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Good afternoon, and welcome to IonQ Second Quarter 2026 Earnings Conference Call. Please note, this event is being recorded. I would now like to turn the conference over to Hanley Donofrio, Director of Investor Relations. Please go ahead.
Thank you. Good afternoon, everyone, and welcome to IonQ's Second Quarter 2026 Earnings Call. My name is Hanley Donofrio, and I am the Investor Relations Director here at IonQ. I'm pleased to be joined on today's call by Niccolo de Masi, IonQ's Chairman and Chief Executive Officer; and Inder Singh, IonQ's Chief Operating Officer and Chief Financial Officer. By now, everyone should have access to the company's second quarter 2026 earnings release issued this afternoon, which is available on the SEC's website and on the Investor Relations section of our website at investors.ionq.com. Please note that on today's call, management will refer to non-GAAP financial measures. While the company believes these non-GAAP financial measures provide useful information for investors, the presentation of this information is not intended to be considered in isolation or as a substitute for the financial information presented in accordance with GAAP. You are directed to our earnings release for a reconciliation of adjusted EBITDA and adjusted EPS to the closest comparable GAAP measures. During the call, we will discuss our business outlook and make forward-looking statements, including those regarding our guidance for 2026. These comments are based on our predictions and expectations as of today and are not guarantees of future performance. Actual events or results could differ materially due to a number of risks and uncertainties. Therefore, you should not put undue reliance on those statements. We refer you to our SEC filings, including our annual report on Form 10-K for the year ended December 31, 2025, and our quarterly report on Form 10-Q for the quarter ended June 30, 2026, for a more detailed discussion of those risks and uncertainties. We undertake no obligation to revise any statements to reflect changes that occur after this call, except as required by law. Now I will turn it over to Niccolo de Masi, Chairman and CEO of IonQ.
Thank you all for joining us today. I am pleased to report that IonQ delivered second quarter revenue of $80.1 million, representing 287% year-on-year growth. This means Q2 2026 is the strongest quarter in IonQ's history and our fifth consecutive quarter of record results. As shown on Slide 4 of this quarter's investor presentation, this performance reflects momentum across our entire quantum platform, spanning quantum computing, quantum networking, quantum security and quantum sensing. Following the successful close of our acquisition of SkyWater, our platform now also includes quantum semiconductor manufacturing. Inder will take you through the financial results and outlook in more detail. I want to center my remarks today on 3 key areas defining our progress. First, manufacturing our industry-leading quantum systems on a semiconductor road map with SkyWater. Second, expanding our role as a merchant supplier to the U.S. and allied quantum ecosystem. And third, delivering defense in depth via a complete quantum-safe cybersecurity stack as we accelerate the timeline for full fault-tolerant quantum computing. Beginning now on our quantum computing achievements and the production of quantum systems with semiconductor manufacturing. One year ago, we announced that IonQ would move our pioneering and commercially successful trapped ion architecture from laser-based control to electronic qubit control. This is a globally unique and powerful control approach, allowing us to rapidly scale our trapped ion systems into the millions of qubits using well-established semiconductor pathways. For our customers, electronic control facilitates more seamless standard enterprise workflows while delivering the lowest cost and lowest energy footprint per logical qubit on the market. IonQ has been consistently executing against this major initiative over the past year. Let me recap that progress because the pace has been extraordinary. For those following along in our investor presentation, please see Slide 5. Last September, we closed our acquisition of Oxford Ionics, bringing the pioneers of electronic qubit control into IonQ. In October last year, we published results setting the new world record in two-qubit gate fidelities, demonstrating 99.99% fidelity without ground state cooling. These results proved that electronic qubit control enables world-leading performance via a scalable and production-ready semiconductor manufacturing process. In February 2026, we announced that we had progressed through 3 rounds of tape-outs for our first semiconductor-based quantum chip, and we're preparing to hand those designs to the foundry for production. In May 2026, we reported that we had received our first chip prototypes back. These prototypes demonstrated the critical quality metrics required for our production-grade 256-qubit chips, while also approaching those required for our 10,000-qubit chips. Each milestone has reduced execution risk and positioned IonQ to create value for our customers and shareholders. I am proud to report that this quarter, we received our first fully featured, fully integrated QPUs back from SkyWater, and they are now undergoing testing in our College Park facility. These chips consolidate all the individual capabilities validated by our last few months of prototyping into a single unified chip architecture. Having a full QPU prototype like this is what enables us to start testing integrated systems. These QPUs represent a pivotal milestone in our compute road map and a powerful testament to what IonQ and SkyWater can achieve together. We have moved with conviction to demonstrate our 256-qubit technology and plan to begin commissioning systems in 2027. We are also advancing our control software and system architecture. For those following along in our investor presentation, please turn to Slide 6. In April of this year, we released our walking cat architecture, which is the industry's first end-to-end detailed manufacturable blueprint of a fault-tolerant quantum computer. This