Arqit Quantum Inc. · NASDAQ:ARQQ
Arqit Quantum — SPAC Merger (August 2021)
31 slides from Arqit Quantum's SPAC merger presentation, Aug 3, 2021
Slide 1: Arqit: Stronger simpler encryption
Arqit Stronger simpler encryption July 2021
Slide 2: Disclaimer (1/2)
2 Disclaimer (1/2) The following presentation, the information communicated during any delivery of the presentation and any question and answer session and any other materials distributed at or in connection with the presentation (collectively, this “presentation”) has been prepared by Arqit Quantum
Slide 3: Disclaimer (2/2)
3 Disclaimer (2/2) Use of Projections This presentation also contains certain financial forecasts, including projected revenue, gross profit, EBITDA and unlevered free cash flow (“uFCF”) for Arqit’s fiscal years 2021 through 2025. Neither Centricus’ nor Arqit’s independent auditors have audited, rev
Slide 4: Today's presenters
4 Today’s presenters David Williams CEO and Founder, Arqit ▪ Former CEO & co - founder of Avanti plc ▪ Former TMT Banker ▪ Queens Award for Exports 2016 Garth Ritchie CEO, Centricus Acquisition Corp ▪ Former Head of Investment Bank for Deutsche Bank and Member of Management Board ▪ Joined Centricus
Slide 5: Centricus Acquisition Corporation overview
Centricus Acquisition Corporation overview 5 ▪ Centricus Acquisition Corporation (NASDAQ: CENHU) is a Nasdaq - listed blank check company led by former executives at Silversea Cruises and Centricus ▪ This entity was formed by Centricus and Heritage Group: Monaco - based private equity group with a c
Slide 6: Vision
V i sion Our mission is to use our world leading quantum encryption platform to keep safe the data of our governments, enterprises and citizens. 6
Slide 7: Problem: legacy encryption is obsolete
Problem: legacy encryption is obsolete 7 ▪ PKI was designed decades ago ▪ It was never intended to protect our hyper connected world ▪ It has many vulnerabilities in its implementation for attackers to exploit ▪ Quantum computers will soon compromise the mathematics at the heart of PKI ▪ The world i
Slide 8: Solution: A new way to distribute symmetric encryption keys
8 Solution: A new way to distribute symmetric encryption keys Symmetric keys are the solution Long random number cannot be broken by computers Used with physical couriers for decades Previously not possible to distribute them electronically with adequate security Arqit transformational innovation A
Slide 9: Transatlantic leadership in cloud encryption
9 Transatlantic leadership in cloud encryption David Bestwick CTO & Founder Former CTO, Avanti plc . Marconi engineer . Astrophysicist . Royal Aeronautical Society medal winner Dr Daniel Shiu Chief Cryptographer Former Head of Mathematics & National Technical Authority for Cryptographic Design & Qua
Slide 10: What does the product do?
10 What does the product do? ▪ Quantum satellites will put the root source of symmetric key data into global data centres to form the QuantumCloud TM ▪ In our network today, the role of satellites is emulated in data centres, which is very secure. But, targeted for 2023, we intend to launch two quan
Slide 11: A moat of 1,435 patent claims
A moat of 1,435 patent claims 11 T o d ay In no v ation Arqit solved the global vs trustless problem for satellite QKD with ARQ19, a transformational quantum algorithm 1 4 QuantumCloud TM uses root source keys to moderate end point “key creation process” 5 End point Keys are “One Time” - created in
Slide 12: Commercial strategy - scalable business model
Commercial strategy - scalable business model 12 Product • Software is downloaded by customers and used automatically • Software API calls for keys to be created when needed, which triggers billing Distribution • Channel partners resell the service – strategy to get early traction • Any customer glo
Slide 13: Large and growing information security and risk management market
Large and growing information security and risk management market 13 $125.8bn $194.3bn Arqit plays into every subsegment 6.2 58.3 13.1 4.2 15.8 9.7 7.9 90.5 20.1 6.8 35.1 19.0 4.7 2.8 2019 2024 Note: Calculations performed by Arqit Limited, charts/graphics created by Arqit Limited based on Gartner r
Slide 14: Early distribution strategy backed by blue-chip partners
Early distribution strategy backed by blue - chip partners Tech applies to every vertical in the World, but early Customers secured in key vertical markets 14 Note: Existing customers and contracts under negotiation Defence Tel c o Financi a l Se r v i c e s A u toma tion Making fixed and 5G network
Slide 15: Material backlog and pipeline already secured
Material backlog and pipeline already secured 15 G o v e r n m e n t of UK Gover n m en t of UK ~$1.1 billion of backlog and pipeline ~ $ 1 3 0 m ~ $110m ~ $ 1 4 0 m ~ $ 7 4 0 m Executed contracts for project or annual recurring revenues Contracts for annual recurring revenues under negotiation Fram
