Q1 2025 Quantum Computing Inc Earnings Call
Operator: Ladies and gentlemen, greetings and welcome to the Quantum Computing, Inc. first quarter 2025 shareholder update. At this time, all participants are in a listen-only mode.
Ladies and gentlemen, greetings and welcome to the quantum Computing, Inc. First quarter 2025 shareholder update call. At this time all participants are in a listen only mode.
Rosalind: Following management's remarks, the call will be Note this conference is being It is now my pleasure to introduce your host, Rosalind. Thank you, and I want to welcome everyone to the Quantum Computing Inc. first quarter 2025 shareholder update call.
Following management's remarks, the call will be opened for questions. Please.
Speaker Change: Please note. This conference is being recorded it is now my pleasure to introduce your host Russell and Christian with IMS Investor Relations.
Speaker Change: Thank you and I want to welcome everyone to the quantum computing, Inc. First quarter 2025 shareholder update call before we begin I'd like to remind everyone that this conference call may contain forward looking statements based on our current expectations and projections regarding future events and are subject to change based on various.
Rosalind: Before we begin, I'd like to remind everyone that this conference call may contain forward-looking statements based on our current expectations and projections regarding future events and a subject to change based on various important factors. In light of these risks, uncertainties and assumptions, you should not place undue reliance on these forward-looking statements, which speak only as of the date of this call. For more details on factors that could affect these expectations, please see our filings with the Securities and Exchange Commission.
Speaker Change: Important factors.
Speaker Change: In light of these risks uncertainties and assumptions you should not place undue reliance on these forward looking statements, which speak only as of the date of this call.
Speaker Change: More details on factors that could affect these expectations. Please see our filings with the Securities and Exchange Commission.
Rosalind: On the call today, we have Dr. Yu-Ping Huang, Interim CEO and Chairman, and Chris Bemler, CFO. The team will provide an update on the business, followed by a question and answer session.
Speaker Change: On the call today, we have talked to you Ping Pong interim CEO and chairman and Crisp M. A C. S I and the team will provide an update on the business followed by a question and answer session with that I would like to turn Nikolaivich management. Please go ahead you Peng.
Yu-Ping Huang: With that, I would like to turn the call over to management. Please go ahead, Yu-Ping. Thank you everyone for joining us today to hear about QCSS progress in the first quarter.
Speaker Change: Thank you everyone for joining us today to hear about progress in the first quarter.
Yu-Ping Huang: This is my first shareholder update call as Interim CEO of QCI. As the chairman and on behalf of the entire board, I would like to express our sincere appreciation to Dr. Bill McGann for his leadership and dedicated service. We wish him well for his retirement and are deeply grateful for the significant progress he made in positioning QCI for success. Thanks to his vision and effort, the company stands on a strong foundation to continue advancing our strategic goals and capitalizing on the opportunities ahead. As I step into the role of interim CEO, I look forward to working closely with our talented team, partners and shareholders to build on this momentum and continue putting photons to work.
Speaker Change: This is my first day shareholder update call.
Speaker Change: I'm the CEO of <unk>.
Speaker Change: The chairman and on behalf of the entire board.
Speaker Change: We would like to express our sincere appreciation to adopt them again.
Speaker Change: Leadership.
Speaker Change: We have dedicated service way.
Speaker Change: We wish him well for his retirement and deeply grateful for the significant progress <unk> made in positioning <unk> for.
Speaker Change: For success.
Tony: Thanks, Tony as we should and effort the company status on the strong foundation to continue advancing our strategic goals.
Speaker Change: And capitalizing on the opportunities ahead.
Tony: As I step into the role of insurance CEO I look forward to working closely with our talented team partners and shareholders.
Speaker Change: To build on this momentum and to continue putting photons to war.
Yu-Ping Huang: At the same time, the board has initiated an active search for QCY's next CEO, someone who can help us capture the substantial opportunities we see ahead in the market.
Speaker Change: At the same time the board has initiated a.
Speaker Change: Serge for Q says next CEO.
