IonQ, Inc. 10-K

Item 9A. Controls and Procedures. Evaluation of Disclosure Controls and Procedures We maintain “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act that are designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is (1) recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms and (2) accumulated and communicated to our management, including our principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act), as of the end of the period covered by this Annual Report. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that as of December 31, 2024, our disclosure controls and procedures were effective in providing reasonable assurance that information required to be disclosed in our reports filed under the Exchange Act was recorded, processed, summarized and reported within the time periods prescribed by SEC rules and regulations, and that such information was accumulated and communicated to our management to allow timely decisions regarding required disclosure. Accordingly, we believe that the consolidated financial statements included in this Annual Report do fairly present, in all material respects, our financial position, results of operations and cash flows for the periods presented. 64 Management’s Annual Report on Internal Control Over Financial Reporting Management is responsible for establishing and maintaining adequate internal control over financial reporting for the Company. We conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in 2013. This evaluation included review of the documentation of controls, evaluation of the design effectiveness of controls, testing of the operating effectiveness of controls and a conclusion on this evaluation. Based on our evaluation, we have concluded that our internal control over financial reporting was effective as of December 31, 2024. Attestation Report of the Independent Registered Public Accounting Firm The report of our independent registered public accounting firm regarding internal control over financial reporting is set forth beginning on page F-1 of this Annual Report. Changes in Internal Control over Financial Reporting There were no changes in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the three months ended December 31, 2024, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Item 9B. Other Information. Rule 10b5-1 Trading Plans During the three months ended December 31, 2024 , none of our directors or officers (as defined in Rule 16a-1(f) of the Exchange Act) adopted , terminated or modified the amount, pricing or timing provisions of a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(c) of Regulation S-K. Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections. Not applicable. 65 PART III Certain information required by Part III is omitted from this report because we will file with the SEC a definitive proxy statement pursuant to Regulation 14A (the “Proxy Statement”), no later than 120 days after the end of our fiscal year, and certain information included therein is incorporated herein by reference. Item 10. Directors, Executive Officers and Corporate Governance. The information required by this item will be contained in the Proxy Statement and is incorporated in this Annual Report on Form 10-K by reference. Item 11. Executive Compensation. The information required by this item will be contained in the Proxy Statement and is incorporated in this Annual Report on Form 10-K by reference. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. The information required by this item will be contained in the Proxy Statement and is incorporated in this Annual Report on Form 10-K by reference. Item 13. Certain Relationships and Related Transactions, and Director Independence. The information required by this item will be contained in the Proxy Statement and is incorporated in this Annual Report on Form 10-K by reference. Item 14. Principal Accountant Fees and Services. The information required by this item will be contained in the Proxy Statement and is incorporated in this Annual Report on Form 10-K by reference. 66 PART IV Item 15. Exhibit and Consolidated Financial Statements Schedules. The consolidated financial statements schedules and exhibits filed as part of this Annual Report are as follows: (a)(1) Consolidated Financial Statements Report of Independent Registered Public Accounting Firm (PCAOB ID 42) F- 2 Consolidated Balance Sheets F- 5 Consolidated Statements of Operations F- 6 Consolidated Statements of Comprehensive Loss F- 7 Consolidated Statements of Changes in Stockholders’ Equity F- 8 Consolidated Statements of Cash Flows F- 9 Notes to Consolidated Financial Statements F- 10 (a)(2) Consolidated Financial Statements Schedules All other consolidated financial statements schedules are omitted because they are not required or the required information is included in the consolidated financial statements or notes thereto. (a)(3) Exhibits The exhibits required to be filed as part of this Annual Report on Form 10-K are listed in the Exhibit List attached hereto and are incorporated herein by reference. Exhibit Description Form Filed Herewith Incorporated by Reference Form Exhibit Filing Date 2.1^ Agreement and Plan of Merger, dated as of March 7, 2021, by and among dMY Technology Group, Inc. III, IonQ, Inc. and IonQ Trap Acquisition Inc. X 8-K 2.1 March 8, 2021 3.1 Amended and Restated Certificate of Incorporation of IonQ, Inc. X 8-K 3.1 October 4, 2021 3.2 Amended and Restated Bylaws of IonQ, Inc. X 10-Q 3.2 November 9, 2023 4.1 Specimen Common Stock Certificate X S-4/A 4.4 August 11, 2021 4.2 Warrant Agreement, dated November 12, 2020, between Continental Stock Transfer & Trust Company and IonQ, Inc. X 8-K 4.1 November 17, 2020 4.3 Description of the Registrant’s Securities X 10-K 4.3 March 28, 2022 10.1 Amended and Restated Registration Rights Agreement, dated September 30, 2021, between and among the investors party thereto and IonQ, Inc. X 8-K 10.1 October 4, 2021 10.2+ Executive Severance Plan and Summary Plan Description (as amended December 3, 2024) X 8-K 10.1 December 6, 2024 10.3+ Form of Indemnification Agreement of IonQ, Inc. X 8-K 10.13 October 4, 2021 10.4+ 2015 Equity Incentive Plan X 8-K 10.14 October 4, 2021 10.5+ Forms of Stock Option Grant Notice and Option Agreement under 2015 Equity Incentive Plan X 8-K 10.15 October 4, 2021 10.6+ 2021 Equity Incentive Plan X 8-K 10.16 October 4, 2021 10.7+ Forms of Option Grant Notice and Option Agreement under 2021 Equity Incentive Plan X 10-K 10.14 March 30, 2023 10.8+ Form of Restricted Stock Unit Grant Notice and Unit Award Agreement under 2021 Equity Incentive Plan X 10-Q 10.1 August 15, 2022 67 Exhibit Description Form Filed Herewith Incorporated by Reference Form Exhibit Filing Date 10.9+† Form of Performance-Based Award Grant Package (as amended December 3, 2024) X 8-K 10.2 December 6, 2024 10.10+ 2021 Employee Stock Purchase Plan X 8-K 10.19 October 4, 2021 10.11 Amended and Restated Office Lease, by and between University of Maryland – College Park and IonQ, Inc. X 8-K 10.20 October 4, 2021 10.12† Warrant to Purchase Shares, dated November 27, 2019, issued to Amazon.com NV Investment Holdings LLC by IonQ, Inc. X S-4/A 10.33 July 16, 2021 10.13† License Agreement, dated July 19, 2016, among the University of Maryland, Duke University and IonQ, Inc. X S-4/A 10.20 June 17, 2021 10.14† Amendment No. 1 to Exclusive License Agreement, dated September 22, 2017, between Duke University and the Registrant X S-4/A 10.21 June 17, 2021 10.15† Amendment No. 1 to Exclusive License Agreement, dated October 11, 2017, between the University of Maryland and IonQ, Inc. X S-4/A 10.22 June 17, 2021 10.16† Amendment No. 2 to Exclusive License Agreement, dated October 4, 2018, between Duke University and IonQ, Inc. X S-4/A 10.23 June 17, 2021 10.17† Amendment No. 2 to Exclusive License Agreement, dated October 9, 2018, between the University of Maryland and IonQ, Inc. X S-4/A 10.24 June 17, 2021 10.18† Amendment No. 3 to Exclusive License Agreement, dated April 27, 2021, between Duke University, the University of Maryland and IonQ, Inc. X S-4/A 10.25 June 17, 2021 10.19† Amendment No. 3 to Exclusive License Agreement, dated February 1, 2021, between the University of Maryland and IonQ, Inc. X 10-Q 10.2 May 16, 2022 10.20† Amendment No. 4 to Exclusive License Agreement, dated April 27, 2021, between Duke University, the University of Maryland and IonQ, Inc. X S-4/A 10.26 June 17, 2022 10.21† Amendment No. 4 to Exclusive License Agreement, dated February 1, 2021, between the University of Maryland and IonQ, Inc. X 10-Q 10.3 May 16, 2022 10.22† Amendment No. 5 to Exclusive License Agreement, dated September 10, 2021, between Duke University and IonQ, Inc X 10-K 10.29 March 28, 2022 10.23† Amendment No. 5 to Exclusive License Agreement, dated September 24, 2021, between the University of Maryland and IonQ, Inc. X 10-K 10.30 March 28, 2022 10.24† Amendment No. 6 to Exclusive License Agreement, dated January 23, 2023, between Duke University and IonQ, Inc. X 10-K 10.30 March 30, 2023 10.25† Amendment No. 7 to Exclusive License Agreement, dated February 2, 2024, between Duke University and IonQ, Inc. X 10-K 10.31 February 28, 2024 10.26† Exclusive Option Agreement, dated July 15, 2016, between Duke University and IonQ, Inc. X S-4/A 10.27 June 17, 2021 10.27 First Amendment to Option Agreement, dated December 18, 2020, between Duke University and IonQ, Inc. X S-4/A 10.28 June 17, 2021 10.28 Second Amendment to Option Agreement, dated March 19, 2021, between Duke University and IonQ, Inc. X S-4/A 10.29 June 17, 2021 10.29 Amended and Restated Non-Employee Director Compensation Policy X 10-Q 10.1 November 6, 2024 10.30+ Amended and Restated Offer Letter Agreement for Peter Chapman, dated September 8, 2021 X 10-Q 10.2 May 10, 2024 10.31+ Amended and Restated Offer Letter Agreement for Thomas Kramer, dated September 8, 2021 X 10-Q 10.3 May 10, 2024 68 Exhibit Description Form Filed Herewith Incorporated by Reference Form Exhibit Filing Date 10.32+ Employment Offer between the Company and Rima Alameddine, dated October 26, 2022 X 10-Q 10.4 May 10, 2024 10.33+ Bonus Agreement between the Company and Peter Chapman, dated December 16, 2024 X 19.1† IonQ, Inc. Insider Trading Policy X 21.1 List of Subsidiaries of the Company X 23.1 Consent of Ernst & Young LLP, an Independent Registered Public Accounting Firm. X 24.1 Power of Attorney (included on the signature page to this report). X 31.1 Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. X 31.2 Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. X 32.1 Certification of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. X 97 Incentive Compensation Recoupment Policy X 10-K 97 February 28, 2024 101.INS Inline XBRL Instance Document—the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL Document. X 101.SCH Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents. X 104 Cover Page Interactive Data File (formatted as inline XBRL with applicable taxonomy extension information contained in Exhibit 101). X * Furnished herewith and not deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and shall not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act (whether made before or after the date of the Form10-K), irrespective of any general incorporation language contained in such filing. + Indicates a management contract or compensatory plan. † Certain of the exhibits and schedules to this Exhibit have been omitted in accordance with Regulation S-K Item 601(b)(10)(iv). The Registrant agrees to furnish a copy of all omitted exhibits and schedules to the SEC upon its request. ^ Certain of the exhibits and schedules to this exhibit have been omitted in accordance with Regulation S-K Item 601(a)(5). The Registrant agrees to furnish a copy of all omitted exhibits and schedules to the SEC upon its request. Item 16. Form 10-K Summary None. 69 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report on Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized. IonQ, Inc. February 26, 2025 BY: /s/ Peter Chapman Peter Chapman President and Chief Executive Officer ( Principal Executive Officer ) POWER OF ATTORNEY Each person whose individual signature appears below hereby authorizes and appoints Peter Chapman and Thomas Kramer, and each of them, with full power of substitution and resubstitution and full power to act without the other, as his or her true and lawful attorney-in-fact and agent to act in his or her name, place and stead and to execute in the name and on behalf of each person, individually and in each capacity stated below, and to file any and all amendments to this report on Form 10-K, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing, ratifying and confirming all that said attorneys-in-fact and agents or any of them or their or his substitute or substitutes may lawfully do or cause to be done by virtue thereof. Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this Annual Report on Form 10-K has been signed below by the following persons on behalf of the Registrant in the capacities and on the dates indicated. Name Title Date /s/ Peter Chapman President and Chief Executive Officer and Director February 26, 2025 Peter Chapman (Principal Executive Officer) /s/ Thomas Kramer Chief Financial Officer February 26, 2025 Thomas Kramer (Principal Financial and Accounting Officer) /s/ Robert Cardillo Director February 26, 2025 Robert Cardillo /s/ Kathryn Chou Director February 26, 2025 Kathryn Chou /s/ Niccolo de Masi Director February 26, 2025 Niccolo de Masi /s/ William Scannell Director February 26, 2025 William Scannell /s/ Inder M. Singh Director February 26, 2025 Inder M. Singh /s/ Wendy Thomas Director February 26, 2025 Wendy Thomas /s/ Gabrielle Toledano Director February 26, 2025 Gabrielle Toledano /s/ Harry You Director February 26, 2025 Harry You 70 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Report of Independent Registered Public Accounting Firm (PCAOB ID 42 ) F- 2 Consolidated Balance Sheets F- 5 Consolidated Statements of Operations F- 6 Consolidated Statements of Comprehensive Loss F- 7 Consolidated Statements of Changes in Stockholders’ Equity F- 8 Consolidated Statements of Cash Flows F- 9 Notes to Consolidated Financial Statements F- 10 F- 1 Report of Independent Registered Public Accounting Firm To the Stockholders and the Board of Directors of IonQ, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of IonQ, Inc. (the Company) as of December 31, 2024 and 2023, the related consolidated statements of operations, comprehensive loss, changes in stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2024, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 26, 2025 expressed an unqualified opinion thereon. