IonQ, Inc. (IONQ) Q3 2021 Earnings Report, Transcript and Summary

Good day and welcome to the IonQ Inc Third Quarter 2021 Earnings Call. All participants will be in listen-only mode. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Mr. Jordan Shapiro, Vice President of Financial Planning & Analysis, Head of Investor Relations. Please go ahead.

Good afternoon, everyone, and welcome to IonQ’s third quarter 2021 earnings call. My name is Jordan Shapiro and I am the Vice President of Financial Planning & Analysis and Head of Investor Relations here at IonQ. I am pleased to be joined on today's call by Peter Chapman IonQ’s President and Chief Executive Officer, and Thomas Kramer, our Chief Financial Officer. By now, everyone should have access to the Company's third quarter 2021 earnings press release issued this afternoon, which is available on the investor relations section of our website at investorsinq.com. Before we begin, a quick reminder to our listeners, through the course of this call management will make forward-looking statements within the meaning of the federal securities laws. These statements are based on management's current expectations and beliefs, and involve risks and uncertainties that could cause actual results to differ materially from those described in these forward-looking statements. Actual results and the timing of certain events may differ materially from the results or timing predicted or implied by such forward-looking statements, and reported results should not be considered as an indication of future performance. Please note that these forward-looking statements made during this conference call speak only as of today's date, and the company undertakes no obligation to update them to reflect subsequent events or circumstances other than to the extent required by law. Please refer to today's press release into the company's quarterly report on Form 10-Q for the quarter ended September 30 2021, which was also filed with the SEC earlier today, as well as other filings with the SEC for a detailed discussion of the risks that could cause actual results to differ materially from those expressed or implied in any forward-looking statements made today. Please note that on today's call, management will refer to adjusted EBITDA, which is a non-GAAP financial measure. While the Company believes this non-GAAP financial measure provides useful information for investors, the presentation of this information is not intended to be considered in isolation, or as a substitute for the financial information presented in accordance with GAAP. Please refer to our earnings press release for reconciliation of adjusted EBITDA to its most comparable measure prepared in accordance with GAAP. Now, I will turn it over to Peter Chapman, President and CEO of IonQ. Peter?

