Quantum Computing (QUBT) Q2 2026 Earnings Call Transcript

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DATE

Monday, Aug. 10, 2026 at 4:30 p.m. ET

CALL PARTICIPANTS

• Chief Executive Officer and Chairman - Dr. Yuping Huang
• Chief Financial Officer - Christopher Bruce Roberts
• Investor Relations - John Nesbett

TAKEAWAYS

• Revenue -- $5.6 million, increasing from $61,000 in the prior year period due to sales of photonics products across government, educational, and commercial sectors.
• Net Loss -- $11.8 million or $0.05 per basic share, representing a decrease from a net loss of $36.5 million or $0.26 per share primarily due to a lower mark-to-market loss on derivative liabilities.
• Operating Expenses -- $21.8 million, representing a 114% increase driven by higher headcount, payroll for research and development, and $7.3 million in acquisition-related expenses.
• Interest and Other Income -- $13 million, compared to $1.8 million in the second quarter of 2025, reflecting interest generated from a larger cash and investment position.
• Cash, Cash Equivalents, and Investments -- $1.3 billion as of June 30, 2026, down from $1.5 billion at year-end 2025 following strategic acquisitions.
• Total Assets -- $1.6 billion, which remained relatively unchanged compared to Dec. 31, 2025.
• Total Liabilities -- $47.2 million, an increase of $26.5 million compared to year-end 2025.
• Stockholders’ Equity -- $1.6 billion as of June 30, 2026.
• Contract Backlog -- $42.5 million, with contracts typically performed over a period of 12 to 18 months.
• Acquisition Capital Expenditure -- $180 million used for the purchases of Luminar Semiconductor, Inc., NuCrypt, and NHanced Semiconductors, Inc.
• NHanced Acquisition Terms -- $73.1 million in initial cash and stock, with an additional $72 million available if performance targets are achieved.
• Revenue Mix -- 70% to 80% derived from government contracting, primarily as a subcontractor to aerospace and defense primes.
• Fab-2 Production Capacity -- 60,000 wafers per year at the NHanced facility, which significantly expands manufacturing capability relative to the Fab-1 facility.
• Projected CapEx for Fab-2 -- $50 million to $100 million estimated for future capability upgrades, with a target of approximately $75 million.
• Derivative Liability Valuation -- $1.7 million mark-to-market loss in the current quarter, compared to a $28 million non-cash loss in the second quarter of 2025 related to the QPhoton merger.
• Strategic Framework Agreement Value -- $10 million potential aggregate program value with Planck Dynamics for the deployment of Neurawave systems.
• Basic Share Count -- 224.7 million weighted average shares outstanding, up from 141.4 million in the second quarter of 2025.
• Inventory -- $12.8 million as of June 30, 2026, increasing from $352,000 at year-end 2025.
• Accounts Receivable -- $6.9 million, compared to $519,000 at the end of 2025.
• NHanced Historical Revenue -- $16 million in the first half of 2025, though recent performance has been impacted by shifted funding for a large naval contract.

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RISKS

• CFO Roberts stated that "some funding on a big navy contract has been pushed off for the next year," which has caused recent revenue figures for the NHanced acquisition to fluctuate.
• CFO Roberts warned that the company's business model can be "lumpy" and is "hard to predict when you are doing cutting edge development work for a customer."

SUMMARY

Quantum Computing Inc. (NASDAQ:QUBT) reported second quarter results and discussed the completion of three strategic acquisitions intended to expand its integrated photonics and semiconductor manufacturing capabilities. Management reported a transition from research and prototyping toward scalable commercial manufacturing through its dual-facility strategy involving Fab-1 and the newly acquired NHanced facility. The company integrated NHanced Semiconductors, Inc. to provide independent U.S.-based advanced packaging and foundry services. The company currently generates the majority of its revenue from government subcontracts; management also described a strategy to expand commercial market participation in artificial intelligence, telecommunications, and sensing.