historic paper shows how fault-tolerant IonQ systems will execute operations while actively correcting errors. Importantly, this is an architecture that will scale with us as we grow our systems to millions of qubits. This quarter, we validated key elements of our walking cat architecture on our hardware. IonQ achieved a major milestone by demonstrating breakeven quantum error correction using qLDPC codes on a Tempo engineering test system. Our published results this quarter are a major validation of our quantum error correction capabilities, which IonQ is proud to continue pioneering. These technical accomplishments demonstrate IonQ's industry-leading position, rapid commercial advancement and tangible value creation potential. Now let me turn to SkyWater and IonQ's expanding role as a merchant supplier to the U.S. and allied quantum ecosystem. Last week, we closed our $1.8 billion acquisition of SkyWater, creating the only vertically integrated full-stack quantum platform company. Together, IonQ and SkyWater own the design, fabrication, packaging and deployment of our systems, entirely onshore, entirely in trusted U.S. facilities. For IonQ and our partners, this has a profound impact, as seen on Slide 7. This is a transformational combination that enables IonQ to materially accelerate our quantum computing road map and our ability to design, test and iterate on QPUs at speed. Oxford Ionics brought us proprietary world-leading electronic qubit control technology to scale qubit counts on standard silicon. SkyWater brings a world-class semiconductor foundry under our own roof to fabricate those designs. This past quarter, we closed the loop. QPUs designed with electronic qubit control built at SkyWater and returned to us as our first fully featured chips. IonQ and SkyWater have together carried a design from concept to fabrication, proof that our strategy is translating into results. As you can see on Slide 8, with SkyWater, we're also pleased to expand our role as the leading merchant supplier to the broader quantum ecosystem. Even before the acquisition, IonQ served as an important merchant supplier with our industry-leading atomic clocks, sensors and networking products being sold to other leading quantum companies. With SkyWater semiconductor technology supporting multiple QPU modalities, IonQ is now the world's largest quantum merchant supplier, delivering the critical technologies every quantum company needs. Our goal is to accelerate all quantum companies working with us, ions, atoms, superconductors, photonics, sensors and networks. I'm also pleased to share that we are further expanding our merchant supplier capabilities in Q2 through our acquisition of UC Santa Barbara's spin-off, Nexus Photonics. Nexus brings foundational technologies that enable chip scale integration of lasers, modulators and optical subsystems for the miniaturization and mass manufacture of quantum systems. We have already begun integrating these solutions into our next-generation atomic clocks and gravimeters. For quantum networking, these integrated photonics capabilities move us closer to data center scale distributed quantum systems. We plan to supply these critical integrated components to the broader quantum ecosystem as part of the industry's first dedicated quantum photonics foundry offering at SkyWater. As the cornerstone quantum merchant supplier across the U.S. and allied landscape, we have the procedures in place to protect our customers' IP and can assure our customers a partnership focused on accelerating their road maps. Turning to Slide 9. I want to now address quantum security and Q-Day, a topic rapidly moving to the forefront of boardrooms and defense agencies around the world. Quantum computing is a paradigm shift, not only for every aspect of applied science, but also for cybersecurity. As I foretold a year ago, the timeline for cryptographically relevant machines that threaten RSA encryption is rapidly compressing. Over the past 15 years, the estimated number of qubits needed to break encryption has dropped by 4 orders of magnitude. Simultaneously, IonQ is accelerating our path to 10,000 qubits in 2027, positioning us at the forefront of this security reality. As you can see on Slide 10, IonQ uniquely provides defense-in-depth via our complete quantum-safe cybersecurity stack. Post-quantum cryptography is a critical first step in protecting existing infrastructure at scale. Longer-term resilience, however, will increasingly rely on advanced quantum communications technologies, including quantum key distribution. To meet those needs, this quarter, we launched a new QKD product that allows customers to send multiple data types across existing municipal fiber networks, making enterprise-grade quantum security practical, deployable and cheaper to operate. We welcome the U.S. administration's June 22 quantum executive orders, which recognize that quantum technologies are inflecting. Quantum leadership is emerging as the defining technological competition of not only our lifetimes, but I expect of the 21st century itself. We enter the second half of this year as a clear technology leader, critical merchant supplier and vital ecosystem enabler for the entire quantum industry. With SkyWater now a part of IonQ, we are derisking and accelerating multiple engineering pathways for our next-generation quantum chips. In parallel, we are also helping to create the manufacturing and supply chain foundation required to accelerate and scale the entire U.S. and allied quantum industry. In closing, I will say that our conviction is that quantum, like classical before it, ultimately scales on a semiconductor foundation. That is why we have built a manufacturable silicon-based platform and why we are increasingly focused on the measures that determine real-world value, cost and energy per logical qubit and the cost and time to solution. Those are the metrics that allow quantum computing to serve industry and government dependably and at scale. Around all of it sits an interoperable software and enablement stack with an access strategy that spans on-prem deployments and every major public cloud. This is what defining an industry looks like. I'm now delighted to hand over the call to Inder.
