Earnings call transcript: Quantum Computing Inc. Q3 2025 beats revenue expectations

Quantum Computing Inc. (QUBT) reported its Q3 2025 earnings, showcasing a notable revenue surge and a positive EPS surprise. The company's revenue reached $384,000, significantly outperforming forecasts, while earnings per share (EPS) came in at $0.01, beating the expected -$0.06. Despite the positive earnings surprise, the company's stock experienced a 4.28% decline in aftermarket trading, closing at $9.60.

Key Takeaways

• Revenue for Q3 2025 was $384,000, far exceeding the forecast of $125,000.
• EPS was $0.01, surpassing the expected -$0.06.
• Gross margin improved to 33% from 9% a year ago.
• Stock price fell 4.28% in aftermarket trading despite positive earnings.
• The company raised $1.25 billion through financing in September and October 2025.

Company Performance

Quantum Computing Inc. demonstrated strong performance in the third quarter of 2025, with revenue increasing significantly from $101,000 in Q3 2024 to $384,000. The company attributes this growth to advancements in its quantum technology offerings and successful partnerships. Additionally, the gross margin improved markedly to 33%, reflecting enhanced operational efficiency.

Financial Highlights

• Revenue: $384,000, up from $101,000 in Q3 2024.
• Earnings per share: $0.01, compared to a loss in the previous forecast.
• Gross Margin: 33%, up from 9% in Q3 2024.
• Cash and Cash Equivalents: $352 million.
• Total Assets: $898 million, a significant increase from $154 million at the end of 2024.

Earnings vs. Forecast

Quantum Computing Inc. delivered an EPS of $0.01, outperforming the forecasted -$0.06 by a significant margin. This resulted in an EPS surprise of 116.67%. The revenue also exceeded expectations, coming in at $384,000 against a forecast of $125,000, marking a surprise of 207.2%.

Market Reaction

Despite the positive earnings results, Quantum Computing Inc.'s stock fell by 4.28% in aftermarket trading, closing at $9.60. This decline may reflect investor caution or profit-taking after the stock's recent performance, as it had gained 5.68% earlier in the day. The stock remains well below its 52-week high of $27.15, indicating potential volatility in investor sentiment.

Outlook & Guidance

Looking ahead, Quantum Computing Inc. has outlined a three-year roadmap focusing on refining manufacturing processes and scaling production. The company aims to transition to volume production by the end of the decade and is exploring mergers and acquisitions to accelerate technology development. Revenue forecasts for future quarters suggest continued growth, with projections reaching $2.2 million by FY 2026.

Executive Commentary

Dr. Yuping Huang, CEO of Quantum Computing Inc., emphasized the company's commitment to making quantum technology accessible. "We are working to make quantum usable for a broader community of industries and innovators," he stated. He also highlighted the rapid unfolding of the quantum era and the importance of adopting quantum-secured internet solutions.

Risks and Challenges

• The volatility in stock price might reflect market skepticism or broader economic uncertainties.
• The transition to volume production could face operational or logistical hurdles.
• Competitive pressures in the rapidly expanding quantum computing market.
• Dependence on successful partnerships and technological advancements to maintain growth.

Q&A

During the earnings call, analysts inquired about the partnership with Poet Technologies for high-speed transceivers and the company's quantum security solutions for the financial sector. Executives also discussed plans for the new Fab 2 manufacturing facility and international expansion efforts in Europe, South Korea, and Singapore.

Full transcript - Quantum Computing Inc (QUBT) Q3 2025:

Conference Operator: Ladies and gentlemen, greetings and welcome to the Quantum Computing Inc. Q3 2025 shareholder update call. At this time, all participants are placed on a listen-only mode. Following management's remarks, the call line will be open for questions. It is now my pleasure to introduce your host, Roslyn Christian with IMS Investor Relations.

Roslyn Christian, Investor Relations, IMS Investor Relations: Thank you. I want to welcome everyone to the Quantum Computing Inc. Q3 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 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. On the call today, we have Dr. Yuping Huang, Interim CEO and Chairman, and Chris Roberts, 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, Yuping.

