Quantum Computing Inc.'s Q3 2025: Contradictions Emerge on Fab 1 Capacity, M&A Shifts, Foundry Delays, Market Demand, and Global Expansion

Date of Call: November 14, 2025

Financials Results

• Revenue: $384,000 in Q3 2025, up from $101,000 in Q3 2024
• EPS: Approximately $0.01 per share in Q3 2025 (net income of $2.4M), compared to a net loss of $5.7M in Q3 2024
• Gross Margin: 33% in Q3 2025, compared to 9% in Q3 2024

Guidance:

• Pipeline of sales and partnerships expected to support future revenue growth
• SG&A expense expected to grow in the near term as the company scales
• Additional Fab 1 CapEx of approximately $2M to install high-speed test equipment
• Developing Fab 2 over the next 3 years to enable volume manufacturing (aiming for hundreds of millions of chips/year)
• Expect ~224M shares outstanding for Q4; year-end 2026 count depends on option/warrant exercises
• Not expecting another financing in the near term

Business Commentary:

* Revenue and Financial Performance: - Quantum Computing Inc. reported revenue of $384,000 for Q3 2025, up from $101,000 in the same period last year. - The increase in revenue was primarily due to increased sizes and levels of effort on research and development services contracts and custom hardware contracts, as well as recognition of revenue for cloud-based access to the DIRAC-3 quantum optimization system.

• Balance Sheet Strengthening:
• The company's cash and cash equivalents rose to $352 million, and investments increased to $460 million on the balance sheet at the end of the quarter.
• The improvement was due to the closing of a $500 million equity financing in September and an additional $750 million financing in October, enhancing the company's ability to execute on its long-term vision.

• Manufacturing Capacity Expansion:
• Quantum Computing Inc. is expanding its manufacturing capabilities with Fab 2, which is expected to begin development over the next 3 years.
• The expansion is aimed at supporting volume manufacturing, driven by growing demand in telecommunications, sensing, and quantum information systems, as well as scaling production to meet the increasing demand for thin-film lithium niobate photonic chips.

• Commercial and Government Sector Engagement:
• The company saw growing adoption of its quantum and photonic solutions across research, enterprise, and government sectors.
• This momentum was driven by successful commercial engagements, including the sale of the EmuCore reservoir computing device and the completion of a transaction with a major U.S. financial institution, validating the company's quantum AI and security platforms in real-world settings.
  

  Sentiment Analysis:

  Overall Tone: Positive

  • Management highlighted a 'strengthened balance sheet' after raising $500M in Q3 and $750M post-quarter, reported revenue growth (Q3: $384k vs $101k prior year), improved gross margin (33% vs 9%), and a Q3 net income of $2.4M, while emphasizing plans to scale manufacturing (Fab2) and invest in execution.

Q&A:

• Question from Maxwell Michaelis (Lake Street Capital Markets): Can you give more detail on the POET Technologies press release, the long-term opportunity with them, and other similar partnerships in the pipeline?
  Response: We're actively collaborating with multiple partners on thin-film lithium niobate (TFLN) for next-gen high-speed transceivers; POET is one such collaboration and we expect similar telecom/datacom partnerships.

• Question from Maxwell Michaelis (Lake Street Capital Markets): You mentioned top 5 U.S. banks and a purchase order for quantum security solutions — what other use cases or large opportunities are you discussing beyond security?
  Response: Discussions include integrating our quantum communication tech onto photonic integrated chips for PUFs, QRNGs and broader applications (wireless, aerospace, ISPs), expanding use cases beyond security.

• Question from Maxwell Michaelis (Lake Street Capital Markets): On inorganic opportunities and M&A, how are valuations trending and what end markets/technologies are you targeting?
  Response: We are actively evaluating acquisitions to acquire customers, revenue and complementary technologies to accelerate commercialization, but the M&A market is volatile and nothing formal to announce.

• Question from Troy Jensen (Cantor Fitzgerald): What is the remaining CapEx for Fab 1 roughly?
  Response: Fab 1 is largely built out; planned incremental CapEx is about $2M for high-speed measurement/testing equipment.

• Question from Troy Jensen (Cantor Fitzgerald): For Fab 2, will you produce PICs for yourselves and outsource capacity to others that need TFLN capabilities?
  Response: Fab 2 is being scoped to support our in-house quantum machine manufacturing and external TFLN demand, targeting high-volume output to serve both needs.

• Question from Troy Jensen (Cantor Fitzgerald): What share count should we model exiting 2026?
  Response: We have 224 million shares outstanding now (and expect ~224M for Q4); year-end 2026 depends on option/warrant exercises, but no near-term financing is planned.

• Question from Troy Jensen (Cantor Fitzgerald): Is the near-term opportunity more in sensing and other applications versus QPU-type sales?
  Response: Near term we see multiple revenue streams: DIRAC-3 optimization revenues and upgrades, sensing and communications sales, while gate-based hardware development is underway but longer-term.

• Question from John McPeake (Rosenblatt Securities): Could increasing quantum threats (e.g., advances on Shor) be increasing the pipeline of security deals, especially in finance?
  Response: Yes — customers are increasingly focused on quantum cyber risk; we offer fiber-compatible quantum-secured solutions designed for practical deployment to address that threat.