Speaker Change: Okay and help us capture the substantial opportunities we see in the market.
Yu-Ping Huang: For those who are newer to our story, let me start with a brief overview of who we are and what drives us. Quantum Computing Inc. is an integrated photonics and quantum optics technology company.
Speaker Change: For those who are newer to our story, let me start with a brief overview of.
Speaker Change: Well, we are and what drives us.
Speaker Change: Quantum computer Inc is not integrated photonics.
Speaker Change: Quanta optics technology company.
Yu-Ping Huang: Our mission is to deliver accessible, affordable, quantum machines and photonic solutions that solve real-world problems today. Not that case for now. By leveraging the unique properties of the same thing with Niobate and advanced botanic engineering. We are building systems that operate at room temperature, consume low power, and seamlessly integrate into existing infrastructure.
Speaker Change: Our mission is to deliver accessible affordable.
Speaker Change: Quantum machines, and photonic solutions that solve real world problems today.
Speaker Change: Not decades from now.
Speaker Change: By leveraging the <unk>.
Speaker Change: Unique properties of thinking decent niobate.
Speaker Change: And our advanced electronic engineering.
Speaker Change: We are building systems that operate at room temperature.
Speaker Change: So low power and seamlessly integrate into existing infrastructures.
Yu-Ping Huang: Our vision is to make high-performance quantum solutions practical, scalable, and impactful across industries. from scientific research to industrial applications. We believe QCI stands apart.
Speaker Change: Our vision is to make high performance Quanta solutions.
Speaker Change: Pickle scalable and impactful across industries.
Speaker Change: From scientific research to industrial applications.
Speaker Change: We believe Q size stands apart.
Yu-Ping Huang: by focusing on two key areas. The first is our quantum machine. which solves complex optimization, machine learning, and sensing problems in fields like biomedical research, transportation, and finance. The second is our thin-film lithonibate photonic tube foundry.
Speaker Change: By focusing on two key areas.
Speaker Change: The first is our quantum missions, which solves complex optimization machine learning and if anything the problems it feels like biomedical research transportation and defense.
Speaker Change: The second is our sales team.
Speaker Change: Mr Niobate photonic chip sponsored.
Yu-Ping Huang: which provides critical building blocks for next-generation telecommunications, AI, and quantum applications.
Speaker Change: Which provides critical building blocks for our next generation telecommunications.
Speaker Change: And quanta applications.
Yu-Ping Huang: And now for a summary of our progress this quarter. First, let's start with the progress we have made at our quantum photonic chip foundry in Tempe, Arizona.
Speaker Change: And now for a summary of our progress this quarter.
Speaker Change: First let's start with the progress made at our Quanta photonic chip sponge in Tempe, Arizona.
Yu-Ping Huang: In the first quarter of 2025, we completed construction of the facility. which is a significant milestone for our company. At the Foundry, we have moved into the next phase of testing tools, finalizing certifications, and we are beginning to ramp up customer delivery. some of which will be fulfilled using a shared use facility in the past.
Speaker Change: In the first quarter of 2025, we completed construction of the first strategy.
Speaker Change: Which is a significant milestone for our company.
Speaker Change: The foundry, what having moved into the next phase of testing towards finalizing certifications added.
Speaker Change: We are beginning to resolve customer deliveries some ways, where you fulfilled yossi I should.
Speaker Change: In the past.
Yu-Ping Huang: This is a specialty staff. Purposely built to manufacture high performance sensing litho-niobate photonic integrated circuits.
Speaker Change: This is a specialty fab.
Speaker Change: Purposely build to manufacture high performance lithium niobate photonic integrated circuits.
Yu-Ping Huang: And while this is a smaller. highly focused facility compared to large semiconductor fabs, it represents the first phase of what we see as a multi-phase strategy to address significant and growing market demands. particularly in data communications and telecommunications. We expect to see modest initial revenue from the fab this year, and as we scale and bring more customers online, we anticipate revenue growth starting to accelerate in 2026.
Speaker Change: And while this is a smaller.