Dr. Yuping Huang, Interim CEO and Chairman, Quantum Computing Inc.: Thank you, everyone, for joining us today to hear about Quantum Computing Inc.'s progress in the Q3 of 2025. The past few months have been pivotal for our company. We ended the quarter with a strengthened balance sheet, a growing portfolio of commercial relationships, and a clear discipline strategy for scaling our technology. To date, in 2025, we have reached over $1.5 billion in capital, and we now have the resources to execute thoughtfully on our long-term vision, putting quantum technology into the hands of people. In the Q3, we raised $500 million, and subsequent to the quarter, we raised another $750 million. These raises put us in a very strong position to drive our roadmap forward and make strategic investments in engineering, manufacturing, and sales. As many of you know, Quantum Computing Inc.'s mission has always been centered around building quantum systems that are practical, scalable, and accessible.

We're not just developing quantum technologies for laboratories. We are working to make quantum usable for a broader community of industries and innovators, with the ultimate goal of having our technology as ingrained in society as cell phones. This is what sets QCI apart. While many quantum players remain focused on theoretical advances of systems that require complex cryogenic environments, our integrated photonic approach enables room temperature operation, more compact form factors, and energy-efficient performance. These advantages not only reduce the cost and the complexity of deployment but also make it possible to scale quantum solutions to a wide range of real-world settings, from aerospace and defense to telecommunications, finance, and data security. As the technology matures, we believe the key differentiator will not be who can build the most powerful quantum prototype in isolation, but who can scale quantum reliably and affordably.

The challenge ahead is one of engineering and manufacturing execution, and that's where QSA's focus lies today. Our long-term goal is to move from prototype and small-batch manufacturing towards volume production, and we see that transition take shape by the end of this decade. To get there, our current three-year roadmap is focused on refining our processes, scaling small-batch production, and expanding our team and facility to position QSA for industrial-scale output. In other words, the technology is there. Our quantum machines and photonic chips have been validated across multiple use cases. The next step is to scale the engineering and the manufacturing behind them, and we now have the team, resources, facility, and plan to make that happen. Let me take a moment to highlight some of the key updates from the Q3.

First, on the commercial front, we continue to see growing adoption of our quantum and photonic solutions across research, enterprise, and government sectors. During the quarter, we recorded revenue from our ongoing NASA LIDAR initiative, which uses our Direct3 quantum optimization machine to remove solar noise from space-based LIDAR data. This project represents a significant technical achievement and underscores the real-world value of Quantum Computing Inc.'s quantum computing technology for scientific and environmental applications, as well as our initiatives to drive strong relationships within government programs. We also saw meaningful momentum in our commercial engagements, following the sale of our IMICO reservoir computing device early this year to a global automotive manufacturer. In the third quarter, we completed a transaction with a major U.S. financial institute, making another important milestone in validating our quantum AI and security platforms in real-world settings. Our foundry operations in Tempe, Arizona, also continue to progress.

As we have shared previously, this facility, also known as Fab 1, is a small-scale manufacturing site designed to qualify processes and support early customer programs in thin-film lithium niobate photonic chips. This is an important first step in our broader manufacturing strategy. Since launch, our team has been refining the production line, expanding our operations staff, and building relationships with early customers across research, government, and commercial sectors. This engagement helps us fine-tune both process quality and device yield. Importantly, we are already in the early stage of planning for Fab 2, which we expect to begin developing over the next three years. Fab 2 will be designed to support higher volume manufacturing and serve as a cornerstone for scaling production to meet growing demand in telecommunications, sensing, and quantum information systems. As we advance this manufacturing strategy, our hiring efforts are ramping accordingly.

Over the past quarter, we have added key technical and operations staff to strengthen our execution capabilities, and we expect that trend to continue as we prepare for higher production volumes. We have also continued to broaden awareness of QSA's capabilities within the quantum and photonic communities. Over the past several months, we have been active participants at multiple industry events and conferences, presenting our work and engaging both public and private sector partners. Those events include the IEEE International Conference on Quantum Computing and Engineering, the NYC Quantum Computing Meetup, Quantum World Congress, the Dutch Photonics Event, the 51st European Conference on Optical Communication, Quantum Tech Europe, and the Quantum Innovation and Readiness Forum. We also recently joined the Quantum Economic Development Consortium and the Consumer Technology Association, aligning QSA with an expanding network of technology leaders and innovators.

