Welcome to the Pasqal Holding Third Quarter 2026 Business Update Call. At this time, all participants are in listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. I would now like to turn the conference over to your host, Roger Chuchen, Head of Investor Relations at Pasqal. Thank you. You may begin.
Welcome to Pasqal's Third Quarter 2026 Business Update Conference Call. Joining us are Pasqal's CEO, Wasiq Bokhari, and CFO, Stéphane Rougeot. Before we begin, I would like to remind everyone that today's discussion will include forward-looking statements, including among other things, statements about our expectations for our future financial performance, growth opportunities, business strategy, market trends, and capital allocation plan. These statements are based on our current views and assumptions and are subject to risks and uncertainties that could cause actual results to differ materially. We direct you to our recent SEC filings for a full description of these risks. We undertake no obligation to update any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law. We will also reference certain non-IFRS financial measures. These measures should be considered only a supplement to their comparable IFRS measures.
Additional information can be found in our earnings release. Finally, I would like to remind everyone that this call will be recorded and made available for replay via a link available in the Investor Relations section of the company's website at investors.pasqal.com. With that, I will now turn the call over to Wasiq.
Good morning, everyone, and thank you for joining us. When we spoke in September, it was our first call as a public company. We spent a lot of time on the Pasqal story, who we are, why our neutral atoms approach is compelling, how we are delivering full analog quantum computing today, and our path to deliver fault-tolerant quantum computing. I will not. Instead, I want to show you what our strategy looks like in practice, quarter by quarter. The short version: our underlying fundamentals are strong. Our QPU-related services grew 53% year-over-year. But what I am even more encouraged by is the strong global pipeline of opportunities we see across enterprise, sovereign, and public sector customers. That pipeline has two parts. The first is deepening engagement with our algorithm implementations among our core customers.
As customers put our systems to work, they bring us more use cases, and that means more algorithm development and solution work for us. This also results in upgrades of our deployed QPUs to enable additional capabilities desired by our existing customers. The second is new opportunities that strategically extend the reach of our platform, but stay squarely within our core focus industry verticals. We are not chasing every opportunity. We are going after the ones where we have already shown we can deliver value. Together, these give us confidence in growing our booked and awarded business. Beyond driving commercial traction, developing business solutions with our customers and delivering commercial value with our analog systems today builds trust and credibility. The use cases and relationships we build now carry forward on the same platform, and we believe that positions us well competitively as we move toward fault-tolerant quantum computing.
With that in mind, let me walk you through the traction we are building in our three core verticals, where you will see both parts of that pipeline, and then the progress we are making across our technology platform. Let us start with energy. Aramco is our reference customer. A few months ago, we deployed our QPU in Aramco's data center in Dhahran, the first quantum computer in Saudi Arabia, alongside the region's first commercial Quantum Computing as a Service platform. I am pleased to say we are off to a very good start. We are working closely with Aramco on a number of use cases. The number of use cases has steadily grown, showing our deeper engagement with our reference customer. Utilization of the QPU is tracking in line with our expectations. Most importantly, we are seeing encouraging signals that we are demonstrating ROI relative to classical computing resources.
That is the conversation that matters to our customer and to us, not whether a system is analog or digital, but whether it can deliver more commercial value than what they realize today. Our traction in Saudi Arabia goes well beyond our relationship with Aramco. in August, we announced an agreement with Eleven Ventures to form a commercial joint venture to deploy, commercialize, and scale our systems across the kingdom and the broader MENA region. The long-term plan is to deploy multiple quantum systems in the kingdom over the coming years and give customers there direct commercial access to that infrastructure at scale, meeting fast-growing regional demand for sovereign high-performance computers. In the quarter, we also signed a research collaboration agreement with KACST through its National Center for Quantum Technologies, which deepens our engagement with the kingdom's research ecosystem.
KACST is a preeminent research institution in the kingdom and the region, and our work with them focuses on further development of our quantum solutions related to cryptography. The pattern here is the one we described last quarter. One deep reference relationship builds credibility and trust, and gives us domain experience to deliver value. Successful engagement with a reference customer then helps us initiate relationships with other customers. Next, material simulation. In our last call, we spoke about our demonstration of quantum advantage in simulating the rare earth element-based magnetic material TMGO. We believe that this is the first instance in the quantum industry of a scientifically rigorous demonstration of quantum advantage in the simulation of a real-life material. What I can tell you now is that this result has accelerated customer interest.
