Earnings Call Transcript - IONQ Q4 2021

Operator, Operator

Greetings. Welcome to the IonQ Fourth Quarter 2021 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. Please note, this conference is being recorded. I would now to turn the conference over to your host, Jordan Shapiro, VP of Financial Planning & Analysis and Head of Investor Relations. Thank you. You may begin ahead.

Jordan Shapiro, VP of Financial Planning & Analysis and Head of Investor Relations

Good afternoon everyone and welcome to IonQ’s fourth quarter and full year 2021 earnings call. My name is Jordan Shapiro and I am the Vice President of Financial Planning & 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 fourth quarter and full year 2021 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. You are directed to our press release for reconciliation of such measures to GAAP. Now, before we begin, please note that some of our remarks on this call will be forward-looking. Therefore, please refer to the cautionary statement in today's press release for additional details about these remarks.

Peter Chapman, President and CEO

Thanks, Jordan, and thank you all for joining us today. I first want to acknowledge the deeply troubling crisis still unfolding in Ukraine. It's a time of great concern for all of us and it is simply devastating to see the impact it's having on the lives of so many people, including some of our IonQ staff members who have family in harm's way. Before I get started, I thought I would share a little history of IonQ. When I joined IonQ three years ago, the Board told me to ignore sales, ignore the competition, and ignore the press, just focus on building the world's best quantum computer and bring it to market as quickly as you can. In some sense, a Field of Dreams approach. If you build it, they will come. And that's just what we believe we have done. We believe we have built the world's best quantum computer, as shown in our latest generation IonQ ARIA machine. I tell you this story because it's important to understand where IonQ is in its commercialization efforts and the upside to come. At the beginning of 2021, we had no dedicated sales executives and were selling two 11 qubit machines. Now, having finished 2021, I am happy to report that even after tripling our original 2021 contract bookings forecast in September, from $5 million to $15 million, we beat that number again to end up at $16.7 million for the full year. This resulted in recognized revenue of $2.1 million for the 2022 fiscal year, which was 31% above the $1.6 million we forecasted on the Q3 call. This year, we are starting to stand up our production engineering and manufacturing departments. This group will be responsible for building all commercial quantum computers going forward, including for the first time selling systems outright to customers, which we anticipate could start shipping as early as 2023. In our outlook today, we have not included any upside related to scaling the sales of these machines. We believe that over the next two years, one or two system sales could push our combined TCV contract bookings over nine figures for the three-year period from 2021 to 2023. That said, the Quantum industry is nascent, making it harder to predict which quarter particular sales contracts will land. As a result, we expect our contract bookings in the near term to continue to be very lumpy. In 2022, we expect to more than double our sales staff, including our first sales people in Europe. We are now selling our recently announced Aria machines that are more than 1000 times more powerful than last year's model. Our forecast for fiscal 2022 expects our 2022 revenue to be over $10 million at the midpoint, which will be approximately 5x our 2021 revenue. We estimate full-year 2022 bookings at $22 million at the midpoint. This represents a $7 million or 47% increase over our original forecast, which we set out before going public, and a 32% increase from our outstanding 2021 results. Thomas Kramer, our Chief Financial Officer, will go over the rest of our financials in detail shortly. On the technology side, in February, we took a leap forward not just for IonQ, but for the quantum computing industry as a whole. We announced the performance results for our latest generation Aria machine. This system achieved a record 20 algorithmic qubits, with the independent industry benchmarks from the QEDC showing that Aria clearly outpaces every commercially available quantum compute solution today. We are confident that IonQ systems are the best in the world and that we are only furthering our lead. Last week, we were excited to announce that Microsoft customers can leverage the power of IonQ REO series quantum computer on Microsoft Azure. We expect this will unlock the creativity of Microsoft application developers worldwide. IonQ Aria is only one part of the story. As part of our plan to scale IonQ quantum computers beyond Aria, we announced in December that we plan to build new systems using barium qubits. Barium qubits