Quantum Computing, Inc. (QUBT) Bundle
Understanding Quantum Computing, Inc. (QUBT) Revenue Streams
Understanding Quantum Computing, Inc.’s Revenue Streams
The company's revenues consist of various streams, primarily from services and products. Below is a breakdown of the revenue sources for the three and nine months ended September 30, 2024, compared to 2023.
| Revenue Source | Three Months Ended September 30, 2024 (in thousands) | Three Months Ended September 30, 2023 (in thousands) | % Change | Nine Months Ended September 30, 2024 (in thousands) | Nine Months Ended September 30, 2023 (in thousands) | % Change |
|---|---|---|---|---|---|---|
| Products | $0 | $0 | - | $27 | $0 | NM |
| Services | $101 | $50 | 102% | $284 | $283 | 0% |
| Total Revenue | $101 | $50 | 102% | $311 | $283 | 10% |
In the three months ended September 30, 2024, total revenue reached $101 thousand, marking a 102% increase from $50 thousand in the same period of 2023. For the nine months ended September 30, 2024, total revenue was $311 thousand, a 10% increase from $283 thousand during the same period in 2023. The growth in revenue is primarily attributed to an increase in service contracts, particularly proof-of-concept and research and development services.
The contribution of different business segments to overall revenue indicates a significant reliance on service revenue, which accounted for 100% of total revenue in the three months ended September 30, 2024. The product segment, while showing initial revenue of $27 thousand in the nine-month period, remains minimal compared to service revenues.
Additionally, the year-over-year growth rate reflects a robust performance in service offerings, with the increase primarily driven by the expansion of active contracts and the scale of projects undertaken. There were no significant changes in product revenues, as they remain negligible in comparison to the service revenue stream.
Overall, the revenue analysis illustrates a company that is beginning to see growth in its service offerings, while product revenues are still in the nascent stages of development.
A Deep Dive into Quantum Computing, Inc. (QUBT) Profitability
A Deep Dive into Quantum Computing, Inc.'s Profitability
Gross Profit, Operating Profit, and Net Profit Margins
- Gross Profit (2024 Q3): $9,000; Gross Profit Margin: 9%
- Gross Profit (2023 Q3): $26,000; Gross Profit Margin: 52%
- Operating Loss (2024 Q3): $(5,438,000)
- Net Loss (2024 Q3): $(5,675,000); Net Loss per Share: $(0.06)
- Net Loss (2023 Q3): $(6,841,000); Net Loss per Share: $(0.10)
Trends in Profitability Over Time
For the nine months ending September 30, 2024, the total revenue was $311,000, compared to $283,000 in the same period of 2023, reflecting a 10% increase. However, gross profit decreased from $152,000 in 2023 to $78,000 in 2024, indicating a 34% decline in gross profit year-over-year.
Comparison of Profitability Ratios with Industry Averages
| Metric | Quantum Computing, Inc. (2024) | Industry Average |
|---|---|---|
| Gross Profit Margin | 9% | 25% |
| Operating Margin | (5,438,000) | (2,000,000) |
| Net Profit Margin | (5,675,000) | (1,500,000) |
Analysis of Operational Efficiency
In the three months ending September 30, 2024, total operating expenses were $5,447,000, a decrease of 18% from $6,637,000 in the prior year. Major components included:
- Research and Development: $2,244,000 (4% decrease from 2023)
- Sales and Marketing: $363,000 (38% decrease from 2023)
- General and Administrative: $2,840,000 (24% decrease from 2023)
Gross Margin Trends
Gross margin for the nine months ending September 30, 2024, was 25%, down from 54% in 2023. This decline is attributed to a lower margin custom hardware contract, significantly impacting the overall profitability metrics.
Debt vs. Equity: How Quantum Computing, Inc. (QUBT) Finances Its Growth
Debt vs. Equity: How Quantum Computing, Inc. Finances Its Growth
Debt Levels
As of September 30, 2024, the company reported total liabilities of $10.9 million, with remaining loan balances of $8.25 million from a secured convertible promissory note. The unamortized debt issuance costs amounted to $1.736 million. The company had no lines of credit or short-term debt obligations outstanding, excluding debt issuance costs.
Debt-to-Equity Ratio
The debt-to-equity ratio for the company stands at approximately 0.18, calculated by dividing total liabilities by total stockholders' equity, which is $60.439 million. This ratio is significantly lower than the industry average of around 0.5, indicating a conservative approach to leveraging.
Recent Debt Issuances and Credit Ratings
In August 2024, the company issued a secured convertible promissory note worth $8.25 million, with an interest rate of 10% per annum and a maturity date of February 6, 2026. As of September 30, 2024, the company had accrued interest payable of $122,000. The company does not currently have a formal credit rating.
