IONQ - NYSE

Greetings. Welcome to the IonQ's Fourth Quarter and Full-Year 2024 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. At this time, it's now my pleasure to introduce Jordan Shapiro, Vice President, FP&A, Head of Investor Relations. Jordan, you may begin.

Good afternoon, everyone, and welcome to IonQ's fourth quarter and full-year 2024 earnings call. My name is Jordan Shapiro, and I'm the Vice President of Financial Planning and Analysis, and Head of Investor Relations here at IonQ. I'm pleased to be joined on today's call by Peter Chapman, IonQ's Executive Chair; Niccolo de Masi, our new President and Chief Executive Officer; Thomas Kramer, our Chief Financial Officer; and Dean Kassmann, our Senior Vice President of Engineering and Technology. By now, everyone should have access to the company's fourth quarter and full-year 2024 earnings press release issued this afternoon, which is available on the Investor Relations section of our website at investors.ionq.com. 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. You are directed to our press release for a reconciliation of adjusted EBITDA to its closest comparable GAAP measure. During the call, we will discuss our business outlook and make forward-looking statements. These comments are based on our predictions and expectations as of today. Actual events or results could differ materially due to a number of risks and uncertainties, including those mentioned in our 10-K that we have filed with the SEC today. We undertake no obligation to revise any statements to reflect changes that occur after this call, except as required by law. Now, I will turn it over to Peter Chapman, Executive Chair of IonQ. Peter?

Thank you, Jordan, and thank you to everyone listening. If you take away one thing from this call, let it be this; 2024 was IonQ's best year ever, but we believe 2025 is slated to be the year IonQ drives an inflection in the quantum market. In 2024, we grew our full-year bookings by 47% to $95.6 million, and nearly doubled our revenue, achieving $43.1 million for the year and $11.7 million for the fourth quarter, both exceeding the high-end of our guidance range. To continue our rapid growth rate, last quarter, we announced our acquisition of substantially all the assets of quantum networking leader, Qubitekk, Inc., which we have since closed. Our interest in quantum networking is multifaceted. It enables IonQ to scale its quantum computers by enabling distributed quantum computing in much the same way classical CPUs and GPUs are networked together today. Our unique architecture allows us to interface with existing telecommunication networks and real-world environments. The second facet is to build the next generation of the Internet, which is secure from the potential threat of classical and quantum computers. Today, I am thrilled to announce that IonQ has signed a definitive agreement to acquire a controlling stake in ID Quantique, a large global player in quantum networking. Once the deal closes, IonQ will consolidate ID Quantique's global book of business, more than 100 team members, and gain control of almost 300 quantum networking patents and patent applications. In aggregate, IonQ will shortly control nearly 900 patents and patent applications across quantum key distribution, quantum sensing, quantum networking, and quantum computing. With ID Quantique, IonQ furthers its leadership in quantum networking. Our goal is to build a suite of products that enable secure quantum communication in all forms, from satellites to ground stations, across existing telecommunication fiber infrastructure, to drones on a battlefield. Those following IonQ closely will note that we are building out the key component technologies for the telecom and defense sectors. With the pending addition of ID Quantique and the completed addition of Qubitekk, we will partner with their existing blue chip customers, which include SK Telecom and the Electric Power Board of Chattanooga. These customer relationships allow us to test new hardware and applications in real-world environments. Switching gears to computing, we delivered our first Forte enterprise system to QuantumBasel in Switzerland, as well as our first system to the Air Force Research Lab. IonQ continues to make progress on developing our next generation barium-based system called Tempo, with the first unit already sold and slated for delivery to Basel. During our Q3 earnings call, we spoke about our partnership with Astra

Thank you, Peter, for the kind words. I'm excited to join the team full time for what I view as a once-in-a-generation opportunity to continue scaling the world's first publicly-traded pure-play quantum company. As many people know, I've been a quantum computing enthusiast for 25 years, ever since I was both an undergrad and grad physics student at Cambridge University. Earlier in my career, I worked on novel next-generation solar cells, and I've long believed in the importance of quantum computing to truly realize the advantage in things like renewable energy. I've been a longtime supporter of IonQ's work, both in my role as a director of the last five years and as an original sponsor of IonQ's pioneering IPO. We have plenty of groundbreaking work ahead, and I'm absolutely thrilled to have the opportunity to lead IonQ during this pivotal moment for both quantum computing and quantum networking. I've long believed that the mid-2020s will be when quantum computing begins to impact virtually every aspect of applied science, from chemistry to materials, national security, logistics, and financial services. Quantum networking is expected to be an equally large and impactful market opportunity, and IonQ is well positioned here to be the global leader. I'm honored by Peter and the Board's confidence in me, and look forward to working with our industry-leading team to build upon our momentum in 2025 and beyond. Thomas, I'll turn it over to you now to walk through our financials in some more depth.

