Quantum Computing Q2 2026 Earnings Report

Quantum Computing EPS Results

• Actual EPS: -$0.05
• Consensus EPS: -$0.03
• Beat/Miss: Missed by -$0.02
• One Year Ago EPS: N/A

Quantum Computing Revenue Results

• Actual Revenue: $5.55 million
• Expected Revenue: $5.15 million
• Beat/Miss: Beat by +$399.00 thousand
• YoY Revenue Growth: N/A

Quantum Computing Announcement Details

• Quarter: Q2 2026
• Date: 8/10/2026
• Time: After Market Closes
• Conference Call Date: Monday, August 10, 2026
• Conference Call Time: 4:30PM ET

Quantum Computing (NASDAQ:QUBT), Inc. (NASDAQ: QUBT), also known as QCi, develops quantum computing and quantum optics technologies designed to address complex computational and optimization problems. The company focuses on photonic quantum computing, which uses light-based systems intended to operate at or near room temperature and potentially reduce the infrastructure requirements associated with some conventional quantum-computing architectures.

QCi’s offerings include quantum optimization systems and related software intended for applications such as logistics, financial modeling, artificial intelligence, machine learning, cybersecurity and drug or materials discovery. The company has also offered access to its technology through cloud-based and on-premises solutions, seeking to make quantum and quantum-inspired computing tools available to commercial, government and research customers.

Founded in 2018, Quantum Computing, Inc. is headquartered in Leesburg, Virginia. Its business is focused primarily on developing and commercializing photonic quantum technologies for customers in the United States and other markets. Robert Liscouski serves as the company’s chairman and chief executive officer.

Quantum Computing Q2 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Second-quarter revenue rose to $5.6 million from $61,000 a year earlier and $3.7 million in Q1, with contributions from government, commercial, and educational customers. Contract backlog stood at approximately $42.5 million at June 30, expected to support activity through at least Q3 2027 if no additional contracts are won.
• Positive Sentiment: QCi highlighted commercial milestones including the installation of a Dirac-3 optimization machine, a university order for quantum-secure communications, and a NeuraWave framework agreement with an initial order for five systems and potential program value exceeding $10 million.
• Positive Sentiment: The NHanced Semiconductors acquisition launched the company’s Fab 2 initiative and expanded advanced packaging, chiplet, photonic integration, and U.S.-based manufacturing capabilities. Management said the facility can process roughly 60,000 wafers annually and strengthens the infrastructure for commercial photonics and future quantum products.
• Negative Sentiment: Operating expenses more than doubled year over year to $21.8 million, including approximately $7.3 million in acquisition-related costs, while the company still reported an $11.8 million net loss. Cash, cash equivalents, and investments declined to about $1.3 billion after roughly $180 million was spent on acquisitions, and management is considering up to approximately $75 million of additional Fab 2 investment.
• Neutral Sentiment: Government work, mainly subcontracting, currently represents roughly 70%–80% of the business, while commercial activity is expected to grow gradually. Management cautioned that revenue from NHanced and other technical contracts can be lumpy and difficult to forecast quarter to quarter, with some projects and funding pushed into later periods.

Presentation

[Operator]

Following management's remarks, the call line will be opened for questions. It is now my pleasure to introduce your host, John Nesbitt, with IMS Investor Relations.

[John Nesbitt, Head of Investor Relation at IMS Investor Relations]

Thank you, and I want to welcome everyone to Quantum Computing Inc.'s second quarter 2026 shareholder update call. Before we begin, please note that today's remarks may include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding expected results, operational plans, strategy, and market opportunities. These statements are made pursuant to the Safe Harbor provision of Section 27A of the Securities Act and Section 21E of the Exchange Act and are based on current assumptions and expectations. Forward-looking statements are neither promises nor guarantees and involve risks and uncertainties that could cause actual results to differ materially. Important risk factors are discussed in our annual report on Form 10-K for the year ended December 31st, 2025, and in subsequent SEC filings, including the quarterly report on Form 10-Q for the quarter ended June 30th, 2026.

