Horizon Quantum Computing Pte. Q3 Earnings Call Highlights

Key Points

• Reported net income of $33.4 million was driven by a $43.1 million non-cash gain from revaluing warrant liabilities, not operating revenue; Horizon remains pre-revenue. Adjusted EBITDA loss widened to $6.3 million as operating expenses more than doubled.
• Horizon demonstrated Triple Alpha integrations and quantum-processor characterization work, including reducing experiments to measure qubit crosstalk on Rigetti’s processor from more than 5,000 to seven.
• Horizon signed a non-binding letter of intent to acquire Entropica Labs for $27 million in shares, aiming to add quantum error-correction capabilities. The deal remains subject to due diligence and definitive agreements.

Horizon Quantum Computing Pte. NASDAQ: HQ reported third-quarter net income of $33.4 million, but said the profit was driven by a non-cash gain on warrant-related liabilities as the pre-revenue quantum software company increased spending on research and hiring.

The company also outlined progress integrating its Triple Alpha software with quantum processors and discussed a non-binding letter of intent to acquire Entropica Labs for $27 million in Horizon Class A ordinary shares.

Founder and CEO Dr. Joe Fitzsimons said the proposed acquisition would strengthen Horizon’s capabilities in quantum error correction and fault tolerance. The transaction remains subject to due diligence, related audits, definitive agreements and other customary conditions.

Warrant Gain Drives Reported Profit

Horizon’s third-quarter net income amounted to $0.61 per ordinary share, compared with a loss of $5.2 million, or $0.13 per share, a year earlier. The latest result included a $43.1 million non-cash gain from remeasuring warrant-related derivative liabilities after the company’s share price declined during the quarter.

CFO Greg Gould said outstanding public and private warrants will continue to be remeasured at fair value each quarter, potentially creating further non-cash gains or losses as the share price changes.

Horizon reported an adjusted EBITDA loss of $6.3 million, compared with a $3.0 million loss a year earlier. The non-GAAP measure excludes items including changes in the fair value of liabilities, share-based compensation and non-recurring business combination expenses.

Total operating expenses rose to approximately $10.5 million from $4.9 million, primarily reflecting hiring and costs associated with becoming a public company. Research and development expenses increased to approximately $4.5 million from $2.0 million, while general and administrative expenses rose to $5.2 million from $2.3 million.

Cash and cash equivalents stood at $102.8 million on Sept. 30, down from $113.3 million at the end of June. Net cash used in operating activities was $7.2 million for the quarter, compared with $3.3 million a year earlier and $5.1 million in the second quarter.

The company ended the quarter with 60 full-time employees, up 43% from a year earlier, Gould said. He added that Horizon is paying for a trapped-ion quantum system it expects to receive next year.

Hardware Integration and Characterization

Fitzsimons highlighted Horizon’s work with OQC to integrate its 32-qubit Toshiko processor with Triple Alpha, allowing developers to control the processor at the pulse level and conduct experiments to measure properties such as qubit relaxation and coherence.

Separately, Horizon tested a method for measuring unwanted interactions between qubits, known as ZZ crosstalk, on Rigetti’s 108-qubit Cepheus processor. Fitzsimons said the company reduced the number of distinct experiments needed to characterize those interactions from more than 5,000 to seven by multiplexing measurements.

The company also used a multiplexed approach on its Ember-1 testbed to characterize control crosstalk, which occurs when signals intended for one qubit affect others. Fitzsimons said Horizon validated the results against individual pairwise experiments and saw “very good agreement.”

Although the demonstrations focused on superconducting processors, Fitzsimons said the broader approach could potentially apply across other hardware types. He clarified that Horizon had not run the multiplexed experiments on OQC’s systems.

Entropica Deal and Commercial Plans

Fitzsimons said Entropica’s work on error correction could complement Triple Alpha’s existing ability to compile high-level programs and execute computations on hardware. The companies have begun collaborating on compilation across their systems, although he described that work as being at a very early stage.

Because the proposed purchase would be paid in shares, it would not directly reduce Horizon’s cash balance, Fitzsimons said. He added that salaries would be the main cash impact from the acquisition.

Horizon remains pre-revenue. Gould said the company does not pursue proof-of-concept services work because management believes it would distract technical staff from the development roadmap. Instead, Horizon plans to transition early-access users to paying customers when the broader industry reaches quantum advantage, which Gould described as the point at which quantum computers can solve difficult problems classical computers cannot.

Fitzsimons said Horizon typically announces hardware partnerships when the companies are collaborating on technical problems or are in a position to offer Triple Alpha to hardware users. The company is not yet ready to announce any partnership in which Triple Alpha is the default software for a system, he said.

About Horizon Quantum Computing Pte. (NASDAQ:HQ)

Horizon Quantum Holdings Ltd. is a quantum software infrastructure company focused on tools and systems that help developers build and deploy quantum applications. The company emphasizes software, algorithms, and workflow infrastructure intended to support practical quantum and hybrid quantum-classical use cases.

Horizon Quantum became a public company through its business combination with dMY Squared Technology Group, Inc (DMYY), which was formed to take a private company public through a business combination.

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