These memberships enhance our visibility and influence in shaping the future of quantum computing, cyber, photonics, and AI-driven solutions across the consumer technology landscape. In September, we deepened our thought leadership presence in the photonics and AI community through a webinar hosted by Optica titled "Photonic Machine Learning for Time-Series Problems." The session highlighted how our IMICO reservoir computing platform and next-generation photonic architecture address memory and power consumption bottlenecks in modern AI workloads and underscored our thin-film lithium niobate foundry capability for high-performance photonic systems. This engagement further expands our credibility in both academic and industrial circles and underscores Quantum Computing Inc.'s increasing visibility as a practical quantum and photonic innovator. We have also been pleased with the increasing level of inbound interest from prospective customers and collaborators across academia and industry.

The conversations we are having today reflect the momentum building behind integrated photonics and quantum-ready devices, where QSA has a clear first-mover advantage. QSA's approach positions us uniquely for the next phase of industrial evolution. While the broader quantum computing sector continues to grapple with scalability and stability challenges, our integrated photonics platform operates at room temperature with significantly lower size, weight, and power, and cost requirements, the so-called SWaP-C advantages. These advantages are becoming increasingly relevant as global energy constraints and the computational demands of artificial intelligence push existing infrastructure to its limit. We believe that energy-efficient room-temperature quantum devices represent a critical piece for the next generation of computing, and QSA is positioned to deliver such solutions at scale. Over the next three years, our roadmap priority is small-scale, high-value manufacturing as we refine processes, demonstrate performance across customer applications, and establish supply chain and design partnerships.

In parallel, we will be developing the foundation for Fab 2, which will enable volume manufacturing and allow us to bring quantum-enabled devices into wider users across multiple sectors. The quantum era is unfolding faster than most predicted, and our team is determined to ensure QSA remains at the center of transformation delivering technologies that make quantum practical, scalable, and accessible to the world. With that, I will now turn the call over to our Chief Financial Officer, Chris Roberts. Thank you, Yuping. Now, let's review the financial results from the quarter. Revenue during our Q3 totaled approximately $384,000, compared to $101,000 in the same period last year. The increase in revenue is primarily due to increases in the number of, size of, and level of effort on research and development services contracts and custom hardware contracts.

We also started to recognize some revenue for cloud-based access to the Direct3 quantum optimization system during the Q3. Looking ahead, the company continues to build a healthy pipeline of sales and partnership opportunities, which we expect will support future growth as customer adoption of our products and technologies continues to increase. Our gross margin for the Q3 increased to 33% compared to 9% in the Q3 of 2024. However, it's important to keep in mind that with a small number of active contracts, some of which involve custom design work, gross margin is likely to be variable from one period to the next. As Yuping mentioned earlier, we have been active in the capital markets and substantially strengthened our balance sheet during the Q3, closing on a $500 million equity financing in September 2025.

As a result, we ended the Q3 with cash and cash equivalents of $352 million and investments of $460 million on our balance sheet at the end of the quarter. After the end of the Q3, we also closed on an additional $750 million financing in October. As a result of the recent financings, we now have substantial resources to implement our TFLN fabrication and quantum machine development initiatives. In addition to organic growth plans, a key element of our long-term strategy is to evaluate acquisition opportunities that could help us accelerate our vision of putting quantum technology in the hands of people. Operating expenses for the Q3 totaled $10.5 million, compared to $5.4 million in the same quarter last year.

The increase in operating expenses is the result of substantial growth in personnel for research and development, engineering, manufacturing, sales and marketing, and administration as we position the company for long-term growth. We are scaling our organization across the board to support this expansion plan, including all functional areas of the company. As a result, SG&A expense is expected to grow in the near term as we invest in the necessary resources to advance our technology and execution capabilities. The company reported net income of $2.4 million for the Q3, or approximately $0.01 per share, compared to a net loss of $5.7 million in the Q3 of 2024. The increase in net income this quarter was primarily due to a gain of $9.2 million from the mark-to-market of a derivative liability, plus interest income of $3.5 million.

