IonQ Reports Earnings, Surpasses Revenue Expectations in Q2 2024

Insider Brief

• IonQ reported $11.4 million in Q2 2024 revenue, surpassing its projected range of $7.6 million to $9.2 million, and booked $9 million in sales contracts.
• The company achieved a two-qubit native gate fidelity of 99.9% with barium ions and introduced a new partial error correction technique, enhancing quantum computation accuracy.
• IonQ secured a $5.7 million contract with ARLIS for quantum networking node systems and extended its AWS partnership, raising its 2024 revenue guidance to $38-$42 million.

IonQ, quantum computing company specializing in trapped ion technology., has reported its financial results for the second quarter of 2024, significantly surpassing revenue expectations and demonstrating strong commercial and technical momentum. The company announced $11.4 million in recognized revenue for the quarter, exceeding the high end of its projected range of $7.6 million to $9.2 million.

Financial Highlights

Peter Chapman, IonQ’s CEO, began the earnings call by highlighting the company’s financial performance. “I’m excited to say that we have once again exceeded the high end of our revenue range for the quarter, delivering $11.4 million in recognized revenue,” Chapman said.

This achievement was driven mainly by significant progress on contracts, using a percentage of completion revenue recognition approach. The company also booked $9 million in sales contracts for the quarter and remains confident in meeting its annual bookings goal.

Thomas Kramer, Chief Financial Officer, provided a detailed breakdown of the financials, noting an uptick in costs and expenses.

“For Q2 2024, our total operating costs and expenses were $60.3 million, up 56% from $38.6 million in the prior year period,” Kramer said.

The increase in operating expenses is attributed to substantial investments in research and development, as well as sales and marketing. According to Kramer, R&D costs rose to $31.2 million, a 57% increase from the previous year, reflecting the company’s commitment to advancing its quantum computing technology. Sales and marketing expenses surged by 72%, reaching $6.1 million, as IonQ expanded its commercial efforts.

IonQ reported an adjusted EBITDA loss of $23.7 million for the second quarter, compared to a $19.4 million loss in the same period last year. Despite the loss, the company maintains a strong cash position, with $402 million in cash, cash equivalents and investments as of June 30, 2024.

“We continue to believe this cash position is the strongest of any publicly traded company focused exclusively on full-stack quantum computing,” Kramer emphasized.

Technical and Commercial Momentum

IonQ also highlighted significant technical advancements and commercial achievements during the call. The company achieved a two-qubit native gate fidelity of 99.9%, or “three 9’s,” using barium ions, a notable milestone that enhances the accuracy of quantum computations.

“We chose to move to barium because science suggests it enables higher fidelities than ytterbium,” Chapman said.

Additionally, IonQ unveiled a new partial error correction technique that reduces errors for Clifford gates within quantum circuits. This innovation promises to enhance the accuracy of near-term quantum computers and accelerate the path to commercial viability.

“This Clifford error reduction technique allows for more accurate quantum algorithms, but requires a ratio of only about 3 physical qubits per 1 error-reduced qubit,” Chapman said.

On the commercial front, IonQ secured a contract with the Applied Research Laboratory for Intelligence and Security (ARLIS) to design quantum networking node systems for blind quantum computing, funded by a $5.7 million award. The project, supported by a total of $40 million in Congressional funding for fiscal years 2023 and 2024, aims to enhance U.S. national security capabilities.

IonQ also extended its partnership with Amazon Web Services (AWS) to continue offering its quantum computing services through Amazon Braket. The new cloud feature set includes 24/7 global operations and improved queuing engines, making it more accessible for developers to leverage IonQ’s technology.

Future Outlook

Looking ahead, IonQ raised its revenue guidance for the full year of 2024 to a range of $38 million to $42 million, reflecting increased confidence in its contract progress. The company expects third-quarter revenue to be between $9 million and $12 million and maintains its annual bookings guidance of $75 million to $95 million.

Chapman concluded the call with optimism about the future, stating, “With the combination of hardware and software improvements, we believe that we can extend our achievement of three 9’s to production systems in 2025 and bring that to five 9’s in 2025 and six 9’s in 2026 using error correction.”

IonQ trades on the NYSE under the symbol “IONQ”.

At A Glance

• Recognized Revenue: $11.4 million for Q2 2024, exceeding the projected range of $7.6 million to $9.2 million.
• Sales Contracts: $9 million booked in Q2 2024.
• Operating Costs and Expenses: $60.3 million for Q2 2024, up 56% from $38.6 million in Q2 2023.
  • Research and Development: $31.2 million, up 57% from $19.9 million in Q2 2023.
  • Sales and Marketing: $6.1 million, up 72% from $3.6 million in Q2 2023.
• Adjusted EBITDA Loss: $23.7 million for Q2 2024, compared to $19.4 million in Q2 2023.
• Cash Position: $402 million in cash, cash equivalents, and investments as of June 30, 2024.
• Full Year 2024 Revenue Guidance: Raised to a range of $38 million to $42 million.
• Third Quarter Revenue Guidance: Projected between $9 million and $12 million.
• Annual Bookings Guidance: Maintained at $75 million to $95 million.