Q4 2021 IONQ Inc Earnings Call
Greetings. Welcome to the ION- Q4 th 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.
Greetings and welcome to the ion Q4 th 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.
If anyone should require operator assistance from the conference, please press star zero on your telephone keypad. Please note this conference is
If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad. Please.
Please note this conference is being recorded.
I will now turn the conference over to your host, Jordan Shapiro, VP of Financial Planning and Analysis and Head of Investor Relations. Thank you. You may begin.
I will now turn the conference over to your host Jordan Shapiro VP of financial planning and analysis and head of Investor Relations. Thank you you may begin.
Jordan Shapiro: Good afternoon, everyone, and welcome to INQ's fourth quarter and full year 2021 earnings call. My name is Jordan Shapiro, and I am the Vice President of Financial Planning and Analysis and Head of Investor Relations here at INQ.
Good afternoon, everyone and welcome to Inq's fourth quarter and full year 2021 earnings call.
My name is Jordan Shapiro.
The vice President of financial planning and analysis and head of Investor Relations here Inq.
Speaker Change: I am pleased to be joined on today's call by Peter Chapman, I am Q's president and chief executive officer, and Thomas Kramer, our chief financial officer.
I am pleased to be joined on today's call by Peter Chapman.
He is president and Chief Executive Officer and.
Thomas Kramer, our Chief Financial Officer.
Speaker Change: 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 at investors. ianq.com.
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 our website at investors <unk> Dot com.
Speaker Change: Please note that on today's call, management will refer to adjusted evita, which is a non- GAAP financial measure.
Please note that on today's call management will refer to adjusted EBITDA, which is a non-GAAP financial measure.
Speaker Change: 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 an isolation or as a substitute for the financial information presented in accordance with GAP. You are directed to our press release for reconciliation of such measures to GAP.
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 an isolation or as a substitute for the financial information presented in accordance with GAAP.
You are directed to our press release for a reconciliation of such measures to GAAP.
Speaker Change: 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.
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.
Speaker Change: Please note that these four looking statements made during this conference call speak only as of today.
Please note that these forward looking statements made during this conference call speak only as of today.
Speaker Change: Now I will turn it over to Peter Chapman, President and CEO of INQ. Peter?
Now I will turn it over to Peter Chapman, President and CEO of Inq Peter.
Peter Chapman: Thanks Jordan, and thank you all for joining us today.
Thanks, Jordan and thank you all for joining us today.
Peter Chapman: I first want to acknowledge the deeply troubling crisis still unfolding in Ukraine.
I first want to acknowledge the deeply troubling crisis is still unfolding in Ukraine.
Peter Chapman: 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.
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.
Peter Chapman: including some of our I&Q staff members who have family in harm's way.
Including some of our Inq staff members, who have family in Harm's way.
Peter Chapman: Before I get started, I thought I would share a little history of INQ.
Before I get started I thought I would share a little history of IL two.
Peter Chapman: When I joined Io Q3 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.
When I joined I in Q3 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 bringing it to market as quickly as you can.
In some sense it field of dreams approach, if you build it they will come.
And that's just what we believe we have done.
Peter Chapman: We believe we have built the world's best quantum computer as shown in our latest generation I&Q ARIA machine.
We believe we have built the world's first quantum computer as shown in our latest generation I think you are you a machine.
Peter Chapman: I tell you this story because it's important to understand where I and Q is in its commercialization efforts and the upside become.
I would tell you. This story because it's important to understand where I N Q isn't it's commercialization efforts and the upside to come.
Peter Chapman: At the beginning of 2021, we had no dedicated sales executives, and we're selling two 11-cubit machines.
At the beginning of 2021, we had no dedicated sales executives and we're selling to 11 cubic machines.
Peter Chapman: Now having finished 2021, I am happy to report that even after tripling our original 2021 contract bookings forecast in September , from $5 to $15 million.
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.
Peter Chapman: We beat that number again to end up at $16.7 million for the full year.
Peter Chapman: This resulted in recognized revenue of $2.1 million for the 2022 fiscal year, which was 31 percent above the $1.6 million we forecasted on the Q3 call.
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.
Peter Chapman: This year, we're starting to stand up our production engineering and manufacturing department.
This year, we are starting to stand up our production engineering and manufacturing departments.
Peter Chapman: 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.
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 'twenty 'twenty three.
Peter Chapman: In our outlook today, we have not included any upside related to scaling the sales of these machines.
In our outlook today, we have not included any upside related to scaling the sales of these machines.
Peter Chapman: We believe that over the next two years, one or two system sales could push our combined PCV contract bookings over nine figures for the three-year period from 2021 to 2023.
We believe that over the next two years, one or two system sales could push our combined P. C V contract bookings over nine figures for the three year period from 2021 to 2023.
Peter Chapman: That said, the quantum industry is nascent, making it hard to predict which quarter particular sales contracts will land.
That said the quantum industry is nascent making it hard to predict which quarter particular sales contracts will land.
Peter Chapman: As a result, we expect our contract bookings in the near term to continue to be very lumpy.
As a result, we expect our contract bookings in the near term to continue to be very lumpy.
Peter Chapman: In 2022, we expect more than double our sales staff, including our first sales people in Europe .
In 2022, we expect to more than double our sales staff.
<unk>, our first salespeople in Europe .
Peter Chapman: We are now selling, are recently announced, are in machines that are more than a thousand times more powerful than last year's model.
We are now selling our recently announced are in machines that are more than a thousand times more powerful than last year's model.
Peter Chapman: Our forecast for fiscal 22 expects our 2022 revenue to be over $10 million at the midpoint, which will be approximately 5x our 2021 revenue.
Our forecast for fiscal 'twenty, two expects our 2022 revenue to be over $10 million at the midpoint.
Which will be approximately five X our 2021 revenue.
Peter Chapman: We estimate full year 2022 bookings at $22 million at the midpoint.
We estimate full year 2022 bookings at $22 million at the midpoint.
Peter Chapman: 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.
This represents a $7 million or 47% increase over our original forecast, which we set out before going public.
And a 32% an increase from our outstanding 2021 results.
Peter Chapman: Thomas Kramer, our chief financial officer, will go over the rest of our financials in detail shortly.
