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DATE

Thursday, May 21, 2026 at 11 a.m. ET

CALL PARTICIPANTS

• Chief Executive Officer — Andrew J. Leaver
• Chief Financial Officer — Nicholas Pointon
• Chief Financial Officer — Rob Russell

TAKEAWAYS

• Revenue -- $623 thousand for the first half, up from $67 thousand in the comparable period, driven by revenue from 11 contracts versus 6.
• Contract Activity -- 11 contracts executed, with 3 in telecom and 8 in government, defense, and enterprise segments; 2 contracts expected to be imminently renewed and upsized.
• Administrative Expenses -- $33.9 million, up from $20.2 million, reflecting higher headcount and share-based compensation, partially offset by lower property and FX costs.
• Share-based Compensation -- Noncash charge of $12.7 million versus $872 thousand in the prior period, included in administrative expenses.
• Operating Loss -- $33.7 million, compared with $20 million prior period, due to rising operating costs outpacing revenue growth.
• Loss Before Tax -- $33.1 million, compared with $19.5 million, impacted by higher expenses and lower finance income.
• Cash and Equivalents -- $28.9 million as of March 31, rising to $35.9 million by May 20, providing more than 14 months of financial runway.
• Warrants Outstanding -- $13.5 million of in-the-money warrants expiring September 2026, representing 5.4 million shares; additional warrants expire by September 2028.
• Encryption Intelligence Product Rollout -- First commercial contract signed May 18 and first partnership agreement signed May 19 with a European specialist cybersecurity provider.
• Partnership Highlights -- Strategic collaborations established with 6WIND and RAD, and selected as scale-up partner for Tomorrow Street, a Vodafone and Technoport joint venture.
• Key Use Case Deployment -- Sparkle, a tier 1 Italian network operator, licensed Arqit’s product to deliver quantum-secured network services, including commercial launch across 20 Equinix data centers worldwide.
• Defense Sector Progress -- Partner contract renewed and upsized by almost 90% on May 1; renewal and expansion of largest U.S. defense contract is expected.
• Government and Telecom Pipeline -- Engaged in advanced contract discussions with multiple telecom providers, including one in the U.S., and substantial increase in government and defense bid activity.
• Product Differentiation -- Encryption solutions are software-based, crypto-agile, require no new hardware, and enable rapid deployment from data centers to edge devices.
• Leadership Transition -- Rob Russell appointed full-time CFO effective May 1; Nicholas Pointon steps down end of May after a transition period.

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RISKS

• Administrative expenses increased materially, primarily due to higher headcount and share-based compensation, resulting in a wider operating loss despite revenue growth.
• Operating loss reached $33.7 million, with loss before tax at $33.1 million, highlighting financial challenges associated with growth-stage investments.

SUMMARY

Arqit Quantum (ARQQ +26.05%) reported substantial revenue growth and contract momentum, particularly in telecommunications and government defense segments, underscored by major partnership announcements and new product deployments. Management emphasized a market-wide acceleration toward quantum-safe cryptography, with external industry leaders compressing migration timelines and citing urgent infrastructure requirements. The company’s liquidity improved quarter-to-date, aided by rising cash balances and anticipation of incremental warrant proceeds, while concurrent expense escalation resulted in significant losses and a highlighted need for continued financial discipline.

• The commercial adoption of Arqit's encryption intelligence and network security solutions advanced with initial contract signings and expanded industry collaborations.
• Deployment with tier 1 global operators and entry into the Tomorrow Street ecosystem signals increasing enterprise and telco customer access for Arqit.
• Board-approved leadership change initiates a transition of financial stewardship at a key growth juncture for the company.

INDUSTRY GLOSSARY

• PQC: Post-quantum cryptography; cryptographic algorithms designed to be secure against attacks from quantum computers.
• Crypto-agility: The capability of a system to rapidly switch between cryptographic algorithms and protocols in response to new threats.
• VPN: Virtual Private Network; provides secure, encrypted connections over untrusted networks for enterprise data transfer.
• DCI: Data Center Interconnect; connects geographically distributed data centers, enabling secure data transfer across enterprise infrastructure.

