Arqit Quantum Inc. · NASDAQ:ARQQ
Arqit Quantum — SPAC Merger (May 2021)
26 slides from Arqit Quantum's SPAC merger presentation, May 12, 2021
Slide 1: Quantum Cyber Security
Quantum Cyber Security Encryption Re-Born For The Cloud
Slide 2: Disclaimer (1/2)
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 I
Slide 3: Disclaimer (2/2)
Disclaimer (2/2) Financial Information The financial information contained in this presentation has been taken from or prepared based on the historical financial statements of Arqit for the periods presented. An audit of these financial statements is in process. Accordingly, such financial informati
Slide 4: Today’s presenters
Today’s presenters Garth Ritchie David Williams CEO, Centricus Acquisition Corp CEO and Founder, Arqit Former Head of Investment Bank Former CEO & co-founder of for Deutsche Bank and Member of Avanti plc Management Board Former TMT Banker Joined Centricus in June 2020 Queens Award for Expo
Slide 5: Centricus Acquisition Corporation overview
Centricus Acquisition Corporation overview Business at a glance Well defined acquisition criteria Centricus Acquisition Corporation (NASDAQ: CENHU) is a Nasdaq- listed blank check company led by former executives at Silversea Cruises and Centricus Defensible market position in large / growing ma
Slide 6: Problem: legacy encryption tech is failing the World
Problem: legacy encryption tech is failing the World 1980s legacy “PKI” encryption is not suited All encryption MUST be upgraded in the short term for hyperconnected to prepare for the Quantum threat world Symmetric encryption keys are superior to every other form of encryption But there has been no
Slide 7: Solution: A new way to distribute symmetric encryption keys
Solution: A new way to distribute symmetric encryption keys Symmetric keys are the solution Well understood and used in defence & banking, better than PKI for our customers today, safe against Quantum threat tomorrow Transformational innovation 1,098 patent claims filed – a completely new way to cre
Slide 8: Transatlantic leadership in cloud encryption
Transatlantic leadership in cloud encryption David Bestwick Nick Pointon Air Vice Marshal David Williams CTO & Founder CFO Rocky Rochelle CB CEO & Founder COO Former CTO, Avanti plc. Marconi engineer. Former CFO, Privitar. Ex VP Finance, Air Vice Marshal RAF Capability, highly Former CEO & Co-Founde
Slide 9: What does the product do?
What does the product do? Quantum satellites put symmetric keys into global data centres to form the QuantumCloudTM Devices like phones, servers or cars want to communicate together They both send information about their own key to the QuantumCloudTM That information is transformed and retur
Slide 10: Commercial strategy - scalable business model
Commercial strategy - scalable business model Product • Software is downloaded by customers and used automatically • Software API calls for keys to be created when needed triggers Billing Distribution • Channel partners resell the service – strategy to get early traction • Any Customer globally can
Slide 11: Large and growing information security and risk management market
Large and growing information security and risk management market $194.3bn Arqit plays into every subsegment 7.9 Consumer Security Software 90.5 Security Services $125.8bn Other Information Security Software 6.2 Network Security Equipment Integrated Risk Management Infrastructure Protection 20.1 58.