It has changed the tone of our conversations, and potential customers are now asking which of their own materials could benefit from the same approach. Two announcements this quarter show what this traction looks like. First, we formed a strategic partnership with USA Rare Earth and Riven Systems to develop next-generation separation technology and novel extractants for rare earth elements. As we know, rare earth element supply chain is critical from a strategic point of view. The goal is to drive smaller, lower-cost, and less energy-intensive processing plants. Separating mixed rare earth into individual oxides is one of the hardest bottlenecks in building a Western supply chain. Any efficiency improvements in the separation process has cascading benefits downstream. Riven's self-driving lab will run thousands of automated experiments to generate training data. Our QPUs will then benchmark quantum machine learning models against classical models to identify the most promising extracting molecules.
The best candidates will be validated at USA Rare Earth R&D facility in Colorado. Second, with True Nexus, a Saudi-based company, we reached a milestone in protein modeling. We used our neutral atom QPUs to encode protein structures tied to gelation, the process that gives foods their structure and texture. This is a first step towards designing protein functionality rather than discovering it by inefficient trial and error. The work is supported by the Saudi Arabia's Ministry of Communications and Information Technology, so it's also another proof point for our position in the kingdom. Rare earths and proteins are seemingly very different problems, but they have something in common. They are quantum mechanical at their core, they're hard for classical computers, and they are economically significant. That's exactly where our technology shines. Lastly, financial services, highlighted by a reference client, Crédit Agricole.
As a reminder, in late June, we signed a strategic partnership with CACIB that moves our multi-year collaboration in portfolio optimization and risk modeling from exploration to deployment, with initial production use cases targeted as early as 2028. Across our customers in this vertical, that approach is yielding encouraging results. We have already demonstrated efficiency improvements for our partners using our quantum-enabled algorithms. As our machines continue to advance, we expect to deliver even more value in portfolio optimization and risk modeling, moving these workloads into hybrid quantum-classical systems. What's the plan from here? For the balance of 2026 and into 2027, we'll keep going deeper with our reference clients in these three verticals. Every engagement adds to a deepening library of business solutions, and our job is to prioritize these solutions so we can bring them to other customers in the same vertical.
That is how a deep relationship becomes a repeatable business. Now let me turn to our technology and the progress we are making across our platform, from hardware to software. This quarter, we made progress on two fronts: the hardware that gets us to fault-tolerant quantum computing at scale, and the software that puts our systems in more hands. First, hardware. We continue to make progress against our published technology roadmap. We have committed to delivering 10,000+ physical qubits and 200+ logical qubits with six nines of logical fidelity by the end of 2029. This roadmap allows us to extend our leadership in delivering full analog quantum computing today that enables us to solve complex material simulation, machine learning, and optimization problems in the energy, financial, and specialty materials industry verticals. This roadmap also enables us to deliver industry-leading specifications in fault-tolerant quantum computing in line with the industry timeline.
Very importantly, we deliver both of these capabilities on the same hardware platform while preserving our ability to operate our quantum computers without deep cryogenic systems so they can be deployed in standard data centers. Related to progressing our hardware capability, on our last call, I mentioned that we had trapped individual atoms using laser light from a photonic chip developed with Aeponyx, a technology acquisition we made 18 months ago. Our focus now is scaling that architecture, generating, routing, and controlling more of that laser light directly on chip. That matters because as systems grow, the optics needed to control every atom become a major engineering challenge. Moving that control onto a chip gives us a path to shrink the optical footprint of future processors by up to 50 times and to manufacture at scale. Second, software.
Last quarter, I described our research using AI agents to take a plain English description of a quantum experiment all the way to a result on a live QPU. in October, we turned that research into a product. Our AI-assisted workflow is now available on Pasqal Cloud, plugged into leading agentic coding tools, and runs on our cloud QPUs in France, Canada, and Saudi Arabia, with the researcher in charge of every scientific decision. Lowering the barrier to using our systems means more users, more experiments, and ultimately, more use cases. This in turn drives utilization of our systems and grows our user base. The common thread is the same one you heard throughout the day. Research turning into product, all on one platform and focused on solving business-relevant problems.