• CEO Huang stated the company’s mission is "to put quantum products and the technologies into the hands of everybody" through room-temperature photonic architecture that reduces system complexity and cost.
• The company launched its Fab-2 initiative ahead of schedule following the acquisition of NHanced Semiconductors, Inc., adding expertise in hybrid bonding, chiplet architectures, and photonic device integration.
• Management announced that the Neurawave photonic reservoir computing platform reached commercial readiness and secured an initial order for five systems as part of a larger framework agreement.
• CEO Huang reported the Dirac-3 quantum optimization machine was successfully installed at a global consulting firm to handle complex enterprise challenges, including portfolio optimization.
• The company appointed a new chief revenue officer to lead a sales expansion plan aimed at scaling commercial and government orders.
• CEO Huang indicated that the team has made "very exciting progress" on developing gate-based quantum machines using single photons and heterogeneous integrated chips.
• CFO Roberts indicated that the current contract backlog consists of long-term contracts expected to be fulfilled over a period of 12 to 18 months.

INDUSTRY GLOSSARY

• Nanophotonics: The study of light's behavior on the nanometer scale and the interaction of nanometer-sized objects with light.
• Thin-Film Lithium Niobate (TFLN): A high-performance material used in integrated photonics for optical modulators and circuits.
• Dirac-3: A quantum optimization machine designed by QCI to solve complex NP-hard mathematical problems using room-temperature photonics.
• Neurawave: A computing platform that combines optical and digital computing for fast, energy-efficient AI inference at the edge.
• NP-hard: A class of computational problems that are difficult for classical computers to solve efficiently.
• Fab-2: The company's second manufacturing facility, established through the acquisition of NHanced Semiconductors, Inc.
• Photonic Integrated Circuit (PIC): A device that integrates multiple photonic functions, such as lasers and detectors, on a single chip.
• Reservoir Computing: A framework for computation derived from neural network theory that is particularly effective for processing time-dependent data in photonic systems.

Full Conference Call Transcript

Operator: Ladies and gentlemen, greetings, and welcome to the Quantum Computing Inc. Second Quarter 2020 Shareholder Update Call. At this time, all participants are in a listen-only mode. Following management's remarks, the call line will be opened for questions. It is now my pleasure to introduce your host, John Nesbett with IMS Investor Relations.

John Nesbett: Thank you, and I want to welcome everyone to Quantum Computing Inc. Second Quarter 26 Shareholder Update Call. Before we begin, please note that today's remarks may include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 2 thousand including statements regarding expected results, operational plans, strategy, and market opportunities. These statements are made pursuant to the safe harbor provision of Section 27A of the Securities Act and Section 21E of the Exchange Act and are based on current assumptions and expectations. Forward looking statements are neither promises nor guarantees and involve risks and uncertainties that could cause actual results to differ materially.

Important risk factors are discussed in our annual report on Form 10-K for the year ended 12/31/2025 and in subsequent SEC filings, including the quarterly report on Form 10 Q for the quarter ended 06/30/2026. We undertake no obligation to update these statements except as required by law. On the call today, we have Dr. Yuping Huang, chief executive officer and chairman, and Christopher Bruce Roberts, chief financial officer. The team will provide an update on the business followed by a question-and-answer session. With that, I will now turn the call over to management. Please go ahead, Yuping.

Yuping Huang: Good afternoon, and thank you for joining us for Quantum Computing Inc. Second Quarter 26 Earnings call. During the second quarter, we continued to build on the momentum established in the first quarter executing on our quantum road map while expanding the technologies and manufacturing capabilities that enable both our quantum systems and a growing portfolio of commercial products and services. We also made meaningful progress in our transition toward scalable, cost effective production of miniaturized quantum products based on nanophotonics and advanced packaging. As I have said before, our goal is simple. To put quantum products and the technologies into the hands of everybody.

Everything we do at QCI is focused on making quantum systems smaller more practical, more affordable, and ultimately more accessible. At our core, QCI is a quantum technology company Our long-term vision is to develop quantum systems built on nanophotonics and advanced packaging that can be manufactured at scale. And deployed across real-world applications. Supporting this strategy is the expansion of our portfolio of photonic components, lasers, detectors, photonic integrated circuits, thin-film lithium-niobate technologies, optical packaging, advanced packaging, and US based semiconductor manufacturing and foundry services. These products and services address growing commercial markets today while providing the core technologies and manufacturing capabilities that will enable our current customers access to the next generation quantum systems.

This integrated approach is central to our strategy by investing in commercially relevant photonics and semiconductor technologies we are creating value today. While building the engineering expertise manufacturing scale, and the production infrastructure needed to enable our long-term quantum road map. During the first half of the year, we completed 3 strategic acquisitions that significantly expanded our commercialization efforts technical capabilities, manufacturing capacities, and engineering talent. Together, these acquisitions have strengthened our ability to across multiple high growth markets while creating a more integrated company serving customers in photonic semiconductor manufacturing, AI, defense, aerospace, telecommunications, and quantum technologies.

