IonQ, Inc. Fair Value Disclosure
5. FAIR VALUE MEASUREMENTS
The Company’s financial assets and liabilities subject to fair value measurements on a recurring basis and the level of inputs used for such measurements were as follows (in thousands):
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Fair Value Measured as of |
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December 31, 2025 |
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Level 1 |
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Level 2 |
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Level 3 |
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Total |
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Assets |
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Cash, cash equivalents and restricted cash: |
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Cash and money market funds(1) |
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$ |
538,195 |
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$ |
— |
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$ |
— |
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$ |
538,195 |
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U.S. government and agency |
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— |
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|
499,553 |
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|
— |
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|
499,553 |
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Total cash, cash equivalents and restricted cash |
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$ |
538,195 |
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$ |
499,553 |
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$ |
— |
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$ |
1,037,748 |
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Short-term investments: |
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Corporate notes and bonds |
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— |
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1,999 |
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— |
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1,999 |
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U.S. government and agency |
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— |
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1,359,292 |
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— |
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|
1,359,292 |
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Total short-term investments |
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$ |
— |
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$ |
1,361,291 |
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$ |
— |
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$ |
1,361,291 |
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Long-term investments: |
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U.S. government and agency |
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— |
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944,643 |
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— |
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|
944,643 |
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Total long-term investments |
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$ |
— |
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$ |
944,643 |
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$ |
— |
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$ |
944,643 |
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Total assets |
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$ |
538,195 |
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$ |
2,805,487 |
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$ |
— |
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$ |
3,343,682 |
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Liabilities |
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Warrant liabilities |
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$ |
44,168 |
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$ |
— |
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$ |
2,427,409 |
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$ |
2,471,577 |
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Fair Value Measured as of |
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December 31, 2024 |
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Level 1 |
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Level 2 |
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Level 3 |
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Total |
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Assets |
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Cash, cash equivalents and restricted cash: |
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Cash and money market funds(1) |
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$ |
33,204 |
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$ |
— |
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$ |
— |
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$ |
33,204 |
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U.S. government and agency |
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— |
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|
23,636 |
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— |
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|
23,636 |
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Total cash, cash equivalents and restricted cash |
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$ |
33,204 |
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$ |
23,636 |
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$ |
— |
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$ |
56,840 |
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Short-term investments: |
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Corporate notes and bonds |
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— |
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43,868 |
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— |
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43,868 |
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U.S. government and agency |
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— |
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|
242,028 |
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— |
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|
242,028 |
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Total short-term investments |
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$ |
— |
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$ |
285,896 |
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$ |
— |
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$ |
285,896 |
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Long-term investments: |
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Corporate notes and bonds |
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— |
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1,924 |
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— |
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|
1,924 |
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U.S. government and agency |
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— |
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21,621 |
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— |
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21,621 |
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Total long-term investments |
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$ |
— |
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$ |
23,545 |
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$ |
— |
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$ |
23,545 |
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Total assets |
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$ |
33,204 |
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$ |
333,077 |
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$ |
— |
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$ |
366,281 |
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Liabilities |
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Warrant liabilities |
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$ |
70,688 |
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$ |
— |
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$ |
— |
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$ |
70,688 |
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Transfers to/from Levels 1, 2 and 3 are recognized at the beginning of the reporting period. There were no transfers between levels during the current period.
The Company’s warrant liabilities are comprised of the public warrants and the Series A and Series B private warrants. The Series A and Series B prefunded warrants were fully exercised as of December 31, 2025. Refer to Note 13 for further details. The fair value of the Series A prefunded warrants and Series A private warrants (together, the “Series A Warrants”) and the Series B prefunded warrants and Series B private warrants (together, the “Series B Warrants”) was determined using Level 3 inputs. Management determined the fair value of the Series A Warrants and Series B Warrants using unobservable inputs in the Black-Scholes option-pricing model. Inherent in the valuation were assumptions related to the expected stock-price volatility, expected term, risk-free interest rate, and dividend yield. The Company estimated the expected volatility based on the Company’s historical and implied stock
price volatility. The expected term was assumed to be equivalent to the warrants’ remaining contractual term. The risk-free interest rate was estimated using the yield on actively traded non-inflation-indexed U.S. treasury securities with contract maturities equal to the expected term. The dividend yield was based on the historical rate, which the Company anticipates remaining at zero.
The assumptions used to estimate the fair value of the Series A Warrants and Series B Warrants during the period were as follows:
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December 31, 2025 |
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October 14, 2025 |
|
|
July 9, 2025 |
|
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Risk-free interest rate |
|
|
3.87 |
% |
|
|
3.75 |
% |
|
|
4.07 |
% |
Expected term (in years) |
|
6.67 |
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|
7.00 |
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|
7.00 |
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Expected volatility |
|
|
95.00 |
% |
|
|
100.00 |
% |
|
|
95.00 |
% |
Dividend yield |
|
|
— |
% |
|
|
— |
% |
|
|
— |
% |
Investments in Privately-Held Companies
During fiscal year 2025, the Company entered into certain agreements (“Investment Agreements”) to purchase equity securities, convertible debt securities, and SAFE investments of privately-held companies (each, an “Investee”). As of December 31, 2025, the total amount of investments in privately-held companies included in other noncurrent assets on the consolidated balance sheet was $91.0 million, including $36.0 million of convertible debt securities, $25.0 million of SAFE investments, and $30.0 million of equity securities. The Company did not record any impairments for the privately-held securities held as of December 31, 2025. The fair values of convertible debt securities and SAFEs are based on unobservable inputs and are classified as Level 3 in the hierarchy.
In connection with the Investment Agreements, each Investee and the Company entered into a commercial contract for access to the Company’s products and services. The Company assessed the commercial contracts under the guidance within ASC 606, Revenue from Contracts with Customers, as well as the commercial substance of the arrangement considering the customer’s ability and intention to pay as well as the Company’s obligation to perform under the contract. Based on its assessment, the Company concluded the commercial contracts are within the scope of ASC 606 and the Company will apply the principles within ASC 606 to measure and recognize revenue. During the year ended December 31, 2025, the Company recognized $3.4 million of revenue from the commercial contracts.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 25, 2026 | Showing above |
| 2024 | Feb 26, 2025 | |
| 2023 | Feb 28, 2024 | |
| 2022 | Mar 30, 2023 | |
| 2021 | Mar 28, 2022 | |
| 2020 | Mar 25, 2021 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.