IonQ, Inc. Q4 FY2025 Earnings Call

Welcome to the IonQ Fourth Quarter 2025 Earnings Conference Call. Please note this event is being recorded. I would now like to turn the conference over to Hanley Donofrio, Director of Investor Relations. Please go ahead.

Good afternoon, everyone, and welcome to IonQ's Fourth Quarter and Full Year 2025 Earnings Call. My name is Hanley Donofrio, and I'm the Investor Relations Director here at IonQ. I'm pleased to be joined on today's call by Niccolo de Masi, IonQ's Chairman and Chief Executive Officer; and Inder Singh, IonQ's Chief Financial Officer and Chief Operating Officer. By now, everyone should have access to the company's fourth quarter and full year 2025 earnings release issued this afternoon, which is available on the SEC's website and on the Investor Relations section of our website at investors.ionq.com. Please note that on today's call, management will refer to non-GAAP financial measures. While the company believes these non-GAAP financial measures provide 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. You are directed to our earnings release for a reconciliation of adjusted EBITDA and adjusted EPS to the closest comparable GAAP measures. During the call, we will discuss our business outlook and make forward-looking statements, including those regarding our guidance for 2026. These comments are based on our predictions and expectations as of today and are not guarantees of future performance. Actual events or results could differ materially due to a number of risks and uncertainties. Therefore, you should not put undue reliance on those statements. We refer you to our recent SEC filings, including our annual report on Form 10-K for the year ended December 31, 2025, for a more detailed discussion of those risks and uncertainties. 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 Niccolo de Masi, Chairman and CEO of IonQ.