• Question from John McPeake (Rosenblatt Securities): DIRAC-3 just started recognizing revenue — how is the market for optimization solutions trending and is awareness growing?
  Response: Awareness is growing; we're addressing adoption hurdles via education/marketing, building an applications team for integration, and lowering unit costs through scaling and volume production.

• Question from Edward Woo (Ascendiant Capital Markets): Do you plan to focus on international opportunities given current U.S. focus?
  Response: Yes — we're active internationally with sales and partnerships (EmuCore, vibrometer to TU Delft), a South Korea distributor and DIRAC-3 users in Singapore.

Contradiction Point 1

Fab 1 Capacity and Expansion Plans

It involves differing statements about the capacity constraints and expansion plans for Fab 1, which could impact production capabilities and investor expectations.

Can you provide the remaining CapEx for Fab 1 and future plans? - Troy Jensen (Cantor Fitzgerald & Co., Research Division)

2025Q3: Fab 1 is fully operational, with plans to add high-speed testing equipment for $2 million. This investment will enhance Fab 1's capabilities to support foundry services. - Yuping Huang(CEO)

Do you expect capacity constraints in the near term? Are you considering opening another facility domestically or internationally? - Ed Woo (Ascendiant Capital)

2025Q1: We are anticipating capacity constraints as QCi is developing and commercializing disruptive technologies. ... We are considering further expansion, including Fab 2, to accommodate growth. - Yuping Huang(Interim CEO and Chairman)

Contradiction Point 2

M&A and Inorganic Opportunities

The company's stance on M&A and inorganic opportunities seems to have shifted, which could impact strategic decision-making and investor expectations.

What inorganic opportunities or M&A valuation trends are you targeting, and which technologies or markets are of interest? - Maxwell Michaelis (Lake Street Capital Markets, LLC, Research Division)

2025Q3: M&A market is volatile, valuations depend on stock market conditions. QCi actively evaluates acquisition candidates, aiming to accelerate commercialization and acquire customers/revenue. Specific targets are not announced yet. - Christopher Roberts(CFO & General Counsel)

Can you discuss the M&A prospects, including potential targets like a 3D sensing technology company or other areas, and the overall M&A outlook? - Noam Lanman (Citi)

2025Q1: We are very focused on organic growth as our top priority at this point, and we don't need to resort to inorganic growth. - Yuping Huang(Interim CEO and Chairman)

Contradiction Point 3

Foundry Business Ramp-up

It involves differing expectations about the ramp-up time and operational efficiency of the foundry business, which could affect revenue projections and customer satisfaction.

What is the remaining CapEx for Fab 1 and are there any future plans? - Troy Jensen (Cantor Fitzgerald & Co., Research Division)

2025Q3: Fab 1 is fully operational, with plans to add high-speed testing equipment for $2 million. This investment will enhance Fab 1's capabilities to support foundry services. - Yuping Huang(CEO)

Will the foundry business operate at 100% efficiency immediately, or will it take time to ramp up? - Ed Woo (Ascendiant Capital)

2024Q4: Well, of course, there's a startup time, right, because what you have to do, I'm sure you're aware, is we have to get what's called our PDKs, our process design kits going, and we have that going. So we'll be delivering chips proof of concept chips to customers in Q2. - William McGann(CEO)

Contradiction Point 4

Market and Customer Demand

It affects the understanding of the market demand for quantum technology and the company's ability to respond to customer needs, which are crucial for market positioning and strategic decision-making.

What other use cases and large opportunities are you discussing with large firms outside of security solutions? - Maxwell Michaelis (Lake Street Capital Markets, LLC, Research Division)

2025Q3: Discussions include applying quantum communication technology to wireless and Internet providers, aerospace platforms, and more. This involves miniaturizing current quantum systems for easier adoption across sectors. - Yuping Huang(CEO)

What are the 2-3 most important milestones you need to achieve over the next 1-3 years? - Troy Jensen (Cantor)

2025Q2: We are working with more and more customers to integrate Quantum Systems with their existing workflows. The goal is to have Quantum machines that are more usable, more accessible, more affordable. - Yuping Huang(CEO)

Contradiction Point 5

International Business Focus

It highlights a shift in the company's focus on international opportunities, which could impact growth strategies and market penetration.

What are the plans for international expansion and current international partnerships or sales? - Ed Woo (Ascendiant Capital Markets LLC, Research Division)

2025Q3: Quantum technology is in demand globally. QCi has sold products and services internationally, working with partners in Europe, South Korea, and Singapore, with plans to further explore global opportunities. - Yuping Huang(CEO)

Is your current focus primarily on domestic business or global opportunities? - Ed Woo (Ascendiant Capital)

2024Q4: It is currently a big focus in the US with some commercial entities. Those entities are global companies. And with some of the US government initiatives with our Dirac-3, particularly in the areas of fraud detection and sort of portfolio analysis, payment analysis. We do have, I will say, a couple of orders for our photonic chips that are offshore, both in Europe and in Asia. - William McGann(CEO)