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Capitalized internal-use software development costs Description of the Matter As discussed in Note 2 and Note 7 to the consolidated financial statements, the Company capitalizes certain costs related to internal-use software incurred during the application development stage. The Company capitalized $6.8 million of internal-use software costs in the year ended December 31, 2024 and had total capitalized internal-use software costs, net of accumulated amortization, of $10.6 million as of December 31, 2024. Capitalized internal-use software is recorded within intangible assets, net on the consolidated balance sheets. Auditing the Company’s capitalization of internal-use software development costs was especially challenging because management’s determination of which development activities qualify for capitalization requires significant judgment, as only those costs incurred in certain stages of software development and which result in additional functionality can be capitalized in accordance with the applicable accounting standards. How We Addressed the Matter in Our Audit To test the Company’s capitalization of internal-use software development costs, we performed audit procedures that included, among others, testing a sample of capitalized internal-use software development costs related to upgrades and enhancements to existing internal-use software projects. For each sample, we inspected underlying documentation to evaluate whether the development activities were capitalizable under F- 2 the applicable accounting standards. In addition, we inquired of a sample of the individuals performing the internal-use software development activities, and their supervisors, regarding the specific nature, stage of development, and time incurred on the projects selected for testing. /s/ Ernst & Young LLP We have served as the Company’s auditor since 2020. Tysons, Virginia February 26, 2025 F- 3 Report of Independent Registered Public Accounting Firm To the Stockholders and the Board of Directors of IonQ, Inc. Opinion on Internal Control Over Financing Reporting We have audited IonQ, Inc.’s internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, IonQ, Inc. (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on the COSO criteria. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2024 and 2023, the related consolidated statements of operations, comprehensive loss, changes in stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2024, and the related notes and our report dated February 26, 2025 expressed an unqualified opinion thereon. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ Ernst & Young LLP Tysons, Virginia February 26, 2025 F- 4 IonQ, Inc. Consolidated Balance Sheets (in thousands, except share and per share data) December 31, December 31, 2024 2023 Assets Current assets: Cash and cash equivalents $ 54,393 $ 35,665 Short-term investments 285,896 319,776 Accounts receivable 10,188 11,467 Prepaid expenses and other current assets 28,325 23,081 Total current assets 378,802 389,989 Long-term investments 23,545 100,489 Property and equipment, net 52,761 37,515 Operating lease right-of-use assets 9,470 4,613 Intangible assets, net 29,469 15,077 Goodwill 9,904 742 Other noncurrent assets 4,437 5,155 Total Assets $ 508,388 $ 553,580 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable $ 5,230 $ 5,599 Accrued expenses and other current liabilities 16,424 18,376 Current portion of operating lease liabilities 3,366 710 Unearned revenue 10,678 12,087 Current portion of stock option early exercise liabilities 387 392 Total current liabilities 36,085 37,164 Operating lease liabilities, net of current portion 14,359 7,395 Unearned revenue, net of current portion — 447 Stock option early exercise liabilities, net of current portion 61 448 Warrant liabilities 70,688 23,004 Other noncurrent liabilities 3,333 128 Total liabilities $ 124,526 $ 68,586 Commitments and contingencies (see Note 11) Stockholders’ equity: Common stock $ 0.0001 par value; 1,000,000,000 shares authorized; 221,919,191 and 206,611,704 shares issued and outstanding as of December 31, 2024 and December 31, 2023, respectively $ 22 $ 20 Additional paid-in capital 1,067,403 839,014 Accumulated deficit ( 683,720 ) ( 352,073 ) Accumulated other comprehensive income (loss) 157 ( 1,967 ) Total stockholders’ equity $ 383,862 $ 484,994 Total Liabilities and Stockholders’ Equity $ 508,388 $ 553,580 The accompanying notes are an integral part of these consolidated financial statements. F- 5 IonQ, Inc. Consolidated Statements of Operations (in thousands, except share and per share data) Year Ended December 31, 2024 2023 2022 Revenue $ 43,073 $ 22,042 $ 11,131 Costs and expenses: Cost of revenue (excluding depreciation and amortization) 20,597 8,108 2,944 Research and development 136,827 92,321 43,978 Sales and marketing 28,395 18,270 8,385 General and administrative 71,055 50,722 35,966 Depreciation and amortization 18,654 10,375 5,604 Total operating costs and expenses 275,528 179,796 96,877 Loss from operations ( 232,455 ) ( 157,754 ) ( 85,746 ) Gain (loss) on change in fair value of warrant liabilities ( 117,107 ) ( 19,206 ) 30,136 Interest income, net 18,249 19,322 7,093 Other income (expense), net ( 275 ) ( 85 ) 6 Loss before income tax expense ( 331,588 ) ( 157,723 ) ( 48,511 ) Income tax benefit (expense) ( 59 ) ( 48 ) — Net loss $ ( 331,647 ) $ ( 157,771 ) $ ( 48,511 ) Net loss per share attributable to common stockholders— basic and diluted $ ( 1.56 ) $ ( 0.78 ) $ ( 0.25 ) Weighted average shares used in computing net loss per share attributable to common stockholders—basic and diluted 213,029,365 202,576,492 197,727,642 The accompanying notes are an integral part of these consolidated financial statements. F- 6 IonQ, Inc. Consolidated Statements of Comprehensive Loss (in thousands) Year Ended December 31, 2024 2023 2022 Net loss $ ( 331,647 ) $ ( 157,771 ) $ ( 48,511 ) Other comprehensive income (loss), net of reclassification adjustments: Change in unrealized gain (loss) on available-for-sale securities, net 2,127 5,398 ( 7,207 ) Currency translation adjustments ( 3 ) ( 10 ) — Total other comprehensive income (loss) 2,124 5,388 ( 7,207 ) Total comprehensive loss $ ( 329,523 ) $ ( 152,383 ) $ ( 55,718 ) The accompanying notes are an integral part of these consolidated financial statements. F- 7 IonQ, Inc. Consolidated Statements of Changes in Stockholders’ Equity (in thousands, except share data) Stockholders’ Equity Accumulated Additional Other Total Common Stock Paid-in Accumulated Comprehensive Stockholders' Shares Amount Capital Deficit Income (Loss) Equity Balance, December 31, 2021 195,630,975 $ 19 $ 737,150 $ ( 145,791 ) $ ( 148 ) $ 591,230 Net loss — — — ( 48,511 ) — ( 48,511 ) Other comprehensive income (loss) — — — — ( 7,207 ) ( 7,207 ) Stock options exercised 2,239,490 1 1,058 — — 1,059 Vesting of restricted common stock 515,534 — 1,162 — — 1,162 Issuance of common stock from the settlement of restricted stock units 1,474,592 — 473 — — 473 Stock-based compensation — — 29,980 — — 29,980 Warrants exercised 1,532 — 25 — — 25 Balance, December 31, 2022 199,862,123 $ 20 $ 769,848 $ ( 194,302 ) $ ( 7,355 ) $ 568,211 Net loss — — — ( 157,771 ) — ( 157,771 ) Other comprehensive income (loss) — — — — 5,388 5,388 Stock options exercised 1,778,090 — 1,954 — — 1,954 Vesting of restricted common stock 501,364 — 1,128 — — 1,128 Issuance of common stock from the settlement of restricted stock units 4,466,894 — 3,923 — — 3,923 Stock-based compensation — — 62,104 — — 62,104 Warrants exercised 3,233 — 57 — — 57 Balance, December 31, 2023 206,611,704 $ 20 $ 839,014 $ ( 352,073 ) $ ( 1,967 ) $ 484,994 Net loss — — — ( 331,647 ) — ( 331,647 ) Other comprehensive income (loss) — — — — 2,124 2,124 Stock options exercised 4,818,974 — 8,012 — — 8,012 Vesting of restricted common stock 192,580 — 392 — — 392 Issuance of common stock from the settlement of restricted stock units 7,388,376 2 11,442 — — 11,444 Stock-based compensation — — 105,683 — — 105,683 Warrants exercised 2,907,557 — 102,860 — — 102,860 Balance, December 31, 2024 221,919,191 $ 22 $ 1,067,403 $ ( 683,720 ) $ 157 $ 383,862 The accompanying notes are an integral part of these consolidated financial statements. F- 8 IonQ, Inc. Consolidated Statements of Cash Flows (in thousands) Year Ended December 31, 2024 2023 2022 Cash flows from operating activities: Net loss $ ( 331,647 ) $ ( 157,771 ) $ ( 48,511 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 18,654 10,375 5,604 Non-cash research and development arrangements 520 520 520 Stock-based compensation 106,878 69,743 31,456 (Gain) loss on change in fair value of warrant liabilities 117,107 19,206 ( 30,136 ) Amortization of premiums and accretion of discounts on available-for-sale securities ( 8,804 ) ( 9,746 ) ( 1,577 ) Other, net 4,803 1,474 441 Changes in operating assets and liabilities: Accounts receivable 1,609 ( 8,175 ) ( 1,510 ) Prepaid expenses and other current assets ( 15,200 ) ( 14,413 ) ( 7,012 ) Accounts payable ( 601 ) 2,188 1,060 Accrued expenses and other current liabilities ( 411 ) 3,319 1,344 Unearned revenue ( 1,752 ) 2,604 3,892 Other assets and liabilities 3,161 1,865 ( 269 ) Net cash provided by (used in) operating activities $ ( 105,683 ) $ ( 78,811 ) $ ( 44,698 ) Cash flows from investing activities: Purchases of property and equipment ( 17,992 ) ( 13,703 ) ( 9,336 ) Capitalized software development costs ( 3,905 ) ( 4,558 ) ( 2,179 ) Intangible asset acquisition costs ( 1,672 ) ( 1,288 ) ( 1,049 ) Purchases of available-for-sale securities ( 296,329 ) ( 298,445 ) ( 605,689 ) Maturities of available-for-sale securities 418,082 386,760 310,045 Businesses acquired ( 15,454 ) — ( 848 ) Net cash provided by (used in) investing activities $ 82,730 $ 68,766 $ ( 309,056 ) Cash flows from financing activities: Proceeds from stock options exercised 8,012 1,954 1,059 Proceeds from public warrants exercised 33,437 37 17 Other financing, net 238 ( 230 ) 20 Net cash provided by (used in) financing activities $ 41,687 $ 1,761 $ 1,096 Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash 25 ( 2 ) — Net change in cash, cash equivalents and restricted cash 18,759 ( 8,286 ) ( 352,658 ) Cash, cash equivalents and restricted cash at the beginning of the period 38,081 46,367 399,025 Cash, cash equivalents and restricted cash at the end of the period $ 56,840 $ 38,081 $ 46,367 Supplemental disclosures of non-cash investing and financing transactions Property and equipment purchases in accounts payable and accrued expenses $ 1,060 $ 773 $ 485 Intangible asset purchases in accounts payable and accrued expenses 77 254 164 Operating lease right-of-use assets subject to lease liability 6,129 2,380 — Remeasurement of operating lease right-of-use assets due to lease modification — ( 849 ) — Noncash reclassification of warrant liabilities to equity upon exercise 69,423 20 8 Bonus settled in restricted stock units 11,443 3,923 473 Net share settled stock option exercises 1,016 291 — The accompanying notes are an integral part of these consolidated financial statements. F- 9 IonQ, Inc. Notes to Consolidated Financial Statements 1. DESCRIPTION OF BUSINESS IonQ, Inc. (“IonQ” or the “Company”), formerly known as dMY Technology Group, Inc. III (“dMY”), was incorporated in the state of Delaware in September 2020 and formed as a special purpose acquisition company for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization, or similar business combination with one or more businesses. IonQ Quantum, Inc. (formerly known as IonQ, Inc., and referred to as “Legacy IonQ” herein), was incorporated in the state of Delaware in September 2015 and is headquartered in College Park, Maryland. On March 7, 2021, Legacy IonQ entered into an Agreement and Plan of Merger (the “Merger Agreement”) with dMY and Ion Trap Acquisition Inc. (“Merger Sub”), a direct, wholly owned subsidiary of dMY. Pursuant to the Merger Agreement, on September 30, 2021 (“the Closing Date”), the Merger Sub was merged with and into Legacy IonQ with Legacy IonQ continuing as the surviving corporation following the merger, becoming a wholly owned subsidiary of dMY and the separate corporate existence of the Merger Sub ceased (the “Business Combination”). Contemporaneously with the Business Combination, dMY changed its name to IonQ, Inc. and Legacy IonQ changed its name to IonQ Quantum, Inc. IonQ develops quantum computers and networks designed to solve some of the world’s most complex problems, and transform business, society, and the planet for the better. To operate the quantum computers and networks, the Company has developed custom hardware, custom firmware, and an operating system to orchestrate the quantum computers. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Preparation The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("U.S. GAAP") as determined by the Financial Accounting Standards Board (“FASB”). Such consolidated financial statements include the accounts of IonQ and its wholly owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation . Use of Estimates The preparation of consolidated financial statements in conformity with U.S. GAAP and the rules and regulations of the SEC require management to make estimates and assumptions that affect the amounts reported in these consolidated financial statements and accompanying notes. Significant estimates and assumptions are inherent in the analysis and measurement of items including, but not limited to: total expected costs for revenue arrangements recognized over time, capitalization of quantum computing system costs, useful lives for quantum computing systems, estimates of the fair value of intangible assets acquired in business combinations, and stock-based compensation for awards with performance and market conditions. Management bases its estimates and assumptions on historical experience, expectations, forecasts, and on various other factors that are believed to be reasonable under the circumstances. Due to the inherent uncertainty involved in making estimates, actual results reported in future periods may differ and be affected by changes in those estimates. Foreign Currency The reporting currency of the Company is the U.S. dollar. Financial statements of subsidiaries whose functional currency is not the U.S. dollar are translated at exchange rates in effect at the balance sheet date for assets and liabilities and at average exchange rates for revenues and expenses for the respective periods. Translation adjustments are recorded in accumulated other comprehensive income (loss) in the consolidated balance sheets. The Company is exposed to foreign currency risk to the extent that it enters into transactions denominated in currencies other than its subsidiaries’ respective functional currencies. Transactions denominated in currencies other than subsidiaries’ functional currencies are recorded based on exchange rates at the time such transactions arise. Changes in exchange rates with respect to amounts recorded in the Company’s consolidated balance sheets related to these items will result in unrealized foreign currency transaction gains and losses based upon period-end exchange rates. The Company also records realized foreign currency transaction gains and losses upon settlement of the transactions. Foreign currency transaction gains and losses resulting