IQM Quantum (IQMX) Q3 2026 Earnings Call Transcript

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DATE

Thursday, Nov. 5, 2026

CALL PARTICIPANTS

• Investor Relations - Chiara Mantegani
• Chief Executive Officer and Co-Founder - Jan Goetz
• Chief Financial Officer - Jan Kuerschner

TAKEAWAYS

• New Order Intake -- EUR 42.2 million in the third quarter, driven primarily by the LUMI-IQ contract and new system orders in Japan and Brazil.
• Revenue -- EUR 8.9 million for the third quarter, reflecting a 51% increase driven by progress in customized projects recognized over time.
• Nine-Month Revenue Growth -- 49% year over year, reaching EUR 17.7 million as the company delivered higher value standardized systems and reached milestones on customized projects.
• Order Backlog -- EUR 102.5 million as of Sept. 30, 2026, representing a 52% increase from the start of the year.
• Gross Margin -- 47% in the third quarter, compared to 46% in the second quarter, reflecting stable production costs.
• Cash and Cash Equivalents -- EUR 260.4 million at quarter-end, providing a projected financial runway into the second quarter of 2028.
• Operating Loss -- EUR 171.2 million for the quarter, including EUR 13.5 million in transaction costs and a EUR 127.1 million noncash share-based listing expense.
• System Deployment Status -- 31 total systems sold globally to date, with 17 systems delivered and 17 currently in production.
• LUMI-IQ Contract -- EUR 33 million for an IQM Halocene error-correction system, which management noted is roughly equal in value to the company's entire 2025 revenue.
• Full-Year Revenue Guidance -- EUR 42 million to EUR 47 million, with achievement dependent on the scheduled customer acceptance of the first 150-qubit systems.
• Full-Year Order Intake Guidance -- EUR 65 million to EUR 75 million for 2026.
• Headcount -- 490 total employees and external staff, an increase from 460 at the end of June to support research and delivery capacity.
• Backlog Conversion -- EUR 59.5 million of the current order backlog is expected to be recognized as revenue within the next 12 months.
• Cloud Platform Engagement -- 17,000 registered users on the IQM Resonance cloud, where enterprises build initial quantum capabilities.
• Fidelity Benchmarks -- 99.8% combined fidelity across single-qubit gates, readout, and two-qubit CZ gates, as reported in peer-reviewed research.
• Stability Performance -- 40 hours of continuous operation for the CZ gate, which stayed within a few hundreds of 1% of its peak performance with only one single-qubit recalibration.
• T1 Relaxation Time -- 1.6 milliseconds achieved at the fabrication facility, serving as a stepping stone toward higher gate fidelities.
• Year-to-Date Order Intake -- EUR 52.9 million for the first nine months of 2026.

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RISKS

• Kuerschner warned that revenue timing is subject to risk because recognition for standardized systems occurs only upon customer acceptance rather than at the time of shipping or installation.
• Goetz noted that the company is facing a slight delay in the delivery of systems for the CESGA contract in Spain, with the timeline now expected to move into early 2027.
• Goetz identified a human capital bottleneck, stating, "With efforts like this, we help resolve a key bottleneck in our industry: the number of people who have actually built and operated quantum hardware."

SUMMARY

IQM Quantum Computers Oyj (NASDAQ:IQMX) reported third-quarter results highlighted by a significant increase in order backlog and the closing of its first contract for error-corrected quantum computing. Management stated that the commercial market is shifting from research to early deployment, with sovereign entities and AI factories increasingly demanding on-premises architectures. The company completed its public listing on July 2, 2026, and is focusing on the scheduled delivery and acceptance of its first 150-qubit systems in the fourth quarter to meet annual revenue targets. Strategic priorities remain centered on executing the technology roadmap toward fault-tolerant computing while expanding the global manufacturing and software ecosystem.

• Management reported the completion of 10 quantum AI integrations connecting quantum computers directly to GPU clusters in supercomputing environments.
• The company expanded its geographic reach to South America through a new system order from the Eldorado Research Institute in Brazil.
• Goetz stated, "Governments are no longer just funding quantum, they are investing in it and buying it, and we see this in our pipeline."
• Management reported progress on the Star topology, a connectivity architecture that connects each qubit to 12 others to support more efficient error-correction codes.
• Chief Scientist Ines De Vega noted, "currently, the quantum computer belongs inside a workflow that remains largely classical, alongside CPUs and GPUs in AI and HPC infrastructure."
• The company began integrating assets from Quantistry to provide a cloud-native platform that allows chemists and engineers to run simulations without specialized quantum training.

