IonQ, Inc. (IONQ) Earnings

Management highlights

### Strategic Acquisitions & Vertical Integration - Closed the $1.8 billion acquisition of Skywater, creating the only vertically integrated full-stack quantum platform company with end-to-end design, fabrication, packaging, and deployment of quantum systems in trusted U.S. facilities - Closed the acquisition of Nexus Photonics, a UC Santa Barbara spinoff, adding foundational chip-scale laser, modulator, and optical subsystem technologies for miniaturized mass-produced quantum systems, with plans to launch a dedicated quantum photonics foundry offering at Skywater - Previously acquired Oxford Ionics in September 2025, bringing world-leading proprietary electronic qubit control technology to scale qubit counts on standard silicon ### Technical & Product Milestones - Received the first fully featured, fully integrated semiconductor-based quantum processing units (QPUs) built with electronic qubit control from Skywater, now undergoing testing; plans to commission 256-qubit systems in 2027, with 10,000-qubit chip development already in progress - Validated key elements of the industry's first end-to-end manufacturable fault-tolerant quantum computer blueprint (the 'walking cat architecture') on hardware, achieving break-even quantum error correction using QLDPC codes on a test system - Launched a new quantum key distribution (QKD) product that supports multiple data types over existing municipal fiber networks, making enterprise-grade quantum security more practical, deployable, and lower cost - Completed key design milestones for the Halo Europa contract with the U.S. Space Development Agency, progressing toward delivering satellites for a multimodal quantum-enabled constellation - Opened the Tennessee Quantum Communications Research Center focused on quantum memory development for quantum networking and distributed quantum computing ### Commercial Progress - Began shipments of fifth-generation quantum computing subsystems to KISTI (Korea Institute of Science and Technology Information), with final assembly of a fifth-generation machine complete at Quantum Basel (Switzerland), marking the world's first commercial deployment of two consecutive generations of quantum computers at the same site - Remaining Performance Obligations (RPO) reached $485 million at the end of Q2 2026, up from $470 million in Q1 2026 and $122 million one year prior, even after drawing down RPO to recognize revenue in the quarter - 84 Skyloom optical communication terminals are now deployed on orbit, double the number from one year prior - Established new MOUs with Andoril and Sandia National Labs, aligned with recent U.S. quantum-focused executive orders, reflecting industry and government recognition of INQ's full-stack platform capabilities

Guidance

- INQ raised its full-year 2026 standalone revenue guidance to a range of $280 million to $290 million, up from prior guidance - Reiterated the full-year expectation of 100% YoY organic revenue growth, as guided at the start of 2026 - Combined company guidance (including Skywater) will not be provided until operational integration is complete, as intercompany revenue elimination, purchase accounting, and other post-merger adjustments are still being finalized; management estimates $120 million in 2026 intercompany spending between INQ and Skywater that will be eliminated in consolidated reporting - 256-qubit semiconductor-based systems remain on track to begin customer commissioning in the first half of 2027 - Management expects semiconductor-based quantum computers to become the main revenue driver for INQ starting in 2027, as the company shifts from laser-based to electronic-based qubit control

Segment performance

INQ reported total GAAP revenue of $80.1 million in Q2 2026, representing 287% year-on-year (YoY) growth, beating internal expectations by 20%. Organic revenue grew 132% YoY, driven primarily by fifth-generation quantum computing system deployments. Geographic segment breakdown: 50% of revenue came from international customers across over 50 countries, while 50% came from the U.S. Customer segment breakdown: 60% of revenue came from commercial (non-U.S. government) customers, with 40% from government. Multi-product sales (customers purchasing more than one product) grew 40% YoY, comprising 25% of total Q2 2026 revenue. Quantum computing is the principal revenue driver for full-year 2026, with space-based sensing/optical communication terminals showing strong progress: 84 terminals are now deployed on orbit, double the count one year prior.

Risks & headwinds

- Technical execution risk remains for scaling qubit counts from 256 to 10,000 and eventually millions of qubits, even with recent prototype milestones - Commercial conversion risk: early-stage partnerships and MOUs have not yet been converted to contracted revenue, and no revenue from these opportunities is included in current guidance or RPO - Regulatory and accounting uncertainty remains around post-merger consolidation of INQ and Skywater, which could impact reported financial results - The timeline for widespread enterprise and government adoption of quantum technologies (including quantum security and quantum computing) depends on broader market awareness and regulatory action, which could move slower than expected - Geopolitical risk surrounding quantum development creates uncertainty around demand timelines and competitive positioning - As with any emerging technology, actual commercial results may differ materially from management's forward-looking projections

Analyst Q&A

• Q: What is the strategy for Skywater's foundry business post-acquisition – will it only support INQ's roadmap, or also serve the broader ecosystem, and how does it compete against new quantum manufacturing entrants?

  A: Management reaffirmed INQ's long-stated commitment to operating as a leading merchant supplier to the entire quantum ecosystem. Skywater already has a track record of providing secure foundry services with strong IP protection, and will continue to serve all quantum modalities (superconducting, photonic, ions, atoms) in addition to supporting INQ's own vertically integrated roadmap. It is currently the only operational quantum foundry in the U.S. operating at a 200mm price point, giving it an early competitive advantage.

• Q: Post the recent U.S. quantum-focused executive orders, are you seeing increased engagement from government or enterprise customers, or both?

  A: Management reported broad-based increased urgency across both groups. There is now widespread recognition that Q-Day (when quantum computers can break widely used public-key encryption) will occur in the 2020s, not the 2030s. Government agencies are accelerating activity, while data-heavy industries (especially financial services) are also increasingly seeking quantum security protections in addition to quantum computing capabilities. Demand is particularly strong for defense-in-depth security that combines post-quantum cryptography (PQC) with hardware-based QKD.

• Q: With the accelerated technical roadmap to 256 and 10,000 qubit systems, are you seeing increased customer interest, and what is the customer value proposition?

  A: Management says customers are increasingly confident INQ will be the first to deliver fault-tolerant quantum computing, as the company has a proven track record of shipping successive generations of systems on schedule. Customers are already placing orders for current-generation systems to reserve priority access to next-generation 256 and 10,000 qubit systems. INQ has invested $3 billion in total through the Oxford Ionics and Skywater acquisitions to accelerate the roadmap, giving it a substantial lead over competitors.

• Q: Is there increased market demand for QKD given growing concerns that PQC is not provably secure against quantum hacking?

  A: Management confirms they are seeing a significant uptick in inbound interest, consistent with the question's premise. PQC is an important first layer of defense, but there is growing recognition that QKD provides physical-layer security that cannot be cracked without violating laws of physics, offering stronger long-term protection. INQ is the only provider offering a full defense-in-depth quantum security stack that includes both PQC and QKD, and now offers network vulnerability scanning for quantum threats to help customers prioritize protections.