from the conversion of the transaction currency to functional currency are included in other income (expense), net in the consolidated statements of operations. F- 10 Fair Value Measurements The Company evaluates the fair value of certain assets and liabilities using the fair value hierarchy. Fair value is an exit price representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement: • Level 1—Observable inputs, which include quoted prices in active markets; • Level 2—Observable inputs other than the quoted prices in active markets that are observable either directly or indirectly, such as quoted prices in markets that are not active, or other inputs such as broker quotes, benchmark yield curves, credit spreads and market interest rates for similar securities that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; • Level 3—Unobservable inputs that are supported by little or no market activity and that are based on management’s assumptions, including fair value measurements determined using pricing models, discounted cash flow methodologies or similar techniques. The Company’s assessment of the significance of a particular input to the fair value measurements requires judgment and may affect the valuation of the assets and liabilities being measured and their placement within the fair value hierarchy. For assets that are measured using quoted prices in active markets, the total fair value is the published market price per unit multiplied by the number of units held, without consideration of transaction costs. Assets and liabilities that are measured using significant other observable inputs are primarily valued by reference to quoted prices of similar assets or liabilities in active markets, adjusted for any terms specific to that asset or liability. Assets and liabilities that are measured at fair value on a non-recurring basis include property and equipment, intangible assets, and goodwill. The Company recognizes these items at fair value upon initial recognition when acquired through a business combination or an asset acquisition or when they are considered to be impaired. The fair value of these assets and liabilities are determined with valuation techniques using the best information available and may include quoted market prices, market comparables and discounted cash flow models. Due to their short-term nature, the carrying amounts reported in the Company’s consolidated financial statements approximate the fair value for cash and cash equivalents, accounts receivable, accounts payable and accrued expenses. Cash, Cash Equivalents and Restricted Cash Cash and cash equivalents include cash and checking deposits, money market funds, and U.S. government and agency securities. The Company considers all short-term highly liquid investments with an original maturity at the date of purchase of three months or less to be cash equivalents. Restricted cash for collateralizing letters of credit and corporate credit cards is included in other noncurrent assets in the consolidated balance sheets. The Company issues letters of credit in the ordinary course of business, including for lease arrangements. As of December 31, 2024 and 2023, letters of credit totaling $ 2.1 million were outstanding. The following table provides a reconciliation of cash, cash equivalents and restricted cash included in the consolidated balance sheets to the amounts included in the consolidated statements of cash flows (in thousands): December 31, December 31, 2024 2023 Cash and cash equivalents $ 54,393 $ 35,665 Restricted cash 2,447 2,416 Total cash, cash equivalents and restricted cash in the consolidated statements of cash flows $ 56,840 $ 38,081 Accounts Receivable and Allowance for Credit Losses Accounts receivable are non-interest bearing and represent amounts billed and currently due from customers at the gross invoiced amount as well as unbilled amounts related to unconditional rights for consideration to be received for services performed F- 11 but not yet invoiced. A receivable is recorded when the Company has an unconditional right to receive payment. Accounts receivable consists of the following (in thousands): December 31, December 31, 2024 2023 Billed accounts receivable $ 6,516 $ 8,564 Unbilled accounts receivable 3,672 2,903 Total accounts receivable $ 10,188 $ 11,467 On a periodic basis, management evaluates its accounts receivable and determines whether to provide an allowance for credit losses. This assessment is based on management’s evaluation of relevant information about past events, including historical experience, current conditions and reasonable and supportable forecasts that affect the collectability of the receivable. The Company did no t have any allowance for credit losses as of either December 31, 2024 or 2023 . Materials and Supplies, Net Materials and supplies, including spare parts, are carried at average cost and recorded in prepaid expenses and other current assets in the consolidated balance sheets. Materials and supplies used in the production of quantum computing systems to be made commercially available are capitalized to property and equipment when installed. Materials and supplies used to support customer contracts, for maintenance, or for research and development efforts are expensed when consumed. The Company capitalized $ 7.2 million, $ 3.6 million and $ 1.3 million of materials and supplies to property and equipment for the years ended December 31, 2024, 2023 and 2022, respectively. Materials and supplies are evaluated regularly for excess quantities and obsolescence. This evaluation includes analysis of the Company's current and future strategic plans, risk of technological obsolescence, and general market conditions. Excess and obsolescence charges were $ 1.3 million during the year ended December 31, 2024, and less than $ 0.1 million during the years ended December 31, 2023 and 2022. The following table summarizes the activity in the Company’s excess and obsolescence reserve against materials and supplies (in thousands): 2024 2023 Beginning balance $ 65 $ — Provisions 1,331 65 Recoveries ( 55 ) — Ending balance $ 1,341 $ 65 Investments Management determines the appropriate classification of investments at the time of purchase based upon management’s intent with regard to such investments. The Company primarily invests in debt securities and classifies its investments as available-for-sale at the time of purchase if they are available to support either current or future operations. This classification is re-evaluated at each balance sheet date. Investments not considered cash equivalents, with remaining contractual maturities of one year or less from the balance sheet date are classified as short-term investments, and those with remaining contractual maturities greater than one year from the balance sheet date are classified as long-term investments. All investments are recorded at their estimated fair value, and any unrealized gains and losses are recorded in the consolidated balance sheets in accumulated other comprehensive loss. Realized gains and losses on sales and maturities of investments are determined based on the specific identification method and are recognized in the consolidated statements of operations in other income (expense), net. Accrued interest receivable on available-for-sale investments is recorded in the consolidated balance sheets in prepaid expenses and other current assets. The Company performs periodic evaluations to determine whether any declines in the fair value of investments below amortized cost are credit losses or impairments. The evaluation consists of qualitative and quantitative factors regarding the severity of the unrealized loss, as well as the Company’s ability and intent to hold the investments until a forecasted recovery occurs. Declines in fair value are considered to be credit losses if they are related to deterioration in credit risk or are considered impairments if it is likely that the underlying securities will be sold prior to a full recovery of their cost basis. Credit losses and impairments are determined based on the specific identification method and are reported in other income (expense), net in the consolidated statements of operations. F- 12 Property and Equipment, Net Property and equipment, net is stated at cost less accumulated depreciation. Historical cost of fixed assets is the cost as of the date acquired. Hardware and labor costs associated with the building of quantum computing systems and supporting equipment are capitalized in the period the costs are incurred when it is probable that such costs will provide future economic benefit. The costs of quantum computing systems and supporting equipment that are used in research and development activities and have alternative future uses are capitalized. Costs to maintain quantum computing systems are expensed as incurred. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets. Useful lives are as follows: Computer equipment and acquired computer software 3 – 5 years Machinery, equipment, furniture and fixtures 4 – 7 years Quantum computing systems 3 years Leasehold improvements Shorter of the lease term or the estimated useful life of the related asset The Company evaluates the useful life of its assets periodically and whenever events or changes in circumstances indicate that the useful life may have changed. In assessing useful lives, the Company considers, among other factors, the use of the asset, changes in technology, and the competitive environment. Leases The Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets and current operating lease liabilities and operating lease liabilities, net of current portion on the Company’s consolidated balance sheets. As of December 31, 2024 and 2023, the Company has no financing lease arrangements. The Company recognizes lease expense for its operating leases on a straight-line basis over the term of the lease. The Company records a ROU asset and lease liability in connection with its operating leases. The Company’s lease portfolio is comprised primarily of real estate leases, which are accounted for as operating leases. The Company elected the practical expedient to not separate lease and non-lease components for all leases. ROU assets and lease liabilities are recognized at the lease commencement date based on the present value of the future minimum lease payments, including the impact of any lease incentives, as applicable, over the lease term. An amendment to a lease is assessed to determine if it represents a lease modification or a separate contract. Lease modifications are reassessed as of the effective date of the modification using an incremental borrowing rate based on the information available at the commencement date. For modified leases the Company also reassesses the lease classification as of the effective date of the modification. The interest rate used to determine the present value of the future lease payments is the Company’s incremental borrowing rate, because the interest rate implicit in the Company’s leases is not readily determinable. The incremental borrowing rate is estimated to approximate the interest rate on a collateralized basis with similar terms and payments, and in economic environments where the leased asset is located. The Company’s lease terms include periods under options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. The Company considers contractual-based factors such as the nature and terms of the renewal or termination, asset-based factors such as physical location of the asset and entity-based factors such as the importance of the leased asset to the Company’s operations to determine the lease term. The Company generally uses the base non-cancelable lease term when determining the ROU assets and lease liabilities. Intangible Assets, Net The Company’s intangible assets include website domain costs, patents, intellectual property, customer relationships, developed technology and trademarks. Intangible assets with identifiable useful lives are initially valued at acquisition cost and are amortized over their estimated useful lives using the straight-line method. With respect to patents, acquisition costs include external legal and patent application costs. Intangible assets with indefinite useful lives, such as trademarks, are assessed for impairment at least annually. F- 13 Software Development Costs The Company incurs software development costs for internal-use software, which the Company primarily uses to provide services to its customers, as well as for external-use software that will be part of a product to be sold, leased, or marketed. Internal-Use Software The costs to purchase and develop internal-use software are capitalized from the time that the preliminary project stage is completed, and it is considered probable that the software will be used to perform the function intended, until the time the software is placed in service for its intended use. Any costs incurred during subsequent efforts to upgrade and enhance the functionality of the software are also capitalized. Once this software is ready for its intended use, these costs are amortized on a straight-line basis over the estimated useful life of the software, which is typically assessed to be three years . Capitalized internal-use software is recorded within intangible assets, net, in the consolidated balance sheets. During the years ended December 31, 2024, 2023 and 2022 , the Company capitalized $ 6.8 million, $ 8.0 million and $ 3.2 million in internal-use software costs, respectively. The Company amortized $ 5.3 million, $ 2.9 million and $ 1.5 million of capitalized internal-use software costs during the years ended December 31, 2024, 2023 and 2022, respectively. External-Use Software Costs incurred in researching and developing external-use software are expensed as incurred until technological feasibility is established. Once technological feasibility is established, software costs are capitalized until the product is available for general release to customers. Judgment is required in determining when technological feasibility of a product is established. Generally, this occurs shortly before the products are released to production. No external-use software costs were capitalized during any of the years ended December 31, 2024, 2023 and 2022 . Goodwill Goodwill is the excess of the purchase price over the fair values assigned to the net assets acquired in a business combination. The Company tests goodwill for impairment on an annual basis, which it has determined to be the first day of the fourth quarter, and whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. The Company tests goodwill qualitatively, or quantitatively by comparing the fair value of the reporting unit with the unit’s carrying amount. No impairment loss was recognized for any of the years ended December 31, 2024, 2023 and 2022 . B usiness Combinations The Company recognizes and measures the assets acquired and liabilities assumed in a business combination based on their estimated fair