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II

IonQ, Inc. (IONQ)·Q3 2024 Earnings Summary

Executive Summary

  • Q3 2024 revenue was $12.4M, exceeding the high end of guidance and up 102% year over year; bookings surged to $63.5M on the back of a $54.5M AFRL award, Qubitekk acquisition, and new partnerships (AstraZeneca, Ansys) .
  • Net loss widened to $52.5M (EPS $(0.24)), and Adjusted EBITDA loss was $23.7M; CFO attributed the revenue beat to faster progress on percentage-of-completion contracts .
  • FY24 revenue guidance was raised to $38.5–$42.5M; Q4 revenue guided to $7.1–$11.1M; bookings guidance reiterated at $75–$95M .
  • Catalysts: AFRL networking contract, Qubitekk asset acquisition ($22M cash), remote ion-ion entanglement milestone, and supply chain partnerships (NKT Photonics, imec) that enhance commercialization readiness for data-center deployments .

What Went Well and What Went Wrong

What Went Well

  • Record commercial momentum: $63.5M bookings, including the largest 2024 U.S. quantum contract ($54.5M AFRL) and expanded UMD partnership ($9M) .
  • Strategic M&A and applications: Signed definitive agreement to acquire Qubitekk to accelerate quantum networking; announced application development initiatives with AstraZeneca and Ansys targeting production use cases .
  • Technical progress: Demonstrated remote ion-ion entanglement (key photonic interconnect milestone) and announced NKT Photonics and imec partnerships to scale and reduce system cost/SWAP for data-center readiness .
  • CEO tone: “We have entered a new era of commercialization for quantum networking… These announcements advance our position as a market leader” .

What Went Wrong

  • Profitability and OpEx: Net loss increased to $52.5M; R&D ($33.2M, +35% YoY) and Sales & Marketing ($6.6M, +31% YoY) rose as IonQ invests in talent and commercialization; Adjusted EBITDA loss remained elevated .
  • Cash draw: Cash, cash equivalents and investments declined to $382.8M from $402.0M in Q2 and $434.4M in Q1, reflecting operating cash usage and investment pace .
  • Guidance for Q4 implies sequential revenue softness ($7.1–$11.1M) vs Q3 actual, highlighting bookings lumpiness and POC revenue timing .
  • Analyst concern: Clarifications needed on networking economics and OpEx trajectory; management reiterated FY focus and will guide OpEx for next year on the Q4 call .

Financial Results

Quarter-over-Quarter Performance (Q1→Q2→Q3 2024)

MetricQ1 2024Q2 2024Q3 2024
Revenue ($USD Millions)$7.58 $11.38 $12.40
Net Loss ($USD Millions)$(39.59) $(37.56) $(52.50)
Net Loss per Share (EPS) ($)$(0.19) $(0.18) $(0.24)
Adjusted EBITDA ($USD Millions)$(26.99) $(23.70) $(23.66)
Bookings ($USD Millions)$0.30 $9.00 $63.50

Notes:

  • Management attributed the Q3 revenue beat to more progress than anticipated on percentage-of-completion contracts .
  • YoY revenue growth in Q3 was 102% (company-reported) .

Year-over-Year (Q3 2023 vs Q3 2024)

MetricQ3 2023Q3 2024
Revenue ($USD Millions)$6.14 $12.40
Net Loss ($USD Millions)$(44.81) $(52.50)
Net Loss per Share (EPS) ($)$(0.22) $(0.24)
Adjusted EBITDA ($USD Millions)$(22.41) $(23.66)

KPIs and Balance Highlights

KPIQ1 2024Q2 2024Q3 2024
Cash, Cash Equivalents & Investments ($USD Millions)$434.4 $402.0 $382.8
Weighted Avg. Shares (Millions)208.16 211.64 214.31
Unearned Revenue – Current ($USD Millions)$16.74 $13.67 $8.33

Segment breakdown: Not disclosed; IonQ reports consolidated results .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueFY 2024$38–$42M (Q2 guide) $38.5–$42.5M (Q3 guide) Raised
RevenueQ4 2024N/A$7.1–$11.1M New
BookingsFY 2024$75–$95M (Q1–Q2 guide) $75–$95M (Q3 reiterated) Maintained
RevenueQ3 2024$9–$12M (Q2 guide) Actual $12.4M Beat vs guidance high end