Thanks, Jordan. And thank you all for tuning in to our first earnings call as a public company. Before I jump into the results and the events of the quarter, I wanted to give you some background for those who are new to the IonQ story. IonQ makes the world's most powerful Quantum computers. And we differ from most of our competitors by using a unique trapped IonQ approach. We employ some of the world's foremost talent in our space, including our co-founders, Dr. Jungsang Kim and Dr. Chris Monroe. Both have been trailblazers in the world of Quantum computing for decades and sit on the White House's national Quantum initiative advisory committee. They are some of the most cited Quantum computing researchers in the industry with complementary skill sets in electronics and experimental physics. In the six years since InoQ’s founding, we've made significant strides in taking our revolutionary trapped-ion technology out of the lab, and putting it into the hands of our customers, as a commercial grade readily available quantum computer. IonQ hardware is being used by companies and partners to push the boundaries in areas like machine learning, financial modeling, logistics, optimization, and even quantum video games. At a high level, I am pleased to announce that InoQ is tracking at or ahead of schedule on all critical path items underpinning our business. We manufacture and operate the best quantum computers in the world. And our mission is to make our quantum computers even more accessible, and to nurture a global developer ecosystem. In the next few minutes, I'll take you through InoQ’s strong progress against the technical milestones we outlined earlier in the year. How we are continuing to broaden and deepen our ecosystem, and how we are accelerating in scaling and commercialization. Let's begin with the impressive progress we've made on scaling our hardware. Quantum Computing is a next generation form of computation, similar to how a GPU differs from the CPU. There are several approaches to quantum computing. InoQ’s technology use trapped-ions for our qubits, or the quantum bits underlying our systems. We chose trapped-ions because we believe they exhibit qualities. They're well suited for stability and their ability to scale. It can be hard to evaluate the relative merits of various quantum computing platforms in the market. However, the recent publication of the benchmarking study of all commercially available quantum computers by the QED-C, a third party industry group confirmed that InoQ’s computers are best-in-class along key dimensions, such as their accuracy, while running algorithms with high circuit width, and circuit depth. InoQ’s hardware outperforms the field, outpacing entities from IBM, Honeywell and Rigetti. For additional details, we will refer you to the original paper and a blog post on our website that walks you through the value of the algorithm based benchmarks, the specific tests performed, and the conclusions of the paper. Broadly speaking, every quantum computing company is working to increase the number of qubits in their systems and at the same time, reduce the prevalence of errors in order to improve the capacity of their platforms. For our quantum processing unit, or QPU, that is designed to allow us to increase the number of qubits in our system while maintaining stability. We believe this creates a path to scale that could allow us to place hundreds of qubits on a single chip up from the dozens we have on chips today. In early October, researchers from InoQ and the University of Maryland published results in a prominent peer reviewed journal that documented best-in-class error correction technology. This joint study with Duke University, the University of Maryland, and the Georgia Institute of Technology was the first and so far the only one on any quantum computing system to show fault tolerant error correction working in practice. Solving error correction is critical to creating quantum computers large enough to deal with the complex problems that governments, businesses and societies face today. In summary, we are confident that our technical progress today will allow InoQ to continue its leadership in the quantum industry. Next, I'm excited to update you how we're bringing quantum out of the lab and into the real world. Our goal is to enable every developer to use InoQ’s quantum hardware and create applications that take advantage of the unique strengths of our quantum computers. Year-to-date, we've accomplished what we believe to be the two most important steps in making InoQ’s quantum hardware, widely accessible, broad cloud partnerships, and broad software support. First, InoQ is the only provider of quantum computing hardware available on all three major public clouds. We already have two quantum systems available for our customers through every major U.S. cloud provider, including Amazon Web Services, Microsoft Azure, and Google Cloud. We've also completed the construction of our third more powerful system, which we announced at our second quarter business update call on September 22 this year. This is now available as a private beta for select customers via our dedicated cloud. We are the only provider of quantum computing hardware available on all three major public clouds. And second, we've integrated InoQ’s hardware with every major quantum software development kit, including platforms like IBM's Qiskit, and Google Search. This simplifies access to our hardware for hundreds of 1000s of developers already on those platforms. Lastly, I will discuss the great progress we've made on the commercial side of the business and in building the company. We are proud to announce that we've tripled our bookings expectations for fiscal year 2021. This past quarter, we announced partnerships and collaborations with world class companies, including Goldman Sachs, Fidelity Center for Applied Technology, Accenture and GE Research, as well as with educational institute Like the University of Maryland. We continue to make progress towards new and exciting applications and customer wins. We have also fortified IonQ’s balance sheet in recent months. Having completed our business combination with dMY Technology Group III on September 30 2021. IonQ is now the first publicly traded, pure play quantum computing company in the world. We are fortunate to have Hyundai Motor Company and Kia Corporation, Silver Lake, MSD Partners, Breakthrough Energy Ventures, NEA, GV and Fidelity Management & Research Company as stockholders of IonQ. As a result of this transaction, we received net proceeds of $575 million, which will fund our commercialization efforts and accelerate the development of future generations of quantum computers. While we achieved all these milestones through Q3 2021 with comparatively modest funding, we are now one of the best funded quantum computing companies in the world. Part of scaling the business is growing the team, including recent key hires. We brought in Ariel Braun, as Senior Vice President of Product Management. Ariel's background is truly impressive with extensive experience across diverse roles and technology areas, working in companies ranging from early start-ups to the Fortune 100. In addition to co-founding Pure Digital Technology, which generated over 1 billion in revenue, with the Flip video camcorder, Ariel led Cisco's consumer product portfolio, as well as Google's AR and VR product management. We hired Dean Kassmann as Vice President of Research and Development. Prior to joining us, he was Senior Director of Advanced Technology for Blue Origin. There Dean established and led the team responsible for companywide applied research in the support of their launch vehicle engines in in-space product lines. Dean has over 25 years of leadership in software, hardware and technology development, including advanced modeling and planning roles at both Aspen Technology and Amazon. We are thrilled to welcome Ariel and Dean to the IonQ family and look forward to working with them as we continue to build out a world class team. We are beyond excited to begin our life as a public company. And I want to thank all our board members, advisors, investors, employees, and everyone who make our public listing possible. And with that, I'd like to turn over the call to our CFO, Thomas Kramer. Thomas?