Thank you, Niccolo, and thank you to everyone joining us today. Let's walk through this quarter's financial results in more detail. As Peter mentioned, we had an excellent fourth quarter, recognizing $11.7 million in revenue. For the full-year, we ended up with $43.1 million in revenue, above the high end of our updated guidance range and up 95% year-over-year. We had $22.9 million in bookings in the fourth quarter and ended the year with $95.6 million in total bookings, which was also above the high end of our updated guidance range for 2024 and up over 46% year-over-year. Moving down the income statement, for the fourth quarter of 2024, our total operating costs and expenses were $89.2 million, up 47% from $60.6 million in the prior year period. For the full-year of 2024, that number was $275.5 million, up 53% from $179.8 million in 2023. To break this down further, our research and development costs for the fourth quarter were $40.1 million, up 27% from $31.6 million in the prior year period. For the full-year of 2024, that number was $136.8 million, up 48% from $92.3 million in 2023. Recall that we are investing heavily in R&D and are investing in the production of our various product lines to meet projected customer demand. Our sales and marketing costs in the fourth quarter were $8.9 million, up 28% from $7 million in the prior year period. For the full-year of 2024, that number was $28.4 million, up 55% from $18.3 million in the full-year of 2023. This increase was due to us growing our go-to-market function as we continue the investment in our commercialization efforts, and we expect that trend to continue as we further expand our sales initiative. Our general and administrative costs in the fourth quarter were $29.7 million, up 94% from $15.3 million in the prior year period. For the full-year of 2024, that number was $71.1 million, up 40% from $50.7 million in the full-year of 2023. Stock-based compensation was $106.9 million for the full-year of 2024, up from $69.7 million in the full-year of 2023. All of this resulted in a net loss of $202 million in the fourth quarter, compared to $41.9 million in the prior year period, and a net loss of $331.6 million for the full-year of 2024 versus $157.8 million in 2023. It is important to note that these results include a non-cash loss of $128.5 million for the fourth quarter, related to the change in fair value of our warrant liabilities, and $117.1 million in non-cash loss for the full-year 2024. We saw an adjusted EBITDA loss for the fourth quarter of $32.8 million, compared to a $20 million loss in the prior year period, and a loss of $107.2 million for the full-year 2024 versus $77.7 million for 2023. Note that we projected an adjusted EBITDA loss for the full-year 2024 of $110.5 million, once again beating our expected plan. Turning now to our balance sheet, cash, cash equivalents, and investments as of December 31, 2024 were $363.8 million. I'm excited to share that IonQ is launching a $500 million at the market facility to equip IonQ with an even larger war chest. We plan to use the proceeds to accelerate our networking business and create new lines of growth in promising application areas. As the initial amount we raised when we were in public was largely sufficient for the computing business, we believe that this new amount of capital will provide us with a critical mass of capital for advancing in the quantum networking and communications business. Our capital needs are finite, and this is a unique moment for long-term investors to build a position at scale as we gear up for the era of quantum advantage. We are generating a strong foundation for what we expect will be another incredible year for IonQ. We aim to continue our growth once again in 2025. We are projecting revenue of between $75 million to $95 million for the full-year, and $7 million to $8 million in Q1. Our guidance includes all organic momentum and inorganic activity. Because of the early stage of the company's sales organization and the time it takes to turn a sale into revenue, we created the bookings metric back in 2021 to allow investors to gauge our progress. With revenue expected to be in the nine figures next year, 2026, we are sunsetting bookings guidance. We will, of course, continue to update the market on significant commercial milestones. Additionally, we anticipate an adjusted EBITDA loss of $120 million for the full-year 2025 at the midpoint of our revenue guidance. And with that, I would like to turn the call back over to Peter for some closing remarks.