INDUSTRY GLOSSARY

• Qubit: The fundamental unit of quantum information, analogous to a bit in classical computing but capable of existing in multiple states simultaneously.
• Error Correction: A set of techniques used in quantum computing to protect information from errors caused by decoherence and environmental noise.
• On-premises: A deployment model where hardware is physically installed and operated at the customer's site rather than accessed via the cloud.
• Fault-tolerant: A stage of quantum computing where error rates are low enough to perform large-scale, complex calculations accurately.
• NISQ: Noisy Intermediate-Scale Quantum, referring to current quantum computers that are sensitive to noise and do not yet have full error correction.
• HPC: High-Performance Computing, often referring to supercomputing data centers.
• CZ Gate: A Controlled-Z gate, which is a fundamental two-qubit operation used to create entanglement.
• Surface Code: A specific type of quantum error-correction code that arranges qubits on a two-dimensional lattice.

Full Conference Call Transcript

Operator: Good day, and thank you for standing by. Welcome to the IQM Quantum Computers Third Quarter 2026 Financial Results Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Chiara Mantegani. Please go ahead.

Chiara Mantegani: Good morning, and welcome to IQM Quantum Computers Third Quarter 2026 Earnings Call. Joining me today are Dr. Jan Goetz, our Chief Executive Officer and Co-Founder; and Jan Kuerschner, our Chief Financial Officer. Before we begin, I would like to remind everyone that today's discussion includes forward-looking statements, such as comments on our product and technology road map, customer demand, system deliveries and customer acceptance, bookings, revenue timing, operating plans, liquidity and outlook. These statements are subject to risks and uncertainties that could cause actual results to differ materially from our current expectations. Please refer to today's earnings release, our filings with the U.S.

Securities and Exchange Commission, our listing prospectus and our stock exchange releases for more information on those risks. We will also discuss certain non-IFRS measures. Reconciliations to the most directly comparable IFRS measures are provided in our earnings release available at investors.iqm.tech. With that, I'll turn the call over to Jan Goetz.

Jan Goetz: Thank you, Chiara, and thank you all for joining us. Q3 was a quarter of strong execution for IQM, supporting our straightforward thesis. We put working quantum computers directly into the hands of our customers and jointly codeveloped our products further. Because we optimize and deliver the full stack, we believe this is the fastest path to fault-tolerant quantum computing. This quarter, our thesis continue to turn into contracted deployments and repeatable delivery. During the quarter, we expanded into new geographies. We signed one of our largest contracts to date and continue to advance our technology road map. This momentum reflects a market that is moving in our direction. Let me first comment on the quantum market more broadly.

The quantum computing market is moving from research into early commercial deployment. Our latest State of Quantum report shows the sixfold contract market surge since 2021, with deals reaching $2.6 billion in value. 46% of enterprise buyers are now mandating on-premises architecture. That is exactly the market IQM was built for. Since 2021, we have been deploying full-stack quantum computers directly into research, HPC and AI data centers. We have done and are working on 10 quantum AI integrations where we connect our quantum computers directly to GPU clusters. We do this in supercomputing environments, both with NVIDIA and AMD systems.

These integrations are a market-leading number of quantum AI integrations, which is relevant for the current developments around AI factories. Against this backdrop, let me turn to how we performed. We delivered against the 3 main drivers we presented in our August earnings call. First, commercial traction; second, product development; and third, financial strength. My remarks will focus on what advanced in each of these 3 core areas during the quarter. Let me begin with the headlines. First, commercial traction. In Q3, we achieved EUR 42 million in new order intake, adding to an already strong order backlog. Out of the backlog, EUR 9 million was converted into revenue for the quarter.

This means a net growth of EUR 33 million in backlog for Q3. When it comes to the actual customers behind these figures, we booked the first order for IQM Halocene, our error-correction platform. The order came from CSC and the LUMI AI Factory, a contract roughly equal in value to our entire 2025 revenue. We also announced a new system order in Japan from TOYO, a repeat enterprise customer. In addition, we expanded into a new geography, Brazil, which extends IQM's presence to major customers across 4 continents. Second, product development. We produced 2 150-qubit customer systems, which left our factory and are now being installed at the customer sites.

This is a key signal to the market about our ability to deliver on our way to error correction. This ability to execute is underpinned by our ongoing fab expansion, which is on track to produce our next-generation processor generations. And third, financial strength. We closed the quarter with EUR 260 million in cash and have advanced with several grants leading to additional source of income on top of our sales. Our CFO, Jan Kuerschner, will take you through the numbers. Let's look more closely at our commercial traction, how we drive quantum adoption through use case development and grow sales through the most important order of the quarter. Customers use our quantum computers to get quantum-ready with their organizations.

They co-develop use cases, they run case studies and integrate our quantum computers into their workflows. On the enterprise side, adoption is building through skills and industry applications. Our IQM Resonance cloud now has more than 17,000 registered users, and it is increasingly where enterprises build their first quantum capabilities. For example, Intesa Sanpaolo, Italy's largest bank, launched an advanced quantum algorithms program through IQM Resonance cloud that runs on IQM Emerald, our 54-qubit system. And in July, together with Deutsche Bahn, we published a hybrid quantum classical pipeline for rolling stock planning on real operational data, running end-to-end on IQM hardware. Let's put this into context.