Thank you very much, Niccolo. Very excited to be reporting our strongest quarter ever in the history of the company. And as Niccolo said, delivering $80.1 million in GAAP revenue, which is 287% growth year-on-year. Not only was it our strongest quarter ever, it also exceeded our own expectations by 20%. We continue to be pleased by our progress in the market, and that progress is being validated by the financial outcomes we are seeing and reporting to you today. As I cover our financials in greater detail, you can also see some of this in our investor presentation, starting on Page 12. The largest driver of our revenue outperformance this quarter was the continued momentum of deploying our fifth-generation quantum computing systems. This quarter, we began shipments of subsystems to the Korea Institute of Science and Technology Information, or KISTI, and those systems are currently being delivered and assembled in Korea at the customer site. Similarly, with QuantumBasel in Switzerland, our fifth-generation machine is now in final assembly on site right next to the fourth-generation machine they had previously purchased from us. I believe this represents the world's first deployment of 2 consecutive generations of quantum computers next to each other in a commercial setting ever. Recall that we had told you previously, we were ramping production to do exactly this: deliver multiple global systems at once and at scale. The bottom line is that we continue to innovate in ways no one else has done so far and at a velocity that we also think is incomparable. Speaking of organic growth within that, our Q2 organic revenues grew 132% year-over-year. Based on these global quantum computer deployments that I mentioned and others, I would remind you, for the full year, we are still expecting organic revenue to grow 100% as we guided at the very start of the year. I'm delighted to see that the acceleration at least in the current quarter is showing the strength of that business. This year, Tempo quantum computing revenues are the principal driver. And next year, we expect our semiconductor-based computers, as Niccolo just mentioned, to become the main driver and the future in our road map as we shift from laser-based to electronic-based control of qubits. We also have made excellent progress across our space-based products. And recently, we reported that we now have 84 Skyloom optical communication terminals deployed on orbit, which is double the number from just a year ago. We also began work during the quarter for the U.S. Space Development Agency with the HALO Europa contract, completing key design milestones on the path to delivering functioning satellites into orbit to support a multimodal constellation, prime for quantum solutions. All of these achievements show the progress that we're making across our product portfolio. As we've done in recent quarters, let me now provide some metrics related to the drivers of our revenue. And these will be around geography, commercial and multiproduct. I would remind you that we are sharing these in the spirit of transparency and as color. But as you can imagine, these can vary in any particular quarter. Together, Niccolo and I, when we focus on the business, focus on the trends of these, and we're very encouraged by what we're seeing. Let me start by talking about geography first. Approximately 50% of our revenue in the quarter was derived from international customers, spanning countries such as Australia, South Korea, Portugal, India, Denmark, Germany, Israel, Japan, just to name some. This quarter was especially strong for the international metric due to our quantum computing deployments, as I mentioned, in KISTI and QuantumBasel. We are delivering solutions in over 50 countries around the world, and we have inbound inquiries from many more. We may not turn all those into customers, of course, because pipelines are very large and also require effort, and we believe we can win in the majority of those, but the breadth of countries we are looking at also means we want to remain focused on our best investments for the best ROI. The second revenue metric is commercial revenue. In the quarter, we once again saw 60% of our revenue come from commercial, meaning non-U.S. government customers. This tells us that our customers are putting our solutions to work in real-world applications, not just in funding research. We, of course, expect government to grow. And of course, this could skew the metric and become more government in any given quarter. Of course, I'll take that happily. Third, we continue to be excited about the multiproduct dimension of our revenues, and we believe there's a lot more we can be doing here. As an example, one very obvious example is to drive both sales of quantum computing and quantum security, which are 2 things we're really starting to see in high demand among our portfolio. To me, this is low-hanging fruit, and the sales team are working to create the incentives to make things happen and turn into revenue even more than we're seeing. On a year-over-year basis, our multiproduct sales grew by 40% and now comprise about 25% of this quarter's revenue. This represents strong growth year-on-year; a priority for us remains diligently driving our cross-selling opportunity even higher. Having more than one