Arqit Quantum: Early-Stage, High-Risk Bet on Unproven Quantum Market

TL;DR

**ARQQW is a speculative bet on an unproven quantum market, requiring significant capital and facing high execution risk; proceed with extreme caution.**

AI Summary

Arqit Quantum Inc. (ARQQW) filed its 20-F for the fiscal year ended September 30, 2025, revealing its status as an early-stage company with a history of losses, heavily reliant on increased sales and marketing to achieve profitability. The company's future success hinges on the market adoption of its quantum encryption products, which is currently unproven and evolving. A significant business change includes a Reverse Share Split effective September 25, 2024, consolidating every twenty-five shares into one. Key risks highlighted include the need for additional capital to fund operations, potential delays or expenses from undetected software defects, and challenges in protecting intellectual property rights. Arqit's strategic outlook emphasizes growth in government, defense, telecom, and confidential computing markets, projecting the global enterprise key-management/discovery market to reach nearly $7.74 billion by 2033 and the global confidential-computing market to extend to about $153.84 billion by 2030. The company also faces risks from currency exchange rate fluctuations and the accounting treatment of its Business Combination Warrants as liabilities, which could materially affect financial results.

Why It Matters

Arqit's 20-F filing is crucial for investors as it underscores the company's precarious early-stage status and significant capital requirements, directly impacting its ability to commercialize its quantum encryption technology. For employees, the need for additional capital and the unproven market adoption create job security uncertainties. Customers and the broader market will be affected by the pace of quantum technology adoption and Arqit's ability to deliver on its promises, especially given the competitive landscape where rapid technological change is a constant threat. The company's success or failure could influence the trajectory of the nascent quantum cybersecurity industry.

Risk Assessment

Risk Level: high — Arqit is an early-stage company with a history of losses, explicitly stating it "will require additional capital to fund its operations." The market adoption of its product is "not fully proven" and "may develop more slowly than or differently from the Company's expectations," indicating significant commercialization risk. Furthermore, the company's Business Combination Warrants are accounted for as liabilities, and changes in their value "could have a material effect on its financial results."

Analyst Insight

Investors should approach ARQQW with extreme caution, recognizing the high-risk, high-reward profile of an early-stage quantum technology company. Consider a small, speculative position only if you have a high-risk tolerance and a long-term horizon, as the company's success is contingent on significant market adoption and securing additional capital.

Key Numbers

• $7.74B — projected global enterprise key-management/discovery market by 2033 (indicates potential market opportunity for Arqit's products)
• $153.84B — forecasted global confidential-computing market by 2030 (indicates potential market opportunity for Arqit's products)
• 15,291,767 — Ordinary Shares outstanding (as of September 30, 2025, post Reverse Share Split)
• 13,038,904 — Business Combination Warrants outstanding (listed on Nasdaq under ARQQW, accounted for as liabilities)
• 25 — shares consolidated into one (effect of Reverse Share Split on September 25, 2024)
• $287.50 — aggregate exercise price per whole ordinary share (for Business Combination Warrants, requiring 25 warrants for one share)
• $0.0025 — par value per ordinary share (post Reverse Share Split)

Key Players & Entities

• Arqit Quantum Inc. (company) — registrant for 20-F filing
• ARQQW (company) — trading symbol for Business Combination Warrants on Nasdaq
• Nasdaq Stock Market LLC (regulator) — exchange where ordinary shares and warrants are listed
• Andrew Leaver (person) — Company Contact Person
• U.S. Securities and Exchange Commission (regulator) — filing oversight body
• International Accounting Standards Board (regulator) — sets IFRS accounting standards
• Centricus Acquisition Corp. (company) — merged with Arqit Quantum Inc. in Business Combination
• Arqit Limited (company) — wholly-owned subsidiary of Arqit Quantum Inc.