At these problem sizes, the performance of quantum computers matches the performance of conventional computers. We are building trust by showing that the technology works for subsets of the actual problem size. It is the working pipeline, the trained team and the well-framed problem that delivers value to our customers. And this is how we will continue to talk about applications: openly and honestly while pushing the technology further. What enables these use cases are our state-of-the-art quantum computers, which we deploy globally. A good reference point is that our customers and partners have published, in total, over 100 research papers on IQM quantum computers that we have deployed globally.

In addition to quantum adoption for use cases, we drive it by deploying error-corrected quantum computers to customers. In July, the CSC Supercomputing Center in Finland selected IQM to deliver an IQM Halocene system, it is named LUMI-IQ, integrated into their LUMI AI Factory. LUMI-IQ is jointly owned by Finland, Czechia, Norway and Poland and co-funded by the EuroHPC Joint Undertaking. It will be hosted in CSC' new data center in Kajaani alongside one of the world's most powerful supercomputers. The total value of this order was EUR 33 million. To make this important deal possible, we announced in September an upgrade path for our quantum computers. LUMI-IQ will be delivered in 3 stages.

First, an IQM Halocene H4 system in 2027 with 150 physical qubits and early error-correction capabilities. Then an upgrade in 2028 to lower logical error rates and enable real-time error correction. And finally, an IQM Halocene H5 system in 2029. After the final stage, the system is designed to support logical qubits with fast real-time feedback and to run Clifford operations between them. This will enable computations with up to 9 fault-tolerant logical qubits using distance-3 surface codes and other more advanced codes, including color codes. Now why is this important for investors? Three reasons. First, it is a multiyear sovereign-backed customer relationship that grows with our road map.

Second, it shows how system value steps up as we move from today's NISQ machines to error-corrected ones in the future. A single Halocene contract is worth a multiple of a typical Radiance system. And third, LUMI-IQ is on track to become Europe's first superconducting quantum computer with logical qubits, built, owned and operated in Europe, all with the support from IQM. Especially the third point, the advanced ownership model is gaining traction globally. In September, we announced that TOYO Corporation in Japan ordered its second IQM system, an IQM Spark for its R&D center in Tokyo. This system joins the IQM Radiance 20 system that will be installed in Japan's Advanced Industrial Science and Technology quantum center.

Both systems are planned to be delivered over the next 3 months and operations are planned to begin in early 2027. What stands out here is how TOYO will use the IQM quantum computers. It is opening both machines to Japanese universities, start-ups, research institutes and companies as a test bed for algorithms and for the components that go into superconducting quantum computers. Japan's national strategy targets 10 million domestic quantum users by 2030. Our approach to deliver shared and owned infrastructure supports this strategic goal. In the U.S., our IQM Radiance 20 system at Oak Ridge National Lab called Pathfinder is now live and operational. Again, it is owned and operated by Oak Ridge's own team.

For the first time, the quantum HPC software stack that Oak Ridge developed against simulators is running on a physical quantum computer. We also announced a completely new geographical expansion, our first quantum computer in South America. The Eldorado Research Institute in Campinas, Brazil's largest technology cluster, will install an IQM Spark in the first quarter of 2027. They also received cloud access through Resonance platform through our 54-qubit system in Europe. Like TOYO, Eldorado will open the system to the universities, start-ups and industry partners around it. In summary, this means 4 customers, 4 continents and the same underlying decision. They grow through ownership of a full-stack quantum computer with an open software architecture.

This is how IQM expands quantum ecosystems globally and delivers technology readiness. As of today, IQM has cumulatively sold 31 full-stack quantum computers worldwide, including Community of Madrid that was announced after the quarter end in October. We have delivered 17 systems to customers with additional 17 systems currently in production. Next, let's talk about sovereign programs and our U.S. footprint. Governments are treating quantum as a sovereign capability. Confirmed public funding worldwide now stands at about $41 billion. Governments are no longer just funding quantum, they are investing in it and buying it, and we see this in our pipeline.

In the U.S., we opened our first Quantum Technology Center in the University of Maryland's Discovery District, and we welcomed Governor Wes Moore there. In the same building, Microsoft Quantum has opened a quantum hardware makerspace, and IQM is one of its 7 initial partners on the Quantum Hardware Training Initiative. We joined alongside AMD, Bluefors, Intel, Fermilab, Riverlane and Quantum Motion. With efforts like this, we help resolve a key bottleneck in our industry: the number of people who have actually built and operated quantum hardware.