have the potential to enable lower error rates and higher gate abilities, which in turn could lead to more accurate and powerful quantum computers. They can also be controlled by visible light lasers, as opposed to ultraviolet lasers we use in our Ytterbium systems. We believe visible light lasers could result in cheaper, more readily accessible components and a promise of faster gate speeds. Another crucial advantage of barium qubits is that they're easier to network together over long distances. Networking quantum systems together is key to making them more powerful and eventually to building a quantum Internet. In summary, while Aria is leading the pack with its Ytterbium qubits, we believe the addition of barium qubits to power our systems could further our lead in system performance. We believe our investment in barium qubits is already paying off. Earlier this month, we published data from the forthcoming barium-based system showing a 13-fold improvement in state preparation and measurement error, lovingly known as FAM error in the industry, one of the key limitations to scaling quantum computers. Expect more exciting news to come from our barium systems later this year. Given the state of the global supply chain, a natural follow-up question might be where do we get enough barium qubits to serve our needs? In February, we announced the results of our public-private partnership with the U.S. Department of Energy's Pacific Northwest National Laboratory to secure a constant supply of barium atoms for our computers. We could not be more thrilled to be working with the esteemed scientists and engineers over at PNNL to make barium-based quantum computers a reality. Next, let's talk about our research and development progress since our last conference call. Last month, IonQ announced that together with researchers from Duke University, we outlined a novel method of running a new set of N-qubit quantum gates that operate on many qubits in a single step, including the well-known Toffoli gate. We expect N-qubit gates to lead to substantial breakthroughs in quantum algebra, making them more efficient and powerful with fewer operations. What's more, this new family of gates can only be run on the proprietary architecture, exclusive to our trapped Ion computers. Our platform has the most algorithmic qubits in the industry, and now we're enabling those qubits to do even more. We expect these gates to be essential to work across applications such as quantum chemistry, optimization, and machine learning. Last, let me discuss our progress on real-world quantum applications with customers. In January, we were thrilled to announce a new partnership with Hyundai to develop quantum algorithms to simulate battery chemistry for electric vehicles. This work has the potential to greatly enhance the charging, discharging, durability, capacity, and safety of batteries. With electric vehicle adoption increasing all over the world, battery development is a critical component in the transition to a more sustainable mobility. The Hyundai partnership follows a series of projects on quantum chemistry at IonQ. We have previously announced the work with Dow Chemical to demonstrate an end-to-end pipeline for simulating molecules, such as those present in fertilizer creation. Our work with Dow was an extension of previous IonQ efforts to simulate water molecules with our quantum computers. The Hyundai project shows the natural progression of tackling increasingly complex molecules with these projects. We believe the experience we gained from manipulating molecules and the new Hyundai partnership will be broadly applicable in related fields such as drug discovery and materials development. In summary, we have confidence in our 2022 contract bookings forecast of $22 million. As we are getting ready to sell full systems over the next couple of years, we believe there's potential for significant upside for the next 24-month period. Our team is filling out nicely with top talent joining both at the executive and individual contributor level. We're focusing special attention on scaling our salesforce. We continue to lead the industry with our technical milestones and are already seeing our endeavor into barium-based systems paying off. We are the leader in the cloud quantum computing market as the only company available on all three major platforms and compatible with every major quantum developer language. And although we did not discuss it in detail today, our patent portfolio continues to grow at pace, which we believe will continue to be an asset for decades to come. Between our financial results, technical progress, and significant cash reserves, we believe we are well-prepared to maintain our leadership position and drive the adoption of our quantum computing solutions. For more detailed information about Aria, algorithmic qubits, our barium system, spam error, and the Microsoft announcement, I point you to our website. And with that, I'll turn it over to Thomas for an update on our financials.

