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Now I'd like to turn the call over to Andy Leaver, the company's Chief Executive Officer. Andy?

Thank you, and thank you for joining our first half of fiscal year 2026 earnings call. When we spoke in December, reflecting on fiscal year 2025, 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 roadmaps to enhance cryptographic postures for governmental agencies and encouraging enterprises to take action as well. I noted that from Arqit'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 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 U.S. National Institute for Standards and Technology, or NIST, timeline for migration to post-quantum cryptography, which calls for the deprecation, meaning the marking of removal, of unsafe cryptography by 2030 and complete disallowance by 2035. On March 23rd, 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 elliptic curve cryptography, the kind of cryptography that protects things like crypto wallets, with 20x fewer qubits and gates than previously projected. That moves the timescale from 2035 to by 2029. That is a serious migration timeline compression.

Cloudflare, on April 7th, 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 30th. Oratomic concluded that by leveraging advances in high rate quantum error correcting codes, efficient logical instruction sets, and circuit design, Shor's algorithm can be executed at cryptographically relevant scales with as few as 10,000 reconfigurable atomic qubits. That is a shockingly low estimate of the computational resources needed to crack RSA. Finally, IonQ, on its May the 6th earnings call, CEO Niccolo de Masi stated, "Based on our public roadmap, we expect to achieve the logical qubit count required to challenge RSA 2048 encryption in the 2028 to 2029 window." If IonQ is correct, migration to a post-quantum security posture by 2029 may be too late.

The urgency to migrate to post-quantum cryptography is heightened by two 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 at 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 is 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 in use across a 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 CISOs 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, protecting against Harvest Now, Decrypt Later attacks, and when quantum computers arrive at scale.

Our solutions are cryptographically agile, which gives CISOs and CTOs flexibility to mix and match PQAs, that's 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've completed deployments in as few as a couple of days. 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 rollouts 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 18th, Arqit executed its first Encryption Intelligence contract supporting PQC migration planning. On May 19th, Arqit signed its first partnership agreement with a European specialist cybersecurity provider for Arqit's Encryption Intelligence solution. Feedback about our Encryption Intelligence product 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 CISOs 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, is gaining traction. Sparkle, a Tier 1 Italian network operator, licensed our product to create a quantum secure network as a service.

It has seen take-up of its offering, most notably with a financial institution. This is important for several reasons. One, it demonstrates the efficacy of our encryption in a real-world use case, securing critical data and communication in transit. Two, it demonstrates the applicability of our cryptographic solutions for the financial service industry, which we believe is a significant market opportunity. Three, and finally, take-up of Sparkle's network-as-a-service offering means consumption of its volume-defined license with Arqit. We wish Sparkle much success and would welcome Sparkle's need to upsize its license. We expect that to be the case, as Sparkle just yesterday announced the commercial availability of its Quantum Safe Interconnect, which is secured by Arqit across 20 Equinix International Business Exchange data centers in Europe, the Americas, and Asia, where Equinix Managed Solutions are offered.

Sparkle's Quantum Safe Interconnect is now available to enterprises, carriers, and hyperscalers seeking quantum-safe protection for their cross-site VPNs, hybrid infrastructures, and distributed multi-cloud environments. Sparkle indicated that it expects to expand the offering across the broader Equinix ecosystem. To paraphrase Joe Crawford, Vice President 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 teamed with Colt Technology Services to deliver a quantum-secure wide-area network to help protect A&K Travel Group from the future risk presented by quantum computers, including the threat presented by Harvest Now, Decrypt Later. A&K owns a portfolio of premier travel brands, including Abercrombie & Kent, Crystal, and Cox & Kings.

A&K's brands provide travel adventures in more than 100 countries across the world and rely on a secure global network's key customers, employees, and travel partners connected. Colt and Arqit will now keep A&K Travel Group customers and the customer's data and communications protected from the quantum threat. Large telecommunications networks are a significant opportunity for our encryption solutions. We're engaged in late-stage dialogue and demonstrations with several, including one in the U.S. However, our encryption solutions are broadly applicable beyond Tier 1 telecommunications networks. The lightweight software nature of our product allows deployment at all layers of a network and almost any device, regardless of size or power. Our solution is also crypto-agile in 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 with defense organizations.