Thomas Kramer, our Chief Financial Officer, who will go over the rest of our financials in detail shortly.
Thomas: On the technology side, in February , we took a leap forward, not just for I&Q, but for the quantum computing industry as a whole. We announced the performance results for our latest generation, R&M machine. This system achieved a record 20 algorithmic qubits with the independent industry benchmarks from the QEDC, showing that R&M clearly outpaces every commercially available quantum compute solution today.
On the technology side in February we took a leap forward not just for <unk>, but for the quantum computing industry as a whole.
We announced the performance results for our latest generation are in machine. This system achieved a record 20 algorithmic cubits with the independent industry benchmarks from the QED C showing that ARIA clearly outpaces every commercially available quantum compute solution today.
Thomas: We are confident that I and Q systems are the best in the world and that we are only furthering our lead.
We are confident that <unk> systems are the best in the world and that we are only furthering our lead.
Thomas: Last week, we were excited to announce that Microsoft customers can leverage the power of iinfuse aria series quantum computer on Microsoft Azure.
Last week, we were excited to announce that Microsoft customers can leverage the power of <unk> are you serious quantum computer on Microsoft's Azure.
Thomas: We expect this will unlock the creativity of Microsoft application developers worldwide.
We expect this will unlock the creativity of Microsoft application developers worldwide.
Thomas: I&Q ARIA is only one part of the story. As part of our plan to scale I&Q quantum computers beyond ARIA, we announced in December that we planned to build new systems using Barium Cubans.
I think you are it is only one part of the story.
As part of our plan to scale inq quantum computers beyond area, we announced in December that we plan to build new systems using barium cubits.
Thomas: Barium cubits have the potential to enable lower error rates and higher gate civilities, which in turn could lead to more accurate and powerful quantum computers.
Perry I'm kubitz have the potential to enable lower error rates and higher gate fidelity's, which in turn could lead to more accurate and powerful quantum computers.
Thomas: They can also be controlled by visible light lasers as opposed to ultraviolet lasers we use in our ytterbium systems.
They can also be controlled by visible light lasers as opposed to ultraviolet lasers, we use in our <unk> systems.
Thomas: We believe visible light lasers could result in cheaper, more readily accessible components and a promise of faster gate speed.
We believe visible light lasers could result in cheaper more readily accessible components and a promise of faster speeds.
Thomas: Another crucial advantage of barium qubits is that they're easier to network together over long distances.
Another crucial advantage of barium cubits isn't it they're easier to network together over long distances narrower.
Thomas: Networking quantum systems together is key to making them more powerful and eventually to building a quantum internet.
Networking quantum systems together is key to making them more powerful and eventually to building a quantum internet.
Thomas: In summary, while ARIA is leading the pack with its uterbium qubits, we believe the addition of barium qubits to power our systems could further our lead in system performance.
In summary, while ARIA is leading the pack with its your turbine cubits.
Believes the addition of barium kubitz to power systems could further our lead in system performance.
Thomas: 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 spam 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.
We believe our investment in barium cubits is already paying off earlier. This month, we published data from the forthcoming barium based system showing a 13 fold improvement in state perforation and measurement error lovingly known as spam error in the industry.
One of the key limitations to scaling quantum computers.
More exciting news to come from our barium systems later this year.
Thomas: Given the state of the global supply chain, a natural follow-up question might be, where do we get enough barium cubits 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.
Given the state of the global supply chain, a natural follow up question might be where do we get enough barium kubitz 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.
Thomas: 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.
We could not be more thrilled to be working with the <unk> scientists and engineers over at P. N N L to make barium based quantum computers a reality.
Thomas: Next, let's talk about our research and development progress since our last conference call.
Next let's talk about our research and development progress since our last conference call.
Thomas: Last month, INQ 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.
Last month, <unk> 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 cubits in a single step, including the well known Toughly gate.
Thomas: We expect n cubic gates to lead to substantial breakthroughs in quantum algorithms, making them more efficient and powerful with fewer operations.
We expect any pubic gates to lead to substantial breakthroughs in quantum algorithms, making them more efficient and powerful with fewer operations.
Thomas: What's more, this new family of gates can only be run on the proprietary architecture exclusive to our trapped-ion computers.
What's more this new family of gates can only be wrong on the proprietary architecture exclusive to our trapped ion computers.
Thomas: Our platform has the most algorithmic qubits in the industry, and now we're enabling those qubits to do even more.
Our platform has the most algorithmic cubits in the industry and now we're enabling those kubitz to do even more.
Thomas: We expect these gates to be essential to work across applications such as quantum chemistry, optimization, and machine learning.
We expect these gates to be essential to work across applications, such as quantum chemistry optimization and machine learning.
Thomas: Last, let me discuss our progress on real-world quantum applications with customers.
Lastly, let me discuss our progress on real world quantum applications with customers.
Thomas: In January , we were thrilled to announce a new partnership with Hyundai to develop quantum algorithms to simulate battery chemistry for electric vehicles.
In January we were thrilled to announce a new partnership with Hyundai to develop quantum algorithms to accumulate battery chemistry for electric vehicles.
Thomas: This work has the potential to greatly enhance charging, discharging, durability, capacity, and safety of batteries.
This work has the potential to greatly enhance charging discharging durability capacity and safety of batteries.
Thomas: With electric vehicle adoption increasing all over the world, battery development is a critical component in the transition to a more sustainable mobility.
With electric vehicle adoption, increasing all over the World Battery development is a critical component in the transition to a more sustainable mobility.
Thomas: The Hyundai partnership follows a series of projects on quantum chemistry at I&Q. 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 I&Q efforts to simulate water molecules with our quantum computers.
The Hyundai partnership follows a series of projects and quantum chemistry it out in Q.
We have previously announced the work with Dow chemical to demonstrate an end to end pipeline for simulating molecules such as those present and fertilizer creation. Our work with Dow was an extension of previous two efforts to stimulate water molecules with our quantum computers.
Thomas: The Hyundai project shows the natural progression of tackling increasingly complex molecules with each project.
The Hyundai project shows the natural progression of tackling increasingly complex molecules with each project.
Thomas: We believe the experience we gain from manipulating molecules in the new Hyundai partnership will be broadly applicable in related fields such as drug discovery and materials development.