FAQ

Risk Factors

• Need for Additional Capital [high — financial]: The company has a history of losses and is heavily reliant on increased sales and marketing to achieve profitability. It requires substantial additional capital to fund its operations and development, indicating a significant financial risk if such funding cannot be secured.
• Unproven Market Adoption of Quantum Encryption [high — operational]: Arqit's future success hinges on the market adoption of its quantum encryption products, which is currently unproven and evolving. Delays or failure in market acceptance could materially impact the company's revenue and growth prospects.
• Software Defect Risks [medium — operational]: There is a risk of potential delays or expenses arising from undetected software defects in the company's products. This could lead to reputational damage and increased costs for remediation.
• Intellectual Property Protection Challenges [medium — legal]: The company faces challenges in protecting its intellectual property rights. This is critical for a technology-focused company and any infringement or inability to protect its IP could harm its competitive advantage.
• Accounting Treatment of Warrants [medium — financial]: The Business Combination Warrants are accounted for as liabilities, which could materially affect financial results. This accounting treatment introduces volatility and potential adjustments to the company's reported financial performance.
• Currency Exchange Rate Fluctuations [low — financial]: Arqit faces risks from fluctuations in currency exchange rates. As a global company, adverse movements in foreign exchange can negatively impact its reported financial results and profitability.

Industry Context

Arqit operates in the nascent but rapidly growing quantum encryption and confidential computing sectors. The company faces a competitive landscape that includes established cybersecurity firms and emerging quantum technology players. Key industry trends involve increasing demand for advanced data security solutions driven by the rise of quantum computing threats and stringent data privacy regulations.

Regulatory Implications

As a publicly traded company, Arqit is subject to SEC regulations and reporting requirements, including the filing of Form 20-F. The accounting treatment of its Business Combination Warrants as liabilities introduces complexity and potential volatility in financial reporting, requiring careful compliance.

What Investors Should Do

1. Monitor Market Adoption of Quantum Encryption
2. Assess Future Capital Needs and Funding Sources
3. Evaluate Progress on Product Development and Commercialization
4. Understand Warrant Exercise Dynamics

Key Dates

• 2024-09-25: Reverse Share Split Effective — Consolidated every twenty-five (25) existing ordinary shares into one (1) ordinary share. This significantly impacts share count and per-share metrics.
• 2021-09-03: Business Combination Completed — The transaction through which Arqit Quantum Inc. became a publicly traded entity, merging with Centricus Acquisition Corp.

Glossary

Business Combination Warrants

Warrants issued in connection with the company's business combination that are exercisable for ordinary shares. They are listed on Nasdaq under the symbol ARQQW. (These warrants are outstanding and accounted for as liabilities, impacting the company's financial statements and potentially diluting shareholders upon exercise.)

Reverse Share Split

A corporate action where a company reduces the total number of its outstanding shares by consolidating existing shares into fewer, proportionally more valuable shares. (Arqit executed a 1-for-25 reverse stock split on September 25, 2024, significantly reducing the number of ordinary shares outstanding from a pre-split figure.)

Ordinary Shares

The basic form of stock that represents ownership in a corporation and entitles the holder to voting rights and dividends. (Post-reverse split, Arqit had 15,291,767 ordinary shares outstanding as of September 30, 2025. These shares have a par value of $0.0025 each.)

Confidential Computing

A technology that protects data while it is being processed in use, typically within a hardware-based Trusted Execution Environment (TEE). (Arqit is targeting this market, which is projected to reach approximately $153.84 billion by 2030, indicating a significant growth opportunity.)

Key Management/Discovery Market

The market for solutions that manage and discover cryptographic keys used to secure data. (Arqit aims to capture a share of this market, projected to reach $7.74 billion by 2033, highlighting a key area of its business strategy.)

Year-Over-Year Comparison

The 20-F for the fiscal year ended September 30, 2025, reflects the impact of a significant 1-for-25 reverse share split effective September 25, 2024, which drastically reduced the number of ordinary shares outstanding to 15,291,767. While specific year-over-year financial metrics like revenue and net income are not detailed in the provided text, the filing emphasizes the company's early-stage status, ongoing losses, and critical reliance on future sales growth and market adoption of its quantum encryption technology. New risks related to the unproven nature of the market and the accounting treatment of warrants are highlighted.

