KanawatTH
Introduction
I advise purchasing Arqit Quantum (NASDAQ: ARQQ). With the increased need for cyber security, organizations are relying on better, more protected alternatives for securing their information. Nevertheless, ARQQ is not your common cyber security business. I think it possesses an exclusive technology that is head and shoulders above the rest.
Business description
As a cybersecurity business, ARQQ has developed a special quantum encryption technology that strengthens the communication links of any networked device against all kinds of cyber attack. The technology, Quantum Cloud develops low-cost, easily utilized software encryption secrets that have been proven to be solid. The amazing aspect of Quantum Cloud is that it can be applied to every edge device and cloud machine on the planet.
I encourage readers to check out ARQQ innovation in its F-1, as I will not be entering into technical details. (Below is a graphical overview of the tech stack.)
A $230 billion dollar TAM
I believe there will be groundbreaking market opportunities for ARQQ products due to an anticipated change in the cyber file encryption industry in the next ten years. Public Key Infrastructure [PKI], the most popular cyber encryption innovation, isn’t great when it comes to dealing with more recent innovations, especially quantum computer systems, which I anticipate to be established enough to break PKI over the next couple of years. This indicates consumers, organizations, and governments, irrespective of geographical and industrial borders, will require to adopt more recent innovation in all electronic user interfaces and dispose of the old. It is known that symmetric file encryption secrets are secure versus quantum computers. The concern depends on discovering a protected method to develop and disperse symmetric keys electronically.
I expect ARQQ to have opportunities for growth in every direction: federal government, defense, telecoms, financial services, the internet of things, and connected car markets. Every connected or electronic service is susceptible to cyberattacks, particularly in the future. The PKI may be unable to sustain such attacks, exposing every linked endpoint, network gadget, and cloud maker. Management has pointed out that the only reliable mechanism for distributing cyber file encryption innovation is Quantum Cloud, which is both remarkable and protected.
ARQQ’s TAM is yet to be approximated since there are so many case studies out there. That stated, Gartner estimates the worldwide TAM for info security services to be worth around $230 billion by CY2025. This figure gives a concept of how huge the market is for ARQQ.
ARQQ exclusive technology disrupts the tradition world of PKI
ARQQ is a necessary disruption to the calm in the digital world. It leaves from the regular way of doing things, particularly when more consumers and companies are pioneering more digital solutions.
Due to the failures of the PKI to stand up to escalating cyber attacks, ARQQ develops symmetric file encryption secrets, a cyber file encryption technology that is safe versus all kinds of attack. As soon as created, the symmetric file encryption secret is computationally safe. This makes it impossible to think the keys in an amount of time much shorter than a million years, even for a quantum computer.
The core of ARQQ or Arqit’s service is its capability to distribute symmetric secrets at scale by producing them at endpoints. This has solved the unpleasant problem of developing and distributing symmetric secrets through electronic ways. ARQQ creates those symmetric keys at endpoints where they are required and in groups of any size. Developed at endpoints rather of being delivered, these keys can not remain in risk of interception.
I think this is a revolutionary discovery on the course to producing and dispersing unbreakable symmetric keys. It was made using a “mixed trust model,” which makes it difficult for a third party to recreate or guess the key. This is due to the fact that the secret was never sent out across any network when it was made, making it difficult to find out where it came from.
Easy to carry out and scale
The average user, who doesn’t understand much about cybersecurity, should have the ability to set up the software without much problem.
Built into practically every major software application system, Quantum Cloud is easily released with no significant modifications to existing customer infrastructure. While symmetric encryption secrets impose low computational workloads on endpoint devices, ARQQ’s light-weight software application deals with even the tiniest Web of Things sensors.
Another essential thing to note is that Arqit’s software automatically develops limitless volumes of keys at very little cost, resulting in low capital investment. It does not need human analysis and support to work. This restricts personnel spending to the maintenance of core infrastructure, marketing, and consumer support. This situation, for that reason, is a win-win for both ARQQ and its customers.
Projection
Based upon my financial investment thesis, I anticipate ARQQ to grow at a quicker rate as it advertises its product and gains growth momentum from a little revenue base. As mentioned earlier, the TAM is big, and it is hard to predict the exact sales figure; for this reason, I used management’s long-lasting guidance as a criteria. I anticipate ARQQ to produce $660 million in revenue and $477 million in EBITDA in FY25. Assuming ARQQ does that and trades at the very same forward EBITDA multiple as the S&P, it should be worth $43.65 (which is where it traded at the end of 2021).
Key risk
Really early-stage company with no profits
Much like every other start-up, buying ARQQ is a leap of faith. Unpredictabilities are hiding around every corner. Investors should comprehend that this financial investment may be “dead money” until the numbers start to climb up.
Evolving nature of cybersecurity industry
ARQQ disrupted the tradition PKI because of its remarkable exclusive innovation. There is no stating that ARQQ can’t be deposed anytime quickly. The cyber security market evolves quickly. A newer, better innovation postures considerable dangers to the company.
Conclusion
ARQQ is undervalued at its existing share cost since the date of this writing. People, business, and federal governments will always require and be ready to spend for cybersecurity services. This represents a market that will never run dry, with adequate growth runway for financiers.