The analog systems customers rely on today run on the same neutral atom architecture we are scaling towards logical qubits, so every step forward compounds. Let me leave you with one thought before I hand over to Stéphane. We have a unique position in quantum. With our dual analog to digital systems, we can sell commercially useful systems now while moving forward towards fault tolerance tomorrow. That gives us a significant head start in building a library of use cases and deep customer relationships. We believe that head start extends our lead and positions Pasqal to emerge as the leading quantum computing company over the long term. With that, I'll turn it over to Stéphane to walk through the financials.
Thank you, Wasiq. I'll now take you through our key financial and operational metrics for the third quarter of 2026. The third quarter reflected our continued commercial progress, disciplined execution, as well as further strengthening of our financial position as we emerged as a publicly traded company listed on NASDAQ. QPU-related services revenues increased 53% and reached EUR 3.1 million compared to EUR 2 million in the third quarter of 2025. The increase included initial commencement of the Aramco Quantum Computing as a Service hours consumed during the third quarter. For background, our QPU-related services consist primarily of consulting, remote access, upgrade, and maintenance services. Revenues for the third quarter was EUR 3.3 million compared with EUR 5.7 million in the third quarter of 2025.
The prior year period benefited from EUR 3.2 million revenues recognized from QPU sales, while there were no QPU sales realized in the current period. Our government grant income was EUR 1 million compared to EUR 0.7 million in the third quarter of 2025. At the end of September 2026, our order book, defined as firm orders not yet fulfilled, was EUR 69.8 million, a level pretty much stable compared to the end of June. As Wasiq noted, we assess the order book together with the quality and strategic depth of the underlying relationship. Our focus remains on expanding strategic accounts, progressing applications, and improving solution repeatability. At the end of September, we had EUR 312.8 million of cash on our bank accounts following the successful completion of the business combination. This gives us plenty of headroom to fund our growth strategy.
Our capital priorities remain focused on core research and development, acceleration of our fault-tolerant roadmap, commercial expansion, manufacturing and deployment capacity, as well as sovereign and middleware development. We will continue to manage capital with discipline and align our investment with our technology milestones, our customer opportunities, and the goal of developing a durable and scalable quantum computing company.
Thank you, Stéphane. Last quarter, I laid out five priorities. I said we will hold ourselves accountable to them, so let me give you a quick check-in. First, building enterprise-grade QPUs and the capability to deliver them. Our system is deployed and operational in the Aramco data center, and utilization is on track. Second, going deeper on business-critical use cases with reference customers. You heard it today. Additional use cases with Aramco, new engagements in material sciences vertical, building on our TMGO results, and optimization-related results in finance. Third, expanding access to our system. Our joint venture to deploy multiple systems across Saudi Arabia and the wider region, alongside our Quantum Computing as a Service platform in the kingdom. Four, continued execution and progress in delivering our technology roadmap, leading to fault-tolerant quantum computing. Fifth, investing our capital with discipline.
We are one quarter in as a public company, and we are executing the strategy we have described. With that, we are happy to take your questions. Operator, please open the line.
Thank you. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question comes from the line of Gary Mobley with StoneX. Please proceed with your question.
Morning, gentlemen. Thanks for taking my question. I wanted to ask about sort of the delivery time frames. I believe two months ago you mentioned there were three systems being built. I am curious to know if there are any problems with getting those systems out the door, what sort of heavy lifting is still in front of you to get those out the door, and then as well whether or not that number has changed from the three that you highlighted last quarter.
Yeah. So, this is Stéphane. Maybe, Gary, I will start and then let Wasiq complement. Yes, indeed, we have three systems in production. By the way, some of those systems are also for our own internal needs. Just want to clarify that in terms of the expectation when it comes to impact on bookings and revenues. There is no particular issue in terms of delivering those systems. Some of them are expected to be delivered towards the end of the year, so we are actively working on that, including when it comes to clients. Then to the beginning of your question, which is delivery time frame, yes, it does take time to deliver systems.