product means we can sell more things at one time. Let me now discuss our remaining performance obligations, or RPOs, a widely used measure of forward revenue visibility. We ended Q2 with $485 million in reported RPOs, up from $470 million in Q1 and up from $122 million 1 year ago. This is even though we had one of the strongest quarters. So we drew down RPOs into revenue, as you know, and we replenished it and then some as well. RPOs, of course, can vary from quarter-to-quarter, but at any one point in time, they provide visibility into revenues that will turn in more than 1 year. So we like to have that visibility. And as we try to grow this business and continue growing it, this will remain a focus for us. Turning now to operating expenses. GAAP operating expenses for the quarter were $417.3 million or $201.2 million on a non-GAAP basis. Our largest area of OpEx continues to be R&D as we pioneer transformational quantum technologies and fuel our innovation engine. $160.6 million of our GAAP OpEx consisted of R&D. In addition to R&D, as we've told you last quarter, we're also investing in go-to-market resources as the enterprise opportunities continue to emerge. Overall, our investment approach is to focus on execution and to create operating leverage over time. By ramping our manufacturing to meet demand, an effort that SkyWater will help us with further, we are now already delivering multiple global compute systems simultaneously, and we're preparing to do even more next year. Moving forward, we will continue to strengthen operations by optimizing our supply chain and consolidating operations across the company. And we'll maintain a tight discipline on all things quantum and investments in those areas. And through vertical integration with SkyWater, as Niccolo noted, we expect to be able to lower IonQ's total development costs for quantum hardware over time, delivering industry-leading cost per qubit and create further structural cost advantage. Our focus on long-term investment allows us to attract industry-leading talent density, create innovation velocity and drive operating performance. Our capital strength also allows us to invest for the long term, which is essential, of course, in quantum, even as we execute quarter-to-quarter. Moving on to adjusted EBITDA. We reported negative $120.3 million for the second quarter. As we reported last quarter, our spending with SkyWater increased as we found success accelerating our technology road map. This quarter, that higher spend resulted in about $20 million of additional spending included in that number. Additionally, we had approximately $10 million of higher investment related to pre-integration costs, scaling the business in anticipation of SkyWater's close and also to securing our supply chain. As most of you already know, our GAAP net income is volatile from quarter-to-quarter and depends on warrant valuations. We reported a GAAP net loss of negative $1.9 billion for the second quarter, primarily due to a roughly $1.6 billion noncash impact from the mark-to-market valuation of warrants as required by accounting conventions. Needless to say, this accounting impact does not reflect the operating fundamentals of our business. Let me say, we are very excited to welcome SkyWater into IonQ. I'm pleased to welcome Tom and his team to execute on our world-leading technology road map and work together with us as we deliver solutions for our customers. As a reminder, because IonQ and SkyWater operated as separate public companies throughout the second quarter, today's results and any guidance we provide only includes financials from IonQ. SkyWater is expected to file its own 10-Q for the second quarter in the coming days. Now turning to guidance. We had a tremendous quarter, outperforming even our own expectations, and we are raising our full year guidance for IonQ to a range of $280 million to $290 million in revenue. This guidance range applied only to IonQ, as I mentioned. Because we have operated as a combined company for less than a week, we need to integrate our operations before providing combined company revenue or EBITDA guidance. A number of things will be looked at. For example, we estimate that our full year spending with SkyWater under our commercial agreement would have been approximately $120 million of spending for us, converting into revenue for them in fiscal year 2026. Following the close, we will be looking at eliminating some of this intercompany revenue and other costs as well. There are additional accounting adjustments that are required as our companies merge, such as purchase price accounting treatment and some contracts we have to look at as well. So we will come back to you with combined guidance down the road. But for today, we're talking principally about IonQ. In summary, we delivered a spectacular quarter of phenomenal growth, and we could not be more bullish on the long term and the potential for our company. We recognize, as with any company, execution is always key, and there are always risks that we must work to mitigate, and we are laser-focused on ensuring we do that. We continue to expect approximately 100% growth in our organic business and 100% growth in our quantum platform strategy as well. With that, I'd like to turn the call over to the operator for Q&A. Operator?