[John Nesbitt, Head of Investor Relation at IMS Investor Relations]

We undertake no obligation to update these statements except as required by law. On the call today, we have Dr. Yuping Huang, Chief Executive Officer and Chairman, and Chris Roberts, Chief Financial Officer. The team will provide an update on the business, followed by a question and answer session. With that, I will now turn the call over to management. Please go ahead, Yuping.

[Yuping Huang, CEO and Chairman at Quantum Computing]

Good afternoon, and thank you for joining us for Quantum Computing Inc.'s second quarter 2026 earnings call. During the second quarter, we continued to build on the momentum established in the first quarter, executing on our quantum roadmap while expanding the technologies and manufacturing capabilities that enable both our quantum systems and a growing portfolio of commercial products and services. We also made meaningful progress in our transition toward scalable, cost-effective production of miniaturized quantum products based on nanophotonics and advanced packaging. As I have said before, our goal is simple, to put quantum products and technologies into the hands of everybody. Everything we do at QCi is focused on making quantum systems smaller, more practical, more affordable, and ultimately, more accessible. At our core, QCi is a quantum technology company.

[Yuping Huang, CEO and Chairman at Quantum Computing]

Our long-term vision is to develop quantum systems built on nanophotonics and advanced packaging that can be manufactured at scale and deployed across real-world applications. Supporting this strategy is the expansion of our portfolio of photonic components, lasers, detectors, photonic integrated circuits, thin film lithium niobate-based technologies, optical packaging, advanced packaging, and U.S.-based semiconductor manufacturing and foundry services. These products and services address growing commercial markets today while providing the core technologies and manufacturing capabilities that will enable our current customers access to the next-generation quantum systems. This integrated approach is central to our strategy. By investing in commercially relevant photonics and semiconductor technologies, we are creating value today while building the engineering activities, manufacturing scale, and the production infrastructure needed to enable our long-term quantum roadmap.

[Yuping Huang, CEO and Chairman at Quantum Computing]

During the first half of the year, we completed three strategic acquisitions that significantly expanded our commercialization efforts, technical capabilities, manufacturing capacities, and engineering talent. Together, these acquisitions have strengthened our ability to execute across multiple high-growth markets while creating a more integrated company serving customers in photonics, semiconductor manufacturing, AI, defense, aerospace, telecommunications, and quantum technologies. Each acquisition contributes unique technologies and activities that strengthens our portfolio of intellectual property, and we are already seeing the benefits of integrating these organizations. Just as importantly, we have welcomed some of the industry's leading engineers and scientists who are now focused on advancing our mission to deliver practical, scalable, and accessible quantum solutions. During the second quarter, we completed the strategic acquisition of NHanced Semiconductors, Inc., allowing us to launch our Fab 2 initiative ahead of schedule to advance key roadmap development goals and expand manufacturing capabilities.

[Yuping Huang, CEO and Chairman at Quantum Computing]

NHanced is the leading independent U.S.-based advanced package foundry with deep expertise in integration, hybrid bonding, chiplet architectures, silicon interposers, photonic device integration, and advanced semiconductor packaging and manufacturing. The NHanced acquisition immediately expands our advanced packaging and semiconductor manufacturing capabilities in core nanophotonics area and beyond, while strengthening the production infrastructure supporting our thin film lithium niobate-based platform and future quantum products. Importantly, it also adds to our customer base, production capacity, operational flexibility, and brings an experienced engineering team, positioning us to better serve both commercial and government customers today, while accelerating commercial development of next generation and quantum technologies. In April, we announced that NeuraWave, our next generation photonic reservoir computing platform, reached commercial readiness. NeuraWave combines photonic and digital computing to deliver fast, energy-efficient AI inference and advanced signal processing at the edge.

[Yuping Huang, CEO and Chairman at Quantum Computing]

It is designed to support a broad range of applications across defense, telecommunications, autonomous vehicles, robotics, healthcare, industrial monitoring, and other markets where real-time intelligence and low-power operations are critical. NeuraWave also demonstrate the versatility of our photonics platform. The technologies we are developing extend well beyond quantum computing, enabling differentiated solutions across AI communications, sensing, and edge computing. This allows us to participate in large and growing commercial market while continue to advance our quantum roadmap. In June, we successfully delivered and installed our Dirac-3 quantum optimization machine at a global consulting firm, marking another important commercial milestone for QCi. The Dirac-3 system is being deployed to support our customers' engagements with their enterprise customers on complex optimization challenges, including portfolio optimization.