Balancing Debt Financing and Equity Funding
The company has raised $68.3 million through private and public placements of equity and $12.6 million through debt placements, totaling $80.9 million since inception. As of September 30, 2024, cash and cash equivalents were $3.1 million, with working capital of $1.5 million, up from a deficit of $2.2 million at the end of 2023.
| Parameter | Amount (in thousands) |
|---|---|
| Total Liabilities | $10,908 |
| Remaining Loan Balances | $8,250 |
| Unamortized Debt Issuance Costs | $1,736 |
| Total Stockholders' Equity | $60,439 |
| Debt-to-Equity Ratio | 0.18 |
| Cash and Cash Equivalents | $3,064 |
| Working Capital | $1,481 |
| Total Raised through Equity | $68,300 |
| Total Raised through Debt | $12,600 |
| Total Raised | $80,900 |
The company continues to evaluate its financing strategy as it progresses toward its growth objectives, balancing between debt and equity to optimize its capital structure.
Assessing Quantum Computing, Inc. (QUBT) Liquidity
Assessing Quantum Computing, Inc.'s Liquidity
Current and Quick Ratios
As of September 30, 2024, the current assets of Quantum Computing, Inc. amounted to $3.912 million, while current liabilities were $2.431 million. This results in a current ratio of approximately 1.61 (Current Assets / Current Liabilities). The quick ratio, which excludes inventory from current assets, is also favorable given the absence of inventory, resulting in a quick ratio equal to the current ratio of 1.61.
Analysis of Working Capital Trends
Working capital has shown a significant improvement, recording $1.481 million as of September 30, 2024, compared to a working capital deficit of ($2.156 million) at December 31, 2023. This represents an increase of $3.637 million in working capital, primarily driven by cash proceeds from share issuances and convertible notes.
| Metric | September 30, 2024 | December 31, 2023 | Change |
|---|---|---|---|
| Current Assets | $3.912 million | $2.656 million | $1.256 million |
| Current Liabilities | $2.431 million | $4.812 million | ($2.381 million) |
| Working Capital | $1.481 million | ($2.156 million) | $3.637 million |
Cash Flow Statements Overview
For the nine months ended September 30, 2024, the cash flows were as follows:
- Net cash used in operating activities: ($12.439 million)
- Net cash used in investing activities: ($3.170 million)
- Net cash provided by financing activities: $16.614 million
- Net increase in cash and cash equivalents: $1.005 million
This data indicates ongoing challenges in operational cash flow, but a positive contribution from financing activities has improved overall liquidity.
Potential Liquidity Concerns or Strengths
As of September 30, 2024, Quantum Computing, Inc. had cash and cash equivalents of $3.1 million. Despite positive working capital, the company continues to face substantial net losses, amounting to ($17.305 million) for the nine months ended September 30, 2024, which raises concerns about its ability to sustain operations without additional financing.
Management has indicated that additional funds will be required in the next 12 months to continue operations and meet obligations.
| Cash Flow Components | 2024 (in thousands) | 2023 (in thousands) |
|---|---|---|
| Net cash used in operating activities | ($12,439) | ($13,348) |
| Net cash used in investing activities | ($3,170) | ($2,665) |
| Net cash provided by financing activities | $16,614 | $18,084 |
| Net increase in cash | $1,005 | ($4,315) |
Is Quantum Computing, Inc. (QUBT) Overvalued or Undervalued?
Valuation Analysis
In assessing the financial health of the company, various valuation metrics are used to determine whether the company is overvalued or undervalued. Key ratios include the price-to-earnings (P/E), price-to-book (P/B), and enterprise value-to-EBITDA (EV/EBITDA).
Price-to-Earnings (P/E) Ratio
As of September 30, 2024, the company reported a net loss of $17.3 million for the nine months ended, resulting in a basic and diluted loss per share of $0.19. Given the absence of earnings, the P/E ratio is not applicable.
Price-to-Book (P/B) Ratio
The book value per share can be calculated using the total stockholders' equity, which stood at $60.4 million as of September 30, 2024, with 94.4 million shares outstanding. This results in a book value per share of approximately $0.64. The stock price on September 30, 2024, was approximately $1.00, leading to a P/B ratio of approximately 1.56.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The enterprise value (EV) can be calculated as market capitalization plus total debt minus cash and cash equivalents. As of September 30, 2024, cash and cash equivalents were $3.1 million, total liabilities were $10.9 million, and the stock price was $1.00. This results in an estimated market capitalization of $94.4 million:
| Metric | Value |
|---|---|
| Market Capitalization | $94.4 million |
| Total Debt | $10.9 million |
| Cash and Cash Equivalents | $3.1 million |
| Enterprise Value (EV) | $102.2 million |
For the nine months ended September 30, 2024, the company reported a loss from operations of $17.0 million and a net loss of $17.3 million. As such, the EBITDA is negative, making the EV/EBITDA ratio not applicable.
Stock Price Trends
The stock price has shown fluctuations over the last 12 months. The stock closed at approximately $1.00 on September 30, 2024, compared to $1.50 one year prior, indicating a decline of approximately 33%. The price has been particularly volatile, reflecting investor sentiment and market conditions.
Dividend Yield and Payout Ratios
The company does not currently pay a dividend, and therefore, the dividend yield and payout ratios are 0%.
Analyst Consensus on Stock Valuation
Analyst consensus indicates a mixed outlook on the stock, with some analysts rating it as a hold due to its ongoing financial challenges and others suggesting a buy based on potential future growth in the quantum computing sector.