We believe the experience we gained from manipulating molecules and the new Hyundai partnership will be broadly applicable and related fields, such as drug discovery and materials development.
In summary.
Thomas: We have confidence in our 2022 contract bookings forecast of $22 million.
We have confidence in our 2022 contract bookings forecast of $22 million.
Thomas: As we are getting ready to sell full systems over the next couple of years, we believe there is potential for a significant upside for the next 24-month period.
As we were getting ready to sell full systems over the next couple of years. We believe there is potential for significant upside for the next 24 months period.
Thomas: Our team is filling out nicely with top talent joining both at the executive and individual contributor level.
Our team is filling out nicely with top talent, joining both at the executive and individual contributor level.
Thomas: we're focusing special attention on scaling our sales force.
We're focusing special attention on scaling our sales force.
Thomas: We continue to lead the industry with our technical milestones and are already seeing our Endeavor into barium-based systems paying off.
We continue to lead the industry with our technical milestones and are already seeing our endeavor into barium based systems paying off.
Thomas: 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.
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.
Thomas: 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.
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.
Thomas: 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.
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.
Thomas: For more detailed information about ARIA, algorithmic qubits, our barium system, spam error, and the Microsoft announcement, I point you to our website.
For more detailed information about ARIA algorithmic kubitz, our barium system spam error and the Microsoft announcement I point, you to our website.
Thomas: And with that, I'll turn it over to Thomas for an update on our financials. Thomas.
And with that I'll turn it over to Thomas for an update on our financials.
Thomas.
Thomas: Thank you, Peter. Good afternoon, everyone, and thank you for joining us. I would like to start off by going over our slides.
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.
Thomas: 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.
As Peter mentioned, we outperformed our outlook this quarter with $1 $6 million in revenue and one $5 million in contract bookings for the quarter.
Thomas: 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.
We ended the full year with $2 $1 million in revenue, which is $500000 or 31% higher than what we estimated on the third quarter call.
Thomas: Our TCV contract bookings ended up at $16.7 million for the year, which exceeded our most recent midpoint estimate of $15.8 million.
R. A T C V contract bookings ended up at $16 $7 million for the year.
Which exceeded our most recent midpoint estimate of $15 $8 million.
Thomas: given on the Q3 call, which was already up 3x from our beginning of the year forecast.
Given on the Q3 call, which was already up three X from our beginning of the year forecast.
Thomas: 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 where customers pay for a served compute asset.
Given that we are still at the beginning of our commercialization phase and then in addition to transactional based cloud revenue.
Large contracts or customers pay for it has served to compute the axis.
Thomas: We should expect bookings to continue to be lumpy for quite some time.
We should expect bookings to continue to be lumpy for quite some time.
Thomas: We have been approached by several entities about potential system sales outright, which would further add to this trend if and when these sales should happen.
We have been approached by several entities about potential system sales outright, which would further add to this trend if and when these sales should happen.
Thomas: 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 year period.
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 year period.
Thomas: For the full year 2021, this totaled $40.8 million up 159% from $15.7 million in 2020.
For the full year 2021, this totaled $48 million up 159% from $15 $7 million in 2020.
Thomas: 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.
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.
Thomas: For the full year, R&D totaled $20.2 million, up 99% from the $10.2 million in 2020.
For the full year RMB.
R&D totaled $22 million up 19, 9% from the $10 $2 million in 2020.
Thomas: We expect these costs to continue to increase sequentially as we invest in building our next generation of computers.
We expect these costs to continue to increase sequentially as we invest in building our next generation of computers.
Thomas: 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 our sales team.
Our sales and marketing costs in the fourth quarter were $849000 up 281% from 223000 in the year prior period.
For the full year sales and marketing costs were $3 $2 million.
565% from the $486000 in 2020.
This increase was due to further investment in our commercialization efforts and growing our sales team.
Thomas: 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.
Our general and administrative costs in the fourth quarter were $5 $4 million up to 217%.
From $1 $7 million in the year prior period for.
For the full year G&A costs were $13 $7 million up 287% from.
From the $3 $5 million in 2020.
Thomas: 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.
This increase is largely attributable to a growing headcount and overhead associated with scaling and some of those incremental costs and fees associated with being a public company.
Thomas: We expect G&A cost as a whole to continue to increase sequentially as we hire more world-class talent to scale the business accordingly.
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.
Thomas: In our full-year results, you may also note the $4.3 million non-operating costs on our P&L, which is the portion of the transaction costs allocated to the liability-classified warrants from the original DMY-3 IPO.
And our full year results you May also note the $4 $3 million.
Non operating costs in our P&L with just a portion of the transaction cost allocated to the liability classified warrants from the original DIY three IPO.
Thomas: This is a one-time non-cash expense and will not be a recurring charge.
This is a onetime noncash expense and will not be a recurring charge.
Thomas: We saw a net loss of $74.1 million in the fourth quarter compared to $4.9 million in the prior year period.
We saw a net loss of $74 $1 million in the fourth quarter compared to $4 $9 million in the prior year period.
Thomas: For the full year, net loss was $106.2 million compared to a loss of $15.4 million in 2020.
For the full year net loss was $106 2 million compared to <unk>.
The loss of $15 $4 million in 2020.
Thomas: Included in the net losses for the fourth quarter and the year were non-cash charges related to the fair value of our warrant liabilities of $63.3 million.
Included in the net losses for the fourth quarter and the year were noncash charges related to the fair value of our warrant liabilities.
The $3 $3 million.
Thomas: 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 year period. For the full year, our adjusted EBITDA loss was $28.3 million compared to a $12.8 million loss in 2020.
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 year period for the full year, our adjusted EBITDA loss was $28 $3 million compared to a $12 $8 million loss in <unk>.
The country.
Thomas: Turning now to our balance sheet, cash, cash equivalents and investments as of December 31st, 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.
Turning now to our balance sheet cash cash equivalents and investments as of December 31st tried to country one.
$603 million going forward we.
We expect our cash on hand to be sufficient to fund operations for the foreseeable future without the need to raise additional capital.
Thomas: Recall that our transaction in DMY3 closed on September 30th last year and provided us with net proceeds of $573 million.
Recall that our transaction with <unk> three close on September 30th last year and provided us with net proceeds of $573 million.