I think we generally gave an indication that between an order and the moment where the client on-premise can commission and accept the system, it is at least a good 12 months, and sometimes it can be more than that. So yes, it absolutely does take time. This will reduce progressively, but it actually indeed does take time. I will give you another example. In our press release, we indicated that in the same period in 2025, there was a QPU sale for an amount of EUR 3.2 million. That QPU sale at the time, which was recognized in 3Q 2025, it was actually a contract signed in 2023. So it was even earlier days, so it took even longer. But yes, for the type of QPU, which are complex machines, remember, that we do, it does take time to deliver.
Got it. To follow up on that, I wanted to ask about the addressable opportunity for existing priority customers that you highlighted in your prepared remarks versus the opportunity in adding new customers into your orbit, so to speak. Looking at those maybe five lead customers or however many there are, how do you see the revenue evolving in the future relative to where you are at today? As well, how methodical will you be in adding new relationships between now and FTQC in the 2028, 2029 timeframe?
Yeah, thank you for that question. This is Wasiq here. As you know, our strategy is to focus on key verticals and go deep. Part of that going deep is that we systematically, with a very pragmatic business view, we look at the business problems that we can solve, and we vector in on the problems where we can deliver value. In terms of existing customers, that is exactly our approach and strategy. We are just going deeper and deeper into the relevant business problems. As part of our engagement, we work on solving those problems, and that gives us a sense and the delivery of the ROI of our solution. Very importantly, it drives the utilization of our cloud hours. With existing customers, it is deepening engagement, leading to increased use of our cloud hours and also increased use of our services.
This is something that you are seeing reflected as we deepen our engagement with Aramco and with other customers. So that is the existing set. The reason we do that is that we feel that one of the most important problems for the quantum industry to solve in general is to figure out what are the problems where we can deliver ROI. That is why we are taking a very methodical and a very pragmatic approach to solving that business problem instead of just only focusing on the technology side. This also helps us with new customers because of our focused approach, whatever we achieve and deliver and demonstrate with a reference customer becomes our calling card and opens the door to other significant customers in those verticals. That is how we expand into our new customers.
This is our general approach, and this is what we have been doing, and that is why it is driving our QPU utilization or cloud utilization revenue, and it is driving our services revenue as well.
Thank you.
Thank you. Our next question comes from the line of David Williams with Needham & Company. Please proceed with your question.
Hey, good morning, and thanks for taking my question. Congratulations on the progress. Maybe just first, just thinking about the PIC, and you mentioned some of this in the script, but can you help us understand the magnitude of benefit that the integration of photonic and your progress here on that photonic integrated chip can really scale the systems longer term?
Yeah, absolutely. This basically allows us to dramatically reduce the size of a particular part of our QPU, which relates to how we immobilize and control our neutral atoms using laser light. This has not only the effect of reducing the size and the complexity requirements, but also it allows us to scale in terms of the number of atoms that we can also trap and we can manipulate. So, it has double benefit. This is one of the important technology capabilities that we have indicated in our public roadmap, and what we are sharing here is that we are executing exactly on plan to what we committed two years ago.
Great. Appreciate the color there. Then maybe just secondly, thinking about the pipeline and your visibility, how should we think about that bookings conversion as we move forward? You had talked a little bit about the length of time that it requires, but how should we think about maybe the pace of new bookings coming in, and then how does that convert over time? Thank you.
Yes. So, of course, I will not give you any particular guidance in terms of new bookings. This is something that we have not disclosed publicly. What we have said is that the work that has been done over the last couple of months when it comes to existing clients and expanding the engagement, but also new clients and finding opportunities to sell either QPUs or hours, we have been quite happy with the progress that has been made, and that gives us a lot of confidence about the progression of the bookings towards the end of the year and also into 2027. Now, as you understand, we have essentially those two models, and they are quite different in terms of impact on the order book and then also impact on the revenues.
