IonQ, Inc.

Greetings and welcome to INQ's third quarter 2024 earnings conference call. At this time, all participants are on 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 zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Jordan Shapiro. Thank you. You may begin.

Good afternoon, everyone, and welcome to INQ's third quarter 2024 earnings call. My name is Jordan Shapiro, and I'm the Vice President of Financial Planning and Analysis and Head of Investor Relations here at INQ. I am pleased to be joined on today's call by Peter Chapman, INQ's President and Chief Executive Officer, Thomas Kramer, our Chief Financial Officer, and Dr. Dean Kassman, our Senior Vice President of Engineering and Technologies. By now, everyone should have access to the company's third quarter 2024 earnings press release issued this afternoon, which is available on the investor relations section of our website at investors.inq.com. 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 or as a substitute for the financial information presented in accordance with GAAP. You are directed to our press release for a reconciliation of adjusted EBITDA to its closest comparable GAAP measure. During the call, we will discuss our business outlook and make forward-looking statements. These comments are based on our beliefs as of today. Actual events or results could differ materially from the outlook and other forward-looking statements due to a number of risks and uncertainties, including those mentioned in our 10-Q filing with the SEC this week. We undertake no obligation to revise any statements to reflect changes that occur after this call, except as required by law. Now, I will turn it over to Peter Chapman, President and CEO of INQ. Peter?