Implementations range from a defense contractor securing communications of a government defense research network to a defense contractor securing tactical 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 upsizing of our largest U.S. defense-related contract is imminent, further establishing a track record which we can build upon. Also, on May 1st, a partner, which is the leading technology and innovation solution provider to the aerospace and defense industry, renewed and upsized its contract with Arqit by almost 90%. Together, we bid into contract opportunities to military organizations with a heavy emphasis on Europe. Our opportunity set in the government and defense markets is the strongest it has ever been. The 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've added three 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 the Tomorrow Street portfolio as a scale-up partner, a joint venture between Vodafone Group and Technoport, Luxembourg's national tech incubator. Tomorrow Street'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. Finally, on May 19th, Arqit signed a partnership agreement with the European specialist 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 Arqit. 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 CISOs 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 of telecommunications and government and defense. Circling back to my remarks from our fiscal year 2025 earnings call, the key message was that 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. We're 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 our up and to the right momentum to continue. With that, let me turn the call over to Nick Pointon. Thank you. Nick?

Thank you, Andy. For the first half of fiscal year 2026, Arqit generated $623,000 in revenue as compared to $67,000 in revenue for the similar period in fiscal year 2025. 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 2025, and revenue under 11 contracts in the period versus six in the first half of fiscal year 2025. Revenue for the period represents the second consecutive reporting period of growth. With a small data set, it gives credence to Andy's comments when we reported in fiscal year 2025 results that our revenue had troughed as of March 2025, and our expectation is for growth going forward. As I noted, we executed under 11 contracts in the period. For comparison, we executed under seven for fiscal year 2025.

Two of the 11 contracts have or are expected to imminently renew and be upsized. Three of our 11 contracts were in the telecom sector and eight 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 GBP 20.2 million for the 6 months ended 31st March 2025 to GBP 33.9 million for the 6 months ended 31st March 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 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 GBP 12.7 million non-cash charge associated with share-based compensation versus a GBP 872,000 charge for the comparable period in 2025. Operating loss for the period was GBP 33.7 million versus a loss of GBP 20 million for the first half of fiscal year 2025. The variance in operating loss between periods primarily reflects high revenue more than offset by an increase in administrative expenses for the period. For the period, loss before tax from continuing operations was GBP 33.1 million. For the first half of fiscal year 2025, loss before tax from continuing operations was GBP 19.5 million. The variance between periods is primarily due to increased administrative expenses and a lower finance income. As of 31 March, the company had cash and cash equivalents of GBP 28.9 million. However, our cash balance as of 20th of May was GBP 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 GBP 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 five 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 1st, following two months working part-time to ensure continuity ahead of assuming the CFO role. I'm confident that this measured transition leaves the company's financial stewardship in excellent hands. With that, I will hand the call back to Andy.

Thank you, Nick. On behalf of the company and board, I would like to thank you for your service. You've been instrumental in building the infrastructure which every company needs to operate and succeed. It's 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. Now I'll hand the call back to the operator for Q&A.

Certainly. Ladies and gentlemen, if you do have a question at this time, please press star one one on your telephone. If your question has been answered and you'd like to remove yourself from the queue, simply press star one one again. Our first question comes from the line of Troy Jensen from Cantor Fitzgerald. Your question, please.

Hey, gentlemen. Congrats on all the momentum. Maybe start off here with one for Andy. I'd just be curious, your thoughts on the sense of urgency around Q-Day and just relating that to the slowness that it seems that we've seen on the adoption currently. Any thoughts would be helpful.

Yeah. Hey, thanks, Troy. Thanks for joining the call. Appreciate the question. I think as I mentioned in my opening comments, we are seeing, obviously, some of the very big players in the market, notably Google, Cloudflare, are all pulling forward their predictions of cryptographically relevant quantum computers becoming available. Likewise, at the same time, we're seeing the estimate of the number of qubits required to break Shor's algorithm is coming down also at the same time, hence the revision of those timelines coming forward. I think what's really interesting is today, which literally has happened just before our earnings call is, we've seen people like The Wall Street Journal and others reporting that the U.S. government has taken an active interest in investment into quantum companies. If rumors are believed, it's in the region of $2 billion.

