Quantum-Si Incorporated — Q2 2023 Form 10-Q
Reporting period: Three and six months ended June 30, 2023. Quantum-Si develops protein-sequencing and analysis products, including its Platinum instrument, Carbon sample-preparation system, software, chips and reagents. Commercial shipments of Platinum began in January 2023; revenue was not reported in the comparable 2022 periods.
Financial performance and liquidity
| Metric | Q2 2023 | H1 2023 | Comparable 2022 |
|---|---|---|---|
| Revenue | $0.205 million | $0.459 million | None reported |
| Gross profit / margin | $0.078 million / 38.0% | $0.202 million / 44.0% | None reported |
| Operating expenses | $26.970 million | $56.315 million | Q2 $30.200 million; H1 $57.340 million |
| Operating loss | $26.892 million | $56.113 million | Q2 $30.200 million; H1 $57.340 million |
| Net loss | $25.573 million | $49.184 million | Q2 $32.414 million; H1 $67.589 million |
| Net loss per share, basic and diluted | $0.18 | $0.35 | Q2 $0.23; H1 $0.49 |
At June 30, cash and cash equivalents were $87.9 million and marketable securities were $209.3 million, totaling $297.2 million. Current assets were $306.8 million versus current liabilities of $10.2 million. Total liabilities were $25.9 million, including $16.2 million of operating lease liabilities and $0.9 million of warrant liabilities; the filing reports no borrowings. Stockholders’ equity was $315.3 million.
For H1, operating cash outflow was $51.6 million, investing cash inflow was $55.2 million, and financing cash flow was zero; cash increased by $3.6 million. Investing inflows primarily reflected $59.5 million of marketable-security sales, not operating cash generation. Marketable securities carried a cumulative net unrealized loss of $14.8 million from interest-rate changes.
Changes versus prior period
- Revenue began with the Platinum commercial launch: Q2 product revenue was $0.187 million and service revenue $0.018 million; H1 amounts were $0.438 million and $0.021 million, respectively.
- Q2 operating expenses fell 10.7% year over year, primarily reflecting refined R&D activity and the 2023 restructuring. H1 expenses fell 1.8%; lower R&D was partly offset by higher SG&A, including stock-based compensation and commercial hiring.
- Net loss narrowed year over year, but comparisons were affected by investment-market valuation changes and warrant-liability fair-value changes. H1 other income was $2.1 million versus $17.1 million of other expense in 2022, principally due to lower unrealized investment losses.
Outlook, risks and unusual items
- Management expects cash and marketable securities, together with product and service revenue, to fund operations for at least 12 months. It expects negative operating cash flows for the foreseeable future and anticipates continued investment in commercialization, R&D, sales and marketing, and inventory. No revenue or earnings guidance is provided.
- H1 restructuring costs were $1.9 million, primarily severance; $1.0 million remained accrued at June 30. In April, the company said it intended to wind down its Platinum and Carbon contract-manufacturing relationship and transition to another manufacturer by the end of Q4 2023.
- Backlog was approximately $0.1 million. Customers may cancel or delay orders, so backlog may not convert to revenue as expected.
- The company is suing its New Haven landlord over reimbursement of up to $9.1 million in leasehold improvements. It says the litigation’s likely outcome and financial impact cannot be estimated. Separately, management states it is not party to other pending or threatened litigation expected to have a material adverse effect.
- Other risks include commercialization and adoption, manufacturing and supply constraints, financing needs, interest-rate and marketable-security effects, and the ongoing leadership transition. Management reported effective disclosure controls as of June 30, 2023.
Key facts for investors to verify
- Whether Platinum sales and the small reported backlog develop into sustained revenue growth and improving gross margins.
- Actual cash burn and runway relative to management’s 12-month liquidity assessment, including the effect of commercialization spending.
- Progress, timing, costs and continuity of the contract-manufacturer transition and inventory build.
- Developments in the landlord dispute and recoverability of the claimed lease incentives.
- Potential dilution: 27.2 million options, 0.5 million RSUs and 4.0 million warrants were excluded from diluted EPS as anti-dilutive; review vesting, exercise terms and share counts.