In short, when we sell a QPU, there is a big positive hit on the order book upfront, but then it takes at least a year before it turns into revenues. Then it turns into revenues one shot, if I put aside the maintenance that then is spread over a few years. When we sell QPU hours, we also put that into the order book. Of course, the amounts are substantially lower compared to selling a machine. However, they generally turn into revenue relatively quickly over a few months as we are working with the client on those specific use cases. So, if you take the example of Aramco, we have right now close to 10 use cases going on. Some of them are more advanced because we started them before the summer when we deployed the machine.
As we have progressed with the client, now those use cases are advanced, which means there is a higher consumption of hours. Those that have been started more recently, there is still quite a bit of work upfront to define the algorithm, to show the ROI, and that consumes some QPU hours, but not too much. Once this is well advanced, then there is a higher level of consumption. So, it does take also a little bit of time for those cloud-based contracts to start generating revenues as the utilization is going up, and this is what we see with Aramco, and we will see it also with others. So, that is really the sharpest way to describe the difference, and both of them, they have an impact on the order book, but then they turn into revenue later or progressively. I do not know if it helps clarify it.
Yes. Thanks for the color very much. Certainly appreciate it, and that's all I had. Thank you.
Thank you. Ladies and gentlemen, as a reminder, if you'd like to join the question queue, please press star one on your telephone keypad. Our next question comes from the line of Suji De silva with ROTH Capital Partners. Please proceed with your question.
Hello, everybody, and congrats on the progress as well. On the longer term, the FTQC roadmap, can you talk about the key progress items or next steps to watch there alongside the analog quantum computers and revisit the timeframe just to understand the steps there?
Absolutely. Thank you for that question. We are very much focused on what we have publicly disclosed in terms of our technology roadmap. Specifically, if you look at the upcoming years, we have committed to demonstrating a larger and larger number of logical qubits with higher and higher fidelities and higher and higher repetition rates. This is all part of our public roadmap. But specifically, as we look at the next 12 months, for example, there's a few things to watch. We will see logical registers running error correction, and we will, as we've already shown, we will continue to show our logical implementations, meaning physical implementations consistently. This has already been shown in terms of error detection, implementation on our hardware, and this will go into a full error correction implementation.
The second thing is that we will be showing our logical error rates to be falling as well as we implement different kinds of codes, primarily surface codes. That's basically a test of whether our approach on the implementation of those codes is working and how well it's working. All of this is to drive us towards what is called the break-even point, where basically the better we get and the deeper we get beyond the break-even point, we get better even faster. Finally, the other thing that we look at is, which is constantly an area of development improvement for us, is that we build on the natural advantages of neutral atoms to have very high-quality, consistent, perfect physical qubits. Basically, this carries over to physical operations that can hold their quality.
As we scale that from thousands of reliable physical operations and beyond to several hundred qubits, then basically this consistency and high quality of our individual qubits forms the foundation that allows us to build a very good quality of our logical roadmap as well. So over the longer run, as we look at the end of the decade, we will see our roadmap, which we have stated. Goals are moving towards 10,000 - 50,000 physical qubits before the end of the decade. That itself is not the goal. As I mentioned earlier, we will keep on pushing our fidelities as well. But what we are going to get into is the MegaQuOps regime, basically being able to run millions of reliable logical operations without errors that compromise that computation chain.
That's our laser focus, to be able to demonstrate MegaQuOps by the time we reach hundreds of logical qubits with that high level of fidelity. At this moment, we don't currently see a fundamental scientific roadblock. There's always, of course, engineering challenges that we have to navigate. One example is, as we continue to increase our repetition rate, which has a direct impact on the acceleration of the computational speed and the number of operations we can do in parallel, which is a unique advantage that we have versus other approaches. Those are all engineering areas of focus for us, and we are working towards those.
Great. Thanks, Wasiq. Maybe one for Stéphane. Stéphane, can you update us on the progress of your hiring and whether you're able to add the heads that you intended to, and just update us on the implications on cash burn and your progress there?
