IonQ 3Q26: more than half of the beat is the foundry, and the guide raise needs a big fourth quarter

Key takeaways

• Revenue of $171.4m beat our $158.0m estimate, but $91.8m was SkyWater in its first full quarter1 (source: Form 8-K, Exhibit 99.1, Q3 2026 earnings release, opens in a new tab)
• IonQ-only revenue of $79.6m was flat on the quarter, and acquired businesses contributed about $41m of it2 (source: Form 10-Q, Q3 2026 Form 10-Q, opens in a new tab)
• Management raised the FY26 IonQ-only guide to $290m to $300m, which needs about $92m in the fourth quarter3 (source: Earnings call transcript, Q3 2026 earnings call, opens in a new tab)
• Gross margin fell to 22.6% from 24.9%, and free cash flow was negative $148m4 (source: Form 8-K, Exhibit 99.1, Q3 2026 earnings release, opens in a new tab)
• Sell and $15 unchanged: at $43.91 the price still implies about 50% annual revenue growth to 20355 (source: Penmark initiation, IONQ, page 4, opens in a new tab)

3Q26 results

Investment thesis

The beat is mostly consolidation. SkyWater was 54% of revenue1 (source: Form 8-K, Exhibit 99.1, Q3 2026 earnings release, opens in a new tab), and within IonQ-only revenue about $41m came from acquisitions2 (source: Form 10-Q, Q3 2026 Form 10-Q, opens in a new tab). At initiation we estimated that 46% of the FY26 IonQ-only guide was acquired rather than organic6 (source: Penmark initiation, IONQ, page 9, opens in a new tab); this quarter does not change that. The price still discounts about 50% revenue growth a year to 2035 at a 30% margin5 (source: Penmark initiation, IONQ, page 4, opens in a new tab).

Valuation

Our $15 target is unchanged. It weights a probability-weighted DCF ($12; WACC 12%, terminal growth 3.5%) at 60% and a sum of the parts ($19) at 40%7 (source: Penmark initiation, IONQ, page 1, opens in a new tab).

Our estimates

Risks to our view

• Early proof of fault tolerance, or selection for DARPA QBI Stage C
• A fourth quarter above the raised guide if both system deliveries land in December3 (source: Earnings call transcript, Q3 2026 earnings call, opens in a new tab)
• A short squeeze in a stock with a beta of 3.3
• Upside from SkyWater synergies, which management describes as a multi-year process8 (source: Earnings call transcript, Q3 2026 earnings call, opens in a new tab)

Sources

1. 1
   Form 8-K, Exhibit 99.1, Q3 2026 earnings release (opens in a new tab)Table: Condensed results
2. 2
   Form 10-Q, Q3 2026 Form 10-Q (opens in a new tab)Note 4, revenue by source
3. 3
   Earnings call transcript, Q3 2026 earnings call (opens in a new tab)Chief Financial Officer
4. 4
   Form 8-K, Exhibit 99.1, Q3 2026 earnings release (opens in a new tab)Cash flow
5. 5
   Penmark initiation, IONQ, page 4 (opens in a new tab)IonQ: the quantum revenue leader, priced as if the fault-tolerant win is already banked (Sep 30, 2026)
6. 6
   Penmark initiation, IONQ, page 9 (opens in a new tab)IonQ: the quantum revenue leader, priced as if the fault-tolerant win is already banked (Sep 30, 2026)
7. 7
   Penmark initiation, IONQ, page 1 (opens in a new tab)IonQ: the quantum revenue leader, priced as if the fault-tolerant win is already banked (Sep 30, 2026)
8. 8
   Earnings call transcript, Q3 2026 earnings call (opens in a new tab)Chief Executive Officer, Q&A

This sample update and the company documents it cites are illustrative.