To me, I see that as, 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-talked-about Q-Day, which looks like it's getting closer and closer. I believe now, you'll 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, I liken it a little bit to the original build-out of the internet, you're seeing a lot of the infrastructure providers.

We've just talked about people like Equinix, infrastructure provider, telcos, which are providing the cabling. The ground up 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. As I said in my comments, I really feel like last year was the year of quantum. This is year of quantum security. It actually does feel like the year of quantum security.

Yeah, interesting. I'd agree with you on the sense of urgency. It just feels like we need to have an inflection in some point, right, for all these governments and telcos and corporations are going to get quantum ready. What are your thoughts on the milestones then, or the catalysts that we need to watch for investors in the near term here?

Could you just repeat the last bit? I missed the very last bit of the question.

Yeah. The milestones that we need to watch to really see when this catalyst or when this inflection is going to come in the near term. I'm assuming it's just the technical milestones that need to happen from the quantum companies, but your thoughts on the next catalyst for you guys?

Yeah, I think just to comment on the quantum availability side, I don't believe that there's going to be a day where somebody says, "Hey, we've used Shor's algorithm, we've broken existing encryption." That could be any time in the next two years, according to what Cloudflare and Google are talking about, or kind of in that timeframe. I think for us, it's this recognition, I think a lot of people thought for a while, "Hey, this is just moving to a new form of encryption, and we just move on." You think about the previous way that we're securing things with certificates. It was built for a different age. It was built for a very different level of compute power, memory, storage, et cetera. I don't think people quite understand that it's a bigger job, especially with the amount of data that's machine-generated now.

That's why we made a thing talking there about all the way from center to the edge. You think about how many edge devices there are now, which are producing masses of data. I think for us, when we use Encryption Intelligence to say, where do you start and how do you ensure that you are quantum-safe on the perimeter working into the core, and then how do you lay out a plan to make sure you can migrate the whole organization? I am not sat here now saying, "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.

All right. Makes sense. One other question, or it's probably a multi-point question. Just on finances here. The warrants that you just talked about, GBP 30 million you'll raise, just what's the share count that's going to come with that? Are there other warrants outstanding? Can you just talk about your cash position, and the cash burn would be awesome to hear.

Well, let me turn to Nick first to start that question, and I am sure Rob has got some thoughts on that as well.

I think I'll just hand over the cash part of that answer to Rob while we look at the warrants.

Great. Thanks, Nick, and thanks for the question, Troy. As Nick said earlier, we closed the half year with GBP 29 million of cash in the bank. Today, we have in excess of GBP 35 million. That translates to more than 14 months of runway. Add on top of that the GBP 13.5 million worth of warrants, which you've mentioned that heavily in the money, and they expire in September, so before the fiscal year end. What does all of that translate to? We feel very comfortable with our cash position. We believe it gives us more than enough cash to meet our commercial objectives, especially in a market that we believe is moving towards us for the reasons that Andy's outlined.

Very fair. All right. Well, good luck, gentlemen.

Just real quick-

I wasn't listening to the warrants bit. Yeah. Thank you.

Shall I just jump in? On the warrants that expire in September 2024, that equates to 5.4 million shares according to the table.

Okay, any other outstanding warrants?

There are other outstanding warrants. I think these are covered in the 20-F in some detail, and expire over the next two further years. The last one's expiring in September 2028.

Okay. All right. Good luck, guys.

Thanks, Troy.

Thank you. As a reminder, ladies and gentlemen, if you do have a question at this time, please press star one one on your telephone. This does conclude the question and answer session of today's program. I'd like to hand the program back to Andy Leaver for any further remarks.

Hey, thank you, Jonathan. Thank you everybody on the call for joining us today, or if you're listening on replay. We look forward to speaking with you again following the close of our 2026 fiscal year. Thank you.