Speaker Change: How do you focused Saturday to compared to large semiconductor fabs and represents the first phase of what do we say.
Speaker Change: Modest space strategy to address significant.
Speaker Change: And the growing market demand.
Speaker Change: Particularly in data communications telecommunications.
Speaker Change: We expect to see modest initial revenue from the fab this year and as we scale and bring more customers online, we anticipate revenue growth starting to accelerate in 2026.
Yu-Ping Huang: In the first quarter, we secured our fifth purchase order for foundry services from a leading Canadian research institute. which shows early validation of the global demand we are saying for this. capacities. We are working closely with our pre-order customers. to finalize designs and start fabrication and we are excited about what's ahead.
Speaker Change: In the first quarter, we secured our faith.
Speaker Change: All of the four foundry services from a leading Canadian Research Institute.
Speaker Change: Which shows early validation of the global demand we are setting for this.
Speaker Change: Capacities.
Speaker Change: We are working closely with our.
Speaker Change: Pre order customers.
Speaker Change: To finalize designs and to start fabrication. Neither we are excited about what's ahead.
Yu-Ping Huang: And now, for our quantum machine business, in the first quarter of 2025, we announced a great collaboration with the Center's True Institutional Therapeutics Discovery Institute. This is a joint effort between Memorial Sloan Kettering, Rockefeller University, and Wake Corner Medicine. through this partnership. They are leveraging cloud-based access through our directory quantum optimization machine to support advanced research in computational chemistry and biomolecular modeling. This is exactly the kind of real-world application we envisioned when we built directory. And it demonstrates that Q-SAT systems are making an impact today. not 5 or 10 years down the road. Since the end of the quarter, we have kept the momentum going.
Speaker Change: And now for our quantum machine business in the first quarter of 2025, we announced a great collaboration ways that send us sure institutional sort.
Speaker Change: Is there a predicts.
Speaker Change: Discover Institute this is a joint effort between Memorial Sloan Kettering Rockefeller University, and we called out medicine.
Speaker Change: Through this partnership.
Speaker Change: They are leveraging cloud based access to our directory quanta optimization machine to support advanced research in computational chemistry, and a buyout molecule.
Speaker Change: This is exactly the kind of reward application, we envisioned when they build directory.
Speaker Change: And it demonstrates that our Qs as systems are making may impact today.
Speaker Change: Not five or 10 years down the road.
Speaker Change: Since the end of the quarter.
Speaker Change: We have kept the momentum going we recently announced that it.
Yu-Ping Huang: We recently announced that we secured a new subcontract through the Analytic Mechanics Association to support NASA's Lonely Research Center. We will be applying our Direct3 quantum machine to help remove sunlight noise from space-based LIDAR data. A challenge that has historically limited NASA's ability to conduct reliable daytime Earth observations. This project builds on our prior collaborations with NASA and underscores the trust we have built as a technology partner.
Speaker Change: We secured a new sub contract through the analytic mechanics associated to support NASA Langley Research Center.
Speaker Change: We would be applying our direct III quantum machine to help with more sunlight noise from space based lidar data.
Speaker Change: A challenge that has historically limited nossa <unk> ability to conduct reliable daytime earth.
Speaker Change: Observations.
Speaker Change: This project builds on our trial collaborations with NASA and underscores the trust we have built as a technology partner.
Speaker Change: Subsequent to the quarter, we also booked two exciting new customer orders.
Yu-Ping Huang: Subsequent to the quarter, we also booked two exciting new customer orders.
Speaker Change: First.
Yu-Ping Huang: We sold a quantum photonic vibrometer to DEF, University of Technology in the Netherlands, to support cutting-edge research in non-destructive testing and structural health monitoring. Shortly after that, we announced the sales. of a chemical reservoir computing device to a major automotive manufacturer for R&D use. Both of these we demonstrate how we are broadening adoption of our quantum solutions across both academic and industrial market.
Speaker Change: So that a quantum photonic why for me to to death University of technology in the Netherlands to support Cottie edge research in non destructive testing and the structure.
