Pasqal Holding S.A. Ordinary Share Q2 FY2026 earnings call

• Strategic Positioning: Pascal operates the world's second-largest fleet of high-complexity quantum computers after IBM, with seven systems deployed across three continents and three additional systems in production. The company emphasizes its neutral atom architecture as commercially relevant infrastructure rather than lab equipment.
• Commercial Strategy: Focus is on "problems worth solving" in energy, financial services, and high-value materials. The strategy prioritizes deepening relationships with strategic accounts over acquiring new logos. Key milestones include commissioning the QPU for Aramco (focusing on reservoir simulation and optimization) and announcing a joint venture MOU with 11 Ventures for regional expansion.
• Technology & R&D: Demonstrated quantum advantage in material simulation using TMGO (a rare earth magnet), achieving results in hours that took weeks on classical GPUs. Advanced fault-tolerant roadmap by demonstrating logical qubit building blocks. Integrated Photonic Integrated Circuits (PICs) to trap rubidium atoms, reducing optical footprint by up to 50x and removing scalability barriers.
• Agentic AI Integration: Published work in Nature showing agentic GenAI systems can convert plain English descriptions into running quantum simulations, lowering the barrier to entry for enterprises and accelerating research velocity.
• Backlog & Momentum: Booked and awarded business stood at €70.4 million as of June 30, 2026. Management views this as evidence of commercial traction and customer confidence, noting that value compounds through reusable expertise within strategic accounts.

Total revenue for the first half of 2026 was €4.9 million, representing a 14% increase year-over-year from €4.3 million in H1 2025. Revenue contribution by segment is as follows: QPU-related services generated €3.9 million (approximately 80% of total revenue), up 34% year-over-year, driven largely by an €0.8 million upgrade under the ULICH contract. Cryostat revenues were €0.9 million (approximately 18% of total revenue), down from €1.3 million in the prior year due to fewer deliveries and timing of recognition. Other minor revenue streams contributed approximately 2%.

• No Specific Financial Guidance Provided: Management did not provide specific forward-looking revenue or loss guidance for the remainder of 2026 or 2027.
• Capital Allocation: Emphasized disciplined investment of the substantial capital raised ($250 million via convertible bonds + $27.7 million SPAC trust + existing cash). Priorities include core R&D, commercial expansion, manufacturing capacity, and software/middleware.
• Roadmap Targets: Confirmed the target to achieve fault-tolerant quantum computing in the digital domain by 2029 remains unchanged.
• Production Status: Clarified that current production of three systems is not fully linked to the backlog, as some are for internal development or cloud availability rather than immediate sale, indicating no immediate manufacturing bottlenecks.

• Financial Losses: Reported operating loss of €59.2 million (€21.6 million excluding one-off share-based compensation and transaction fees). Net loss was €53.2 million. While cash position is strong post-financing, the company remains unprofitable.
• Revenue Recognition Timing: Revenues fluctuate based on milestone completion and delivery timing. For example, Aramco service revenues will be recognized in future periods despite QPU commissioning in H1.
• Market Adoption Uncertainty: Success depends on proving quantum advantage in commercially viable problems. If customers do not perceive sufficient economic value compared to classical approaches, adoption may lag.
• Technological Execution Risk: Progress toward fault-tolerant quantum computing by 2029 involves significant technical hurdles, including error correction and scaling logical qubits, which remain experimental in many architectures.

Q: Analyst asked how the TMGO rare earth magnet simulation result relates to the USA Rare Earth partnership and if the approach applies to other materials like battery cathodes.

A: CEO explained that while magnetic materials map cleanly to Rydberg arrays, the partnership leverages additional capabilities like graph machine learning to improve separation efficiency. He noted that different bonding structures allow flexibility, enabling the application of these simulation techniques to broader material science challenges beyond just magnets.

Q: Analyst asked about the 'multiplier effect' of expanding use cases within strategic accounts like Aramco and the time frame from installation to revenue qualification.

A: CEO indicated that use cases can expand more than 6x per customer, moving from one initial problem to over a dozen consequential, industry-general applications. CFO clarified that hardware sales recognize revenue upon transfer of ownership/commissioning, while cloud-based revenue generation takes longer as it depends on launching use cases and driving usage volume, expected to accelerate over the next 12 months.

Q: Analyst asked how many of the seven deployed systems are accessible externally via the cloud and the potential revenue from installed capacity.

A: CEO stated that five of the seven systems are currently accessible externally with high availability. He emphasized that cloud utilization is primarily enterprise-driven, meaning revenue growth is tied to deepening enterprise engagement and increasing consumption of cloud hours, suggesting substantial latent revenue potential from the existing fleet.

Q: Analyst asked about Pascal's differentiation against competitors in the neutral atom space and the role of Agentic AI.

A: CEO highlighted three differentiators: industrialized, autonomous machines vs. one-offs; a smooth spectrum from analog to fault-tolerant computing on the same hardware; and a focused commercial strategy. Regarding AI, he explained that agentic systems lower the barrier to entry by allowing non-experts to run complex workloads via natural language, enabling enterprises without internal quantum teams to utilize the systems effectively.

Q: Analyst asked about the best way to increase computational capabilities (logical vs. physical qubits) and the benefit of Photonic Integrated Chips (PICs).

A: CEO explained that increasing physical qubits is the first step, but neutral atoms offer unique advantages in clustering and error correction efficiency due to atom mobility and detectable errors, leading to a favorable logical-to-physical ratio. Regarding PICs, he confirmed they shrink the optical footprint, allowing control of more atoms in a fixed space, which is critical for scaling beyond tens of thousands of physical qubits per processor.