Quantum Computing Inc. Third Quarter 2026 Shareholder Update Call - VITRIA TECHNOLOGY INC

Explicit Guidance:

• No formal numerical revenue, earnings, or margin guidance provided for the current or future fiscal years.
• Management expects "strong finish to this year" and a "solid backlog leading into 2027" over the next 12–15 months.
• Operating Expense (OpEx) run rate is estimated to be similar to the third quarter ($29M), with "dramatic" increases not anticipated; payroll and facility costs expected to rise moderately with headcount growth.
• Capital expenditure (CapEx) allocated for the "Enhanced" Fab 2 project estimated at $70–$80 million, with significant spend occurring between Q3 2026 and March 31, 2027.
• Cash liquidity projected to fund operations for "at least the next 12 months."

Business-Segment Outlook:

• Quantum Computing (Direct3S): Expecting first customer shipment in Q4 2026; anticipating significant pipeline growth as existing Direct3 customers upgrade to the new 9,980-variable system and new customers enter via cloud and on-premise deployments.
• Photonics & Advanced Packaging: Targeting revenue growth through Q4 2026; aiming to balance the customer mix from ~70% Government/Aerospace to ~50/50 Government/Commercial over time as technology matures.
• Backlog: Currently $39.1 million; expected to fluctuate quarterly but anticipated to grow over the next few months; typically converts to revenue over 12–18 months.
• Geographies: Majority of sales and backlog currently domestic (US); international expansion planned but constrained by potential export restrictions (ITAR); 50/50 domestic/international split viewed as "aggressive" in the near term.
• Manufacturing: Operations across 8 states and 11 facilities remain in place (no consolidation); focus is on integrating teams and moving subsystems between sites (e.g., Santa Barbara chip fabrication to Princeton assembly) to enable volume production.
• Clinical Research: Collaboration with EmuBio exploring optimization AI for clinical trial data (Phase 1–3); identifying this as a new vertical for quantum applications beyond drug discovery.

Market and Competitive Outlook:

• Demand Trends: Anticipating growth in data center efficiency applications driven by AI infrastructure expansion; internal analysis suggests Direct optimization can improve compute utilization, potentially creating market demand for existing data centers.
• Competitive Positioning: Benchmarking indicates Direct3S offers advantages over leading classical solvers (e.g., Heuristic algorithms from Hacksley) in "time to solution" and "quality of solution" for specific optimization problems; acknowledged "quantum advantage" in specific workloads without claiming full supremacy.
• Industry Dynamics: Transitioning from a pure "technology innovation" phase to a "scalable manufacturing" phase; industry-wide adoption expected to vary by market as customers validate ROI.

Macro / Industry Outlook:

• Regulatory Environment: Geopolitical climate and ITAR/export controls cited as potential headwinds for international sales and data center applications; no specific predictions on timeline or impact due to uncertainty.
• Fiscal/Political: Acknowledged recent changes in the US political landscape (midterm states/elections) but noted consensus on AI and data center investment as a near-term opportunity.
• Technology Maturity: Industry-wide trend of customers moving from exploration to commercial adoption; photonics approach (room temperature, low power) viewed as offering practical accessibility advantages over cryogenic competitors.

Strategic Initiatives:

• Direct3S Launch: Next-generation optimization machine (up to 9,980 variables) expected to ship in Q4 2026; immediate development improvements ongoing post-launch.
• Manufacturing Expansion (Fab 2): Timeline for Fab 2 accelerated from end-of-2028 (greenfield plan) to earlier completion via integration with "Enhanced" acquisition capabilities; internal engineering team collaborating on heterogeneously integrated photonic circuits.
• Product Roadmap: Goal to make quantum systems smaller, more capable, and easier to deploy by integrating more technology onto photonic chips; 12–18 month horizon to demonstrate heterogeneously integrated circuits.
• M&A Strategy: Evaluating future acquisitions strictly on ability to accelerate quantum roadmap and improve manufacturing; no immediate consolidation of facilities planned.
• Capital Allocation: Over $1 billion in cash reserved for CapEx and strategic investments; disciplined approach to avoid dilutive capital raises during stock price downturns.

Risks and Headwinds to Outlook:

• Execution Risks: Manufacturing yield, delivery timing complexities, and ability to integrate disparate acquired facilities into a cohesive production network.
• Financial Risks: "Lumpiness" in revenue and backlog due to project-based nature of sales; potential for operating expenses to rise with headcount growth beyond current run rate.
• Regulatory Risks: Export restrictions (ITAR) could limit international revenue growth despite market opportunities.
• Market Risks: Uncertainty regarding political direction on AI/data center funding; customer adoption rates dependent on proving ROI for quantum vs. classical solvers.
• Technology Risks: Continued need to evaluate performance across diverse applications; some benchmark problems may still show classical solver advantages.

Management Tone on the Future:

• Confidence Level: Cautiously optimistic; emphasizes "execution" and "discipline" over pure technology promises.
• Strategic Shift: Clear pivot from "building technology" to "building a sustainable business" and "putting technology to work."
• Communication Style: Repeated emphasis on the absence of formal guidance due to the "lumpy" nature of the market; avoids specific quantitative targets for 2027 while expressing confidence in "strong finish."
• Risk Management: Highlights the responsibility to deploy capital wisely and maintain liquidity to navigate a "capital-intensive" industry.

Miscellaneous:

• Share Count: 330+ employees as of Q3 2026 (up from ~300 in Q2 2026); no specific share count or buyback targets mentioned.
• Acquisition Synergies: Integration of "Enhanced" and "Nucrypt" is proceeding well with "high synergy" at the engineering level; acquired assets serve dual purpose of near-term photonics revenue and long-term quantum scaling.
• Partnerships: Expanded cloud access provided to Hemad Bin Khalifa University (Qatar) and Planck Dynamics (defense) to validate adoption and research utility.