Pure-play investments in the quantum computing space are often young, small, and financially unstable. Industry-leading quantum computing systems builder IonQ (IONQ 10.84%) collected just $12.4 million in revenues in the third quarter of 2024 while spending $65.5 million on operating costs.
IonQ consumes plenty of cash
The company reported negative free cash flows of $24.2 million in the third quarter, consuming a total of $120.4 million of cash over the last four financial reports.
Knee-deep in research efforts and manufacturing of quantum computers, IonQ's business is expensive. In this early stage, this is a bet on quantum computing's potentially game-changing performance in the long run, and on IonQ's ability to stay relevant as the market evolves.
Fortunately, IonQ has plenty of cash-like assets on hand. The balance sheet holds zero long-term debt, $30.2 million of liquid cash equivalents, $17.1 million in long-term investments, and a whopping $335.5 million in short-term investments.
Keeping an eye on IonQ's combined investments should help you monitor the company's ability to stay financially solvent:
These investments are IonQ's financial safety net. The company had $356 million of cash and short-term investments at the end of 2022. Another $184 million was invested in long-term bonds and Treasury notes. In the latest report, the balance has shifted to mostly short-term assets, leaving just $17 million in the basket of long-term investments.
What if the cash well runs dry?
IonQ's consistently cash-burning operations could empty the cash cushion in a couple of years, unless the company finds a way to stem the bottom-line tide. That's why the total investment balance is so important.
It's unclear what management would do in that scenario. Cash-raising options include raising debt, selling more stock, or accepting a buyout offer from some deep-pocketed tech giant. The first option comes with annual interest fees, the second one is dilutive to existing shareholders, and the third would unlock an immediate buyout premium but the quantum computing stock wouldn't be a high-octane growth investment anymore.