Thomas Kramer, Chief Financial Officer

Thank you, Peter. Good afternoon everyone and thank you for joining us. I would like to start off by going over our results for the quarter. As Peter mentioned, we outperformed our outlook this quarter, with $1.6 million in revenue and $1.5 million in contract bookings for the quarter. We ended the full year with $2.1 million in revenue, which is $500,000 or 31% higher than what we estimated on the third quarter call. Our TCV contract bookings ended up at $16.7 million for the year, which exceeded our most recent midpoint estimate of $15.8 million given on the Q3 call, which was already up 3x from our beginning of the year forecast. Given that we are still at the beginning of our commercialization phase and that in addition to transactional-based cloud revenue, we sell large contracts our customers pay for reserved compute access, we should expect bookings to continue to be lumpy for quite some time. We have been approached by several entities about potential system sales outright, which would further add to this trend if and when the sales should happen. Moving down the income statement, our total operating costs and expenses for the fourth quarter were $12.5 million, up 153% from the $4.9 million in the comparable prior period. For the full year 2021, this totaled $40.8 million, up 159% from $15.7 million in 2020. To break this down further, our research and development costs for the fourth quarter were $4.9 million, up 96% from $2.5 million in the year prior period. For the full year, R&D totaled $20.2 million, up 99% from the $10.2 million in 2020. We expect these costs to continue to increase sequentially as we invest in building our next generation of computers. Our sales and marketing costs in the fourth quarter were $849,000, up 281% from $223,000 in the year prior period. For the full year, sales and marketing costs were $3.2 million, up 565% from the $486,000 in 2020. This increase was due to further investment in our commercialization efforts and growing headcount. Our general and administrative costs in the fourth quarter were $5.4 million, up 217% from $1.7 million in the year prior period. For the full year, G&A costs were $13.7 million, up 287% from the $3.5 million in 2020. This increase is largely attributable to a growing headcount and overhead associated with scaling as well as incremental costs and fees associated with being a public company. We expect G&A costs as a whole to continue to increase sequentially as we hire more world-class talent to scale the business accordingly. In our full year results, you may also note that $4.3 million non-operating costs in our P&L, which is the portion of the transaction costs allocated to the liability classified warrants from the original dMY III IPO. This is a one-time non-cash expense and will not be a recurring charge. We saw a net loss of $74.1 million in the fourth quarter compared to $4.9 million in the prior year period. For the full year, net loss was $106.2 million compared to a loss of $15.4 million in 2020. Included in the net losses for the fourth quarter and the year were non-cash charges related to the fair value of warrant liabilities of $63.3 million. All of this resulted in an adjusted EBITDA loss for the fourth quarter of $7.9 million compared to a $4 million loss in the prior period. For the full year, our adjusted EBITDA loss was $28.3 million compared to a $12.8 million loss in 2020. Turning now to our balance sheet, cash, cash equivalents, and investments as of December 31, 2021, were $603 million. Going forward, we expect our cash on hand to be sufficient to fund operations for the foreseeable future without the need to raise additional capital. Recall that the transaction in dMY III closed on September 30th last year and provided us with net proceeds of $573 million. We continue to believe we are well-capitalized and well-positioned to benefit from increased interest in quantum computing in both the public and private sectors. I also want to mention a new development on the fiscal infrastructure side. We will be opening a new facility in Seattle, which we believe would be important for both talent acquisition and scaling our production engineering function. The Pacific Northwest has long been a hotbed of technology development and quantum computing has been no exception. As we build new and lasting ties in the area with PNNL, the Northwest Quantum Network, and other partners in the greater Seattle area, we believe this will greatly benefit the company. We are looking forward to spending more time building relationships and quantum computers in and around the Puget Sound. Now, turning to our first quarter and full year 2022 outlook. This year we anticipate full-year 2022 bookings of between $20 million and $24 million, with between $3 million and $4 million for the first quarter. As a result of bookings and previous periods and new 2022 activity, we expect revenue for the full year to be between $10.2 million and $10.7 million, with between $1.8 million and $2 million for the first quarter. We also anticipate an adjusted EBITDA loss of $55 million for the full year 2022 at the midpoint of our revenue guidance. Note that since we sell large contracts with term stretching several years and with implementation typically lagging contract signing by a few months, we expect bookings to significantly exceed revenue recognition. Until our business begins to scale in a meaningful way, it is possible that the timing of large deals may have an outsized impact on our revenue and bookings quarter-to-quarter. This means that we may not always see linear bookings growth, whereas recognized revenue will tend to follow a more traditional pattern, barring any system sales. Investors and analysts should also be aware that even if we see a spike in bookings in a period, the impact on recognized revenue may not be significant for several quarters. Our fourth quarter and full year results were encouraging, and we are seeing strong momentum both in external demand and internal technical advances. The world has been through a lot in the past few years, when we have all learned the meaning of terms like pandemic and supply chain. Inflation concerns and the unrest in Europe are unlikely to improve worldwide stability. 2022 brings with it its own set of challenges, but it's too early to identify the impact on the business environment. We feel comfortable saying we have no direct supply chain exposure to Russia. So, we could still see their adverse effects from the general slowdown around the globe. That said, it is not clear that the current turmoil will produce headwinds that will outpace the demand from both corporations and governments that they seek solutions to previously unsolvable questions. In the absence of further unforeseen events, we believe we are well-positioned to continue executing our plan and look forward to updating the entire investment community on our progress. Finally, it is my pleasure to welcome the newest member of our IonQ team, Laurie Babinski. Laurie joins us as our General Counsel with deep legal experience from Intuit Credit Karma. Laurie brings a wealth of IP experience in the technology sector and will be a wonderful addition to the team. We look forward to working with Laurie and welcome her contributions to IonQ and the quantum computing space as a whole.