Thank you, Peter, and good afternoon, everyone. I would like to start off by quickly going through some of our financial results in more detail. Earlier in Q3, we raised our full year 2021 forecasted bookings expectations from $5 million to $15 million. Today, I am happy to announce that as of the end of Q3, our total bookings for the year have already exceeded our increased expectations for the full year ending up at $15.1 million. We believe this is a recognition of the promise our customers see in our platform, and resulted from customers buying more and also earlier than we had expected. Given that we are still at the beginning of our commercialization phase, and that in addition to transactional based cloud revenue, we sell large contracts where customers pay for reserved compute access we should expect bookings to continue to be lumpy for quite some time. On the top line, we had $233,000 of revenue in the third quarter of 2021 for a total of $451,000 year-to-date. We had no revenue in the prior period. Moving down the income statement, our total operating costs and expenses for the quarter were $10.8 million, up from $3.6 million in the prior year period. Breaking this down a bit, our research and development costs in the third quarter of 2021 were $6.2 million, compared to $2.3 million in the prior period, as we continue to invest in building our technology advantage. Our selling and marketing costs in the quarter were $1.3 million compared to 81,000. In the prior period this is due to the ramp up in our commercialization efforts and focus on sales and partnerships. Our general and administrative costs were $2.5 million compared to $727,000 in the prior year period, due to increased headcount and overhead associated the scaling. We expect our general and administrative expenses to increase for the foreseeable future as we scale headcount with the growth of our business and as a result of operating as a public company. You may also know this $4.3 million non-operating costs on our P&L, which is the portion of the transaction costs allocated to the liability classified warrants from the original dMY III IPO. This is a one-time non-cash expense that will not be a recurring charge. This resulted in net loss of $14.8 million, compared to a net loss of $3.6 million in the prior year period. Our adjusted EBITDA loss for the quarter was $7.9 million, compared to the $3 million in the comparable year prior period. As a reminder, due to the nature of our business and technology, we expect to continue to build our investment in our business for the immediate future. On our balance sheet, cash and cash equivalents were $587 million as of September 30 2021, which was largely a result of the close of a transaction with dMY III. The transaction closed on September 30, and provided us with net proceeds of $575 million. We intend to use these funds to bring new generations of hardware with higher capacity to market and to build out our commercial capabilities. In addition to investing in the quantum computer ecosystem, we are well capitalized and well-positioned to benefit from Capitol Hill’s interest in quantum, as shown by the infrastructure bill. Turning briefly to our fourth quarter and full year guidance. We continue to see strong demand for our compute platform. In the third quarter, we benefited from some contract bookings closing sooner than anticipated. Fill in the fourth quarter; we expect an additional six to $800,000 in new total contract value bookings. As a result, we anticipate that we will end the year between $15.7 million and $15.9 million in bookings. This is well above our original 2021 estimate of $5 million and also significantly above our updated full year target or $15 million. The closing of bookings in Q3 will have a direct impact on recognized revenue and accordingly, we anticipate our top line for Q4 to end up between $1 million and $1.2 million for the full year revenue of $1.5 million to $1.7 million for 2021. Now I'd like to touch on two topics that we felt were important to mention outside of our financial results. First, the redemption rate observed during our de-stack process was notably low at approximately 2.5% of the outstanding shares of dMY III. We take this as an indication over investor confidence in our long term prospects, which can be further summarized for the fact that 71% of our investor base agree to lockup periods ranging between six to 18 months. Second, I want to mention that we expect a large number of one time transaction related expenses in addition to cost of being public to be paid out in the fourth quarter of 2021. The largest of these is the D&O Insurance Policy, which will be approximately $2 million. Finally, I'd like to move on to some of the partnerships that we announced in the quarter. As Peter touched upon earlier, in Q3, we announced a partnership with the University of Maryland to create the national quantum lab at Maryland, or Q-Lab. The Q-Lab will serve as an important conduit for some of the rising stars of quantum and for the scientific community as a whole to pursue world leading research to hands on access to commercial grade quantum computer. Access to the facility will be open to UMD affiliated students, faculty, researchers, staff and partners across the country allow in collaboration with our own scientists and engineers. We will be the exclusive provider of quantum computers to the Q-Lab. And as such, the University of Maryland is an important customer. We could not be more excited about this partnership and look forward to future projects with the University of Maryland, who just made a name for itself as an international powerhouse for quantum research. Next, in collaboration with Goldman Sachs and QC-Ware, we demonstrate how our quantum computers are powerful enough to run an algorithm that lays the foundation for speeding up Monte Carlo simulations. As many of you know, Monte Carlo simulation is an important analytical tool for a variety of industries including financial services, drug discovery, robotics and climate science. We are working to design the number of quantum algorithms intended to let firms evaluate risks and similar prices for a variety of financial instruments much faster than classical computers are capable of doing today. In a similar vein, we also released a paper in collaboration with the Fidelity Center for Applied Technology demonstrating how our quantum computers can outperform classical computers in the generation of high quality data using testing financial models. We believe the new technique is a significant step in developing applications for quantum finance that is also applicable to a broad set of other industries. Obviously, we are very encouraged by these results and their potential. Additionally, we announced a multiyear strategic relationship with Accenture, intended to accelerate the development of quantum computer business applications. Accenture's experience in quantum, it's worked with companies across a wide range of industries and its ability to design customers industry solutions tailored to our hardware will enable us to have more companies become quantum ready in the future. Lastly, we announced a partnership with GE Research to explore how our quantum computers can be used in the field of risk analysis. Risk analysis which is common in the finance industry can apply to a wide set of complex systems such as supply chains, environmental systems, and cybersecurity networks. We are encouraged by our financial performance this quarter, and look forward to continuing to execute on our roadmap. With that operator, you may now open the line for questions.