values at the acquisition date. Goodwill as of the acquisition date represents the excess of the purchase consideration of an acquired business over the fair value of the underlying net tangible and intangible assets acquired net of liabilities assumed. The purchase consideration is determined based on the fair value of the assets transferred and liabilities assumed after considering any transactions that are separate from the business combination. Any adjustments to provisional amounts that are identified during the measurement period, not to exceed one year from the date of acquisition, are recorded in the reporting period in which the adjustment amounts are determined. Upon the conclusion of the measurement period, any subsequent adjustments are recorded in the Company’s consolidated statements of operations. Impairment of Long-Lived Assets Long-lived assets, such as property and equipment and other long-term assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. If circumstances require a long-lived asset or asset group be tested for possible impairment, the Company first compares undiscounted cash flows expected to be generated by that asset or asset group to its carrying amount. If the carrying amount of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent the carrying amount of the underlying asset exceeds its fair value. No impairment loss was recognized for any of the years ended December 31, 2024, 2023 and 2022 . Early Exercise of Stock Options Stock options granted under the Company's 2015 Equity Incentive Plan provide employee option holders, if approved by the Board, the right to exercise unvested options in exchange for restricted common stock, which is subject to a repurchase right held by the Company at the lower of (i) the fair market value of its common stock on the date of repurchase or (ii) the original purchase price. Early exercises of options are not deemed to be substantive exercises for accounting purposes and accordingly, amounts received for F- 14 early exercises are recorded as a liability. These amounts are reclassified to common stock and additional paid-in capital as the underlying shares vest. Warrant Liabilities The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives in accordance with ASC Topic 815, “Derivatives and Hedging.” For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value on the grant date and is then re-valued upon exercise or at each reporting date for the unexercised warrants, with changes in the fair value reported in the consolidated statements of operations. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. The warrants of dMY assumed in the Business Combination are classified as liabilities and remeasured at each reporting period (as more fully described in Note 14). Derivative warrant liabilities are classified as non-current liabilities as their liquidation is not reasonably expected to require the use of current assets or require the creation of current liabilities. Revenue Recognition The Company derives revenue from the design, development, construction and sale of specialized quantum computing hardware together with related maintenance and support, from providing access to its quantum-computing-as-a-service (“QCaaS” or “Platform” services), and from consulting services related to co-developing algorithms on the quantum computing systems. The Company applies the provisions of the FASB Accounting Standards Update (“ASU”), Revenue from Contracts with Customers (“ASC 606”), and all related applicable guidance. The core principle of ASC 606 is that an entity shall recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To support this core principle, the Company applies the following five step approach: 1. Identify the contract with the customer 2. Identify the performance obligations 3. Determine the transaction price 4. Allocate the transaction price to the performance obligations 5. Recognize revenue when (or as) the entity satisfies a performance obligation Certain of the Company’s contracts contain multiple performance obligations, most commonly in contracts for the sale of specialized quantum computing hardware together with related maintenance and support. Such contracts may also include access to the Company’s QCaaS. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when or as the performance obligation is satisfied. When there are multiple performance obligations in a contract, the Company allocates the transaction price to each performance obligation based on its standalone selling price when available. The Company determines standalone selling price based on the observable price of a product or service when it sells the products or services separately in similar circumstances and to similar customers. Certain products and services have limited or no history of being sold on a standalone basis, requiring the Company to estimate the standalone selling price. To date, the Company has estimated the standalone selling price based on other contracts for similar products and services adjusted for differing terms than the contract being evaluated, as well as internal pricing guidelines and market factors. In addition, the Company takes into consideration the estimated costs to be incurred to satisfy the performance obligation plus an appropriate profit margin. In limited situations, for certain contracts executed in prior years, when the standalone selling price was not known, due to it being either highly variable or uncertain, the Company allocated the transaction price using the residual approach. Estimates related to standalone selling price have not had a material impact on revenue recognized in recent periods. The Company has determined that its QCaaS contracts represent a combined, stand-ready performance obligation to provide access to its quantum computing systems together with related maintenance and support. The transaction price generally consists of a fixed fee for a minimum volume of usage to be made available over a defined period of access. Fixed fee arrangements may also include a variable component whereby customers pay an amount for usage over contractual minimums contained in the contracts. For performance obligations related to providing QCaaS access, fixed fees are recognized on a straight-line basis over the access period. Variable usage fees are recognized in the period they occur. The Company has determined that contracts that contain consulting services related to co-developing quantum computing algorithms and the ability to use its quantum computing systems to run such algorithms represent a combined performance obligation that is satisfied over-time. F- 15 Performance obligations are satisfied over time if the customer receives the benefits as the Company performs the work, if the customer controls the asset as it is being produced (continuous transfer of control), or if the product being produced for the customer has no alternative use and the Company has a contractual right to payment for performance to date. For performance obligations related to specialized quantum computing hardware and consulting services, revenue is recognized over time based on the efforts incurred to date relative to the total expected effort, primarily based on a cost-to-cost input measure. The Company applies judgment to determine a reasonable method to measure progress and to estimate total expected effort. Factors considered in these estimates include the Company's historical performance, the availability, productivity and cost of labor, the nature and complexity of work to be performed, the effect of change orders, availability and cost of materials, and the effect of any delays in performance. For the years ended December 31, 2024, 2023 and 2022, substantially all revenue was recognized based on transfer of service over time. Revenues recognized at a point in time were not material. In arrangements with cloud service providers, the cloud service provider is considered the customer and IonQ does not have any contractual relationships with the cloud service providers’ end users. For these arrangements, revenue is recognized at the amount charged to the cloud service provider and does not reflect any mark-up to the end user. The Company may enter into multiple contracts with a single counterparty at or near the same time. The Company will combine contracts and account for them as a single contract when one or more of the following criteria are met: (i) the contracts are negotiated as a package with a single commercial objective; (ii) consideration to be paid in one contract depends on the price or performance of the other contract; and (iii) goods or services promised are a single performance obligation. Consideration payable to a customer includes cash amounts that an entity pays, or expects to pay, to the customer. For arrangements that contain consideration payable to a customer, the Company uses judgment in determining whether such payments are a reduction of the transaction price or a payment to the customer for a distinct good or service. The variable fees associated with the QCaaS are generally billed a month in arrears. Customers also have the ability to make advance payments. Advance payments are recorded as a contract liability until services are delivered or obligations are met and revenue is earned. Contract liabilities to be recognized in the succeeding 12-month period are classified as current and the remaining amounts are classified as non-current liabilities in the Company’s consolidated balance sheets. Assets Recognized from Costs to Obtain a Contract Sales commissions paid to employees and third parties are considered incremental costs to obtain a contract with a customer. These costs are capitalized in the period a customer contract is executed and are amortized as an expense consistent with the transfer of the goods or services to the customer. Capitalized costs are recorded in prepaid expenses and other current assets and other noncurrent assets in the consolidated balance sheets. Applying the practical expedient, the Company recognizes the incremental costs of obtaining contracts as an expense when incurred if the amortization period of the assets is one year or less. As of December 31, 2024 and 2023, total capitalized costs were $ 2.4 million and $ 2.8 million, respectively. Amortization expense was $ 1.7 million, $ 0.6 million and less than $ 0.1 million for the years ended December 31, 2024, 2023 and 2022 , respectively, and is included in sales and marketing in the consolidated statements of operations. Cost of Revenue Cost of revenue primarily consists of expenses related to construction of specialized quantum computing hardware and delivery of our services, including personnel-related expenses, hardware costs, allocated overhead costs for customer facing functions, and costs associated with maintaining the Company's in-service quantum computing systems to ensure proper calibration as well as costs incurred for maintaining the cloud on which the QCaaS resides. Personnel-related expenses include salaries, benefits, and stock-based compensation. Cost of revenue excludes depreciation and amortization related to our quantum computing systems and related software. Research and Development Research and development expenses consist of personnel-related costs, including salaries, benefits and stock-based compensation, and allocated overhead costs for the Company’s research and development function. Unlike a standard computer, design and development efforts continue throughout the useful life of the Company’s quantum computing systems to ensure proper calibration and optimal functionality. Research and development expenses also include purchased hardware and software costs related to quantum computing systems constructed for research purposes that are not probable of providing future economic benefit and have no alternate future use, as well as costs associated with third-party research and development arrangements. Under an agreement with Duke University (“Duke”), the Company issued common shares to Duke in consideration for research and development services through July 15, 2026. The agreement is considered a research and development service arrangement and is F- 16 recorded as a prepayment based on the fair value of the common stock issued and is amortized over the term of the arrangement as services are received and is recognized in research and development in the consolidated statements of operations. Refer to Note 9 for further information on the Duke agreements. Advertising Costs Advertising costs are expensed as incurred and are included in sales and marketing expenses in the consolidated statements of operations. These costs were $ 0.2 million, $ 0.9 million and $ 1.3 million for the years ended December 31, 2024, 2023 and 2022 , respectively. Stock-Based Compensation The Company measures and records the expense related to stock-based awards based on the fair value of those awards as determined on the date of grant. The Company recognizes stock-based compensation expense over the requisite service period of the individual grant, generally equal to the vesting period and uses the straight-line method to recognize stock-based compensation. The Company uses the Black-Scholes-Merton (“Black-Scholes”) option-pricing model to determine the estimated fair value for stock options. The Black-Scholes option-pricing model requires the use of subjective assumptions, which determine the fair value of stock option awards, including the option’s expected term, the price volatility of the underlying common stock, risk-free interest rates, and the expected dividend yield of the common stock. The assumptions used to determine the fair value of the stock options represent management’s best estimates. These estimates involve inherent uncertainties and the application of management’s judgment. The Company records forfeitures as they occur. Stock-based compensation cost for restricted stock units and performance-based restricted stock units is measured based on the fair value of the Company’s common stock on the grant date. The fair value of performance-based restricted stock units with a market condition is estimated on the date of grant using the Monte Carlo simulation model. The Monte Carlo simulation model requires the use of subjective assumptions, which determine the fair value of these awards, including price volatility, contractual term, discount rate, risk-free interest rates, and the expected dividend yield of the common stock. The assumptions used to determine the fair value of the performance-based restricted stock awards represent management’s best estimates. These estimates involve inherent uncertainties and the application of management’s judgment. For awards with a performance-based vesting condition, including those with a market condition, the Company records stock-based compensation cost if it is probable that the performance conditions will be achieved. Stock-based compensation cost will be recognized if the performance condition is satisfied, even if