Each acquisition contributes unique technologies and that strengthens our portfolio of intellectual property, and we are already seeing the benefits of integrating these organizations. Just as importantly. We have welcomed some of the industry's leading engineers and scientists who are now focused on advancing our mission to deliver practical, scalable, and accessible quantum solutions. During the second quarter, we completed the strategic acquisition of Enhanced Semiconductor, Inc., Allowing us to launch our Fab-2 initiative ahead of schedule to advance key road map development goals and expand manufacturing capabilities. Enhanced is the leading independent US based advanced package foundry with deep expertise in integration, hybrid bonding, chiplet architectures, silica interposers, photonic device integration, and advanced semiconductor packaging and manufacturing.

The enhanced acquisition immediately expands our advanced packaging and semiconductor manufacturing capabilities in core nanophotonics area and beyond. While strengthening the production infrastructure supporting our thin-film lithium-niobate platform and the future quantum products. Importantly, it also adds to our customer base production capacity operational flexibility, and brings a experienced engineering team positioning us to better serve both commercial and the government customers today while accelerating commercial development of next generation photonic and quantum technologies. In April, we announced that Neurawave our next generation photonic reservoir computing platform, reached commercial readiness. Neurawave combines photonic and digital computing to deliver fast energy efficient AI inference and advanced signal processing at the edge.

It is designed to support a broad range of applications across defense, telecommunications, autonomous vehicles, robotics, health care, industry monitoring, and other markets where real time intelligence and the low power operations are critical. Neurawave also demonstrate the versatility of our photonics platform. The technologies we are developing extend well beyond quantum computing. Enabling differentiated solutions across AI communications, sensing, and edge computing. This allows us to participate in large and growing commercial market while continuing to advance our quantum road map. In June, we successfully delivered and installed our Dirac-3 quantum optimization machine at a global consulting firm. Marking another important commercial milestone for QCI.

The Dirac-3 system is being deployed to support our customers engagements with their enterprise customers on complex optimization challenges including portfolio optimization. This cell demonstrates the growing interest in practical quantum optimization solutions and reflects our continued progress in bringing commercially relevant quantum technologies into real-world customer environments. Also in June, we reached a framework agreement with Planck Dynamics that included a initial purchase order for 5 of our Neurawave photonic reservoir computing systems. Beyond this initial order, the agreement provides a pathway for the potential deployment of multiple dozens of Neurawave systems as customer milestones are achieved representing a potential aggregate program value of more than 10 million.

We view this as an important validation of our photonic computing technology. Its commercial readiness and its ability to address emerging AI infrastructure requirements. On a commercial scale. We also expanded the commercial reach of our quantum communication portfolio with a purchase order from a world leading university for our Quantum secure communications system. The university plans to evaluate our technology as part of its broader research and development effort for quantum secure networking for next generation communication infrastructure. We believe this order reflects continued commercial traction for our quantum communications solution and growing recognition of the role quantum secure communications will play. In the networks of the future.

During the second quarter, we attended 8 industry conferences to broaden our visibility and strengthen our strategic partnerships across the quantum ecosystem. These engagements including the 5th annual economist commercializing Quantum Global 26 Conference the Quantum Tech World Conference, and the optical quantum Industry Summit give us the opportunity to connect with customers government stakeholders, and prospective partners. While showcasing our expanding photonics, and quantum optics capabilities. Looking ahead, we remain focused on 2 complementary growth engines. First, we will continue to move aggressively along our quantum technology road map. Leveraging our differentiated room temperature photonic architecture to develop quantum systems that are smaller, more scalable, and more practical for real-world deployment.

As these technologies become commercially viable, it allows us to better serve our existing customer base who will be exploring use cases for these systems. Second, we will continue to grow our commercial portfolio of photonic components lasers, detectors, photonic integrated circuits, thin-film lithium niobate technologies, optical packaging, advanced packaging, semiconductor, manufacturing, and other foundry services. These products and services generate revenue and address attractive market opportunities. Today while providing technologies manufacturing activities, and production scale that directly support and enable our long-term quantum strategy. Our scalable manufacturing strategy has accelerated significantly with the expansion from our Fab-1 facility in Tempe, Arizona. To the launch of Fab-2 through enhanced acquisition.

