Quantum computing may be a very big deal in the future, but the companies betting on this sector need to produce revenue in the present to find out how big of a deal it eventually will be.
This week, IonQ reported second quarter 2024 earnings that included $11.4 million in revenue, above the company’s previous guidance range for the quarters of between $7.6 million and $9.2 million. The posting represented 106% growth over $5.5 million in revenue the company reported in Q2 2023. The company also achieved $9 million in new bookings for the second quarter, and expects total bookings for the year to land between $75 million and $95 million.
IonQ, based in College Park, Maryland, with an additional R&D and manufacturing facility in the Seattle area, is doing just that, consistently hitting or exceeding its quarterly revenue expectations for more than a year now. The company is one of just a few in its sector that has managed to sell full quantum computing systems (just a few), while also booking revenue from cloud-based access to its computing resources for users not ready to buy their own quantum computers, as well as from consulting services, research projects, and more.
The company’s net loss for Q2 2024 was $37.6 million, which was down from more than $43 million for the same period last year.
More than half of the second quarter operating costs went toward R&D, which again is not surprising given the company, the technology that it is developing, ad the relative immaturity of the market opportunity, but $6.1 million of the total was allocated for marketing and sales expenses. That figure was up 72% from $3.6 million in Q2 2023, and reflects how IonQ is staffing up its marketing and sales group and intensifying its commercial efforts, Kramer said.
Also, while it waits for all of those bookings to translate to recognized revenue, IonQ has plenty of cash, cash equivalents and investments in hand to keep the lights on–about $402 million worth as of June 30. As expected for a nine-year-old technology start-up in an embryonic market, the company is spending a lot of money and quickly. Total operating expenses for the second quarter were $60.3 million. up 56% from $38.6 million in Q2 2023, “but were within our plan for this year,” said IonQ CFO Thomas Kramer, during the second quarter earnings call.
The first phase of the project, worth about $5.7 million to IonQ, will focus on the design phase of the quantum system. Future phases of the project, which have yet to be awarded, include the construction, delivery, and maintenance of these systems, and IonQ could pull in about $40 million when all is said and done.
The increasing sales focus is starting to pay off, as the company last year landed a breakthrough deal for the $28 million sale of two quantum computers to Quantum Basel, a quantum computing center. Supercomputing and quantum computing research centers also have been a source of business for other firms in the sector in the early going, but more recently the government market has been heating up as well, particularly as the race to develop fault-tolerant quantum computers has become something of a modern-day “space race” between countries like the U.S., China, Russia, and others. IonQ struck a deal in that sector last fall, earning a $25.5 million project with the U.S. Air Force Research Laboratory
IonQ CEO, President, and Chairman Peter Chapman elaborated on the earnings call: “We expect by the end of this year to win the next phase of an additional $12 million. So, in fiscal 2024 we expect the ARLIS contract to contribute roughly $17.5 million dollars towards our bookings for the year, and the rest of the remaining contract will show up in 2025.”
The latest sales win in the government market came this week, as IonQ announced the day before its earnings report that it had won a contract through a competitive solicitation with the Applied Research Laboratory for Intelligence and Security (ARLIS) to design a networked quantum computing system for the U.S. Department of Defense. It represents another breakthrough for IonQ in that quantum computer networks are expected to be a key way for such computers to achieve the scale and processing power that leaves classical computers in the dust.
ARLIS, the Department of Defense’s principal university-affiliated research center for intelligence and security, will use the IonQ-built system to conduct hands-on research into the cybersecurity of multi-party quantum computation, including blind quantum computing protocols – a process where quantum computers remain ‘blind’ to what information is being processed through them, according to an IonQ statement.
Rep. C.A. Dutch Ruppersberger (D-Md.), said of the contract, “With the rapid advancement of technologies like quantum and AI, we as a nation must maintain our leadership position in these developing fields while also hardening our security tools against global actors like China and Russia. I am pleased to have secured $40M to support this project to bring IonQ’s quantum systems to the ARLIS facility, and it’s exciting to see the first phase of this project underway, which will guide the DoD’s strategy for securing the quantum space.”
