By Mackenzie Tatananni

IonQ reported fourth-quarter and full-year financial results on Wednesday, and while the quantum computing company's revenue nearly doubled in 2024, its stock was slumping.

IonQ posted revenue of $11.7 million in the quarter, exceeding the high end of the range management had forecast. Full-year revenue came in at $43.1 million, representing 95% growth compared to the prior year.

The company revealed that it had selected a new CEO and signed a definitive agreement to acquire a majority stake in ID Quantique, a Swiss company specializing in quantum-safe encryption. IonQ said it was also entering into a strategic partnership with SK Telecom, South Korea's largest wireless telecom operator.

But other details in the report, released after markets closed on Wednesday, highlight that quantum-computing stocks are still in their early stages, which means they burn through cash. IonQ reported a widening quarterly loss, dwindling cash reserves, and growing operating expenses.

The company posted a net loss of $220 million in the quarter, compared with the $41.9 million loss reported a year earlier. Cash and investments totaled $363.8 million as of Dec. 31, down from $455.9 million in the previous year. Total operating costs and expenses increased to $275.5 million in 2024, from $179.8 million.

The stock sank 11% on Thursday, taking shares of other pure plays with it. Rigetti Computing slid 6.2%, D-Wave Quantum was down 2.8%, and Quantum Computing fell 4.7%.

IonQ, founded in 2015, aims to be profitable by 2030. The new CEO and president, Niccolo de Masi, will lead the effort. He succeeds Peter Chapman, who will continue in the role of executive chair.

"As a longtime evangelist of the quantum industry, I believe wholeheartedly in IonQ's mission and technology," de Masi said in a statement. A physicist by training, de Masi joined IonQ in 2021 after heading the special purpose acquisition company that took it public that year.

Proponents argue the technology has near-endless applications in drug discovery, materials science, portfolio optimization, and any other fields that require specialized computations.

Bill Stone, chief investment officer at Glenview Trust, previously remarked that quantum computing "may be the next big thing, but it is currently in speculation territory." Speaking to Barron's on Thursday, Stone noted that IonQ's expenses were higher even though fourth-quarter revenues nearly doubled, causing the company's net loss to expand.

"To be bullish on the stock, one must expect revenues to continue to grow and expenses to slow at some point, allowing the company to become profitable," Stone said. And while quantum pure plays have a murky trajectory, that isn't to say it can't be done.

"The most remarkable example of this working well is Amazon, which grew revenue and spending quickly in the early years, ending in losses," Stone said. "Eventually, revenue growth overwhelmed expenses, leading to rapid profit growth."

However, Stone offered a word of caution. " Amazon was a happy ending, but not all emerging growth stocks have such a pleasant outcome for investors," he said.

Write to Mackenzie Tatananni at mackenzie.tatananni@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

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February 27, 2025 14:38 ET (19:38 GMT)

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