Ruben Roy, Analyst at WestPark Capital

Thank you. Thanks very much for the questions. Hi, Peter. Congrats on the continued progress and a great finish to fiscal 2021. I guess the first question I had is just around the commentary around system sales and being approached by entities about system sales. I think in the past, when we've spoken about revenue recognition over the next several years, system sales were a little bit further down the list in terms of how you're looking at your overall hardware; you have hardware in the cloud, you've got engineering services, etc. Has anything changed with your view on how hardware system sales will progress? Are they potentially going to progress more quickly because of the barium qubits that you guys are working on or anything changed in the way you're thinking about revenue recognition over the next three to five years? Thank you.

Peter Chapman, President and CEO

We understand that to achieve scale, multiple quantum computers must be manufactured, and it's important for these computers to be standardized and easily manufacturable. This requires proper support for them as well. I can say that we're ahead of schedule with our technology plan and are now beginning to address these challenges. We've already informed the market that we're focusing on photonic interconnects to link these systems, which is essential for developing larger quantum computers. What's new is the significant interest we've received from several customers who are looking to acquire a complete system, which is a shift from what we've previously communicated.

Ruben Roy, Analyst at WestPark Capital

Great. Congrats on that.

Peter Chapman, President and CEO

And the other.

Ruben Roy, Analyst at WestPark Capital

I'm sorry, go ahead.

Peter Chapman, President and CEO

And I'll just add a little bit, just given the impact potentially on these, it obviously would drive kind of maybe a single sale would make a quarter be pretty lumpy and we should expect a certain amount of lumpiness going forward as we see these.

Ruben Roy, Analyst at WestPark Capital

As a quick follow-up, my question for Thomas is about the improvement in bookings. Is that fairly broad-based, or is it more concentrated from government or some commercial partners? Any additional detail around the bookings progress would be helpful. Thanks.

Thomas Kramer, Chief Financial Officer

Absolutely. You're correct to inquire about revenue recognition, as it varies between system sales and System-as-a-Service sales. We thought it would be wise to bring this up now so that there are no surprises later on. The increase in our bookings reflects ongoing interest from corporate, academic, and government institutions. For the moment, we won't provide details on individual sales, but we are optimistic about the diverse interest in quantum and the number of job submissions we receive daily from unfamiliar sources through AWS, Azure, and Google apps.

Ruben Roy, Analyst at WestPark Capital

Okay, thank you very much, guys. Congrats again.

Peter Chapman, President and CEO

Thank you, Ruben.

Thomas Kramer, Chief Financial Officer

Thank you.

Scott Fessler, Analyst at Morgan Stanley

Hi, guys, congratulations on the great quarter. Following up on the system sales question, what impact should we expect that has on the operating model, particularly around margins?

Peter Chapman, President and CEO

We are not making any immediate changes to the operating model. However, once we implement the system sale, you can expect an increase in both bookings revenue and margins. This is because we will capture all the revenue benefits currently without extending the expenses over multiple periods. Therefore, there will be an increase in margins, but it won't deviate from the model since we will still account for the same costs, just recognized in one period instead of several.

Scott Fessler, Analyst at Morgan Stanley

Got it. Got it. And then if I could get a follow-up in as well, could you just share some early customer feedback you had from the Aria launch?

Peter Chapman, President and CEO

Generally, the customer feedback is really very, very positive. People are impressed with what this new hardware can do and are excited to see kind of being able to take their applications to the next level. So far, the customer feedback has been tremendous.

Scott Fessler, Analyst at Morgan Stanley

Excellent. Thanks, guys.

David Williams, Analyst at Benchmark Company

Hey, good afternoon. Thanks for letting me ask the question. Clearly, making some very nice headway here, some good progress. But I wanted to ask, as you kind of think about the landscape and understanding of the technology and applications, how do you envision the competitive dynamics developing over time? It seems the size of the opportunity would provide room for multiple technologies to coexist without restrictions to growth? And just kind of curious how you think about the competitive landscape and maybe your business just kind of given the strength of your systems?