Together, these facilities strengthen our ability to serve commercial customers across multiple industries. Support government programs, expand US based manufacturing services, and scale production as demand grows. We continue to see in our commercial validation through new customer engagements strategic partnerships, and government programs across both our commercial photonic business and our quantum products. We believe our unique combination of photonics innovation, semiconductor manufacturing, advanced packaging, and quantum technology positions QCI to create sustainable long-term value. By serving customers across a broad and expanded set of high growth markets while continue to build technologies that will define the future of quantum computing. As we execute on our road map, our focus remains unchanged. Putting quantum into the hands of everybody.

We are moving quantum out of laboratory and into business, government agencies, critical infrastructure, and ultimately, everyday applications. Our room temperature chip scale, photonic architecture, is a key differentiator. Dramatically reducing system complexity, power consumption, and cost while enabling practical deployment in real-world environments. We believe the combination of our quantum technology leadership expanding photonics portfolio, and growing manufacturing capabilities positions QCI to help shape the next generation of information processing. While creating long-term value for our customers and shareholders. Now I am going to turn the call over to Christopher Bruce Roberts, who is going to review the financials. Christopher?

Christopher Bruce Roberts: Thank you, Yuping. it is my pleasure to review QCI's financial performance for the second quarter. Revenue for the second quarter of 2026 totaled $5.6 million compared to $61 thousand in the second quarter of 2025, and $3.7 million in the first quarter of this year. All business units of the company contributed to the second quarter revenue. Which derives from a broad cross section of government, educational, and commercial customers, second quarter revenue came mainly from the sales of various photonics products that are critical to our quantum roadmap and a wide range of existing industrial applications. Operating expenses for the second quarter totaled $21.8 million compared to $10.2 million in the second quarter of 2025.

An increase of 114%. The year over year increase was largely due to increase in personnel, and related payroll costs for R&D expense, efforts sales and marketing, as well as acquisition related transaction expenses of approximately $7.3 million Interest and other income for the quarter totaled $13 million compared to $1.8 million in the second quarter of 2025. The increase in interest income was due to interest generated from the company's larger cash position compared with last year. The company reported a net loss of $11.8 million. Or a loss of $0.05 per share for the second quarter of 2026 compared to a net loss of $36.5 million or $0.26 per basic share for the prior year period.

The main reason for the decrease in net loss was the change in the fair value of a derivative liability. Give you some detail, in the second quarter of 2025, the company recognized a $28 million noncash loss on the mark to market valuation of the company's warrant derivative liability compared to a mark to market loss of only $1.7 million in the second quarter of 2026. I want to emphasize these are noncash losses and they are as previously disclosed, the derivative liability we are talking about is related to the merger with QPhoton in June 2022. And the warrants issued with that transaction. Our balance sheet continues to be strong.

Total assets as of 06/30/2026 were approximately $1.6 billion relatively unchanged compared to December 31. Cash, cash equivalents and investments totaled approximately $1.3 billion as of 06/30/2026, compared to approximately $1.5 billion at year end 2025. The cash balance reported at the end of the second quarter reflects expenditures for our acquisitions of Luminar Semiconductor, NuCrypt, and Enhanced Semiconductor for which we used approximately $180 million in cash including transaction expenses. Total liabilities as of 06/30/2026 were $47.2 million an increase of $26.5 million compared to year end 2025. As of June 30, the company has stockholders' equity of $1.6 billion Our contract backlog as of June 30, 2026 was approximately $42.5 million.

And I will now turn the call back over to Yuping.

Yuping Huang: Thank you, Christopher. As we look ahead to the second half of 26, we remain focused on integrating our recent acquisitions and unlocking the full value of talent technology, and manufacturing capabilities they bring to QCI. We continue to advance our transition from research JV innovation and prototyping toward scalable commercial manufacturing positioning us to meet growing demand across our target markets. We are encouraged by the momentum in our commercial and government contract pipeline and remain committed to executing on the partnerships that extend our reach and credibility in the marketplace. As always, we will continue to evaluate targeted acquisition opportunities that strategically strengthen our organization and drive our path to scale.

