Related Party Transactions

12 Months Ended

Dec. 31, 2023

Related Party Transaction [Line Items]

Related Party Transactions

18. RELATED PARTY TRANSACTIONS

Transactions with UMD and Duke

As described in Note 8, the Company entered into a License Agreement and Option Agreement with UMD and Duke whereby the Company, in the normal course of business, has licensed certain intellectual property and, in the case of the amendments to the Option Agreements, has purchased research and development services. The Company considers these agreements to be related party transactions because the Company’s Co-founder and Chief Technology Officer serves as a professor at Duke and the Company’s Co-founder and former Chief Scientist served as a professor at UMD. During 2021, the Company’s former Chief Scientist moved to Duke and, in his role as a professor at Duke, co-lead the research subject to the License Agreement and Option Agreement with Duke, alongside the Company's Chief Technology Officer, until his departure from the Company. The Company's Chief Technology Officer continues to lead the research subject to the License Agreement and Option Agreement with Duke as of December 31, 2023.

In addition, the Company has an operating lease for office space with UMD, which expires in 2030. Future minimum lease payments as of December 31, 2023 are $5.7 million. The lease costs and cash flow related to the operating lease were as follows (in thousands):

	Year Ended December 31,
	2023		2022
Fixed lease cost	$	763	$	763
Lease payments	$	671	$	644

A summary of the weighted-average remaining lease term and weighted-average discount rate is presented below:

	December 31,			December 31,
	2023			2022
Weighted-average remaining lease term (in years)	6.9			7.9
Weighted-average discount rate		11.9	%		11.9	%

In September 2021, the Company entered into a contract with UMD to provide certain quantum computing services and facility access (the “UMD Quantum Agreement”) related to the National Quantum Lab at UMD in exchange for payments totaling $14.0 million over three years. Over the term of the contract, the Company estimates that it will make payments to UMD of approximately $1.4 million, including a contribution of $1.0 million to establish the IonQ Endowed Professorship in the College of Computer, Mathematical and Natural Sciences at UMD. The pledge and other estimated payments to UMD will not be an exchange for distinct goods or services under the provisions of ASC 606 and therefore are considered a reduction of the transaction price for the UMD Quantum Agreement. The transaction price is currently estimated at $12.6 million, reflecting this reduction.

In July 2022, the Company entered into an agreement to provide customized quantum computing hardware to UMD for a transaction price of $0.7 million.

The Company’s results from transactions with related parties, as reflected in the consolidated statements of operations are detailed below. Except as noted below, all transactions in the table below relate to the Company’s arrangements with UMD (in thousands):

	Year Ended December 31,
	2023		2022
Revenue	$	4,585	$	4,022
Cost of revenue		132		51
Research and development(1)		1,035		1,082
Sales and marketing(2)		57		131
General and administrative(3)		116		117

(1)Included in research and development are expenses attributable to Duke of $0.5 million for each of the years ended December 31, 2023 and 2022.

(2)Included in sales and marketing are expenses attributable to Duke of less than $0.1 million and zero for the years ended December 31, 2023 and 2022, respectively.

(3)Included in general and administrative are expenses attributable to Duke of less than $0.1 million and zero for the years ended December 31, 2023 and 2022, respectively.

The Company has the following balances related to transactions with related parties, as reflected in the consolidated balance sheets. Except as noted below, all transactions in the table below relate to the Company’s arrangements with UMD (in thousands):

	December 31,		December 31,
	2023		2022
Assets
Prepaid expenses and other current assets ($520 and $520 attributable    to Duke)	$	531	$	529
Operating lease right-of-use asset		3,452		3,753
Other noncurrent assets ($805 and $1,325 attributable to Duke)		805		1,325
Liabilities
Accounts payable ($6 and zero attributable to Duke)	$	6	$	29
Accrued expenses ($6 and zero attributable to Duke)		124		—
Current operating lease liabilities		661		591
Unearned revenue		2,670		3,514
Non-current operating lease liabilities		3,181		3,459