Arqit Quantum's Q4 2025 Earnings Call: Contradictions Emerge on Sales Strategy, OpEx, and Market Expansion

Date of Call: December 9, 2025

Financials Results

• Revenue: $530,000 in fiscal 2025, compared to $293,000 in fiscal 2024
• Operating Margin: Operating loss $38.5M in fiscal 2025, versus an operating loss of $26.9M in fiscal 2024

Guidance:

• Target maximum cash spend of $2.5 million per month in FY2026.
• $1.2 million of contractual revenue could be recognized in fiscal 2026.
• Expect to build on fiscal 2025 momentum and grow revenue in fiscal 2026.
• Plan additional product and go-to-market announcements for confidential computing and data sovereignty.

Business Commentary:

* Market Momentum and Customer Engagement: - In the first 2 months of this fiscal year, Arqit signed 12 demonstration and test engagements, demonstrating a significant increase in prospective customer activities compared to the previous fiscal year. -

- The increase in market momentum and customer engagement is driven by the growing awareness of quantum computing threats and the need for post-quantum security solutions, as well as regulatory pressures.

• Product and Service Expansion:
• Arqit's acquisition of Ampliphae's Encryption Intelligence product and risk advisory services expanded its engagement with current and prospective customers, offering a comprehensive solution for migrations to a post-quantum cryptographic posture.

• Collaborations with Intel and Sparkle broadened Arqit's product solution sets, including confidential computing and quantum secure communications across the optical transport layer, tapping into emerging market opportunities.

• Revenue Growth and Contract Wins:

• Arqit generated $530,000 in revenue for fiscal 2025, compared to $293,000 in fiscal 2024, representing a material improvement.
• The growth in revenue was primarily due to the commencement of a multiyear contract with a customer in the Middle East and the signing of additional contracts with Sparkle, RSG Telecom, and Fabric Networks.

Sentiment Analysis:

Overall Tone: Positive

• CEO: "we have seen a change in the market from awareness ... to action" and "we are excited about our prospects for 2026." CFO: cash and cash equivalents of $36.9M and plan to cap cash spend at $2.5M/month, signaling confidence in runway and controlled investment to capture momentum.

Q&A:

• Question from Scott Buck (H.C. Wainwright & Co, LLC, Research Division): Andy, I'm curious, is there -- or was there a particular catalyst that's helping drive the higher level of demonstrations and activity here in the last couple of months, either something external or maybe some change in the selling process?
  Response: Primary catalyst is heightened market awareness from 2025 quantum advances (IBM/Google/etc.) plus regulatory pressure (especially in telco) and concern about 'harvest now, decrypt later,' driving inbound demo requests.

• Question from Scott Buck (H.C. Wainwright & Co, LLC, Research Division): No, that's very helpful. It sounds like the market is coming to you guys rather than you having to change any of your kind of internal selling procedures to grab more attention, which is great. I also want to ask about Encryption Intelligence. What does the sales cycle look like there versus the legacy product? I would imagine it's significantly shorter and maybe a driver of revenue here in the near term.
  Response: Encryption Intelligence shortens and accelerates sales cycles, is being adopted by telcos as an ongoing tool, and serves as a lead generator into Arqit's SKA encryption solutions.

• Question from Scott Buck (H.C. Wainwright & Co, LLC, Research Division): Yes. No, that makes sense. I'm curious, Andy, are there additional kind of bolt-on or tuck-in opportunities similar to that asset purchase you made back in May that might make sense to, I don't know, either bring in some additional revenue or expand the potential customer footprint?
  Response: The company is actively seeking tuck-ins around data sovereignty and confidential compute that complement detect/protect/comply capabilities and extend market reach.

• Question from Scott Buck (H.C. Wainwright & Co, LLC, Research Division): Great. And then if I can squeeze one more in, and this is probably for Nick. Curious, should we anticipate any change in OpEx for fiscal '26? Or can you support the anticipated growth in the business with this kind of current level of OpEx spend?
  Response: CFO: plan to maintain cost control and cap cash spend at approximately $2.5M per month in FY2026; expect to support growth within that constraint.

• Question from Troy Jensen (Cantor Fitzgerald & Co., Research Division): Congrats on all the great progress here. Maybe, Andy, for you to start with, can we just touch on competition? It seems like 6, 12 months ago, there was really nobody -- the traditional security vendors talking about post-quantum security and now I hear them upgrading their algorithms and whatnot. So curious, is that just mainly software-based competition? Or I just curious if you could touch on the competitive dynamics.
  Response: Competition is increasing, but Arqit differentiates via 5+ years of work, ~25 patents and a lightweight, software-based symmetric key agreement approach trusted by governments and defense.

