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Arqit Quantum Inc. (ARQQ)
:ARQQ
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Arqit Quantum
(NASDAQ:ARQQ)
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Rating:42Neutral
Price Target:
$30.00
▼(-15.30% Downside)
Arqit Quantum's overall stock score is primarily impacted by its poor financial performance, with significant revenue declines and cash flow issues. While there are strategic wins and a shift towards a SaaS model, these are insufficient to offset the financial challenges. Technical analysis and valuation metrics further indicate potential risks.
Positive Factors
Strategic Partnerships
Partnerships with industry leaders like Intel enhance Arqit's product offerings and market credibility, potentially driving long-term growth and innovation in quantum encryption solutions.
Market Positioning
Arqit's focus on quantum encryption positions it as a leader in cybersecurity, addressing emerging threats and expanding its market share in a growing industry.
Cost Control
Effective cost control measures, such as reducing headcount, improve operational efficiency and financial sustainability, crucial for long-term business viability.
Negative Factors
Revenue Decline
Significant revenue decline indicates challenges in market penetration and sales execution, potentially impacting long-term growth and financial stability.
Operating Loss Increase
Rising operating losses highlight inefficiencies and financial strain, which could hinder future investments and strategic initiatives essential for growth.
Delayed Revenue Recognition
Delays in revenue recognition disrupt cash flow and financial planning, affecting the company's ability to invest in growth and maintain operational stability.
Arqit Quantum (ARQQ) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$541.65M
Dividend YieldN/A
Average Volume (3M)330.77K
Price to Earnings (P/E)―
Beta (1Y)2.59
Revenue Growth-67.43%
EPS Growth87.17%
CountryUS
Employees82
SectorTechnology
Sector Strength88
IndustrySoftware - Infrastructure
Share Statistics
EPS (TTM)-1.35
Shares Outstanding15,292,167
10 Day Avg. Volume309,267
30 Day Avg. Volume330,771
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)N/A
P/FCF RatioN/A
Enterprise Value/Market Cap0.30
Enterprise Value/Revenue476.21
Enterprise Value/Gross Profit-399.18
Enterprise Value/Ebitda-9.03
Forecast
1Y Price Target
$52.00Price Target Upside46.81% 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 sale and licensing of its QuantumCloud™ encryption platform. The company generates revenue by offering subscription-based services to organizations that require secure data transmission and communication solutions. Additionally, Arqit may engage in strategic partnerships and collaborations with other technology and cybersecurity companies to enhance its product offerings and expand its market reach. The company may also receive funding or investments from government contracts or grants focused on advancing quantum encryption technologies.
Arqit Quantum Earnings Call Summary
Earnings Call Date:May 22, 2025
(Q2-2025)
| % Change Since: |
Next Earnings Date:Dec 11, 2025
Earnings Call Sentiment Neutral
The earnings call highlighted significant strategic wins and progress in product development and market positioning. However, these positive developments were offset by a decline in revenue, increased operating losses, and delays in revenue recognition. While the company is making strides in key markets and controlling costs, the financial performance for the first half was impacted by external delays and a transition in revenue recognition models.Q2-2025 Updates
Positive Updates
Strategic Contract Wins
Arqit Quantum Inc. signed a three-year contract with a tier-one telecom network operator for its NetworkSecure product and a one-year contract with the US Department of Defense, marking significant progress in key vertical markets.
Market Positioning and Product Development
The company is well-positioned to address the quantum threat with its symmetric key cryptography software. Notable collaborations include a partnership with Intel for confidential computing, enhancing data security in the cloud.
Cost Control and Operational Efficiency
The company reduced its headcount from 125 to 72 employees, resulting in cost savings despite unfavorable foreign exchange impacts. Administrative expenses were $18 million compared to $16.8 million in the previous period.
Sales Pipeline Growth
Arqit Quantum Inc. reported substantial sales leads and inquiries from the RSA cybersecurity conference, indicating growing market awareness and interest in their products.
Negative Updates
Revenue Decline
The company reported $67,000 in revenue for the first half of fiscal year 2025, down from $119,000 in the comparable period of 2024, attributed to delays in contract revenue recognition.
Operating Loss Increase
Operating loss increased to $17.8 million for the period, up from $16.6 million in the first half of fiscal year 2024, primarily due to lower revenue and increased administrative expenses.
Delayed Revenue Recognition
Revenue recognition was delayed due to unforeseen delays by end customers, particularly affecting multi-year contracts in the EMEA region.