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

On today's call, we will be referencing the press release issued this morning that details the company's full fiscal year 2025 results, which can be downloaded from the company's website at arquettegroupgroup.com. At the end of the company's prepared remarks, there will be a question and answer period for selected equity research analysts. Please note that those selected equity research analysts that would like to ask a question in the Q&A session will need to dial into the call rather than joining through the webcast link. Finally, a recording of the call will be available on the Investors section of the company's website later today. Please note that this webcast includes forward-looking statements. Statements about the company's beliefs and expectations concerning words such as may, will, could, believe, expect, anticipate, and similar expressions are forward-looking statements and are based on assumptions and beliefs as of today. The company encourages you to review the safe harbor statements, risk factors, and other disclaimers contained in today's press release as well as in the company's filings with the Securities and Exchange Commission, which identifies specific risk factors that may cause actual results or events to differ materially from those described in our forward-looking statements. The company does not undertake to publicly update or revise any forward-looking statements after this webcast. And now, I would like to turn the call over to Andy Leaver, the company's Chief Executive Officer. Andy?

Thank you, and thank you for joining our fiscal year 2025 earnings call. From my vantage point, fiscal 2025 was a year of building momentum. The issue which Arqit Quantum Inc.'s products and services address, specifically current weaknesses in encryption, and the future threat posed by quantum computers moved up the risk register of enterprises and governments around the world. It was a year of building momentum for the company as well, momentum in customer engagements across our key markets, momentum in revenue, and momentum in contracted backlog coming into fiscal year 2026. Fiscal year 2025 was also a year of broadening our product and service footprint. Our acquisition of Amplify's encryption intelligence product and risk advisory services broadens our engagement with current and prospective customers to address the migration journey to a post-quantum cryptographic posture from beginning to end. Innovative collaborations with Intel and Sparkle broaden our product solution sets to include confidential computing, which is an exciting emerging market opportunity on quantum secure communications across the optical transport layer. Finally, the year was marked by further building upon past successes, specifically replicating past successes in the telecom network sector and defense sectors with additional contract wins. The need for enhanced cryptography is ever increasing, particularly with each new announcement of advances in quantum computing capability. Organizations are increasingly aware of the need to address the issue. We have seen a change in the market from awareness of the issue to action to address it. The level of action is uneven across or within market segments. However, it is no longer a question of if organizations need to upgrade their cryptographic posture, but when they will upgrade their posture. Arqit Quantum Inc. recently was invited to present to a leading US securities industry regulatory organization about the rise of quantum computing and the threat it poses to cybersecurity for the financial industry. One of the most interesting questions posed was, what can we, as a regulatory body, do to support and encourage a transition to post-quantum security? From Arqit Quantum Inc.'s perspective, the invitation to present and the question asked demonstrated the increasing urgency which is being felt across key market sectors to move to a post-quantum encryption posture. Many governments, security agencies, and regulatory bodies across the globe are mandating or encouraging the migration to post-quantum cryptography. Some are even imposing deadlines. Top-down pressure plus increased awareness of the issue at the CTO or CISO level within organizations is driving increased action to address the issue. As a result of this market trend, Arqit Quantum Inc.'s marketing programs have been announced successes with seen increased activity with prospective customers. The first step with prospective customers is a demonstration and test engagement. In the first two months of this fiscal year, we have already signed 12 demonstration and test engagements. The pace of engagements is running well ahead of fiscal 2025. We believe this is the best barometer of building market migration towards a post-quantum cybersecurity preparedness. And it signals increasing awareness of Arqit Quantum Inc.'s symmetric key agreement encryption platform as a compelling solution. We have a proven solution to address the weaknesses of today's and the threat posed by quantum computers. However, we recognize that as an organization wants to migrate to a post-quantum encryption posture, it needs to understand its current cryptographic landscape and its risk exposure before we can take steps to upgrade its encryption architecture. We lacked an important capability, namely a risk advisory tool to help our organizations take the first important step to understand their risk. In May, we acquired Amplify's product portfolio IP and innovations team specializing in encryption risk advisory and AI analytics. Amplify's encryption intelligence risk analysis tools we acquired give organizations complete visibility into all encryption technologies in use across the network, automatically identifying weak points and vulnerabilities, including those susceptible to quantum attacks. Encryption intelligence risk analysis tools offer CSOs and CTOs an on-ramp for their post-quantum migration. They cannot address issues which they cannot see. Encryption intelligence shines a light on the problem. While a revenue opportunity in and of itself, encryption intelligence is also a sales lead generator for our symmetric key encryption solutions.

