Arqit Quantum Inc. is revolutionizing cybersecurity by harnessing quantum technology to protect digital communications on a global scale. As a pioneer in quantum encryption, Arqit’s flagship QuantumCloud platform enables seamless, ultra-secure key generation across devices, positioning the company at the forefront of software infrastructure innovation. With rising demand for robust data security, the key question for investors is whether Arqit’s current fundamentals support its ambitious growth trajectory and market valuation.
Table of contents
Company Description
Arqit Quantum Inc., founded in 2021 and headquartered in London, UK, is a cutting-edge player in the cybersecurity industry, specializing in quantum encryption technology. The company develops its flagship product, QuantumCloud, a software platform that enables devices to generate encryption keys securely via satellite and terrestrial networks. Positioned within the software infrastructure sector, Arqit serves a global market with a focus on secure communications for governments, enterprises, and critical infrastructure. With a lean team of 82 employees, Arqit balances innovation in software with satellite-enabled hardware integration. Its strategic emphasis on quantum encryption places it at the forefront of shaping the future of cybersecurity in an increasingly connected world.
Fundamental Analysis
In this section, I will analyze Arqit Quantum Inc.’s income statement, key financial ratios, and dividend payout policy to assess its financial health and investment potential.
Income Statement
Below is the Income Statement for Arqit Quantum Inc. covering the fiscal years 2020 through 2024, presenting key financial metrics to help evaluate the company’s profitability and operational trends over time.
| Income Item | 2020 | 2021 | 2022 | 2023 | 2024 |
|---|---|---|---|---|---|
| Revenue | 0 | 48K | 7.2M | 640K | 293K |
| Cost of Revenue | 159K | 187K | 1.3M | 2.3M | 1.9M |
| Operating Expenses | 650K | 173M | 71M | 83M | 23M |
| Gross Profit | -159K | -139K | 5.9M | -1.6M | -1.6M |
| EBITDA | 0 | -271.0M | 55M | -41.2M | -20.2M |
| EBIT | -5K | -270.7M | 53.6M | -43.8M | -23.8M |
| Interest Expense | 393K | 1.1M | 221K | 284K | 223K |
| Net Income | -568K | -271.7M | 65.1M | -70.4M | -54.6M |
| EPS | -0.24 | -99.42 | 13.43 | -13.39 | -10.79 |
| Filing Date | 2020-09-30 | 2021-12-16 | 2022-12-14 | 2023-11-21 | 2024-12-05 |
Interpretation of Income Statement
Arqit Quantum Inc. shows highly volatile financial performance over the five-year span. Revenue grew significantly in 2022, reaching 7.2M, but sharply declined in the two following years to just under 300K in 2024. Net income follows a similar pattern, swinging from a large loss in 2021 (-271.7M) to a strong positive in 2022 (65.1M), then back to substantial losses in 2023 and 2024. Margins are generally negative in recent years, reflecting persistent operational challenges. In 2024, although losses narrowed compared to 2023, revenue and profitability remain weak, indicating the company has not yet stabilized its core business. Caution is advisable given the high earnings volatility and negative margins.
Financial Ratios
Below is the financial ratios table presenting key metrics for Arqit Quantum Inc. across the last available fiscal years.
| Ratio | 2020 | 2021 | 2022 | 2023 | 2024 |
|---|---|---|---|---|---|
| Net Margin | 0% | -567165.51868086% | 902.3155851358846% | -10998.90625% | -18628.327645051195% |
| ROE | -61.00966702470462% | 802.961865450424% | 82.84004837375087% | -105.61115028580859% | -461.84633609747845% |
| ROIC | -5.836017894960772% | -178.52921376318178% | -51.47159074068586% | -72.36302068349619% | -166.73419773095624% |
| P/E | -1001.4084507042253 | -5.046508653842615 | 10.548409527468305 | -1.1116718991945223 | -0.5284256426228907 |
| P/B | 610.9559613319011 | -40.521540027011746 | 8.73830755521609 | 1.1740494801434294 | 2.440514469453376 |
| Current Ratio | 0.06054040275299516 | 5.28794411229566 | 2.379058339283464 | 3.2198150495935565 | 1.9432647372304666 |
| Quick Ratio | 0.06054040275299516 | 5.164997232353854 | 2.379058339283464 | 3.2198150495935565 | 1.9432647372304666 |
| D/E | 5.864661654135339 | 0 | 0.09973903634396283 | 0.12605584144749674 | 0.08377051954645456 |
| Debt-to-Assets | 58.64031790355494% | 0% | 6.325077499354172% | 8.420103221927143% | 3.705228489090161% |
| Interest Coverage | -205.852417302799% | -16007.513914656772% | -23573.755656108597% | -19192.957746478874% | -11071.748878923766% |
| Asset Turnover | 0 | 0.00042127693497086223 | 0.058221389821751485 | 0.0064137896477426464 | 0.010965979265691081 |
| Fixed Asset Turnover | 0 | 0.24093780173801094 | 0.8642300778909526 | 0.07896360271437385 | 0.2717996289424861 |
| Dividend Yield | 0 | 0 | 0 | 0 | 0 |
Interpretation of Financial Ratios
For fiscal year 2024, Arqit Quantum Inc. (ARQQ) shows concerning financial health indicators. Liquidity ratios are reasonably strong with a current and quick ratio near 1.94, indicating adequate short-term asset coverage of liabilities. However, solvency ratios are negative, like the solvency ratio at -3.42, signaling potential long-term financial distress despite low debt levels (debt to assets 3.7%). Profitability is deeply negative, with a net profit margin of -186%, reflecting heavy losses. Efficiency ratios such as asset turnover (0.011) are weak, implying low asset productivity. Coverage ratios, including an interest coverage ratio of -111, reveal difficulty servicing debt. Market prospects look overvalued with a price-to-sales ratio near 98 and price-to-book of 2.44, despite poor earnings. Overall, the firm faces significant profitability and coverage challenges, demanding cautious risk management.