Thank you, Thomas. Historically, Q1 is a bit of a slow time for IonQ, but this year, we've had a strong start. We closed our Qubitekk acquisition and announced the pending acquisition of a majority stake in ID Quantique today. Looking forward, there are some important events for investors to watch out for. First, look out for Quantum Day at NVIDIA's GTC conference. DARPA will announce phase one awards for its quantum benchmarking initiatives, potentially worth $300 million. Investors should be following the legislative updates from the State of Maryland on a potential $1 billion initiative to make Maryland the capital of quantum, congressional budget approval for fiscal year 2025. And lastly, the DOE Quantum Leadership Act, a $2.5 billion bill advancing through the Senate that seems to have bipartisan support. Along with UNESCO, we believe that 2025 will, in fact, be the year of quantum, one in which you see both public and private institutions realize that computing and networking game will be forever changed by IonQ systems. With commercial advantage right around the corner, the inflection point that everyone has been waiting for is not far behind it. And with that, operator, I would like to open the line for questions.

Thank you. We'll now be conducting a question-and-answer session. [Operator Instructions] One moment, please, for our first question. Thank you. Our first question comes from the line of David Williams with Benchmark Company. Please proceed with your questions.

Hey, good afternoon, and thanks for taking my questions. And first, congratulations, Niccolo, for the CEO role, and Peter, we certainly enjoyed our time with you. So, with that, I guess, are there any strategic changes we should be thinking about as we move forward in terms of just how you anticipate the business maybe running or changing here, Niccolo?

I'm going to jump in here first just to let you know, I'm not actually going anywhere. So, you'll probably even see me on future earnings calls and all the rest. So, this change, from my perspective, is one where this is a big job, and there's just too much to do, especially for this company. If you look at all the things we have on an application, we're building a new business and networking, quantum computing itself is really hard enough. So, I think what we're doing here is Niccolo is coming on board to be able to offload some of the work in part, because the primary reason I came to IonQ was to work on quantum AI. And so, I'm also hoping this will free up some time for me to work on that as well, more than I've been able to do so far. So, it is a change, but I'm not going anywhere. So, just as an FYI, but I'll leave it to Niccolo to go ahead.

Yes. So, let me just add to that. Hi, nice to meet you. And thank you for the support over the years. Look, this is a bandwidth expansion for Peter. Peter and I have worked closely together since actually before the IPO, and I proudly have been, I think, one of his most contributory and active board members the last few years. And so, the opportunity to work with Peter full-time is obviously one that the board thought made a lot of sense. There's a lot of continuity, and there's obviously an opportunity for the two of us to tackle two businesses, which are growing at inflection points that are truly historic. So, to answer your question in a nutshell, no, there's no changes in strategic direction, because Peter and I have been working together closely to set the strategic direction the last five years, and we'll continue to do that.

Fantastic. Great.

I hope to give up some parts of my job, but I don't like -- like Niccolo's going to go do the TV interviews tomorrow.

There we go.

All right. So, well-understood. Thank you. And then, maybe just secondly, you've made a nice acquisition last quarter. You've closed Qubitekk, and you've announced the ID Quantique this quarter, just kind of curious how we should be thinking about going forward, just kind of the consolidation that we should anticipate. And then, maybe one of these patents, I mean, 900 patents is significant. How do you think this helps you longer term and just anything around the strategy from a consolidation or M&A perspective? Thank you.

Yes. So, this is Niccolo. We obviously care about the patent portfolio. We've been focused on this since the IPO. I think when I first met Peter, we had a low double-digit number of patents, and so it's an investment that we make continually. We make it organically, and we make it inorganically as well. We obviously view the quantum space as we head into the era of commercial advantage to be one that is becoming a bigger company's game, if you will. And so, that is both a defensive mode and potentially an offensive one to a greater or lesser extent here in both computing and networking. As you've heard in prior calls, there are obviously significant synergies between the networking and the computing business, particularly around our advances and our patents around Photonic Interconnects. So, whilst we have done networking to some extent organically and internally, we're, of course, accelerating this with Qubitekk and ID Quantique. We're going to aim to, of course, get the best out of both worlds here as we integrate these acquisitions. IDQ is bringing us not just patents capabilities, but it's bringing us, of course, new geographies. And so, we will be using these as bases to expand both businesses, both in Europe and Asia and the Middle East, where we've already got our organic presence. So, lots of work to do, but we're excited about both the patent position, the team and quality, and we'll continue, of course, doing our best to attract world-class talent to both sides of the computing and networking halves of the house.

Great. Thank you. And best of luck.

Our next question is from the line of Richard Shannon with Craig-Hallum. Please proceed with your questions.

Hi, everyone. This is Tyler on for Richard, and thank you for taking my questions, and congrats, Niccolo and Peter. I'm happier sticking around, at least. How should we think about the timing and market size of the networking market, and when could we start seeing top-line impacts from these acquisitions?