All of this is underpinned by a strong balance sheet which gives us the financial flexibility to invest in our organization and strategically pursue those opportunities from a position of strength. We remain guided by our core principle of practicality first scalability by design, and innovation with a purpose. As we build the future of quantum for everyone. Our strategy is straightforward. Move aggressively to commercialize quantum technologies while continuing to expand the photonics semiconductor, and advanced manufacturing capabilities that create value today and provide the foundation for the quantum industry of tomorrow. Thank you for your time today, and your continued support of Quantum Computing Inc.

We look forward to updating you on our continued progress throughout the rest of the year. Operator, please open up the call for questions.

Operator: Thank you. At this time, we will be conducting a question-and-answer session. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. 1 moment please while we poll for questions. And the first question today is coming from John McPeake from Rosenblatt Securities. John, your line is live.

John McPeak: Thank you. Congrats to Yuping and Christopher, on closing Enhanced and the progress here. Thank you. And, yeah, no problem. And the question I have a few. The first 1 is on Dirac-3, the enhancements that we have been talking about relative to additional variables. Being enabled in the system. Anything you can talk about there, Yuping?

Yuping Huang: Yep. Thanks, John. Certainly, on Dirac-3, we in the past, we reported, we have already seen clear advantages of using quantum effects. But we also realized that for wide adoption, we needed to provide more functionality and be able to more and more variables. I am very happy to report that, John. So we have made pretty good progress. On that. So I would-- I would advise you to watch out for some news coming out in the coming month. So personally, I am very happy and excited about the progress that we have made. Okay. So that could unlock some additional markets with more variables as the way I would think about it, I guess. Yeah. Yep.

I am-- I am pretty confident on that. Alright. Great.

John McPeak: And then if I just 1 follow-up. You know, with the enhanced acquisition, have your CapEx needs changed relative to Fab-2 because they are, you know, bringing some nice packaging and other capabilities to you guys.

Christopher Bruce Roberts: that is a really good question. And I am a we are looking closely at what we need to do to upgrade the cap capability at the enhanced facility. They can currently do roughly 60 thousand wafers a year, so it is a substantial increase over our Fab-1. But there are some features we would like to have. We are looking at you know, less than we would take to build out a whole new facility. So probably in the $50 million to $100 million range. Probably $75 million is what we are looking at, but we do not have that.

Yeah. it is still in the planning stages, and we are probably not gonna spend anywhere near that this year.

John McPeak: Okay. Great. Thanks. I will get back in the queue. Thanks, guys.

Yuping Huang: Okay. Thank you, John.

Operator: The next question is coming from Max Michaels from Lake Street Capital Markets. Maxwell, your line is live.

Max Michaelis: Yeah, guys. Hey. Few questions from me. I want to touch on the backlog Thanks for giving that data. $42.5 million at the end of June. Just curious to know how that is trended in the past month or 2?

Christopher Bruce Roberts: Well, certainly, with the acquisition of are you talking about up to June 30 or after June 30? Well, after June 30, I kind of, yeah. $42.5 is up till June 30. So how's that kind of trended in the past month and a half or so? Just curious. Oh, with the kind of contracts we are dealing with, the backlog tends to move in fits and spurts. You know, there will be you know, quiet week, and then there will be a very big week. So there has not been a lot of change in the last 40 days.

As you can imagine, a lot of that increase from the backlog we reported at the end of Q1, is related to Enhanced, but we have also had a pretty good run of business development success across the company. 1 way to think about the backlog is that these are not quick turn contracts. These are contracts that will be performed over a period of 12 to 18 months. So we are not we are not expecting to burn the backlog up between now and December. This is really if nothing else came in, this would keep us going until third quarter of next year, maybe a little bit longer.

Max Michaelis: Perfect. And then just going off of the Q2 revenue, you touched on the range of government education and commercial customers. Just curious to know which end market you are you feel like you are having the best headway with right now in terms of customer conversations and potential orders? Just kinda maybe stack rank those end markets that you guys shared in the press release today.

Christopher Bruce Roberts: Right now, we are primarily a provider to government agencies, whether it is mainly through subcontracts. So commercial would be a second. Ed is a distant third in terms of just markets. And that is true across the entire company that the large portion of the work that we are doing is in subcontracts to primes both on the civil side as well as on aerospace and defense. And we expect that is probably gonna continue for a while. But we are seeing a lot of interest in commercial markets for quantum and other products. So we think that the balance is going to gradually shift over time.

But right now, roughly 70% to 80% of our business comes from government contracting. Mainly as a subcontractor.

Yuping Huang: Yep.

