Quantum-Si outlines continued placement-driven growth and Proteus launch milestones as market pressures persist

Earnings Call Insights: Quantum-Si incorporated (QSI) Q3 2025

MANAGEMENT VIEW

* CEO Jeffrey Hawkins emphasized three corporate priorities: accelerating commercial adoption, delivering on the innovation roadmap, and preserving financial strength. He highlighted the impact of capital sales headwinds, reporting "our revenue for the third quarter was $552,000 as top line results continue to be impacted by the capital sales headwinds in the market."
* Hawkins discussed the early success of the alternative instrument placement program, noting "since launching this initiative, we have had 12 new customers implement our platform and all have made their initial reagent purchases. Importantly, more than half of these new customers are in academic labs, a segment that has been very difficult for us to access in 2025 due to the NIH funding challenges."
* The CEO provided updates on strategic partnerships, particularly the Broad Institute initiative, stating "we have two active projects underway now and another two in the final stages of study design."
* Hawkins shared that Quantum-Si has "successfully completed sequencing runs on a prototype Proteus system," calling this "the single most important milestone for the program to achieve in 2025." He added, "we have multiple prototype systems performing sequencing and are excited about the quality of the data we are seeing at this stage of the program."
* The company launched its version 4 sequencing kit in early September, with initial shipments completed in Q3. Hawkins explained the kit "includes increased amino acid detection capabilities and the addition of a new enzyme that is engineered specifically to provide high-efficiency cutting of the amino acid directly preceding a proline."
* Hawkins stated the company remains "very confident in the long-term market opportunity in proteomics" and is optimistic about the early traction seen with the placement program.
* CFO Jeffry Keyes reported, "revenue in Q3 2025 was $552,000, which consisted of revenue from our Platinum line of instruments, consumable kits and related services. Gross profit was $194,000 and gross margin was 35%."
* Keyes addressed operating expenses, noting "GAAP total operating expenses for the third quarter of 2025 was $40 million compared to $28.5 million in the third quarter of 2024, while adjusted operating expenses were $21.4 million for the third quarter of 2025 compared to $26.0 million for the third quarter of 2024." He also highlighted a $13.6 million expense due to the termination of the New Haven lease, which led to a $10.2 million net cash outlay but is expected to save over $24 million in future operating expense.
* Keyes confirmed, "as of September 30, 2025, we had $230.5 million in cash, cash equivalents and investments in marketable securities."

OUTLOOK

* The company expects adjusted operating expenses for 2025 to be $96 million or less and total cash use to be $103 million or less. Keyes noted, "this updated number of $103 million is inclusive of the net $10.2 million payment under the lease termination agreement, meaning outside the lease termination, we are falling below the previously communicated $95 million of cash, highlighting our continued focus on most efficient use of our cash possible."
* Hawkins indicated that Quantum-Si will provide further updates on the Proteus program and recognizer development at the upcoming Investor and Analyst Day on November 19, including milestones for 2026.

FINANCIAL RESULTS

* Q3 2025 revenue was $552,000, gross profit was $194,000, and gross margin was 35%.
* For the nine months ended September 30, 2025, revenue totaled $2.0 million and gross profit was $1.0 million, with a gross margin of 52%.
* Adjusted operating expenses for the quarter decreased year-over-year, reflecting "very tight cost controls while still funding innovation and significant development progress of our Proteus platform and other programs that did not exist in the same period of 2024."
* The company reported $2.6 million in dividend and interest income for Q3 2025.