Key Financial Figures

• $0.0025 — 15,291,767 Ordinary Shares, par value $0.0025 per share, as of September 30, 2025 I
• $287.50 — share at an aggregate exercise price of $287.50 per whole ordinary share. " Cayman Co
• $50.00 — ordinary shares at an exercise price of $50.00 per share, which became exercisable on
• $62.50 — ordinary shares at an exercise price of $62.50 per share, which became exercisable on
• $19.50 — ordinary shares at an exercise price of $19.50 per share, which became exercisable on
• $24.37 — ordinary shares at an exercise price of $24.37 per share, which became exercisable on
• $2.50 — ordinary shares at an exercise price of $2.50 per share 4,673,562 of which became exe
• $7.74 billion — market is projected to reach nearly US $7.74 billion by 2033; the global confidential-compu
• $153.84 billion — ket is forecasted to extent to about US $153.84 billion by 2030; that new opportunities for g
• $76.1 m — 25, Arqit generated operating losses of $76.1 million, $68.0 million and $36.4 million
• $68.0 million — ated operating losses of $76.1 million, $68.0 million and $36.4 million respectively. Arqit i
• $36.4 million — ses of $76.1 million, $68.0 million and $36.4 million respectively. Arqit intends to continue

Filing Documents

• arqq-20250930x20f.htm (20-F) — 3689KB
• arqq-20250930xex2d10.htm (EX-2.10) — 291KB
• arqq-20250930xex8d1.htm (EX-8.1) — 11KB
• arqq-20250930xex12d1.htm (EX-12.1) — 14KB
• arqq-20250930xex12d2.htm (EX-12.2) — 14KB
• arqq-20250930xex13d1.htm (EX-13.1) — 7KB
• arqq-20250930xex13d2.htm (EX-13.2) — 6KB
• arqq-20250930xex15d1.htm (EX-15.1) — 7KB
• arqq-20250930xex19d1.htm (EX-19.1) — 56KB
• arqq-20250930xex15d1001.jpg (GRAPHIC) — 1KB
• 0001104659-25-119500.txt ( ) — 15735KB
• arqq-20250930.xsd (EX-101.SCH) — 100KB
• arqq-20250930_cal.xml (EX-101.CAL) — 86KB
• arqq-20250930_def.xml (EX-101.DEF) — 274KB
• arqq-20250930_lab.xml (EX-101.LAB) — 701KB
• arqq-20250930_pre.xml (EX-101.PRE) — 547KB
• arqq-20250930x20f_htm.xml (XML) — 3875KB

Item 18

Item 17 Item 18 If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No Table of Contents Page PART I Item 1. Identity of Directors, Senior Management and Advisers 7 Item 2. Offer Statistics and Expected Timetable 7 Item 3. Key Information 7 3.A. Reserved 7 3.B. Capitalization and Indebtedness 7 3.C. Reasons for the Offer and Use of Proceeds 7 3.D.

Risk Factors

Risk Factors 7 Item 4. Information on the Company 20 4.A. History and Development of the Company 20 4.B. Business Overview 20 4.C. Organizational Structure 26 4.D. Property, Plant and Equipment 26 4.E. Unresolved Staff Comments 26 Item 5. Operating and Financial Review and Prospects 27 5.A. Operating Results 27 5.B. Liquidity and Capital Resources 35 5.C. Research and Development, Patents and Licenses, Etc. 37 5.D. Trend Information 38 Item 6. Directors, Senior Management and Employees 39 6.A. Directors and Senior Management 39 6.B. Compensation 40 6.C. Board Practices 42 6.D. Employees 44 6.E. Share Ownership 44 6.F Disclosure of a Registrant's Action to Recover Erroneously Awarded Compensation 44 Item 7. Major Shareholders and Related Party Transactions 44 7.A. Major Shareholders 44 7.B. Related Party Transactions 46 7.C. Interests of Experts and Counsel 46 Item 8. Financial Information 46 8.A. Combined Statements and Other Financial Information 46 8.B. Significant Changes 47 Item 9. The Offer and Listing 47 9.A. Offer and Listing Details 47 9.B. Plan of Distribution 47 9.C. Markets 47 9.D. Selling Shareholders 48 9.E.

Dilution

Dilution 48 9.F. Expenses of the Issue 48 Item 10. Additional Information 48 10.A. Share Capital 48 10.B. Memorandum and Articles of Association 48 10.C. Material Contracts 58 10.D. Exchange Controls 58 10.E. Taxation 58 10.F. Dividends and Paying Agents 65 10.G. 65 10.H. Documents on Display 66 10.I. Subsidiary Information 66 Item 11.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 66 Item 12.