Speaker Change: Health monitoring shortly.
Speaker Change: Shortly after that we announced the cells.
Speaker Change: Of a email called reservoir computing device to a major automotive manufacturer for R&D use.
Speaker Change: Both of these wins.
Speaker Change: Demonstrating how we are broadening adoption of all Qantas solutions across both academic and industrial markets.
Yu-Ping Huang: On the marketing front, we attended some key trade shows where we connected with prospective customers and partners.
Speaker Change: On the marketing front, we attended some key trade shows where we connected with prospective customers and partners.
Yu-Ping Huang: Those interactions are expanding our relationships and building awareness of our solution. During the quarter, we also strengthened.
Speaker Change: <unk> interactions expanding our relationships and building awareness of our solutions.
Speaker Change: During the quarter, we also strengthened.
Yu-Ping Huang: our board with the addition of Eric Schwartz. Eric brings more than 20 years of experience in financing, M&A, and corporate strategy. Here's guided companies through the exact types of commercialization and the manufacturer scale-up efforts we are working on now. So his expertise will be a great asset as we move forward.
Speaker Change: Our Board was addition of Arab show Us that.
Eric: Eric brings more than 20 years of experience in financing and Monday.
Speaker Change: And corporate strategy.
Speaker Change: He has guided the company through the exact types of commercialization and manufacturing scale up efforts, we are working on now.
Speaker Change: So his expertise will be a great asset as we move forward.
Chris Bungler: With that, I will turn the call over to our CFO, Chris Bungler, to walk through our financials. Thank you so much, Yuping. I will provide a brief overview of our financial performance for the first quarter of 2025. First quarter 2025 revenues totaled approximately $39,000 compared to $27,000 in the prior year quarter. Our gross margin decreased to 33% from 41% in the first quarter of 2024.
Speaker Change: With that I will turn the call over to I'll say them, all Chris Butler to walk through our financials.
Chris Butler: Thank you so much you paying I will provide a brief overview of our financial performance for the first quarter of 2025.
Chris Butler: First quarter 2025 revenues totaled approximately 39000 compared to 27000 in the prior year quarter, our gross margin decreased to 33% from 41% in the first quarter of 2024.
Chris Bungler: something that remains variable at our current revenue level. With our continued strengthened capital position, which was fueled by three separate financings during the three months ended at January 2025. We are strategically investing in key growth areas to advance both our quantum machine program and our Tiflin chip foundry initiatives. Operating expenses for the first quarter totaled $8.3 million compared to $6.3 million in the same quarter last year. Employee-based expenses were the main driver of the year-over-year increase. The company reported net income attributable to common stockholders of approximately $17 million, or $0.13 per basic share, compared to a net loss of $6.4 million in the prior year quarter.
Chris Butler: It's something that remains variable at our current revenue level.
Chris Butler: With our continued strengthened capital position, which was fueled by three separate financings during the three months ended January 2025.
Chris Butler: We are strategically investing in key growth areas to advance both our quantum machine program.
Chris Butler: Our <unk> chip foundry initiatives.
Chris Butler: Operating expenses for the first quarter totaled $8 3 million compared to $6 3 million in the same quarter last year.
Chris Butler: Employee based expenses were the main driver of the year over year increase.
The company reported net income attributable to common stockholders of approximately 17 million or <unk> 13 per basic share compared to a net loss of $6 4 million in the prior year quarter.
Chris Bungler: The increase in net income this quarter was primarily due to a $26 million non-cash gain on the mark-to-market valuation of the company's warrant-related derivative liability as a result of our merger with Qfoton in June of 2022. As of March 31st, 2025, total assets stood at approximately $242.5 million, up from $153.6 million at year-end 2024. Cash and cash equivalents increased by $87.5 million to $166.4 million at quarter end, bolstered by total net proceeds of approximately $93.6 million raised in the first quarter through offerings of our common stock. Total liabilities at year-end were $21.7 million, a decrease of approximately $25 million compared to year-end 2024.