Thank you all for joining us on today's historic call. 2025 was a highly successful and transformational year for IonQ, both strategically and financially. Strategically, we expanded our business from leadership in quantum computing to become the world's leading quantum platform solution and merchant supplier. We are the first company in history capable of delivering integrated quantum solutions across computing, networking, sensing, and security in all major allied geographies. IonQ is the world's only full stack quantum platform company operating in all domains. This strategic expansion is powered by an unmatched intellectual engine as we continue to attract the world's best and brightest quantum leaders as well as the leading quantum IP portfolio. IonQ benefits from approximately 300 PhDs and 800 talented colleagues with advanced degrees, many of whom are household names in their fields. Financially, we delivered a record year, not only for IonQ, but a historic one for the entire quantum industry. In the third quarter of 2025, we delivered nearly as much revenue as we did in all of 2024. In the fourth quarter of 2025, we surpassed this by growing more than 50% quarter-over-quarter. After becoming the first public quantum company to achieve 8 figures of revenue in 2024, we grew to deliver substantially more revenue in the fourth quarter of 2025 than in the entire calendar year of 2024. Strong organic growth powered our full year 2025 revenue to be over 3x that of 2024. Commensurately strong investor interest allowed us to fortify our balance sheet with the 2 largest capital raises from a single investor in quantum history. Quantum is indeed now, and IonQ is confidently leading this revolution by every measure. As most listeners know, late last month, we announced the largest acquisition agreement in quantum history and the first public-to-public planned quantum transaction ever. SkyWater is the leading quantum foundry in the world, commercially supporting not only IonQ, but also more than a dozen other quantum and DOD programs. By leveraging SkyWater's unique expertise in pioneering quantum semiconductor scaling within secure trusted environments, we will be positioned to accelerate the manufacturability of IonQ's entire quantum platform roadmap. However, our mission extends beyond IonQ to power the broader U.S. quantum industry and all our global allies. We aim to ensure our nation's entire quantum ecosystem moves forward with speed and security. In our joint IonQ SkyWater webinar last month, we laid out the fact that IonQ is already a leading merchant supplier to the broader quantum industry. Our precision atomic clocks power a number of quantum computing businesses and government contractors, and we already sell our quantum networking solutions and sensors broadly. Our modality-agnostic networking components are, in fact, designed to integrate diverse quantum devices, ensuring seamless connectivity across the quantum industry. Once SkyWater is part of the IonQ family, we will become the largest quantum merchant supplier in the world, with Thomas Sonderman continuing to lead SkyWater. Our focus is on accelerating our nation's quantum industry, and we will continue investing to ensure the United States prevails in this geopolitical race. SkyWater has already created the compartmentalization, the protocols, and the IP protections that will allow customers to continue to operate within our foundry model. We are a kindred spirit with everyone supporting our nation and our allies in this quantum space race of our era. Our combined company will have the capacity and capital to grow not only U.S. quantum R&D initiatives across quantum computing, networking, sensing, and security but also to ensure U.S. quantum manufacturing scaling. SkyWater helps us build an IonQ platform that customers, especially government and other mission-driven buyers, can trust and plan around irrespective of geopolitics. Together, we intend to ensure the entire U.S. quantum industry will deliver, scale, and do so onshore with trusted processes for the good of the nation. Returning to 2025. It has been a year of tremendous accomplishments across our product families, both technically and commercially. In quantum computing, IonQ demonstrated the highest performance quantum gates in any system platform and by a wide margin. 99.99% 2-qubit gate fidelity means we can concentrate on system architecture and scaling in order to make smaller and cheaper systems even as they become more powerful. While other quantum computing companies are still working on perfecting their underlying qubits and gate operations, ours are based on physics that was settled 25 years ago. Our fidelity advantage translates into a powerful and enduring error correction advantage. I want to highlight today that our quantum computers deliver the best time to solution on the market for commercially relevant applications. Time to solution is how fast a customer running an algorithm gets to accurate answers that actually solve their problem. For example, when we look at a common quantum algorithm used for signal processing, search, and factoring, IonQ is up to 1,000x faster than the leading superconducting system on reaching the solution. We also see a massive speed advantage in signal processing and optimization tasks with up to a 10,000x faster solution on IonQ systems compared to superconducting. We aren't just doing theoretical work. We are solving real-world problems at a speed that creates commercial utility. This is how IonQ is delivering in today's competitive landscape, and we're just getting started. Our near-term roadmap builds to 1,600 fault-tolerant module qubits a year before our competitors even get to 200. We believe we will continue to outpace competitors on commercial utility to an accelerating extent as we unlock our application roadmap announced last fall. Best of all, we deliver these advantages at a far more accessible cost for both commercial and government customers. At our Analyst Day in September, we shared third-party validated estimates of IonQ's full scale system cost, which is 2 orders of magnitude below superconducting competitors. As students of history, we all know that the best economics occasionally beat the best technology, but best economics and best technology is what makes markets and builds an irresistible ecosystem. This is what IonQ is poised and focused on delivering. In Q4 2026, we are targeting to demonstrate an operational 256-qubit system, which will be our sixth-generation machine in the market. With our world-leading 2-qubit gate fidelity, we expect to unlock substantial value for our customers and explore world-changing applications this year. Last year, we worked closely with dozens of customers around the world who use our quantum computers to run complex applications. A prime example is our continuing work with Ansys and Synopsys as we pursue a mutual goal of commercializing quantum in the engineering space. To paraphrase the CEO of Synopsys on my Quantum panel at the World Economic Forum in Davos last month, the key driver of innovation is complexity. Customers do not adopt new technology because they're curious, but because they need to solve a problem in a more affordable way. We help customers around the world do just that, running applications from pharmaceuticals and automotive to chemistry and AI with the fastest, most energy-efficient, and cost-effective approach. In quantum networking, among numerous deployments, we partnered with the U.S. Air Force Research Lab to achieve the first qubit to photon frequency conversion in a field deployable system. This ensures real-world quantum networks on existing standard fiber optic commercial infrastructure. We also won the contracts to deliver multiple international quantum networks, including the world's first citywide dedicated quantum network in Geneva, Switzerland; Slovakia's first national quantum communication network; and one of Europe's largest operational QKD networks to date in Romania. In quantum sensing, our atomic clocks and inertial sensors are the highest performing fielded devices for their form factors. Our quantum sensors already operate in domains from under the ocean to up in the air. This technology leadership is translating directly into high-value defense partnerships, including U.S. Navy contracts for miniature ultra-stable atomic clocks and U.S. Army contracts to provide resilient timing systems for GPS-denied environments. Our clocks are the highest performing in the marketplace, and they are shrinking in size. Most recently, in partnership with DARPA, we successfully reduced our clock size by 6x while maintaining similar performance, a breakthrough that paves the way for integration into satellite payloads. Together, IonQ's market-leading quantum sensing technologies complement our quantum computing and quantum networking infrastructure to position IonQ as the partner of choice for the mission-critical needs of defense, aerospace, and sovereign nation customers. We bolstered our IonQ federal team with the appointment of Katie Arrington as our CIO until recently, the acting CIO of the Department of War, and adding General John Raymond to our Board, the first Chief of Space Operations for the United States Space Force. Rick Muller joined last year, also having until then been the Director of IARPA. Dean Da Costa joined to run communications and government relations, having previously held the same role at Lockheed Martin. The collective expertise of these leaders uniquely positions IonQ to navigate the complexities of the federal landscape and win large-scale mission-critical federal contracts. Geographically, we deepened momentum in South Korea through our QKD National Security accreditation and KISTI system sale win, where IonQ is now anchoring the country's largest quantum classical compute platform. We also expanded our agreement with QuantumBasel in Switzerland to over $60 million, spanning 4 years and 4 generations of IonQ systems. In the EU, we struck a partnership with leading autonomous vehicle company, Einride of Sweden, and incorporated IonQ Italy under the leadership of Dr. Marco Pistoia, the former Head of Quantum at JPMorgan. In Canada and Sweden, we struck a partnership with CCRM to accelerate the development of advanced therapeutics, reinforcing the transformative impact of quantum in the pharmaceutical sector and building on the proven results of our work with AstraZeneca last year. Scott Millard joined us to lead our global commercial efforts, having previously led the AI team at Dell. Chad Sakac joined us to run field engineering and presales following his distinguished career doing the same at EMC and Dell. Under their leadership, our expanded commercial team is positioned to accelerate our global go-to-market strategy, delivering our full stack quantum solutions to meet the evolving needs of our global enterprise customers. Moving now on to 2026. As our team knows, we have 3 key objectives; first, to drive superior financial performance by leveraging our scale and our complete platform to further accelerate our commercial execution. Our strategic evolution into the world's only full stack quantum platform company positions us with continued momentum to achieve $235 million in revenue in 2026 at our current guidance midpoint. Second, to answer the key strategic questions that unlock exponential value in our product families and across our global quantum platform. DARPA QBI Phase C and the next-generation GPS that is orders of magnitude more accurate are examples of our ambitions here. Third, to hone our internal operating system for efficiency, speed, and talent density as we scale. We continue to make smart, disciplined organic investments to move technical progress earlier in all our product families. We will also continue to consider value-enhancing acquisitions to further deepen our product and service offerings and accelerate our long-term path to profitability. You will hear us talk more about both time to solution and cost to solution, areas where IonQ has and will always excel. And we will unlock utility for Fortune 500 companies, U.S. and allied governments alike. Our North Star is to positively impact all aspects of applied science by pioneering and globally commercializing the world's quantum solutions. 2026, I believe, begins the era of truly showing IonQ's quantum platform in action in all its forms and domains, quantum applications, quantum computers, quantum networks, quantum security, and quantum sensors. IonQ is one platform, one team, primed and poised to win. As we advance our strategy and deliver on our objectives, we are confident we will drive significant value creation for shareholders. As I conclude, allow me to thank my colleagues for their tremendous efforts in 2025 and the entire U.S. quantum industry for their trust. We are here to speed up all of our nation's quantum initiatives and players using our merchant supplier capabilities. IonQ is here to support all initiatives at the White House, DOD, DOC, DOE, and Capitol Hill advance to ensure our country and its allies benefit from U.S. quantum leadership in the 21st century. We look forward to 2026 and beyond with confidence as IonQ's technical roadmap is delivered across all product families and our operating momentum continues to build. I am delighted now to hand you over to Inder Singh, IonQ's CFO and COO.

