IonQ Quantum Computing Company

Taking a Holistic Look at IonQ 

On October 1st, 2021, IonQ became the first pure-play quantum computing (QC) company to go public. Ahead of that epoch-making event that would shape the QC industry, lets take a deeper look at IonQ Quantum Computing capabilities and more broadly the business functions.

Recall that the Quantum Computing firm finalized its collaboration agreement with dMY Technology Group Inc., a publicly traded special purpose acquisition company (SPAC), the previous day before going public. But how has the company fared nearly two years after getting listed on the NYSE? Lets find out.

Meet the Trailblazer of Trapped-ion Technology  

Before taking a holistic look at IonQ over the years, it is crucial to take a sneak peek at its background. After 25 years of extensive research, Christopher Monroe and Jungsang Kim decided to take their work from the research labs to the real world. That strategic decision would lead to IonQ’s establishment in 2015 in Maryland, USA.

When the duo founded the Quantum Computing firm, the company had $2 million in seed funding from venture capital firm New Enterprise Associates (NEA). Some three years later, the team raised $20 million from GV, Amazon Web Services, and NEA. All these well-coordinated efforts have helped the American QC firm to build two QC systems hinged on the principle of trapped ion quantum computing. 

Now, let’s make sense of all this. IonQ has a clear-cut goal – to take trapped ion quantum computing out of the lab and into the market. What is this trapped ion technology this company speaks of? Well, it is the proposed approach for building and scaling quantum computers.

As you know, scaling those next-gen computers is one of the challenges the industry players are still grappling with today. According to the trapped-ion technology proponents, the idea is to suspend ions (or charged particles) in free space by using electromagnetic fields.

Because qubits are stored in the free electromagnetic state of each ion, they can transfer quantum information through the collective quantized motion of the ions in a shared trap. Indeed, quantum computer researchers and scientists have experimentally demonstrated that they can build scalable, fault-tolerant QC systems using the trapped ion technique. Today, the IonQ team is blazing that trail and working hard to actualize that goal. However, they haven’t commercialized their Quantum Computing systems yet. 

But then, since the company doesn’t have large-scale Quantum Computing systems on sale yet, where does its revenue come from at the moment? Essentially, IonQ currently makes access to its quantum computers available via cloud platforms and to select customers through its cloud services. By doing this, the US-based QC company provides a broad quantum-as-a-service (QaaS) to enterprise users.

Therefore, its revenue comes from QaaS arrangements, consulting services related to co-developing and deploying quantum algorithms on enterprise users’ systems, and projects associated with the design and development of specialized QC systems together with its related services. As regards its milestones and targets, IonQ achieved its goal of having a system using 25 algorithmic qubits in 2022.

Without a doubt, it is a plus! It plans to scale up to 29 qubits this year (2023), 64 qubits in 2026, and surpass the 1000-qubit threshold by building a 1024-qubit quantum computer by 2028. But after ringing the NYSE bell, what next? 

After IONQ went public 

On March 30th, 2023, IonQ made public its 2022 financial statement. From the details of the financial report, IonQ has yet to show a profit years after going public, but the company keeps hitting the headlines in the tech world. In all fairness, its financial statement shows that things are gradually looking up for the QC trailblazer. It is not uncommon for companies in unchartered territories to struggle with huge losses before breaking even, making profits, and attaining a strong position of consistent net income.

A close look at the inner financials of the company indicates that more than half of its operating costs come from research and development (R&D), suggesting that the team isn’t resting on its laurels and strives to maintain its spot as the top-tier pure-play QC company. President and CEO Peter Chapman, who joined IonQ in 2019, stated that they intend to continuously lead in their industry and maintain their position as the most capitalized pure-play QC company by a wide margin. 

From June 2020 through December 2022, its revenue has been increasing. However, it is noteworthy that its earnings are still relatively insignificant compared to its operating expenses. Furthermore, the statement shows that the company met some of its goals and still working toward actualizing its 2023 goal.

CEO Chapman noted that they have had to deal with market conditions that tried to slow down their progress but that nothing would slow them down. He added that they would rake in more revenue in 2023 than in 2022 because more customers are showing interest in their products and that the QC space has high prospects in 2023. 

Analyzing the financial standing, IonQ made about $11.13 million in 2022. Its financial statement revealed that it raked in $3.8 million in the last quarter of the year, unlike the previous year (2021) when it made $1.6 million in the quarter under review. IonQ achieved bookings of $24.5 million throughout 2022 with cash, cash equivalent, and investments hovering around $537.8 million as of New Year’s Eve. On the flip side, the QC firm also incurred some losses.

The financial report shows that its loss was $18.6 million in the fourth quarter of 2022, unlike $74.1 million in 2021. By and large, its net loss in 2022 was $48.5 million, compared to $106.2 million in 2021. Moving on to its financial outlook for 2023, IonQ looks forward to revving up its revenue from $11.1 million in 2022 to about $18.4 – $18.8 million in 2023. For the bookings, they project between $38 and $42 million in the full year 2023 bookings.   

The IONQ in the public eye 

After the release of the financial report, IONQ stocks skyrocketed. In fact, it was up by a whopping 31% for the day and has almost doubled in value year to date. For full-year revenue of $11.1 million, it is unsubstantial, considering that it has a market capitalization of nearly $1.5 billion. However, you ought to give them some credit because their industry is still in its infancy.