[Yuping Huang, CEO and Chairman at Quantum Computing]

This sale demonstrates the growing interest in practical quantum optimization solutions and reflects our continued progress in bringing commercially relevant quantum technologies into real-world customer environments. Also in June, we reached a framework agreement with Planck Dynamics that included an initial purchase order for five of our NeuraWave photonic reservoir computing systems. Beyond this initial order, the agreement provides a pathway for the potential deployment of multiple dozens of NeuraWave systems as customer milestones are achieved, representing a potential aggregate program value of more than $10 million. We view this as an important validation of our photonic computing technology, its commercial readiness, and its ability to address emerging AI infrastructure requirement on a commercial scale. We also expanded the commercial reach of our quantum communication portfolio with a purchase order from a world-leading university for our quantum secure communications system.

[Yuping Huang, CEO and Chairman at Quantum Computing]

The university plans to evaluate our technology as part of its broader research and development effort focused on quantum secure networking for next generation communication infrastructure. We believe this order reflects continued commercial traction for our quantum communications solution and growing recognition of the role quantum secure communications will play in the networks of the future. During the second quarter, we attended 8 industry conferences to broaden our visibility and strengthen our strategic partnerships across the quantum ecosystem. These engagements, including the Fifth Annual Economist Commercialising Quantum Global 2026 Conference, the Quantum.Tech World Conference, and the Optica Quantum Industry Summit, gave us the opportunity to connect with customers, government stakeholders, and prospective partners while showcasing our expanding photonics and quantum optics capabilities. Looking ahead, we remain focused on two complementary growth engines.

[Yuping Huang, CEO and Chairman at Quantum Computing]

First, we will continue to move aggressively along our quantum technology roadmap, leveraging our differentiated room temperature photonic architecture to develop quantum systems that are smaller, more scalable, and more practical for real-world deployment. As these technologies become commercially viable, it allows us to better serve our existing customer base, who will be exploring use cases for these systems. Second, we will continue to grow our commercial portfolio of photonic components, lasers, detectors, photonic integrated circuits, thin film lithium niobate technologies, optical packaging, advanced packaging, semiconductor manufacturing, and other foundry services. These products and services generate revenue and address attractive market opportunities today, while providing technologies, manufacturing activities, and production scale that directly support and enable our long-term quantum strategy. Our scalable manufacturing strategy has accelerated significantly with the expansion from our Fab 1 facility in Tempe, Arizona, to the launch of Fab 2 through NHanced acquisition.

[Yuping Huang, CEO and Chairman at Quantum Computing]

Together, these facilities strengthen our ability to serve commercial customers across multiple industries, support government programs, expand U.S.-based manufacturing services, and scale production as demand grows. We continue to see encouraging commercial validation through new customer engagements, strategic partnerships, and government programs across both our commercial photonic business and our quantum products. We believe our unique combination of photonics innovation, semiconductor manufacturing, advanced packaging, and quantum technology positions QCi to create sustainable long-term value by serving customers across a broad and expanded set of high-growth markets, while continuing to build technologies that will define the future of quantum computing. As we execute on our roadmap, our focus remains unchanged: putting quantum into the hands of everybody. We are moving quantum out of laboratory and into business, government agencies, critical infrastructure, and ultimately, everyday applications.

[Yuping Huang, CEO and Chairman at Quantum Computing]

Our room temperature, chip-scale photonic architecture is a key differentiator, dramatically reducing system complexity, power consumption, and cost while enabling practical deployment in real-world environments. We believe the combination of our quantum technology leadership, expanding photonics portfolio, and growing manufacturing capabilities positions QCi to help shape the next generation of information processing, while creating long-term value for our customers and shareholders. Now I am going to turn the call over to Chris Roberts, who is going to review financials. Chris?