Thank you very much, Niccolo. It really has been an amazing year for IonQ. I'm extremely pleased that 2025 has been such a transformative and record-setting year for us from virtually every lens that I can see: from record-setting financial results to exceptionally strong commercial sales globally to unmatched technology breakthroughs like the four 9 fidelity you mentioned. It was the year in which we transformed the company from a single product quantum computing company in 2024 to a full stack quantum platform company, able to deliver not just quantum computing, but as you said, quantum networking, quantum security, quantum sensing, interconnects, laser-based communications, the world's most precise PNT, and on and on. In short, from one amazing product to the world's most comprehensive quantum product portfolio. In the process, we also became the quantum industry's merchant supplier. Yes, as Niccolo noted, we provide components to our peer group companies in the quantum space. And as you heard from Niccolo, we're not stopping there. We've announced our intent to acquire SkyWater Technologies, already recognized as the most secure fab in the United States. With SkyWater, once it receives regulatory approval, we would have both surety of supply and security in our solutions. With more than $3 billion of cash among our financial firepower, we intend to bring that surety and security in the most advanced and secure products to our customers around the world. Let me highlight our financial results, which help really punctuate what you and I just talked about. IonQ ended 2025 with an exceptional fourth quarter following a record-setting third quarter. Fourth quarter revenues were $61.9 million, even exceeding our own expectations and growing 429% year-over-year. This brought our full year 2025 revenues to $130 million, comprising 202% year-on-year growth. These historically high results mean that IonQ has outperformed our revenue guidance once again, exceeding the midpoint by 55% for the fourth quarter and 20% for the full year. Our full year revenues now exceed the street expectations for 2025 revenues while the other pure-play quantum players combined. Let me take a moment to talk about some key drivers of what the performance we saw this quarter and this year. First, we saw tremendous demand from customers for our latest fifth-generation 100-qubit tempo system. In the fourth quarter, we welcomed KISTI of South Korea as a new customer of our fifth-generation system. This sale highlights IonQ's distinct value and the ability for us to win even against competitors that may be larger than us or more entrenched with bigger marketing dollars. The value and the strength of our products clearly shine through. Customers are choosing to partner with IonQ because of our industry-leading tech roadmap today and the tech roadmap we have announced for the next 5 years as well. We also welcomed another new customer, CCRM, one of the world's leading advanced therapeutics accelerators, which plans to use IonQ's Tempo cloud-based solution to do bioprocess optimization, disease modeling, and the design and manufacturing of advanced therapies for many health conditions. Yet another commercial success story is with QuantumBasel, which demonstrates our land-and-expand strategy, but also that we treat our customers as partners in a journey, combining theirs with ours. QuantumBasel, which already owns our prior fourth-generation Forte quantum computer, agreed in the fourth quarter to purchase our fifth-generation tempo computer and also obtained access to our future sixth-generation computer, which is still in development, and this is a 256-qubit semiconductor-based computing device we expect to deliver in 2027. This multiyear relationship is now expected to span 7 years from the years we've been with them in the past and the 4 years that Niccolo mentioned with this new arrangement we have with them. It also demonstrates how one compute device can lead to the adoption of an entire roadmap. Beyond computing, we are seeing similar demand and adoption for our networking and post-quantum cybersecurity solutions. As you also heard from Niccolo, we saw quantum networking adoption in Geneva, in Slovakia, and in Romania, where IonQ is deploying one of the largest and most complex operationally post-quantum cybersecurity networks in Europe. These national partnerships represent significantly larger networks than in the past and are indicative of the growing adoption of our quantum networking and quantum security solutions. Turning now to the mix of revenues we saw. For the full year 2025, over 60% of revenue came from commercial customers, marking strong sales in the commercial sector and reflecting the customers, some of whom I named before. And anecdotally, our international sales comprised more than 30% of revenue for the first time, reflecting how our quantum platform solutions are now resonating worldwide. Because of the breadth of quantum products we are now delivering, our customer list includes Singtel, SK Broadband, Solace, CERN, IIT; it's a very long list. Importantly, this broadening customer base presents us with a golden opportunity to cross-sell more things to more customers. As we move ahead, we continue focusing on new customer opportunities around the world, including in places like Australia, Italy, Greece, India, Japan, Vietnam, Argentina, and many others. Our new CRO and the sales team are taking a very methodical approach to identifying the most compelling opportunities and taking a disciplined pursuit and capture approach. Importantly, our 2025 results included nearly 80% year-on-year organic growth, and I expect this to be even healthier in 2026. We are very pleased to see solid organic growth, of course, even as we have broadened our product portfolio with our quantum platform. With my second successive quarter now in this role, we are continuing our focus on building strong backlog plus developing a very targeted view of our pipeline in order to make sure that we continuously strengthen our visibility for our financial planning and also that we match demand and supply. As a demonstration of this focus, in our 2025 10-K being filed today, we disclosed that our remaining performance obligations, or RPO, which provides one metric to gauge visibility over several quarters, stood at $370 million at the end of 2025 compared to just $77 million at the end of 2024, which is almost a fivefold increase. Turning now to EBITDA. We reported an adjusted EBITDA of negative $67.4 million for the quarter and negative $186.8 million for the year. I wanted to note that even this adjusted EBITDA is better than the full year adjusted EBITDA guidance that we had provided at the time of our third quarter earnings call. The adjusted EBITDA reflects the fact that we are making investments. We are investing in our business and our key investment area, as you'd expect, continues to be R&D. R&D comprised $96.1 million in Q4, and for the year, it was $305.7 million. That's a 123% annual increase. We will continue to invest in R&D as