For the nine months ended September 30, 2025, the company reported a net loss of $17.1 million, or $0.12 per share, compared to a net loss of $17.3 million, or $0.19 per share in the first nine months of 2024. As of September 30, 2025, total assets stood at $898 million, up from $154 million at year-end 2024. Since the end of 2024, cash and cash equivalents have increased by $273 million to $352 million, and total investments have increased by $460 million. Total liabilities at the end of the Q3 were $20 million, which is a decrease of approximately $26 million compared to year-end 2024. Now, this decrease in liability is driven primarily by a $25.8 million decrease in the derivative liability related to the QPhoton merger warrants. Stockholders' equity rose to $878 million at the end of the Q3, which also shows our strengthened financial position.

It is my pleasure to turn the meeting back over to Yuping. Thank you, Chris. As we move into the final month of 2025, I wanted to take a moment to thank our employees, partners, and shareholders for the continued support. The technological and strategic progress we have made this year positions Quantum Computing for what I believe will be a defining period ahead. Our technology is maturing rapidly, and our focus remains on scaling our engineering and manufacturing capabilities, advancing customer programs, and continuing to strengthen our relationships across government, industry, and academia. With a solid balance sheet, a growing team, and a clear roadmap, we are well-positioned to drive this next phase of growth. Thank you for joining us today and for your continued confidence in our mission. With that, we will now open the call for questions. Operator, please go ahead. Certainly.

Everyone at this time will be conducting a question-and-answer session. If you have any questions or comments, please press Star 1 on your phone at this time. We do ask that while posing your question, please pick up your handset if you're listening on speakerphone to provide optimum sound quality. Once again, if you have any questions or comments, please press Star 1 on your phone. Your first question is coming from Max Michaels from Lake Street Capital. Your line is live. Hey, guys. Thanks for taking my questions. A few here kind of scattered around a couple of different topics. First one is going to be I noticed that press release about Poet Technologies.

I was wondering if you could give maybe a little bit more detail on outside of just what was said in the press release and maybe think about sort of the long-term opportunity with them and then maybe some other partnerships you have in the pipeline similar to that Poet Technologies. Okay. Sure. Thanks, Max. On that front, we have actually been very actively talking with multiple parties on using our thin-film lithium niobate technology for the next-generation high-speed transceiver technology. As you probably know, the industry is recognizing thin-film lithium niobate as the next-generation platform for much higher-speed internet. This collaboration with Poet is one of the agreements that we have discussed and has come to flourish. We look forward to work with them and also with others to explore thin-film lithium niobate for the telecom and the data com applications at the broad. Okay.

My next one is just sort of around that top five U.S. bank you guys secured or purchase order you guys secured in the quarter around quantum security solutions. Can you give some other sort of use cases you guys are having discussions with, with other large opportunities, I guess, or other large firms outside of just security solutions? Yes. In fact, we have been talking with other firms, including the potential of putting our technology on photonic integrated chips so that we can really shrink the size of our current quantum communication systems, our quantum path chips, and our quantum random number generators to an inch-squared chip so that there are many sectors, including the wireless or internet providers, so they can easily adopt.

We have been in discussion also with some potential partners to see if we can apply our quantum communication technology to the aerospace platform so that can solve the issue of the long-term quantum internet challenge. Okay. Chris, I think you mentioned organic opportunities around M&A and sort of how evaluations and multiples trended in that space, as well as maybe adding on sort of the end markets or technologies you guys plan on going after when it comes to M&A. The M&A market continues to be volatile, and evaluations depend in good part on how the stock market's going. Right now, it's very unsettled. We are looking actively for acquisition candidates and evaluating them as they come up. Nothing formal we can announce at this time, but we are working very hard in that direction.

As I mentioned before, we're looking at M&A as a way of doing two things. One is to acquire customers and revenue and product lines that can be moved forward and migrated forward with our technologies. We are also looking to fill in some key aspects of our own technology roadmap so we can accelerate our commercialization. Does that help you answer your question, or do you have a different point in mind? Nope. Nope. That's great. Thanks for taking my question, guys. Sure thing, Max. One thing, let me just add to what Yuping said about the Poet project. It's a perfect example of why we built Fab 1 because we have the only fabrication facility in the U.S. that can work with thin-film lithium niobate.