Yes, for sure. Our hiring plans are on track. It actually takes a little bit more time than what we wanted to hiring. Remember, the main area where hiring is really on the commercial front. We also expand a little bit the headcount when it comes to production and deployment, because as we deploy more machines, we need to make sure we have the right people for installation and maintenance. Then we are relatively well-staffed when it comes to technology, but there are still probably a few areas where we will invest and hire. As I have always said, we have a very disciplined approach when it comes to our spend, and it's relatively easy because of the capital efficiency of neutral atoms modality. That's true in terms of OpEx, and it's true in terms of CapEx.
On the hiring side, it's very selective. We know the areas where we want to hire. We've hired, I would say, a few tens of people compared to the end of June. We still have a few tens of people that are in the plans for hire on the coming month. This is going according to plans. On cash burn, you know when you look at the last couple of years, meaning 2024 and 2025, the cash burn was anywhere between EUR 40 million -EUR 50 million. We've already put in place a lot of the manufacturing footprint that is required. I've always been very clear that we don't expect a significant increase in our cash burn. There will be some increase, but nothing significant.
This is why we are very comfortable with the runway that we have when it comes to the EUR 312 million, that cash that we had at the end of September. That gives us several years of runway until at least the end of the decade in order to execute the growth journey that we have and to scale our business. So that we're still as comfortable as we were a few months ago.
Excellent. Appreciate the detailed answers. Thank you.
Thank you. Our next question comes from the line of Troy Jensen with Cantor Fitzgerald. Please proceed with your question.
Hey, gentlemen. Congrats on all the progress here, and thanks for the update. Wasiq, quick question for you. I would be curious if Pasqal is planning on participating in the ProQure program that should be announced sometime soon.
ProQure, is that the U.K. program?
Yes, sir. It certainly is.
Yes. We will get back to you on that. We are looking at multiple options and programs.
Okay. All right, understood. Just quick thoughts. Your balance sheet now is pretty full here. You got EUR 313 million. Just thoughts on M&A strategy. Is there anything that you feel could accelerate your guys' commercialization roadmap here with a merger?
Yeah, in general, thank you. That is a great question. Going back to Stéphane's point about disciplined execution and disciplined identification of investment areas, while keeping the discipline, we look at areas that can accelerate our technology or product roadmap, and similarly, anything that can accelerate our commercialization focus, which is very vertical-oriented. Those are, in general, the big areas that we look at. Of course, within technology, obviously, as you know, we have our full analog capabilities, and we go into great depth in terms of specific industry verticals and especially in materials simulations. On the other side is the work that we are doing on the fault-tolerant quantum computing. On either side, we will be very selective, and that is our first criterion.
It is the good fit and meeting a very high bar in terms of the capabilities that come to us that are complementary to us.
Got it.
Stéphane, any other?
All right, congrats again.
Thank you.
Congrats again, and I look forward.
Thank you very much.
Thank you. Ladies and gentlemen, that concludes our question-and-answer session. I will turn the floor back to Mr. Bokhari for any final comments.
Well, first of all, thank you, operator, and thank you all for joining us. Our strategy is to focus on problems worth solving, deliver business value with the systems we have operational today, accelerate our commercial advantage in the industry verticals of our choice, and maintain focus on delivering our technology and product roadmap for both full analog quantum computing and fault-tolerant quantum computing. This quarter, you saw that strategy at work. Although our order book and revenue do not show it this past quarter, and it has not been a strong quarter in terms of what we are reporting on those two elements today, we have made important progress. In our technology roadmap, we are executing both on analog and FTQC work streams, scaling on-chip photonic control, and bringing AI-assisted workflows to Pasqal Cloud, as we mentioned.
On the commercial front, we see increased traction with our reference customers and have broadened our reach across our three priority verticals. Aramco is moving into real use, our engagement is growing with other key customers, and we have new customer engagements focused on our ability to provide material simulations. We have increased our pipeline of opportunities across enterprise, sovereign, and public sector customers, which gives us confidence in growing our booked and awarded business. Looking forward to the balance of 2026 and into 2027, we will maintain a disciplined investment approach to scale our capital-efficient business. We will keep going deeper with our customers, keep building our library of business-relevant use cases, and keep advancing our technology and product roadmap. We look forward to updating you on our progress next quarter. Thank you very much.
Thank you. This concludes today's conference call. You may disconnect your lines at this time. Thank you for your participation.