Thomas: 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 sector.
We continue to believe we are well capitalized and well positioned to benefit from increased interest in quantum computing and both the public and private sectors.
Thomas: I also want to mention a new development on the physical infrastructure side. We will be opening a new facility in Seattle, which we believe will be important for both talent acquisition and scaling our production engineering function.
I also want to mention a new development on the physical infrastructure side, we will be opening a new facility in Seattle, which we believe will be important for both talent acquisition and scaling our production engineering function.
Thomas: The Pacific Northwest has long been a hotbed of technology development and quantum computing has been no exception.
The Pacific Northwest has long been a hotbed of technology development and quantum computing has been no exception.
Thomas: 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.
As we build new and lasting ties into area with P. N N idle.
Northwest quantum network and other partners in the greater Seattle area.
We believe this will greatly benefit the company.
Looking forward to spending more time building relationships and quantum computers, and then around the Puget sound.
Thomas: Now turning to our first quarter and full year 2022 outlook. This year we anticipate full year 2022 bookings of between $20 and $24 million, with between $3 and $4 million for the first quarter.
Now turning to our first quarter and full year of 2022 outlook. This year, we anticipate full year 2022 bookings of between 20 and $24 million with between three and $4 million for the first quarter.
Thomas: As a result of bookings and previous periods and new 2022 activity, we expect revenue for the full year to be between $10.2 and $10.7 million, with between $1.8 and $2 million for the first quarter.
As a result of bookings in previous periods, our new 2022 activity, we expect revenue for the full year to be between $10 to $10 $7 million with between one eight and $2 million for the first quarter.
Thomas: We also anticipate an adjusted EBIT dollars of $55 million for the full year 2022 at the midpoint of our revenue guidance.
We also anticipate an adjusted EBITDA loss of $55 million for the full year 2022 at the midpoint of our revenue guidance.
Thomas: Note that since we sell large contracts with terms stretching several years and with implementation typically lagging contract signing by a few months, we expect bookings to significantly exceed revenue recognition.
Note that since we sell large contracts with terms stretching several years and with implementation typically lagging contract signing by a few months, we expect bookings to significantly exceed revenue recognition.
Thomas: 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 booking growth, whereas recognized revenue will tend to follow a more traditional pattern, barring any system sales.
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 recognize revenue does tend to follow a more traditional pattern barring.
Barring any system sales.
Thomas: 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.
Investors and analysts should also be aware that even if we see a spike in bookings in the period the impact on recognized revenue may not be significant for several quarters.
Our fourth quarter and full year results were encouraging.
Thomas: And we are seeing strong momentum, both in external demand and internal technical events.
And we are seeing strong momentum both in external demand and internal technical advances.
Thomas: The world has been through a lot in the past few years when we all learned the meaning of terms like pandemic and supply chain.
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.
Thomas: Inflation concerns and the unrest in Europe are unlikely to improve worldwide stability.
Inflation concerns and the unrest in Europe are unlikely to improve worldwide stability.
Thomas: 2022 brings with it its own set of challenges, but it's too early to identify the impact to the business environment.
22 brings with it its own set of challenges, but it's too early to identify the impact to the business environment.
Thomas: We feel comfortable saying we have no direct supply chain exposure to Russia, though 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 as they seek solutions to previously unsolvable questions.
So comfortable saying, we have no direct supply chain exposure to Russia.
We could still see it there 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 as they seek solutions to previously unsolvable questions.
Thomas: 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.
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.
Speaker Change: Finally, it is my pleasure to welcome the newest member of our IMQ team, Lori Babinski.
Finally, it is my pleasure to welcome the newest member of our IR team Laurie but minsky.
Laurie: Lori joins us as our general counsel with deep legal experience from Intuit's Credit Crown.
Laurie joins us as our general counsel with deep legal experience from Intuit is credit Karma.
Laurie: Lori brings a wealth of IP experience in the technology sector and will be a wonderful addition to the team.
Laurie brings.
Wealth of IP experience in the technology sector.
It will be a wonderful addition to the team.
Laurie: We look forward to working with Laurie and welcome her contributions to IonCube and the quantum computing space as a whole. And with that, Operator.
We look forward to working with Lori and welcome her contributions to <unk> and the quantum computing space as a whole.
And with that operator, I would like to open the line for questions.
Speaker Change: Thank you. At this time, we will be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue.
Thank you.
At this time, we'll be conducting a question and answer session.
If you'd like to ask a question. Please press star one on your telephone keypad.
A confirmation tone will indicate your line is in the question queue.
Speaker Change: You may press star two if you'd like to remove your question from the queue.
You May press star two if you'd like to remove your question from the queue.
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Speaker Change: Our first question comes from the line of Reuben Roy with West Park Capital. Please proceed with your question.
Our first question comes from the line of Ruben Roy with West Park Capital. Please proceed with your question.
Reuben: Thank you. Thanks very much for the questions. Hi, Peter. Congrats on the continued progress and a great finish to fiscal 21. I guess the first question I had is just around the commentary around system sales and being approached by entities around system sales. I think in the past when we've spoken about revenue rec over the next several years, system sales was a little bit further down the list in terms of how you're looking at
Thank you thanks very much for the questions Hi, Peter.
Congrats on the continued progress and a great finish to our fiscal.
Fiscal 'twenty one I guess the first question I had is just around the commentary around system sales and being approached by entities around system sales I think in the past when we've spoken about revenue rack over the next several years. The system sales was a little bit further down the list in terms of how you're looking at.
Reuben: You know 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 cubits that you guys are working on or anything changed In the way, you're thinking about rev Greg over the next three to five years. Thank you
You know your overall hardware hardware in the cloud you've got engineering services et cetera.
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 kubitz that you guys were working on or or anything changed in the way Youre thinking about Rev. Rec over the next three to five years. Thank you.
Reuben: Well, there's a couple of pieces. One is we do recognize to get to scale that you have to be able to manufacture multiple quantum computers.
Well, there's a couple of pieces one is.
We do recognize to get to scale that you have to be able to manufacture multiple quantum computers and in addition that you want those quantum computers to be standardized and you know and easily manufacturable, which means you need to be able to support them in and all the rest so what I would.