This gives us the ability to do this type of advanced prototyping of product concepts that we can then, if we're successful, move forward into Fab 2 and produce in collaboration with a firm like Poet for a larger market. This is a real validation of the idea behind the investment in Fab 1. Okay. No, perfect. Thanks, guys. You're welcome. Thanks for calling and joining the call. Thank you. Your next question is coming from Troy Jensen from Cantor Fitzgerald. Your line is live. Hey, Dylan. Congrats on all the progress here. Maybe a couple of quick ones for Chris first. Can you tell us what is the remaining CapEx for Fab 1, roughly? Fab 1 is a good question. Fab 1 is pretty much built out. It is built out.

We're always looking at new equipment, but Yuping, you might be a better one to answer on that. I don't have anything I know of that's lined up near term. Yep. Yep. Right now, Troy, Fab 1 is fully operational, and we actually are making chips to deliver the 10-plus foundry service orders that we have received so far. We do have planned to install very high-speed measurement equipment in the foundry so that we can quickly test the property of high-speed electro-optical modulations on the chip. There we are looking at an additional CapEx of about $2 million to add this very high-speed testing equipment. All right. That seems pretty modest. With respect to Fab 2, building that out, would you guys obviously, hopefully, produce in your own picks, but is the idea to outsource capacity to other people that need thin-film lithium niobate capabilities?

Yes. Yes. We are scoping Fab 2 to both support our own quantum machine manufacturer and as well as to serve the increasing demand on thin-film lithium niobate chips as the industry is becoming more and more interested due to the many nice properties of this interesting material for different applications beyond quantum. Troy, our goal there is that we hope that we can quickly establish a Fab 2 that can make hundreds to millions of chips per year. That will both support our own need for our quantum machines and also substantially submit from others on the thin-film lithium niobate manufacturing. Great. Okay. How about a quick one for Chris? Could you let us know what the share count will be exiting 2026? At the moment, we have 224 million shares outstanding and 250 million shares authorized. We are not expecting to do another financing.

It will probably end up with another couple of million shares potentially if options are exercised, but it would not be a large number. Is that what you're driving? Yeah, the offering that just happened. I mean, if you include the offering that happened here in Q4, any other options. Including the $750 million offering that was concluded in October, we have 224 million shares outstanding. There are several million outstanding warrants and stock options, which I have no way of predicting when they may be exercised, but that gives you a sense of the range of possible outcomes at the end of 2026. Great. For a share count that we should be modeling, it should be the 224 number for Q4? 224 for Q4, yes. That's probably the best number I can provide.

But at the end of 2026, that's a little harder because it really depends on market conditions and. Yeah. No, that's good. How about if I could toss in one more for Yuping here? I guess I'd love to hear stats on your QPU with respect to Q account or Fidelity or maybe it's too early to talk about that now. And maybe correct me if I'm wrong, but is the near-term opportunity more in the sensing and other applications that you guys are targeting right now versus kind of QPU-type sales? Sure. I can talk about both. So on the QPU front, so in fact, we have been upgrading our current Direct3 system where some of our external users, they actually start to find some real nice advantage over classical computers. So we have some pretty exciting results there.

In the meanwhile, we are actually making very good progress in building the next version of that, which is based on the same architecture and built for the optimization. There, we increased the speed by orders of magnitude. We are making pretty good progress there for our quantum optimization machine. In the meanwhile, as I reported last time, we do have the roadmap of going to gate-based machines. We have done a lot of theoretical work and proof of concept in the lab. We just got started on the hardware development because the gate machine requires very high-quality thin-film lithium niobate chips. As you know, we just finished the construction of Fab 1 in March and over the summer. We developed the recipe and set up the processes.