the market condition is not met and the award does not vest. At each reporting period, the Company reassesses the probability of the achievement of the performance conditions and any change in expense resulting from an adjustment in the estimated shares to be released is treated as a cumulative catch-up in the period of the adjustment. The Company records stock-based compensation expense for incentive compensation liabilities based on estimated payments to employees for which the Company expects to settle the liability by granting restricted stock units. For these awards, stock-based compensation expense is accrued commencing at the service inception date, which generally precedes the grant date, through the end of the requisite service period. Income Taxes Income taxes are accounted for using the asset and liability method. Deferred income taxes are provided for temporary differences in recognizing certain income, expense and credit items for financial reporting purposes and tax reporting purposes. Such deferred income taxes primarily relate to the difference between the tax bases of assets and liabilities and their financial reporting amounts. Deferred tax assets and liabilities are measured by applying enacted statutory tax rates applicable to the future years in which deferred tax assets or liabilities are expected to be settled or realized. Excess tax benefits or tax deficiencies from stock option exercises are recognized in the income tax provision in the period in which they occur. The Company records a valuation allowance when it determines, based on available positive and negative evidence, that it is not more-likely-than-not that some portion or all of its deferred tax assets will be realized. For certain income tax positions, the Company uses a more-likely-than-not threshold based on the technical merits of the tax position taken. Tax positions that meet the more-likely-than-not recognition threshold are measured at the largest amount of tax benefits determined on a cumulative probability basis, which are more-likely-than-not to be realized upon ultimate settlement in the consolidated financial statements. The Company’s policy is to recognize interest and penalties related to income tax matters in income tax expense. There were no amounts recognized relating to interest and penalties in the consolidated statements of operations for any F- 17 of the years ended December 31, 2024, 2023 and 2022 . The Company had no uncertain income tax positions as of either December 31, 2024 or 2023 . Concentrations of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash, cash equivalents, restricted cash, investments, and trade accounts receivable. The Company maintains the majority of its cash, cash equivalents, restricted cash and investments with three financial institutions. The Company’s deposits routinely exceed amounts guaranteed by the Federal Deposit Insurance Corporation. The Company’s accounts receivable are derived from customers primarily located in the U.S., including the U.S. government. The Company performs periodic evaluations of its customers’ financial condition and generally does not require its customers to provide collateral or other security to support accounts receivable and maintains an allowance for credit losses. Credit losses historically have not been material. Significant customers are those that represent more than 10 % of the Company’s total revenue. For the year ended December 31, 2024 , the Company had two significant customers that accounted for 77 % of total revenue. For the year ended December 31, 2023, the Company had two significant customers that accounted for 58 % of total revenue. For the year ended December 31, 2022, the Company had three significant customers that accounted for 70 % of total revenue. Earnings (Loss) Per Share Basic earnings (loss) per share is computed by dividing net income (loss) by the weighted-average number of shares of common stock outstanding for the period. Diluted earnings per share is computed by dividing net income (loss) by the weighted average number of shares of common stock during the period, plus common stock equivalents, outstanding during the period. If the Company reports a net loss, the computation of diluted loss per share excludes the effect of dilutive common stock equivalents, as their effect would be antidilutive. The following table sets forth the computation of basic and diluted loss per share attributable to common stockholders (in thousands, except share and per share data): Year Ended December 31, Numerator: 2024 2023 2022 Net loss attributable to common stockholders $ ( 331,647 ) $ ( 157,771 ) $ ( 48,511 ) Denominator: Weighted average shares used in computing net loss per share attributable to common stockholders— basic and diluted 213,029,365 202,576,492 197,727,642 Net loss per share attributable to common stockholders—basic and diluted $ ( 1.56 ) $ ( 0.78 ) $ ( 0.25 ) In periods with a reported net loss, the effect of stock options, warrants, unvested restricted stock units, unvested performance-based restricted stock units, and unvested common stock (including unvested restricted common stock) are excluded and diluted loss per share is equal to basic loss per share. The following is a summary of the weighted average common stock equivalents for the securities outstanding during the respective periods that have been excluded from the computation of diluted net loss per common share: Year Ended December 31, 2024 2023 2022 Common stock options outstanding 19,147,636 23,518,426 22,951,439 Warrants to purchase common stock 7,559,312 8,301,202 8,301,202 Public warrants 5,014,121 5,230,613 5,231,750 Unvested restricted stock units 16,203,257 13,726,782 4,418,852 Unvested performance-based restricted stock units 1,980,589 542,905 — Unvested common stock 307,473 654,442 1,158,095 Total 50,212,388 51,974,370 42,061,338 F- 18 Recently Adopted Accounting Standards In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The Company adopted this standard for the year ended December 31, 2024, and has applied the standard retrospectively to all prior periods presented in the consolidated financial statements. Refer to Note 22 for further details. Recently Issued Accounting Standards Not Yet Adopted In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvement to Income Tax Disclosures to enhance the transparency and decision usefulness of income tax disclosures. ASU 2023-09 is effective for annual periods beginning after December 15, 2024, on a prospective basis, with early adoption permitted. The Company is currently evaluating the impact of this accounting standard update on its consolidated financial statements and related disclosures. In November 2024, the FASB issued ASU 2024-03, Income Statement -- Reporting Comprehensive Income -- Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires additional expense disclosures by public business entities in the notes to the financial statements. ASU 2024-03 is effective for annual periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact of this accounting standard update on its financial statement disclosures. 3. BUSINESS COMBINATIONS Qubitekk Federal, LLC On December 27, 2024, the Company acquired Qubitekk Federal, LLC (“Qubitekk”) for total consideration of approximately $ 22.1 million of cash consideration, of which $ 15.5 million was paid at closing, with the remainder to be paid over the next eighteen months, subject to reductions for indemnities, working capital adjustments, and certain other conditions that existed at the acquisition date. The holdback liabilities are recorded in accrued expenses and other current liabilities and other noncurrent liabilities on the consolidated balance sheets. The acquisition supports the Company’s quantum networking capabilities by expanding its quantum networking expertise and technology portfolio. The Company incurred approximately $ 1.5 million in acquisition costs, which were primarily related to fees associated with financial and legal advisors and were recorded in general and administrative expenses in the consolidated statements of operations for the year ended December 31, 2024. The Company utilized a benchmarking approach based on comparable transactions within the Company's industry peer group to determine the preliminary fair values of intangible assets acquired. Upon completion of the final purchase price allocation, the final fair values of assets acquired and resulting goodwill may differ materially from the preliminary assessment. The following table summarizes the preliminary fair values of Qubitekk assets acquired as of the acquisition date (in thousands): Accounts receivable $ 400 Prepaid expenses and other current assets 531 Intangible assets 11,900 Goodwill 9,220 Other noncurrent assets 3 Total fair value of net assets acquired $ 22,054 The goodwill of $ 9.2 million is primarily attributable to Qubitekk's specialized assembled workforce and expected future synergies from combining operations. We expect the goodwill from this acquisition will be deductible for income tax purposes. Identifiable intangibles recognized consists of $ 7.7 million in customer relationships and $ 4.0 million in developed technology, each with useful lives of 5 years, and $ 0.2 million in trademarks with an indefinite useful life. The Company has included the revenue and expenses of Qubitekk in its consolidated financial statements from the date of acquisition. Qubitekk's financial results are not material to the Company's results of operations. No summarized unaudited pro forma results are provided for the Qubitekk acquisition due to the immateriality of this acquisition relative to the Company's consolidated financial position and results of operations. F- 19 4. CASH, CASH EQUIVALENTS, RESTRICTED CASH AND INVESTMENTS The following table summarizes the Company’s unrealized gains and losses and estimated fair value of cash, cash equivalents, restricted cash and investments in available-for-sale securities recorded in the consolidated balance sheets (in thousands): As of December 31, 2024 As of December 31, 2023 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Cash and money market funds $ 33,204 $ — $ — $ 33,204 $ 25,131 $ — $ — $ 25,131 Commercial paper — — — — 16,374 — ( 14 ) 16,360 Corporate notes and bonds 45,823 22 ( 53 ) 45,792 176,793 38 ( 1,854 ) 174,977 Municipal bonds — — — — 4,990 — ( 43 ) 4,947 US government and agency 287,084 319 ( 118 ) 287,285 237,015 311 ( 395 ) 236,931 Total cash, cash equivalents, restricted cash and investments $ 366,111 $ 341 $ ( 171 ) $ 366,281 $ 460,303 $ 349 $ ( 2,306 ) $ 458,346 Unrealized losses related to investments were primarily a result of interest rate fluctuations. The following tables present information about the Company’s investments in available-for-sale securities with gross unrealized losses and the length of time that individual securities have been in a continuous unrealized loss position (in thousands): As of December 31, 2024 Less than 12 Months 12 Months or Longer Total Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Loses Corporate notes and bonds $ — $ — $ 24,396 $ ( 53 ) $ 24,396 $ ( 53 ) US government and agency 67,600 ( 111 ) 3,987 ( 7 ) 71,587 ( 118 ) Total $ 67,600 $ ( 111 ) $ 28,383 $ ( 60 ) $ 95,983 $ ( 171 ) As of December 31, 2023 Less than 12 Months 12 Months or Longer Total Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Loses Commercial paper $ 16,360 $ ( 14 ) $ — $ — $ 16,360 $ ( 14 ) Corporate notes and bonds 11,074 ( 58 ) 151,174 ( 1,796 ) 162,248 ( 1,854 ) Municipal bonds — — 4,947 ( 43 ) 4,947 ( 43 ) US government and agency 109,540 ( 192 ) 24,795 ( 203 ) 134,335 ( 395 ) Total $ 136,974 $ ( 264 ) $ 180,916 $ ( 2,042 ) $ 317,890 $ ( 2,306 ) The Company did no t have any allowance for credit losses as of either December 31, 2024 or 2023. The Company neither intends to nor believes that it is more likely than not that it will be required to sell the investments in an unrealized loss position before the recovery of the associated amortized cost basis. The estimated fair value of the Company’s cash, cash equivalents, restricted cash and investments in available-for-sale securities as of December 31, 2024, aggregated by investment category and classified by contractual maturity date, is as follows (in thousands): 1 Year or Less Greater than 1 Year Total Cash and money market funds $ 30,799 $ 2,405 $ 33,204 Corporate notes and bonds 43,868 1,924 45,792 US government and agency 265,664 21,621 287,285 Total $ 340,331 $ 25,950 $ 366,281 F- 20 5. FAIR VALUE MEASUREMENTS The Company’s financial assets and liabilities subject to fair value measurements on a recurring basis and the level of inputs used for such measurements were as follows (in thousands): Fair Value Measured as of December 31, 2024 Level 1 Level 2 Level 3 Total Assets Cash, cash equivalents and restricted cash: Cash and money market funds (1) $ 33,204 $ — $ — $ 33,204 US government and agency — 23,636 — 23,636 Total cash, cash equivalents and restricted cash $ 33,204 $ 23,636 $ — $ 56,840 Short-term investments: Corporate notes and bonds — 43,868 — 43,868 US government and agency — 242,028 — 242,028 Total short-term investments $ — $ 285,896 $ — $ 285,896 Long-term investments: Corporate notes and bonds — 1,924 — 1,924 US government and agency — 21,621 — 21,621 Total long-term investments $ — $ 23,545 $ — $ 23,545 Total assets $ 33,204 $ 333,077 $ — $ 366,281 Liabilities Public warrants $ 70,688 $ — $ — $ 70,688 Fair Value Measured as of December 31, 2023 Level 1 Level 2 Level 3 Total Assets Cash, cash equivalents and restricted cash: Cash and money market funds (1) $ 25,131 $ — $ — $ 25,131 US government and agency — 12,950 — 12,950 Total cash, cash equivalents and restricted cash $ 25,131 $ 12,950 $ — $ 38,081 Short-term investments: Commercial paper — 16,360 — 16,360 Corporate notes and bonds — 130,423 — 130,423 Municipal bonds — 4,947 — 4,947 US government and agency — 168,046 — 168,046 Total short-term investments $ — $ 319,776 $ — $ 319,776 Long-term investments: Corporate notes and bonds — 44,554 — 44,554 US government and agency — 55,935 — 55,935 Total long-term investments $ — $ 100,489 $ — $ 100,489 Total assets $ 25,131 $ 433,215 $ — $ 458,346 Liabilities Public warrants $ 23,004 $ — $ — $ 23,004 (1) Includes money market funds associated with the Company’s overnight investment sweep account and cash collateralizing the Company's letter of credit and corporate credit cards. Transfers to/from Levels 1, 2 and 3 are recognized at the beginning of the reporting period. There were no transfers between levels during the current period. On December 31, 2024 , the closing trading price of the public warrants was $ 30.46 per warrant. F- 21 6. PROPERTY AND EQUIPMENT, NET Property and equipment, net is composed of the following (in thousands): December 31, December 31, 2024 2023 Quantum computing systems $ 38,374 $ 28,296 Leasehold improvements 17,921 10,043 Machinery, equipment, furniture and fixtures 16,683 9,238 Computer equipment and acquired computer software 7,395 4,537 Gross property and equipment 80,373 52,114 Less: accumulated depreciation ( 27,612 ) ( 14,599 ) Total property and equipment, net $ 52,761 $ 37,515 Depreciation expense for the years ended December 31, 2024, 2023 and 2022, was $ 13.0 million, $ 7.2 million and $ 4.0 million, respectively. 