$119,000 of revenue for the six month period ended 31 March 2024 with certain prospective deals slipping to the second half of the fiscal year Renewal or contract extension with nine existing customers, representing revenue from small engagements with potential for larger revenue opportunities in the future Recent significant award notification Additional cost reduction initiative commenced, which is expected to reduce operating costs to $1.8 million per month Cash position of $21.3 million at the end of the period LONDON, May 20, 2024 (GLOBE NEWSWIRE) -- Arqit Quantum Inc. (NASDAQ:ARQQ, ARQQW)) ("Arqit"), a leader in quantum safe encryption, today announced its operational and financial results for the six months ended 31 March 2024. Recent Operational Highlights Arqit sells Symmetric Key Agreement ("SKA") software enabling quantum safe encryption. The company has re-branded its flagship product from QuantumCloud™ to SKA Platform™ to more precisely reflect its offering which no longer contains any hardware or quantum effects – it is a pure software tech stack which runs in the cloud. During the first half of fiscal year 2024, nine existing customers renewed or increased commitments to buy Arqit software under existing contracts. All customer contracts maturing during the period were renewed or extended. Several transactions that were expected to bill in the period slipped into the second half of the fiscal year. Following the end of the first half of the fiscal year, Arqit entered into several new transactions and contract expansions that are expected to result in revenue recognised during the second half of the fiscal year. After the period end we were notified of the award, following a competition, of a seven figure multi-year contract with a government customer in the EMEA region, our first such contract. Three new major telcos operators agreed to or launched initial test installations and several others are in planning, suggesting market adoption is now accelerating. In April, Arqit announced that an integration of its software with Intel for out-of-the-box post-quantum cryptography solutions using Arqit's SKA Platform™ running on Intel Xeon Scalable processors. Arqit believes it represents the world's first quantum-safe, 1.89 Tb IPsec solution. The product is currently available for sale and joint commercial efforts are underway. Arqit views this as a very significant milestone and a key differentiator against competition. Arqit's TradeSecure™ offering which provides a symmetric key agreement solution for digital assets, specifically trade finance documents, announced in April 2024 additional partners to bring Arqit TradeSecure™ to market: Lux Kapitalmarkt Management AG (LuxAG) has entered into a partnership with Arqit and TraxPay to invest in digital negotiable instruments. This partnership will help to facilitate liquidity in the supply chain finance market. Vayana TradeXchange's marketplace for global trade finance will use Arqit TradeSecure™ technology to transform international supply chains. Vayana TradeXchange is part of Vayana Group, one of India's largest regulated networks for domestic supply chain finance. Following the launch of our TradeSecure™ product with supply chain platforms and credit funds signing agreements to provide vendor financing, a number of transactions are currently under negotiation. Telecom Italia Sparkle announced the successful completion of a quantum-safe VPN test, preliminary to a large-scale commercial launch. TI Sparkle is one of the largest Tier 1 Internet providers in the world. It owns and manages a network of more than 600,000 km of fibre. Arqit announced one additional OEM relationship (Intel) bringing total OEM partners or relationships to three; and announced additional reseller relationships with Phalanx, Total Computers, LuxAG and Vayana TradeXchange bringing total reseller relationships to 12. Arqit also has four distributor relationships. During the period, Arqit made significant progress in generating positive evaluation of its technology by major government organisations which are influential in the development and adoption of technological standards, particularly for cyber security. Arqit expects to report more fully on this in future periods. During this period, Arqit announced that Arqit's SKA Platform™ meets the National Security Agency (NSA) Commercial Solutions for Classified (CSfC) Symmetric Key Management Requirements Annex V2.0 and uses an NSA approved Key Generation Solution (KGS) to generate and manage pre-shared keys.  The SKA Platform has been integrated into NIAP validated CSfC components which deliver a significant competitive advantage for national security systems.  As such, there is a growing interest from OEM partners and telcos for incorporation into government contracts. Arqit is positively engaged with a number of national security and cyber agencies. Arqit won two Global Mobility awards at Mobile World Congress in February 2024. The company took home the top honour in the CTO Choice: Outstanding Mobile Technology Award category, which was voted on by CTO's across the industry, including those from the world's major mobile phone companies. The award was for a secure 5G solution that was developed in collaboration between Arqit, Hewlett Packard Aruba and Ampliphae. The collaboration also won the award for Best Mobile Security Solution. During the first half of fiscal 2024, after a comprehensive sale process failed to result in a transaction for its satellite division, Arqit discontinued its satellite construction program. All costs associated with the program have been eliminated, and assets and liabilities related to the program have been classified as discontinued operations. There is no longer any hardware element to Arqit's activities – the company is solely focused on selling its SKA Software. In April, Arqit was informed by Nasdaq that it was eligible for an additional 180 day period in order to regain compliance with Nasdaq minimum bid price requirements. In May 2024, Arqit commenced a cost reduction initiative across all business functions which will include the elimination of significant headcount. These cost reduction actions have begun in accordance with local laws in each of the relevant jurisdictions. Pro forma for the cost reduction initiative, Arqit will have 81 employees as compared to 125 at the end of the reporting period. In addition, the company has undertaken actions to rationalize its office space to further reduce costs. These cost reduction initiatives are expected to result in a 40% decrease in monthly budgeted operating costs to approximately $1.8 million commencing July from previously budgeted monthly operating costs of approximately $3.0 million.  As of 31 March 2024, Arqit had $21.3 million of cash and cash equivalents.  In December 2022, Arqit established an at-the-market equity offering program (the "ATM Program") pursuant to which it may issue and sell ordinary shares with an aggregate offering amount of up to $50.0 million. Effective 15 April 2024, Arqit amended its ATM Program reducing the aggregate offering amount to $29.0 million. As a result, the remaining balance available for issuance, net of amounts issued in previous periods, is $17.5 million. Arqit did not issue any shares under the ATM Program during the first half of fiscal year 2024. After the close of the fiscal period, $0.9 million in gross proceeds from an equity subscription from D2BW Limited, an entity controlled by Arqit's founders, was received. Management Commentary There is increasing market awareness of the need for Post Quantum Cryptography by cyber security technology vendors and customers. Arqit's technology has been selected by several important OEM partners and customers and has been well received in on-going government evaluations. Important new industry voices are amplifying the suitability of Arqit's Symmetric Key Agreement Platform: In May, Intel published a detailed white paper describing the technical merits of the integration of Arqit SKA technology with Intel processers to address the store now, decrypt later threat and launched commercial sale of the integration. In May, Industrial Data Corporation, in partnership with Arqit, independently reviewed and published a research note describing the positive merits of Arqit's products. In February, the GSMA conference publisher released a paper describing the need for and suitability of Arqit's products for the mobile phone industry. In May 2022, the ...