[Chris Roberts, CFO at Quantum Computing]

Thank you, Yuping. It is my pleasure to review QCi's financial performance for the second quarter. Revenue for the second quarter of 2026 totaled $5.6 million, compared to $61,000 in the second quarter of 2025 and $3.7 million in the first quarter of this year. All business units of the company contributed to the second quarter revenue, which derives from a broad cross-section of government, educational, and commercial customers. Second quarter revenue came mainly from the sales of various photonics products that are critical to our quantum roadmap and a wide range of existing industrial applications. Operating expenses for the second quarter totaled $21.8 million, compared to $10.2 million in the second quarter of 2025, an increase of 114%. The year-over-year increase was largely due to increase in personnel and related payroll costs for R&D efforts, sales and marketing, as well as acquisition-related transaction expenses of approximately $7.3 million.

[Chris Roberts, CFO at Quantum Computing]

Interest and other income for the quarter totaled $13 million compared to $1.8 million in the second quarter of 2025. The increase in interest income was due to interest generated from the company's larger cash position compared with last year. The company reported a net loss of $11.8 million, or a loss of $0.05 per share for the second quarter of 2026 compared to a net loss of $36.5 million or $0.26 per basic share for the prior year period. The main reason for the decrease in net loss was the change in the fair value of a derivative liability. To give you some detail, in the second quarter of 2025, the company recognized a $28 million non-cash loss on the mark-to-market valuation of the company's warrant derivative liability, compared to a mark-to-market loss of only $1.7 million in the second quarter of 2026.

[Chris Roberts, CFO at Quantum Computing]

I want to emphasize, these are non-cash losses, and as previously disclosed, the derivative liability we are talking about is related to the merger with QPhoton in June of 2022, and the warrants issued with that transaction. Our balance sheet continues to be strong. Total assets as of June 30, 2026, were approximately $1.6 billion, relatively unchanged compared to December 31 of 2025. Cash, cash equivalents, and investments totaled approximately $1.3 billion as of June 30, 2026, compared to approximately $1.5 billion at year-end 2025.

[Chris Roberts, CFO at Quantum Computing]

The cash balance reported at the end of the second quarter reflects expenditures for our acquisitions of Luminar Semiconductor, NuCrypt, and NHanced Semiconductors, for which we used approximately $180 million in cash, including transaction expenses. Total liabilities as of June 30, 2026, were $47.2 million, an increase of $26.5 million compared to year-end 2025. As of June 30, the company had stockholders' equity of $1.6 billion.

[Chris Roberts, CFO at Quantum Computing]

Our contract backlog as of June 30, 2026, was approximately $42.5 million. I will turn the call back over to Yuping.

[Yuping Huang, CEO and Chairman at Quantum Computing]

Thank you, Chris. As we look ahead to the second half of 2026, we remain focused on integrating our recent acquisitions and unlocking the full value of talent, technology, and the manufacturing capabilities they bring to QCi. We continue to advance our transition from research-driven innovation and prototyping towards scalable commercial manufacturing, positioning us to meet growing demand across our target markets. We are encouraged by the momentum in our commercial and government contract pipeline and remain committed to executing on the partnerships that extend our reach and credibility in the marketplace. As always, we will continue to evaluate targeted acquisition opportunities that strategically strengthen our organization and drive our path to scale. All of this is underpinned by a strong balance sheet, which gives us the financial flexibility to invest in our organization and strategically pursue those opportunities from a position of strength.

[Yuping Huang, CEO and Chairman at Quantum Computing]

We remain guided by our core principle of practicality first, scalability by design, and innovation with a purpose as we build the future of quantum for everyone. Our strategy is straightforward: move aggressively to commercialize quantum technologies while continuing to expand the photonics, semiconductor, and advanced manufacturing capabilities that create value today and provide the foundation for the quantum industry of tomorrow. Thank you for your time today and your continued support of Quantum Computing Inc. We look forward to updating you on our continued progress throughout the rest of the year. Operator, please open up the call for questions.

[Operator]

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 one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. 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. The first question today is coming from John McPeake from Rosenblatt Securities. John, your line is live.

[John McPeake, Analyst at Rosenblatt Securities]

Thank you. Congrats, Yuping and Chris, on closing NHanced and the progress here.