分析師問答
The first question comes from Kevin Garrigan with Jefferies.
Congrats on the great results. Just to start, regarding the Anduril and Sandia MOUs, what are the next steps for converting these into development contracts or system deployments? And are there any dollars that are currently included in RPO or the 2026 revenue outlook from these?
I'll take the second part of the question for sure. I think there are no dollars that we included in RPOs from future business coming from that relationship. We are incredibly excited about that relationship though. It brings together the best of quantum solutions we have and the solutions they have as well. So we think there's a lot of potential going forward. But no, we have not included anything in RPOs for what we might get from that.
Yes. All I would add is, obviously, the White House has issued a couple important executive orders, one on quantum security and one on quantum computing, sensing and networking. Taking them together, it's a great reflection of IonQ's total platform strategy. I think we're the only quantum company in the world, probably the only company in the world that can say we actually embody all aspects of both executive orders in their totality. And so these MOUs are obviously very much a recognition of the fact that we have a lot to bring to bear to help not just our nation's government labs and some of the most historic and important ones out there, but also support the Department of Defense with a range of applications, which obviously we haven't fully enumerated because of confidentiality and because, as you rightly pointed out, and Inder rightly addressed, this is not yet in our numbers because it is still in an early stage. We'll report more on these as they develop. Note also that we have an Investor Day coming up on September 8.
Yes. Okay. Got it. Perfect. And then as a follow-up, the 25% of customers that are now utilizing multiple products, what products are most frequently bundled together? And are those engagements generating larger contracts or higher renewals that you're seeing?
Well, I think they're creating stickiness for us, most importantly, and having a one-stop shop where customers can come and get what they need now and then get what they need next. Those are good validators. I've seen that, and Niccolo has seen that in the dozen-plus companies that he's been in as well. So it's an important indicator for us that we have the right solutions under one roof. Also, to your point, the most natural groupings of products we're seeing are sensing and space, and the demand for computing continues to grow strongly. The recent executive order around preparing for a post-quantum Q-Day environment for security is also making security a bigger part of customer discussions. More and more customers are talking about security and also looking at our computing use cases. Networking obviously comes in as the next thing in terms of connecting nodes together and also connecting compute devices together. I think it's a matter of time when we start to see sensing play into this in some ways as well. We're looking across the portfolio. We're happy to see multiple TAMs available to us, and we're happy to see some of the world-leading products in each one of those under our roof and allowing the sales team to take a land-and-expand approach, meeting the customer where they are.
Our next question comes from Quinn Bolton, Craig Ellis with B. Riley Securities.
It's Craig Ellis. It seemed like there were 2 analysts called there, but I'll go ahead. So one, congratulations on closing the SkyWater deal, and congratulations to Tom and his team. The first question I wanted to follow up on was on the road map comments that you provided, Niccolo. What I wanted to understand is greater detail on what you're hoping to accomplish with the in-progress systems test. What are the key milestones that you want to be able to check off? And as we look at customer commissioning in the first half of the year, can you help us understand what the key executables are as you go from the system test to customer commissioning?
Sure. IonQ has had systems in the marketplace that have been able to run applications for the better part of a decade. We've been on all 3 public clouds since 2020 and early 2021. So we're no stranger to moving from prototypes to systems. We already have a compiler that works. We already know how to run algorithms, and we've got a full-stack software team and control team. The key shift for us from Tempo and where we've been building machines the last few years to today's Oxford Ionics and SkyWater electronic qubit control is that we are putting ion traps on a semiconductor chip, and we're scaling from there from not just 256 chips, but to 10,000 and obviously higher numbers, 100,000 and 1 million in the coming generations. Now we're doing a number of things in parallel here. So we are working on at least 3 generations of those chips at the same time. As I mentioned, we're making progress on the 10,000-qubit chip at the same time as we have taped out and nearly finalized prototypes of the 256-chip. There are other components to getting a fully commissioned system into the marketplace. So it's the chip plus, of course, an enclosure and the rest of the kit and caboodle. The chip was the hard part, which is why we have provided a lot of granularity in the last 6 to 9 months on the progress from closing Oxford Ionics in September last year to our February earnings call, our May earnings call and now our August call. We're feeling great about the translation of a 30-year R&D base building full systems that we've been selling and putting in the marketplace and changing the guts of the system from bulk optics and lasers to the semiconductor electronic qubit control system. SkyWater has been delivering great as a commercial partner. Tom has been a great partner of ours in the last year. We expect that closing this transaction will help on the margins to accelerate the entire industry. You'll get an update from us every earnings call and between that, if we have other Reg FD compliant events and conference calls. But I think the bulk of the challenge here is now under our belt. Once we have chip prototypes that are coming off the line, the rest of this is a solved problem for us that we've done for many years. You're correct that we expect to be commissioning systems and deploying systems and getting the manufacturing lines spooled up in the first half of next year. That remains all on track.