We will now begin the question-and-answer session. [Operator Instructions] The first question comes from Katy Huberty with Morgan Stanley. Please go ahead.

Thank you. Good afternoon and congratulations on the public listing and many product announcements and milestones in the quarter. I have a couple of questions. The first is about the bookings and mix of bookings year-to-date, what can you tell us about the number of customers or deals within that 50 million of bookings, and about the mix of customers and use cases that you've seen this year?

Hi, Katy, thanks for calling in, and excellent questions. What we have seen to date is that we've seen thousands of customers running projects on our machines with billions of shots in terms of running their quantum computations. We continue to see a mix of customers coming in through our public cloud where we actually don't know who all the customers are, because that fits with the public cloud provider, and we have customers on a private cloud as well. We are to date not going to break out the individual customer names because many of these actually covered by confidentiality process.

Okay, and then as it relates to the cost structure, the fact that G&A today is greater than sales and marketing just speaks to how early you are in the commercialization phase. How should we think about sales and marketing expense scaling long, longer term? Should we model that as a percentage of bookings? And then just remind us at what revenue scale would you expect the business to be profitable on a non-GAAP basis?

So excellent questions. We look forward to providing updates on our future cost structure as well as earnings on the Q4 call. However, you are absolutely right in that we anticipate our commercialization to ramp up and sales and marketing should grow as a percentage of our total cost basis.

Okay, and then just lastly, the high level thoughts. I know it's early to be specific, but you've outperformed the bookings target by 3x in 2021. Your original target for 2022 was 15 million so flat with what you've executed to this year. I imagine that there's some upward pressure potentially on next year outlook just any thoughts as to how the outperformance year-to-date influences qualitatively your view of next year? Thank you.

Absolutely. We're extremely happy to have seen how many customers have been willing to invest in us early on in our lifecycle as a commercial company that is offering products for sale. And we anticipate that this will continue to happen. And we look forward to updating the market on our expectations for 2022 sales and our Q4 earnings call.