There, so the fund has just started. With that, we will quickly get to the hardware of the gate-based machine. On the quantum sensor part, yes. As we reported, we did sell one for our quantum photonic vibrometer. People are using it for different applications. We also sold a quantum communication system to a U.S. bank, as we reported. We have also made some sales on the AI front. We continue to engage the community on thin-film lithium niobate. We have recorded more sales on foundry services. Gotcha. All right, guys. Keep up the good work. Thanks, Troy. Appreciate your calling in. Thank you. Your next question is coming from John McPeak from Rosenblatt Securities. Your line is live. Hey, guys. Congratulations, Dr.

Yuping and Chris, on the momentum in the business and the bank deal. Thank you, John. Thank you. Recently, there's been some new implementations of Shor's algorithm that suggests that pretty soon we're going to be able to crack RSA 2048. I guess when I say soon, we're talking about years, at least kind of over the career of a CISO at a large company. They can't just ignore it. I'm just wondering if that might be increasing the pipeline of potential security deals, particularly in the financial sector. Yes, definitely. John, one thing that we all have to keep in mind is that if someone has a very powerful quantum computer to crack our passwords, he or she will not make a public announcement on that, right? We have to really deal with the cyber threat.

We really have to think ahead and act fast and plan ahead. So far, as I know, the only truly secure cyber solution against the attack of the quantum computer would be using quantum itself to secure our internet. At QCI, we actually, our engineers, we are leveraging over 10 years of our engineering work in quantum communication, quantum encryption, quantum authentication. Now, we are pushing our engineering effort to put our technology in practical footprint. In fact, we have designed our technology so that it is fully compatible with existing fiber-based telecom infrastructure. In order to use our technology, you can just buy some end units from us and hook onto the fiber portal in your garage. You will be able to enjoy quantum-secured internet.

You do not need to worry about if somebody has already a powerful quantum computer or not. Yes, John, in short, to your question, I think it is time. It is really, really time for us to start to adopt quantum-secured internet solutions. Thank you. On the other side of the business, on the optimization, I guess the Direct3 is just starting to have revenues recognized this past quarter. How is that market trending right now? Is there more awareness of these solutions for optimization? Yes. Yes. I would like to put it in this way. Quantum computing is a pretty disruptive technology. Just like how other disruptive technologies are commercialized, we must address three hurdles before we can see wide adoption and very meaningful revenue.

The first is that the customers really needed to know and understand at some levels the technology itself. The second is that they will need to see a clear path to be able to integrate and adopt the technology with their existing systems and solutions. The third is that we, as technology providers, must lower the entry level so that people can quickly get to the technology. That includes making the device very compatible. We have a very easy user interface, and the price tag is reasonable. For the first one, we are ramping up our marketing communication, including pushing out more educational material on our website, publishing open access journals so that people can find the material to know and to understand our technology.

For the second, we are actually building and expanding our applications team to explore and help with potential customers to adopt our technology. Now, for the third, we are actually in the phase of transitioning ourselves from a technology innovation company to volume production so that we can reduce the unit cost of our quantum computing products. Those are the three measures that we are undertaking now in order to quickly get our technology into the hands of people. Thank you. That's helpful. Thank you, John. Thank you. Once again, everyone, if you have any questions or comments, please press star, then one on your phone. Your next question is coming from Ed Wu from Ascendant Capital. Your line is live. Yeah. Congratulations on all the progress. I was just curious about international opportunities. It seems like most of your focus now is in the U.S.

Do you have plans to focus on international opportunities? Yes. Yes. In fact, quantum is also very hot outside the U.S., and we have been very active in talking to and looking for opportunities either partnering or providing our products and services to international institutes. For example, we actually sold our IMICO system, which is an AI device at Edge, and we sold our vibrometer to TU Delft in Europe. We actually are working with a distributor in South Korea to explore the market there. Our Direct3, we actually have users from Singapore. Great. Thanks for answering my questions. I wish you guys good luck. Thank you. Thanks, Ed. Thank you, Ed. Thank you. That concludes our Q&A session. I'll now hand the conference back to management for closing remarks. Please go ahead.

Thank you, everyone, for joining and participating in today's call. I encourage you to follow us on our social media channels, including LinkedIn, where we regularly post updates and insights into our business and technology. Should you have any questions, please do not hesitate to reach out to our investor relations. Have a great rest of your day. Thank you, everybody.

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