Full Conference Call Transcript

Andrew J. Leaver: Thank you, and thank you for joining our first half of year 2026 earnings call. When we spoke in December, reflecting on fiscal year 25, I said that 2025 had been a year of momentum in the realization of the need for enhanced cybersecurity to address the coming threat to data security posed by quantum computers at scale. Governments were taking their concerns public, some mandating road maps to enhance cryptographic postures, for governmental agencies, and encouraging enterprises to take action as well. I noted that from Arqitde's conversations with governments and enterprises, it was no longer a question of if organizations need to upgrade their cryptographic security posture, but when they will upgrade their posture.

What has become clear in the first half of our current fiscal year is that when is becoming now. While that, in my view, while that is my view based on our deep understanding of the threat, let me cite the view of some leading players in the quantum and security space. Google has been aligned with the US National Institute for Standards and Technology, or NIST, timeline for migration to post quantum cryptography which calls for the deprecation, meaning the market of removal, of unsafe cryptography by 2030 and complete disallowance by 2035. On March 25, Google advised that cryptographic systems migrate by 2029.

Google's accelerated timeline was the result of research which it published that demonstrated quantum computers will be able to break elliptical curve cryptography, the kind of cryptography that protects things like crypto wallets, with 20x fewer qubits engaged than previously projected. That moves the timescale from 2035 to by 2029. That is a serious migration timeline compression. Also, Cloudflare on April 7, it pulled forward its advice to migrate by 2029 as well. Cloudflare's revision was based on Google's published research, but also research published by Oratomic on March 30.

Oritomik concluded that by leveraging advances in high rate quantum error correcting codes, efficient logical instruction sets, and circuit design, Shaw's algorithm can be executed at cryptographically relevant scales with as few as 10 thousand reconfigurable atomic qubits. That is a shockingly low estimate of the computational resources needed to crack RSA. And finally, IonQ, on its May 6 earnings call, CEO, Nicola DiMasi stated, based on our public road map, we expect to achieve the logical cubic count required to challenge RSA 2048 encryption in the 28 to 29 window. If it is correct, migration to a post quantum security posture by 2029 may be too late. The urgency to migrate post quantum cryptography is heightened by 2 factors.

Firstly, protecting your existing data against harvest now, decrypt later attacks. Any data that is stolen today, even if protected with current encryption technology, is vulnerable to exposure when a quantum computer sets to work on it on a later date. Any data that is sensitive or has a shelf life should be secured with post quantum encryption now. Secondly, migrating to post quantum cryptography involves analysis, planning, and execution across the entire data and communication architecture of an organization, which requires time. If Google Cloudflare, and IonQ are correct, and we think they are, then time's of the essence. Arqit's product set is well positioned to enable an end to end migration to a post quantum cryptographic security posture.

From assessing the current risk inherent in an organization's network architecture to implementing software based post quantum cryptographic solutions which are compliant with NIST and NSA standards. Our encryption intelligence risk analysis tool gives organizations complete visibility into all encryption technologies and use across the network automatically identifying weak points and vulnerabilities, including those susceptible to quantum attacks. This is a critical step in developing a migration strategy. Understanding what encryption is in use, where and what it is protecting allows CSOs and CTOs to scope their risk and develop a game plan to upgrade to post quantum cryptography.

Our software based post quantum encryption solutions allow organizations to upgrade now protect and against harvest now, decrypt later attacks, and when quantum computers arrive at scale. Our solutions are cryptographically agile, which gives CSOs and CTOs flexibility to mix and match PQAs, that is post quantum algorithms, and symmetric key cryptography. Being software based and lightweight, our encryption solutions can be flexibly deployed at any level of a network architecture from servers, down to small edge devices. No new hardware devices are required, and it can be implemented quickly. We have completed deployments in as few as a couple of days.