Thank you. The next question comes from David Williams with Benchmark. Please go ahead.

Hey, good afternoon. Thanks for the -- let me ask the question and congrats on the solid progress here.

Thank you.

I wanted to maybe ask maybe on a competitive environment; you spent some time talking about this clearly made a lot of progress here. But when you think about some of the competitors within the space, what are the key differentiators you think on IonQ that you cannot be able to exploit? Or maybe I realized, we're still in the early days of quantum technology. But beyond the metrics, how do you think about the competitive landscape?

Well, hi, this is Peter, and thanks for the call. The -- in general, there's a lot of noise about total number of qubits, from competitors. And as we said before, we don't think that that by itself is going to foretell, who's going to win the quantum space race. Other factors such as average two-qubit gate fidelity, the error correction, overhead, qubit, conductivity, and eventually the price per qubit are going to be the kind of need to be considered as well. And all quantum companies know this, even though they don't talk about it. And we continue to believe ours will lead to the best quantum computer in the future.

Fantastic, thank you. And then maybe as I understand that some of the aspects around the different approaches, or models, maybe gate versus annealing, it seems optimization type problems are less tolerant, or maybe have a little more overhead than the maybe the gate approach. Can you maybe just talk about that a little bit in terms of the applications you think IonQ systems will have the best advantage? Maybe any specific areas you think you can capture here?

Hi, good question. This is Chris Monroe, scientist. So the annealing model of quantum computing is highly experimental. Now, it's not clear that quantum even plays a role in what's going on there. It's not it's really apples and oranges comparing that to the gate model, which is the type of computing mode, we and most of the others in the industrial space work on. And the benefit of the gate model is that it's proven to be universal. You can perform any quantum algorithm with a gate machine. It's not clear you can do that with annealer although you may be able to do interesting things with this and the other. I think that's left to research. So with the gate model, again, we can we can characterize the number of qubits, the number of gates seen and perform and compare the different technologies.

Okay, very helpful. Thanks. And one last one, maybe, if you can maybe talk a little bit about the new chip that you have announced and just curious, maybe if you can walk through the timing and when we should expect to have maybe some early performance data? And then is this a fundamental change and maybe the epitaxial process or maybe it's a circuit architecture, or is this just maybe a refinement of your existing approach?

Chris Monroe here again. So the new chip we demonstrated, allowed us in intermediate way to scale up our system by multiplexing, several cores of ion-trapped of collections of qubits. Now, the chip itself, it's made of a different material than we had used previously. But there's nothing quantum about the chip, it's more of the support structure, it's part of the control system. And we anticipate in the future, probably changing at around two as need be. The main point of that chip is scaling and allowing us to get algorithm the qubit numbers so that we can hit useful applications.

Fantastic. Thanks so much. I look forward to seeing the 4Q results.

The next question comes from Ruben Roy with WestPark Capital. Please go ahead.

Yes, thank you. And thanks for taking my questions. I guess other Peter or Chris, just to kind of follow up on that last question. Seeing that the bookings are moving higher, which is great? Just wondering if you can give us an update on systems manufacturing progress. Are you, I think Peter mentioned you're ahead of schedule on most of your metrics, but maybe a little bit of an update on where you stand with systems at this point, how you're looking for next year will be helpful?

Hi, Ruben, happy to answer. So at the current time, we have two systems, which are servicing jobs out on the cloud for all three cloud partners and internal for our private cloud. And then there is an additional system which is the what we call the 32 qubit systems, which right now is in private beta. And we have customers and in fact, actually, Goldman Sachs and Fidelity, have been running jobs on that system as well as other customers. So that one we haven't put out into the cloud yet. We will expect to do that in 2022. And then, in addition, there is three additional systems under construction and various phases of development that we're building right now that we'll be talking about in the future.