Management also projected FY Adjusted EBITDA loss of ~$110.5M (call disclosure) .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 2024)Previous Mentions (Q2 2024)Current Period (Q3 2024)Trend
Quantum Networking CommercializationLimited; focus on pipeline/partners, manufacturing build-out ARLIS blind quantum computing design award ($5.7M initial) AFRL $54.5M award; Qubitekk acquisition; remote ion-ion entanglement milestone Accelerating
Applications (Enterprise Use Cases)DESY/Airport gates; ORNL grid optimization; SC Quantum access AWS Braket extension; Forte Enterprise assembly in Basel AstraZeneca drug discovery center; Ansys CAE integration Transitioning from R&D to production apps
Hardware Roadmap & FidelityNot highlighted99.9% two-qubit gate fidelity; partial error correction; roadmap to 100 physical qubits by YE25 Photonic interconnect progress; partnerships with NKT Photonics, imec for PICs/lasers Sustained advances
Bookings Momentum$0.3M; backloaded commentary $9.0M; acknowledged lumpiness $63.5M; within reach of high end; expect high-end bookings Step-change
Government vs Enterprise MixEarly public sector activity Continued government wins Near-term government heavy, beginning shift to enterprise via applications Shifting toward enterprise
OpEx/ProfitabilityElevated investment posture Higher R&D/S&M with growth R&D +35% YoY; S&M +31% YoY; will discuss next-year OpEx on Q4 call Investment-focused, cautious on OpEx

Management Commentary

  • CEO: “We have entered a new era of commercialization for quantum networking… These announcements advance our position as a market leader in quantum networking, in addition to our pole position in quantum computing” .
  • CFO: “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” .
  • CEO on applications: “Today marks a seminal moment… application areas [with] AstraZeneca and ANSYS… to bring production-grade quantum applications” .
  • CEO on networking strategy: Qubitekk acquisition adds “118 U.S. and international granted patents… [and] will continue to strongly drive sales and be the first product group that is cash flow positive” .
  • SVP Engineering: imec PICs/ion trap collaboration aims to “reduce overall hardware system size and cost, increase qubit count, and improve system performance and scale” .

Q&A Highlights

  • Qubitekk acquisition economics: Consideration of $22M, funded in cash; expected to contribute to near-term bookings/revenue and provide telco field relationships .
  • Government vs enterprise mix: Near-term skew to government; shift toward enterprise as applications move to production with AstraZeneca/Ansys .
  • Networking technology: Remote entanglement and photonic interconnect path; components like frequency conversion to telecom wavelengths; imec’s role is longer-term .
  • Supply chain and commercialization: NKT Photonics to deliver three optical subsystems in 2025; focus on reducing system cost/size and enabling 24/7 operation .
  • OpEx outlook: No change for FY24; prioritizing targeted growth; FY25 OpEx guide to be provided on Q4 call .

Estimates Context

  • S&P Global consensus estimates were unavailable at time of analysis due to request limits; therefore, comparisons vs Wall Street consensus could not be provided. We benchmarked results against company guidance instead, highlighting the beat vs Q3 guidance high end and raised FY revenue guidance .

Key Takeaways for Investors

  • Commercial inflection: Bookings escalated to $63.5M in Q3, anchored by AFRL; management expects to finish near the high end of FY bookings, supporting FY25 revenue trajectory .
  • Networking leadership: Qubitekk acquisition plus remote entanglement and government contracts position IonQ as a near-term leader in quantum networking commercialization; potential for earlier cash-flow positivity in the networking division .
  • Applications to drive enterprise adoption: AstraZeneca and Ansys initiatives indicate movement from proofs to production-aligned use cases, broadening TAM beyond government to commercial verticals .
  • Revenue quality/timing: Q3 beat owed to POC progress; ongoing lumpiness implies quarterly volatility, but aggregate bookings/guidance are trending favorably for FY24 .
  • Investment intensity: R&D and S&M costs elevated to support roadmap and commercialization; monitor FY25 OpEx guide and path to free cash flow positive targets stated by management .
  • Balance sheet: $382.8M in cash/investments provides multi-year runway; manufacturing build-out largely behind, with PIC/laser partnerships aimed at cost-down and scale-up .
  • Tactical setup: Near-term catalysts include Q4 results vs guidance, closing of Qubitekk assets in the next six months, 2025 delivery of NKT subsystems, and continued milestones on photonic interconnects .