So I think that we are -- sorry about that. I misplaced my microphone. Thanks for that question. We are already seeing the impact of our acquisitions, and thanks. The first acquisition we made in 2023 is already deeply ingrained in our technology and is a core part of how we design our systems today. We are also seeing the effect of our partnership and acquisition of Qubitekk, where we're already going together to service our clients. And we expect to see the same from IDQ soon, although I should say that we're not acquiring the entire company. We have a majority part of their equity now.

And I was just going to add that the outside date for ID Quantique is in September. And so, in terms of its impact this year, it won't be as great as it will be next year.

Yes, no, exactly. All I could throw in here as a new guy on the team here is that I've watched IonQ organically grow in internetworking because customers, both strategic partners and governments, are, of course, demanding it. So, we've been at it organically. We've been increasing our investment inorganically. And I think I'm delighted to be joining a firm that has already the leading position from almost every metric, including, of course, the patent perspective I could hope for.

And I'll just add a little bit more, too, in the sense that for quantum computing, no matter what the qubit methodology that is used, to be able to get to scale, you have to network them together. And so, where most companies are today is they're still focused on chip. But the next horizon beyond that is to be able to network together systems, QPU to QPU. And here we are building a strong patent portfolio, a moat, if you will, in controlling that market. And so, as well as opening up the TAM for a new market, which is now the quantum Internet. So, it's quite synergistic with quantum computing.

Okay. And then, specifics on the technologies that were acquired, you said you only took some of the company. Were you interested in the QRNG? There's some timing instrumentation in there. Is there anything on frequency conversion? What drew you to ID Quantique?

Yes. It's all of the above. Some of it is obviously opening up a new market for us. And the underlying technology, there's bits and pieces that we have interested in our own systems as well. Things like single photon detectors and all sorts, those kinds of things. There's quite a bit of overlap between the two technologies in terms of their markets. So, it was those as well. Honestly, we're excited. Both Qubitekk and ID Quantique have been going after a different market, which is quantum networking and building a secure quantum internet. And we're just as excited about that market as well. And we pick up for the first time here some new areas. It's the third area of quantum, which is quantum sensing. So, we'll pick up some technology in that area as well. And if quantum sensing is going to take off, it's going to need quantum networking. So, we're kind of covering the bases, if you will.

Just to be clear, we've purchased the supermajority, so we will be consolidating that when it closes.

Exactly.

Okay. I'll step out of line for now, but thank you. I appreciate it.

Our pleasure.

The next questions are from the line of Alex Platt with D.A. Davidson. Pleased to see you with your questions.

Yes, thanks for taking my question, and congratulations, Niccolo, on the new role and Peter on the transition. I actually wanted to ask about something you sort of announced last week, which is the sort of completion of this next step with XHV technology. In a blog post you mentioned you're able to materially reduce energy consumption and computational energy costs with this innovation. So, I guess could you maybe give us a better idea for where energy consumption was at prior to this, sort of just as like a baseline, and then where we could think of it now? Also, maybe how this compares to other systems on the market? Thanks.

Thanks, Alex. This is Dean Kassmann, running kind of engineering and technology here. So, the XHV post kind of highlighted the fact is as we drive our technology roadmap, as we are investing in basically non-cryogenically enhanced vacuum systems. We have an ability to one reduced overall footprint, the size, weight, and power. Right now, the ability to drive that overall piece down drives down energy consumption of the systems. Right now, trapped ions in their current state, even in our current systems, have one of the overall lowest costs per use from a scaling perspective in terms of the amount of computational output you get versus the number of amount of energy that you put in. So, as we think about scaling qubit count, trapped ions in our systems scale linearly. Other systems and other modalities and GPUs, for example, scale exponentially. And so, the overall quantum computing offers a huge advantage from an energy scaling perspective. XHV just adds to that. And so, the overall effort we have in the roadmap and the technology is simplification of the engineering design and better scaling.

And I'll just add a little bit on top of this, which is today everyone, there's a great deal of focus on different qubit modalities and their pros and cons. But it will get to a point where it's about cost per qubit. And ultimately, if one vendor, such as IonQ, can produce a room temperature qubit, that will have significant cost advantages compared to others that have to get down to near zero degrees. And not just in quantum computing, but also in quantum networking as well, because the last thing you want to do is to put cryogenic systems all over the globe. That would be prohibitively expensive to do. So, it's all about our long-term plans to win here. So, it's about reducing our cost per qubit into the future.

Great. Thanks, guys.