Our encryption intelligence product combined with Arqit Quantum Inc.'s quantum encryption

technology delivers a comprehensive proposition to identify and mitigate cyber risk exposure from both current and future quantum threats. Arqit Quantum Inc. can help organizations detect, protect, and comply. What I mean by that is firstly, we can help organizations detect their cryptographic risk exposure through the use of encryption intelligence. Secondly, we can help organizations enhance and protect their networks and IT infrastructure through the use of our quantum-safe symmetric key agreement encryption solutions. And thirdly, organizations can migrate to a post-quantum encryption posture that is compliant with cybersecurity guidance from leading government agencies and trade groups as our encryption intelligence tools map against leading security agency recommendations and our encryption solutions meet all such recommendations, including the National Security Agency's commercial solutions for classified key management requirements. While a concise multiphase detect, protect, and comply captures the essence of what we do and the value proposition which we offer customers. Adding encryption intelligence to our portfolio is an important broadening of our offering to assist clients in their end-to-end migrations. Another important point to add to the broadening of our product portfolio was the announcement of our collaboration with Intel to bring symmetric key cryptography into the trusted domain created by Intel's TDX enclave. What that means to the less technically inclined is workloads in our can move between on-premise and cloud environments, which is and confidential. Hence, it is called confidential computing. The security of workloads in process and transit is of vital importance to CTOs and CSOs. Confidential computing is increasing in importance. It is an element of the rise in market focus on trust and data sovereignty.

Trust

and sovereignty are the words we hear regularly in our engagements with existing and prospective customers. Data sovereignty is the concept that data is subject to the laws of the country or region where it was generated. It's an issue which is complicated by the continued movements of data and workloads to the cloud, which are often transnational. This is a particularly important issue in the European Union. Recent materials announced by Deutsche Telekom, British Telecom, and Orange focused on their sovereign cloud or network architecture initiatives. Arqit Quantum Inc.'s collaborative solution with Intel and its Intel TDX has significant applicability to the trust and sovereignty issues confronted by organizations seeking to comply with data sovereignty laws. We expect to have additional announcements about offerings and go-to-market strategies targeted to the confidential computing and data sovereignty market in this fiscal year. Arqit Quantum Inc. believes this market represents a meaningful opportunity for the company, and we have a strong partner in Intel with whom to attack it. While we have broadened our product offering with encryption intelligence and our activities with Intel, we remain focused on building on our recent successes specifically in the telecom and government and defense markets. In the telecom market, we signed a three-year contract with Sparkle, a tier-one network operator enabling them to offer a quantum secure network as a service. Building upon our relationship, we just recently announced in partnership with Sparkle that it had demonstrated embedding Arqit Quantum Inc.'s encryption technology directly into the optical transport layer, validating that sensitive data could be secured at the physical network layer without compromising performance. This demonstration opens the door for additional secured product offerings for network end users. In addition to activities with Sparkle, Arqit Quantum Inc. signed additional license agreements or contracts with RSG Telecom and its affiliate, Fabric Networks. Our engagement with prospective large telecom network operators is strong. We expect to replicate our success with Sparkle, RSG, and Fabric with other network operators as we have the blueprint which should shorten implementation times for prospective customers. Likewise, in defense, whether militaries or defense contractors are building upon our recent success. Our previously announced initial Department of War contract in partnership with a large IT vendor has been a validating event. Since the announcement, we've signed several additional defense-related contracts, including one for integration into unmanned battlefield assets. There is significant opportunity in the defense market, and we have undertaken multiple demonstration and test engagements, usually as part of a solution set with partners with US and foreign military organizations and defense contractors. While sales cycles in defense can be slower than other markets, we believe that this market will represent a large percentage of our revenue over time. In that regard, we've increased and realigned our US operations and personnel to drive our efforts to capture more of this market, whether US military, national security, or government. So circling back to my introduction, we are experiencing the market momentum to take action to address the weaknesses in today's encryption and the threat of quantum computers. Prospective customer engagements are accelerating. We have broadened our product offering to provide a comprehensive solution to detect, protect, and comply. We have also broadened our product offering to be a first mover in Quantum Secure confidential computing and data sovereignty. And finally, we have deepened our success in key network operator and defense markets. Our efforts are beginning to come through in our results, which Nick will talk about in a moment. I will say we believe that fiscal 2025 represents a trough year from a revenue perspective. The company grew revenue materially in the second half of the year as compared to the first half. We ended the fiscal year with executed contracts that represent $1,200,000 in revenue that could be recognized in fiscal year 2026. We expect to build upon that foundation through 2026. As momentum in the marketplace for quantum-safe solutions grows, so is our conviction. Organizations are starting the migration journey. We can assist in the assessment of risk exposure, and we offer a provably secure symmetric key encryption solution. We like our position in the marketplace to capture the demand we are building. We are excited about our prospects for 2026. Thank you. And with that, I will turn it over to our CFO, Nick Pointon. Thank you, Andy. For the fiscal year 2025, Arqit Quantum Inc.