Thanks, Jordan, and thank you to everyone for joining today's earnings call. We have a lot to talk about, so let's dive in. On the financial front, we are leading the industry with our commercial trajectory. In the third quarter, We exceeded our expected range on revenue, raising our annual revenue guidance, and brought in $63.5 million of new contract bookings. We are making game-changing announcements on the development of quantum applications with AstraZeneca and Ansys. We have solidified our push into quantum networking via our recent contracts less than a year after announcing our networking initiative. And we are sharing the news of our acquisition of Cubitech, a leader in the quantum networking industry. What's more, we will share some details of our rapidly developing technical progress and the manufacturing partnerships that are driving it. So in more detail, we once again exceeded the high end of our revenue range for the quarter, delivering $12.4 million in recognized revenue compared to our range of $9 to $12 million for the quarter. This also represents INQ more than doubling our third quarter revenue year over year. With that in mind, we are raising our revenue guidance for the full year 2024 and fourth quarter to a range of $38.5 million and $42.5 million. We announced a new $54.5 million contract with our existing customer, the United States Air Force Research Lab, as well as a $9 million renewal with the University of Maryland. This brings INQ year-to-date bookings for 2024 to $72.8 million, within close range of our target guidance for the year of $75 million to $95 million. Given our sales progress to date, we now believe that we will come in closer to the high end of the bookings guidance range. And of course, our booking success will set us up for continued success next year in growing our revenue. IMQ has exceeded its original bookings targets for each of the past three years since we have been publicly traded. raising or beating our bookings or revenue expectations 12 times out of our 13 earnings calls, including today. Meanwhile, we are on track to roughly double the company's recognized revenue for the third year in a row. Our annual revenue has exceeded the high end of our guidance range every year. In short, one can no longer ignore the scale of INQ's commercial success. The investment thesis for INQ is our potential for high growth, and we keep delivering on that promise. Thomas will discuss our financials in more depth. Everyone, investors and customers alike, want to know when previously impossible tasks can be addressed by quantum applications. The answer is at the convergence of powerful enough quantum computers, a matching application, and ability to manufacture the hardware at scale. In the quantum world, there are two camps or schools of thought on this topic. One camp believes you need near perfection before value can be unlocked. If they are correct, sadly, quantum is still a long way off. The naysayers belong to this camp, but their numbers are dwindling every day. The other camp, which INQ and others belong to, believe today's early noisy quantum computers can provide value even before they are perfected. And if we are right, it gives us a significant advantage by generating early, meaningful cash collection as we work towards perfection. About 18 months ago, I challenged our teams to answer a critical question. I told them I don't care about theoretical algorithms with limited practical applicability. I don't care about the academic argument about quantum supremacy. Instead, I ask them, what are the applications that have the potential to disrupt multibillion-dollar industries? The team has since identified several application areas where we believe commercial value will be first realized and aligned with our next-generation hardware and INQ's production capability. We then reached out to industry partners to understand the value of these applications to their respective industries. Today marks a seminal moment in the quantum industry as we announce the first two application areas, biopharmaceutical drug discovery and computer-aided simulations for the engineering and manufacturing industries. In the global biopharmaceutical industry, I am excited to announce the creation of a new quantum application development center in collaboration with AstraZeneca. INQ will be leveraging the power of our quantum experts and AstraZeneca's world-class scientists to develop applications in their innovation bio venture hub in Gothenburg, Sweden. In the computer-aided engineering industry, INQ has joined forces with ANSYS to accelerate simulation, expand high fidelity design exploration, and reduce product development timelines, enabling faster market entry for more innovative products. The partnership is aimed at making simulation accessible to both quantum experts and non-experts by allowing seamless integration between ANSYS software and INQ computers. To reach our aggressive sales goals, we have always planned on growing application revenue. We expect these applications to drive demand for new systems in production, but also for us to share in the up to $2 trillion economic value that McKinsey projects will be unlocked by 2035. We've reached an incredibly impactful point. And we could not be more excited to partner with AstraZeneca and Ansys to bring production-grade quantum applications to their respective industries. I can't tell you how much personally I am excited about these applications. Now switching our focus to quantum networking. We believe that INQ is the only quantum computing company that has an inherent advantage in the quantum networking market. contributing to our early leadership. Specifically, we have always relied upon networking as part of our architecture to scale our quantum computers. Quantum networking and quantum computing for INQ are highly synergistic. Our recent wins of a $54.5 million contract with AFRL and our $5.7 million contract with the Applied Research Laboratory for Intelligence and Security, or ARLIS, are examples of our quantum networking investments paying off. At more than $60 million, we believe these two sales alone have catapulted INQ to become a leading player in the quantum networking industry. To expand on that leadership, today we are excited to announce that we have signed a definitive agreement to acquire Cubitech, a leading Vista California-based quantum networking company. The combination of Cubitech and INQ will allow us to continue our momentum in quantum networking by the addition of Cubitech's 118 U.S. and international granted patents. I expect that the quantum networking products will continue to strongly drive sales and to be the first product group that is cash flow positive. Quantum networking is a large and rapidly growing opportunity, with McKinsey estimating that quantum communication will become a $36 billion market by 2040. Quantum networking, like classical networking hardware, is also expected to require several orders of magnitude more physical hardware than quantum computing to build the infrastructure for the quantum internet. This is another element of the networking market where INQ is particularly well-suited, given the investments we have made over the past years to scale up our production manufacturing capabilities. The INQ technical team also demonstrated ion-to-ion entanglement, the second of four significant milestones required to develop photonic interconnects and significantly scale our system capacity. While we are thrilled with our technical progress in quantum networking, we're even more thrilled to join forces with Cubitech and leverage their quantum networking expertise. Lastly, on the technology front, we are happy to announce two new agreements for critical components of future systems, starting with INQ Tempo. Number one, we announced a partnership with NKT Photonics, a subsidiary of Hamamatsu Photonics. to develop next-generation laser systems for our trapped ion computers and networking equipment. The arrangement will begin with NKT Photonics developing and delivering three innovative prototype optical subsystems to us in 2025, designed to improve the performance, size, weight, and power of our upcoming data center-ready quantum computers. Number two. Today, I am also pleased to announce a new partnership with IMEC, a world-renowned innovation hub in nanoelectronics and digital technologies, to develop photonic integrated circuits and chip-scale ion trap technology. With these groundbreaking technologies, INQ aims to reduce overall hardware system size and cost, increase qubit count, and improve system performance and scale. The developments of this quarter are nothing short of groundbreaking and position INQ to be the preeminent player in the quantum industry in the near term and for many years to come. Many of you already know INQ as a leading quantum computing company. With today's announcements, we believe that we are now the leading company at the intersection of quantum computing and networking. And in the future, you will likely also know us as a software application company. Our commercial track record has launched IMQ towards the rarefied echelon of rapidly growing young technology companies by achieving nine figures in bookings in record time. And with that, I'd like to turn the call over to Thomas.