Chris Butler: The increase in net income this quarter was primarily due to a two 6 million noncash gain on the mark to market valuation of the Companys warrant related derivative liability as a result of our merger with Q photon in June of.
Chris Butler: 2022.
Chris Butler: As of March 31, 2025, total assets stood at approximately $242 5 million up.
Chris Butler: Up from $153 6 million at year end 2024.
Chris Butler: Cash and cash equivalents increased by $87 5 million to $166 4 million at quarter end.
Chris Butler: All stirred by total net proceeds of approximately $93 6 million raised in the first quarter through offerings of our common stock.
Chris Butler: Total liabilities at year end were $21 7 million.
Chris Butler: A decrease of approximately 25 million compared to year end 2020 for drew.
Chris Bungler: driven primarily by the previously disclosed non-cash mark-to-market adjustment. for the aforementioned Q-Photon warrant liability. Stockholders' equity rose to $220.8 million, reflecting our strengthened capital position.
Chris Butler: Driven primarily by the previously disclosed noncash mark to market adjustment.
Chris Butler: For the aforementioned Q photon warrant liability.
Chris Butler: Stockholders equity rose to $228 million, reflecting our strengthened capital position.
Yu-Ping Huang: I'll now turn it back to Yuping for some closing remarks. Thank you, Chris. As you have heard throughout the call, QSAT has entered 2025 with strong momentum, both operationally and financially. We are advancing real-world applications of our quantum and photonic technologies, building valuable partnerships across government, research, and industry. and laying the groundwork for our long-term sustainable growth. With the completion of our 10B chip foundry, a growing pipeline of customer activity, and a strengthened balance sheet. We are well positioned to continue delivering on our mission.
Chris Butler: I'll now turn it back to you paying for some closing remarks.
Speaker Change: Thank you Chris.
Speaker Change: As you have heard throughout the call Cusack has entered 2025 ways strong momentum both operationally and financially.
Speaker Change: We are advancing in real world applications.
Speaker Change: Longtime the photonic technologies building valuable partnerships across government research and industry.
Speaker Change: And laying the groundwork for our long term sustainable growth.
Speaker Change: With the completion of our 10 day chip foundry.
Speaker Change: Growing pipeline of customer activity and a strengthened balance sheet.
Speaker Change: We are well positioned to continue delivering on our mission.
Yu-Ping Huang: Thank you for your continued support and interest in our progress.
Thank you for your continued support and interest in our progress was that we.
Operator: With that, We will now open the call for the question. Operator, please go ahead. Certainly.
Speaker Change: We will now open the call for the question operator. Please go ahead.
Speaker Change: Certainly at this time, we will be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad.
Operator: At this time, we will be conducting a question and answer. 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. You may press star 2 if you would like to remove your question from the... For participants using speaker equipment, it may be necessary to pick up your handset before pressing the start button.
Speaker Change: Confirmation tone will indicate your line is in the question queue you.
Speaker Change: You May press Star two if you would like to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star keys, one moment, please while we poll for questions.
Operator: One moment, please, while we poll for questions.
Speaker Change: Your first question for today is from Ed Woo with the city of <unk> capital.
Ed Woo: Your first question for today is from Ed Woo with Ascendian Capital. Yeah, congratulations on all the progress. My question is, you know, congratulations on the, you know, opening of the Tempe boundary.
Ed Woo: Yes, congratulations on all the progress my question is congratulations on the opening of the Tempe boundary. My question is is.
Ed Woo: My question is, is there any expectations of any capacity constraints in near term? And have you thought about potentially opening up another one, either in the US or internationally?
Ed Woo: Is there any expectation of any capacity constraints in the near term and have you thought about potentially opening up another one either in the U S or internationally.
Yu-Ping Huang: Thanks for the question, Ed. So to your first question, so the answer is yes, but I wanted to emphasize that QCI is developing and commercializing disruptive technologies. I believe that we will change the world, but not all by ourselves. We needed to build an ecosystem that is open, inclusive, and mutually beneficial. At this stage, we are still discovering our customers. explain our technology to them and let them validate our product. It all takes time, but once people start to see the power of our products. I believe that many will jump onto them, at which time I expect to see a very fast increase in the revenue.