generated $530,000 in revenue as compared to $293,000 in revenue for fiscal year 2024. The variance between periods resulted primarily from the commencement in March of our previously announced multiyear contract with a customer in The Middle East. In 2025, we generated revenue from seven licenses for our SKA platform and network secure solutions and professional services. This compares to 13 licenses for fiscal year 2024. While our revenue for the fiscal year is modest, our full-year result does represent a material improvement from the prior year and a material sequential improvement from the 2025 to the end of the period. Recall, our 2025 revenue was $67,000 while the second half of the year saw revenue accelerate to $463,000. The acceleration in second-half revenue benefited from, amongst other factors, the commencement of revenue generation from our multiyear contract in The Middle East, which as previously reported, had been delayed. It also reflects the commencement of our multiyear contract with Sparkle. In keeping with Andy's theme of momentum, we previously reported that we ended fiscal year 2025 with $1,200,000 of contractual revenue which may be recognized in fiscal year 2026. While we are still speaking in modest nominal dollar terms, the trajectory of our prospective customer discussions, licensing activity, and now revenue is all moving in a positive direction. Revenue from the Arqit Quantum Inc. platform SKA platform as a service and Arqit Quantum Inc. Network Secure products totaled $476,000. Professional services and maintenance revenue in support of contract activity was $54,000 for the period. For fiscal year 2024, Arqit Quantum Inc. SKA platform as a service and Arqit Quantum Inc. Network Secure contracts revenue totaled $191,000. And professional services and maintenance in support of activity was $102,000. Our administrative expenses equate to operating costs for those more familiar with US GAAP. Administrative expenses for fiscal year 2025 were $34,700,000 versus $25,400,000 for fiscal year 2024. The variance between periods was primarily due to a reduction in foreign exchange gain resulting from the strengthening of the pound against the US dollar. Employee and property costs saw material reductions year over year. Arqit Quantum Inc.'s headcount as of September 30, 2025, was 91 employees as compared to 82 as of September 30, 2024. Administrative expense for the period includes a $5,600,000 noncash credit associated with share-based compensation versus a restated $600,000 noncash charge for fiscal year 2024. Operating loss for the period was $38,500,000 versus a loss of $26,900,000 for fiscal year 2024. The variance in operating loss between periods is primarily an increase in administrative expenses and recognition of an exceptional item for the outstanding class action lawsuit in the period. We previously announced that an agreement in principle has been reached regarding a settlement of the lawsuit. For the fiscal year, loss before tax from continuing operations was $36,500,000. For fiscal year 2024, loss before tax from continuing operations was $37,400,000. The variance between periods is primarily due to an improvement in currency translation differences. As of September 30, 2025, the company had cash and cash equivalents of $36,900,000. With that, I turn the call back to Andy.