Reuben: and in addition that you want those quantum computers to be standardized and, you know, and easily manufacturable, which means you need to be able to support them and all the rest. So what I would say is we're ahead of schedule in terms of the technology plan, and so we're starting now to work on that particular problem.
We're ahead of schedule in terms of the.
Technology plan and so we're starting now to work on that particular problem. So youll start to see we've already said to the market that we were going to work on photonic interconnect to start to connect these things together.
Reuben: So you'll start to see, you know, we've already said to the market that we were going to work on photonic interconnect to start to connect these things together.
Reuben: And that's a way to get to much larger quantum computers. What is new is that we have seen a great deal of interest from several customers where they have expressed interest in getting a full system. And so that is.
And that's a way to get to a much larger quantum computers.
Is new is that we have seen a great deal of interest from several customers, where they have expressed interest in <unk>.
Getting.
A full system and so that is new from what we had said before.
Speaker Change: Great. And the other, I'm sorry go ahead. And I'll just add a little bit, just given, you know, the impact potentially on these, it obviously would drive kind of maybe a single sale would would make a quarter be pretty lumpy. And so you should expect a certain amount of lumpiness going forward as we see.
Great.
Any other I'm sorry good.
And I'll just add a little bit just given you know the impact potentially on these it obviously would drive kind of maybe a single sale it would make a quarter be pretty lumpy.
You should expect a certain amount of lumpiness going forward as we see these.
Speaker Change: Sure, sure. As a quick follow-up then, my question for Thomas is just around the improvement in bookings.
Sure sure as a quick follow up then my question for Thomas just around the improvement in bookings.
Thomas: Is that fairly broad-based, Thomas, or is it more concentrated either from government or some commercial partners that are coming forth any additional detail around the bookings progress?
Is that fairly broad based on this is it.
Or is it more concentrated either buy from government or some commercial partners that are you.
You know coming forth any any additional detail around the bookings progress would be helpful. Thanks.
Speaker Change: Absolutely, and you're right to ask about the REVREC. It's obviously different for system sales for.
Absolutely.
And.
You're right to ask about the Rev. Rec, it's obviously different for system sales versus.
Speaker Change: uh, more, uh, system as a service sale. However, um,
More.
System as a service sale however.
Speaker Change: We thought it would be prudent of us to just raise that. It's not a flag, it's more of like, it's a good thing, but we wanted to raise it before it happens so that we're not all surprised.
We thought it would be prudent for us to just race that a it's not a flag is more of like it.
It's a good thing, but we wanted to raise it before it happens so that we're not all surprised.
Speaker Change: When we look at the lift in our bookings, we are seeing a continued interest from both corporate, academic, and government institutions. At current we won't be breaking out individual sales, but we are very encouraged to see both how
When we look at the the lift in our bookings we are seeing a continued interest from both our corporate academic and government institutions at current we won't be breaking out individual sales that we are very encouraged to see both how varied the.
Speaker Change: varied the interest is in quantum as well as how many jobs that are submitted every day from people we don't even know who are because they're coming in through AWS and Azure and Google Cloud.
Interest is in quantum as well as how many jobs that are submitted every day from people. We don't even know who are because they're coming in through AWS and Azure and Google cloud.
Sure.
Okay. Thank you very much guys congrats again.
Thank you.
Speaker Change: Our next question comes from the line of Scott Fessler with Morgan Stanley . Please proceed with your question.
Our next question comes from the line of Scott Fessler with Morgan Stanley . Please proceed with your question.
Scot Bestesler: Hi guys, congratulations on the great quarter. Following up on the system sales question, what impact should we expect that that has on the operating model, particularly around margin?
Hi, guys congratulations on the great quarter.
Following up on the system sales question, what impact should we expect that that has on the operating model, particularly around margins.
Scot Bestesler: So we are not foreseeing any immediate change to the operating model. But what you will see is that once we implement the system sale, you would see a bump both in bookings, revenue, and margins, because you're able to take down all of the benefit of the revenue to the current, whereas we will not stretch out all the expenses.
So we are not foreseeing any immediate change to the operating model.
But what you will see is that once we implement a system sale.
You would see a bump in bookings revenue and margins because you're able to take down all of the benefit of the revenue to the current whereas we will not stretch out all the expenses so.
Scot Bestesler: It will be a bump to the margin, but it wouldn't be an immediate, like it wouldn't be.
It will be a bump to the margin, but it wouldn't be an immediate like it wouldn't be.
Scot Bestesler: uh, outside of the model because we still would recognize all the same costs. It just happened.
Uh huh.
Outside of the model because we still would recognize all the same caution just happen in one period instead of several.
Speaker Change: 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?
Got it got it and then if I could get a follow up and as well could you just share some early customer feedback yet from the from the Oreo launch.
Speaker Change: Generally, the customer feedback is really very, very positive.
Generally the customer feedback is really very very positive people are impressed with what this new hardware. It can do and are excited to see kind of being able to take their applications to the next level. So.
Speaker Change: People are impressed with what this new hardware can do and excited to see kind of being able to take their applications to the next level. So, so far the customer feedback has been tremendous.
So far the customer feedback has been tremendous.
Excellent thanks, guys.
Speaker Change: Thank you. Our next question comes from the line of David Williams with Benchmark Company. Please proceed with your question. Hey, good afternoon. Thanks.
Thank you.
Our next question comes from the line of David Williams with Benchmark Company. Please proceed with your question.
Hey, good afternoon, Thanks for the time and let me ask the question.
David Williams: 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, I guess, a lot of innovation.
Clearly, making some some very nice headway here some good progress, but I wanted to ask you 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 with rod room for multiple technologies to coexist without restrictions to growth.
David Williams: will exist without restrictions to growth. And just kind of curious how you think about the competitive landscape.
Just kind of curious how you think about the competitive landscape and maybe your business just kind of given the strength of their systems.
David Williams: Um, you might hear from some competitors where they think that, um, there'll be kind of certain niches that they'll be able to.
Okay.
You might hear from some competitors, whereas I think that.
There'll be kind of certain niches that they'll be able to to kind of be as a leader in.
David Williams: to kind of be the leader in. It's interesting in.
It's interesting in depending on the Cuba technology, when you have to design the chip at.