Slide 16: Monetisation
16 Monetisa t ion There are three different ways for customers to pay Arqit for the QuantumCloud TM : ▪ A distributor (like a national telco) sells to large enterprises and government departments and pays Arqit net of its margin – operating now ▪ A defence customer buys a “private instance” from Arq
Slide 17: Typical Customer – The Master Distributor
17 Typical Customer 1 – The Master Distributor ▪ Distributors want early exclusive advantage ▪ We offer quasi territorial or sectoral exclusivity ▪ In return, a binding revenue commitment over five years ▪ When they sell more than the minimum they pay more ▪ They are obliged to sell to sub - distrib
Slide 18: Identifying major revenue sources early on
Identifying major revenue sources early on 18 Typical Customer 2 – Federated Quantum System ▪ Defence users are early adopters ▪ There is currently NO COMPETITOR to Arqit ▪ Governments WANT the Arqit tech ▪ BUT they want a private instance » They want to control physical security of infra from kinet
Slide 19: Since the Business Combination Agreement Announcement
19 Since the Business Combination Agreement Announcement: Patents Filed claims increased 30% to 1,435 (1,098) Product QuantumCloud TM Release version 1.0 has been launched live to customers New Customer Contracts Announced Northrop Grumman, Leonardo, Honeywell, Dentons
Slide 20: Financial and Transaction Overview
Financial and Transaction Overview
Slide 21: Strong growth, high profitability, exceptional cash generation
21 Strong growth, high profitability, exceptional cash generation Substantial revenue growth First mover advantage results in capturing the quantum encryption market which is in its nascent stage Strong pipeline and backlog $1.1bn+ pipeline with $130m contracted revenue with government and blue - ch
Slide 22: Financial projections highlights
22 Financial projections highlights Dec - YE, $m 2021E 2022E 2023E 2024E 2025E QuantumCloud TM 4 16 148 400 660 Project revenues 11 16 5 2 - Total revenue 14 32 153 402 660 % growth 125% 371% 163% 64% Total COGS ( 5) (9) (13) (23) (51) Gross profit 10 24 140 378 609 % margin 66% 72% 91% 94% 92% ( -
Slide 23: Detailed transaction overview
Detailed transaction overview 23 Sources & Uses Pro Forma Capitalization ($ in millions) Sources Existing Arqit shareholders rollover equity $900 64% SPAC Cash in Trust 345 25% Additional PIPE Equity 71 5% Founder Shares rollover equity 86 6% Total Sources $1,402 100% Uses Amount % Existing Arqit sh
Slide 24: Defining the peer group for Arqit
Defining the peer group for Arqit 24 x First movers in new categories x Similar high growth profile Capital intensive unlike Arqit Not as profitable in near term as Arqit Recent SPAC transactions Established security x Security software end market Mature / relatively low growth Government tech x Sim
Slide 25: Arqit benchmarks well against peers across all financial metrics
107 . 7 % 142 . 1 % 23 . 6 % 30 . 2 % 14 . 6 % Arqit benchmarks well against peers across all financial metrics 25 Revenue growth Gross margin uFCF margin High growth security and infrastructure (c) Government tech (b) Recent SPAC t ran s a ctio n s (a) Est ab lis he d security (d) High growth secur
Slide 26: Valuation benchmarking
Valuation benchmarking 26 Note: Metrics that are considered non - GAAP financial measures are presented on a non - GAAP basis without reconciliation of such forward - looking non - GAAP measures. For more information around non - GAAP financial measures, see slide 3. These projections are for illust
Slide 27: Transaction represents an attractive valuation to peers
$8,271 $3,989 $1,026 $11,574 $5,582 Implied future Enterprise Implied current enterprise value value Pro forma Enterprise Value Transaction represents an attractive valuation to peers 27 ▪ 2025E projected financials - based valuation is appropriate given Arqit’s significant revenue growth and confid
Slide 28: Highly attractive investment thesis for Arqit
Highly attractive investment thesis for Arqit 28 1 2 3 4 5 6 7 At the intersection of key secular megatrends powering the fourth industrial revolution Cybersecurity, space, quantum technology, robotics, mobility, and AI Ready for market Product launch in July 2021 Large, growing and underpenetrated
Slide 29: Additional Materials: Benchmarking
Additional Materials Benchmarking
Slide 30: Operational benchmarking
Operational benchmarking 30 Note: Metrics that are considered non - GAAP financial measures are presented on a non - GAAP basis without reconciliation of such forward - looking non - GAAP measures. For more information around non - GAAP financial measures, see slide 3. These projections are for illu
Slide 31: Valuation benchmarking
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