Ed Woo: Thanks for the question Ed.
Ed Woo: So to your first question so the <unk>.
Ed Woo: Answer is yes, but I wanted to emphasize that <unk> is developing and commercializing disruptive technologies I believe that we will change the world, but no but not all by ourselves.
Ed Woo: We needed to build a ecosystem that is open in corrosive and mutually beneficial.
Ed Woo: This stage Westwood discovery our customers.
Ed Woo: They explained all the technology to them and let them validate our product.
Ed Woo: All it takes time, but once people start to see the power of our of our products.
Ed Woo: But even that the menu you jump onto them.
Ed Woo: At which time I expect to see very fast increase in the revenue.
Yu-Ping Huang: And another note that I would like to make is that, as many of you know, we had a pretty tough last year financially wise. We decided to cut costs and put our valuable resources to build our foundry and support our production. And this is why we were able to complete the foundry on time and why we have now multiple product offerings. And now at a much stronger financial position, we will boost our sales and the business development team to quickly expand our customer basis and to get ready for a fast growth in the revenue.
Ed Woo: And then another.
Ed Woo: Note that I would like to make is that as many of you know we had a pretty tough last year financial wise, we decided to cut cost and to put our valuable resources to.
Ed Woo: Beauty or foundry and are supporting our production and this is why we were able to complete the foundry.
Ed Woo: On tie and why we have now multiple product offering.
And now at a much stronger financial position will be a boost to our sales and business development team to quickly expand our customer basis and to get ready for a fast growth in the <unk>.
Speaker Change: Revenue so.
Yu-Ping Huang: So this is actually one main reason that we made the leadership promotions as we announced last week. Now, to your second question, Ed, yes, in fact, so right after the grand opening, so we had a two-day to develop wonderful technology and manufacturing capability at home.
Speaker Change: So this is actually one main reason that we made a leadership promotions as we announced last week.
Speaker Change: Now to your second question, Yes in fact, so right after the Grand opening so we had a two day.
John Walsh: John Walsh of between the team and the board and in the way, we really spend a lot of time talking about that the next is that including fab too. So so I think so.
John Walsh: We have some very exciting development ahead of us.
John Walsh: I cannot wait to see how the team.
John Walsh: We'll bring lots of those.
John Walsh: Those are.
John Walsh: Wonderful.
John Walsh: Technology and manufacturing capability at home.
Ed Woo: Great, thanks for answering my questions and I wish you guys good luck. Thank you. Thanks so much.
Speaker Change: Great. Thanks for answering my questions and I wish you guys. Good luck. Thank you.
John Walsh: Thanks, so much.
Yu-Ping Huang: We have reached the end of the question and answer session and I will now turn the call over to management for closing remarks. Thank you. And I would like to thank everyone again for joining and participating in today's call. I encourage you to follow us on social media channels, including LinkedIn, where we regularly post updates and insights into our business and technology. I believe that you can find some pictures about our facility, about FAB there, so I encourage you to check those media channels. Should you have any questions, please do not hesitate to reach out to our investor relations.
Speaker Change: We have reached the end of our question and answer session and I will now turn the call over to management for closing remarks.
Speaker Change: Thank you and I would like to thank everyone again for joining and participating in today's call I encourage you to follow us all social media channels, including Linkedin, where we regularly post updates and insights into August.
Speaker Change: And the technology I believe that that you can find some.
Speaker Change: Pictures about our fatality about fab there so I encourage you to attack those.
Speaker Change: Those are made in China. So do you have any questions. Please do not hesitate to reach out to our Investor Relations I wish you all a great rest of your day. Thank you so much.
Yu-Ping Huang: I wish you all a great rest of your day. Thank you so much.
Speaker Change: This concludes today's conference and you may disconnect. Your lines at this time. Thank you for your participation.
Operator: This concludes today's conference and you may disconnect your lines at this time. Thank you for your participation.