[Yuping Huang, CEO and Chairman at Quantum Computing]

Thank you.

[John McPeake, Analyst at Rosenblatt Securities]

Yeah, no problem. The question, I have a few. The first one is on Dirac-3, the enhancements that we've been talking about relative to additional variables being enabled in the system. Anything you can talk about there, Yuping?

[Yuping Huang, CEO and Chairman at Quantum Computing]

Yep. Thanks, John. Certainly, on Dirac-3, we in the past, as we reported, we have already seen clear advantages of using quantum effects. We also realized that for wide adoption, we needed to provide more functionality and be able to support more and more variables. I'm very happy to report that, John, we have made pretty good progress on that. I would advise you to watch out for some news coming out in the coming months. Personally, I'm very happy and excited about the progress that we have made.

[John McPeake, Analyst at Rosenblatt Securities]

Okay, that could unlock some additional markets with more variables is the way I would think about it, I guess. Yeah.

[Yuping Huang, CEO and Chairman at Quantum Computing]

Yep. I'm pretty confident on that.

[John McPeake, Analyst at Rosenblatt Securities]

All right, great. One follow-up. With the NHanced acquisition, have your CapEx needs changed relative to FAB2? Because they are bringing some nice packaging and other capabilities to you guys.

[Chris Roberts, CFO at Quantum Computing]

That's a really good question, and we're looking closely at what we need to do to upgrade the capability at the NHanced facility. They can currently do roughly 60,000 wafers a year, so it's a substantial increase over our FAB1. But there are some features we'd like to have. We're looking at less than it would take to build out a whole new facility, so probably in the $50 million-$100 million range. Probably closer to $75 million is what we're looking at, but we don't have that. It's still in the planning stages, and we're probably not going to spend anywhere near that this year.

[John McPeake, Analyst at Rosenblatt Securities]

Okay, great. Thanks. I'll get back in the queue. Thanks, guys.

[Chris Roberts, CFO at Quantum Computing]

Okay.

[Yuping Huang, CEO and Chairman at Quantum Computing]

Thank you, John.

[John McPeake, Analyst at Rosenblatt Securities]

Thank you.

[Operator]

The next question is coming from Max Michaelis from Lake Street Capital Markets. Max, your line is live.

[Max Michaelis, Analyst at Lake Street Capital Markets]

Yeah, guys. Hey, a few questions from me. I want to touch on the backlog. Thanks for giving that data. $42.5 million at the end of June. Just curious to know how that's trended in the past month or two.

[Chris Roberts, CFO at Quantum Computing]

Well, certainly with the acquisition of, are you talking about up to June 30th or after June 30th?

[Max Michaelis, Analyst at Lake Street Capital Markets]

Well, after June 30th. Yeah, $42.5 million is up till June 30th, so how has that trended in the past month and a half or so? Just curious.

[Chris Roberts, CFO at Quantum Computing]

With the kind of contracts we're dealing with, the backlog tends to move in fits and spurts. There'll be a quiet week, and then there'll be a very big week. There hasn't been a lot of change in the last 40 days. As you can imagine, a lot of that increase from the backlog we reported at the end of Q1 is related to NHanced, but we've also had a pretty good run of business development success across the company. One way to think about the backlog is that these are not quick turn contracts. These are contracts that will be performed over a period of 12-18 months. We're not expecting to burn the backlog up between now and December. This is really, if nothing else came in, this would keep us going until third quarter of next year, maybe a little bit longer.

[Max Michaelis, Analyst at Lake Street Capital Markets]

Perfect. Then just going off of the Q2 revenue, you touched on the range of government, educational, and commercial customers. Just curious to know which end market you feel like you're having the best headway with right now in terms of customer conversations and potential orders. Just kind of maybe stack rank those end markets that you guys shared in the press release today.

[Chris Roberts, CFO at Quantum Computing]

Yeah. Right now, we are primarily a provider to government agencies, whether it's mainly through subcontracts. Commercial would be a second. Educational is a distant third in terms of just markets. That's true across the entire company. A large portion of the work that we're doing is in subcontracts to primes, both the civil side as well as aerospace and defense. We expect that that's probably going to continue for a while. But we're seeing a lot of interest in commercial markets for quantum and other products. So we think that the balance is going to gradually shift over time. But right now, roughly 70%-80% of our business comes from government contracting, mainly as a subcontractor.

