TORONTO, November 11, 2026 -- Xanadu Quantum Technologies Limited, a leading photonic quantum computing company, today announced financial results for the third quarter ended September 30, 2026. 

"Loss is the engineering challenge between Xanadu and a utility-scale quantum computer, and we continue to go after it from every direction: more tapeouts, better components, and manufacturing partners who can help us push further," said Dr. Christian Weedbrook, Founder and Chief Executive Officer of Xanadu. "The partnerships, tooling, and facilities we are adding are designed to shorten the time between a design change and a measured improvement, and we plan to keep building toward a quantum data center."

Dr. Weedbrook added, "Our launch of Backline with AMD represents an important step in building the classical computing infrastructure required for utility-scale quantum computing. By integrating CPUs, GPUs, and FPGAs with quantum hardware for real-time processing and control, we believe Backline addresses a critical challenge in scaling fault-tolerant quantum computers."

"We believe we are investing ahead of the curve, and we added new government support to keep doing it. Canada’s agreement for funding through Project OPTIMISM to support the development of our new Inception facility and DARPA’s extension both provide support for the work we are already doing," said Michael Trzupek, Chief Financial Officer of Xanadu.

Third Quarter and Recent Business Milestones and Announcements

Loss reduction: Increased tapeouts, wafer runs, and investment in research and development ("R&D") headcount accelerated the Company’s cycles of learning and produced measurable progress across key components.

• Optical switch: A new 7-millidecibel optical switch sets a record the Company believes is state of the art for the component.
• Loss targets: Continued advances in component performance have meaningfully reduced overall system loss, supporting progress toward the Company's year-end 2026 system loss target of 10.2, outlined at our August Investor Day, and our longer-term objective of building a quantum data center.
• Qubit roadmap: Reducing loss supports the roadmap Xanadu presented in August at its inaugural Technology Roadmap Presentation, which targets up to 200 logical qubits by 2029, up to 500 by 2030, and more than 1,000 by 2031. See "Forward-Looking Statements".
   

Manufacturing partnerships: Added partners and capabilities that we believe will strengthen our manufacturing foundation and our ability to scale towards a utility-scale quantum computer.

• ASML: Collaboration with a leading supplier of semiconductor lithography equipment to help address waveguide loss, which the Company expects to be the largest source of optical loss in its integrated photonic circuits.
• Bluefors: Partnership to develop compact, modular cryogenics that bring detector cooling into a data-center footprint. Xanadu’s architecture already requires minimal cryogenics, and the work is expected to further reduce the size and cost of the cryogenic system.
• GlobalFoundries: Multi-year strategic partnership, announced in October, to scale Xanadu’s ultra-low-loss silicon nitride platform and its superconducting nanowire single-photon detectors ("SNSPDs"). The faster detectors are expected to raise the clock rate of Xanadu’s machines and reduce the footprint and resource requirements of the qubit factory.

Software: Launched Backline in collaboration with AMD, advancing Xanadu's software and classical computing infrastructure for fault-tolerant quantum computing.

• Ultra-low latency: Demonstrated median round-trip communication latency of 2.3 microseconds between an FPGA and CPU, and 4.5 microseconds between an FPGA and GPU, enabling high-speed classical processing and feedback.
• Heterogeneous computing: Supports integration of CPUs, GPUs, and FPGAs through a unified software framework, allowing workloads such as quantum error correction and real-time control to be executed on the most appropriate classical hardware.
• Open and hardware-agnostic: Provides a Python-based programming interface with compilation and execution across multiple hardware platforms, reducing vendor lock-in and enabling developers to scale from research prototypes to production systems.

Customers and strategic partnerships: Advanced work with industrial, academic, and national research partners.

• Mitsubishi Chemical: Supported by Canadian and Japanese national innovation programs, the companies demonstrated that quantum algorithms can accurately model key properties of EUV photoresist materials used in advanced semiconductor manufacturing. They are now developing an FTQC-ready software pipeline for semiconductor materials development.
• Royal Bank of Canada ("RBC") and Booz Allen: Engaged in workforce development programs leveraging Xanadu's software stack to build quantum computing expertise, alongside Xanadu's workforce training work with Lockheed Martin.
• University of Alberta: Strategic research partnership to develop quantum algorithms for cancer treatment. 

Funding and government support: Converted discussions into signed or provisionally approved support from federal sources in both Canada and the United States.

• Government of Canada: Definitive agreement under the Strategic Response Fund for approximately $140 million⁽¹⁾ in federal funding, structured as a non-dilutive loan, to support Inception, Xanadu’s new 158,000-square-foot advanced photonics research, development, and manufacturing facility in Toronto. Xanadu expects to receive the funds over time to reimburse the Company for qualifying R&D investments.
• DARPA: Provisional approval for project funding of up to $10 million under the Quantum Benchmarking Initiative (QBI). The one-year contract extension builds on Xanadu’s Stage B work, and Xanadu expects to allocate the majority of the funding to accelerate critical components of its R&D roadmap.

Third Quarter Financial Highlights ⁽¹⁾

• Cash and cash equivalents were $286.5 million as of September 30, 2026.
• Revenue of $1.3 million, a 32% year-over-year increase primarily driven by DARPA QBI revenue and revenue from partnership engagements, which was largely offset by completion of prior-year contracts.
• Research and development ("R&D") expense of $25.6 million, a 67% year-over-year increase, primarily due to higher compensation related costs due to increased engineering headcount and higher material consumption costs.
• General and administrative ("G&A") expense of $9.2 million, a 129% year-over-year increase primarily due to higher compensation related costs, including higher headcount and grants of restricted stock unit.
   
• Net loss was $32.2 million, compared to a loss of $20.3 million in the third quarter of 2025.
• Adjusted EBITDA⁽²⁾ loss of $26.3 million, compared to a loss of $15.4 million in the third quarter of 2025 primarily due to increased R&D and G&A year-over-year.
• Capital expenditures of $8.4 million in the third quarter mainly driven by the purchase of R&D test equipment.

⁽¹⁾ All financial figures in this release are presented in United States Dollars unless otherwise noted.

⁽²⁾ Adjusted EBITDA is a non-GAAP financial measure defined under “Non-GAAP Financial Measures,” below.

Note: Components may not sum to totals due to rounding. FPGA refers to a field-programmable gate array; CPU refers to a central processing unit; GPU refers to a graphics processing unit; and FTQC refers to fault-tolerant quantum computing. EUV (extreme ultraviolet) lithography is the chip-making process that uses very short-wavelength light to print the smallest features on the most advanced semiconductors.

Synthetic At-The-Market Equity Facility

Xanadu did not draw on its synthetic at-the-market equity facility with Yorkville Advisors during the third quarter of 2026. The Company raised $67.2 million in net proceeds under the facility in the second quarter, and up to $232.8 million of the $300 million facility remains available as of September 30, 2026. Xanadu plans to continue to use the facility opportunistically.