• Question from Troy Jensen (Cantor Fitzgerald & Co., Research Division): Perfect. Great answer. And then, Andy, also for you, just if you look at the success lately, it seems like it's been telco and government. I'm curious, can you just talk about the corporate side? It seems like this is something financial organizations and a variety of different kind of corporate American companies should be looking at.
  Response: Corporate targets expanding beyond telco/defense to regulated industries and IP-heavy sectors—financial services, life sciences, chemicals and other critical-infrastructure firms are engaging due to regulation and long-lived IP risks.

Contradiction Point 1

Sales Cycle and Market Interest

It involves differing explanations of the factors driving sales and market interest, which are crucial for understanding the company's growth trajectory and customer engagement.

Is there a catalyst for increased activity in recent months, such as external factors or changes in the sales process? - Scott Buck (H.C. Wainwright & Co, LLC, Research Division)

2025Q4: The catalyst is the growing awareness of the potential impact of quantum computing. The advances in quantum technology, especially from larger players like IBM and Google, have emphasized the need for action. - Andrew Leaver(CEO)

As you accumulate these contract wins, how much is due to your sales capabilities versus broader market interest and FOMO from slower-moving clients? - Scott Buck (H.C. Wainwright)

2025Q1: We focus on aligning our interests with customers through a pay-as-you-grow model and reducing friction in the sales process. - Andy Leaver(CEO)

Contradiction Point 2

OpEx and Cash Burn

It involves a discrepancy in the expected OpEx and cash burn levels, which are critical financial indicators for investors and stakeholders.

Will OpEx in fiscal '26 support expected business growth? - Scott Buck (H.C. Wainwright & Co, LLC, Research Division)

2025Q4: Our plan is to maintain the cost control achieved in fiscal '25 and keep our maximum cash spend per month at $2.5 million for fiscal '26. - Nicholas Pointon(CFO)

With recent sales growth, will OpEx increase to support new contracts signed recently? How might operating leverage evolve as the business scales? - Scott Buck (H.C. Wainwright)

2025Q1: Our trailing monthly cash burn is approximately $2.2-2.4 million, and we expect this level to remain stable in the near term. - Nick Pointon(CFO)

Contradiction Point 3

Partnership and Market Expansion Strategy

It involves changes in the strategic focus and market expansion plans, which are crucial for understanding the company's growth strategy and potential market reach.

Are financial institutions and other U.S. companies exploring post-quantum security? - Troy Jensen (Cantor Fitzgerald & Co., Research Division)

2025Q4: We're seeing interest from regulated industries, critical infrastructure, and companies with long development cycles in IP-rich industries like life sciences and chemicals. Financial services are also a focus, especially with the need for secure compute environments. - Andrew Leaver(CEO)

What is the status of the UK defense contracts and their potential for expansion? - Scott Buck (H.C. Wainwright)

2024Q4: We have secured a contract with the UK Ministry of Defence to provide our quantum-resistant encryption technology for a critical defense communication system. This validates the effectiveness of our solution and opens opportunities for further expansion in the defense sector. - Andy Leaver(CEO)

Contradiction Point 4

Sales Cycle and Revenue Growth Expectations

It involves differing expectations regarding the sales cycle and revenue growth, which are crucial for understanding the company's financial outlook and operational strategies.

How does the sales cycle for Encryption Intelligence differ from the legacy product? - Scott Buck (H.C. Wainwright & Co, LLC, Research Division)

2025Q4: The acquisition of Encryption Intelligence has enhanced our ability to help organizations identify and mitigate cryptographic weaknesses in their networks. The sales cycle now involves showing organizations their cryptographic landscape, vulnerabilities, and potential attacks while providing deterministic solutions. - Andrew Leaver(CEO)

How do you expect revenue growth in 2024 from maturing relationships to compare to your current cash balance? Do you have enough runway to reach operating breakeven significantly closer? - Scott Buck (H.C. Wainwright)

2023Q4: We have confidence that the scale of our channel partnerships and the increasing maturity of those partnerships does offer us the ability to get towards cash flow breakeven within a relatively modest time period. - David Williams(CEO)