this helps maintain the technological advantage that we deliver for our customers and also creates new IP to extend the value for our customers in the future. We are doubling down on investments in our computing platform, which is already leading the market by multiple years by both investing in our fifth-generation tempo deployments, which are in progress this year, which are already beginning to build out our sixth-generation 256-qubit computing platform, as Niccolo mentioned. And then we have our sights on our seventh-generation system beyond that. Unlike other market players, we are also investing in building our own quantum application, in many cases, in partnership with our customers and also on our own. We are focusing on applications with the highest potential impact with the intent to build once and sell many times. Just a few examples of high-impact applications we might build include quantum high-frequency trading, energy grid optimization, life sciences acceleration, and even the design of semiconductor chips in a more effective way. There are many others. To sum it up, our investments in R&D are not just lab experiments. We are bringing quantum to life and delivering to our customers today. Turning to net income. For the fourth quarter, we reported a positive $753.7 million of GAAP net income, which was mainly due to an approximately $950 million mark-to-market valuation of warrants as required by accounting conventions. Needless to say, the mark-to-market impact warrants are noncash items and valuations are more related to our stock price at any given point and do not represent the operating fundamentals of our business. For the full year 2025, we reported a negative $510 million GAAP net income, which included warrants valuation impact of $66.7 million. Cash, cash equivalents, and investments as of December 31, 2025, were $3.3 billion. The strength of our balance sheet provides us with what we consider unprecedented financial firepower to continue to invest in R&D to build out even more new products, to invest in go-to-market resources, and yes, to also acquire for critical new capabilities or to accelerate our roadmaps. IonQ is uniquely positioned with the resources, talent, and differentiation so we can focus on cementing our market leadership and delivering the world's most advanced quantum technologies in every sector. As for operational excellence, which is so critical for establishing the foundation of future success, this will be one of the top priorities for Niccolo and the leadership team in 2026. And as you said, and as we reported last quarter, we've already turned our focus to this very important area to prepare for the future. Deploying organizational clarity and accountability is one essential ingredient. Manufacturing under a clear leadership, customer deployment under a single leader, sales under a single leader, supply chain under a single leader, and applications development ownership. All of these things comprise the building blocks of what you need to be able to ensure that there's accountability and planning. Last quarter, we mentioned we have established a dedicated M&A integrations team. And I'm very pleased to report that since then, we have successfully integrated key functions like HR and finance and are making strong progress on IT consolidation under our new CIO. In short, we have moved to rapidly integrate our acquisitions, increase our execution velocity, and deliver on key priorities. I'm pleased to report that our IT cybersecurity teams are now unified under the leadership of our new CIO that Niccolo mentioned, Katie Arrington, who recently joined the team from the Department of War and our CISO, who also brings years of experience with many agencies and also other companies, including through other agencies and reports to Katie. Our goal is to create our products in as highly secure posture as possible. Last quarter, we also spoke about IonQ's unique ability to now leverage the established semiconductor manufacturing process for our next-generation compute. In January of 2026, as Niccolo noted, we announced our intent to acquire SkyWater in order to strengthen our supply chain all the way through to manufacturing. On the close of that transaction, which, of course, must go through a regulatory process, we would acquire SkyWater's trusted fab U.S.-based Tier 1 foundry, enabling us to ensure we would have the availability, security, and quality to scale our chip-based roadmap, bringing us both CMOS as well as advanced packaging capability. This acquisition also builds on our already existing merchant supplier business model in which we currently serve other quantum players today. As the pacesetter of the quantum industry, we do see it as a key responsibility to also help ensure in the overall development of our ecosystem. Let me turn now to fiscal year 2026 guidance. On the shoulders of the amazing 2025 numbers that we saw, we feel we have built a strong foundation for yet another year of strength in 2026. With that in mind, we are pleased to offer the following financial guidance for full year 2026 as well as for the first quarter. For 2026, we are projecting revenues of between $225 million to $245 million for full year and $48 million to $51 million for the first quarter. Our projected revenue growth is anchored by a continued expansion of our customer base, both in terms of number of customers and number of offerings that we bring to the market. And as I mentioned earlier, our guidance today is based on visibility stemming from a healthy backlog and an attractive pipeline that we will work methodically to convert. We are projecting adjusted EBITDA to be between negative $310 million and negative $330 million for the full year 2026. And as I discussed today, this range represents our continued investment in critical R&D to help drive the next generation of quantum solutions across our portfolio. It goes without saying that since we announced the SkyWater transaction has not closed, our guidance metrics do not reflect SkyWater. We continue to operate as separate publicly traded companies until such time as approvals are in hand. As Niccolo mentioned at the beginning of his comments, IonQ has rapidly established itself with the world's most unique set of products and capabilities, and we are for sure not stopping there. Compared to any other quantum pure-play one might look at, our product suite is unmatched. Our talent density is exceptional. Our business is global. We are actively selling into commercial deployments, not just labs. And critically for the future of quantum, we possess a merchant supplier business model that enables the entire quantum ecosystem to develop and succeed over time as we progress. And yes, while we do now and then take a moment to celebrate our progress like today, and I must say it does feel good. Tomorrow, the entire IonQ team will get up and continue to dash towards delivering the world's most advanced, innovative, and complete quantum solutions for our customers. With that, operator, can you please open the call for Q&A?