That's helpful. Then the follow-up is for Inder. It's on the topic of the executive orders and just clarifying some of the interaction that you're seeing. Our checks since those were announced suggests that government agencies have been very active accelerating their activity with quantum entities. You certainly have the broadest platform out there, a long time in the market with relevant capabilities. And so the question is, is the engagement that you're seeing post-executive order really government entities? Or is it also enterprise customers? And to what extent would one of those groups be greater than the other?
Yes. I think the nation at large is moving towards adopting and implementing the spirit of the executive orders and trying to get there earlier. There's a realization that didn't exist a year to 18 months ago that the evolution of quantum computing will be rapid and that IonQ will generate computers at an increasing rate. As you go up in capability quickly, the sense of urgency is rising. That's happening not only in government but also in data-heavy industries. Financial services is waking up to the reality that RSA-2048 and other encryption protocols such as ECC-256 may be at risk. The debate is around timing—two years, three years, less or more—but it's clearly not decades away. There are adversaries around the world trying to get to the same outcomes, which changes the dynamics. We've had a number of calls; Niccolo meets CEOs often, and our sales team does as well. In each one, security now enters the discussion. A year ago, it was about computing. Now it's about computing and protection: how do I use your solutions and how can you protect me from the inevitable? In parts of Asia, where we already have a strong presence with QKD solutions, that's been evident for years. They live in a geopolitical environment where it's risky, and every country considers what to do. We're seeing demand from around the world, and importantly, now from the United States. There's an understanding that you have to batten down the hatches—not just at the software level with PQC, but also at the hardware level to protect critical assets and secure data in motion end-to-end in a post-quantum world. It's broad-based. Some will move faster, others will lag. Data-intensive industries are realizing they need to prepare for something that is approaching much sooner than previously expected.
Our next question comes from Joe Moore with Morgan Stanley.
This is Ella Tulchinsky on for Joe. So now that SkyWater is going to be part of IonQ, can you talk about how you see the foundry business evolving over time? Do you expect it to operate mainly in support of IonQ's own road map, serve the broader quantum ecosystem or both? And then how do you think about SkyWater's competitive positioning as more companies invest in quantum-focused manufacturing capabilities?
Sure. We've been clear since announcing the transaction that we are a merchant supplier and intend to continue in that role. We are the leading merchant supplier to the sector, and we will support the industry while ensuring maximal IP protection for all customers. SkyWater brings a pedigree of protecting IP and has been the only quantum foundry in the United States in recent years. On a go-forward basis, when we say merchant supplier, we mean we will support the industry with strong physical and digital IP protections and security. We are selling our atomic clocks, integrated photonics, quantum networking solutions, and now quantum foundry solutions under SkyWater as a merchant supplier. This will not change. SkyWater currently operates in the 200-millimeter segment, which we believe will remain compelling for the quantum industry for the foreseeable future. We expect more quantum foundries to appear over time, but it takes time to build new foundries. SkyWater has been at this for the last decade, so we expect to be busy supporting both IonQ's vertically integrated ambitions and providing foundry services to other quantum players who work with us or want to begin working with us. We're already having productive conversations and finding strong interest across modalities including superconducting, photonics, ions and atoms.
Our next question comes from Troy Jensen with Cantor Fitzgerald.
Congrats on the great results. Niccolo, just to start with you, I'd be curious if you could provide any kind of a DARPA QBI update. Obviously, you guys made it to Stage B, and I'm assuming there'll be a broader Stage C announcement soon.
I don't think we are able to announce anything before DARPA does, and they've been clear about that through this program. We'll all have to watch that space. At the same time, we have invested aggressively over many years to ensure IonQ continues to lead this industry. We built the world's first quantum logic gate in 1995. We've published a shovel-ready blueprint for fault-tolerant quantum computing that is manufacturable at scale. We are working on multiple systems and generations in parallel: 256-qubit prototypes, 10,000-qubit designs and future generations. We have experience moving prototypes into production and expect to continue reporting milestones quarter to quarter. We will update the market following any announcements DARPA makes. We've announced other DARPA work before, such as the HARQ program earlier in the year. We are involved in a number of DARPA programs across the IonQ platform—not just computing, but networking and other areas.
