So that degree of independent validation placed under NDA into the hands of these customers actually helped us to educate those customers much faster. And so I think those engagements have really accelerated very noticeably since about May or June time when we had those first meetings. Similar things are happening with a small number of other hyperscale vendors, who perhaps may have had six months ago entrenched views or different opinions or simply didn’t understand this. But we found that when we place the proof into the hands of their experts and when we deploy experts at Arqit such as Dr. Daniel Shiu, and Dr. Barry Childe very quickly skepticism goes away. So I feel optimistic that, there will as a result be a number of other large corporations signing up to use our products during the current financial year.
So yes, those companies were in our pipeline at the beginning, but they’ve most certainly accelerated in the last six months.
Nihal Choksi: Understood. Where they actually part of that sort of $440 million pipeline that you guys started from the stack roadshow?
David Williams: All of those companies was certainly on the pipeline of companies that we wish to do business with where we hope and expect to generate revenue.
Nihal Choksi: Understood. And is your understanding of what the value of that pipeline for each of those changed since citing that initial 749 — $740 million pipeline?
David Williams: Yes. It most certainly has. We’ve been able to engage with those companies over the last few months in a very high level of detail about the nature of the opportunity. So we have very specific pricing. We understand the likely volume of trade that we can imagine we can do with those companies. For example, Fortinet have a very large installed base, we are able to gain access to detailed planning with our partners like Fortinet about which of their customers are likely to want to buy the product, do we know what we’ll sell it for. So we’re able to now build our own views of price times volume and penetration based on real world facts coming from detailed partnership discussions rather than an extrapolation. So, yes, I think we have a more detailed view of how that’s likely to pay out.
Given that, I didn’t expect that we would sign hyperscale partners until 2024 given that we’ve already done it, I feel that I’ve got better visibility of the medium term of this business and as a result I have better confidence.
Nihal Choksi: Got it. Breaking down that price times volume equation that you now have greater detail and confidence on what the price times volume is, how has that price change from 13 months ago and volume changed from 15 months ago?
David Williams: Well, if we go back a year and a half or so, we were originally imagining that we were selling enterprise licenses with fixed prices and we weren’t at that point, able to produce an annual recurring revenue started price, we just didn’t have the information. It’s my belief — I think it’s relatively well understood that an ARR style of revenue is to the advantage of a company like Arqit. It’s definitely better to have an ARR style of business that have enterprise license. When you set of fixed enterprise license, you tend to be giving away the farm for a modest amount of money. We thought we’d be doing that for a couple of years, because we didn’t expect to have success with hyperscale channel vendors. And ARR’s style of business with the product being sold into a very, very large customer base in my opinion is likely to generate faster superior financial outcomes as larger revenues in the medium to long-term that an enterprise license style of business.
So, this feels like an acceleration of our go-to-market strategy to me and it feels like my confidence is higher as a result.
