous years, with a negative growth rate. Both EBIT and net profit margins are negative, indicating operational inefficiencies and high net losses. Despite a positive gross profit margin in the latest year, the overall profitability remains deeply unprofitable.25
Negative
Balance Sheet
The balance sheet indicates a moderate financial position with some concerns. The company has a debt-to-equity ratio that suggests manageable leverage, although equity is shrinking. The equity ratio has decreased, pointing to increased liabilities over assets. There is a potential cash position, but shrinking stockholder equity signals financial stress.30
Negative
Cash Flow
Arqit Quantum's cash flow statement highlights severe issues. The company has negative operating and free cash flows, indicating it is not generating enough cash to sustain operations or cover capital expenditures. The free cash flow growth rate is negative, reflecting a worsening cash flow situation. The operating cash flow to net income ratio is also negative, further demonstrating cash generation problems.20
Very Negative
| Breakdown | |||||
| TTM | Sep 2024 | Sep 2023 | Sep 2022 | Sep 2021 | Sep 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 740.00K | 293.00K | 640.00K | 7.21M | 47.91K | 0.00 | Gross Profit |
| -394.00K | 293.00K | -1.65M | 5.92M | -139.09K | -159.00K | EBIT |
| -48.38M | -24.69M | -84.44M | -52.10M | -172.56M | -809.00K | EBITDA |
| -45.28M | -20.19M | -71.13M | 54.92M | -270.60M | ― | Net Income Common Stockholders |
| -80.45M | -54.58M | -70.39M | 182.25M | -272.81M | -568.00K |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 48.75K | 18.70M | 44.45M | 48.97M | 86.97M | 195.00K | Total Assets |
| 2.33M | 26.72M | 99.78M | 123.87M | 113.73M | 9.31M | Total Debt |
| 1.36M | 990.00K | 8.40M | 7.83M | 0.00 | 5.46M | Net Debt |
| 1.32M | -17.71M | -36.05M | -41.13M | -86.97M | 5.26M | Total Liabilities |
| 2.10M | 14.90M | 33.13M | 45.32M | 147.57M | 8.38M | Stockholders Equity |
| 232.75K | 11.82M | 66.65M | 78.56M | -33.84M | 931.00K |
| Cash Flow | Free Cash Flow | ||||
| -46.35M | -37.45M | -48.95M | -51.35M | -33.34M | -5.91M | Operating Cash Flow |
| -47.36M | -34.13M | -32.83M | -26.92M | -24.03M | -1.33M | Investing Cash Flow |
| 614.00K | -2.40M | -16.08M | -24.43M | -9.31M | -4.57M | Financing Cash Flow |
| 26.59M | 11.19M | 44.85M | 22.37M | 120.11M | 1.68M |
Arqit Quantum Technical Analysis
Negative
15.06
Price Trends
18.26
Negative
19.90
Negative
13.70
Positive
Market Momentum
0.07
Negative
45.16
Neutral
15.70
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ARQQ, the sentiment is Negative. The current price of 15.06 is below the 20-day moving average (MA) of 15.62, below the 50-day MA of 18.26, and above the 200-day MA of 13.70, indicating a neutral trend. The MACD of 0.07 indicates Negative momentum. The RSI at 45.16 is Neutral, neither overbought nor oversold. The STOCH value of 15.70 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for ARQQ.
Arqit Quantum Risk Analysis
Arqit Quantum disclosed 36 risk factors in its most recent earnings report. Arqit Quantum reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Arqit Quantum Peers Comparison
Overall Rating
UnderperformOutperform
Sector (58)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
58 Neutral | $21.06B | 10.51 | -17.38% | 2.43% | 4.55% | -24.07% | |
57 Neutral | $52.45B | ― | -31.43% | ― | 29.21% | -51.47% | |
46 Neutral | $2.47B | ― | -38.29% | ― | ― | 2.40% | |
44 Neutral | $239.92M | ― | -41.48% | ― | 182.62% | -3.67% | |
44 Neutral | $5.27B | ― | -76.34% | ― | 95.41% | -97.85% | |
43 Neutral | $213.13M | ― | -61.11% | ― | -54.22% | ― | |
43 Neutral | $2.42B | ― | -170.20% | ― | -10.15% | -67.68% |
* Technology Sector Average
Performance Comparison
ARQQ
Arqit Quantum
15.06
-1.84
-10.89%
QS
QuantumScape
4.33
-1.80
-29.36%
SNOW
Snowflake
150.63
-9.89
-6.16%
QSI
Quantum-Si
1.27
-0.58
-31.35%
IONQ
IonQ
22.85
12.86
128.73%
RGTI
Rigetti Computing
8.15
6.69
458.22%
Arqit Quantum Earnings Call Summary
Earnings Call Date: Dec 5, 2024 | % Change Since: -37.77% | Next Earnings Date: May 8, 2025
Earnings Call Sentiment Neutral
The earnings call highlights strategic advances, including a significant government contract, increased telecom engagements, and recognition as an IDC innovator. Despite these achievements, the company faced a decline in revenue and cash balance. While cost-cutting measures have been effective, the financial performance remains a concern.Highlights
CEO Transition and Strategic Review
Andy Leaver, the new CEO, conducted a comprehensive review and identified a significant market opportunity for Arqit's unique symmetric key agreement software. The company is accelerating engagement with OEMs, network operators, governments, and end users.
Significant Government Contract
Arqit secured a seven-figure multi-year contract with a Middle Eastern government agency, marking a significant breakthrough in the government and military markets.
Increased Engagement with Telecom Providers
Arqit engaged with eight leading telecom network providers, focusing on technical and integration matters, which could convert into annual recurring licenses.
Cost Reduction Initiatives
The company reduced its headcount from 147 to 82 employees and lowered budgeted monthly operating costs to $2.15 million, resulting in administrative expenses of $23.5 million, down from $55.2 million.
Recognition as a 2024 IDC Innovator
Arqit was named a 2024 IDC innovator for post-quantum cryptography, one of only five vendors recognized for transformative solutions.
Lowlights
Revenue Decline
Revenue for the fiscal year was $293,000, a decrease from $640,000 in the previous year due to a shift from perpetual to operational licenses.
Operating Loss
The company reported an operating loss of $24.6 million, though this was an improvement from a $54.5 million loss in the previous fiscal year.
Cash Balance Reduction
Arqit's cash and cash equivalents decreased to $18.7 million from $44.5 million at the previous fiscal year-end.
Company Guidance
During the fiscal year 2024 earnings call, Arqit provided several key metrics and guidance for the upcoming period. The company reported a revenue decline from $640,000 in 2023 to $293,000 in 2024, mainly due to a strategic shift from selling perpetual enterprise licenses to operational licenses aimed at generating annual recurring revenue. Despite this short-term revenue decrease, Arqit executed 13 contracts in 2024, up from seven in the previous year, and engaged in significant technical discussions with 11 entities, including eight telecom network operators. The company also focused on cost reduction, cutting its headcount from 147 to 82 employees and reducing monthly operating costs to $2.15 million for fiscal 2025. Additionally, Arqit secured a seven-figure multi-year contract with a governmental agency in the Middle East, expected to begin contributing to revenue in the current fiscal year. The company aims to capitalize on increased market interest in quantum computing and encryption, with a focus on telecom, government, and military markets.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.