In Germany, the Federal Ministry of Research, Technology and Space launched its Quantum Computing Competition with up to EUR 640 million in planned funding to develop at least 2 error-corrected quantum computers for industrial use by 2030. The SuperPilot consortium coordinated by IQM together with Infineon Technologies and Zurich Instruments has been selected as 1 of 6 projects to advance to the next phase of the competition. It combines our experience in building and delivering complete systems with Infineon semiconductor manufacturing expertise and Zurich Instruments' industrial-grade quantum control. On the European level, IQM has been selected into the first phase of the Grand Challenge program.

This is part of the renewed EU strategy on quantum computing, which will be implemented through the EU Quantum Act. Finally, in Japan, we are supported by the government through NEDO, a joint project with Kyocera and AIST. All these projects support the development of our road map, both financially and through joint R&D resources. Now let me switch gears and turn your attention to our technology road map towards fault-tolerant quantum computing. Here, our message is clear and consistent: we measure progress at the level of the system, not a single hero number. In May, our work demonstrating above 99.9% fidelity across all 3 core operations in a single device was published in the peer-reviewed journal, PRX Quantum.

These results were also presented by our team during the SQA conference in Gothenburg in August. SQA is a globally leading tech conference for superconducting quantum computers and algorithms, which we co-hosted together with Chalmers University and SCALINQ. The results we presented, a combined fidelity of 99.8% across all 3 corporations, made up of 99.98% for single-qubit gates, 99.94% for readout and 99.93% for the 2-qubit CZ gate. The CZ figure is the one I'd like to underline. It isn't the best single measurement, but an average over 40 hours of continuous operation. The gate ran stably for nearly 2 days, only one single-qubit recalibration and stayed within a few hundreds of 1% within its peak.

That kind of stability is what data center integration, long hybrid workflows and real applications depend on. And it's the performance we are engineering into our next-generation customer systems. Based on the fast innovation cycles enabled by our own fab, we have reached record T1 times of 1.6 milliseconds. This is a major stepping stone towards higher gate fidelities in our processors. We know investors are focused on how this performance carries over to larger processors. A good example is that we have now entangled all 54 qubits on an IQM Emerald processor after fully entangling our 20-qubit Garnet system earlier.

The new 54-qubit result has been achieved with advanced error mitigation that came from bringing our optimized control methods to full processor scale, together with firmware upgrades and cryogenic refinements. And because Emerald is available through our IQM Resonance cloud and through Amazon Braket, this isn't a lab result; it is a production system with significantly increased performance to run algorithms researchers and customers around the world can access today. Our priority for the coming quarters is to demonstrate these results also at the system level on our 150-qubit processors. The first 2 systems are on schedule for final delivery by year-end. We have started unboxing these systems at the customer site and are preparing them for final installation.

The next step on our tech road map is implementing error correction for our Halocene product line. We made significant progress on the 2 things that matter as processors scale towards error correction. The first point is running many gates simultaneously without them interfering. This means we have been suppressing leakage and crosstalk significantly. The second point is connectivity. We have achieved a new direct 2-qubit operation between any pair of qubits on our Star topology. Through its central coupling element, the Star topology is the building block of our broader constellation architecture, where each qubit connects to 12 other qubits rather than to just 4 qubits.

This increased connectivity is the basis for the barbell error-correction codes we announced in June. Error correction is where the industry attention has moved, and we are executing a strong road map towards fault-tolerant quantum computing. This quarter, our work is focused on making it real-time, open and testable. Real time because IQM Halocene runs NVIDIA Ising calibration, which we contributed and developed together with NVIDIA natively through NVQLink. This way, calibration and error-correction loops run on hardware the customer owns. It is open because with NVIDIA CUDA-Q, which we adopted in September, the same workload can be compared across codes and architectures on common metrics. And it is testable because researchers can now run these experiments themselves.

Our Qrisp package carries the same code from simulator to IQM hardware. And at NERSC supercomputing center in the U.S., researchers ran their own surface code memory experiments on IQM Resonance. Based on these achievements, we continue executing our ambitious technology road map. In 2027, we target our first error-correction demonstrators followed by first customer deliveries, typically 12 to 18 months after each demonstration. And deals like the LUMI-IQ system for CSC show how that road map now translates into contracted customer deployments. Another key ingredient of building fault-tolerant quantum computers for real use cases is the software stack. It's the applications running on top and, of course, AI.

IQM's acquisition of Quantistry's asset in July added a cloud-native AI-powered chemistry and materials platform and an experienced team. We are now integrating that platform into our product solutions. It lets chemists and engineers, not just quantum specialists, run their own use cases with each step routed to classical HPC or quantum as appropriate. On stable IQM hardware, that is how our customers will identify the use cases where quantum genuinely makes a difference. Our application teams delivered results this quarter that show how hybrid quantum classical workflows are heading. Let me give you 2 examples how we drive use case adoption with customers and partners.