Great, thank you, Peter. To follow up on that, I guess. And following up on a question from earlier, just around expenses. I guess, Thomas, maybe we could talk a little bit about how you're thinking about R&D. I don't think you really talked about scaling that, and how that might impact the model near term as the bookings go up, and you are working on these new systems. I would imagine it's more of development than research at this point. But if you can give us a little bit of you know how you're thinking about R&D, that'd be helpful.

Absolutely. Good to hear you Ruben. I think you covered it very nicely. We will absolutely continue to scale up our R&D investments, but it's mostly on the D and not on the R. Most of the technology that we are utilizing has already been laid out and documented through 25 years of research from Dr. Kim and Dr. Monroe. And what we are doing is executing on this roadmap that they've already laid out. Thankfully, most of our parts are standard off the rack; we like to joke that we can buy them on Amazon. But in reality, what we do, of course, buy some things on Amazon; we buy these from standardized makers of traditional parts, and some untraditional ones that we won't cover on this call. But that's our secret thought of course. But these parts are neither very unique or very expensive, which allows us to have a much lower cost base than what you would expect from an early stage hardware manufacturer. And we are very happy to see that we've been able to do this with a limited investment. And already we're seeing quite some pickup in the market.

Great. Thanks, Thomas. Last question since we do have Dr. Monroe on the call. Wondering you started to talk a little bit about the chip and scalability, the reconfigurable Chip. What are sort of the milestones that you're looking for next? When you talk about scalability, I think you guys have talked about using an optical interconnects, to scale into systems that have higher qubits. Is that sort of the next milestone? Or what should we be thinking about in terms of moving forward towards commercialization of that new technology?

Yes, thanks for the question. That's certainly one of the milestones, I would say. One aspect that sets our company apart from the entire market is we have a very deliberate path to scale on several fronts. One of them is the multi core architecture that we demonstrated the basics of on this recent chip where we, on a single chip can have many cores of individual; we call them local quantum computers. And it's reconfigurable it allows us to move qubits back and forth between the cores. And then as you correctly noted, our out game is to move the information off chip to another chip. And we here we envision something like a data center where each chip would be in its own phone device connected by optical fiber to another device, and then it comes down to, how much land do you have to put racks in and scale up your quantum computer accordingly. Now, again, we have, we have very concrete plans to do that. And we understand as we scale that we will have, we will, we will have full conductivity, any qubit and the entire system can directly talk to any other qubit. And so this is one advantage to scale that they that we were going to pull away even, more notably compared to today as we scale. So you're right, the photonic interconnects is a key part of our scaling strategy going forward, but it's not the only one.

Excellent. I appreciate all the detail and Congrats guys on the continued execution.

Thank you.

The next question comes from Richard Shannon with Craig-Hallum. Please go ahead.

Well, great. Thanks for taking my questions as well, guys. Maybe a quick financial question for, for Thomas. Gross margins, I think in your spec presentation deck, you talked about kind of a 40s percentage or percentage of gross margins. We're seeing it so far this year at the end kind of around zero here. When do we get up to the levels we're talking about here like 40s, or even higher here? Is this something that you expect in the fourth quarter or soon thereafter?

So the gross margins that we spoke of earlier was on a unit lifecycle basis. And we think that we are actually delivering towards those already. We will continue, obviously, to see a very modest gross margin as we are so early on in the commercialization phase. And we look forward to updating you on the expectations, the gross margins in 2022 on our Q4 call.

Okay, fair enough. Second question on bookings. Thomas, again, in your prepared remarks you talked about your bookings in your outlook for next year. And I think a response to a question as well you also talked about it being a lumpy. I think you had a small number of contracts that provided most of the upside to your, your 2021 number here. Can you give us a sense of what you're looking at in terms of the bookings pipeline today? Whether it hits that 15 million goal or whatever it ends up being next year? Like, what is the 80? Is there like an 80:20 rule to this or even a more extreme version of that, that helps you get to that 15 million number or whatever it becomes next year? Can you give us some color as to how that will develop?