[Max Michaelis, Analyst at Lake Street Capital Markets]

Yep. All right, guys, that's it for me. Thanks for taking my questions.

[Chris Roberts, CFO at Quantum Computing]

Sure.

[Operator]

Thank you. The next question will be from Troy Jensen from Cantor Fitzgerald. Troy, your line is live.

[Troy Jensen, Analyst at Cantor Fitzgerald]

Hey, gentlemen. Congrats on all the progress here. Maybe I will start with you, Yuping. I just got a question on Dirac. I guess I have seen a couple of optimization examples, and there was always a quantum computer in the background kind of driving it. So is this an [inaudible]?

[Chris Roberts, CFO at Quantum Computing]

Troy, you are breaking up a little bit.

[Yuping Huang, CEO and Chairman at Quantum Computing]

Yeah, Troy, I could not hear you well.

[Troy Jensen, Analyst at Cantor Fitzgerald]

All right, I will try again. I was just curious. Can you hear me, guys?

[Chris Roberts, CFO at Quantum Computing]

Yes.

[Yuping Huang, CEO and Chairman at Quantum Computing]

Hello.

[Troy Jensen, Analyst at Cantor Fitzgerald]

Can you hear me now?

[Yuping Huang, CEO and Chairman at Quantum Computing]

Troy-

[Yuping Huang, CEO and Chairman at Quantum Computing]

Yes. We can.

[Yuping Huang, CEO and Chairman at Quantum Computing]

Your voice still breaks up a bit.

[Troy Jensen, Analyst at Cantor Fitzgerald]

Yep. I'm going to try one more time. Can you hear me now, guys?

[Yuping Huang, CEO and Chairman at Quantum Computing]

I can hear you now.

[Troy Jensen, Analyst at Cantor Fitzgerald]

Gentlemen, can you hear me?

[Chris Roberts, CFO at Quantum Computing]

Yeah, I can hear you.

[Troy Jensen, Analyst at Cantor Fitzgerald]

Okay. Okay, perfect. Had to step outside. I've seen a couple of these optimization examples in the past, and it seems like they're always being driven by a quantum computer in the background. I'm just curious, the Dirac, is this an application that's working with other systems? Or just explain a little bit more. That'd be great.

[Yuping Huang, CEO and Chairman at Quantum Computing]

Yep. As you know, Troy, Dirac-3 machines were designed specifically to solve some very complex and NP-hard optimization problems. The purpose of Dirac-3 is really there to look at how to utilize the quantum effects to better solve those NP-hard problems that are very challenging to solve on the classical machines, usually trapped in what people usually call local minimum. What we have found is that the quantum effects that we utilize in the Dirac machines can indeed help us hop off the local minimum. From that perspective, the advantage stems similarly from the, say, quantum annealing, but with the distinction that it is not a quantum annealing machine, instead it is room temperature, and we use photonics.

[Yuping Huang, CEO and Chairman at Quantum Computing]

As I just reported, in the past, both our own engineers and outside users, they have really benchmarked our machine against other optimization machines using quantum effects. They have reported pretty clear advantage over both classical approaches and over other quantum machines that they can access in the market. On other hand, we also understand that for our technology to be widely adopted, we needed to continue to reduce the SWAP-C parameters while supporting more and more variables and improve the quality of the solutions. This is what our team has been focused on. Recently, indeed, we have made some very exciting progress, and that would help us to connect with more customers, be able to give more and more quantum values to customers for the practical applications.

[Troy Jensen, Analyst at Cantor Fitzgerald]

Great. Got you. Okay. Then maybe just a follow-up for Chris. Could you give us any help on, like, a revenue or an OpEx contribution from the NHanced acquisition?

[Chris Roberts, CFO at Quantum Computing]

Sure. We're still not giving formal guidance, Troy, but I want to point you to the pro formas in the most recent Q that was filed this afternoon. I think it's footnote four. In those pro formas, which go back, actually, footnote three. What you'll see is the breakout by company of the revenue by quarter, the first six months of this year and first six months of last year. The thing that leaps out is how variable the year-over-year revenue is. This is a business that tends to be lumpy. In the first half of last year, NHanced did about $16 million.

