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Arqit Quantum Inc. (ARQQ)
:ARQQ
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Arqit Quantum
(NASDAQ:ARQQ)
Rating:45Neutral
Price Target:
$24.00
▼( -4.42% Downside)
Positive Factors
Investor Interest
The rising level of investor interest in quantum computing, similar to the rise in AI, drives long-term optimism for growth in the sector.
New Contracts
Recent contract wins, including work with the U.S. Department of Defense, validate Arqit's quantum secure encryption technology and are likely to trigger additional contracts in the future.
Operating Leverage
Operating costs are expected to grow well below the pace of revenue growth, indicating significant operating leverage as the business scales.
Negative Factors
Revenue Decline
Revenue was down year over year as the company strategically shifted away from perpetual licenses.
Revenue Expectations
Revenue expectations for FY24 and FY25 have been lowered, reflecting lighter than previously modeled revenue.
Arqit Quantum (ARQQ) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$320.07M
Dividend YieldN/A
Average Volume (3M)743.93K
Price to Earnings (P/E)―
Beta (1Y)2.84
Revenue Growth-67.43%
EPS Growth87.17%
CountryUS
Employees82
SectorTechnology
Sector Strength76
IndustrySoftware - Infrastructure
Share Statistics
EPS (TTM)-1.35
Shares Outstanding12,746,713
10 Day Avg. Volume1,645,926
30 Day Avg. Volume743,926
Financial Highlights & Ratios
PEG Ratio-0.23
Price to Book (P/B)20.05
Price to Sales (P/S)0.00
P/FCF Ratio-6.41
Enterprise Value/Market Cap0.93
Enterprise Value/Revenue135.59
Enterprise Value/Gross Profit-725.79
Enterprise Value/Ebitda-1.92
Forecast
1Y Price Target
$52.00Price Target Upside107.09% 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 subscription of its QuantumCloud™ platform to enterprise and government customers. These clients pay for the use of Arqit's encryption technology to secure their communications and data. The company may also generate revenue through strategic partnerships and collaborations with technology firms and governmental bodies, which help expand the reach and application of its quantum encryption solutions. Additionally, Arqit could potentially engage in consultancy services, offering expertise in quantum encryption implementation and integration.
Arqit Quantum Financial Statement Overview
Summary
Arqit Quantum is experiencing significant financial challenges. The income statement, balance sheet, and cash flow all demonstrate poor performance, with declining revenues, negative profitability, and severe cash flow issues. Despite manageable debt, the shrinking equity and persistent net losses indicate urgent financial distress.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 | ||||
| 342.00K | 293.00K | 640.00K | 7.21M | 47.91K | 0.00 | Gross Profit |
| -408.00K | -1.59M | -1.65M | 5.92M | -139.09K | -159.00K | EBIT |
| -25.85M | -24.69M | -84.44M | -52.10M | -172.56M | -809.00K | EBITDA |
| -18.04M | -20.19M | -71.13M | 54.92M | -270.60M | ― | Net Income Common Stockholders |
| -24.07M | -54.58M | -70.39M | 182.25M | -272.81M | -568.00K |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 21.33M | 18.70M | 44.45M | 48.97M | 86.97M | 195.00K | Total Assets |
| 41.80M | 26.72M | 99.78M | 123.87M | 113.73M | 9.31M | Total Debt |
| 5.24M | 990.00K | 8.40M | 7.83M | 0.00 | 5.46M | Net Debt |
| -16.09M | -17.71M | -36.05M | -41.13M | -86.97M | 5.26M | Total Liabilities |
| 26.47M | 14.90M | 33.13M | 45.32M | 147.57M | 8.38M | Stockholders Equity |
| 15.33M | 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
25.11
Price Trends
16.63
Positive
18.81
Positive
15.15
Positive
Market Momentum
2.46
Negative
72.85
Negative
65.29
Neutral