Max Michaelis: Alright, guys. that is it for me. Thanks for taking my questions.

Christopher Bruce Roberts: Sure.

Yuping Huang: Thank you.

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

Troy Jensen: Hey, gentlemen. Congrats on all the progress here. Maybe I will start with you, Yuping. I just got a question on Dirac. I guess I have seen a couple of optimization examples, and I was always a quantum computer in the background kind of driving it. So can you-- is this an app and that is-- we are-- Please help me create a computer.

Christopher Bruce Roberts: Troy, you are breaking up a little bit.

Yuping Huang: Yeah. Troy, I could not hear you well.

Troy Jensen: Alright. I will try it again. I was just curious. Can you hear me, guys? Yes. Hello? Can you hear me now?

Yuping Huang: Troy, your voice still breaks up a bit. Yep.

Troy Jensen: I am gonna try 1 more time. Can you hear me now, guys? I can hear you. Christopher, can you hear me? Yeah. I can hear you. Okay. Okay. Perfect. I had to step outside. But so I guess I have seen a couple of these optimization examples in the past, and it seems like they are always being driven by a quantum computer in the background. I am just curious. Is this the Dirac, is this, like, an application that is working with other systems? Or just explain a little bit more, that would be great.

Yuping Huang: Yep. So as you know, Troy, the Dirac-3 machines were designed specifically to solve some very complex NP-hard optimization problems. The purpose of Dirac-3 is really that look at how to utilize the quantum effects to better solve those NP hard problems that are very challenging to solve on the classical machines, usually trapped in what people usually call local minimum. And, and what we have found is that the quantum effects that we utilize in the Dirac machines can indeed help us hop out of the local minimum. So from that perspective. This-- so the advantage stems similarly from the say quantum annealing.

But with the distinction that it is not a quantum annealing machine, Instead, it is room temperature and we use photonics. And as I just reported, in the past, as both our own engineers, and outside users. They have really benchmarked our machine against other optimization machines using quantum effects. And they have reported pretty clear advantage over both classical approaches and our other quantum machines that they can access in the market. On other hand, we also understand that for our technology to be widely adopted, we needed to continue to reduce the SWaP-C parameters while supporting more and more variables and improve the quality of the solutions.

This is what our team has been focused on, and recently, we have made-- we have made some very exciting progress, and that would help us to connect with more customers, be able to give more and more quantum values to customers for the practical applications. Right. Gotcha. Okay.

Troy Jensen: And then, maybe just a follow-up for Christopher. Could you give us any help on, like, a revenue or an OPEX contribution from the Enhance acquisition?

Christopher Bruce Roberts: Sure. We are still not giving formal guidance, Troy. But I want to point you to the pro formas in the most recent Q that was filed this afternoon I think it is footnote 4. And those pro formas, which go back let's see, footnote 3. What you will see is the breakout by company of the revenue by quarter well, first 6 months of this year and first 6 months of last year. And the thing that leaks out is how variable the year over year revenue is. This is a business that tends to be lumpy. And in the first half of last year, enhanced did about $16 million.

Yuping Huang: But Okay.

Christopher Bruce Roberts: In the And we are hoping or the earn out goals for 2027 are predicated on a $35 million revenue target. But if you look at the pro formas, their numbers have gone down a bit. More recently as they have-- you know, some of the business mix has shifted. Some funding on a big navy contract has been pushed off for the next year. So we are you know, let me let me answer this in 2 parts. We are we are standing by what we said before. Which is the models that we have seen that showed QCI before enhanced doing $20 million to $25 million For this year, we stand by that.

The estimate that enhanced will contribute is somewhere in between the $7.07 million and $16 million that they have done in the past. And it is it is really gonna be dependent on how quickly some of these projects are delivered and accepted by their customers, and that is frankly, it is hard to predict when you are doing cutting edge development work for a customer. Sometimes you get it done on the schedule, and sometimes it just takes a little bit longer. So we are trying to be cautious and not get over our skis on this. I hope that helps. We do have that.

Yuping Huang: Thank you, Christopher. We have a growing backlog, but the due to the inherent challenges of the of, you know, technical completion and delivery, it is really hard to predict on a quarter by quarter basis. A little easier in the aggregate for a full year. Alright.

Christopher Bruce Roberts: I am just I would caution to be-- on the backloading, if you are doing-- if you are doing a model. I will be CFO friendly. I promise. I appreciate it, Troy. Thanks. Thank you, Troy.