So leading industry players are now saying the time for post quantum cryptography is here, Arqit is saying we have the products to meet that need. Where do we stand in capturing growing market demand for post quantum migration? We acquired our encryption intelligence product in 2025 and announced commercial rollout in January of this year. We are actively directly marketing the solution to end customers, A marketing campaign targeting approximately 450 organizations is in process, and engagement to date has been strong. On May 18, Arqit executed its first encryption intelligence contract supporting PQC migration planning. On May 19, ARKit signed its first partnership agreement with a European specialist cybersecurity provider for ARKIT's encryption intelligence solution.

Feedback about our encryption intelligence products has been favorable, and the breadth of prospective customer engagement has been highly encouraging. The product delivers high utility for organizations, giving deep network encryption visibility and risk assessment a critical first step for CSOs and CTOs on their PQC migration journey. Based on the pipeline of sales opportunities, we expect additional contract wins during the balance of the fiscal year. Our software-based encryption solutions, led by our NetworkSecure product, are gaining traction. Sparkle, a tier 1 Italian network operator, licensed our product create a quantum secured network as a service. It is seen take up of its offering most noticeably with the financial institution. This is important for several reasons.

1, it demonstrates the efficacy of our encryption in a real world use case. Securing critical data and communication in transit. 2, it demonstrates the applicability of our cryptographic solutions for the financial service industry, which we believe is a significant market opportunity And 3, and finally, take-up of Sparkle's network as a service offering means consumption of its volume defined license with ARKit. We wish Sparkle much success, and we are welcome Sparkle's need to upsize its license. And we expect that to be the case as Sparkle just yesterday announced the commercial availability of its Quantum Safe Interconnect, which is secured by ARKit across 20 Equinix international business exchange data centers in Europe.

The Americas, and Asia where Equinix managed solutions are offered. Sparkle's Quantum Safer Internet is now available to enterprises, carriers, and hyperscalers seeking quantum safe protection for their cross site VPNs hybrid infrastructures, and distributed multicloud environments. Sparkle indicated that it expects to expand the offering across the broader Equinix ecosystem. To paraphrase, Joe Crawford, VP of Equinix managed service, it is innovative, quote, integration of next generation security directly into the environment where dense ecosystem of customers build and scale their digital infrastructure. This is an exciting development for Sparkle and Arqit.

In regards to other telecom network operators, recently, Arqit with-- excuse me, COLT Technology to deliver a quantum secure wide area network to help protect ANK Travel Group from the future risk presented by Quantum Computers including the threat presented by Harvest Now, Decrypt Later. AMK owns a portfolio of premier travel brands, including Abercrombie & Kent, Crystal, and Cox & Kings. AMK's brands provide travel adventures in more than 100 countries across the world and rely on a secure global network to key customers, employees, and travel partners connected. Colton Arqit will now keep ANK Travel Group customers and the customers' data and communications protected from the quantum threat.

Large telecommunications networks are a significant opportunity for our encryption solutions, and we engage in late stage dialogue and demonstrations with several, including 1 in The US. However, our encryption solutions are broadly applicable beyond Tier 1 telecommunications networks. The lightweight software nature of our product allows deployment of all layers of a network and almost any device regardless of size or power. Our solution is also crypto agile and that it can be mixed and matched with other cryptographic modalities, including post quantum algorithms. The flexibility of our software encryption solutions has been manifest in our activities defense organizations.

Implementations range from a defense contractor securing communications for a government defense research network to a defense contractor securing tax control of drone platforms for a European Ministry of Defense. From large networks to small devices. It takes time to win contracts in the government and defense space, That said, we are making tangible progress. We believe a renewal and up sizing of our largest US defense related contract is imminent, further establishing a track record which we can build upon. Also, May 1, a partner, which is the leading technology and innovation solution provider to the aerospace and defense industry, renews renewed and upsized its contract with Arqit by almost 90%.