Company Guidance
During the call, Arqit Quantum Inc. provided guidance on several key metrics and strategic initiatives for the first half of fiscal year 2025. The company reported a revenue of $67,000, a decrease from $119,000 in the comparable period of 2024, attributed to delays in revenue recognition from a multiyear contract in the EMEA region. Despite this, Arqit highlighted significant developments, including a three-year contract with a tier-one telecom network operator and a contract with the U.S. Department of Defense, marking their first DoD win. The company is transitioning from enterprise sales to a SaaS model, focusing on cost control, with administrative expenses reported at $18 million, an increase from $16.8 million in 2024. Headcount was reduced to 72 employees from 125, reflecting a shift towards customer fulfillment. Arqit emphasized its collaborations, notably with Intel, on confidential computing, positioning itself to address the quantum threat. The company forecasts continued growth and expects operating costs to remain stable, with a monthly cash burn rate between $2.2 and $2.4 million.Arqit Quantum Financial Statement Overview
Summary
Arqit Quantum is facing significant financial difficulties, with declining revenue trends, poor profitability, and a weak cash flow position. The company shows negative growth rates in revenue, EBIT, and net profit margins, indicating operational inefficiencies and high net losses. The balance sheet reveals manageable debt levels but shrinking equity, while the cash flow statement highlights severe cash generation issues.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 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 342.00K | 293.00K | 640.00K | 7.21M | 47.91K | 0.00 |
| Gross Profit | -408.00K | -1.59M | -1.65M | 5.92M | -139.00K | -159.00K |
| EBITDA | -18.04M | -20.19M | -41.20M | 54.92M | -270.60M | -5.00K |
| Net Income | -24.07M | -54.58M | -70.39M | 65.08M | -271.73M | -568.00K |
Balance Sheet | ||||||
| Total Assets | 29.39M | 26.72M | 99.78M | 123.87M | 113.73M | 9.31M |
| Cash, Cash Equivalents and Short-Term Investments | 24.78M | 18.70M | 44.45M | 48.97M | 86.97M | 195.00K |
| Total Debt | 833.00K | 990.00K | 8.40M | 7.83M | 0.00 | 5.46M |
| Total Liabilities | 13.41M | 14.90M | 33.13M | 45.32M | 147.57M | 8.38M |
| Stockholders Equity | 15.98M | 11.82M | 66.65M | 78.56M | -33.84M | 931.00K |
Cash Flow | ||||||
| Free Cash Flow | -27.30M | -37.45M | -48.95M | -51.35M | -33.34M | -5.91M |
| Operating Cash Flow | -23.95M | -34.13M | -32.83M | -26.92M | -24.03M | -1.33M |
| Investing Cash Flow | -1.69M | -2.40M | -16.08M | -24.43M | -9.31M | -4.57M |
| Financing Cash Flow | 29.31M | 11.19M | 44.85M | 22.37M | 120.11M | 1.68M |
Arqit Quantum Technical Analysis
Positive
35.42
Price Trends
33.77
Positive
29.58
Positive
25.18
Positive
Market Momentum
0.04
Negative
61.67
Neutral
88.72
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ARQQ, the sentiment is Positive. The current price of 35.42 is above the 20-day moving average (MA) of 30.12, above the 50-day MA of 33.77, and above the 200-day MA of 25.18, indicating a bullish trend. The MACD of 0.04 indicates Negative momentum. The RSI at 61.67 is Neutral, neither overbought nor oversold. The STOCH value of 88.72 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive 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 (61)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
72 Outperform | 148.16M | ― | 0.00% | ― | 0.00% | 0.00% | |
56 Neutral | 1.73B | -20.16 | 454.37% | ― | 0.00% | 0.00% | |
53 Neutral | 419.25M | -184.09 | 0.00% | ― | 4.74% | 94.70% | |
46 Neutral | 303.71M | -3.87 | -83.21% | ― | -50.07% | 40.90% | |
42 Neutral | $541.65M | ― | -160.52% | ― | -67.43% | 87.17% | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% |
* Technology Sector Average
Performance Comparison
ARQQ
Arqit Quantum
35.42
29.17
466.72%
ALLT
Allot
9.37
6.26
201.29%
PDYN
Palladyne AI Corp
7.24
5.34
281.05%
MLGO
MicroAlgo
11.45
-113.89
-90.86%
RZLV
Rezolve AI
7.11
0.11
1.57%
HPAI
Helport AI Limited
3.99
-1.73
-30.24%
Arqit Quantum Corporate Events
Arqit Quantum Inc. Announces AGM Results and Board Appointments
Sep 11, 2025
On September 11, 2025, Arqit Quantum Inc. held its annual general meeting where shareholders approved all proposals, including the appointment of three nominees to the Board of Directors. This event signifies a continued commitment to strengthening its governance structure, which may enhance its strategic positioning in the quantum technology industry.
Arqit Quantum Inc. Announces September 2025 Annual General Meeting
Aug 28, 2025
Arqit Quantum Inc. has announced its upcoming Annual General Meeting of Shareholders, scheduled for September 11, 2025, in London and via webcast. The meeting will address the election of two Class I directors and other business matters. Shareholders of record as of August 8, 2025, are entitled to vote, and the company encourages participation either in person or through proxy voting. This meeting is crucial for stakeholders as it involves key decisions impacting the company’s governance and strategic direction.
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
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.