Nearly all of IonQ’s predictions about the future of the quantum industry can be found in a building that is being built in Boulder, Colorado. Located in a city that has quietly developed into one of the nation’s densest clusters of quantum talent, this $100 million research facility spans 22,000 square feet and is devoted to testing the next generation of machines. Unless you think the science is no longer the difficult part, you don’t spend that much money on a lab. That’s what IonQ seems to think.
The company’s numbers are truly peculiar, which is both a compliment and a caution. Revenue for the first quarter was $64.67 million, which exceeded the company’s own forecast by about 30% and increased by more than 755% from the same period last year. It has exceeded its guidance for the fourth consecutive quarter. Nevertheless, the EBITDA deficit increased, the adjusted loss expanded, and the stock continues to trade at a sales multiple above sixty. It’s difficult to ignore the tension as you watch this play out. The market hasn’t determined which fact is more important, and the company is simultaneously growing and losing money.
Revenue wasn’t the only thing that altered the narrative this spring. Manufacturing was the activity. At a JPMorgan conference, CFO Inder Singh stated that IonQ’s laser-controlled systems reached a limit at 100 qubits because they were too large, too costly, and required too much upkeep. Oxford Ionics provided the solution by replacing lasers with electronic control based on standard chip manufacturing. According to Singh’s framing, the strange, almost paradoxical outcome is that the machine becomes simpler as it gains power. Perhaps less expensive. Most state-of-the-art hardware does not behave that way.
The proposed $1.8 billion purchase of SkyWater Technology, the biggest semiconductor foundry with a sole American base, is the most audacious move. Niccolo de Masi, the company’s CEO, called the stock undervalued and swaggeringly likened it to an early Tesla or Nvidia. It remains to be seen if that holds up. However, the reasoning behind the deal is sound: IonQ doesn’t have to beg a vendor with conflicting priorities because it owns the factory, and national security customers want domestic chips. It was approved by shareholders. It hasn’t been closed by regulators yet.
And there’s the amusing May episode. IonQ was not included in Washington’s approximately $2 billion commitment to nine quantum companies. D-Wave and Rigetti were rivals. The stock would be stung by the snub. Rather, it rose on the enthusiasm of the entire industry, as though investors had quietly concluded that the company was too large to require the handout. IonQ seems to have advanced into a new category where execution is more important than survival.
During the quarter, the most well-known early backer, Amazon, sold all of its shares. In contrast, institutions increased their collective holding above 41%. Sitting next to each other are two readings of the same company. The believers’ case was strengthened by a $39 million contract with the Space Development Agency and a 256-qubit system sold to the University of Cambridge.
Although the guidance of $260 to $270 million is still uncertain, there is no way to miss at this valuation. However, the roadmap to 10,000 qubits no longer seems like a pipe dream, the factories are being constructed, and the chips are actual. This kind of doubt was once experienced by Tesla. Everyone is being asked to wait by IonQ, and surprisingly many people appear to be willing to comply.