Together, we bid on its contractor opportunities to military organizations with a heavy emphasis on Europe. Our opportunity set in the government and defense market is the strongest it has ever been. Breadth of demonstration and bid activity is significant. We expect further progress in this key target market and expect to see further results in the second half of the fiscal year. We continue to grow our go to market partnerships during the first half of the fiscal year and more recently, we have added 3 new partnerships to grow our opportunities in the telecommunications market, and just this week, signed our first partnership agreement for Arqit's encryption intelligence solution.

Specifically, we announced a strategic collaboration with 6Wind to deliver highly scalable quantum safe encrypted virtual private network or VPN business services. 6WIND products enable telecom service providers and enterprises to build and manage efficient, scalable, secure, and sustainable networks. Secondly, a strategic collaboration with RAD to deliver a joint quantum safe encryption solution for telcos enabling them to offer quantum safe business services such as site-to-site and site to cloud VPNs, as well as data center interconnect or DCI. RAD is a global leader in networking edge solutions.

Further, Arqit was selected to join Tomorrow Street portfolio as a scale up partner, a joint venture between Vodafone Group and Technoport, Luxembourg's national tech incubator, TomorrowStreet's ecosystem brings together innovative young companies and scales their technology solutions across Vodafone's global ecosystem. Arqit is the first quantum security company to join the portfolio. And finally, on May 19, Arqit signed a partnership agreement with the European cybersecurity provider, for Arqit's encryption intelligence product. Our product will be the cornerstone of strategic PQC migration activities. Within financial services. Go to market partnerships drive product awareness and are an important source for lead and bid generation. They are a force multiplier for ARKET.

We expect to see revenue opportunities come through these partnerships. From my vantage point, the important vectors for success are converging. Those vectors are market need, the right products, and customer traction. The need to migrate to a post quantum cryptographic security posture has significantly increased with rapid advancement in quantum computing. Leading industry players are now sounding the alarm. We are no longer the modest voice raising awareness, big industry voices are in full cry. We have the right products to enable CSOs and CTOs to understand their current cryptographic security posture and upgrade to quantum safe encryption. We are seeing product take up in our key markets: telecommunications and government and defense.

Circling back to my remarks from our fiscal year-end 2025 earnings call, the key message was the momentum was building in the market and for the company in 2025, The first half of fiscal year 2026 has seen a continuation and amplification of momentum. Excited about the building demand for post quantum cryptography, and we believe in the products and solutions which we offer. With continued focus on hard work, I expect an up our up and to the right momentum to continue. With that, let me turn the call over to Nick Pointon. Thank you, Nick.

Nicholas Pointon: Thank you, Andy. For the first half of fiscal year 2026, Arqit generated $623 thousand in revenue, as compared to $67 thousand in revenue for the similar period in fiscal year 25. The variance between periods resulted from revenue under a contract with a customer in The Middle East that commenced late in the first half of fiscal year 25, and revenue under 11 contracts in the period versus 6 in the first half of fiscal year 25. Revenue for the period represents the second consecutive reporting period of growth.

With a small dataset, it gives credence to Andy's comments when we reported in fiscal year 25 results that our revenue had troughed as of March 2025, and our expectation is for growth going forward. As I noted, we executed 11 contracts in the period. For comparison, we executed under 7 for fiscal year 25. 2 of the 11 contracts have or are expected to imminently renew and be upsized. 3 of our 11 contracts were in the telecom sector, and 8 for government defense, and enterprise organizations. Our administrative expenses equate to operating costs for those more familiar with US GAAP.

Administrative expenses for the first half of fiscal year 2026 rose from $20.2 million for the 6 months ended 03/31/2025 to $33.9 million for the 6 months ended 03/31/2026. The variance between periods resulted from an increase in employee related costs and share based compensation stemming from a higher headcount during the period partially offset by a decrease in property costs as a result of the termination of Arqit's previous office lease arrangements and a decrease in foreign exchange expenses. Administrative expenses for the period includes a $12.7 million noncash charge associated with share based compensation versus an $872 thousand charge for the comparable period in 2025.