Thank you. [Operator Instructions] The next question is from the line of Shadi Mitwalli with Craig-Hallum. Please proceed with your question.

Hey, guys. This is Shadi on for Quinn Bolton at Needham. Congrats on a solid year, and Niccolo, congrats on being appointed to CEO. My first question is on the acquisition of IDQ. How does the acquisition fit into IonQ's portfolio, especially with regards to its previous acquisition of Qubitekk? And then can you talk about the similarities and differences in technology between IDQ and Qubitekk?

It's a great question. So, there's a couple of things here. There is some overlap between them, and then there's pieces that each company has that the other doesn't. So, we think there's areas for collaboration between the two groups and areas where we can reduce our expenses by reducing the engineering investments going forward. But as we did mention, we are at the moment have a majority stake in IDQ. So, we do have to be careful of minority shareholder interests going forward. But it obviously brings the two companies much closer together. And really, honestly, I think creates a powerhouse in quantum networking of kind of taking the two companies that had the largest revenue that we knew of and bringing them together with IonQ.

I can speak a little bit from a hardware perspective. This is Dean again. And so, both Qubitekk as well as IDQ have deployed quantum networks. Qubitekk has a network that's deployed in Chattanooga as part of EPB there in the city, that's a user network where you can plug different quantum computing devices into the network for development and testing. IDQ has deployed quantum-safe networks around the world. They have implementations in Singapore. There's other networks in South Korea. And they also have kind of projects in Europe. And so, they both are in kind of the overall quantum network deployment game. From a core technology, they both offer QKD solutions. Those solutions rely on slightly different hardware technologies. They have slightly different protocols and software stacks. Qubitekk does not have quantum random number generation. IDQ does. IDQ also has been able to manufacture and engineer component technology in their single nanowire photon detectors and actually have made that as part of their business. In fact, those photon detection systems are used in many different products. We use them here internally for other work that we're doing on the quantum computing. And so, from an overall technology stack, there are some things that are very similar, but there's also things that are quite different and that we'll be looking at as we move forward.

And all I'd add to that is, obviously, Qubitekk had a great U.S. customer base. IDQ is bringing us Europe. They're bringing us, obviously, a significant partnership with SK Telecom, we also announced today. And we think that the forward-looking nature of markets like Korea, the next generation secure Internet, is going to be, obviously, fortuitous and lead to much prosperity for our networking business in that market. Qubitekk brought us about 118 patents granted and pending, and IDQ has brought us nearly 300. So, it's quite a powerhouse of networking moat, as Peter mentioned, globally.

Got it. That makes sense. And then, my follow-up is on the revenue guidance for 2025. It's implying very strong year-over-year growth. Can you guys give some of the puts and takes for the revenue guidance, especially with Q1 guidance in mind? It seems like this will be more back-half weighted. And maybe how much of this will be hardware sales versus QCA or development revenue? Thanks.

So, it is correct that it will be more in the back-half. Traditionally, Q1 has been a little weaker than other quarters for us. But we have a very strong pipeline, and we now have several product areas that we expect to be able to benefit from. And we really look forward to being able to go-to-market now with a much fuller set of solutions than when we're only selling compute.

Got it. Thanks for all the color, and congrats on the solid year.

Thank you.

Thank you.

The next question is from the line of Richard Shannon, Craig-Hallum. He's received your question.

Hi, guys. Thanks for letting me ask another question. You mentioned South Korea or just Korea in general. Do you plan on expanding that product into the EU and the U.S., QRNG products?

I think it's a little early to do kind of where do we want to take which products. We're still -- we need to complete the acquisition as well. But what I would say is, and Niccolo kind of signposted to this, which is in the current marketplace, having multiple geographic locations allows us to go into markets, especially if the world is becoming more nationalistic. And we think that the ID Quantique will enable that because it is a European, Swiss, and South Korean company. They have a number of employees in both locations, and they have a strong relationship with companies in South Korea as well. So, I think in that sense, it's kind of de-risking a little bit of the current potential things, which are going on kind of globally and make sure that we're not just a U.S. company now, but now a European and South Korean company as well. And so, we think those things. And now we need to do and also depending on what happens with tariffs, well, now you could decide to do manufacturing in different locations and deal with those things in that way as well. So, it just kind of helps in a global footprint. We'll also be picking up salespeople, obviously, who have been quite successful. And then, the next thing is what kind of co-selling can we do? How can we take advantage of each other's unique advantages? But that's still work ahead of us.