Absolutely. So we have been busily talking to potential customers and partners for probably two years now. And it's only been recently that we've been able to come to the market with an actual product that we can sell. And what we have seen is that the reception in the market was larger and faster than we had anticipated. And that refers to the lumpiness. And as you know, when you look at recognized revenue, that pain tends to straighten itself out, particularly when you have a contract that you can state line which most of us ours are. However, the actual time when it comes in, can create spikes, where you'll see that it goes up and one quarter might be higher than the next like Q3 was higher than we are anticipating Q4 being. So that is just the nature of the beast when you sell large deals. And we can we anticipate that this will continue for quite some time. Although we anticipate our recognized revenue to be much smoother. We are busily working away on our next year bunch of sales, of course. And we look forward to updating you on our expectations on the Q4 earnings call.

Okay, we look forward to hearing about that. A couple more questions for me one for Peter. The paper you put out a number of weeks ago regarding the benchmarking organization in the data which I read the paper and it seems very complementary to IonQ in general here. Maybe can you tell us about the reactions you're hearing from customers, researchers and even competitors in the market?

Well, this, this validates what we've been saying, kind of all along that now having an industry association be doing kind of independent benchmarking, ensuring that our quantum computers have the best. If you know in part two, you also hear it from customers, when they say we've tried this on various other platforms, but only run on IonQ’s hardware. And so you're hearing it now both in kind of customer voices, and also now in an industry kind of industry benchmark. And so we do think that these industry benchmarks are the way kind of going forward to be able to compare systems. In the future, we hope everyone else will join kind of the benchmarking effort so that we can compare these systems fairly from one vendor to the next. Obviously, at the current time, we're doing quite well on that as the kind of leading vendor in this space.

Okay. Thanks for that feedback. My last question, I guess, I'd love to hear from both Peter and Chris on this one. As you think about the industry developing over the medium to long term, to what degree do you see this market being a winner take all kind of opportunity.

Well, the, the TAM for quantum is huge. So it's hard to imagine one company taking it all. That would be like saying somehow like Intel was the one that was going to take all over the entire classical computing market. So we do think that there will be space for multiple players, they'll probably be space for multiple approaches to quantum and who's winning. And we think those things will be good things for customers and what the competition makes us better.

Okay, great. That is all for me. Thank you.

[Operator Instructions] The next question comes from Jack Andrews with Needham. Please go ahead.

Good afternoon and congratulations on the results. I was wondering if you could speak to the overall hiring environment, just given your efforts to scale your organization? How hard is it to find relevant people with the requisite quantum computing skills? Or are there similar backgrounds that you think are appropriate and you can leverage in terms of building your organization?

It's a great question. Thanks, Jack. Well, the quantum talent war is indeed heating up. But we found that those with quantum skill sets are drawn to work on the most advanced technology in the world, at IonQ. And we were lucky to have our two co-founders who are the brightest minds in the field. And often people are drawn to them to come work with us. So I think that makes all the difference. We are working to create a quantum Silicon Valley in College Park. And with a symbiotic relationship with the University of Maryland, that continues to also give us a pipeline of new talent as they come out of the universities. We do think kind of internationally as well, that often talent isn't just focused in the United States. And so sometimes it's overseas. So what we can, as a country can do to help us and make that talent available here is also important. But that's probably outside of our control.

Thanks for the perspective. And just as a follow up question, I was wondering if you could just drill down a little bit into the traction that you're with the public cloud vendors in particular, is there any one of the three major hyper scalars that you're particularly optimistic about that they can help move the needle for you here in the near term?

The answer, the answer is, we unfortunately can't, can't tell you due to agreements with them as to what the sales are for one versus the other.

Got it. Appreciate that. Thank you.

This concludes our question and answer session. I would like to turn the conference back over to Peter Chapman for any closing remarks.

Thank you everyone for attending today. Any company is the sum of its employees, and we would not be here without the incredible dedication of the InoQ team. I'd like to thank each and every one of our employees for their contribution. We continue to be focused on our long term goals of investing and building the business to make InoQ the clear market leader in quantum computing. We'll use these calls as a forum to highlight the key milestones along our journey. And we look forward to updating the entire investment community on our progress going forward. Thank you, everyone for taking the time to listen today.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.