Great. Great answer, Niccolo. Maybe a quick follow-up for Inder. On the commercial side, I assume most commercial demand may be security and other areas. But I'm curious if there's going to be software in that. Would you guys actually own the software IP? Or are you partnering and selling the hardware that the IP can drive?
Great question. We're delivering the full stack. When we talk about total revenues or commercial revenues, it includes hardware solutions around quantum computing and applications that run on top of it. You can also ask for QCaaS from us. We deliver machines and quantum computing as a service, and QCaaS is developing quickly and is a high-margin business for us. Owning the machine and a sovereign system allows customers to create their own applications. In many cases, customers ask for our help building quantum solutions. Sometimes we own the IP for generalized algorithm development that we can apply elsewhere; other times the customer wants to own it. We meet the customer where they are. We have one of the largest algorithm development teams in quantum and will continue to invest in and build out that team. We've deployed it centrally to create algorithms across end markets and directly with our sales team in technical sales, helping customers build applications and forward-deploy engineers. We are building an ecosystem around us and supporting other quantum players as well. This industry needs to grow together. We deliver hardware, software, security and connectivity—it's a scalable, long-term approach. So yes: high-margin software via application development, high-margin QCaaS services and computing services where customers prefer that model.
Our next question comes from Gary Mobley with StoneX.
You're effectively raising your full year outlook by $20 million at the top line. I think as well, you're also reiterating 100% organic revenue growth, same as last quarter. So help me reconcile what's changed in the last 90 days? Is it more contribution from some of the acquisitions that's driving the upside? And then what really drove the upside in the just reported June quarter?
As I mentioned, our organic business grew 132% in the quarter, which exceeded our expectations for the full year. That strong organic performance was the primary driver of the upside. Computing drove the largest portion of our growth this quarter. We also had sales across other product lines, so multiple product lines contributed. We are no longer a one-product company; we have a portfolio with growth vectors in security, networking, sensing, and space. Everything is starting to show vectors of growth for us, with computing growing strongest.
Okay. Great. And as a follow-up, I wanted to ask about SkyWater's business. Prior to you closing the acquisition, I believe the consensus revenue view was about $610 million. Inder, are you saying in consideration of the close, you have to figure out what intercompany revenue gets eliminated from that? And can you speak to how SkyWater's business has been trending? I would assume maybe there's some upside to that just given industry conditions out there in the semiconductor space.
We closed the deal very recently and haven't had months to comb through every detail yet. We did have a commercial relationship with SkyWater; we funded them to help create the semiconductor road map. The $120 million number I mentioned is our estimate of what our spending with them would have been for the year, which would have been revenue on their side. When we combine the companies, intercompany revenues get eliminated on consolidation. So $120 million would be an example of an amount that could be eliminated. SkyWater will file its own 10-Q in the coming days and provide details. We'll take a few weeks to finalize eliminations and accounting adjustments such as purchase price accounting treatment before providing combined guidance. We are excited to leverage their foundry capabilities and expand their services to other quantum players. It's a symbiotic combination.
Our next question comes from John McPeake with Rosenblatt Securities.
Nice upside to 2Q and guidance. Congrats on closing the deal and the organic growth. I like the comment that you have 256 high-quality physical qubits commissioning in the first half of next year, path to 10,000. I would think this would be attracting serious interest from new customers. Is there any color you can give us there on interest? You guys do have the most aggressive timeline now. You have the fab, you're iterating.
We have been executing over multiple quarters to move this company from being an early quantum computing company to, in our view, the leading quantum computing company. We're doing more quantum computing faster and in a manufacturable and robust way with a path to data center solutions at compelling price points, energy consumption, and space requirements. We also lead in quantum cybersecurity, networking, atomic clocks and sensors. When you combine the full platform and our merchant supplier position, we offer solutions few others can. The results are showing up in our numbers: 287% growth year-on-year and strong organic growth. Customer recognition is appearing quarter-on-quarter. We are the pacesetter and scale setter for the sector and intend to continue investing so quantum arrives sooner than expected. Customers are recognizing that Q-Day and other inflection points are nearer, and they are engaging accordingly.
One additional point: we'll be living in a hybrid world for a long time with classical and quantum security. We'll provide solutions to scan networks and identify vulnerabilities against quantum threats, help CIOs and CTOs understand if and where they are vulnerable, and map those vulnerabilities on day one. We can then help protect those assets now, whether customers choose PQC, QKD or another approach. We intend to be the one-stop shop for these needs. We're investing in computing and security as the next growth vector.