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 25.11 is above the 20-day moving average (MA) of 18.30, above the 50-day MA of 16.63, and above the 200-day MA of 15.15, indicating a bullish trend. The MACD of 2.46 indicates Negative momentum. The RSI at 72.85 is Negative, neither overbought nor oversold. The STOCH value of 65.29 is Neutral, 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 | $191.23M | 19.36 | 56.45% | ― | ― | ― | |
61 Neutral | $11.29B | 10.07 | -7.05% | 2.96% | 7.47% | -10.75% | |
53 Neutral | $315.95M | ― | -7.51% | ― | -1.03% | 90.81% | |
47 Neutral | $514.15M | ― | ― | ― | -1012.30% | ||
45 Neutral | $320.07M | ― | -160.52% | ― | -67.43% | 87.17% | |
40 Underperform | $265.35M | ― | -136.41% | ― | -16.95% | 54.71% |
* Technology Sector Average
Performance Comparison
ARQQ
Arqit Quantum
25.11
15.08
150.35%
ALLT
Allot
7.96
5.62
240.17%
PDYN
Palladyne AI Corp
7.43
5.58
301.62%
RZLV
Rezolve AI
2.11
-9.26
-81.44%
HPAI
Helport AI Limited
5.15
-5.94
-53.56%
Arqit Quantum Earnings Call Summary
Earnings Call Date:May 22, 2025
(Q2-2025)
| % Change Since: -3.01%|
Next Earnings Date:Dec 11, 2025
Earnings Call Sentiment Neutral
The earnings call reflects a mixed sentiment. While there are significant strategic wins in telecom and defense, key partnerships, and disciplined cost management, these positives are countered by a decline in revenue, increased operating losses, and delayed revenue recognition. The company's shift to a subscription model and partnerships suggest potential for future growth, but current financials show challenges.Q2-2025 Updates
Positive Updates
Strategic Contract Wins
Arqit Quantum Inc. signed a three-year contract with a tier-one telecom network operator and secured a contract with the US Department of Defense, marking significant milestones in the telecom and defense sectors.
Key Partnerships and Collaborations
Collaboration with Intel on confidential computing, integrating Arqit Network Secure with Intel TDX, enhances data security during processing and presents new market opportunities.
Cost Management and Efficiency
The company's headcount decreased from 125 to 72 employees, reflecting disciplined cost control and efficient operations, while maintaining a focus on customer fulfillment.
Shift to Subscription Licensing Model
Transition from enterprise sales to subscription-based licensing aligns with customer interests and supports scalable growth, particularly in telecom.
Negative Updates
Revenue Decline
Revenue decreased from $119,000 in 2024 to $67,000 in the first half of 2025, impacted by end customer delays and the transition from enterprise sales to SaaS.
Increased Operating Loss
Operating loss for the period increased from $16.6 million in 2024 to $17.8 million in 2025, due to lower revenue and increased administrative expenses.
Delayed Revenue Recognition
Delays in revenue recognition from a multi-year contract in the Middle East affected financial results, though terms of the contract remain intact.
Company Guidance
In the fiscal year 2025 earnings call held on May 22, Arqit Quantum Inc. reported a revenue of $67,000 for the first half of the fiscal year, a decrease from $119,000 in the same period in 2024. The revenue was impacted by delays in customer activity under a multiyear contract in the EMEA region. The company's administrative expenses increased to $18 million from $16.8 million, despite a reduction in headcount from 125 to 72 employees. The operating loss for the period was $17.8 million, compared to $16.6 million in the previous year. Arqit Quantum Inc.'s cash and cash equivalents stood at $24.8 million as of March 31, 2025. The company highlighted significant progress in product development and market penetration, including a three-year contract with a tier-one telecom operator and a contract with the US Department of Defense. The transition from enterprise sales to a SaaS model is largely complete, and future revenue recognition is expected to improve. The company remains focused on cost control and expects the monthly cash burn to remain stable around $2.2 to $2.4 million.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.