Insider Brief
- Arqit reported just $67,000 in revenue for the first half of fiscal 2025, citing customer delays, but emphasized recent contract wins with the U.S. Department of Defense and a major telecom operator as signs of future growth.
- Operating losses widened to $17.8 million as the company maintained average monthly costs of $2.4 million, despite reducing headcount from 125 to 72 employees year-over-year.
- Arqit highlighted growing demand for its quantum-safe encryption products and expects multiple contracts in telecom and defense to convert in the second half as urgency around quantum threats increases.
- Image: Arqit
Arqit Quantum reported just $67,000 in revenue for the first half of fiscal year 2025, a sharp year-over-year decline, but said in a statement that momentum is building behind its quantum-safe encryption products as new contracts with the U.S. Department of Defense and European telecom operators begin to activate.
The London-based cybersecurity company, which is traded on Nasdaq, attributed the low revenue to a delay in one key contract signed in late fiscal 2024. Revenue recognition under the multi-year deal in the EMEA region did not begin until late March, leaving most of the contract’s revenue outside the reporting window, according to the company statement on its first half of 2025 results. Despite the slow start, Arqit maintained that the deal and others represent significant long-term opportunities. The delayed EMEA contract and a separate agreement with a Tier 1 telecom firm are expected to yield seven-figure recurring revenue annually.
According to the management commentary, the company’s leadership believe that growing anticipation of quantum potential — and quantum threats — could drive technological adoption.
“The pace of development of quantum computing is accelerating,” they write. “Significant public and private capital has been invested in development of the technology and the result of that investment is manifesting itself. Since late 2024, leading technology firms such as Microsoft, Google and Amazon have, respectively, announced development of quantum computing chips with advanced computational power. Quantum computer developers such as Rigetti, D-wave and IBM are announcing continual increases in computational power and error correction of their respective computers. While timing of a quantum computer at scale is uncertain, there is no doubt about the resources and effort being put toward that end.”
Symmetric Key Agreement Technology
Arqit’s symmetric key agreement (SKA) technology offers a form of cryptographic protection designed to be resilient against the threat posed by quantum computers, which could one day crack today’s encryption standards. The company is aiming to place its software into secure network and cloud environments where sensitive data is processed or transmitted.
Six customer contracts generated revenue in the first half, down from nine a year earlier. Two of those are structured as multi-year licenses, and both began producing revenue only at the very end of the period. Other contracts included professional services and licensing of Arqit’s NetworkSecure product.
Rising Costs And Operating Losses
Operating costs for the half-year averaged $2.4 million per month. Total administrative expenses rose slightly to $18 million, up from $16.8 million in the same period last year. While headcount dropped to 72 from 125 a year earlier, foreign exchange impacts pushed expenses higher. The company posted an operating loss of $17.8 million, slightly worse than the $16.6 million loss in the same period of fiscal 2024.
As of March 31, Arqit held $24.8 million in cash and cash equivalents. In January, it launched an at-the-market equity program, issuing over 1.1 million shares in the first half to raise capital.
Commercial Traction
Despite the modest top-line numbers, Arqit emphasized in the statement a series of contract wins and product integrations after the close of the fiscal period that may pave the way for commercial traction.
At the end of March, the company signed a contract to embed its SKA encryption software into a secure communications product delivered to the U.S. Department of Defense through a large government IT vendor. Arqit said this marks its first entry into a DoD program of record—an important milestone that could unlock future sales across the federal defense landscape.
Just days later, Arqit finalized a deal to integrate its encryption into the offerings of a major IT solutions provider targeting mission-critical enterprise and government systems. The partner will develop sovereign cybersecurity capabilities for edge and remote deployments, with particular focus on European defense customers.
In April, Arqit secured a three-year agreement with a major telecom network operator with a presence in 32 countries. That deal will bring Arqit’s quantum-safe NetworkSecure product into the operator’s Network-as-a-Service suite, which is being sold to both enterprise and public sector clients. The telecom company is already in talks with three end users.
Executives pointed to the contract as evidence of progress in telecom, a core vertical for Arqit. The company has been testing its products with 10 network operators over the past year and said it expects sales cycles to shorten now that a reference customer is in place.
Product development also advanced, according to the statement. In collaboration with Intel, Arqit integrated its encryption into confidential computing environments using Intel’s Trusted Domain Extensions (TDX). This allows chip-level encryption of sensitive workloads, a growing need in enterprise edge computing, secure AI deployments and critical infrastructure.
Separately, Arqit announced a joint effort with Intel and Equus Compute Solutions to deliver what it says is the first quantum-safe mobile access architecture compliant with NSA standards for classified communications. The system uses Arqit’s SKA-Platform, VPN software and Intel hardware to enable secure, encrypted mobile networking.
‘Q-Day’ Preparation
Management pointed to rising awareness of quantum threats, citing increased traffic at its booth during the RSA cybersecurity conference and growing inbound interest from both enterprise and government buyers. Analysts say that as companies prepare for so-called “Q Day” — the hypothetical moment when a quantum computer could break classical encryption — vendors like Arqit may benefit from urgency around upgrading cryptographic systems.
The company’s strategy remains focused on key verticals: telecom, defense and government. However, management also sees near-term potential in industries such as financial services, pharma and data centers, where the protection of sensitive intellectual property and customer data is paramount.
Arqit is prioritizing deals that translate into recurring revenue and says it is aligning its staffing toward sales and fulfillment. Headcount was below budgeted levels at the end of March, helping control expenses even as the company scales contract execution.
Looking forward, executives said Arqit expects to convert several in-progress engagements — particularly in telecom and defense — into contracts in the second half of the fiscal year. Management also emphasized that symmetric key encryption remains a viable solution for securing data in all states: in motion, at rest and in use.
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