Thank you, Nick. A final thought. Nick perhaps said it best when he noted that the trajectory of key measures, prospective customer engagements, signed contracts, revenue, and backlog are all moving in a positive direction. From my perspective, that is a function of the market beginning to take serious action towards migrating to a post-quantum encryption posture. It's also a function of recognition that our key symmetric key agreement encryption platform offers a proven solution today. We are very excited about the market for our products in fiscal 2026. The hard work of the entire Arqit Quantum Inc. team is beginning to bear fruit. We expect to build upon the momentum that we experienced in 2025. Thank you again. I'll hand the call back over to the operator for Q&A.

Thank you. If you are on a headset, please pick up the handset and then press star 11. If you would like to remove yourself from the queue, please press star 11 again. One moment while we compile our Q&A roster. And our first call from today will come from the line of Scott Buck of H.C. Wainwright and Company. Your line is open.

Hi. Good afternoon, guys. Thanks for taking my questions. Andy, I'm curious, is 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.

Hey, Scott. Good question. Thank you. So I kind of look when I kind of laid out where we're seeing business, I would say kind of thematically, what you're seeing is the news flow on quantum and the advances in quantum, this year, this calendar year 2025 have been huge. And I think when you see some of the larger players like sorry. Like IBM and Google when they talk about their hypercomputers and achieving quantum supremacy. And then you also see some of the smaller pure players, which we see a lot, by the way. I think their advances have gotten people to say, hey. We can see now that Quantum is moving very quickly, and we're still actually in the Europe Quantum. So that's the first thing that they're seeing, I would say, thematically. I think also then what we're also seeing is you'll see specifically within the telecom sector is a larger awareness because of I talked about in my notes earlier that in some cases, governments, in other cases, regulatory bodies, are saying to people, this needs to be on your risk register, and this is something you need to look at. And I think that's driving a lot of organizations starting with telco to say, hey. We need to have a position on this, and we need to understand the potential impact. And how we can mitigate against that impact. So on one side, it's hugely excited about quantum arriving in the way that it is because it's a force for good. We all know the benefits of quantum. But in a bad actor's hands, now people are starting to be aware of what the consequences of that are. I would just leave you with one other thing as well. I think it's very well publicized now. The threat of what's being called harvest now decrypt later, which is people having their information hacked and stolen today to be decrypted later when quantum computing is available in a more meaningful way. If that information has a shelf life or has any sort of validity going into the future, then it puts that organization at risk. And I think people are saying, hey. We need to guard against that now. Rather than wait for more and more evidence in terms of the availability of quantum computers. Hopefully, that helps, Scott.

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. Also wanted 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.

Yeah. Hey. We're really pleased with the acquisition we made of encryption intelligence. For us, this is something that that ability to one, in a sales cycle, an organization their cryptographic landscape and show where they have potential weaknesses and potential problems in their network, but also identify that against existing regulatory body guidance. But right behind that is obviously we want organizations to use this as an ongoing tool as well to keep themselves safe against any new attacks. So we're seeing starting particularly with telco operators that are leaning into this and saying, hey. This is something that we'd like to use on an ongoing basis. So in discussion now with a number of telco operators not just to do an initial check on their network, but also then on an ongoing basis for them to use the tool. I like the fact now that we can be very specific about what the threat is, and be very deterministic about what we can do to help them mitigate against that potential attack and vulnerability. I think this year, as I said, being the Euro Quantum, we just have a lot more inbound on that side as opposed to before where we were talking about in the market. The market feels like a lot it's a lot more educated now when it's coming to us. Yep. 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 know, either bring in some additional revenue or expand, you know, the potential customer footprint.

Yeah. That's a really good question. And I talked about what we're seeing particularly with data sovereignty and confidential compute. And I think those two areas are really coming to the fore now particularly as you think about a lot of organizations are now thinking about in that kind of detect, protect, comply. Where is my data going? How do I need to think about complying against local regulation? And then how do I protect it? So anyone that sits on the periphery of really the detect, protect, comply around data sovereignty and confidential compute will be great tuck-ins for us. I think anything around particular tech components of that would be interesting. And, you know, we've looked at a few different areas already in terms of people that are delivering components of it, but are obviously missing the deep intellectual property that we have around the quantum-safe part of it as well. So, absolutely, we've been looking in the market.