David Williams: depending on the qubit technology, when you have to design the chip before manufacture time, that's where you sit down and make a business decision because of this early stage of their processors that may be a particular.
Before manufacturer time, that's where you sit down and make a business decision because of this early stage of their processors that maybe in particular.
David Williams: chip might be designed in a way that might help a particular application.
Chip might be designed in a way that might help a particular application.
David Williams: And obviously, one manufacturer can't go and do all chips for all applications. That leads to that segmentation.
And obviously one manufacturer it can't go and do all chips for all applications that leads to that segmentation interestingly enough. It aimed Q, we do the design of the chip if you will at runtime and so we can do at runtime any we can basically design if you will.
David Williams: Interestingly enough, at INQ, we do the design of the chip, if you will, at runtime.
David Williams: And so we can do at runtime any, we can basically design, if you will, the chip, you know, the perfect chip for your application.
The chip.
Perfect perfect chip for the for your application. So we kind of see our our device is unique in that sense in that it can be morphed on the fly for any application, which makes it more.
David Williams: So we kind of see our devices unique in that sense in that it can be morphed on the fly for any application which makes it more, you know, a better machine than say some of the competitors.
Better machine than say some of the some of the competitors you know at some point, we will have so many kubitz that you can throw away cubits.
David Williams: You know, at some point we'll have so many qubits that you can throw away qubits and, you know, do a least common denominator or approach to quantum, but that's not in the, in the near term, but I think you basically doesn't have to make that decision.
Due at least common denominator approach to quantum but that's not in the in the near term, but I'm going to basically doesn't have to make that decision.
David Williams: is we basically wire up the chip at runtime.
We.
We basically wire up the chip at runtime and so it can basically be anyone else's chip and all of them combined at the same time.
David Williams: And so it can basically be anyone else's chip and all of them combined at the same.
David Williams: And I guess one of the other areas, I know that investors and even as I think about your customers, difficulty understanding maybe some of the benchmarking and how you stack up with the other ones. And I know that the algorithm in Qubit is an important metric there. Could you kind of walk us through the value there and why the algorithm in Qubit is more important to think about versus maybe just the standard Qubit?
Thanks, so much for the color.
And I guess one of the other areas I know that investors and even think about your customers difficulty understanding maybe some benchmarking and how you stack up with the other ones and I know that the.
Rhythm and Cupid is an important metric there could you kind of walk us through the value there and why the algorithm is more important to think about versus I mean, it's a center cubit in how you stack up.
Yeah some of the others. So first thing is the.
David Williams: So first thing is the benchmarks themselves. These were selected by the QEDC, which is an industry consortium made up of all the quantum companies. So first thing to know is it wasn't, if you will, an INQ choice of algorithms, although we obviously had input to the selection with many other companies.
Is the benchmarks themselves. So these were selected by the QED C, which is a industry consortium made up of all the quantum company. So first thing to know is it wasn't if you will and I in Q choice of algorithms.
Although we obviously had an input to the to the selection with many other companies.
David Williams: We think it's important because these benchmarks represent the same kinds of programs that we think customers are going to want to run.
We think it's important because you.
These apply these benchmarks represent.
The same kinds of of programs that we think customers are going to want to run and so in that sense. There. They're the benchmark is closer to being representative to what our customer will run other.
David Williams: And so in that sense, the benchmark is closer to being representative to what a customer will run. Other things are much more esoteric and they might be looking at kind of one particular component and not all of them combined into one thing. So this is very similar, if you will, to the classical world. There's a number of classical benchmarks which everyone uses in HPC or even laptop.
Other things are much more esoteric than it might be looking at kind of one particular.
Component and not all of them combined into one thing. So this is very similar if you will to the classical world. There's a number of classical benchmarks, which everyone uses in HBC or even laptops, which are all <unk>.
David Williams: which are all application-oriented benchmarks.
Implication oriented benchmarks.
David Williams: So, and we think, you know, it's important that an independent organization, you know, like QEDC or maybe IEEE should be the one who is deciding what the benchmarks are. And an improvement from what's happening today would be to have an independent third party to actually run them. And so, instead of the individual companies running them. We'd be in favor of all of that because we think we would easily, we'll easily continue to lead.
No.
We think it's important that an independent organization, you know like QE D C or maybe I tripoli's shouldn't be the one who is deciding what the benchmarks are and and an improvement from what's happening today would be to have a independent third party to actually run them.
And so instead of the individual companies running them, we'd be in favor of all of that because we think we would easily will easily continue to lead.
Very helpful. Thanks, so much.
Speaker Change: Thank you. Our next question comes from the line of Richard Shannon with Craig Hallam. Please proceed with your question.
Thank you.
Our next question comes from the line of Richard Shannon with Craig Hallum. Please proceed with your question.
Richard Jannon: Hi guys, thanks for taking my questions. Maybe one for Thomas here, 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 I wanted to get your sense of why so precise is this. You have a lot of visibility into these numbers, and how would you characterize the upside potential as it goes?
Well hi, guys. Thanks for taking my questions.
Maybe one for Thomas here more of a tactical question on your guidance here, both on revenues and bookings.
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 is this you'd have a lot of visibility into these numbers and how would you characterize the upside potential as we go through the year.
Speaker Change: Excellent question and thank you for for raising it. Obviously, it is hard to make predictions, particularly about the future.
Excellent question and thank you for raising it obviously it is a hard to.
Make predictions, particularly about the future.
Speaker Change: But when it comes to revenue, it is actually not that hard because.
That when it comes to revenue it is actually not that hard because.
Speaker Change: The way bookings tend to turn into recognized revenue is straight line on the types of contracts we have sold up until now.
The way bookings tend to turn into recognized revenue.
It is straight line on the types of contracts, we have style sold up until now.
Speaker Change: And there is an implementation lag between when we sell it and when they start producing revenue of roughly $3 million.
And there is an implementation lag between when we sell it and when they start producing revenue of roughly three months.
Speaker Change: So you can do that also knowing that most sales in a quarter, unfortunately, tend to happen at the end of the quarter.
So you can do that also knowing that most sales in a quarter. Unfortunately, it happened to happen at the end of the quarter and so you can you can build your Rev Rec.
Speaker Change: you can build your RevRack schedule that way.