Q&A

* Alexander Vukasin, Canaccord Genuity: Asked about Investor Day updates on Proteus development and expected data. Hawkins responded, "that will be your first look at the data we're generating that we mentioned today. We'll provide an update on our recognizer development program and very specifically where are we at with that program." Vukasin inquired about DARPA's PROS program. Hawkins explained, "we're certainly engaged with DARPA and have engaged in that process. But I'm not sure that our approach... perfectly match that sort of micro system strategy."
* Vukasin also asked for a breakdown of placements. Hawkins stated, "more than half of those placements went into academic labs. The other half were sort of split across a mix of pharma and biotech and even into ag or agricultural sort of testing."
* Scott Henry, Alliance Global Partners: Asked about typical Q3-to-Q4 seasonality. Hawkins said, "I think we might see a modest improvement in Q4 as maybe a few people who have budgets are able to use them, but I don't expect it to be as sort of a significant of a step-up as maybe we've even seen historically Q3 to Q4."
* Henry followed up about NIH budget updates and the shutdown impact. Hawkins provided, "there hasn't really been any progress moving those resolutions forward through Congress... but first, we need to get through this shutdown process."
* Henry inquired about hurdles to Proteus launch. Hawkins detailed, "we have to now scale from prototypes into fully integrated systems. You have to harden those systems off and move those through into the manufacturing sort of processes and bring up, you can do this at scale."
* Swayampakula Ramakanth, H.C. Wainwright: Asked about academic centers in the placement program and internal targets. Hawkins replied, "of the 12 placements we made in the quarter, a little more than half of those were academic. In terms of a target, we don't really have a target... we expect to continue to do that in the fourth quarter."

SENTIMENT ANALYSIS

* Analyst sentiment was neutral to slightly negative, often focusing on the ongoing capital headwinds, NIH funding uncertainties, and the pace of adoption in the academic segment. Analysts probed management on seasonality, funding delays, and hurdles to product launch.
* Management maintained a cautiously optimistic tone during prepared remarks, with confidence expressed in statements such as "we remain very confident in the long-term market opportunity in proteomics." During the Q&A, Hawkins acknowledged challenges but reiterated commitment to strategic milestones.
* Compared to the previous quarter, the tone was similar: management remained focused on innovation and cost control, while analysts continued to press on market headwinds and funding delays.

QUARTER-OVER-QUARTER COMPARISON

* The alternative instrument placement program showed increased traction, with 12 new placements in Q3 versus only "the first few customers" in Q2. More than half of Q3 placements were in academic labs, expanding access despite NIH headwinds.
* The company achieved the milestone of successful sequencing runs on the Proteus prototype, whereas in Q2, this was still a forward-looking goal.
* The version 4 sequencing kit moved from validation in Q2 to commercial launch in Q3.
* Total revenue declined from $591,000 in Q2 to $552,000 in Q3, while gross margin decreased from 59% to 35%, impacted by product mix and accounting adjustments.
* Operating expense control remained a focus, with adjusted expenses lower year-over-year.
* Management's confidence in the placement model and long-term strategy was consistent, though the updated cash use guidance reflects the lease termination payment in Q3.
* Analyst focus remained on funding headwinds, adoption rates, and the timeline for Proteus.

RISKS AND CONCERNS

* Management cited continued capital market headwinds and NIH funding uncertainties as ongoing challenges affecting short-term commercial results.
* The company noted gross margin variability due to commercialization efforts and inventory accounting adjustments.
* The $13.6 million lease termination expense was highlighted as a one-time item, with management stating it will result in future cost savings.
* Analyst questions reflected concern over seasonality, government shutdown impacts on NIH funding, and the pace of academic adoption.

FINAL TAKEAWAY

Quantum-Si's third quarter underscored the effectiveness of its alternative placement program in penetrating academic labs and building a strategic installed base, even as capital sales remain pressured by NIH funding constraints. The achievement of successful sequencing runs on the Proteus prototype marks a significant milestone and sets the stage for further updates at the upcoming Investor and Analyst Day. Cost controls remain tight, and the recent lease termination, while a one-time expense, is expected to yield long-term savings. Management maintains confidence in the proteomics market opportunity and the company's ability to deliver on its innovation roadmap, while acknowledging that near-term results will continue to be shaped by external funding and market dynamics.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/qsi/earnings/transcripts]

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