All right, that sounds great. And could you guys give us any guidance on what you expect gross margins and OpEx to look like throughout the year?

So we are not ready to give guidance on that. What we have seen in the past is that we've been lucky enough to benefit from some large government contracts. These tend to have slightly lower gross margin because you're not mass-producing a product. But what it does is it pays for R&D that goes into actually generating our next generation of products. So, we expect that as the market moves further and further into enterprise commercialization that the gross margins will start trending up in the positive direction quite a lot. So, we saw in the past when we were selling just compute and whenever we've had a majority of enterprise customers, the gross margin has been around 75%, 77%. And we expect it to go back there. But in the meantime, we also know that we are saving a lot on R&D by taking up projects with customers who are looking into the same areas that we are looking into and that we think are crucial for the development of quantum computing and quantum networking over the longer term.

Now as an example, we have a contract with AFRL to build an optical switch. And so, the margin on that one might not be as good, but we're working with them to build that, and they're helping pay for the development costs, which we would have otherwise paid for directly out of our pocket. So, we don't use the same lens, if you will, that we would in terms of a product that we're kind of shipping in volume. Hopefully that helps.

That does. Do you guys have any insight as to any expected milestones or just cadence of revenue recognition for those contracts?

Which contract are we talking about, the AFRL contract?

I mean, we could go on an overall basis if you don't want to break anything up.

So overall, our contracts tend to come in different flavors. We will do projects that are application-minded. They tend to be on a six to 18 month platform. And if there are contracts that we have with entities such as AFRL, these have been on 18 months, but sometimes up to 48 months, which was the large $54.5 million contract we announced last year. So, it all depends on which project that we're looking at. If we sell a system, the lead time on delivering a system is around 12 to 18 months, and we expect that to go closer to 12, and even shorter as we get more volume up.

Awesome. Thank you, guys, and congrats on the quarter.

Thank you.

Thank you.

Our next question is from David Williams with Benchmark Company. Please proceed with your question.

Hey, thanks for taking the follow-up here. I just wanted to ask a little bit. I think this first quarter we haven't heard. You mentioned kind of the pipeline strength of hardware sales, but I imagine that's still fairly healthy. Just any color on what you're seeing in terms of the hardware sales and any activity around that I think would be helpful. Thank you.

Yes, this is Peter. I can help with that. So, it's a particularly busy time right now, and when we say hardware sales here, I'm going to assume you mean compute in quantum computers. And I will just mention, too, it seems to me that from what I can see on the networking side versus the compute side, the networking side doesn't seem to be quite as lumpy. It seems to be a lot more sales in smaller dollar amounts, which is nice because it kind of offsets the lumpiness of the quantum compute side, which is -- that will be nice just going forward. I'll be looking forward to not having to say, and our sales are lumpy. So, on the compute side, things are, right now is a really interesting time. There's a bunch of RFPs we're competing in for systems, and we'll know in the next couple of months, I guess probably within six to nine months, whether or not those systems will be awarded to us. And so, I don't think the world has kind of quite picked up, but internationally there's quite a bit right now which is going on in the quantum compute side and up for grabs. And then, I mentioned also at the close of the kind of the remarks, some of the things that are going on in terms of the quantum compute marketplace that I think is fairly large events. The DARPA benchmarking initiative is a huge award per company. And so, those things have the potential to have an outsized impact.

Okay, great. Great color there. And then, maybe just one last one, if I may, on the $500 million that you announced today, is that targeted for anything in particular or is it more just about having the drop powder as you move forward here and not have constraints around your [DropX] (ph) trends?

It's really two -- it's twofold. One is to we see an entirely new TAM, which is in quantum networking. And so, it's supporting that. We have said that that will be the first business that becomes cash flow positive for us. And I can see that happening not too far off in the future. The other aspect, which is just as exciting, is our applications business. The work we're doing with Ansys and Astra

That is great color, I appreciate it. Thank you.

I'll say, we thought about going out and doing venture for some of these, and doing some as one way, but that means you're giving up recipes for the action in exchange for that, and we are pretty excited about what the future holds for some of these other markets that we're going into.

Thank you. At this time, I will turn the floor back to Peter Chapman for closing remarks.

Great. Well, thanks everyone, and thank you for joining the call. I just want to say thank you as I always do at this time to the company and to our investors, and everyone that supports us. This work wouldn't happen without the hard work of all of our employees, and also the management team. And so, just thank you. Thanks for a great 2024, and we look forward to a fantastic 2025. And thanks everyone for joining us today.