Slide 12: 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 Telco Defence Financial Automation Services Major payment BP network Global payment Making fixed and 5G networks. Securing the future Connected ca
Slide 13: Material backlog and pipeline already secured
Material backlog and pipeline already secured Framework contracts Executed contracts Contracts for annual Other business for technology pilots for project or annual recurring revenues development signed or in or in recurring revenues under negotiation pipeline advanced negotiation ~$130m ~$110m ~$14
Slide 14: Financial and Transaction Overview
Financial and Transaction Overview
Slide 15: Strong growth, high profitability, exceptional cash generation
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-chip cu
Slide 16: Financial projections highlights
Financial projections highlights Dec-YE, $m 2021E 2022E 2023E 2024E 2025E QuantumCloudTM 4 16 148 400 660 Project revenues 11 16 5 2 - Total revenue 14 32 153 402 660 % growth 125% 371% 163% 64% Total COGS (5) (9) (13) (23) (51) Gross profit 10 24 140 378 609 % margin 66% 72% 91% 94% 92% (-) R&D exp
Slide 17: Detailed transaction overview
Detailed transaction overview Sources & Uses Pro Forma Capitalization ($ in millions) ($ in millions, except share price) Sources Amount % Proforma Valuation Amount Existing Arqit shareholders PF shares outstanding (millions) 140.2 $900 64% rollover equity Share Price $10.00 SPAC Cash in Trust 345 2
Slide 18: Defining the peer group for Arqit
Defining the peer group for Arqit High growth security and infrastructure Disruptive platform and technology Recent SPAC transactions Similar growth profile First movers in new Do not own a combination categories of critical infrastructure and Similar high growth end point security as Arqi
Slide 19: Arqit benchmarks well against peers across all financial metrics
Arqit benchmarks well against peers across all financial metrics Revenue growth CAGR 2023-2025E CAGR 2021-2023E 107.7% 142.1% 23.6% 30.2% 14.6% Recent SPAC Government tech(b) High growth security Established transactions(a) and infrastructure(c) security(d) Gross margin 2025E 2022E 92.2% 71.5% 78.5%
Slide 20: Valuation benchmarking
Valuation benchmarking EV / Revenue 2025E 2022E 24.6x 20.1x 7.9x 2.9x Recent SPAC Government tech(b) High growth security Established transactions(a) and infrastructure(c) security(d) EV / EBITDA 2025E 2022E 85.6x 215.6x 26.3x 9.9x Recent SPAC Government tech(b) High growth security Established tran
Slide 21: Transaction represents an attractive valuation to peers
Transaction represents an attractive valuation to peers $11,574 Summary of approach 2025E projected financials-based Discounted back 4 years at valuation is appropriate given 20% discount rate Arqit’s significant revenue growth and confidence in the ramp to steady-state EBITDA margins of $8,271 ~7
Slide 22: Highly attractive investment thesis for Arqit
Highly attractive investment thesis for Arqit 1 At the intersection of key secular megatrends powering the fourth industrial revolution Cybersecurity, space, quantum technology, robotics, mobility, and AI Ready for market 2 Product launch in June 2021 Large, growing and underpenetrated TAM 3 Informa
Slide 23: Additional Materials
Additional Materials Benchmarking
Slide 24: First mover innovations in space, cloud and end point
First mover innovations in space, cloud and end point 1,098 patent claims Tech Stack Today 2023 Innovation Terrestrial Quantum Key 1 Today, we create root keys in the cloud using terrestrial Generation networks. This is very secure. Infrastructure In 2023, Arqit satellites will put root keys into th
Slide 25: Operational benchmarking
Operational benchmarking Revenue Growth CAGR 2023-2025E CAGR 2021-2023E Median: 142% Median: 24% Median: 30% Median: 15% 108% 807% 507% 281% 243% 160% 142% 142% 81% 66% 56% 60% 54% 32% 31% 31% 29% 29% 28% 25% 29% 18% 19% 15% 15% 10% 3% (b) (c) (d) (a) Gross margin 2025E 2022E CY25 Median: 60% CY22E
Slide 26: Valuation benchmarking
Valuation benchmarking EV / Revenue 2025E 2022E CY25 Median: 2.9x CY22E Median: 20.1x CY22E Median: 24.6x CY22E Median: 7.9x 28.8x 43.0x 29.5x 27.8x 27.6x 26.7x 22.4x 22.2x 22.1x 11.8x 10.7x 17.9x 6.4x 4.6x 3.2x 2.9x 2.2x 2.0x 9.2x 8.2x 7.9x 6.2x 6.1x 1.9x 1.0x 0.7x (c) (b) (d) (a) EV / EBITDA 2025E