Another area that may appear gloomy is the loss IonQ incurred in 2021 and 2022. Indeed, no business wants to incur huge operational losses. But then, going back to the figures, the company incurred a net loss of $48.5 million in 2022 versus $106.2 million in 2021, thereby lowering their net loss by $57.5 million. Irrespective of how you look at it, that’s a piece of cheering news as it shows they are making giant strides to lower their losses. No doubt, if a company isn’t making huge profits, the best way to stay afloat is to minimize its losses. 

Considering that building scalable, fault-tolerant QC systems is the holy grail of the quantum computing industry, can IonQ achieve that? To be clear, that should be the primary concern because it is the game-changer the company seeks.

Recent Performance of IONQ

To date, IONQ predictions remain formidable, and many analysts maintain that it is one of the top 3 quantum computing companies. That’s partly because the company has a vibrant, forward-looking team that has shown commitment and doggedness to overcome the enormous challenges of sailing in unchartered waters. The team keeps sealing partnership agreements that will improve its liquidity and bookings.

On April 19th, 2023, the stock closed at a $6.28 dip by 1.88% from the previous day’s price of $6.40. In short, the stock has decreased by 42.49% in 12 months. In comparison with other computer hardware stocks, IONQ has underperformed by 0.34% points. Then again, the IONQ stock is now +106.58% from the 52-week low of $3.04 and -37.82% from its one-year high of $10.10.      

From the technical analysis above, things aren’t looking so good for IonQ. Nonetheless, one of the factors that drives IONQ stock prices is that the company is always on the positive side of the headlines. For instance, in September 2022, IonQ penned down a $13.4 million contract with the US Air Force Research Lab (AFRL).

According to the agreement, IonQ will offer its trapped ion systems for quantum computing hardware research at the AFRL. The aim, the US government sources say, is to engage the QC firm to develop quantum algorithms that will counter quantum-powered attacks from foreign actors. When the new deal hit the headlines, IonQ sold over 3 million shares, outperforming its average trading volume of 3.1 million shares. Plus, the stock price rose to 8.4%, even though the stock had been down by 70.4% since the beginning of 2022.  

Future of IONQ

From what years of research shows us, what IonQ seeks to achieve is not technologically impossible. It’s worth noting that one fact that keeps the IonQ team going is the extensive study QC researchers have done and agreed that building scalable, error-corrected QC systems is feasible. For example, in January 2022, a team of Australian researchers proved that error-free quantum computing was possible.

Professor Andrea Morello of the University of New South Wales (UNSW), Sydney, whose team partnered with other researchers from the US, Japan, Egypt, and the University of Melbourne, made this fascinating revelation. In a publication that details their findings, Professor Morello noted that their operations were 99% error-free, making error detection and correction feasible. That was possible because, according to the don, errors were rare in the system. He concluded that developing and commercializing scalable, error-free quantum computers that can carry out meaningful computations was achievable.    

Professor Morello’s team is one of the several researchers who have drawn the same positive conclusions after exhaustive studies. The Australian researcher achieved 99.95% fidelity in a one-qubit operation, with a slight decline of 99.37 fidelity as he scaled the operations to 2 qubits. Similarly, Electrical Engineer Lieven Vandersypen led the Delft team that achieved 99.97% fidelity in a one-qubit operation and 99.65% fidelity in a two-qubit system.

The Dutch researchers experimented with electron spins in quantum dots formed in the slack of silicon and silicon-germanium alloy (Si/SiGe). Lastly, Seigo Tarucha of the University of Tokyo, Japan led a RIKEN team that demonstrated that building a scalable, error-corrected QC system was attainable. The Japanese physicist achieved 99.84% fidelity in a one-qubit system and 99.51% fidelity in a 2-qubit system in a two-electron system using Si/SiGe quantum dots. 

Deeper review of performance 

Pros 

• Revenue is forecast to grow 41.66% per year. 
• Revenue grew by 430.3% over the past year. 
• IonQ hasn’t had a concerning event in recent times. 
• The company has sufficient cash to run and invest for one year. IONQ’s financial report shows it has $355.80. million in cash for short-term investment. It is enough to cover its annual cash burn of $56.21 million. 
• It has meaningful levels of revenue and appealing market capitalization. 
• IonQ has no negative shareholder equity; it has a low debt-to-equity ratio of 0.05.

Cons 

• Earnings are likely to decline by an average of 1.1% per year in the next 3 years.
• IonQ is not profitable at the moment, and the chances are that it won’t break even in the next three years. 
• Its share prices have remained volatile in the first quarter of 2023.

From the risk analysis above, the quantum computer firm has numerous positive factors working for it. Even though the downsides are few, they are damning and disturbing. Nevertheless, taking a second look at its roadmap, IONQ will launch its 1024 quantum computer by 2028.

Admittedly, IONQ have some red flags, Sure, the company is incrementally making all the daring moves to build a profitable company that will revolutionize the QC landscape and make its investors laugh all the way to the bank. Hence, despite all the downturns, analysts unanimously maintain that the IONQ are a strong position