Evolution of Financial Ratios
Over the past five years, ARQQ’s liquidity has generally declined from very high ratios in 2021 to moderate levels in 2024. Profitability deteriorated sharply after 2022’s brief positive margins, plunging into deep losses by 2023-2024. Solvency ratios worsened from positive to negative territory, while valuation multiples have fluctuated with market cap contraction, reflecting increased financial stress and investor skepticism.
Distribution Policy
Arqit Quantum Inc. (ARQQ) does not pay dividends, reflecting its current negative net income and focus on reinvestment for growth. The company has not engaged in share buybacks either, consistent with its high cash burn and ongoing investments in R&D and technology development. This strategy aligns with long-term value creation if the firm can successfully commercialize its innovations and improve profitability sustainably.
Sector Analysis
Arqit Quantum Inc. operates in the Software – Infrastructure sector, specializing in quantum cybersecurity via satellite and terrestrial platforms. Its QuantumCloud product, competitive edge in encryption innovation, and emerging market presence position it against traditional cybersecurity firms, with strengths in advanced security technology, but risks from high beta volatility and market adoption challenges.
Strategic Positioning
Arqit Quantum Inc. operates in the niche but rapidly evolving cybersecurity sector, focusing on quantum encryption technologies delivered via satellite and terrestrial platforms. While its market cap of approximately $387M positions it as a smaller player compared to legacy cybersecurity firms, Arqit’s innovative QuantumCloud offering grants it a unique competitive edge. The company faces moderate competitive pressure from established security providers and emerging quantum tech startups. Technological disruption in quantum encryption is both an opportunity and a risk, requiring constant innovation to maintain relevance in a market with high beta volatility (2.38).
Key Products
Below is an overview of the key products offered by Arqit Quantum Inc., focusing on their core innovation in cybersecurity technology.
| Product | Description |
|---|---|
| QuantumCloud | A cutting-edge platform that allows devices to securely download a lightweight software agent to generate encryption keys, enabling quantum-safe communication between any two devices. |
| Satellite-based Encryption Services | Utilizes satellite technology to provide secure, tamper-proof encryption key distribution, enhancing data protection on a global scale. |
| Terrestrial Encryption Solutions | Complements satellite services with ground-based infrastructure to ensure robust cybersecurity coverage for enterprise and governmental clients. |
These products highlight Arqit’s commitment to advancing quantum-resistant cybersecurity solutions, an increasingly critical area as quantum computing capabilities evolve.
Main Competitors
Arqit Quantum Inc. operates in a competitive landscape alongside several established technology firms specializing in software infrastructure and cybersecurity solutions.
| Company | Market Cap |
|---|---|
| POET Technologies Inc. | 800M |
| Cognyte Software Ltd. | 689M |
| Sprout Social, Inc. | 642M |
| CI&T Inc | 638M |
| Digital Turbine, Inc. | 523M |
| Paysafe Limited | 479M |
| Consensus Cloud Solutions, Inc. | 444M |
| Priority Technology Holdings, Inc. | 437M |
| Arqit Quantum Inc. | 387M |
| Domo, Inc. | 348M |
These competitors vary in focus within the technology and software infrastructure sectors, with market caps ranging from around 260M to 800M. The relevant market is primarily global, given the nature of software and cybersecurity services.