First, with Volkswagen Group Innovation, we cut the classical post-processing of a quantum classical chemistry method with an estimated 248-fold runtime speedup for 100 orbital systems. We validated the results on IQM hardware and applied it in 40-qubit simulations of a reaction pathway relevant to lithium air batteries. Second, already some time ago, the German Aerospace Center at HQS Quantum Simulations simulated magnetic expectations in real 2-dimensional materials on our cloud at up to 48 qubits. Now this quarter, we delivered the other half, a classical reference pipeline for strongly correlated materials where standard methods break down, giving a rigorous baseline any future quantum materials results will have to beat.

These use cases are enabled by several new methods our teams have developed. Let me give you 3 examples for that. First, our new QISS method extracts better optimization solutions from today's processors already produced. On our 54-qubit Emerald processor, it delivered the same solution quality from noisy hardware as from noiseless simulation. Simulations of deeper noiseless circuits show how it can be competitive with established classical solvers. Second, we released open source error-reduction tools for IQM systems that reduce errors without amplifying noise with 1 line of code and fully reproducible results. And third, we introduced quantum channel polynomial processing, a new algorithmic framework. This framework lets users trade circuit depth against repetitions.

So the same algorithms can scale from today's machines to fault-tolerant ones. In its most precise setting, circuit cost grows only logarithmically with a target accuracy. The common thread here is a view our Chief Scientist, Ines De Vega, set out well this quarter when she said, currently, the quantum computer belongs inside a workflow that remains largely classical, alongside CPUs and GPUs in AI and HPC infrastructure. That is exactly where our systems are deployed. We continue developing an open and modular software stack in co-development with our customers and partners.

The open source project Qrisp that we are supporting is growing and has won the Quantum Effects Awards 2026 for quantum software, a testimonial for the visionary software architecture we are building. All of these efforts I described so far help our ecosystem to grow. The IQM Research Award drew applicants from 10 regions, our free Quantum Summer School put new users on real hardware. And after quarter end, we signed a skills and research agreement with Swinburne University of Technology in Australia. Finally, our people are our most valuable resource. And I was super proud to see IQM being recognized with 2 golds and 1 silver award at this year's Employer Brand Management Awards.

We continue building a world-class team in all our global sites to deliver world-leading quantum computers for the well-being of human kind. With that, I will hand over to our CFO, Jan Kuerschner.

Jan Kuerschner: Thank you, Jan. Let me talk more about our financials and how we are executing on our revenue projects. As a reminder, we operate in a project-driven market where annual revenue comes from a number of large contracts. We recognize revenue from sales of large customized quantum computer systems over time and recognize revenue from standardized product at a point in time when control transfers to the customer. Quarterly revenue can therefore look much more volatile than the underlying business, and we continue to guide you to look at 3 metrics together. First, order intake in the period; second, revenue recognized in the period; and third, order backlog at the end of the period. Let's review the third quarter results.

Order intake. In the third quarter, we booked EUR 42.2 million of new orders, led by the Lumi IQM Halocene contract as well as systems for Eldorado Research Institute of Brazil and the Community of Madrid in Spain. This brings year-to-date order intake to EUR 52.9 million. Revenue. Third quarter revenue was EUR 8.9 million and EUR 17.7 million for the first 9 months of 2026 compared with EUR 11.9 million in the first 9 months of 2025, meaning year-over-year growth of 49% for the 9 months. Order backlog. We ended the quarter with an order backlog of EUR 102.5 million compared with EUR 69.1 million at the end of June.

We expect EUR 59.5 million of our order backlog as at the end of Q3 2026 to be recognized as revenue within the next 12 months. Revenue from hardware and services was EUR 8.7 million for the quarter and EUR 17 million year-to-date. The remainder comes from the cloud-based usage of our quantum computers and from co-development projects or quantum computing-related. Gross margin was 47% for the quarter compared with 46% in the second quarter. Operating loss was EUR 171 million for the quarter and EUR 232 million for the first 9 months. As we flagged in August, the third quarter includes EUR 13.5 million of onetime transaction costs related to the completion of our listing.

Additionally, under IFRS, we incurred a onetime noncash share-based listing expense of EUR 127 million during the quarter. This represents the noncash premium of obtaining a public listing via the merger with RAAQ, and it represents the excess fair value of shares issued by IQM in exchange for the net assets of RAAQ. The underlying growth in our cost base reflects deliberate investment, R&D for our road map to build our sales and delivery capacity and our first full quarter of public company costs. We ended the quarter with a total workforce of 490 employees and external staff compared to 460 at the end of June. Let's now turn to the balance sheet.

We ended the quarter with cash and cash equivalents of EUR 260 million compared with EUR 309 million immediately following our listing on July 2. The change reflects operating cash outflow of EUR 48.3 million. Q3 operating cash flows include EUR 6.2 million associated with the July listing. Our cash position provides a runway into the second quarter of 2028. We are reiterating our full year 2026 guidance. Full year order intake of EUR 65 million to EUR 75 million and full year revenue of EUR 42 million to EUR 47 million. As we said in our August earnings call, 2026 is structurally fourth quarter-heavy.