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?

Yes. So our plan is very much to maintain the control that we benefited from in FY '24. And to keep at the sorry, '25, and to keep the same level in FY '26. So $2,500,000 per month is our sort of target maximum cash spend per month that we anticipate ahead and we believe we can deliver the year ahead within those constraints.

Perfect. Well, I appreciate the added color, guys. Thank you for the time.

Thank you, Scott.

One moment for our next question.

And our next question will be coming from the line of Troy Jensen of Cantor Fitzgerald. Your line is open.

Hey, gentlemen. Congrats on all the great progress here. Maybe, Andy, for you to start with, can we just touch on competition? It seems like six, twelve months ago, there was really nobody the traditional security vendors talking about postmortem security and, you know, now I hear them upgrading their algorithms and whatnot. So curious is that just mainly software-based competition or just curious if you could touch on the competitive dynamics.

Yeah. Sure. I mean, I think in line with what we're seeing in interest and activity within the market. Of course, there's going to be people that are gonna look at this as something that they want to lean into as well. So we absolutely see a few different competing ideas in terms of how people view this and how they want to deliver it. Just to kind of shine the spotlight back at us for a second, you know, we've been at this for over five years. We've got 25 patents. You know, we spend a lot of money deeply thinking about this problem. And believe that we've got something very unique and just to kind of quote a phrase, you know, the gold standard was always symmetric key agreements. Which have been used for a long, long time by governments, military, federal defense, etcetera. Because that's what they trust and have a good pure software solution that allows you to model that without hardware without having to think about distributing keys, and also the fact that it's not mathematical. Anything that mathematical, obviously, a computer eats up very easily. We believe that we've got something that's very light, very flexible goes all the way to the edge of a network, and extends itself into those kind of data sovereignty and also trusted domain conversations that we've been having. So hey, I'm sure there are people that will come along with slightly different views. We just want to make sure that we make it as frictionless and easy as possible what we're doing, and that's what we just keep building on.

Perfect. Great answer. And then, Andy, also for you, just if you look at success lately, 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.

Yeah. Hey. That's a really good question, Troy. And we so I kind of feel like it's building a bit like the OS size stack if people know what that is kind of, you know, from the physical level of words as I talked about. Optical transport layers and things like that. The very basics are, hey. Let's protect the actual fundamentals of how things are connected together. And I feel like now we're getting into the kind of more operational layers I feel like anybody that is regulated, is critical in infrastructure, is heavy in intellectual property, are people that are starting to talk to us. And I mentioned that we'd done a briefing to a regulatory body in my prepared remarks, and you can see that now they're building their guidance saying, hey. This is obviously a threat to regulated financial industries. They're ones we're talking to at the moment. So we're seeing the people that are actually operating some of the infrastructure are thinking about how to protect that and also to protect against bad actors. And then anybody that's doing anything that's rich in IP that they've long development cycles. So you could think about farmers, life sciences, chemicals companies. They're the people that want to protect their IP as well. Because, obviously, if there's a harvest now decrypt later, that's got a long shelf life because they're years into development of that. So those are the industries we're seeing coming along next, and starting to have conversations with them. The secure compute really into financial services as well, obviously, being a regulated industry. So we see those kind of going hand in glove, really. Hopefully, that makes sense.

Perfect. Thank you, Andy. Nick, keep up with good work, guys.

Thank you so much.

Thank you. And there are no more questions in the queue. I would like to turn the call back over to Andy for closing remarks. Please go ahead.

Thank you. And, again, everybody, thank you for joining us today. Look forward to speaking with you again following the close of our 2026 first half results. We really appreciate your interest in the company. Thank you again for your attendance.

Thank you, ladies and gentlemen. This concludes today's conference. Thank you for your participation. You may now disconnect. Speakers, please standby for your debrief.