Quantum-Si Incorporated — Q1 2024 Form 10-Q
Reporting period: Three months ended March 31, 2024; unaudited results compared with the three months ended March 31, 2023. Quantum-Si develops single-molecule protein-sequencing technology. Its platform includes the Platinum instrument, analysis software, reagent kits and semiconductor chips. The company began a full commercial launch of Platinum at the end of Q1 2024, following a controlled launch.
Financial performance and position
| Metric | Q1 2024 | Q1 2023 / prior date |
|---|---|---|
| Product revenue | $0.428 million | $0.251 million |
| Service revenue | $0.029 million | $0.003 million |
| Total revenue | $0.457 million | $0.254 million |
| Gross profit / gross margin | $0.269 million / 58.9% | $0.124 million / 48.8% |
| Research and development expense | $12.101 million | $18.167 million |
| Selling, general and administrative expense | $11.528 million | $11.178 million |
| Operating loss | $(23.360) million | $(29.221) million |
| Net loss | $(19.474) million; $(0.14) per share | $(23.611) million; $(0.17) per share |
| Cash used in operating activities | $(23.208) million | $(28.698) million |
| Cash and cash equivalents | $53.163 million | $133.860 million at Dec. 31, 2023 |
| Marketable securities | $182.268 million | $123.876 million at Dec. 31, 2023 |
At March 31, 2024, cash and marketable securities totaled approximately $235.4 million. Total assets were $275.6 million, total liabilities $21.8 million, and stockholders’ equity $253.8 million. No borrowing debt is reported. Lease liabilities totaled $14.5 million, including $1.6 million current; undiscounted future lease payments were $30.0 million. Warrant liabilities were $1.0 million.
Investing activities used $57.4 million, primarily reflecting purchases of marketable securities; financing activities used $0.1 million. The net decrease in cash and cash equivalents was $80.7 million, reflecting the shift of funds into marketable securities as well as operating cash burn. The company recorded $3.6 million of dividend and interest income and no gain on marketable securities, compared with a $2.9 million gain in Q1 2023.
Material changes versus Q1 2023
- Revenue increased 79.9%, from $0.254 million to $0.457 million; gross margin rose 10.1 percentage points to 58.9%.
- Operating expenses declined 19.5%, primarily as R&D expense fell 33.4%. Management attributed the R&D reduction mainly to lower fabrication and outsourced-services costs and lower payroll costs following 2023 restructuring, as well as personnel costs capitalized in Q1 2024.
- Net loss narrowed by $4.1 million. Lower operating expenses and higher interest and dividend income contributed; the improvement was partly offset by the absence of the prior-year marketable-securities gain.
- Operating cash use improved by $5.5 million year over year. Cash and cash equivalents declined substantially from year-end, while marketable securities increased.
Outlook, risks and unusual items
- Management expects cash, cash equivalents and marketable securities, together with revenue, to fund operations and anticipated capital needs for at least the next 12 months. It expects negative operating cash flows annually for the foreseeable future and anticipates debt or equity offerings may be needed until commercial operations scale. No specific revenue or earnings guidance was provided.
- Management expects spending on commercialization, research and development, sales and marketing, and inventory. Cash needs could rise due to commercialization delays, manufacturing costs, acquisitions or other changes to plans.
- The company has a $150 million shelf registration and an ATM program permitting up to $75 million of Class A shares; it reported no ATM shares sold to date.
- Manufacturing transition is a key execution risk: Quantum-Si is moving Platinum manufacturing to a new provider. Delays, technical problems, limited suppliers or component shortages could constrain product availability. A former contract manufacturer’s Minnesota lawsuit alleges breach of contract; the company says it intends to defend itself, and potential exposure is not estimable at this stage.
- The company is litigating with its New Haven landlord over up to $9.1 million of lease incentives for improvements. It believes it is entitled to reimbursement but cannot determine the likely outcome or estimate the impact on carrying values.
- Inventory reserves were $4.0 million at quarter-end; $0.6 million was recorded as R&D expense during Q1 for inventory without alternative future use. Restructuring activities were complete, with $0.2 million of accrued costs remaining and no material additional charges expected.
- On March 15, 2024, market conditions for certain executive performance stock options were modified. The company expects $2.4 million of incremental stock-based compensation expense over the awards’ remaining service period; Q1 incremental expense was immaterial.
- Management cited inflation, supply-chain constraints, interest-rate uncertainty and geopolitical conflicts as risks. Disclosure controls were concluded effective as of March 31, 2024, with no material change in internal control reported during the quarter.
Key facts for investors to verify
- Whether the full commercial launch produces sustained instrument, consumables and service revenue beyond the reported $0.457 million.
- Cash burn, investment maturities and the assumptions behind management’s stated minimum 12-month liquidity outlook.
- Progress, capacity and quality of the new contract manufacturer, and reliance on limited or sole-source suppliers.
- Developments and potential financial effects of the former manufacturer dispute and landlord lease-incentive litigation.
- Potential dilution from the unused ATM program, outstanding options and RSUs; the filing reports 6.15 million nonvested RSUs at March 31, 2024.