The largest part of our full year revenue is tied to the schedule delivering customer acceptance of our first 150-qubit systems. We remain confident to deliver the 2026 revenue numbers, given that the 2 systems have already left our factory and are currently being installed at the customer site. Because acceptance-based recognition is the main source of timing risk in any quarter, I want to be transparent about how it works. For standardized systems, we recognize revenue at the point when the customer accepts the system, not when it's shipped or installed. Acceptance depends partly on factors on the customer side, such as site readiness, cooling and power infrastructure and public sector procurement sign-off.

Larger customized projects are recognized over time as milestones are reached. If an acceptance moves by a few weeks across the quarter end, the revenue moves with it. The contract value, the backlog and the cash profile do not change. As a reminder, revenue only includes commercial sales contracts of quantum computers, cloud or related services. We are not counting government grants, public funding or other nondilutive financing as revenue, just plain commercial contracts. We include grant funding as other income in our financial statements. And let me also provide 2 structural points that will further help with modeling our business. First, fewer larger contracts. As our systems move to higher qubit counts and embedded error correction, contract values rise.

A single Halocene system is worth a multiple of a Radiance system. That improves the quality of our order backlog, but it also makes order intake and revenue lumpier and extends conversion from order to revenue to sometimes more than 2 years. Second, a growing recurring base. As our installed base expands, service maintenance and upgrade revenue becomes a larger share of the mix. LUMI-IQ's staged upgrades are a good example of how one customer relationship generates revenue across several years. Our capital allocation priorities are unchanged: delivering to our customers, achieving our Halocene error-correction milestones, expanding fab capacity and deepening our cloud and software ecosystem.

We will remain disciplined on opportunistic M&A that strengthens our offering as we did with Quantistry. Our focus is on building an enduring long-term profitable leader in quantum computing infrastructure. And with that, I will hand the call back to Jan Goetz.

Jan Goetz: Thank you, Jan. Let me close with 3 takeaways from the quarter. First, our commercial and geographic base is broadening. We announced and won new orders in Japan and Brazil. Our first U.S. system is live at Oak Ridge and enterprises are building skills on IQM hardware through our cloud, while sovereign customers in Europe remain our anchor. Second, our road map to fault-tolerant quantum computing is continuing to be contracted. With LUMI-IQ, the customer is not just buying a single machine, but committing to a multiyear path toward logical qubits on IQM hardware with system value that steps up as performance does.

And third, the fourth quarter is about execution, delivering and achieving acceptance of our first 150-qubit systems, converting backlog into revenue and building order intake for 2027. For years, the open question in our industry was whether quantum computers could work at all. Today, the question is whether they can be built, delivered and operated at the pace the world needs them. That is a manufacturing and deployment question as much as a physics one. And it is exactly the question IQM has spent years building the capability to answer. Thank you all for joining us today.

Thank you to our customers and partners, to our teams in Espoo, Munich, College Park and around the world and to our shareholders for your trust. Our earnings release and presentation are available at www.investors.iqm.tech. Operator, please open the line for questions.

Operator: [Operator Instructions] Your question comes from Tyler Anderson from Craig-Hallum Capital Group.

Tyler Perry Anderson: This is Tyler Anderson on for Richard Shannon. So I wanted to characterize the existing deployments that you already have. For the systems that are already in production, how much -- how many of these groups are error-correction research groups, or at least that was the intention as to why they purchased the system? And then I have a follow-up.

Jan Goetz: Yes. Thanks, Tyler, for the question. So the deal that we announced with LUMI CSC, this is a Halocene deal, which is really targeting the error-correction functionality. All the other systems that we have sold are either Radiance or Spark. This means, in principle, customers and users, they can run error-correction workload there, but they have to implement everything themselves. So it's really basically their development they have to put in. Whereas these new Halocene systems, this is where we bring in the error-correction capabilities.

Tyler Perry Anderson: Okay. Are you also supplying the error-correction hardware for this?

Jan Goetz: You mean for the Halocene machine?

Tyler Perry Anderson: Yes.

Jan Goetz: Yes. So this is an upgrade path that the customer takes there. And as part of the upgrade, also the error-correction capabilities will be deployed. So for example, the real-time part, I think, will only come with the second delivery and so on. So the system kind of will grow in functionality over time. But at the end, yes, there will be a full functionality in the system with the customer.

Tyler Perry Anderson: Okay. That's great. And then you had mentioned you had open-source error-reduction tools. Are you speaking to error suppression? Or is this error mitigation?

Jan Goetz: Yes. So we have basically put these tools on -- also on our cloud and people can use it. And the focus here has been error mitigation. I'm not 100% sure if there's also error suppression in there, and this is something we would need to double check.