Troy Jensen: Thank you.

Operator: The next question will be from Nehal Chokshi. From Northland Capital Markets. Nehal, your line is live.

Nehal Chokshi: Thank you. And Yuping, you mentioned that Dirac-3 has been benchmarked against other optimization machines, and you are seeing significant advantage. Is this data that has already been published and freely available to everybody else, or is this just information that you have received from the customer so far?

Yuping Huang: I believe at least, a portion of the data, have been published in journals, and, I have also watched some of our customers' reporting the findings in their presentations. And most of our internal benchmark on the other hand, we have not published And, Nehal, I can, ask the team to provide you a collection of the papers presentation either by our own engineers. Or by their external users.

Nehal Chokshi: That would be great. We would love to see that. Alright. And in the analog quantum computing space, I think you have 2 primary competitors. With 2 different modalities. You see 1 of those 2 competitors being a particularly stronger competitor that space?

Yuping Huang: I would like to answer this question in this way. I think we all have our own understanding or our own design of quantum computers. But at the end of the day, it is going to be the customers. it is going to be the applications that define the value of any quantum machine, including quantum computers, that can create As of now, according to many market researchers and also according to our conversations with customers, it looks like optimization problems have perhaps the largest market potential This is 1 reason that, we started our business focusing on optimization using quantum effects. Down the road, I believe that gate based machines will find more and more applications.

In fact, this has also been a part of our road map as well. So we started with the quantum optimization machine without having to use gate. But we have been working on the basis for the conjugate-based machine. Of course, using photonics, it is much harder but once we overcome the engineering challenges we can be looking at the opportunity to mass produce such quantum photonic based machines that, will support volume production, and reduce the unit price Because at QCI, our mission is really to democratize quantum. We our mission the North Star that guides everything we do is to put quantum into the hands of people.

I am not talking about a small group of people I am talking about large population. This is why we have chosen this path. Again it is much, much harder to construct the gates. Quantum gates using single photons. But once we overcome this difficulty, the manufacturing would be much easier Think we are climbing, the last half mile of the mountain, and I am happy with the progress our team has been making on the gate based machine as well. So do not take me wrong. So we currently do not have gate based machine yet, but we have been making very good progress. that is awesome.

Nehal Chokshi: Thank you. And just to follow-up on the quantum gate, you say once overcoming the engineering challenges, and you did mention single photon as being a key element here. Are there other elements, other engineering challenges other than managing photon optical loss to the point of where you can basically maintain the integrity of a single photon throughout the quantum computer path.

Yuping Huang: that is a great question. And I was expecting you to ask this in-depth question, Nehal. To the gate based quantum machine using single photons. Yes. Photon-photon interaction is most critical and it is also most challenging because this is the basis for the logic. But in the meanwhile, so we are talking about building a machine. Right? So we are not talking about demonstrating the gate fidelity. To construct a complete machine that functions at the room temperature and be able to integrated into, say, other computing platforms such as GPU and CPU. So we needed to have a safe contained system that will require us to have, the lasers the single photon.

Detectors, controlling electronics all integrated on a single chip. This is actually the fundamental reasons why we have acquired Luminar Semiconductor, Inc. Have acquired enhanced because we are looking at developing those heterogeneous integrated chips to support our quantum computing platform and all the other quantum technologies including the sensing including the communications, and the photonic AI.

Nehal Chokshi: Great. Thank you very much. Thank you, Nehal.

Operator: Thank you. And the next question is coming from Edward Woo from Ascendiant Capital. Edward, your line is live.

Ed Woo: Yes. Congratulations on the progress. And congratulations on your increasing commercial scale. Would you have to invest significantly in a Salesforce as to expand your commercial opportunities? Thank you.

Christopher Bruce Roberts: Actually, yes. We announced I guess, it was 2 weeks ago that we hired Susan G. Hunt as our new chief revenue officer and our previous CRO is now in charge of products, product management. And Susan has a, you know, an aggressive plan including hiring some key people. In both commercial and government sales. So while we do have a reasonable sized Salesforce today, we are very much going to emphasize sales going forward. And try and build that backlog up as fast as we can.

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

Ed Woo: Great. Thanks for answering my question, and I wish you guys good luck.

Yuping Huang: Thank you.

Christopher Bruce Roberts: Thanks, Edward.

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

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

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

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