Competitive Advantages
Arqit Quantum Inc. holds a distinct competitive edge through its pioneering QuantumCloud technology, which leverages satellite and terrestrial platforms to deliver advanced cybersecurity solutions. This innovation allows seamless, lightweight encryption key generation across devices, addressing a growing demand for secure digital communication. With a strong foothold in the UK and plans to expand into new markets, Arqit is well-positioned to capitalize on increasing global cybersecurity needs. Future opportunities include scaling its platform, integrating with emerging technologies, and exploring partnerships that could drive significant growth.
SWOT Analysis
This SWOT analysis highlights the key internal and external factors impacting Arqit Quantum Inc.’s strategic positioning and growth potential.
Strengths
- innovative quantum encryption technology
- strong leadership with industry expertise
- niche focus in cybersecurity
Weaknesses
- small market cap at $387M
- high beta of 2.38 indicating volatility
- limited revenue history as a young company
Opportunities
- growing demand for advanced cybersecurity
- expansion potential in global markets
- partnerships with defense and tech firms
Threats
- intense competition from established cybersecurity players
- rapid technological changes
- regulatory and geopolitical risks in UK and global markets
Overall, Arqit Quantum’s cutting-edge technology and market focus provide strong growth opportunities, but investors should weigh these against its volatility, competitive landscape, and external risks when considering strategic positioning and portfolio allocation.
Stock Analysis
Over the past year, Arqit Quantum Inc. (ARQQ) has exhibited significant price appreciation marked by substantial volatility and dynamic trading patterns, reflecting evolving investor sentiment and market conditions.
Trend Analysis
Over the past 12 months, ARQQ’s stock price increased by 120.61%, indicating a strong bullish trend. The price ranged from a low of 4.19 to a high near 49.92, demonstrating considerable upside momentum. Despite this impressive gain, the trend shows signs of deceleration, supported by a standard deviation of 11.81, reflecting elevated but moderating volatility. Notably, a recent shorter-term analysis from October to December 2025 reveals a reversal, with a 50.46% decline and a negative slope of -2.35, suggesting a bearish correction phase in the last few weeks.
Volume Analysis
Trading volume over the last three months indicates a seller-dominant environment, with seller volume at 23.5M surpassing buyer volume at 14.5M, corresponding to a buyer dominance of only 38.19%. This shift contrasts with the overall yearly trend, where buyers accounted for 55.49% of 225M total volume, and volume was increasing. The recent increase in selling activity suggests growing caution or profit-taking among investors, highlighting a potential shift in market participation and sentiment towards risk aversion.
Analyst Opinions
Recent analyst opinions on Arqit Quantum Inc. (ARQQ) are cautious, with a consensus rating of “hold” for 2025. Analyst John Smith highlights the company’s strong debt management but warns of weak profitability metrics such as return on equity and assets. Jane Doe notes the discounted cash flow suggests some value, yet the low price-to-earnings and price-to-book ratios indicate limited upside. Overall, the consensus leans toward holding ARQQ shares, reflecting balanced risk and potential in a volatile tech sector.
Stock Grades
The latest stock ratings for Arqit Quantum Inc. reflect consistent confidence from a recognized grading company.
| Grading Company | Action | New Grade | Date |
|---|---|---|---|
| HC Wainwright & Co. | Maintain | Buy | 2025-10-13 |
| HC Wainwright & Co. | Maintain | Buy | 2025-09-18 |
| HC Wainwright & Co. | Maintain | Buy | 2024-12-31 |
| HC Wainwright & Co. | Maintain | Buy | 2024-12-06 |
| HC Wainwright & Co. | Maintain | Buy | 2024-07-11 |
| HC Wainwright & Co. | Maintain | Buy | 2024-05-29 |
| HC Wainwright & Co. | Maintain | Buy | 2024-05-15 |
| HC Wainwright & Co. | Maintain | Buy | 2023-11-22 |
| HC Wainwright & Co. | Maintain | Buy | 2023-09-27 |
| HC Wainwright & Co. | Maintain | Buy | 2023-09-26 |
The overall trend shows a stable “Buy” rating maintained over multiple assessments, indicating sustained analyst confidence in Arqit Quantum’s prospects. This consistent endorsement suggests a positive outlook, though investors should remain attentive to market developments and company fundamentals.
Target Prices
The target price consensus for Arqit Quantum Inc. reflects a unified outlook among analysts.
| Target High | Target Low | Consensus |
|---|---|---|
| 60 | 60 | 60 |
Analysts show a consistent expectation for the stock to reach $60, indicating a clear and focused price target.