Operator: Your question comes from Jesse Sobelson from U.S. Bancorp.

Jesse Sobelson: So you reported 31 systems sold, 17 delivered and 17 are currently in production. So I think it implies that there's 3 that are being produced with no end customer in mind. Are those captive systems that you're building? Or what's the reason behind this?

Jan Goetz: All systems have a customer tied to it. There's no systems that we're just building for the shelf.

Jesse Sobelson: Okay. And then I guess I'm just curious on -- with the delivery that you have. Can you provide a status update? I know that there was a 2-system CESGA contract in Spain. We were expecting those deliveries to come through in June. I got the commentary here on the 150-qubit systems being delivered to customer sites. But is there any detail on the CESGA contract?

Jan Goetz: Yes. I think -- well, first of all, the other two 150-qubit systems that are currently being deployed, so they are already at the customer site. The CESGA system is not yet delivered to the customer. We are facing a slight delay here. But we're not worried about that. That will slip into the beginning of next year, and that does not concern our revenue guidance that we were keeping on that.

Jesse Sobelson: Okay. Great. Yes, I think it speaks really well to you guys having the 150-qubit machines on site. And I think it's looking very interesting for the fourth quarter.

Operator: Your next question comes from the line of Felix Henriksson from Nordea.

Felix Henriksson: I have a couple of questions, take them one by one. Firstly, the LUMI upgrades that you mentioned, are those included in the EUR 33 million contract value? Or are those incremental revenue on top of that?

Jan Kuerschner: Thanks for the question, Felix. Yes, those are included in the EUR 33 million.

Felix Henriksson: Got it. That's very clear. And then you called out the IPO transaction-related costs, EUR 13.5 million for Q3. Are there any sort of onetime nonrecurring listing or other related costs that we still should expect to be included in the Q4 financials?

Jan Kuerschner: No. By now, we've recorded them all.

Operator: We will take our next question and the question comes from Mike Harrison from Rothschild & Co.

Michael Harrison: They're more sort of financially focused than technologically focused. The first is, if I take your order intake and revenue guidance, I think it's implying your backlog will fall to about EUR 90 million by the end of the year. So I just want to double check that, that tallied with your expectations for what 4Q looks like? And then secondly, if I take what you're saying about the amount of backlog that gets recognized in the next 12 months, I think that's implying that your 9 month '27 versus 9 months '26 revenue growth rate would be tracking at about 85% year-on-year.

And I just wanted to kind of sanity check with you guys whether that's a roughly sensible glide path for how you think the quantum market evolves, whether you think that's a bit fast or a bit slow? Just kind of help me understand how I should contextualize that.

Jan Kuerschner: Okay. Let's start with the first part. So as we repeated our guidance, one could make the math and say that approximately EUR 20 million to EUR 25 million of revenue will be recognized in Q4, and that's what we expect. And if you deduct that from the EUR 100 million that we -- EUR 102 million that we have currently at the end of the quarter, that doesn't arrive at the EUR 90 million. However, that being said, we are still expecting some more orders to come in until the end of the year. So that would then again raise the number.

And here, as we gave our guidance, we have the EUR 50 million -- EUR 53 million now secured, and it will be anywhere between EUR 65 million and EUR 75 million. So if you add that to this, your math kind of seems reasonable.

Jan Goetz: Maybe I can comment on the market question. I think overall, of course, it's difficult to derive how the market does based on the performance of how we are doing. Overall, of course, we are super focused on execution, and this usually includes 2 points. One is the product and technology development, so building better computers, and the other one is the commercial traction. But still, there might be fluctuation quarter-to-quarter. So I think there's some uncertainty here. And the other thing is, of course, that we are really pioneering the field of deploying quantum computers to supercomputing center and doesn't mean that the whole market is kind of following at the same pace necessarily.

Operator: The question comes from Krish Sankar from TD Cowen.

Unknown Analyst: This is Stephen calling on behalf of Krish. The first one I have is regarding the new order intake for the quarter. Just kind of curious, like, besides the Halocene system for LUMI AI and the TOYO and also the Brazil orders, were there any other system orders beyond that within the EUR 42 million intake? Or is the remaining balance potentially from cloud bookings and future system usage?

Jan Kuerschner: There is a -- first of all, thanks for your question, Stephen. There is some cloud in there, but not really material. There are some other systems in there, which we have not yet announced, but that will be happening soon.

Unknown Analyst: Got you. That's helpful. And as my follow-up, in terms of error-correction milestones and strategy, so I understand you guys are pursuing and developing multiple technologies, surface codes, color and also barbell codes. And I guess for the primary development on the Halocene systems, are barbell codes the main focus there? Or is there going to be a meaningful amount of resources focused on traditional surface codes? And how should we think about milestones next year for development of error-correction technologies? And specifically, if you can talk to what kind of, I guess, physical qubit to logical qubit ratio you might be able to achieve by the end of next year?