Schedule that way.
Speaker Change: When it comes to bookings, we have taken the approach that we know what's in our funnel, we know how we score that funnel.
When it comes to bookings we have taken the approach that we know what's in our funnel and we know how.
How we score that funnel could we.
For me, yes how's.
Speaker Change: However, I would, we could, obviously every company can also.
However, I will.
Obviously every company can also underperformed, we think it will be hard to see us come in at less than 20. So we're looking at this as a minimum plenty bet and what we could have blue birds, and which is why we brought it up however.
Speaker Change: underperform. We think it will be hard to see us come in at less than 20, so we're looking at this as a minimum 20 bet. We could have blue birds, which is why we brought it up.
Speaker Change: We don't think that they would happen as quickly, but they could. And that's why we're actually raising that, so that we will not be surprised. We would all like to have that surprise.
We don't think that they.
They would happen as quickly, but they could and that's why we're actually raising that and so that we will not be surprised we would all like to have that surprised when it happens and stuff.
Okay. That's very helpful. Thomas Thanks for that.
Speaker Change: Maybe a multi party here on on kind of the sales opportunity here and structure and workforce you're supporting. I think you talked about doubling the sales force this year. I guess the first question to that is how similar is this to kind of the assumptions built into your.
Maybe a multipart here on on kind of the.
Sales opportunity here and the structure and workforce, you're supporting I think you talked about doubling the sales force. This year I guess the first question.
<unk> two that is how similar is this to kind of the assumptions built into your.
Speaker Change: models in the SPAC processes as above or below that in terms of pace. And then I think you said specifically that Salesforce will be built in part to ramp out Europe .
Models in the in the spec processes, just above or below that.
In terms of pace and then I think you said specifically the sales force to be built in part to a chemical ramp out Europe .
Speaker Change: Maybe if you want to characterize the opportunity you see outside of the US, Europe versus Asia and others, just to give us a sense of where you're focusing and why.
Maybe if you want to characterize the opportunity you see outside of the U S Europe versus Asia, and others, just to give us a sense of where you're focusing and why.
Yeah.
Speaker Change: Just in terms of headcount, it's about what we said in the original pipe model or what we thought. And, you know, the point, though, to be honest, is that, you know, last year we started with almost zero in terms of sales team, so on the sales side we're really just getting going. And that's really the point. And we're making good progress on that in terms of the number of people this year.
Just in terms of head count.
About what we said in the original pipe model or what we thought.
You know the point, though to be honest is that are you know last year, we started with.
Almost to almost zero in terms of sales team. So in the on the sales side, we're really just getting getting going and that's really the point.
Then and we're making good progress on that in terms of the number of people this year.
Speaker Change: The, in terms of locations, you know, we see customers overseas, which would be in Europe and the, and, you know, Asia, which would be Japan and, and South Korea, and Australia, there seems to be a great deal of interest there as well.
The in terms of locations.
We see customers overseas, which would be in Europe .
And the and Asia.
Which would be Japan, and South Korea and Australia.
There seems to be a great deal of interest there as well.
Speaker Change: 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, as the first one, coming to the public market, seen a couple of spin-outs, a couple of companies, one not quite and one all the way through the SPAC process here, so a lot more interest and activity and funding in this space.
Okay, great for that and one last question for me and I'll jump out of line.
Peter wanted wanted to get your sense of the overall environment here, you've seen as the first one come into the public market. So you know a couple of spin outs.
A couple of companies one not quite in one all the way through the spec process here. So a lot more interest in activity and funding in this space you've got a fairly substantial cash position here that they seem to be able to fund all of your operations.
Speaker Change: 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 organizations, either hardware or software, that might be of interest and kind of a plug-in to what INQ has already done today?
Organically here, how do you see the market and the need for M&A either in terms of technical teams or even even kind of organizations either hardware or software that might be of interest in kind of a plug into a what I think he has already done to date.
Speaker Change: Certainly, we are keeping an eye out for those particular opportunities going forward.
Certainly we are keeping an eye out and you know for those particular opportunities going forward.
Speaker Change: That's an active task at the current time.
That's our inactive task at the at the current time.
Speaker Change: I do think just in general that while on one hand there's more money going into many quantum companies, at the same time I expect a great deal of consolidation to happen over the next several years. I think you'll see some players who will decide that their technical approach to their hardware is too far behind and will throw in the towel.
I do think just in general that well.
While on one hand, there's more money going into many quantum companies at the same time, they expect a great deal of consolidation to happen.
For the next several years I think you'll see some players who will decide that.
Their technical approach to their hardware is too far behind and we'll throw in the towel and.
Speaker Change: And I expect, too, that we'll see new players who have interest in quantum that haven't expressed it today, because I think a lot of tech companies are just starting to realize that they need to be a player in quantum.
And I expect to that we will see new players who have interest in quantum that haven't expressed it today, because I think a lot of tech companies.
Are just starting to realize that they need to be a player in quantum so theres a number of notable players yet that.
Speaker Change: So there's a number of notable players yet that no one knows what their quantum strategy is. And so those are new opportunities for partnership and the such going forward. So it's certainly an interesting time in quantum.
No one knows what sort of quantitative strategy is and so there are new opportunities for.
For partnership and as such going forward. So.
So that's kind of it's a it's certainly an interesting time and quantum.
Speaker Change: No doubt about that, no doubt about that, Peter, thanks. I think that's all the questions for me and I appreciate it.
No doubt about that no doubt about that Peter Thanks, I think that's all the question for me I appreciate it guys. Thanks.
Speaker Change: Thank you. As a reminder, if you would like to ask a question, please press star 1 on your telephone keypad.
Thank you.
As a reminder, if you would like to ask a question. Please press star one on your telephone keypad.
Speaker Change: Our next question comes from the line of Quinn Bolton with Needham. Please proceed with your question. Good afternoon. Thanks for letting me ask the question. I 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?
Our next question comes from the line of Quinn Bolton with Needham. Please proceed with your question.
Good afternoon. Thanks for letting me ask a question I wanted to start just 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 for you or how do you go about pricing. The systems is it based on gate Fidelity's is it based on number of algorithmic Kubitz and a follow up question as well.
