Slide 1: Arqit: Stronger simpler encryption
Arqit Stronger simpler encryption August 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 ses sion and any other materials distributed at or in connection with the presentation (collectively, this “presentation”) has be en prepared by Arqit Quant
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 fre e cash flow (“uFCF”) for Arqit’s fiscal years 2021 through 2025. Neither Centricus’ nor Arqit’s independent auditors have au dit ed,
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
Slide 6: Vision
Vision Our mission is to use our world leading quantum encryption platform to keep safe the data of our governments, enterprises and citizens. 6 Arqit’s quantum tech stack allows lightweight end point software to create encryption keys which are computationally secure, zero trust and one time in inf
Slide 7: Problem: legacy encryption is obsolete
Problem: legacy encryption is obsolete 7 ▪ PKI was designed decades ago ▪ It was never intended to protect our hyper connected world ▪ It has many vulnerabilities in its implementation for attackers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 Arqit transformational innovation A completely new way to create and distribute unbreakable symmetric keys Symmetric keys are the solution Long random number cannot be broken by computers Used with physical couriers for decades Previously
Slide 9: Endorsements from governments and partners
“Arqit is paving the way in developing a new generation of quantum technologies that defend against sophisticated cyber - attacks on national governments”. - UK Government Minister for Science, Amanda Solloway MP “ We are proud to be providing this technology to UK customers, which will bolster our
Slide 10: Transatlantic leadership in cloud encryption
10 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 & Quant
Slide 11: What does the product do?
11 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 12: A moat of 1,435 patent claims
A moat of 1,435 patent claims 12 Today Innovation 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 the mo
Slide 13: Commercial strategy - scalable business model
Commercial strategy - scalable business model 13 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 14: Large and growing information security and risk management market
Large and growing information security and risk management market 14 Arqit plays into every subsegment $125.8bn $194.3bn 2.8 4.7 9.7 19.0 15.8 35.1 4.2 6.8 13.1 20.1 58.3 90.5 6.2 7.9 2019 2024 Consumer Security Software Security Services Other Information Security Software Network Security Equipmen
Slide 15: 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 15 Defence Telco Financial Services Automation Making fixed and 5G networks end to end secure. Securing the future battlespace. Connected cars.
Slide 16: Material backlog and pipeline already secured
Material backlog and pipeline already secured 16 Government of UK Government of UK ~$1.1 billion of backlog and pipeline ~$130m ~$110m ~$140m ~$740m Executed contracts for project or annual recurring revenues Contracts for annual recurring revenues under negotiation Framework contracts for technolog
Slide 17: Monetisation
17 Monetisation ▪ 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 18: Distributors deliver early go-to-market wins
Distributors deliver early go - to - market wins 18 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
Slide 19: Identifying major revenue sources early on
Identifying major revenue sources early on 19 Typical Customer 2 – Federated Quantum System ▪ One FQS private instance is expected to deliver minimum $19m net revenue per annum ▪ Revenues scale as usage requires more satellites ▪ We initially target 12 closely allied countries Note: This example is
Slide 20: Since the Business Combination Agreement Announcement
20 Since the Business Combination Agreement Announcement: Patents Filed claims increased 30% to 1,435 (1,098) Product QuantumCloud TM r elease version 1.0 has been launched live to customers New quantum safe energy efficient blockchain product announced New self sovereign identity product announced
Slide 21: Financial and Transaction Overview
Financial and Transaction Overview
Slide 22: Financial projections highlights
22 Financial projections highlights Dec - YE, $ m 2021E 2022E 2023E 2024E 2025E Quantum Cloud TM 4 16 148 400 660 Project revenues 11 16 5 2 - Total r evenue 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: Defining the peer group for Arqit
Defining the peer group for Arqit 23 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 24: Highly Attractive Investment Case
24 Highly Attractive Investment Case Product solves an existential threat to the entire digital World Arqit can stop the cyber attacks crippling infrastructure and services Product LIVE and for sale today QuantumCloud TM V1.0 released July Strong customer base $130m in contracts already from blue ch
Slide 25: Detailed transaction overview
Detailed transaction overview 25 Sources & Uses Pro Forma Capitalization ($ in millions) Sources Amount % 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
Slide 26: 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 26 Revenue growth Gross margin uFCF margin High growth security and infrastructure (c) Government tech (b) Recent SPAC transactions (a) Established security (d) High growth security and infrastructure (c
Slide 27: Valuation benchmarking
5.7x 177.3x 187.5x 22.6x 9.9x 85.6x 215.6x 26.3x Valuation benchmarking 27 EV / Revenue EV / EBITDA EV / uFCF High growth security and infrastructure (c) Government tech (b) Recent SPAC transactions (a) Established security (d) High growth security and infrastructure (c) Government tech (b) Recent S
Slide 28: Transaction represents an attractive valuation to peers
$8,271 $3,989 $1,026 $11,574 $5,582 Implied future Enterprise value Implied current enterprise value Pro forma Enterprise Value Transaction represents an attractive valuation to peers 28 ▪ 2025E projected financials - based valuation is appropriate given Arqit’s significant revenue growth and confid
Slide 29: Additional Materials: Benchmarking
Additional Materials Benchmarking
Slide 30: Operational benchmarking
92% 80% 71% 70% 63% 63% 60% 58% 41% 34% 31% na 82% 61% 85% 82% 79% 79% 78% 78% 77% 69% 90% 82% 80% 79% 75% CY22E Median: 79 % CY25 Median: 60% CY22E Median: 80% CY22E Median: 72% 56% 98% 63% 45% 41% 39% 38% na na na nm nm 11% 11% 30% 22% 19% 11% 10% 10% 3% nm 50% 35% 35% 32% 7% CY22E Median: 11% CY2
Slide 31: Valuation benchmarking
620.4x 36.6x 27.1x 25.5x 13.2x 9.9x 8.0x 5.4x 4.1x 1.6x 0.7x 114.1x 57.1x 937.2x 373.5x 244.2x 215.6x 194.4x 165.3x 93.0x nm 144.5x 26.4x 26.3x 19.9x 12.6x CY25 Median: 9.9x CY22E Median: 26.3x CY22E Median: 85.6x CY22E Median: 215.6x 28.9x 19.0x 8.1x 5.7x 4.2x 1.6x 0.7x na na nm nm 260.8x 93.9x 418