IonQ, Inc. (IONQ)·Q2 2024 Earnings Summary

Executive Summary

• Revenue of $11.4M, above the high end of Q2 guidance ($7.6–$9.2M), up 106% YoY; bookings of $9.0M; net loss of $37.6M; Adjusted EBITDA loss of $23.7M .
• Full-year revenue guidance raised to $38–$42M; Q3 revenue guidance set at $9–$12M; FY bookings reiterated at $75–$95M .
• Technical milestones: 99.9% two-qubit native gate fidelity on barium qubits and an industry-first partial error correction technique for Clifford gates, pointing to nearer-term application viability .
• Commercial catalysts: ARLIS $5.7M design phase win (with expectation of next phase $12M), AWS access contract extension, and progress on Forte Enterprise systems in Basel and Seattle .

What Went Well and What Went Wrong

What Went Well

• Revenue beat driven by faster progress on percentage-of-completion contracts; $11.4M recognized, surpassing the guidance high end .
• Breakthrough 99.9% two-qubit native gate fidelity on barium qubits and a novel partial error correction technique reducing Clifford gate errors, enabling more accurate near-term algorithms .
• Commercial traction: ARLIS blind quantum computing system design win ($5.7M initial), AWS contract extension, and assembly/start of construction on Forte Enterprise systems in Europe and Seattle . “We have entered a new era of commercialization for quantum networking” (context carried into Q3) .

What Went Wrong

• Operating expenses elevated as IonQ scales R&D, sales/marketing, and G&A; total operating costs $60.3M (+56% YoY), R&D $31.2M (+57% YoY) .
• Adjusted EBITDA loss widened YoY to $(23.7)M (vs. $(19.4)M) as investment pace increased; stock-based compensation rose to $21.0M in Q2 (vs. $11.3M) .
• Bookings remain lumpy and timing-sensitive; Q2 bookings were $9.0M, with management reiterating back-half weighting and uncertainty on quarterly closings .

Financial Results

Notes:

• Management attributed the revenue beat to accelerated progress on contracts recognized via percentage-of-completion accounting .
• Adjusted EBITDA excludes non-cash warrant liability fair value changes (Q2 non-cash gain of $6.6M) .

Margins vs prior periods (derived from cited data):

KPIs and Operating Metrics:

Estimate comparisons: S&P Global consensus estimates for Q2 2024 were unavailable at time of request; estimate comparison omitted.

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “We have once again exceeded the high end of our revenue range for the quarter, delivering $11.4 million… We also booked $9 million this quarter” — Peter Chapman .
• “IonQ has achieved a 2 qubit native gate fidelity of 99.9%… and invented a new industry-first partial error correction technique” — Peter Chapman .
• “This overperformance was primarily due to our ability to make more progress than previously anticipated on some of our contracts that use percentage of completion revenue recognition” — Thomas Kramer .
• “Cash, cash equivalents and investments as of June 30, 2024, were $402 million” — Thomas Kramer .
• “We are raising our revenue guidance for the full year 2024 to a range of $38 million and $42 million… We remain confident in our 2024 bookings guidance of between $75 million and $95 million” — Thomas Kramer .

Q&A Highlights

• Partial error correction technique: Targets Clifford gates (often noisiest); ~3 physical qubits per 1 error-reduced qubit; modest doubling of gates; expands accessible applications sooner — Dean Kassmann and Peter Chapman .
• ARLIS contract sizing: $5.7M initial design phase; expectation of additional $12M this year; Congress funded $40M overall for research; anticipated bookings contribution ~$17.5M in FY24 — Peter Chapman .
• Roadmap milestones: Tempo remains on track (AQ64 target) using barium; progress shown toward component benchmarks and qubit counts — Dean Kassmann .
• Gate coverage and next steps: Technique addresses Clifford gates; future focus includes T gates; any noise reduction pre-fault tolerance helps — Peter Chapman .
• Government selection criteria: Technical capability (photonic networking), proven delivery track record, and sales execution contributed to wins — Peter Chapman and Dean Kassmann .

Estimates Context

• Wall Street consensus estimates via S&P Global for Q2 2024 were unavailable; therefore, explicit comparisons to consensus for revenue/EPS are omitted.
• Guidance raise (FY revenue $38–$42M and Q3 $9–$12M) implies potential upward revisions to sell-side revenue models for FY24 and Q3 .

Key Takeaways for Investors

• Revenue momentum and execution: Q2 revenue materially beat guidance due to faster progress on percent-of-completion contracts; watch for continued delivery pace on long-duration programs .
• Guidance trajectory: FY revenue raised and Q3 guide introduced; bookings range maintained, but cadence remains back-half weighted and lumpy .
• Technical edge: 99.9% gate fidelity and partial error correction technique can accelerate application viability in NISQ; monitor Tempo milestones and fidelity scaling .
• Commercial pipeline: ARLIS design award and AWS extension, plus active system builds in Basel/Seattle, support near/medium-term revenue visibility in systems and networking .
• Investment cycle: Elevated OpEx reflects R&D and go-to-market scaling; Adjusted EBITDA loss guidance unchanged at $(110.5)M for FY24 — focus on operating leverage as large deals convert .
• Cash runway: $402M in cash and investments at quarter-end underpins multi-year execution and manufacturing scale-up .
• Catalyst watch: Next call expected to detail first production application area; any concrete application revenue or additional government programs could be stock-moving developments .

Additional References:

• Q2 2024 8-K and press release, including full financial statements and outlook .
• Q2 2024 earnings call transcript (prepared remarks and Q&A) .
• Prior quarters: Q1 2024 8-K and call (for trend and prior guidance) ; Q4 2023 8-K (year-end baseline and technical milestones) .