Quinn Bolton: Based on gate fidelities, is it based on number of algorithmic qubits? And the follow-up question is, what's your manufacturing capacity of number of systems per year to the extent you, you know, you
Is your manufacturing capacity of of number of systems per year to the extent you <unk> you.
Speaker Change: you start to get these orders for full-blown quantum systems. It's certainly a great question. So maybe just point out the first thing which is obvious, that you can't use the same model for classical as you can for quantum in terms of price performance.
You start to get these orders for full blown quantum.
It's a.
It's certainly a great question. So maybe just point the first thing which is obvious.
That you know you you can't use the.
Same sort of <unk>.
Model for classical as you can for quantum in terms of price performance because the as you.
Speaker Change: Because as you saw just here, these new machines are 1,000 times more powerful than last year's model. So they can't be 1,000 times more expensive. And in the future, it's just going to get worse and worse. You'll get to some time in the future where the next model will be 100,000 times more powerful than the previous.
Besides just here these new machines or a thousand times more powerful than last year's model. So they can't be a thousand times.
More expensive and then the future, it's just going to get worse and worse, so you'll get to.
Sometime in the future where the next model will be you know a 110 to 100000 times more powerful than the previous model. So you clearly need a more aggressive price performance.
Speaker Change: So you clearly need a more aggressive price performance mix up than what you get today. Today, we expect in the classical world, kind of every year or 18 months using Moore's law to double the performance and be able to buy the same laptop, if you will, for the same price in that same period. Or in other ways, it's, you know, it's half the cost.
You know mix up than what you get today today, we expect in the classical world kind of every year or 18 months using Moore's law to double the performance and be able to buy the same laptop. If you will for the same price in that same period.
Or another way is it perhaps the cost so.
Speaker Change: So, and that leads to, you know, an observation, which is price per cubit needs to be going down in every generation.
So and that leads to an observation which is.
Price per cube, it needs to be going down in every generation.
Speaker Change: And so as much as we're focused on the technology to improve the quantum computers themselves, we're also likewise focused on the manufacturing costs going forward and shrinking the costs in every generation.
And so as much as we're focused on the technology to improve the quantum computers themselves were also likewise focused on the manufacturing costs going forward and shrinking the costs in every generation, which generally means probably for everyone, but us included including us which.
Speaker Change: Which generally means probably for everyone but us included, including us, which is they have to get smaller, because every time you know if every generation gets smaller, generally the things get cheaper. So, so we're just standing up a manufacturing group this year whose sole purpose is it is is to work on that particular problem.
They have to get smaller because every time if every generation gets smaller generally the things get cheaper.
So we're just standing up a manufacturing group this year, whose sole purpose of it is is to work on that particular problems that we.
Speaker Change: We will not deliver, I don't believe, first computers off that line until early 2023.
We will not deliver I don't believe first.
Computers off that line until early 2023.
Got it understood.
Speaker Change: Yep. Thank you. Thank you, Peter. The second question I just had, you know, you went through a number of the benefits of the barium-based ion trap technology. Wondering if there's anything that you think is still on the critical path that you haven't been able to overcome on those systems? Or do you think at this point you've sort of overcome all of the challenges, and it's really just sort of blocking and tackling to get the barium-based systems into production?
Thank you thank you Peter.
My question I just had you know you went through a number of the benefits of the barium based ion trap technology wondering if there's anything that you think still on the critical path that you haven't been able to overcome on on those systems or do you think at this point, you've you've sort of overcome all of the.
<unk> and its really just sort of blocking and tackling to get the barium based systems into <unk> into production.
Speaker Change: As we've kind of said all along, everything that we're doing, we have shown working in a lab once before, so we do not need a breakthrough in manufacturing, material science, physics, no breakthroughs required. We're largely an engineering organization, where we're taking what the two co-founders have done at the University of Laboratories and productizing.
As we kind of said all along everything that we're doing.
We have shown working in a lab once before so we do not need a breakthrough and manufacturing and material science physics, no breakthroughs are required.
We're largely an engineering organization, where we're taking what the two co founders have done at the University laboratories in product timing it.
Speaker Change: So the short answer is, you know, I don't think there's anything, there's no things that's standing in our way. There's no magic that we have to figure out going forward to getting to a much larger quantity.
So.
So the short answer is no.
I don't think Theres anything there's there's no things that standing in our way there's no no magic that we have to figure out going forward to getting to a much larger quantum computer.
Speaker Change: Thank you. And then just quickly for Thomas, you gave an adjusted forecast of $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? Yeah, just one second.
Thank you and then just quickly for Thomas you gave an adjusted EBITDA forecast of $65 million loss in 2022 can you give us any sense on what the capex may be or what.
What a good estimate for cash burn over the year would be.
Okay.
Yes, just one second while we pull that up.
So obviously.
Speaker Change: Since we are manufacturing hardware, there is CAPEX involved that will sometimes outpace our OFFIX. However, we do think that that's going.
Since we are manufacturing hardware.
Is capex involved.
That will sometimes outpace our our opex.
However, we do think that that's cool too.
Level outs.
Speaker Change: let's say, three to four years from now, I would expect that our CapEx this year should be around...
At.
Let's say three to four years now I would expect that our capex this year should be around.
$23 million more or less.
Okay perfect. Thank you very much.
Thank you.
Speaker Change: 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.
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.
Speaker Change: Well, thanks everyone for joining today. I'll just actually make a comment, too, that I'd like to thank all the staff members at I&Q who've worked long hours to make these results possible. So thank you so much.
Well, thanks, everyone for joining today.
I'll, just actually make a comment to that I'd like to thank all of the staff members for I N. Q who've worked long hours to make these results possible. So thank you so much.
Speaker Change: And we are, you know, extremely excited by the results from last year and the continued growth we expect this year. So, we expect last year was an exciting year and we expect this year to continue that pace. So,
And we are you know.
Extremely excited by the results from last year and the continued growth. We expect this year. So we expect that last year was an exciting year and we expect this year to continue that pace. So.
Thanks again for joining.
Speaker Change: This concludes today's conference and you may disconnect your lines at this time. Thank you for your participation and have a wonderful day.
This concludes today's conference and you may disconnect. Your lines at this time. Thank you for your participation and have a wonderful day.
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Yes.
Okay.
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