Description of Securities Other Than Equity Securities

Description of Securities Other Than Equity Securities 66 12.A. Debt Securities 66 12.B. Warrants and Rights 66 12.C. Other Securities 66 12.D. American Depositary Shares 66 Table of Contents PART II Item 13. Defaults, Dividend Arrearages and Delinquencies 67 Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds 67 Item 15.

Controls and Procedures

Controls and Procedures 67 Item 16. [Reserved] 68 16.A. Audit Committee and Financial Expert 68 16.B. Code of Ethics 68 16.C. Principal Accountant Fees and Services 68 16.D. Exemptions from the Listing Standards for Audit Committees 68 16.E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers 68 16.F. Change in Registrant's Certifying Accountant 68 16.G. Corporate Governance 68 16.H. Mine Safety Disclosure 69 16.I Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 69 16.J Insider trading policies 69 16.K Cybersecurity 69 Item 17.

Financial Statements

Financial Statements 70 Item 18.

Financial Statements

Financial Statements 70 Item 19. Exhibits 70 Index to Financial Statements F-1 Table of Contents INDUSTRY AND MARKET DATA In this Annual Report, we present industry data, information and statistics regarding the markets in which the Company competes as well as publicly available information, industry and general publications and research and studies conducted by third parties. This information is supplemented where necessary with the Company's own internal estimates and information obtained from discussions with its customers, taking into account publicly available information about other industry participants and the Company's management's judgment where information is not publicly available. Industry publications, research, studies and forecasts generally state that the information they contain has been obtained from sources believed to be reliable, but that the accuracy and completeness of such information is not guaranteed. Forecasts and other forward-looking information obtained from these sources are subject to the same qualifications and uncertainties as the other forward-looking statements in this Annual Report. These forecasts and forward-looking information are subject to uncertainty and risk due to a variety of factors, including those described under " Risk Factors ." These and other factors could cause results to differ materially from those expressed in any forecasts or estimates. 1 Table of Contents FREQUENTLY USED TERMS Unless otherwise stated or unless the context otherwise requires, the terms "the Company," "the registrant," "our company," "the company," "we," "us," "our," "ours," and "Arqit" refer to Arqit Quantum Inc. In this Annual Report, unless the context otherwise requires: " Arqit " or " Company " means Arqit Quantum Inc., a Cayman Islands exempted limited liability company with registered number 374857 and whose registered office is at Maples Corporate Services Limited, PO Box 309, Ugland House, Grand Cayman, KY1-1104

IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS Not Applicable.

OFFER STATISTICS AND EXPECTED TIMETABLE

ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE Not Applicable.

KEY INFORMATION

ITEM 3. KEY INFORMATION 3.A. [Reserved] 3.B. CAPITALIZATION AND INDEBTEDNESS Not Applicable. 3.C. REASONS FOR THE OFFER AND USE OF PROCEEDS Not Applicable. 3.D. RISK FACTORS You should carefully consider the risks described below, together with all of the other information included in this Annual Report, in evaluating us and our shares. Our business, financial condition or results of operations could be materially and adversely affected by any of these risks. The trading price and value of our ordinary shares could decline due to any of these risks, and you may lose all or part of your investment. This Annual Report also contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including the risks faced by us described below and elsewhere in this Annual Report. Additional risks not presently known to us or that we currently deem immaterial may also impair our business operations. Risks Related to Arqit's Business and Operations Arqit is an early stage company with a history of losses and will be reliant upon a significant increase in sales and marketing activity in order to become profitable in the future. Arqit has only just started to generate material revenues through the commercialization of its products. For the years ended September 30, 2023, 2024 and 2025, Arqit generated operating losses of $76.1 million, $68.0 million and $36.4 million respectively. Arqit intends to continue to invest and to increase investments in sales, marketing and product development, and believes that it will continue to incur operating and net losses until at least the time it is able to fully commercialize its products, but which may occur later than expected or not at all. There can be no assurance that Arqit's products or its sales strategy will be commercially successful. Arqit's potential profitability is dependent up

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