The first question comes from John McPeake with Rosenblatt Securities.

Guys, can you hear me?

We can, yes.

Okay. Great. I think the last time I was on mute, and I don't want to repeat that. So congratulations on the numbers and guide. I just have a question about the SHIELD release that came out a couple of days ago. Now that you guys have a pretty broad portfolio of quantum assets, you talked in the release about the $151 billion opportunity. How should we think about what you might be able to address relative to that number?

We'd love to get all of it. No, I'm kidding, John, of course. We are very pleased to be included among the players that might participate in that. We intend to ensure that we deliver based on what we've built, John. And you know that one of the things that we're trying to make sure we are very clear on, maybe do a better job of, is explain how we're actually a solution company. We're a platform company. And I think in some cases, we're still being compared against a single product company. And when you look at opportunities like SHIELD or frankly, any other opportunity that we may be looking at, and we are looking at others, too, you need a solution. You need to integrate things together. It's not enough to have a quantum computer that may work one day. It's not enough to have a quantum computer that even works today. You need to be able to link things together. You need networking. You need to be able to bring the quantum security up to industrial scale. You need to ensure that you're able to provide secure communications. You need to be able to make sure that you’re able to deliver today, not promise something in 2029. So we're happy to be included in that, John. I mean, I thank you for your question. Yes, we'd love to have our unfair share of it. But I think that we will deliver on the things that we promised, and we think we can do things in a more effective and more complete way than many of the other players that I think we are looked at again. That said, we do these things with humility. We ensure that we have the engineering. We ensure that we have the software. We ensure that we have all the interconnections that are required. It's a solution sale, right, when you look at something like that, John. Niccolo, do you want to add anything to that?

No, absolutely. Look, I mean, credit to the team for an outstanding year. We did a lot, obviously, in 2025. And as I said, we're just getting started. So we expect to continue momentum here, and it's not just momentum in each product family, but it's, of course, as Inder really points out, between the product families, where we really are inventing the future in multiple dimensions, right? And I think that's what's appreciated to a grand extent by our nation's SHIELD initiative amongst many other appreciators at the moment.

The next question comes from Kevin Garrigan with Jefferies.

Team, congrats on the great results in reaching over $100 million in revenue. On SkyWater, can you just update us on the status of the regulatory approval process? And over the last 30 days since you made the announcement, have there been any unexpected developments, either positive or negative that could impact the timing?

We're still looking at it in the same way that we talked about it last time, and I appreciate your question, and thanks for your comments. It's a regulatory process. It's well defined. It's not that we try to predict how it may go or not go. We think that the model that brings together a merchant player and quantum platform, which is us and a merchant provider of manufacturing services through SkyWater, is in the interest of the nation, the industry and all the players in it. And as I said, and as Niccolo said, we're already a merchant supplier. We supply products, components to others that you may call our competitors. We don't see them that way. We think that all players need to succeed, and that's what creates an ecosystem and an industry. This industry needs the same. So we are the pacesetter, yes. We will remain the pacesetter, yes. There's a responsibility that comes with that, and we will live up to that.

Yes. Got it. Got it. Okay. That makes sense. And just a quick follow-up, continuing on the acquisition front. You guys had acquired Seed Innovations at the end of January. Can you just talk about how this company fits strategically within your portfolio and what gaps it fills?

Sure. So Seed is a software classified mission control business, that really is quite unique. Because almost all their work is classified, I'm not going to go into huge details for you. But you can assume that it is stitching together not just component solutions that we have at IonQ, but it's also helping 3 letter agencies and portions of our DOD do the same even before IonQ came along. So it is a unique opportunity for quantum, not just in the hardware sense, but also in the application sense to be part of what we're doing in programs like SHIELD for the prior question as well as the rest of the broader quantum platform of sensing, security, networking, which we have put together in every theater of operation from under the ocean to on top of the ocean to on land, in the air, and up in the heavens. There's a lot going on for the battle for the future, and IonQ very much is well positioned to have, hopefully, our fair share and maybe even a bit more.