7. INTANGIBLE ASSETS, NET Intangible assets, net is composed of the following (in thousands, except as otherwise noted): December 31, 2024 Weighted Average Remaining Useful Life (Years) Gross Carrying Amount Accumulated Amortization Net Amount Internal-use software 2.1 $ 21,301 $ ( 10,701 ) $ 10,600 Customer relationships 5.0 7,700 — 7,700 Patents 15.1 7,112 ( 487 ) 6,625 Developed technology 5.0 4,293 ( 293 ) 4,000 Trademark Indefinite 377 — 377 Website and other 7.9 227 ( 60 ) 167 Total $ 41,010 $ ( 11,541 ) $ 29,469 December 31, 2023 Weighted Average Remaining Useful Life (Years) Gross Carrying Amount Accumulated Amortization Net Amount Internal-use software 2.3 $ 14,524 $ ( 5,445 ) $ 9,079 Patents 15.9 5,783 ( 287 ) 5,496 Developed technology 1.0 318 ( 159 ) 159 Trademark Indefinite 154 — 154 Website and other 8.9 227 ( 38 ) 189 Total $ 21,006 $ ( 5,929 ) $ 15,077 F- 22 Total amortization expense for intangible assets for the years ended December 31, 2024, 2023 and 2022, was $ 5.6 million, $ 3.2 million and $ 1.6 million, respectively. As of December 31, 2024, the projected annual amortization expense for the Company’s intangible assets is as follows (in thousands): Amount Year ending December 31, 2025 $ 8,164 2026 6,495 2027 3,660 2028 2,573 2029 2,570 Thereafter 5,630 Total amortization expense $ 29,092 8. GOODWILL Changes in the carrying amount of goodwill for the years ended December 31, 2024 and 2023, were as follows: 2024 2023 Beginning balance $ 742 $ 742 Acquisitions 9,220 — Foreign currency translation ( 58 ) — Ending balance $ 9,904 $ 742 9. AGREEMENTS WITH UNIVERSITY OF MARYLAND AND DUKE UNIVERSITY Exclusive License Agreement The Company entered into an exclusive license agreement (“License Agreement”) in July 2016 with the University of Maryland (“UMD”) and Duke University (“Duke”). The License Agreement grants to the Company an exclusive, perpetual license (“Initial Patents”) to certain patents, know-how and other intellectual property utilized in trapped-ion quantum computing systems. The license granted to the Company is exclusive for all patents (and non-exclusive for other types of intellectual property), subject to certain governmental rights and retained rights by UMD and Duke and other non-profit institutions to use and practice the Licensed Patents (as defined below) and technology for internal research and other non-profit purposes. In exchange for the Initial Patents, UMD and Duke received an aggregate of 142,886 shares of common stock. On February 1, 2021, the Company and UMD executed two amendments to the License Agreement granting exclusive rights to license additional intellectual property in exchange for a total of 257,198 shares of common stock. Management evaluated the amendments and concluded that the arrangements qualify as equity-classified instruments and recorded an intangible asset and additional paid-in capital based on the fair value of the shares at the date the amendments were executed of $ 1.6 million. The shares for each executed amendment were issued during the year ended December 31, 2021. Exclusive Option Agreements The Company also entered into an exclusive option agreement (the “Option Agreement”) with each of UMD and Duke in 2016 whereby on the anniversary of the effective date of the License Agreement for a period of 5 years , the Company has the right to exclusively license additional intellectual property developed by UMD and Duke (the “Additional Patents” and together with the Initial Patents, the “Licensed Patents”) by exercising an annual option and issuing shares of common stock each to Duke and UMD in consideration for the Additional Patents. The amount issued to UMD and Duke pursuant to the Option Agreement over the 5-year term was equal to an aggregate of 642,995 shares of common stock to each university. The Company may elect not to exercise the option if there was not a minimum number of intellectual property developed in a given year and then the Option Agreement would extend another year . In December 2020, the Company amended its Option Agreement with Duke, and under this amendment, the Company issued 1,214,317 shares of common stock to Duke in consideration for research and development services through July 15, 2026. Under the terms of the amended Option Agreement, the issuance of shares is a nonrefundable upfront payment in exchange for research and development services by Duke whereby the Company will obtain rights to any potential future intellectual property developed during F- 23 the term. As such, the fair value of the shares of common stock was recorded as a prepaid expense and is being amortized over the term of the arrangement as services are received. The Company recognized $ 0.5 million of research and development expense related to the agreement with Duke during each of the years ended December 31, 2024, 2023 and 2022. The useful life of the Licensed Patents derived from the License Agreement and the Option Agreement is the remaining legal life at the time of acquisition. The value of the Licensed Patents is based on the fair value of the common stock given as consideration on the effective date of each agreement and exercise of option. The asset is amortized over the useful life of the Licensed Patents. 10. OTHER BALANCE SHEET ACCOUNTS Prepaid expenses and other current assets are composed of the following (in thousands): December 31, December 31, 2024 2023 Materials and supplies $ 18,658 $ 12,476 Prepaid expenses 4,890 5,696 Accrued interest receivable 2,221 2,109 Other current assets 2,556 2,800 Total prepaid expenses and other current assets $ 28,325 $ 23,081 Accrued expenses and other current liabilities are composed of the following (in thousands): December 31, December 31, 2024 2023 Accrued salaries and other payroll liabilities $ 10,368 $ 15,950 Acquisition holdback liabilities 3,300 — Accrued professional services 936 605 Accrued equipment and services liabilities for research and development 534 112 Accrued expenses—other 1,286 1,709 Total accrued expenses and other current liabilities $ 16,424 $ 18,376 11. COMMITMENTS AND CONTINGENCIES Warranties and Indemnification The Company’s commercial services are typically warranted to perform in a manner consistent with general industry standards that are reasonably applicable and materially in accordance with the Company’s documentation under normal use and circumstances. The Company’s arrangements generally include certain provisions for indemnifying customers against liabilities if its products or services infringe third- party intellectual property rights. To date, the Company has not incurred any material costs as a result of such obligations and has not accrued any liabilities related to such obligations in the accompanying consolidated financial statements. Stockholder Lawsuit In May 2022, a securities class action complaint captioned Leacock v. IonQ, Inc. et al., Case No. 8:22-cv-01306, was filed by a stockholder of the Company in the United States District Court for the District of Maryland (the “Leacock Litigation”) against the Company and certain of the Company’s current officers. In June 2022, a securities class action complaint captioned Fisher v. IonQ, Inc., Case No. 8:22-cv-01306-DLB (the “Fisher Litigation”) was filed by a stockholder against the Company and certain of the Company’s current officers (“IonQ Defendants”). Both the Leacock Litigation and Fisher Litigation, which have been consolidated into a single action, allege violations of Section 10(b) of the Exchange Act, and Rule 10b-5 promulgated thereunder, and Section 20(a) of the Exchange Act and seek damages. In September 2022, the Court appointed lead plaintiffs and counsel for lead plaintiffs, and ordered lead plaintiffs to file a consolidated amended complaint. The consolidated amended complaint was filed on November 22, 2022. As part of the consolidated amended complaint, certain members of the Company’s board of directors as well as other dMY-related defendants (“Additional Defendants”) have been added as defendants to the case. On February 7, 2023, the IonQ Defendants and the Additional Defendants each filed a motion to dismiss the consolidated amended complaint. On March 23, 2023, lead plaintiffs filed their omnibus opposition to the motions to dismiss. On April 26, 2023, the IonQ Defendants and the Additional Defendants each filed a reply in support of the motions to dismiss. On September 28, 2023, the District Court of Maryland issued an order dismissing plaintiffs' claims against the IonQ Defendants and the Additional Defendants with prejudice and directed the clerk to close the case. On October 26, 2023, the plaintiffs filed a motion for post-judgment relief, seeking to amend their consolidated amended complaint. F- 24 The IonQ Defendants and Additional Defendants filed oppositions to plaintiffs’ motion on December 1, 2023, and plaintiffs filed their reply on January 8, 2024. On July 10, 2024, the plaintiffs' motion for post-judgment relief was denied and the District Court of Maryland directed the clerk to close the case. On July 26, 2024, the plaintiffs filed a Notice of Appeal with the Fourth Circuit Court of Appeals seeking to review the trial court's decision. Plaintiffs filed their Opening Brief in the Fourth Circuit on September 9, 2024. A response brief by IonQ Defendants was filed on October 8, 2024 and plaintiffs’ reply brief was filed on October 29, 2024. Oral argument in the Fourth Circuit occurred on January 31, 2025. Given the uncertainty of litigation and the legal standards that must be met for, among other things, success on the case merits, the Company cannot reasonably estimate the possible loss or range of loss, if any, that may result from the associated suit. 12. STOCKHOLDERS’ EQUITY Our second amended and restated certificate of incorporation authorizes us to issue up to 1,000,000,000 shares of common stock, $ 0.0001 par value per share, and 20,000,000 shares of preferred stock, par value $ 0.0001 per share. Preferred Stock Under our second amended and restated certificate of incorporation, our board of directors may, without further action by our stockholders, fix the rights, preferences, privileges and restrictions of up to an aggregate of 20,000,000 shares of preferred stock in one or more series and authorize their issuance. These rights, preferences and privileges could include dividend rights, conversion rights, voting rights, terms of redemption, liquidation preferences and the number of shares constituting any series or the designation of such series, any or all of which may be greater than the rights of common stock. Any issuance of preferred stock could adversely affect the voting power of holders of common stock and the likelihood that such holders would receive dividend payments and payments on liquidation. In addition, the issuance of preferred stock could have the effect of delaying, deterring or preventing a change of control or other corporate action. No shares of preferred stock have been issued as of December 31, 2024. Common Stock The terms, rights, preference, and privileges of the common stock are as follows: Voting Rights Except as otherwise required by law or as otherwise provided in any certificate of designation for any series of preferred stock, each holder of common stock possess all voting power for the election of our directors and all other matters requiring stockholder action. Holders of common stock are entitled to one vote per share on matters to be voted on by stockholders. The Company’s second amended and restated certificate of incorporation and bylaws do not provide for cumulative voting rights. Dividends Subject to preferences that may be applicable to any then outstanding preferred stock, the holders of common stock may be entitled to receive dividends out of legally available funds if the board of directors, in its discretion, determines to issue dividends and then only at the times and in the amounts that the board of directors may determine. We do not anticipate paying any cash dividends in the foreseeable future. Liquidation In the event of our voluntary or involuntary liquidation, dissolution, distribution of assets or winding-up, the holders of common stock will be entitled to receive an equal amount per share of all of our assets of whatever kind available for distribution to stockholders, after the rights of the holders of the preferred stock, if any, have been satisfied. Rights and Preference Holders of the Company’s common stock have no preemptive or other subscription rights, and there are no sinking fund or redemption provisions applicable to the common stock. The rights, preferences, and privileges of the holders of common stock are subject to, and may be adversely affected by, the rights of the holders of shares of any series of the Company’s preferred stock that may be issued. F- 25 Common Stock Reserved for Issuance The Company’s common stock reserved for future issuances are as follows: As of December 31, 2024 2023 Stock options outstanding 16,687,129 21,664,377 Warrants to acquire common stock 543,152 8,301,202 Public warrants outstanding 2,320,696 5,228,253 Restricted stock units outstanding 14,509,717 15,107,535 Performance-based restricted stock units grants 11,916,771 12,923,499 Shares available for grant under the 2021 Equity Incentive Plan 22,532,379 14,075,832 Shares available for issuance under the Employee Stock Purchase Plan 5,354,000 5,354,000 Total common stock reserved 73,863,844 82,654,698 13. WARRANT TRANSACTION AGREEMENT In November 2019, contemporaneously with a revenue arrangement, the Company entered into a contract, pursuant to which the Company agreed to issue warrants to acquire shares of Legacy IonQ Series B-1 preferred stock (the “Warrant Shares”) to a customer, subject to certain vesting events. Upon closing of the Business Combination, these warrants exercisable for Legacy IonQ Series B-1 preferred stock were assumed by the Company and converted into a warrant to purchase shares of common stock. Except as specifically provided in the Merger Agreement, the Warrant Shares will have the same terms and be subject to the same conditions (including applicable vesting conditions) as set forth in the Legacy IonQ warrant agreement. The contract allowed for the customer to acquire up to 8,301,202 shares of common stock in the Company. The fair value of the Warrant Shares at the date of issuance was determined to be $ 8.7 million. As the Warrant Shares were issued in connection with an existing commercial agreement with a customer, the value of the Warrant Shares was determined to be consideration payable to the customer and consequently was treated as a reduction to revenue recognized under the corresponding revenue arrangement. In August 2020, 543,152 of the Warrant Shares vested and became immediately exercisable. The exercise price for the vested Warrant Shares is $ 1.38 per share and the warrant is exercisable through November 2029. As of December 31, 2024, no additional Warrant Shares can be vested pursuant to the terms of the warrant agreement and accordingly, the remaining 7,758,050 unvested Warrant Shares were forfeited. 