Jan Goetz: Yes. Well, thanks for these questions. I will take them. So on the error-correction approach, I think it's always important to check where we are coming from and then where we are planning to go. So when we started, the whole error correction research was not as developed as it is today and kind of the leading approach was the surface code. And this is why we designed our first systems to support this. And this is basically the Crystal architecture that we have chosen and all our systems that we have shipped so far, except for the Czech one are actually targeting this.

But then we have published these very nice results on the barbell codes, so a different approach, which is more efficient. So the goal is really to lean towards the barbell codes as we move on. But in principle, of course, you could even think about systems where you have, in a way, both because on the barbell codes and the qLDPC in general, there are still some, let's say, topics which are open to research, for example, the magic state distillation. We know that it works with the surface code architecture and let's say, a derisking option would be to do this part still with the surface code, for example.

So in a nutshell, the goal is to really move to the barbell codes, but having the surface code in a back pocket to derisk the approach. And then when it comes to this ratio between physical and logical qubit, this really depends also on the target error rate on the logical side that you are aiming for. And it is also a moving target because it also depends heavily on the physical error rate. So it's really hard to give like one number that captures it all. Overall, the barbell codes that we have developed are, of course, much more efficient than the surface codes.

And this means you really kind of gain their order of magnitude in this ratio between surface code and barbell codes.

Operator: The next question comes from Waltteri Rossi from Danske Bank.

Waltteri Rossi: Waltteri Rossi from Danske Bank. My question is about cash flow. So you state that the current cash runway extends into Q2 '28. So what assumptions for revenue, customer advances and capital expenditures do you have that underpins that runway? And kind of a follow-up. Looking at your year-to-date operating cash flow, it was roughly EUR 99 million negative. So how much of that is recurring operational cash burn? And what should we expect to be this kind of normalized cash burn in Q4 and 2027?

Jan Kuerschner: Okay. Well, thanks, Waltteri, for your question. We're not yet giving guidance on 2028 since you were asking on revenues, what we expect for that year. So it's a bit difficult to answer that. We do, of course, anticipate a growth in revenues. And as from the previous question and our guidance that we gave on the order book and what is going to be -- will be recognized over the next 12 months, we kind of can derive a number here. However, as I said, we're not giving guidance yet and so I will need to ask for your patience for our next earnings call here.

And yes, concerning this year and the operating cash flow, we were stating that there is some expenses tied to the listing and then that was EUR 13 million. So the rest of that operating cash flow is the regular cash flow. And we can interpolate the same for Q4 in that sense. You probably expect something more concrete, sorry for that, but yes.

Operator: [Operator Instructions] The next question comes from Tyler Anderson from Craig-Hallum Capital Group.

Tyler Anderson: I guess what I'm really trying to figure out here is we have the Star topology that can now do error correction. And from my perspective, if I was doing error-correction research on superconductors, that would seem to be a thing that I would want to get into so that I can develop on the platform for the future. Now we have this in '27 being delivered. And then there's the mix of the Crystal lattice and the Star topology, which, again, seems like one of those -- how should I say, like a change in regime, just a changing tide in how things are done.

And so what I'm really trying to find out is, with this installed base that you have, it would seem that there are a good amount of people who would want to upgrade to the new system or at least one of these 2 systems. But then also, it would seem that this would attract new customers as well. And so I just want to kind of get an understanding, where do you have your expectations for Halocene? And is this more -- do you think this is going to attract more interest from customers that you haven't reached yet?

Or do you think that this is going to drive an upgrade cycle with those who already have an installed and up-and-running quantum computer?

Jan Goetz: Yes. Well, I think that's a very valid question. And generally, we do think both will happen, and we have seen both happening. So we have customers, they went through the upgrade path, and we have good indications that this upgrade path is also attractive for others. So we do think that our current customer base will continue to invest into our road map, and this is one thing. But then, I mean, you have seen the numbers. We sold 31 systems. Some of them are actually already upgraded. So the number of customers is smaller.

But then if you just count the number of supercomputing centers, HPC centers, data centers around the world, obviously, you come up with a much higher number. So there is also, I think, a good potential to open new markets and gain new customer traction as we have shown this quarter, right, with Brazil, for example, we have now the first customer in South America. And we do think that there is a way to do both: to serve our existing customers with new and better products, and at the same time, of course, then win additional customers on top of that.

Tyler Anderson: And also thank you for the logical memory experiment. I appreciate it when we point out the memory.

Operator: There are no further questions. I will now hand the call back to Jan Goetz for closing remarks.

Jan Goetz: Yes. So thanks again, everyone, for joining. If you have further questions, I refer you to approach our Investor Relations team, and they are happy to help. And with that, I'm really looking forward to connect then through the next earnings call for the next quarter. Thank you.

Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.

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