IonQ (IONQ)

Quantum computing company IonQ (NYSE:IONQ) reported Q3 CY2025 results beating Wall Street’s revenue expectations, with sales up 222% year on year to $39.87 million. The company’s full-year revenue guidance of $108 million at the midpoint came in 18.4% above analysts’ estimates. Its non-GAAP loss of $0.17 per share was 15.8% above analysts’ consensus estimates.

Company Overview

Founded by quantum physics pioneers from the University of Maryland and Duke University in 2015, IonQ (NYSE:IONQ) develops quantum computers that process information using trapped ions to solve complex computational problems beyond the capabilities of traditional computers.

The Hardware & Infrastructure sector will be buoyed by demand related to AI adoption, cloud computing expansion, and the need for more efficient data storage and processing solutions. Companies with tech offerings such as servers, switches, and storage solutions are well-positioned in our new hybrid working and IT world. On the other hand, headwinds include ongoing supply chain disruptions, rising component costs, and intensifying competition from cloud-native and hyperscale providers reducing reliance on traditional hardware. Additionally, regulatory scrutiny over data sovereignty, cybersecurity standards, and environmental sustainability in hardware manufacturing could increase compliance costs.

IonQ competes with tech giants developing their own quantum computing technologies, including Google (NASDAQ:GOOGL), IBM (NYSE:IBM), Microsoft (NASDAQ:MSFT), and Amazon (NASDAQ:AMZN). Other quantum computing competitors include Rigetti Computing (NASDAQ:RGTI), D-Wave Quantum (NYSE:QBTS), and privately-held companies like Quantinuum and PsiQuantum.

Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can have short-term success, but a top-tier one grows for years.

With $79.84 million in revenue over the past 12 months, IonQ is a small player in the business services space, which sometimes brings disadvantages compared to larger competitors benefiting from economies of scale and numerous distribution channels. On the bright side, it can grow faster because it has more room to expand.

As you can see below, IonQ grew its sales at an incredible 251% compounded annual growth rate over the last four years. This is an encouraging starting point for our analysis because it shows IonQ’s demand was higher than many business services companies.

Long-term growth is the most important, but within business services, a stretched historical view may miss new innovations or demand cycles. IonQ’s annualized revenue growth of 101% over the last two years is below its four-year trend, but we still think the results suggest healthy demand.

This quarter, IonQ reported magnificent year-on-year revenue growth of 222%, and its $39.87 million of revenue beat Wall Street’s estimates by 47.8%.

Looking ahead, sell-side analysts expect revenue to grow 90.7% over the next 12 months, a deceleration versus the last two years. Despite the slowdown, this projection is commendable and indicates the market is forecasting success for its products and services.

IonQ’s high expenses have contributed to an average operating margin of negative 628% over the last five years. Unprofitable business services companies require extra attention because they could get caught swimming naked when the tide goes out.

On the plus side, IonQ’s operating margin rose over the last five years, as its sales growth gave it operating leverage. Still, it will take much more for the company to reach long-term profitability.

In Q3, IonQ generated a negative 423% operating margin.

We track the change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

IonQ’s earnings losses deepened over the last two years as its EPS dropped 24.5% annually. We’ll keep a close eye on the company as diminishing earnings could imply changing secular trends and preferences.

In Q3, IonQ reported adjusted EPS of negative $0.17, up from negative $0.23 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects IonQ to perform poorly. Analysts forecast its full-year EPS of negative $0.82 will tumble to negative $0.97.

Although earnings are undoubtedly valuable for assessing company performance, we believe cash is king because you can’t use accounting profits to pay the bills.

IonQ’s demanding reinvestments have drained its resources over the last five years, putting it in a pinch and limiting its ability to return capital to investors. Its free cash flow margin averaged negative 356%, meaning it lit $356.33 of cash on fire for every $100 in revenue.

Taking a step back, an encouraging sign is that IonQ’s margin expanded during that time. In light of its glaring cash burn, however, this improvement is a bucket of hot water in a cold ocean.

IonQ burned through $128.3 million of cash in Q3, equivalent to a negative 322% margin. The company’s cash burn increased from $22.98 million of lost cash in the same quarter last year.

One of the best ways to mitigate bankruptcy risk is to hold more cash than debt.

IonQ is a well-capitalized company with $1.08 billion of cash and $28.52 million of debt on its balance sheet. This $1.05 billion net cash position is 5.7% of its market cap and gives it the freedom to borrow money, return capital to shareholders, or invest in growth initiatives. Leverage is not an issue here.

It was good to see IonQ beat analysts’ EPS expectations this quarter. We were also excited its revenue outperformed Wall Street’s estimates by a wide margin. Zooming out, we think this was a solid print. The stock traded up 4% to $57.58 immediately after reporting.

Updated: December 4, 2025 at 10:56 PM EST

Before deciding whether to buy IonQ or pass, we urge investors to consider business quality, valuation, and the latest quarterly results.

IonQ is a fine business. To kick things off, its revenue growth was exceptional over the last four years. And while its projected EPS for the next year is lacking, its rising cash profitability gives it more optionality. On top of that, its expanding adjusted operating margin shows the business has become more efficient.

IonQ’s forward price-to-sales ratio is 82.9x. Looking at the business services landscape right now, IonQ trades at a pretty interesting price. If you’re a fan of the business and management team, now is a good time to scoop up some shares.

Wall Street analysts have a consensus one-year price target of $72.35 on the company (compared to the current share price of $54.58), implying they see 32.6% upside in buying IonQ in the short term.