[Troy Jensen, Analyst at Cantor Fitzgerald]

Okay.

[Chris Roberts, CFO at Quantum Computing]

We're hoping the earn-out goals for 2027 are predicated on a $35 million revenue target. If you look at the pro formas, their numbers have gone down a bit more recently as some of the business mix has shifted, some funding on a big U.S. Navy contract has been pushed off to the next year. Let me answer this in two parts. We're standing by what we said before, which is that the models that we've seen that showed QCi before NHanced doing $20 million-$25 million for this year, we stand by that. The estimate that NHanced will contribute is somewhere in between the $7 million and $16 million that they've done in the past. It's really going to be depending on how quickly some of these projects are delivered and accepted by their customers.

[Chris Roberts, CFO at Quantum Computing]

Frankly, it's hard to predict when you're doing cutting-edge development work for a customer. Sometimes you get it done on the schedule, and sometimes it just takes a little bit longer. We're trying to be cautious and not get over our skis on this. I hope that helps.

[Troy Jensen, Analyst at Cantor Fitzgerald]

Yeah, that helps. Thank you, Chris.

[Chris Roberts, CFO at Quantum Computing]

We have a growing backlog, but due to the inherent challenges of technical completion and delivery, it's really hard to predict on a quarter-by-quarter basis. A little easier in the aggregate for a full year.

[Troy Jensen, Analyst at Cantor Fitzgerald]

Sure. All right. Good luck on that.

[Chris Roberts, CFO at Quantum Computing]

I would caution to err on the back-loading if you're doing a model.

[Troy Jensen, Analyst at Cantor Fitzgerald]

I will be CFO-friendly, I promise.

[Chris Roberts, CFO at Quantum Computing]

I appreciate it, Troy. Thanks.

[Yuping Huang, CEO and Chairman at Quantum Computing]

Thank you, Troy.

[Operator]

Thank you. The next question will be from Nehal Chokshi from Northland Capital Markets. Nehal, your line is live.

[Nehal Chokshi, Analyst at Northland Capital Markets]

Thank you. Yuping, you mentioned that Dirac has been benchmarked against other optimization machines, and you're seeing significant advantage. Is this data that has already been published and freely available to everybody else, or is this just information that you have received from the customer so far?

[Yuping Huang, CEO and Chairman at Quantum Computing]

I believe at least a portion of the data has been published in journals. I have also watched some of our customers reporting the findings in their presentations. Most of our internal benchmark, on the other hand, we have not published. Nehal, I can ask the team to provide you a collection of the papers presentations, either by our own engineers or by the external users.

[Nehal Chokshi, Analyst at Northland Capital Markets]

Yeah, that would be great. Would love to see that. All right. In the analog quantum computing space, I think you have two primary competitors with two different modalities. Do you see one of those two competitors being a particularly stronger competitor in that space?

[Yuping Huang, CEO and Chairman at Quantum Computing]

I would like to answer this question in this way. I think we all have our own understanding or our own design of quantum computers. But at the end of the day, it is going to be the customers, it is going to be the applications that define the value of any quantum machine, including quantum computers, that can create. As of now, according to many market researchers, and also according to our conversations with customers, it looks like optimization problems have perhaps the largest market potential. This is one reason that we started our business focusing on optimization using quantum effects. Down the road, I believe that gate-based machines will find more and more applications. In fact, this has also been a part of our roadmap as well. We started with the quantum optimization machine without having to use gate.

[Yuping Huang, CEO and Chairman at Quantum Computing]

But we have been working on the basis for the quantum gate-based machine. Of course, using photonics is much harder, but once we overcome the engineering challenges, we can be looking at the opportunity to mass produce such quantum photonic-based machines that will support volume production and reduce the unit price. Because at QCi, our mission is really to democratize quantum. Our mission, the North Star guiding everything what we do is to put quantum into the hands of people. I am not talking about a small group of people. I am talking about large population. This is why we have chosen this path, again it is much, much harder to construct the quantum gates using single photons. But once we overcome this difficulty, the manufacturing would be much easier.

