Quantum Computing Q1 2025 Earnings Call Transcript

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Operator

Ladies and gentlemen, greetings, and welcome to the Quantum Computing Inc. First Quarter twenty twenty five Shareholder Update Call. At this time, all participants are in a listen only mode. Following management's remarks, the call will be opened for questions. Please note this conference is being recorded.

Operator

It is now my pleasure to introduce your host, Rosalyn Christian with IMS Investor Relations.

Rosalyn Christian
Account Manager at IMS Investor Relations

Thank you, and I want to welcome everyone to the Quantum Computing Inc. First Quarter twenty twenty five 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 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.

Rosalyn Christian
Account Manager at IMS Investor Relations

On the call today, we have Doctor. Yuping Huang, Interim CEO and Chairman and Chris Benle, CFO. The team will provide an update on the business, followed by a question and answer session. With that, I would like to turn the call over to management. Please go ahead, Yu Ping.

Yuping Huang
Yuping Huang
CEO & Chairman at Quantum Computing

Thank you everyone for joining us today to hear about QCDIS progress in the first quarter. 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 Doctor. 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 QSI 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.

Yuping Huang
Yuping Huang
CEO & Chairman at Quantum Computing

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. At the same time, the board has initiated a active search for QSight's next CEO, someone who can help us capture the substantial opportunities we see ahead in the market. 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 a quantum optics technology company.

Yuping Huang
Yuping Huang
CEO & Chairman at Quantum Computing

Our mission is to deliver accessible, affordable quantum machines and the photonic solutions that solve real world problems today, not decades for now. By leveraging the unique properties of thin film lithium niobate and advanced photonic engineering, we are building systems that operate at room temperature, consume low power and seamlessly integrate into existing infrastructures. 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 by focusing on two key areas. The first is our quantum machines, which solves complex optimization, machine learning and sensing problems in fields like biomedical research, transportation and finance.

Yuping Huang
Yuping Huang
CEO & Chairman at Quantum Computing

The second is our thin film nissanitebate photonic tube foundry, which provides critical building blocks for next generation telecommunications, AI and quantum applications. And now for a summary of our progress this quarter. First, let's start with the progress we've made at our Quantum Photonic Chip Foundry in Tempe, Arizona. In the first quarter of twenty twenty five, 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 our customer deliveries, some which we fulfilled using a shared use facility in the past.

Yuping Huang
Yuping Huang
CEO & Chairman at Quantum Computing

This is a specialty fab purposely built to manufacture high performance thin film lithium ion photonic integrated circuits. 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 demand, 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. 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 these capacities. We are working closely with our pre order customers to finalize designs and start fabrication and we are excited about what's ahead.

Yuping Huang
Yuping Huang
CEO & Chairman at Quantum Computing

And now for our quantum machine business, in the first quarter of twenty twenty five, we announced a great collaboration with Sandoz Ture Institutional Therapeutics Discovery Institute. This is a joint effort between Memorial Sloan Kettering, Rockefeller University and, Weill Cornell 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 DIRECT3. And it demonstrates that the QSET systems are making an impact today, not five or ten years down the road.

Yuping Huang
Yuping Huang
CEO & Chairman at Quantum Computing

Since the end of the quarter, we have kept the momentum going. We recently announced that we secured a new subcontract through the Analytic Mechanics Associates to support NASA's Langley 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. Subsequent to the quarter, we also booked two exciting new customer orders.

Yuping Huang
Yuping Huang
CEO & Chairman at Quantum Computing

First, 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 immunohistorological computing device to a major automotive manufacturer for R and D use. Both of these wins demonstrate how we are broadening adoption of our QUANTON solutions across both academic and industrial markets. On the marketing front, we attended some key trade shows where we connected with prospective customers and partners. Those interactions are expanding our relationships and building awareness of our solutions.

Yuping Huang
Yuping Huang
CEO & Chairman at Quantum Computing

During the quarter, we also strengthened our board with addition of Eric Schwarz. Eric brings more than twenty years of experience in financing, M and A and corporate strategy. He has guided companies through the exact types of commercialization manufacturer scale up efforts we are working on now. So his expertise will be a great asset as we move forward. With that, I will turn the call over to our CFO, Chris Vanla to walk through our financials.

Chris Boehmler
Chris Boehmler
CFO at Quantum Computing

Thank you so much, Yu Ping. I will provide a brief overview of our financial performance for the first quarter of twenty twenty five. First quarter '20 '20 '5 revenues totaled approximately 39,000 compared to twenty seven thousand in the prior year quarter. Our gross margin decreased to 33% from 41% in the first quarter of twenty twenty four, 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 January 2025, We are strategically investing in key growth areas to advance both our quantum machine program and our Tiflin chip foundry initiatives.