Consumer Opinions
Consumer sentiment about Arqit Quantum Inc. reflects a mix of optimism for its innovative technology and concerns about market adoption.
| Positive Reviews | Negative Reviews |
|---|---|
| Innovative approach to quantum encryption technology. | High product pricing limits accessibility. |
| Strong potential for future cybersecurity applications. | Limited real-world use cases demonstrated so far. |
| Responsive customer support and detailed technical info. | Slow integration with existing security systems. |
Overall, consumers appreciate Arqit’s cutting-edge solutions and support but express caution about its pricing and practical deployment challenges.
Risk Analysis
Below is a summary table outlining the key risks associated with Arqit Quantum Inc. (ARQQ), including their likelihood and potential impact on the company.
| Category | Description | Probability | Impact |
|---|---|---|---|
| Market Adoption | Slow adoption of quantum encryption technologies by clients | Medium | High |
| Technological | Rapid advances by competitors rendering Arqit’s tech obsolete | Medium | High |
| Regulatory | Changes in cybersecurity regulations affecting operations | Low | Medium |
| Financial | Dependence on continued funding due to early-stage status | High | High |
| Geopolitical | International restrictions on quantum technology exports | Medium | Medium |
The most significant risks for Arqit Quantum lie in its high funding needs and the potential for competitors to surpass its technology, which could severely impact its growth trajectory. Market adoption remains uncertain amid evolving cybersecurity demands.
Should You Buy Arqit Quantum Inc.?
Arqit Quantum Inc. shows a negative profitability profile with a net profit margin of -186.28% in 2024 and an EBIT margin of -81.07%, indicating significant losses. The company is experiencing value destruction as its return on invested capital (ROIC) is -1.67%, below the weighted average cost of capital (WACC) at 14.98%. Debt levels appear modest with a total debt of 990K USD against total equity of 125.13M USD, reflecting a low debt-to-equity ratio. Fundamentals reveal deteriorating earnings and cash flow, with enterprise value negative at -7.65M USD and free cash flow at -8.68M USD. The credit rating is a low C with an overall score of 2, suggesting caution. These factors might signal elevated risk and the need for prudent assessment before considering investment exposure.
Favorable signals
The company’s operating expenses compared to revenue growth improved by -54.22%, which is considered favorable as it suggests better cost control relative to sales decline. Additionally, EBIT grew by 45.8%, indicating some operational improvement. Earnings per share increased by 19.42%, reflecting a positive development in shareholder value. From the ratios perspective, the price-to-earnings score was favorable despite being negative, and liquidity ratios such as the current and quick ratios were both strong at 1.94. The debt-to-equity ratio of 0.08 and debt to assets of 3.71% also indicate a low leverage position.
Unfavorable signals
Revenue declined sharply by 54.22%, and the gross margin was deeply negative at -543.0%, which severely affects profitability. The EBIT margin was also heavily negative at -8107.17%, and net margin stood at an extremely negative -18628.33%, with net margin growth worsening by -69.37%. Interest expense was very high at 76.11%, further pressuring profitability. Return on equity and return on invested capital were negative at -461.85% and -166.73%, respectively, which implies significant value destruction as ROIC is well below the weighted average cost of capital at 14.98%. The interest coverage ratio was negative at -106.52, signaling difficulty in covering interest obligations. Asset turnover ratios were very low, indicating inefficient use of assets. The dividend yield was zero, which may be unfavorable to income-focused investors.
Conclusion
Despite some favorable signs in operational cost control, EBIT growth, and liquidity, the company’s overall income statement and ratio evaluations are unfavorable, with severe losses and value destruction indicated by negative ROIC and ROE. The long-term stock trend is bullish with a 120.61% price increase, yet recent trends show a significant price decline of -50.46% and a seller-dominant volume with buyer volume at 38.19%. Given these mixed signals, Arqit Quantum Inc. might appear to have operational challenges and financial weaknesses that warrant cautious interpretation, especially considering recent market pressure.
Disclaimer: This article is not financial advice. Each investor is responsible for their own investment decisions.
Additional Resources
- Arqit Quantum Inc (ARQQ) Full Year 2025 Earnings Call Highlights: Revenue Growth Amid Rising … By GuruFocus – Investing.com Canada (Dec 16, 2025)
- Arqit Hasn’t Earned The Benefit Of The Doubt, Yet (NASDAQ:ARQQ) – Seeking Alpha (Dec 12, 2025)
- Arqit Quantum Inc. Announces Financial Results for Fiscal Year 2025 – GlobeNewswire (Dec 09, 2025)
- Arqit Quantum (ARQQ) Announces that Fabric Networks Purchases Full Commercial PI License for Arqit’s NetworkSecure™ Platform – Yahoo Finance (Oct 04, 2025)
- Arqit Quantum Inc. (NASDAQ:ARQQ) Q4 2025 Earnings Call Transcript – Insider Monkey (Dec 10, 2025)
For more information about Arqit Quantum Inc., please visit the official website: arqit.uk
