IonQ Agrees to Buy Elisity in All-Stock Deal Valued at Up to $1.3 Billion

IonQ, the quantum-computing company, has agreed to acquire Elisity, a network-security software maker, in an all-stock transaction valued at up to $1.3 billion, extending its push into security products ahead of the arrival of quantum machines able to break today's encryption.

The deal, announced Oct. 12, includes up to $150 million in earnout payments tied to the performance of Elisity's business. The number of IonQ shares to be issued will be set at closing, based on IonQ's volume-weighted average price over the 20 trading days ending before the third business day before closing, within a collar of $33.07 to $49.61 a share. IonQ expects the deal to close in the fourth quarter, subject to customary closing conditions and regulatory approvals.

Elisity, founded in 2019, sells software that applies "Zero Trust" access rules to users, devices, workloads and AI agents on corporate networks, limiting each to the connections it needs. The approach, known as microsegmentation, is meant to stop an attacker who gets inside a network from moving freely across it. Elisity enforces those rules through existing network equipment rather than requiring new hardware.

IonQ said Elisity has been doubling its revenue and customer base each year, has "zero churn among deployed customers" and has more than 100 global customer deployments. It did not disclose Elisity's revenue. Elisity CEO James Winebrenner will remain chief executive of the business after closing.

The strategic logic rests on a timeline. IonQ already sells post-quantum cryptography and quantum key distribution, and says it has deployed quantum-safe communications networks in Switzerland, Poland, Romania and Slovakia. Elisity gives it a base of enterprise security buyers and relationships with chief information security officers through which to sell those products.

"Q-Day is coming much faster than predicted," said Niccolo de Masi, IonQ's chairman and chief executive, referring to the point at which quantum computers can break widely used public-key encryption. "With Elisity and its team as part of IonQ, we will be well positioned to help customers protect critical infrastructure and enterprise networks throughout the transition to the quantum era."

Winebrenner framed the deal around customers' near-term needs. "Our customers need to prioritize post-quantum cryptography initiatives while securing existing assets to keep essential operations running," he said.

IonQ pointed to federal policy as a driver, citing a June 22 White House executive order on quantum and federal agencies' migration to post-quantum cryptography. It also cited its own multiproduct revenue, which it said grew 40% from a year earlier in the second quarter, as evidence that customers are buying more than one IonQ product.

Because IonQ is paying in stock, the price to its shareholders depends on IonQ's share price. The collar limits how many shares IonQ will issue if its stock falls below $33.07 and how few if it rises above $49.61. Excluding the earnout, the upfront value is about $1.15 billion, a Rackline calculation from the company's figures.

Elisity has raised more than $72 million from venture investors, according to the company. Its $37 million Series B in 2024 was led by Insight Partners, with AllegisCyber Capital and Two Bear Capital participating.

The markers to watch are IonQ's securities filing describing the agreement, progress on regulatory approvals, and IonQ's next quarterly report, which should show how the company accounts for the deal and the earnout.