Peter Chapman, President and CEO

Some competitors may believe they can dominate specific niches. The qubit technology dictates that the chip design occurs before manufacturing, requiring a business decision at that stage. This early design can favor particular applications, leading to segmentation, as no single manufacturer can create chips for every application. However, at IonQ, we design our chip at runtime, allowing us to tailor it to meet the demands of any application effectively. This makes our devices unique, as they can adapt on-the-fly, enhancing our competitiveness compared to others. Eventually, we will have so many qubits that we can take a more generalized approach to quantum, but that is not imminent. IonQ benefits from not needing to commit to a fixed design, enabling us to integrate various chip functionalities simultaneously.

David Williams, Analyst at Benchmark Company

Thank you for the insight. One area of interest involves understanding how investors and customers perceive the benchmarking of our technology in comparison to others. The algorithmic qubit is a key metric in this context. Could you explain its significance and how it differs from a standard qubit, as well as provide some comparisons to other technologies?

Peter Chapman, President and CEO

The benchmarks were chosen by the QEDC, an industry group made up of various quantum companies. It’s important to note that this selection was not solely made by IonQ, although we contributed alongside other companies. These benchmarks reflect the types of programs customers are likely to run, making them relevant representations of customer needs. In comparison, other benchmarks may focus too narrowly on specific components rather than integrating them into a comprehensive view. This approach is similar to classical computing, where widely accepted benchmarks are used in high-performance computing or laptops and are geared towards applications. We believe an independent body, such as the QEDC or IEEE, should determine the benchmarks. A positive change would involve having independent third-party organizations conduct the benchmarking, rather than relying on individual companies, and we support that because we feel we would continue to excel in that environment.

David Williams, Analyst at Benchmark Company

Very helpful. Thanks so much.

Richard Shannon, Analyst at Craig-Hallum

Well, hi, guys, thanks for taking my questions. Maybe one for Thomas, more of a tactical question on your guidance here both on revenues and bookings. I guess, probably more so pointed to revenues, but maybe you want to comment on the bookings part as well. The ranges here you have for this year are fairly tight, which would imply a sense of precision here. And so wanted to get your sense of why so precise, do you have a lot of visibility into these numbers? And how would you characterize the upside potential as we go through the year?

Thomas Kramer, Chief Financial Officer

Thank you for your question. It is indeed challenging to make forecasts, especially regarding the future. However, predicting revenue is relatively straightforward due to the consistent way our bookings translate into recognized revenue based on the contracts we have sold so far. There is typically about a three-month implementation delay from the time of sale until revenue starts to be generated. Most sales tend to occur towards the end of each quarter, allowing us to develop our revenue recognition schedule accordingly. For bookings, we understand what is in our pipeline and how we assess that pipeline. While we anticipate that we will exceed expectations, there is always a possibility of underperformance. We believe it is unlikely for us to fall below a 20% increase, so we see that as a minimum target. There is also potential for unexpected positive outcomes, which is why we mentioned this possibility; although we don’t expect such occurrences to happen rapidly, they are still a possibility. Our intent in bringing this up is to ensure we are prepared for any surprises that may come our way.

Richard Shannon, Analyst at Craig-Hallum

Okay, that's very helpful. Thomas, thanks for that. Maybe a multi-party here on kind of the sales opportunity here and structure and workforce you're supporting. I think you talked about doubling the salesforce this year. I guess the first question to that is, how similar is this to kind of the assumptions built into your models in the SPAC process? Is this above or below that in terms of pace? And then I think you said specifically that salesforce would be built in part to kind of ramp out Europe. Maybe if you want to characterize the opportunity you see, outside of the U.S., Europe versus Asia or others, just to give us a sense of where you're focusing and why.

Peter Chapman, President and CEO

In terms of headcount, it aligns with what we initially projected. To be candid, last year we nearly had no sales team. Therefore, on the sales front, we are just at the beginning of our efforts. We're making solid progress this year regarding the number of personnel. Additionally, we are noticing considerable interest from customers overseas in regions like Europe, Japan, South Korea, and Australia.