Operating loss for the period was $33.7 million versus a loss of $20 million for the first half of fiscal year 25. The variance in operating loss between periods primarily reflects higher revenue more than offset by an increase in administrative expenses for the period. For the period, loss before tax from continuing operations was $33.1 million. For the first half of fiscal year 25, loss before tax from continuing operations was $19.5 million. The variance between periods is primarily due to increased administrative expenses and a lower finance income. As of March 31, the company had cash and cash equivalents of $28.9 million. However, our cash balance as of May 20 was $35.9 million.

In addition, there are in the money warrants outstanding with an exercise expiration of September 2026. Which we expect will exercise and provide approximately $13.5 million of additional liquidity to the company. On a personal note, this is my last earnings call with Arqit as I will be stepping down as CFO at the end of the month. It has been my pleasure working with the Arqit team for the past 5 years and building the business, which I believe has a bright future. Rob Russell will be stepping into the CFO role Rob is a seasoned finance executive with deep expertise spanning investment banking, private equity, and SaaS scale ups.

And more recently served as chief financial and operating officer at VirtualStock, where he played a central role in the company's successful exit in 2025. Rob began full time as CFO on May 1 following 2 months working part-time to ensure continuity ahead of assuming the CFO role. I am confident that this measured transition leaves the company's financial stewardship in excellent hands. With that, I will hand the call back to Andy.

Andrew J. Leaver: Thank you, Nick. On behalf of the company and board, I would like to thank you for your service You have been instrumental in building the infrastructure which every company needs to operate and succeed. it is largely the behind the scenes work, which is critical and efficient to creating a successful organization. We wish you well in your future endeavors. Thank you again. And now I will hand the call back to the operator for Q&A.

Operator: Certainly. *1 on your telephone. If your question has been-- And our first question comes from the line of Troy Jensen from Cantor Fitzgerald. Your question, please.

Analyst (Troy Jensen): Hey, gentlemen. Congrats on all the momentum. Maybe start off here with 1 for Andy. I would just be curious your thoughts on the sense of urgency around kind of Q-Day. And just, you know, relating that to the slowness that it seems that we have seen on the adoption currently. So any thoughts would be helpful.

Andrew J. Leaver: Yeah. Hey. Thanks, Troy, and thanks for joining the call. Appreciate the question. So I think as I mentioned in my opening comments, we are seeing, obviously, some of the very big players in the market. So notably, Google, Cloudflare, all pulling forward their predictions of cryptographically relevant quantum computers becoming available. And likewise, at the same time, we have seen the estimate of the number of qubits required to break short algorithm is coming down also at the same time.

Hence, the revision of those timelines coming forward I think what is really interesting is today, which literally has happened just before our earnings call is you know, we have seen people like The Wall Street Journal and others reporting that the US government is taking an active interest in investment into quantum companies. You know, if rumors are believed, it is kind of in the region of $2 billion. To me, I see that as you know, are we now looking at quantum computing being almost like national infrastructure and the strategic importance of that?

And at the same time, aligning that with the needs for organizations, be they defense, public sector, or commercial to actually be ready for the long talks about Q-Day, which looks like it is getting closer and closer. I believe now, and you will see from our encryption intelligence tool, we now have the ability to quantify where are your weaknesses, what are the threats, and what do you need to do urgently to really remedy some of that, but also lay out a timeline to move to a full quantum secure landscape in an organization. I think right now, you know, I liken it a little bit to the original build out of the Internet.

So you are seeing a lot of the infrastructure providers. So we just talked about people like Equinix you know, infrastructure provider, telcos, are driving the cabling. The ground up secure security quantum security of infrastructure is happening, and at the same time, defense regulated industries, and also IP rich industries are also leaning into this thinking that they need to get going. So as I said in my comments, I feel I really feel like you know, last year was the year of quantum. This is the year of quantum security. It actually just feels like the year of quantum security.

Analyst (Troy Jensen): Yeah. Interesting. I would agree with you on the sense of urgency, and it just feels like we need to have you know, an inflection at some point, right, for all these governments and you know, telcos and corporations that can get, you know, kind of quantum ready. But what are your thoughts on, like, the milestones that are the catalyst that we need to watch for investors in the near term here?