And just to add, I mean, the DevSecOps capability and software development that Seed brings to us is actually relevant for all of IonQ. And so we intend to take part in ensuring that Seed is succeeding in everything they're signing up for directly externally, but also, frankly, leveraging their unique capability to help us accelerate in DevSecOps across the company as well.

The next question comes from Craig Ellis with B. Riley Securities.

Congratulations on the really strong results and the big RPO number, $370 million is quite substantial. I wanted to follow up on the guidance for calendar 2026 revenue at the midpoint, $235 million. Can you help give us some color on some of the things that are driving revenues to that level, whether it be the international versus domestic mix of business or whether it be particular programs within your compute, networking, or sensing capability? And then just a sense, Inder, given the first quarter's guide on the linearity through the year, it would seem to be that there is implied growth, but any color would be helpful there.

Thank you for the question. I want to clarify that we will continue to expand our global presence. The number of countries I mentioned was intentional, as we are exploring significant opportunities. Demand is outpacing supply, and we are working to increase our resources to ensure we can provide the fifth-generation machine to all interested customers. We're also seeing early interest in our next-generation machine, the 256 and beyond. We are confident in the compute platform based on our solid roadmap and the collaboration we have with our customers. Our approach of deploying engineers and application developers alongside our customers is effective. We anticipate strong organic growth in our compute platform for 2026, potentially exceeding 100% year-on-year growth. Other areas of our portfolio are also thriving, particularly as the urgency for post-quantum security has significantly heightened compared to last year. We are adaptable regarding the applications our customers require, whether it's PPC, QKD, or others. We believe that within two to three years, a comprehensive approach will be necessary as classical cybersecurity may not suffice. Key players, including large banks and governments in the countries and cities I mentioned earlier, are recognizing this. Our assumptions for the year’s guidance include sustained demand for security and networking solutions. Additionally, sensing is just beginning to unfold exciting possibilities. There are ongoing discussions about GPS interference, which concerns many nations. Our leading PNT solutions and precise atomic clocks present substantial opportunities, and while execution is essential, the demand exists. We plan to deliver on several aspects by 2026, understanding it to be a multi-year journey with extensive future potential. Commercial business has also grown. When Niccolo and I joined the board three to four years ago, our focus was primarily on labs and research institutions. Now we're witnessing demand for our machines, as customers express interest in acquiring the latest models. Investing in applications is crucial to our strategy. Similar to how the iPhone gained popularity with apps, we're aiming to develop a thriving ecosystem in the quantum space. Our philosophy is industry-neutral, and our systems can integrate with platforms like NVIDIA, Microsoft Cloud, and Google Cloud. We want to ensure our presence is widespread while also delivering high-value solutions ourselves. Customers are increasingly expressing readiness for our products, including those not yet available, although we won’t include that in our guidance. However, having a backlog with clear visibility is what we are focusing on.

Yes. Sorry to jump in on you, Inder, but there was mention in the transcript of a 256-qubit system by year-end. What should we keep in mind with the notable engineering milestones from here to bring that to market?

Yes. Look, I think you realize that, of course, and you know this, the 256 system and beyond, that entire roadmap for the next 5 years that we've talked about, is a semiconductor-based roadmap. It's the ability to use mature node manufacturing that exists today to build out and scale from 256 to 10,000 and beyond. So we are in the process already, and we said this when we announced the SkyWater transaction, we're already looking at them to be a supplier to us even prior to the acquisition announcement and other foundries also. These existing foundries enable us to, with some confidence, drive the development of the 256 into the 10,000 and beyond. As for the 256 itself, I'm happy to report that we've done the tape-outs of A, B, and C. And as you know, from semiconductors, those are the most important ones in the beginning. And then the feature-rich, feature driver fourth D tape-out, as it's called, is in progress. So not to give you an exact timeline that you'll then say you told me it's going to be March 31 or April 1 or whatever, we are very comfortable with the way the development of the 256 is going. It's following the roadmap that other semiconductor development follows. And then beyond that, it's into tiling, it's into scaling. And we also have the engineering team already beginning to think about the 10,000, not just the 256. Does that help?

That's very helpful.

The next question comes from V. K. Rakesh with Mizuho.

Pretty impressive guidance and growth for the year. I have a couple of questions. As you look at the fiscal '26 number, is there any way to consider the hardware and software split for the upcoming quarter?

We will provide the usual breakouts when we report, which aligns with what you described. However, I see it as more than just hardware and software. The hardware without the software is ineffective, and the same applies in reverse. The focus should be on solutions. We aim to be the only company capable of delivering a complete solution. This includes connecting one compute device to another, linking cities, bridging ground to space, and ensuring security across these connections. We can utilize Skyloom's OCT terminals for secure, high-speed data transport, among other capabilities. I recall Cisco, and I believe others have acted similarly in the past without needing permission. Since Niccolo became CEO exactly one year ago, tomorrow marks his anniversary, we've transitioned from a one-product company to a platform company. Our task now is to execute responsibly and meet our customers' demands. They are indicating their willingness to invest in our roadmap and solutions as we bring secure solutions together. This presents us with a unique opportunity to execute, making this the year for that alongside ongoing innovation. Expect more announcements and developments; our progress won't slow down.

