Arqit Quantum Inc. (NASDAQ: ARQQ)

Sector: Technology Industry: Software - Infrastructure CIK: 0001859690
Market Cap 369.52 Mn
P/B 10.04
P/E -7.74
P/S 515.93
ROIC (Qtr) 0.00
Div Yield % 0.00
Rev 1y % (Qtr) 0.00
Total Debt (Qtr) 971,621.62
Debt/Equity (Qtr) 0.03

About

Arqit Quantum Inc., or Arqit, is a company that operates in the information security industry, with its stock symbol being ARQQ. The company specializes in quantum-safe cybersecurity, offering a range of products designed to protect communications links from current and future cyber threats, including those from quantum computers. Arqit's main business activities revolve around the development and sale of its quantum-safe security products. These products are designed to provide secure communications for networked devices and data at rest, even...

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Price action

Investment thesis

Bull case

  • Healthy cash reserves of 49.97M provide 139.54x coverage of short-term debt 358108.11, demonstrating strong liquidity position and minimal refinancing risk.
  • Strong tangible asset base of 55.05M provides 56.66x coverage of total debt 971621.62, indicating robust asset backing and low credit risk.
  • Cash reserves of 49.97M provide solid 141.68x coverage of other non-current liabilities 352702.70, indicating strong liquidity.
  • Tangible assets of 55.05M provide robust 5.82x coverage of other current liabilities 9.46M, indicating strong asset backing.
  • Cash reserves of 49.97M provide robust 2.48x coverage of current liabilities 20.14M, indicating strong short-term solvency.

Bear case

  • Operating cash flow of (38.53M) barely covers its investment activities of 922972.97, with a coverage ratio of -41.74, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Free cash flow of (39.27M) provides weak coverage of capital expenditures of 741891.89, with a -52.93 ratio suggesting additional external financing needs for growth initiatives.
  • High financing cash flow of 63.69M relative to working capital of 33.94M, which is 1.88x suggests concerning dependence on external funding for operational needs.
  • Operating cash flow of (38.53M) is outpaced by equity issuance of 50.25M (-0.77 ratio), indicating concerning reliance on equity markets for funding operations.
  • Tangible assets of 55.05M provide limited backing for working capital of 33.94M, which is 1.62x, suggesting increased operational risk in market downturns.

Peer comparison

Companies in the Software - Infrastructure
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 MSFT Microsoft Corp 3,563.59 Bn 33.97 12.13 60.56 Bn
2 ORCL Oracle Corp 561.87 Bn 36.43 9.21 124.39 Bn
3 PLTR Palantir Technologies Inc. 413.65 Bn 377.64 106.17 0.24 Bn
4 PANW Palo Alto Networks Inc 126.45 Bn 113.19 13.23 0.35 Bn
5 CRWD CrowdStrike Holdings, Inc. 116.42 Bn -370.56 25.50 0.82 Bn
6 SNPS Synopsys Inc 86.06 Bn 64.60 12.20 14.29 Bn
7 NET Cloudflare, Inc. 62.78 Bn -609.27 31.18 3.50 Bn
8 FTNT Fortinet, Inc. 60.83 Bn 32.47 9.28 1.00 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 8.80 2.69
EV to Cash from Ops. EV/CFO -13.22 28.91
EV to Debt EV to Debt 524.17 19.83
EV to EBIT EV/EBIT -10.06 -9.95
EV to EBITDA EV/EBITDA -11.03 6.82
EV to Free Cash Flow [EV/FCF] EV/FCF -12.97 26.09
EV to Market Cap EV to Market Cap 1.38 0.36
EV to Revenue EV/Rev 711.09 -9.34
Price to Book Value [P/B] P/B 10.04 3.88
Price to Earnings [P/E] P/E -7.74 -10.66
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Dividend Coverage Ratio 0.00 -0.30
Dividend Payout Ratio % Div Payout % (Qtr) 0.00 2.71
Dividend per Basic Share Div per Share (Qtr) 0.00 0.10
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 0.00 1.68
Interest Coverage Int. cover (Qtr) -780.85 -14.20
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex Growth (1y) % 83.06 -408.01
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 103.03 226.39
Dividend Growth (1y) % Dividend Growth (1y) % 0.00 -0.28
EBIAT Growth (1y) % EBIAT Growth (1y) % 35.95 25.27
EBITDA Growth (1y) % EBITDA Growth (1y) % -28.45 47.48
EBIT Growth (1y) % EBIT Growth (1y) % 31.98 20.13
EBT Growth (1y) % EBT Growth (1y) % 32.16 14.16
EPS Growth (1y) % EPS Growth (1y) % 49.05 67.50
FCF Growth (1y) % FCF Growth (1y) % -5.93 296.60
Gross Profit Growth (1y) % Gross Profit Growth (1y) % 85.78 46.75
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.02 0.67
Cash Payout Ratio Cash Payout (Qtr) 0.00 0.01
Cash Ratio Cash Ratio (Qtr) 2.48 1.22
Current Ratio Curr Ratio (Qtr) 2.69 2.59
Debt to Equity Ratio Debt/Equity (Qtr) 0.03 -0.96
Interest Cover Ratio Int Coverage (Qtr) -780.85 -14.20
Times Interest Earned Times Interest Earned (Qtr) -780.85 -14.20
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % -7,071.90 -548.16
EBIT Margin % EBIT Margin % -5,233.20 -199.84
EBT Margin % EBT Margin % -7,080.94 -607.20
Gross Margin % Gross Margin % 100.00 51.88
Net Profit Margin % Net Profit Margin % -6,668.50 -610.00