Andrew J. Leaver: Could you just repeat the last bit? I missed the very last bit of the question.

Analyst (Troy Jensen): Yeah. The milestones that we need to kind of watch to really see, you know, when this catalyst, when this inflection, is going to come in the near term. Mean, I am assuming it is just the technical milestones that continue to happen from the quantum companies, but your thoughts on kind of the next catalyst for you guys.

Andrew J. Leaver: Yeah. I think just to comment on the quantum availability side, you know, I do not believe that there is gonna be a day where somebody says, hey. We have broken you know, we have used Shaw's algorithm. We have broken existing encryption. I-- you know, that could be anytime in the next 2 years according to what, you know, Cloudflare and Google are talking about or, you know, kind of in that time frame. Think for us, it is this recognition. You know, I think a lot of people thought for a while, hey. This is this is, like, just moving to a new form of encryption and, we just kind of move on.

You think about the previous way that we were securing things with certificates. It was built for a different age. It was built for a very different level of compute power. Memory, storage, etcetera. And I do not think people quite understand that it is a bigger job, especially with the amount of data that is machine generated now. So that is why we made a thing talking there about all the way from the data center to the edge. You think about how many edge devices there are now, which are producing masses of data.

Think for us, when we use encryption intelligence to say, where do you start and how do you ensure that you are safe on the perimeter working into the core, and then how do you plan to make sure you can migrate the whole organization? You know, I am not sat here now saying, you know, is my local supermarket worried about being quantum safe? They will be eventually, but I think that urgency is definitely in like I said, in the more defense, public sector. Infrastructure providers. Those are the ones that are feeling it today and feeling the need to get on top of it.

Analyst (Troy Jensen): Alright. Makes sense. Then 1 other question, or it is probably a multipoint question. Just on finances here. So the warrants that you just talked about, $13.5 million you will raise, just what is the share count that is gonna come with that? Are there other warrants outstanding? Excuse me. And can you just talk about your cash position and the cash burn would be awesome to hear?

Andrew J. Leaver: Well, let me turn to Nick first to start that question, and I am sure Rob's got some thoughts on that as well. I think I will just hand over the cash part of that answer to Rob.

Nicholas Pointon: Rob Russell: While we look at the warrants. Great. Thanks, Nick, and thanks.

Analyst (Troy Jensen): For the question, Troy.

Rob Russell: So as Nick said earlier, we closed the half year with $29 million of cash in the bank. Today, we have in excess of $35 million That translates to more than 14 months of runway. And then add on top of that, $13.5 million worth of warrants, which you have mentioned that are heavily in the money, and they expire in September. So before the fiscal year end. So what does all of that translate to? We feel very comfortable with our cash position. We believe it gives us more than more than enough cash to meet our commercial objectives. Especially in a market that we believe is moving towards us. The reasons that Andy's outlined.

Analyst (Troy Jensen): Very fair. Alright.

Andrew J. Leaver: Well, good luck, gentlemen. Just real quick. I will have missed the warrants. Yeah. Yeah. Yeah. Thank you.

Nicholas Pointon: So I will just jump in. On the warrants that expiring in September 2024, that equates to 5.4 million shares. according to the table. Okay.

Analyst (Troy Jensen): Any other outstanding warrants?

Nicholas Pointon: There are other outstanding warrants. I think these are covered in the 20-F in some detail. And expire over the next 2 further years. The last ones expire in September 2028.

Analyst (Troy Jensen): Okay. Alright. Good luck, guys.

Andrew J. Leaver: Thanks, Rob.

Operator: Thank you. And as a reminder, ladies and gentlemen, if you do have a question at this time, please press star And this does conclude the question and answer session of today's program. I would like to hand the program back to Andy Leaver for any further remarks.

Andrew J. Leaver: Hey. Thank you, Jonathan. And, again, thank you everybody on the call for joining us today. Or if you are listening on replay, we look forward to speaking with you again following the close of our 2026 fiscal year. Thank you.

Operator: Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.