Yes. Very impressive. And just one other question. And obviously, you're growing your team pretty nicely here. Any thoughts on when this national quantum initiative, the NQI funding starts to open up? I know you have some pretty solid engagements with the Golden Dome SHIELD, et cetera. But any thoughts on when that national NQI funding starts to open up for the space?

Thank you for the question. Three years ago, funding was likely our main concern. Now, with over $3 billion in cash available and the ability to raise more if needed, we can invest organically. While other companies may be seeking funding, we are focused on delivering customer value without needing additional financial support. I'll let Niccolo elaborate further, but there’s clearly an opportunity for the entire industry as more countries prioritize quantum initiatives. Virtually every government worldwide is now incorporating quantum discussions alongside AI. The relevance of quantum is increasing as it becomes more tangible, and we are making it a reality. We have the capital and financial resources to continue investing in the future. We're fortunate to have supportive investors who are partners in this journey. Our focus now is on executing this opportunity. Funding was important in the past, but right now, our priority is on the engineering aspect, creating solutions once that can be sold multiple times. We're entering the commercial deployment phase of quantum, with less concern about when funding will be available.

Yes. I mean, look, we, of course, value our government customers. We value them from all of our allies, and we're growing our IonQ federal team to capture that. But I think Inder said well in his prepared remarks as well as our press release today, 60% of our customers are commercial. That's the primary reason why we're not waiting with bated breath on government unlocks, if you will. That having been said, I do want to point out that we have a very bullish administration in the U.S. vis-a-vis growth in the budget of the Department of War. And within that, there's a considerable allocation to building the future of all things quantum sensing, networking, and computing in every warfighting domain. And so IonQ uniquely operates in all of the warfighting domains, and we're uniquely able to sell those complete solutions that we believe the nation and all friendly nations absolutely must need. So watch this space, but we are growing headcount aggressively because we are growing the business aggressively along all of these vectors.

The next question comes from Quinn Bolton with Needham.

This is Shadi Mitwalli on for Quinn. Congrats on the strong results. In the prepared remarks, you guys talked about making smaller and cheaper quantum systems. I believe the acquisition of SkyWater is going to help accelerate that. But just curious to hear the puts and takes of how much it cost to make a system today and how you expect that cost trajectory to evolve over the next few years.

We mentioned at our Analyst Day on September 12 that our full fault-tolerant machines, which will have hundreds of thousands to millions of physical qubits and thousands to tens of thousands of logical qubits, are projected to have a bill of materials cost below $30 million by 2025. While inflation is a factor each year, we expect this cost to be significantly under $30 million to maintain a strong gross margin over time. We are optimistic about our role in expanding the ecosystem in the quantum sector, both in the U.S. and among our allies. The SkyWater acquisition is crucial for us; we are not only supporting their existing customers but also investing in SkyWater. This investment, combined with our enhanced capital, will provide significant advantages to those customers, and we anticipate attracting additional customers to this acceleration platform. Our ability to manage costs while increasing computational power is remarkable. The electronic qubit controls we utilize for our ion traps allow us to add more qubits without significantly impacting the cost of goods sold. Although chip sizes and machine dimensions may slightly increase, these changes represent only a small percentage increase, not enough to reach double digits in most cases. As I stated earlier, we expect that the size and material costs will decrease over time, even as our machines expand from 256 qubits to as many as 2 million qubits by 2030. This cost reduction trend is well-established in the semiconductor industry, and it is crucial for our ecosystem to thrive in the commercial market, including with our federal customers. Historically, economic factors alone can dictate success, but we are offering the most advanced machines in the shortest time frame and at the most accessible prices. This combination puts us five years ahead technically and significantly cheaper by a factor of ten or even a hundred in some cases, which strengthens our confidence in becoming the preferred mass market platform as time goes on.

The next question comes from David Williams with Benchmark.

Let me also add my congratulations on the really solid results here. So I guess maybe firstly, thinking about your capacity and Inder, you talked earlier about the demand outstripping your ability to supply. If you kind of think about what your capacity is today, maybe on the Tempo solution, what would that look like if you could ship everything that you could build in maybe '26 from a unit perspective?

Yes, we are enhancing our capacity to meet customer demand. This involves not only manufacturing but also deploying engineers who prepare sites, install machines, and assist customers. We have invested significantly in these areas over the past six months. As we transition from Tempo in 2026 to the 256 in 2027, our chip roadmap allows us to utilize an existing semiconductor base that is already depreciated, cost-effective, and not capital-intensive. This can help us reduce costs over time, eliminating the need to build a new factory. For prior generations like Tempo, we produced them in our Seattle facility, and we currently have sufficient capacity to meet demand. While it's true that demand exceeds supply, which is a favorable challenge, we remain prepared to scale our deployment and service capabilities as needed. Additionally, with the closure of SkyWater and our established commercial relationship, we can leverage their trusted fabrication facilities to create computing solutions for national security and discerning customers alike. We are mindful of ensuring a reliable supply chain to avoid geopolitical disruptions affecting component availability and product trustworthiness. Therefore, while capacity manufacturing may not be an issue next year, we are actively investing this year and have already hired deployment engineers, which puts us in a strong position.