14. WARRANT LIABILITIES The Company assumed 7,500,000 public warrants on September 30, 2021 as part of the Business Combination. As of December 31, 2024 , there were 2,320,696 public warrants to purchase common stock outstanding. Each warrant entitles the registered holder to purchase one share of common stock at a price of $ 11.50 per share. Public warrants The public warrants may be exercised on the later of (a) 30 days after the completion of a Business Combination or (b) 12 months from the closing of the Initial Public Offering of dMY; provided in each case that the Company has an effective registration statement under the Securities Act covering the shares of common stock issuable upon exercise of the public warrants and a current prospectus relating to them is available (or the Company permits holders to exercise their public warrants on a cashless basis and such cashless exercise is exempt from registration under the Securities Act). The public warrants became exercisable on November 17, 2021. Redemption of warrants when the price per share of common stock equals or exceeds $ 18.00 : Once the warrants become exercisable, the Company may redeem the outstanding warrants for cash: • in whole and not in part; • at a price of $ 0.01 per warrant ; • upon a minimum of 30 days’ prior written notice of redemption ; and F- 26 • if, and only if, the closing price of common stock equals or exceeds $ 18.00 per share (as adjusted) for any 20 trading days within a 30 -trading day period ending on the third trading day prior to the date on which the Company sends the notice of redemption to the warrant holders. Redemption of warrants for when the price per share of common stock equals or exceeds $ 10.00 : Once the warrants become exercisable, the Company may redeem the outstanding warrants: • in whole and not in part; • at $ 0.10 per warrant upon a minimum of 30 days’ prior written notice of redemption provided that holders will be able to exercise their warrants on a cashless basis prior to redemption and receive that number of shares determined by reference to an agreed table based on the redemption date and the fair market value (as defined within the warrant agreement) of the common stock except as otherwise described within the warrant agreement; and upon a minimum of 30 days’ prior written notice of redemption; and • if, and only if, the closing price of common stock equals or exceeds $ 10.00 per public share (as adjusted) for any 20 trading days within the 30 -trading day period ending three trading days before the Company sends notice of redemption to the warrant holders. No public warrants have been redeemed by the Company as of December 31, 2024 . 15. REVENUE Disaggregated Revenue The Company's revenues disaggregated by revenue source is as follows (in thousands): Year Ended December 31, 2024 2023 2022 Specialized quantum computing hardware $ 21,594 $ 7,083 $ 239 Platform, consulting and support services 21,479 14,959 10,892 Total revenue $ 43,073 $ 22,042 $ 11,131 The Company's revenues disaggregated by customer location is as follows (in thousands): Year Ended December 31, 2024 2023 2022 United States $ 40,714 $ 18,703 $ 9,175 International 2,359 3,339 1,956 Total revenue $ 43,073 $ 22,042 $ 11,131 Remaining Performance Obligations As of December 31, 2024 , approximately $ 77.2 million of revenue is expected to be recognized from remaining performance obligations that are unsatisfied (or partially unsatisfied), including both funded (firm orders for which funding has been both authorized and appropriated by the customer) and unfunded (firm orders for which funding has not been appropriated) orders. Unexercised contract options are not included in remaining performance obligations until the time the option is exercised. The F- 27 Company expects approximately 40 % of the remaining performance obligations to be recognized as revenue within the next twelve months . Unearned Revenue The following table summarizes the changes in unearned revenue for the years ended December 31, 2024, 2023 and 2022 (in thousands): 2024 2023 2022 Beginning balance $ 12,534 $ 9,930 $ 4,963 Revenue recognized ( 11,911 ) ( 8,660 ) ( 4,216 ) New deferrals, net 10,055 11,264 9,183 Ending balance $ 10,678 $ 12,534 $ 9,930 16. STOCK-BASED COMPENSATION Equity Incentive Plans The Company has a 2015 Equity Incentive Plan (the “2015 Plan”), which provided for the grant of share-based compensation to certain officers, directors, employees, consultants, and advisors. Upon the closing of the Business Combination, no further awards were made pursuant to the 2015 Plan and all outstanding Legacy IonQ stock options under the 2015 Plan were assumed by the Company. Such stock options granted under the 2015 Plan will continue to be governed by the terms of the 2015 Plan and the stock option agreements thereunder, until such outstanding options are exercised or until they terminate or expire by their terms. For awards granted under the 2015 Plan, vesting generally occurs over four to five years from the date of grant. In August 2021, the Company’s board of directors adopted the 2021 Equity Incentive Plan (the “2021 Plan”), which was subsequently approved by the Company’s stockholders in September 2021, and became effective upon the closing of the Business Combination. The 2021 Plan provides for the grant of stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards (“RSU”), performance awards and other forms of awards to employees, directors, and consultants. The number of shares of the Company’s common stock reserved for issuance under the 2021 Plan automatically increases on January 1 of each year, through and including January 1, 2031, by 5 % of the Fully Diluted Common Stock (as defined in the 2021 Plan) outstanding on December 31 of the preceding year, or a lesser number of shares determined by the Company’s board of directors prior to such increase. As of January 1, 2025, the number of shares reserved for issuance under the 2021 Plan increased by 14,532,010 . For awards granted under the 2021 Plan, vesting terms range from one to four years from the date of grant. As of December 31, 2024, the Company had 22,532,379 shares available for grant under the 2021 Plan. Under both equity incentive plans, all options granted have a contractual term of 10 years. Stock Options The Company estimates the fair value of stock options on the date of grant using the Black-Scholes option-pricing model. The Black-Scholes option-pricing model requires estimates of highly subjective assumptions, which affect the fair value of each stock option. For stock options granted during the years ended December 31, 2024, 2023 and 2022, the assumptions for the Black-Scholes option-pricing model were developed as follows: Expected Volatility —The expected volatility was based on the average historical stock price volatility of comparable publicly-traded companies in the Company's industry peer group, financial, and market capitalization data, due to the limited history of a public market for the Company's common stock prior to closing the Business Combination relative to the expected term of the options. Expected Term —The expected term of the Company’s options represents the period that the stock options are expected to be outstanding. The Company has estimated the expected term of its employee stock option awards using the SAB Topic 14 Simplified Method allowed by the FASB and SEC for calculating expected term, as it has limited historical exercise data to provide a reasonable basis upon which to otherwise estimate expected term. Certain of the Company’s stock options began vesting prior to the grant date, in which case the Company uses the remaining vesting term at the grant date in the expected term calculation. Risk-Free Interest Rate —The Company estimates its risk-free interest rate by using the yield on actively traded non-inflation-indexed U.S. treasury securities with contract maturities equal to the expected term. F- 28 Dividend Yield —The Company has not declared or paid dividends to date and does not anticipate declaring dividends. As such, the dividend yield has been estimated to be zero . Fair Value of Underlying Common Stock —The Company utilizes the closing stock price on the date of grant as the fair value of the common stock underlying such stock options in the Black-Scholes option-pricing model. The assumptions used to estimate the fair value of stock options granted are as follows: Year Ended December 31, 2024 2023 2022 Risk-free interest rate 4.31 % 4.09 % 2.60 % Expected term (in years) 6.00 5.50 5.82 Expected volatility 79.33 % 80.63 % 75.82 % Dividend yield — % — % — % The stock option activity is summarized in the following table: Number of Option Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Term (Years) Aggregate Intrinsic Value (in millions) Outstanding as of December 31, 2023 21,664,377 $ 2.26 Granted 52,640 11.24 Exercised ( 4,918,156 ) 1.84 Cancelled/ Forfeited ( 111,732 ) 4.81 Outstanding as of December 31, 2024 16,687,129 $ 2.40 5.42 $ 656.98 Exercisable as of December 31, 2024 13,651,675 $ 1.81 5.08 $ 545.49 Exercisable and expected to vest as of December 31, 2024 16,687,129 $ 2.40 5.42 $ 656.98 The following table summarizes additional information on stock option grants, vesting and exercises (in millions, except per share amounts): Year Ended December 31, 2024 2023 2022 Total intrinsic value of options exercised $ 58.8 $ 18.6 $ 6.7 Aggregate grant-date fair value of options vested $ 12.5 $ 15.5 $ 9.9 Weighted-average grant date fair value per share for options granted $ 7.98 $ 9.38 $ 5.58 Early Exercised Stock Options As of December 31, 2024 and 2023, there were 211,184 and 403,764 shares, respectively, subject to repurchase related to stock options early exercised and unvested. As of December 31, 2024 and 2023, the Company recorded a liability related to these shares subject to repurchase in the amount of $ 0.4 million and $ 0.8 million, respectively, in its consolidated balance sheets. F- 29 Restricted Stock Units The RSU activity is summarized in the following table: Number of RSUs Weighted Average Grant Date Fair Value Weighted Average Remaining Contractual Term (Years) Aggregate Fair Value (in millions) Outstanding as of December 31, 2023 15,107,535 $ 8.90 Granted 8,856,201 10.36 Vested ( 7,388,376 ) 9.15 Forfeited ( 2,065,643 ) 9.78 Outstanding as of December 31, 2024 14,509,717 $ 9.54 2.58 $ 606.07 Expected to vest after December 31, 2024 14,489,217 $ 9.53 2.58 $ 605.21 The following table summarizes additional information on RSU grants and vesting (in millions, except per share amounts): Year Ended December 31, 2024 2023 2022 Total fair value of RSUs that vested $ 102.0 $ 63.4 $ 8.6 Weighted-average grant date fair value per share for RSUs granted $ 10.36 $ 9.97 $ 7.34 During the years ended December 31, 2024, 2023 and 2022, the Company released 1,064,518 , 566,389 and 81,134 RSUs, respectively, related to the settlement of an accrued bonus liability. Performance-Based Restricted Stock Units The Company grants performance-based restricted stock unit awards (“PSU”) to certain officers and employees, which vest over approximately two to four years . The number of shares that can be earned will range from 0 % to 300 % of the target number of shares, based on the Company's achievement of certain financial and technical goals, as well as a stock price hurdle requirement for a portion of the awards. In the event that the stock price hurdle is not met at the time the PSUs vest, the maximum PSU opportunity shall be limited to target ( 100 %) performance. The number of PSUs expected to vest and for which compensation cost has been recognized is based on the number of awards that the Company believes are probable of vesting as of December 31, 2024. For the portion of the PSUs subject to the stock price hurdle, the fair value was determined using a Monte Carlo simulation model. The Monte Carlo simulation model requires estimates of subjective assumptions, which affect the fair value of each PSU. For PSUs granted during the years ended December 31, 2024, 2023 and 2022, the assumptions for the Monte Carlo simulation model were developed as follows: Expected Volatility —The expected volatility in 2024 was determined based on the Company's historical and implied stock price volatility. The expected volatility in 2023 was based on the average historical stock price volatility of comparable publicly traded companies in the Company's industry peer group, financial, and market capitalization data, due to the limited history of a public market for the Company's common stock prior to closing the Business Combination. Contractual Term —The Company utilizes the remaining performance period on the date of grant as the contractual term, which represents the period that the PSUs are expected to be outstanding. Risk-Free Interest Rate —The Company estimates its risk-free interest rate by using the yield on actively traded non-inflation-indexed U.S. treasury securities with contract maturities equal to the expected term. Dividend Yield —The Company has not declared or paid dividends to date and does not anticipate declaring dividends. As such, the dividend yield has been estimated to be zero . Fair Value of Underlying Common Stock —The Company utilizes the closing stock price on the date of grant as the fair value of the common stock underlying such PSUs in the Monte Carlo simulation model. F- 30 The assumptions used to estimate the fair value of PSUs subject to the stock price hurdle are as follows: Year Ended December 31, 2024 2023 2022 Risk-free interest rate 4.63 % 4.59 % — % Contractual term (in years) 2.46 3.37 — Expected volatility 89.98 % 80.00 % — % Dividend yield — % — % — % The PSU activity is summarized in the following table, based on awards at target: Number of PSUs Weighted Average Grant Date Fair Value Weighted Average Remaining Contractual Term (Years) Aggregate Fair Value (in millions) Outstanding as of December 31, 2023 4,307,833 $ 15.75 Granted 565,498 18.41 Forfeited ( 901,074 ) 15.56 Outstanding as of December 31, 2024 3,972,257 $ 16.17 2.16 $ 165.92 Expected to vest after December 31, 2024 (1) 9,930,643 $ 14.93 2.16 $ 414.80 (1) Represents the number of PSUs expected to vest, which may exceed the target number of shares, based on the Company's probability assessment of expected performance during the performance period. The following table summarizes additional information on PSU grants: Year Ended December 31, 2024 2023 2022 Weighted-average grant date fair value per share for PSUs granted $ 18.41 $ 15.74 $ — Stock-Based Compensation Expense Total stock-based compensation expense for