Quantum-Si Inc (QSI)·Q3 2024 Earnings Summary

Executive Summary

• Q3 revenue of $0.787M grew sequentially vs Q2 ($0.622M) on continued Platinum commercialization, though management signaled full-year revenue will likely fall short of the prior $3.7–$4.2M range; they nevertheless expect Q4 revenue to surpass $1M .
• Gross margin was 47% vs 57% in Q2, with CFO noting an approximate 4% headwind from low/no value inventory in Q3 (vs a ~9% benefit in Q2 and ~10% benefit in Q1); margin variability also reflects instrument/consumables mix during early commercialization .
• Expense and cash guidance were tightened: FY24 adjusted total operating expenses to ~ $100M (from < $103M) and net cash usage to ~ $92M (from < $100M); liquidity runway updated to “into H2 2026” with $196.3M in cash, cash equivalents and marketable securities at 9/30/24 .
• Commercial execution improved under the new CCO; pipeline and channel development accelerated; two new kits (library prep and barcoding) remain on track for Q4 launch and were positioned as adoption catalysts alongside the Nov-20 Investor Day .

What Went Well and What Went Wrong

• What Went Well
  • Pipeline and sales-force execution improved under new CCO; management cited acceleration in sales pipeline and filled most open sales territories; Investor Day scheduled to detail roadmap and partnerships .
  • Innovation cadence: Version 3 sequencing kit launched in Q3; new library prep and barcoding kits on track for Q4 to broaden compatible proteins, reduce prep time, and improve sensitivity/dynamic range .
  • Liquidity and discipline: $196.3M cash/marketable securities at Q3-end; FY24 adjusted opex trimmed to ~ $100M and cash usage to ~ $92M; runway updated to into H2 2026 .
  • Quote: “We have clear strategies… and despite the potential short fall, we remain very confident in the long-term commercial opportunity for Platinum” — Jeff Hawkins, CEO .
• What Went Wrong
  • Sales cycle lengthened; a small number of delayed instrument deals (~$85k list per unit) caused Q3 revenue to undershoot internal expectations; management now expects FY revenue below the prior $3.7–$4.2M range .
  • Gross margin compressed to 47% from 57% in Q2, including a ~4% negative inventory impact in Q3 (vs ~9% benefit in Q2, ~10% in Q1), with continued variability expected during early commercialization and inventory accounting clean-up .
  • Loss metrics widened sequentially: Q3 GAAP net loss ($25.3M) and adjusted EBITDA ($24.5M) were larger than Q2 ($23.1M and $22.6M), reflecting ongoing commercial ramp and opex growth vs Q2 .

Financial Results

Sequential results (oldest to newest)

Year-over-year snapshot

Revenue mix (sequential)

Vs estimates (Q3 2024)

Note: S&P Global consensus could not be retrieved at the time of analysis; beat/miss versus Street is therefore not assessed.

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• Strategic focus: “Our 3 corporate priorities for 2024: accelerate commercial adoption, deliver on our innovation road map and preserve our financial strength.” — Jeff Hawkins, CEO .
• Commercial execution and pipeline: “Under the leadership of our new CCO, there has been clear improvement in commercial execution and the overall acceleration of our sales pipeline.” — Jeff Hawkins .
• Q4 outlook: “We are confident that we will generate a sequential increase in revenue in Q4 of 2024 and expect to surpass $1 million in quarterly revenue for the first time.” — Jeff Hawkins .
• Innovation cadence: “We plan to demonstrate groundbreaking advances in hardware, consumables, chemistry and software that we believe puts us on a clear path to scale our output per sample to billions of reads.” — Jeff Hawkins .
• Expense discipline and runway: “We now expect adjusted operating expenses of approximately $100 million … and net cash usage of about $92 million … [and] runway into the second half of 2026.” — Jeff Keyes, CFO .

Q&A Highlights

• Drivers of Q3 shortfall and Q4 setup: A few delayed instrument deals (list price around $85k) caused the miss vs internal expectations; management still expects to exceed $1M in Q4 revenue, supported by pipeline, filled territories, and possible year-end budget flush .
• Sales ramp and territories: Most territories filled; ~90-day ramp time for new reps; full benefit expected to contribute by early next year .
• Channel mix: Sales are a mix of direct (US/Western Europe) and distributors; early distribution partners have begun placing instruments .
• Kit performance and adoption: Rapid transition to version 3 kit; improved output and reproducibility enabling broader applications .
• End-market traction and time to clinical: Growing adoption in pharma/biotech and first CRO; clinical applications seen as longer-term; more detail to come at Investor Day .

Estimates Context

• Wall Street consensus from S&P Global could not be retrieved at the time of analysis (tool request limit), so a formal beat/miss assessment versus Street is not provided. Management commentary indicated Q4 revenue is expected to surpass $1M, implying sequential growth from Q3 .

Key Takeaways for Investors

• Near-term top-line catalyst is Q4: management guided to >$1M revenue in Q4 as pipelines mature and territories ramp; look for instrument placements and consumable utilization momentum into early 2025 .
• Expense/cash outlook improved: FY24 adjusted opex trimmed to ~ $100M and cash usage to ~ $92M; runway now into H2 2026 with $196.3M liquidity, providing funding for the commercial and R&D roadmap .
• Adoption drivers: Q4 launches of the new library prep and barcoding kits should reduce sample prep time, expand compatibility, and improve sensitivity—key for driving use cases in pharma/biotech and CROs .
• Margin volatility is transitory: Q3’s 47% GM included a ~4% headwind from low/no value legacy inventory; variability should abate as commercialization and mix normalize, but monitor mix and inventory accounting commentary each quarter .
• Execution watch items: Monitor conversion of late-stage deals, distributor productivity, and time-to-productivity for new reps (~90 days), plus evidence of pull-through as installed base grows .
• Strategic roadmap and optionality: Investor Day (Nov 20) to detail advancements across hardware/chemistry/software and partnerships; progress toward higher output (billions of reads) could broaden TAM and reinforce first-mover advantage in protein sequencing .
• Risk balance: Elongated sales cycles and early-stage commercialization can create quarter-to-quarter volatility; however, the improving pipeline, kit cadence, and strengthened leadership provide offsetting execution levers .

Appendix: Additional Context from Q3 Press Releases

• Investor & Analyst Event announced for Nov 20, 2024 to showcase technology roadmap and new instrument offerings .
• Ongoing ecosystem-building: webinars and collaborations (e.g., Northwestern Proteomics Center) highlighting integrated workflows and proteoform analysis advances .
• Executive team expansion in late Q3: appointment of Todd Bennett as CCO (effective Sept 17), plus Chief Product Officer and CHRO roles to support scale-up .