Richard Shannon, Analyst at Craig-Hallum

Okay, great for that. And one last question for me; I'll jump out of line. Peter, wanted to get your sense of the overall environment here. You've seen the first one come into the public market, seen a couple of spinouts, a couple of companies, one not quite in one all the way through the SPAC process here. So, a lot more interest in activity and funding in this space. You've got a fairly substantial cash position here that you seem to be able to fund all of your operations organically here, how do you see the market and the need for M&A either in terms of technical teams or even kind of, organizations either hardware or software that might be of interest in kind of a plug into what IonQ has already done today?

Peter Chapman, President and CEO

We are actively looking for specific opportunities going forward. While there is increased investment in many quantum companies, I anticipate considerable consolidation in the coming years. Some companies may find their technological approaches too outdated and decide to exit the market. Additionally, I believe we will see new entrants into the quantum space, as many tech companies are beginning to recognize the need to engage with quantum technology. There are several significant players whose quantum strategies remain unknown, presenting new partnership opportunities in the future. It is certainly an intriguing time in the quantum field.

Richard Shannon, Analyst at Craig-Hallum

No doubt about that, Peter. Thanks. I think that's all the questions for me and I appreciate it, guys. Thanks.

Operator, Operator

Thank you. At this time, we will be conducting a question-and-answer session. Our first question comes from the line of Quinn Bolton with Needham. Please proceed with your question.

Quinn Bolton, Analyst at Needham

Good afternoon. Thanks for letting me ask a question. Wanted to start just on the outright sale of the quantum computers. Maybe if you could, could you sort of talk to us about sort of your thought process? How do you go about pricing these systems? Is it based on gate fidelity as a baseline? And a follow-up question is, what's your manufacturing capacity of the number of systems per year? To the extent you start to get these orders for full-blown quantum systems?

Peter Chapman, President and CEO

It's a great question. The first thing to note is that you cannot apply the same pricing model to classical and quantum systems due to performance differences. The new machines we have are significantly more powerful than last year's models, and they can't be proportionately more expensive. Looking ahead, the disparity will only increase, with future models potentially being much more powerful. Therefore, a more aggressive pricing strategy is necessary. In the classical computing world, we generally see performance doubling every year to 18 months, in line with Moore's law, while maintaining the same cost for laptops. This leads to the understanding that the price per qubit should decrease with each generation. While we are focused on improving quantum computing technology, we are equally committed to reducing manufacturing costs over time. This often means making components smaller, which usually translates to lower costs. This year, we've established a manufacturing group dedicated to addressing these challenges, though we do not expect to deliver the first computers from this line until early 2023.

Quinn Bolton, Analyst at Needham

Got it. Understood. Yes, thank you. Thank you, Peter. I have a second question. You mentioned several benefits of the barium-based ion trap technology. Is there anything you believe is still a significant obstacle that you haven't been able to address with those systems? Or do you think you have overcome all the challenges, and now it’s just a matter of getting the barium-based systems into production?

Peter Chapman, President and CEO

As we've mentioned before, everything we are working on has been tested in a lab previously. Therefore, we do not require any breakthroughs in manufacturing, material science, or physics. We are primarily an engineering organization focused on transforming what the two co-founders developed in universities or laboratories into market-ready products. In short, I do not see any obstacles in our path. There is no special solution we need to discover to advance towards a significantly larger quantum computer.

Quinn Bolton, Analyst at Needham

Thank you. And then just quickly for Thomas, you've given an EBITDA forecast of a $55 million loss in 2022; can you give us any sense on what the CapEx may be? Or what a good estimate for cash burn over the year would be?

Thomas Kramer, Chief Financial Officer

Yes, just a moment while I retrieve that information. As we are involved in hardware manufacturing, there are capital expenditures that may sometimes exceed our operating costs. However, we anticipate that this will stabilize in about four years. I expect our capital expenditures for this year to be around $23 million, give or take.

Quinn Bolton, Analyst at Needham

Okay. Perfect. Thank you very much.

Peter Chapman, President and CEO

Thank you.

Operator, Operator

Ladies and gentlemen, we have reached the end of the question-and-answer session. I will now turn the call over to management for closing remarks.

Peter Chapman, President and CEO

Thank you all for joining today. I want to express my gratitude to all the IonQ staff members who have worked long hours to make these results possible. We are extremely excited about last year's results and the continued growth we anticipate this year. Last year was an exciting year, and we expect this year to maintain that momentum. Thank you once again for being here.

Operator, Operator

This concludes today's conference and you may disconnect your lines at this time. Thank you for your participation and have a wonderful day.