Chris Boehmler
Chris Boehmler
CFO at Quantum Computing

Operating expenses for the first quarter totaled 8,300,000.0 compared to 6,300,000.0 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 17,000,000 or 13¢ per basic share compared to a net loss of 6,400,000.0 in the prior year quarter. The increase in net income this quarter was primarily due to a 26,000,000 non cash gain on the mark to market valuation of the company's warrant related derivative liability as a result of our merger with Q Photon in June of twenty twenty two. As of 03/31/2025, total assets stood at approximately 242,500,000.0, up from 153,600,000.0 at year end 2024.

Chris Boehmler
Chris Boehmler
CFO at Quantum Computing

Cash and cash equivalents increased by 87,500,000.0 to 166,400,000.0 at quarter end, bolstered by total net proceeds of approximately 93,600,000.0 raised in the first quarter through offerings of our common stock. Total liabilities at year end were 21,700,000.0, a decrease of approximately 25,000,000 compared to year end 2024, driven primarily by the previously disclosed non cash mark to market adjustment for the aforementioned QFOTON warrant liability. Stockholders' equity rose to 220,800,000.0 reflecting our strengthened capital position. I'll now turn it back to Youping for some closing remarks.

Yuping Huang
Yuping Huang
CEO & Chairman at Quantum Computing

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 the 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 10P chip foundry, a growing pipeline of customer activity and a strengthened balance sheet, we are well positioned to continue delivering on our mission. Thank you for your continued support and interest in our progress.

Yuping Huang
Yuping Huang
CEO & Chairman at Quantum Computing

With that, we will now open the call for the question. Operator, please go ahead.

Operator

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. A confirmation tone will indicate your line is in the question queue. You may press 2 if you would like to remove your question from the queue.

Operator

For participants using speaker equipment, it may be Your first question for today is from Ed Woo with Ascenient Capital.

Edward Woo
Director of Research & Senior Analyst at Ascendiant Capital

Yeah. Congratulations on all the progress. My question is, you know, congratulations on the, you know, opening of the Tempe boundary. My question is, is there any expectations of any capacity constraints going in near term? And have you thought about potentially opening up another one either in The US or internationally?

Yuping Huang
Yuping Huang
CEO & Chairman at Quantum Computing

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 a ecosystem that is open, inclusive, and mutually beneficial.

Yuping Huang
Yuping Huang
CEO & Chairman at Quantum Computing

At this stage, we have to discovery our customers, explain our technology to them and let them validate our products. It all takes time, but once people start to see the power of our products, believe that the many will jump onto them, at which time I expect to see very fast increase in the revenue. And another 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 costs and put our valuable resources to build our foundry and supporting our production. And this is why we were able to complete the foundry, the fab one on time and why we have now multiple product offering.

Yuping Huang
Yuping Huang
CEO & Chairman at Quantum Computing

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. So this is actually one main reason that we made the leadership promotions as we announced last week. Now to your second question, yes, in fact, so right after the grand opening, we had a two day joint workshop between the team and the board and we really spent a lot of time talking about the next step, including Fab two. So I think we have some very exciting development ahead of us I could not wait to see how the team will bring lots of those wonderful technology and manufacturing capability home.

Edward Woo
Director of Research & Senior Analyst at Ascendiant Capital

Great, thanks for answering my questions and I wish you guys good luck. Thank you.

Yuping Huang
Yuping Huang
CEO & Chairman at Quantum Computing

Thanks so much, Ed.

Operator

We have reached the end of the question and answer session, and I will now turn the call over to management for closing remarks.

Yuping Huang
Yuping Huang
CEO & Chairman at Quantum Computing

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 and 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 on those meeting channels.

Yuping Huang
Yuping Huang
CEO & Chairman at Quantum Computing

Should 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.

Operator

This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.

Executives
Analysts

Key Takeaways

  • Dr. Yuping Huang was appointed interim CEO and the board has launched a search for a permanent successor following Bill McGann’s retirement.
  • Construction of the thin film lithium niobate foundry in Tempe, AZ is complete, with tool testing underway, certifications being finalized, and initial customer deliveries slated for 2025, ramping further in 2026.
  • QCI secured its fifth foundry purchase order from a leading Canadian research institute and is working with pre-order customers to finalize designs and begin fabrication.
  • The quantum machine segment gained momentum via a collaboration with the Sandoz Therapeutics Discovery Institute, a NASA subcontract for daylight LiDAR data processing, and new orders from Delft University and a major automotive R&D program.
  • First quarter revenue rose to $39K (up from $27K), while net income reached $17M (vs. a $6.4M loss) largely due to a $26M non-cash warrant valuation gain, and cash reserves increased to $166.4M.
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Earnings Conference Call
Quantum Computing Q1 2025
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