IonQ, Inc.

Greetings and welcome to the IonQ first quarter 2022 earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star, then zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to hand the call over to your host, Jordan Shapiro. Please go ahead.

Good afternoon, everyone, and welcome to IonQ's first quarter 2022 earnings call. My name is Jordan Shapiro, and I am the Vice President of Financial Planning and Analysis and Head of Investor Relations here at IonQ. I am pleased to be joined on today's call by Peter Chapman, IonQ's President and Chief Executive Officer, and Thomas Kramer, our Chief Financial Officer. By now, everyone should have access to the company's first quarter 2022 earnings press release issued this afternoon, which is available on the investor relations section of our website. Please note that on today's call, management will refer to adjusted EBITDA, which is a non-GAAP financial measure. While the company believes this non-GAAP financial measure provides useful information for investors, the presentation of this information is not intended to be considered in isolation or as a substitute for the financial information presented in accordance with GAAP. This call discusses certain non-GAAP measures and you are directed to our press release for a reconciliation of such measures to GAAP. Before we begin, please note that some of our remarks in this call will be forward-looking. Therefore, please refer to the cautionary statement in today's press release for additional details about these remarks. Please note that forward-looking statements made during this conference call speak only as of today. Now, I will turn it over to Peter Chapman, President and CEO of INQ. Peter?

Thanks, Jordan, and thank you all for joining us today. Roughly a year before we went public, we defined a multi-year plan to drive revenue growth and technical progress over six years. Today, we stand at the 18-month mark, or about a quarter of the way into that plan. I thought I would use this earnings call to give a quick report card on progress to date and provide my thoughts on the roadmap ahead. Originally, we expected to achieve 114 million TCV contract bookings cumulatively in the first four years of the plan. On the last earnings call, we discussed that we are seeing an increased interest in customers purchasing dedicated INQ quantum computers. As a result, we announced our expectation that TCV contract bookings could be nine figures for the three-year period from 2021 to 2023, roughly a full year ahead of our original financial projections. Our original financial plan was based in part on the cumulative numbers of systems INQ expected to bring online over that period. We projected one in 2022, two in 2023, seven in 2024, 17 by 2025, and 33 by 2026. We currently have two INQ Harmony systems that feature 11 physical qubits available via our cloud partners. We recently announced our latest generation system called INQ ARIA, which features up to 32 physical qubits and 20 algorithmic qubits. In addition, a second ARIA system is currently under construction to meet potential rising customer demand. Today, we are excited to announce the next generation in our series of uterbium systems called INQ Forte. Our early internal results indicate that this machine has an even higher average two-qubit gate fidelity than ARIA. In coming days, we will be issuing a press release on preliminary fidelity of the system and a blog post that will provide additional insight into how Forte operates. We anticipate that Forte will launch for beta access in the second half of this year. We also have our first system based on barium qubits. Controlled by longer wavelength visible light, barium systems are expected to make the optical design much easier while conferring higher performance. To reach our 2023 goals and beyond, this year we're working to establish and optimize our manufacturing process to build systems that scale. We are focused on features such as system footprint, manufacturability, deployability, industrial design, and reliability as part of this development process. With regard to the number of systems we expected this year, we are clearly ahead of plan. On the applications front, I am happy to report that early results with customers demonstrate that we're making serious inroads with quantum machine learning. Recently, we were able to show that we can effectively train quantum image classification models to achieve performance that rivals correspondingly classical machine learning models, while using only a small fraction of the number of training parameters. These learnings build upon the results we previously reported on the speed of the training of the machine learning models, and the results themselves were more expressive and better captured the signal of the original data. We are learning how this can lead to superior performance as we scale up to higher numbers of algorithmic qubits. In summary, INQ is firing on all cylinders, making progress on or ahead of schedule when compared to our roadmap. But that's just what we've accomplished today. What's more important is where we are in our race to make quantum computers that broadly beat classical systems. The first thing we need to do is to push our systems to their limits on native gate fidelity, i.e., the fidelity the qubits can achieve without error correction. INQ Forte is another step in that direction. But as you'll see with upcoming results from our Barium system, adding this new qubit species to our arsenal pushes us even further along that path. Initial testing suggests the fundamental error limit for two-qubit gates using barium qubits will be significantly lower than euterbium qubits, with a fidelity limit of roughly 99.98%. We've already demonstrated and released data showing that our first barium system has extremely low state preparation and measurement, or SPAM, errors, another important type of qubit error. To go beyond the fundamental limits of native gate fidelity, one must implement error correction, which requires a higher number of physical qubits. Last year, together with our university partners, INQ became the first quantum computing company to actually implement an error corrected qubit. And we did it with a 13 to 1 qubit overhead. An important next milestone for the industry will be to run gates between multiple error corrected qubits that result in lower two qubit error rates. Even with a low overhead, we need more physical qubits to implement error correction. We've already proven our multi-core chips can fit more qubits into a single system. Our investment in manufacturing engineering this year will enable us to continue scaling up our systems so that we can achieve error correction in the future. At the same time, we're also working to connect multiple systems together to combine their power using a technology called photonic interconnects. Our partner labs at the University of Maryland and Duke University pioneered this idea many years ago with demonstrations appearing in peer-reviewed journals such as Science and Nature. And this technology has been reproduced by many other labs throughout the world. INQ is working hard to translate these ideas from the laboratory into a commercial setting. The era of broadly applicable quantum computers is coming into crisper focus every day. To summarize, I'm pleased with the progress IAMQ is making both commercially and technologically. We entered the public market as the first pure play quantum computing hardware company with the belief that we can develop world-changing technology. We have demonstrated the value of our systems numerous times with customers who are working to understand how to apply quantum computing to their everyday business problems in industries ranging from energy and mobility to machine learning and financial services. Financially, we are very well capitalized with cash, cash equivalents, and investments of approximately $586 million, which on our current plan we believe to be sufficient to get the company to profitability without the need to raise any additional capital. Last quarter, we were honored in the Time 100 Most Influential Companies list for 2022, alongside some of the most innovative companies of our era, and we intend to continue pushing the limits on quantum technology. None of this would be possible without the relentless efforts of the entire INQ team, our respect for fundamental science, and our longstanding dedication to developing and commercializing cutting-edge technology. While there is still much work to be done, we are proud of our accomplishments so far. I encourage you to read through our 2022 letter to shareholders that outlines our vision for the future of INQ and the quantum computing industry. We believe that the future is bright and are happy to have you alongside us for the journey. Next, Thomas will provide an update on the financials.