Analyst(s): Dr. Bob Sutor
Publication Date: September 30, 2024
With one business quarter remaining in 2024, IonQ is delivering on its bookings targets for the year. The contract with the US Air Force Research Laboratory indicates a strong interest in the company’s trapped ion technology, though possibly more for networking than computing.
What is Covered in this Article:
- How IonQ is delivering on its forecast bookings for 2024
- What IonQ is and how it has worked in the past with the Air Force Research Laboratory (AFRL)
- Quantum computing is important, but so is quantum networking
The News: On September 27, IonQ announced that it signed a $54.5 million contract with the United States Air Force Research Lab (AFRL) to be delivered over four years. The company announced $72.8 million in bookings year-to-date. It has nearly doubled its revenue every year since going public in 2021, driven by its technology roadmap.
Quantum in Context: IonQ Announces a Huge Deal with the US AFRL
Analyst Take: On May 10, I wrote in The Futurum Group Research Note, “Quantum in Context: IonQ Announces Q1 2024 Earnings,” that IonQ’s “low quarterly bookings require continued inspection.” I expanded upon this by saying:
IonQ announced Q1 bookings of $300,000, while raising its bookings expectation range to be between $75 million and $95 million. CEO Chapman attributed his optimism to President Biden signing the US budget bill in March, paving the way for new government contracts in 2024. Aside from the large and somewhat imprecise guidance range, those numbers must be made in the 9 months not covered in the earnings call. Investors and analysts will carefully examine progress made on this metric in the next two quarters.
Well, I guess they knew something I didn’t, as I would hope. They are now in an excellent position to meet their bookings target.
In the press release, IonQ President and CEO Peter Chapman stated, “No other publicly traded pure-play quantum computing company has nearly doubled revenue each year since going public, nor have they approached the $100M bookings mark so quickly.” There are two such companies, Rigetti Computing and D-Wave Quantum. IonQ’s accomplishment is a high bar for any quantum computing company, public or private, large or small, pure-play or otherwise. I expect only the big international computing or cloud providers, if any, to come close to or exceed the IonQ contract size.
At the close of the announcement day, Friday, September 27, IonQ’s stock was up over 20.5% to $9.73. It last exceeded this price on April 1, when it closed at $9.99.
IonQ and Its Relationship with AFRL
IonQ is a quantum computing company that uses trapped ion qubits. It is headquartered in College Park, Maryland, and was founded in 2015 by Christopher Monroe and Jungsang Kim, neither of whom is still with the company. When they started the company, Monroe was a professor at the University of Maryland, and Kim was a professor at Duke University. Chapman was named CEO in 2019. The company went public via a SPAC in 2021.
Trapped ion qubits are known for their long life spans and low error rates when performing quantum operations. The operation speeds are slower than superconducting qubits, and no one has yet shown high-fidelity trapped ion systems with more than one hundred qubits. Ultimately, we will need tens or hundreds of thousands of these physical qubits to solve critical societal and industrial computational problems significantly faster than classical methods. If IonQ and other trapped ion vendors can successfully surpass the scaling problem, they may be able to reach a good balance of cost and performance.
As you might expect, the Air Force Research Laboratory is responsible for tracking, researching, developing, and collaborating on technologies relevant to the air defense and military of the United States’ air defense and military. The AFRL conducts quantum research in Rome, NY, Albuquerque, NM, and Wright-Patterson Air Force Base in Ohio, United States. The AFRL conducts quantum research in Rome, NY, Albuquerque, NM, and Wright-Patterson Air Force Base in OH.
The AFRL works with many technologies associated with quantum information science, computing, communication, and networking. In addition to trapped ions, these include superconducting, photonic, and neutral atom modalities. Non-computing quantum work includes atomic clocks, positioning, navigation, and timing systems (PNT).
In 2022, the AFRL and IonQ signed a $13.4 million agreement for trapped ion computers. This new contract is a testament to the value of the work the organizations have collaborated on over the last two years.
The Critical Future Role of Quantum Networking
Although the 2022 contract emphasized quantum computing, the press release for this agreement highlighted quantum networking:
The AFRL partnership focuses on designing, developing, and delivering technology and hardware that enables the scaling, networking, and deployability of quantum systems. The project will help advance quantum networking compatibility with existing telecommunications infrastructure, interoperability with different quantum systems and devices, and deployability of systems suitable for various environments.
If you are limited by the number of qubits you can put in a given quantum processing unit (QPU), you must connect several together to get a larger quantum computer. You may be able to do this for some modalities, including superconducting qubits, via microwaves to some point. For others, including trapped ions and neutral atoms, you must move quantum states to photons, transport the photons, and then convert the states to whatever qubits you have at the other end. This conversion process is called transduction. In early 2023, IonQ “acquired the assets” of the Entangled Networks company in Toronto, simultaneously launching IonQ Canada. It is exactly this transduction and networking that Entangled Networks worked on. The purchase is bearing fruit in the new AFRL contract.
IonQ is not alone in working on this problem. For example, Nu Quantum in the UK (see disclosures) and Welinq in France address this for multiple qubit modalities.
Transduction and quantum networking are not just nice ideas: they are essential technologies if we ever hope to get big enough quantum computing systems that fulfill industry leaders’ promises about them.
What to Watch:
- Demonstrations of networked quantum computers of different modalities by the AFRL
- AFRL demonstrations of practical use cases with logical qubits on IonQ hardware
- Photonic quantum network technology releases from companies such as Nu Quantum, Qunnect, and Welinq
- Classical computer infrastructure and networking vendors such as Cisco, Fujitsu, Marvell, and NVIDIA moving into the quantum networking market
For additional details, see the “IonQ Announces Largest 2024 US Quantum Contract Award of $54.5M with United States Air Force Research Lab” press release.
Disclosure: The Futurum Group is a research and advisory firm that engages or has engaged in research, analysis, and advisory services with many technology companies, including those mentioned in this article. The author does not hold any equity positions with any company mentioned in this article.
Analysis and opinions expressed herein are specific to the analyst individually and data and other information that might have been provided for validation, not those of The Futurum Group as a whole.
Other insights from The Futurum Group:
Quantum in Context: A Qubit Primer
IonQ Reports Second Quarter 2024 Financial Results
IonQ Announces Q1 2024 Earnings
Author Information
Dr. Bob Sutor is an expert in quantum technologies with 40+ years of experience. He is the accomplished author of the quantum computing book Dancing with Qubits, Second Edition. Bob is dedicated to evolving quantum to help solve society's critical computational problems.