stock option awards, RSUs and PSUs, which are included in the consolidated financial statements, is as follows (in thousands): Year Ended December 31, 2024 2023 2022 Cost of revenue $ 4,740 $ 2,819 $ 902 Research and development 58,696 40,103 13,472 Sales and marketing 13,788 6,762 1,298 General and administrative 29,654 20,059 15,784 Stock-based compensation, net of amounts capitalized $ 106,878 $ 69,743 $ 31,456 Capitalized stock-based compensation—Intangibles and fixed assets 5,188 4,702 1,741 Total stock-based compensation $ 112,066 $ 74,445 $ 33,197 F- 31 Unrecognized Stock-Based Compensation A summary of the Company's remaining unrecognized compensation expense and the weighted-average remaining amortization period as of December 31, 2024, related to its non-vested RSUs, PSUs, and stock option awards is presented below (in millions, except time period amounts): Unrecognized Expense Weighted- Average Amortization Period (Years) Restricted stock units $ 130.1 2.7 Performance-based restricted stock units $ 98.3 2.2 Stock options $ 14.4 1.3 Employee Stock Purchase Plan In August 2021, the Company’s board of directors adopted the Employee Stock Purchase Plan (the “ESPP”), which was subsequently approved by the Company’s stockholders in September 2021, and became effective upon the closing of the Business Combination. The ESPP is intended to qualify as an “employee stock purchase plan” within the meaning of Section 423 of the U.S. Internal Revenue Code of 1986, as amended (the “Code”). The number of shares of common stock initially reserved for issuance under the ESPP was 5,354,000 shares. The ESPP provides for an annual increase on January 1 of each year and continuing through and including January 1, 2031, equal to the lesser of (i) 1 % of the fully diluted shares of common stock outstanding on the last day of the prior fiscal year, (ii) 10,708,000 shares, or (iii) a lesser number of shares determined by the Company’s board of directors prior to such increase. The board of directors elected not to approve the annual increase of ESPP shares on January 1, 2025. Under the terms of the ESPP, eligible employees can elect to acquire shares of the Company’s common stock through periodic payroll deductions during a series of offering periods. Purchases under the ESPP are affected on the last business day of each offering period at a 15 % discount to the lower of closing price on that day or the closing price on the first day of the offering period. As of December 31, 2024 , no shares of common stock had been issued under the ESPP and no offering period had been set by the board of directors. 17. INCOME TAXES The current and deferred components of the provision for income taxes for federal, state and foreign jurisdictions are as follows (in thousands): Year Ended December 31, 2024 2023 2022 Current: Federal $ — $ — $ — State — — — Foreign 59 48 — Total current tax expense (benefit) $ 59 $ 48 $ — Deferred: Federal — — — State — — — Foreign — — — Total deferred tax expense (benefit) $ — $ — $ — Total tax expense (benefit) $ 59 $ 48 $ — F- 32 The Company’s provision for income taxes differs from the amount determined by applying the applicable federal statutory tax rate to the loss before income taxes due to the valuation allowance for the net deferred income tax assets. A reconciliation of the U.S. statutory tax rate to our effective tax rate is presented below: Year Ended December 31, 2024 2023 2022 U.S. federal statutory income tax rate 21.0 % 21.0 % 21.0 % State and local income taxes 3.2 % 4.5 % 7.4 % R&D tax credits 5.3 % 3.1 % 5.9 % Compensation 0.7 % 2.6 % ( 5.1 )% Warrant (gain) loss ( 7.4 )% ( 2.5 )% 13.0 % Change in tax rates 0.0 % ( 0.4 )% 0.4 % Provision to return and deferred tax adjustments 0.1 % ( 0.2 )% 10.9 % Valuation allowance ( 22.9 )% ( 28.0 )% ( 53.4 )% Other 0.0 % ( 0.1 )% ( 0.1 )% Effective tax rate 0.0 % 0.0 % 0.0 % Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets and liabilities are as follows (in thousands): December 31, December 31, 2024 2023 Deferred tax assets: Accrued bonus $ 2,036 $ 3,652 Unearned revenue 158 1,233 Stock-based compensation 9,793 7,308 Depreciation and amortization 3,109 2,843 Capitalized R&D costs 62,939 27,432 Lease liabilities 4,483 2,031 R&D credit carryforwards 29,800 11,428 Net operating loss carryforwards 56,204 36,197 Other 677 686 Total deferred tax assets $ 169,199 $ 92,810 Valuation allowance ( 166,287 ) ( 90,963 ) Total deferred tax assets, net of valuation allowance $ 2,912 $ 1,847 Deferred tax liabilities: Right of use assets ( 2,386 ) ( 1,142 ) Other ( 526 ) ( 705 ) Total deferred tax liabilities $ ( 2,912 ) $ ( 1,847 ) Net deferred tax assets (liabilities) $ — $ — The following table summarizes the activity in the Company’s valuation allowance against its gross deferred tax assets (in thousands): 2024 2023 2022 Beginning balance $ 90,963 $ 48,212 $ 20,388 Charged to costs and expenses 75,780 44,123 25,925 Charged (credited) to other accounts ( 456 ) ( 1,372 ) 1,899 Ending balance $ 166,287 $ 90,963 $ 48,212 The Company had U.S. federal and state net operating loss carryforwards of approximately $ 224.2 million and $ 148.1 million, respectively, as of December 31, 2024 . The Company’s net operating loss carryforwards generated prior to January 1, 2018 of $ 1.1 million will begin to expire, if not utilized, in 2036. The Company’s net operating loss carry forwards generated after December 31, 2017, will carryforward indefinitely. As of December 31, 2024, the Company had U.S. federal and state tax credit carryforwards of $ 30.0 million. The tax credit carryforwards will expire between 2025 and 2044 . F- 33 The deductibility of such credits and net operating losses (“NOL”) may be limited. Under Sections 383 and 382 of the Internal Revenue Code of 1986, as amended (the “Code”), and corresponding provisions of state law, if a corporation undergoes an “ownership change,” which generally occurs if the percentage of the corporation’s stock owned by 5 % stockholders increases by more than 50 % over a three-year period, the corporation’s ability to use its pre-change credits and NOL carryforwards and other pre-change tax attributes to offset its post-change income, may be limited. The Company has not determined if it has experienced Section 383/382 ownership changes in the past and if a portion of its NOL and tax credit carryforwards are subject to an annual limitation. In addition, the Company may experience ownership changes in the future as a result of subsequent shifts in its stock ownership, some of which may be outside of its control. If the Company determines that an ownership change has occurred and its ability to use its historical NOL and tax credit carryforwards is significantly limited, it would harm the Company’s future operating results by effectively increasing its future tax obligations. The Company has evaluated the positive and negative evidence bearing upon the realizability of its deferred tax assets. Based on the Company’s history of operating losses, including a three-year cumulative loss position as of December 31, 2024 and 2023 , the Company has concluded that it is not more likely than not that its net deferred income tax assets will be realized. Accordingly, the Company has provided a full valuation allowance as of December 31, 2024 and 2023. The net increase in the valuation allowance of $ 75.3 million is due to the impact of capitalized research and development and current year operating losses. The Company is generally subject to a three-year statute of limitations by major tax jurisdictions. The current tax years that are subject for examination are tax years 2021 through 2023 , although tax years dating back to 2016 remain open up to the tax attribute amounts carried forward for future use. 18. LEASES The Company has operating leases for its various facilities, including its primary locations in College Park, Maryland; Bothell, Washington; and Arlesheim, Switzerland. The College Park, Maryland facility is used for research and development, servicing customers and corporate functions and is leased from UMD. The Bothell, Washington facility is used for manufacturing, research and development, servicing customers, and general office space. The Arlesheim, Switzerland facility is used for servicing customers and general office space. Both the College Park, Maryland, and Bothell, Washington, leases expire in 2030 and the Arlesheim, Switzerland lease expires in 2029 . As of December 31, 2024 and 2023, the Company's weighted-average remaining lease term was 5.2 years and 6.5 years, respectively, and the weighted-average discount rate was 8.2 % and 9.0 % , respectively. The Bothell, Washington facility lease includes a landlord-provided tenant improvement allowance to offset a portion of the costs of the construction of leasehold improvements. The Company determined that the leasehold improvements will be Company-owned, and as such, reflected the lease incentive as a reduction of lease payments used to measure the operating lease liability and ROU asset as of the lease commencement date. The components of lease cost were as follows (in thousands): Year Ended December 31, 2024 2023 2022 Operating lease cost (1) Fixed lease cost $ 2,522 $ 1,458 $ 763 Short-term cost 221 145 79 Total operating lease cost $ 2,743 $ 1,603 $ 842 (1) The lease costs are reflected in the consolidated statements of operations as follows (in thousands): Year Ended December 31, 2024 2023 2022 Cost of revenue $ 254 $ 145 $ 53 Research and development 1,670 722 612 Sales and marketing 175 84 46 General and administrative 644 652 131 Total operating lease cost $ 2,743 $ 1,603 $ 842 F- 34 Supplemental cash flow and other information related to operating leases was as follows (in thousands): Year Ended December 31, 2024 2023 2022 Cash payments (receipts) included in the measurement of operating lease liabilities, net $ ( 2,251 ) $ ( 1,790 ) $ 644 As of December 31, 2024, maturities of operating lease liabilities are as follows (in thousands): Amount Year Ending December 31, 2025 $ 3,663 2026 4,193 2027 4,257 2028 4,358 2029 3,933 Thereafter 1,511 Total lease payments $ 21,915 Less: imputed interest ( 4,190 ) Present value of operating lease liabilities $ 17,725 19. EMPLOYEE BENEFIT PLAN The Company has a 401(k) savings plan (the “401(k) Plan”), which qualifies as a deferred salary arrangement under Section 401(k) of the Internal Revenue Code. Under the 401(k) Plan, participating employees may elect to contribute up to 100 % of their eligible compensation, subject to certain limitations. The 401(k) Plan provides for a discretionary employer-matching contribution. The Company made a matching contribution of $ 2.4 million, $ 1.6 million and $ 0.9 million to the 401(k) Plan for the years ended December 31, 2024, 2023 and 2022 , respectively. 20. RELATED PARTY TRANSACTIONS Transactions with University of Maryland The Company has contracts with UMD, including contracts to provide certain quantum computing services and facility access, to provide customized quantum computing hardware, and an operating lease. Following the departure of the Company's Chief Scientist, UMD is no longer considered a related party as of January 1, 2024. Revenue recognized from contracts entered into while UMD was a related party was $ 3.5 million, $ 4.6 million and $ 4.0 million for the years ended December 31, 2024, 2023 and 2022, respectively. The Company had the following balances related to contracts entered into while UMD was a related party, as reflected in the consolidated balance sheets (in thousands): December 31, December 31, 2024 2023 Assets Operating lease right-of-use asset $ 3,120 $ 3,452 Liabilities Current portion of operating lease liabilities $ 681 $ 661 Unearned revenue 204 2,670 Operating lease liabilities, net of current portion 2,843 3,181 Transactions with Duke University In July 2016, the Company entered into an exclusive license agreement (the “License Agreement”) and an exclusive option agreement (the “Option Agreement”) with Duke whereby the Company, in the normal course of business, has licensed certain intellectual property and, in the case of the amendments to the Option Agreement, has purchased research and development services. Following the departure of the Company's Chief Technology Officer, Duke is no longer considered a related party as of July 1, 2024. F- 35 The Company has the following balances related to agreements entered into while Duke was a related party, as reflected in the consolidated balance sheets (in thousands): December 31, December 31, 2024 2023 Assets Prepaid expenses and other current assets $ 520 $ 520 Other noncurrent assets 285 805 21. GEOGRAPHIC INFORMATION The following table summarizes long-lived asset balances, which includes property and equipment, net and operating lease right-of-use assets, for geographic areas that individually accounted for 10 % or more of the respective totals, as well as aggregate amounts for the remaining geographic areas (in thousands): December 31, December 31, 2024 2023 United States $ 52,723 $ 41,955 Switzerland 9,357 — Other international 151 173 Total long-lived assets $ 62,231 $ 42,128 22. SEGMENT INFORMATION The Company operates as one operating segment as its chief executive officer , who is the chief operating decision maker, reviews financial information on a consolidated basis for purposes of making operating decisions, allocating resources, and evaluating financial performance. Consolidated net loss as reported on the consolidated statements of operations is used to evaluate performance and allocate resources. The chief operating decision maker evaluates actual results compared to forecasted results for consolidated net loss, including significant expenses, when making decisions about allocating resources. The following table presents revenue, significant expenses, and segment profit and loss (in thousands): Year Ended December 31, 2024 2023 2022 Revenue $ 43,073 $ 22,042 $ 11,131 Less: Operating costs and expenses excluding stock-based compensation: Cost of revenue (excluding depreciation and amortization) 15,857 5,289 2,042 Research and development 78,131 52,218 30,506 Sales and marketing 14,607 11,508 7,087 General and administrative 41,401 30,663 20,182 Stock-based compensation 106,878 69,743 31,456 Depreciation and amortization 18,654 10,375 5,604 Other segment items: (Gain) loss on change in fair value of warrant liabilities 117,107 19,206 ( 30,136 ) Interest income, net ( 18,249 ) ( 19,322 ) ( 7,093 ) Other (income) expense, net 275 85 ( 6 ) Income tax (benefit) expense 59 48 — Net loss $ ( 331,647 ) $ ( 157,771 ) $ ( 48,511 ) 23. SUBSEQUENT EVENTS In February 2025, the Company entered into a definitive agreement to acquire a controlling stake of ID Quantique SA, a global leader in quantum networking and sensing, headquartered in Geneva, Switzerland, in an all-stock transaction for up to approximately 5.2 million shares of common stock. The transaction is expected to close in the next nine months, subject to customary closing conditions. F- 36