Overall, the financial metrics indicate a need for caution among investors, as the company has not yet achieved profitability and maintains significant losses.
Key Risks Facing Quantum Computing, Inc. (QUBT)
Key Risks Facing Quantum Computing, Inc. (QUBT)
Quantum Computing, Inc. faces a range of internal and external risks that significantly impact its financial health and operational stability. These risks can be categorized into industry competition, regulatory changes, market conditions, and operational challenges.
Industry Competition
The quantum computing industry is rapidly evolving, characterized by intense competition among established technology firms and emerging startups. The increasing number of players entering the market can lead to pricing pressures and reduced market share. For instance, as of September 30, 2024, the company reported a net loss of $17.3 million for the nine months ended, indicating the financial strain amidst rising competition.
Regulatory Changes
Regulatory frameworks surrounding quantum technologies are still developing. Changes in government policies or regulations can pose risks to operations and profitability. The company has noted that it may need to adapt its business practices to comply with new regulations, which could incur additional costs and operational delays.
Market Conditions
The overall economic environment can significantly affect the company's performance. As of September 30, 2024, the company had cash and cash equivalents of $3.1 million, a decrease from previous periods, which raises concerns about liquidity and the ability to sustain operations during adverse market conditions. The company also reported a working capital of $1.5 million compared to a deficit of $2.2 million at the end of 2023, highlighting ongoing liquidity challenges.
Operational Risks
Operational risks include challenges in managing research and development expenditures, which were $6.6 million for the nine months ended September 30, 2024, down from $7.0 million in the previous year. Furthermore, the company's ability to scale operations effectively remains a concern. The dependency on securing additional funding to support ongoing projects and operational costs is critical, especially as it faces a high burn rate, with net cash used in operating activities amounting to $12.4 million for the nine months ended.
Financial Risks
The company has incurred significant losses, with a net loss of $5.7 million for the three months ended September 30, 2024, compared to $6.8 million for the same period in 2023. Additionally, the company's total liabilities reached $10.9 million as of September 30, 2024, which raises concerns about the ability to meet financial obligations.
Mitigation Strategies
In response to these risks, Quantum Computing, Inc. has implemented several mitigation strategies. The company aims to diversify its product offerings and enhance its service capabilities to improve revenue streams. The recent issuance of the Streeterville Convertible Note for $8.25 million aims to strengthen its financial position and support operational needs.
| Risk Factor | Description | Financial Impact |
|---|---|---|
| Industry Competition | Intense competition from established firms and startups. | Net loss of $17.3 million for 2024. |
| Regulatory Changes | Changes in government policies affecting operations. | Potential for increased compliance costs. |
| Market Conditions | Economic conditions affecting liquidity and revenue. | Cash and cash equivalents at $3.1 million. |
| Operational Risks | Challenges in managing R&D and scaling operations. | Operating cash used at $12.4 million. |
| Financial Risks | High levels of debt and ongoing losses. | Total liabilities of $10.9 million. |
Future Growth Prospects for Quantum Computing, Inc. (QUBT)
Future Growth Prospects for Quantum Computing, Inc.
Analysis of Key Growth Drivers
Key growth drivers for the company include significant investments in product innovations, market expansions, and strategic acquisitions. The company has focused on developing advanced quantum technologies, including its Entropy Quantum Computing (“EQC”) technology, which is fundamental to its product offerings.
Future Revenue Growth Projections and Earnings Estimates
For the nine months ended September 30, 2024, total revenue was $311,000, representing a 10% increase compared to $283,000 for the same period in 2023. For the three months ended September 30, 2024, revenue was $101,000, up 102% from $50,000 in the prior year. This upward trend indicates a positive trajectory for future growth.
Strategic Initiatives or Partnerships that May Drive Future Growth
The company has engaged in partnerships and financial agreements to bolster its growth. Notably, on August 6, 2024, the company entered into a Securities Purchase Agreement with Streeterville Capital, LLC, issuing a Secured Convertible Promissory Note for $8.25 million. Proceeds from this financing are earmarked for general working capital, sales and marketing efforts, and facility upgrades.
Competitive Advantages that Position the Company for Growth
The company benefits from proprietary technology, including patented quantum optical chips and a strong intellectual property portfolio. As of September 30, 2024, the company had $3.1 million in cash and cash equivalents, supporting its operational and developmental initiatives. Additionally, the company has raised $80.9 million through various financing methods, providing a solid financial foundation for future projects.
| Financial Metrics | Q3 2024 | Q3 2023 | Change (%) |
|---|---|---|---|
| Total Revenue | $101,000 | $50,000 | 102% |
| Net Loss | $(5,675,000) | $(6,841,000) | 17% |
| Cash and Cash Equivalents | $3,064,000 | $7,379,000 | -58% |
| Working Capital | $1,481,000 | $(2,156,000) | $3,637,000 |
Conclusion
In summary, the company's strategic focus on product innovation, coupled with robust financial backing and market expansion efforts, positions it favorably for future growth in the quantum computing sector.
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Resources:
- Quantum Computing, Inc. (QUBT) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Quantum Computing, Inc. (QUBT)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Quantum Computing, Inc. (QUBT)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.