[Yuping Huang, CEO and Chairman at Quantum Computing]

I think we are climbing the last half mile of mountain, and I am happy with the progress our team has been making on the gate-based machine as well. So don't take me wrong, we currently don't have gate-based machine yet, but we have been making very good progress.

[Nehal Chokshi, Analyst at Northland Capital Markets]

That's awesome. Thank you. Just to follow up on the quantum gate, you say once overcoming the engineering challenges, and you did mention single photon as being a key element here, are there other elements, other engineering challenges other than managing photon optical loss to the point of where you can basically maintain the integrity of a single photon throughout the quantum computer path?

[Yuping Huang, CEO and Chairman at Quantum Computing]

That's a great question, and I was expecting you to ask this in-depth question, Nehal. To the gate-based quantum machine using single photons, yes, photon-photon interaction is most critical and it's also most challenging, because this is a basis for the logic. In the meanwhile, we're talking about building a machine, right? We're not talking about demonstrating the gate fidelity. To construct a complete machine that function at room temperature and be able to integrate it into, say, other computing platforms such as GPU and CPU. We needed to have a self-contained system that will require us to have the lasers, the single photon detectors, controlling electronics all integrated on a single chip.

[Yuping Huang, CEO and Chairman at Quantum Computing]

This is actually the fundamental reasons why we have acquired Luminar Semiconductor, Inc., have acquired NHanced, because we are looking at developing those heterogeneous integrated chips to support our quantum computing platform and all the other quantum technologies, including the sensing, including the communications, and the photonic AI.

[Nehal Chokshi, Analyst at Northland Capital Markets]

Okay, great. Thank you very much.

[Yuping Huang, CEO and Chairman at Quantum Computing]

Thank you, Nehal.

[Operator]

Thank you. The next question is coming from Ed Wu from Ascendiant Capital. Ed, your line is live.

[Ed Wu, Analyst at Ascendiant Capital]

Yeah. Congratulations on all the progress, and congratulations on your increasing commercial scale. Will you have to invest significantly in a sales force as to expand your commercial opportunities? Thank you.

[Chris Roberts, CFO at Quantum Computing]

Actually, yes. We announced, I guess it was two weeks ago, that we hired Susan Hunt as our new Chief Revenue Officer, and our previous CRO is now in charge of products, product management. Susan has an aggressive plan, including hiring some key people, in both commercial and government sales. While we do have a reasonable size sales force today, we are very much going to emphasize sales going forward and try and build that backlog up as fast as we can.

[Yuping Huang, CEO and Chairman at Quantum Computing]

Yep, indeed. Ed, I also wanted to add that the reason that we have made this change is because our technology and the manufacturing capabilities have reached an inflection point. We are now really ready to embrace the market at a sizable scale, and we are ready to bring our technology and product into a much larger market because we are ready on the technology side, also on the manufacturing readiness level.

[Ed Wu, Analyst at Ascendiant Capital]

Great. Thanks for answering my question, and I wish you guys good luck. Thank you.

[Chris Roberts, CFO at Quantum Computing]

Thanks, Ed.

[Operator]

Thank you. That does conclude today's Q&A session. I would now like to hand the call back over to management for closing remarks.

[Yuping Huang, CEO and Chairman at Quantum Computing]

Thank you, everybody, for joining our earnings call. If you have any further questions, feel free to reach out to our investor relations. I wish everybody have a nice rest of the day. Thank you.

[Operator]

Thank you. This does conclude today's conference. You may disconnect your lines at this time. Thank you for your participation.

Participants

Executives

• Yuping Huang, CEO and Chairman
• Chris Roberts, CFO

Analysts

• John Nesbitt, Head of Investor Relation at IMS Investor Relations
• John McPeake, Analyst at Rosenblatt Securities
• Max Michaelis, Analyst at Lake Street Capital Markets
• Troy Jensen, Analyst at Cantor Fitzgerald
• Nehal Chokshi, Analyst at Northland Capital Markets
• Ed Wu, Analyst at Ascendiant Capital