Our next question comes from Tyler Anderson with Craig-Hallum.
This is Tyler Anderson on for Richard. So with the Tennessee Quantum Communications Research Center, is the memory that is going to be installed there used for QKD or entanglement distribution? And then any color on what you guys are doing with Sandia National Laboratories with either your linear trap or your QCCD or any one of your other products? I'd love to hear more detail about that. Noting that they did build the Roadrunner, which is a long history between you guys.
Absolutely. Quantum memory is one of the things we're able to bring to the table today and are investing in for the future. We've announced that we're opening an R&D center near EPB in Chattanooga because a lot of quantum initiatives and innovation are happening there. Vanderbilt University is opening a quantum campus there as well. This R&D center will support quantum memory development over many years with multiple product generations, used for caching and other purposes and potentially sold to other players building quantum computers. We chose Chattanooga because of the ecosystem and talent pool developing around quantum. We are unique in being able to support photon caching and related capabilities, which are integral to networking.
EPB now has a computer, a network and memory—it demonstrates a forward-thinking customer using our technologies for energy grid optimization and other applications. Tennessee and the region near Oak Ridge have strong talent pools and research activity, including national lab presence. We're proud to partner with EPB and to perform cutting-edge quantum computing and algorithm research with them that has implications federally and regionally. We'll keep the market updated on this work.
And then for Sandia, any other work that you're doing there?
We've covered this earlier: the relationship with Sandia is at an MOU stage. There's strong connectivity given our team's history and Sandia's position in national lab research. Dr. Rick Muller used to run the quantum program there before serving at IARPA and then joining IonQ, so there's a deep set of connections. Sandia brings domain expertise we don't have, and we're bringing commercially rugged systems and quantum power expertise they can benefit from. This partnership is an endorsement of the fact that we're making quantum real, affordable, robust and deployable. New Mexico has a historical role in national efforts, and we see Sandia as an important partner in applying quantum to energy and other strategic domains. We'll update the market as developments are appropriate.
Our next question comes from Nehal Chokshi with Northland Capital Markets.
Congrats on another stellar quarter financially. Inder, your implicit guidance for 2H is $135 million to $145 million. Can you give us some thoughts on how we should think about distributing that through Q3 and Q4? I think pretty much any way we decide to distribute it probably implicitly says there could be a decline in revenue Q-over-Q, albeit at an impressive level. Help us understand that as well.
We do not plan for a revenue decline; we plan for revenue growth. The close of SkyWater means that next quarter we'll be guiding for the combined company. We decided not to attempt to present a pro forma distribution of combined quarters until we've completed consolidation and eliminations. The deal closed days before this earnings call, so we need time to finalize eliminations and accounting adjustments. We wanted to give IonQ-only guidance so you could see momentum continues. We'll provide combined company numbers when appropriate, likely after we've had time to finalize integration details. Do not interpret this as indicating we anticipate declining quarters.
Okay. All right. And then just real quickly, the 256-qubit chip from SkyWater, that does not include integration of technology from Lightsynq, right? It's just the Oxford Ionics microwave excitation sources?
Lightsynq technology is present in our quantum memory work in Boston, which supports networking and caching of photons. SkyWater is building systems with increasing qubit counts. We are demonstrating milestones at 256 as a full prototype QPU, and we have tape-outs and designs progressing for 10,000-qubit chips. SkyWater took the majority of their consideration in the transaction in IonQ stock; the teams did reverse diligence and found that combining capabilities accelerates the road map. We're optimistic about accelerating qubit counts and translating that into systems and deployments as we continue working together. Thank you, operator. Our mission is to solve the world's hardest problems and to create tremendous national security, societal and commercial value. Delivering on that mission takes more than a computer. It takes an entire quantum value chain and ecosystem. With SkyWater now closed, IonQ is the only vertically integrated full-stack quantum platform and the largest merchant supplier to the U.S. and allied quantum ecosystem. We are already leveraging SkyWater to accelerate and derisk our fault-tolerant quantum computers via our published walking cat architecture. I want to thank our colleagues for their extraordinary efforts and our shareholders for their continued trust. We look forward to welcoming you at our Investor Day on September 8 at the New York Stock Exchange. We will be sharing exciting updates on our progress across the entire IonQ quantum platform. Thank you for joining us today and for your questions. Have a great day.
The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.