Yes. And I'll just add, obviously, that all of those secure trusted fab capabilities and manufacturing scale, we are providing to the entire U.S. industry and all of our allies. So we look forward to working with everyone because I think it's time to put the pedal to metal for the industry.

Great insights. I have one last question. As you consider the current capabilities of your manufacturing facilities and look beyond 2027, do you believe there are significant investments needed to achieve that roadmap? Or do you think the current abilities are sufficient, making the required investment less substantial than it could be?

Well, look, I think that I won't speak for SkyWater, they're an independent company, obviously, right? So from our lens, when we look at the capacity that they have in Texas, in Florida, and in Minnesota, it's more than what we need actually right now. So I don't see that other than sort of like maybe some tooling and things like that, I don't see where we need to necessarily build the fab capacity as much as ensure that it has the type of, I'll call it, sort of quantum-ready ability to be in a clean room environment, right? So they have clean rooms everywhere. The quantum is like one level higher than that clean room; that's the investment. So it's not like move out on many, many dollars. It's more like ensuring that we provide them what they need, of course. But they have the engineering talent. They have the people that are experienced. They have the ability to do advanced packaging, which is really important. It's not just fab, it's packaging. So we are looking forward to the deal closing, and we're looking forward to leveraging them, of course. And in the meanwhile, we have a commercial relationship, and we hope that we're able to continue providing for the needs of '26 and beyond.

Yes. So I think just to add on to that, there is plenty of capacity at SkyWater today for the whole U.S. quantum industry. As the U.S. and allied quantum grows, we are confident we will meet that demand at SkyWater. The tooling absolutely is bespoke per program and per customer, but it's typically actually part of the commercial relationship. Speaking from experience, that's usually part of the total conversation you'll have on a multiyear basis. And so that won't come out of IonQ's balance sheet, so much as be part of each customer's commercial agreement. I think the last thing I'll add is probably the biggest investment we're making in the next few years in SkyWater is we're obviously assuming some debt, which we're going to be paying off on transaction close. And I think that will be the largest chunk of it, believe it or not. The rest of it, I think, will be growing with the operations in a fairly modest way.

And their CapEx to revenue, as you probably saw, is like low single digits. They're not very capital intensive; neither are we. So I don't think that model changes much, candidly. It might be a surge here or there, but I don't think it's a big shift.

And due to time constraints, the last question will be Troy Jensen with Cantor.

Congrats on the great results. Maybe just a quick one for Niccolo. I get the partnership for applications and software. But what's your thoughts on IonQ controlling the controller specifically? And can you touch on your investment in Horizon?

So look, we like to think about our ecosystem in the following way. We are an open interoperable stack, but we're students of history, and we want to make sure that we capture value from the hardware to the compiler to the application layer. It's been well known since our IPO that we've been public on the Google, Amazon, and Microsoft clouds. And we want to interoperate with everyone because I think it's in the nation's interest and, of course, IonQ shareholder interest to have everyone learn on the IonQ systems and sensing and networking hardware and of course, flourish and build on top of that, right? So we like to work with software partners. We like to work with the so-called hyperscaler partners. We work, of course, with everyone from NVIDIA through to Ansys that does computational engineering; is a leader of that in classical and the same in the pharmaceutical space. And so we see this all really as an end, right? We want as much more ease as possible to be interoperable with everyone. And to that extent, we will partner consistently both across our stack and up and down our stack. But we're not handing the keys over to someone else, nor are we trying to be a vertical play where you have to use all of our stuff or none of it works with your stuff, which we think is a limiting approach to life. And there are companies that attempt that. But I think history shows that you want to be open with the right posture and be clear on what you need to maintain control of to make sure that not just your ecosystem works well, but also that it works well and that you continue to be able to accrete long-term value at a pace that grows faster than your cost, of course.

This concludes our question-and-answer session. I would like to turn the conference back over to Niccolo de Masi, Chairman and CEO, for closing remarks.

Thank you. In closing 2025, I am confident the year will be remembered as the year IonQ moved beyond the laboratory and into the bedrock of global infrastructure. We didn't just meet our goals, we redefined the ceiling for the entire industry, becoming the first public quantum company to cross the $100 million revenue threshold while tripling our revenue scale year-on-year. And we did this while demonstrating unprecedented technical excellence, demonstrating 99.99% 2 cubic gate fidelity and becoming the first company in history that can proudly say that all of our key technical milestones have been achieved on the path to full fault-tolerant quantum computers. We are no longer just building quantum computers; however, we are supplying the high-precision atomic clocks, secure quantum networks, and advanced quantum cybersecurity, hardware and software that will serve as the nervous system for the next era of computing, modeling, and sovereign security. And by acquiring SkyWater, we will effectively onshore the future of quantum manufacturing, transforming IonQ into the quantum industry's merchant supplier for the U.S. and our allies in this important geopolitical race. We enter 2026 with a fortified balance sheet and an unmatched intellectual engine of approximately 1,500 professionals, having continued growing strongly even beyond our reported end of year total. Our focus remains clear: to lead the geopolitical space race of quantum for our generation by delivering a unified all-domain quantum platform and to help customers solve the world's most complex problems. The era of quantum utility is not on the horizon, it is here, and IonQ is the one team, one platform primed and poised to win. Thank you for your continued trust in our journey, and we'll see you next time.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.