D-Wave Reports First Quarter Results

BURNABY, British Columbia and PALO ALTO, Calif., May 19, 2023 – D-Wave Quantum Inc., (NYSE: QBTS) (“D-Wave” or the “Company”) a leader in commercial quantum computing systems, software, and services, today announced financial results for its first quarter ended March 31, 2023.

“Our first quarter results reflect our continued measured progress across key business initiatives including commercial customer adoption, production-readiness efforts, product development and scientific advancements,” said Dr. Alan Baratz, CEO of D-Wave. “We continue to expand our business with commercial customers with the percentage of our revenue derived from commercial customers increasing by 30% when comparing our last four quarters with the immediately preceding four quarters. First quarter bookings of $2.9 million were up by 297% on a year-over-year basis, representing the fifth consecutive quarter of sequential quarter-to-quarter increases in bookings.”

He continued: “On the technical front, we achieved a significant scientific milestone, published in Nature, proving that the D-Wave Advantage system’s use of quantum delivers a speedup over classical for an important class of complex problems, 3D spin glasses. The observed speedup matches the theory of coherent quantum annealing and shows a direct connection between coherence and the core computational power of quantum annealing. We believe this research has important implications to optimization and the benefits will increase with future generation systems, including Advantage2.”

Recent Commercial / Business Highlights

Signed a number of new and expanded existing customer engagements with Forbes Global 2000 companies as well as industry leaders such as Interpublic Group, Unisys US, POLARISqb, and Quantum Algorithms Institute
Grew first quarter bookings by 297% on a year-over-year basis, representing the fifth consecutive quarter of sequential quarter-to-quarter growth in bookings and the fourth consecutive quarter of year-over-year growth in bookings
Expanded average deal size comprised of both QCaaS and Professional Services bookings by 430% on a year-over-year basis and by 68% on a sequential Q4 to Q1 basis with the average deal size increasing sequentially for each of the last five quarters
Completed the SOC 2 Type 1 audit, an important initiative in support of D-Wave’s commercial and production readiness, which helps ensure the protection of customer data

Recent Technical Highlights

Published significant research findings in Nature that show coherent quantum annealing can improve solution quality faster than classical for a specific problem set, 3D spin glasses. It is a significant achievement not only for D-Wave, but for the industry as a whole, as evidence of quantum technology’s proven superior performance and utility for larger-scale optimization problems
Introduced a new hybrid solver plug-in for feature selection as part of the company’s focus on helping companies leverage quantum technology to streamline development of machine learning (ML) applications.

First Quarter Fiscal 2023 Financial Highlights

Revenue: Revenue for the first quarter of fiscal 2023 was $1.6 million, a decrease of $130,000, or 7.6%, from fiscal 2022 first quarter revenue of $1.7 million. Given the nature of our professional services engagements, the timing of the booked revenue may vary from period to period resulting in some degree of variability in the timing of the corresponding revenue recognition.
Bookings: Bookings for the first quarter of fiscal 2023 were $2.9 million, an increase of $2.2 million, or 297%, from fiscal 2022 first quarter bookings of $733,000. This represents D-Wave’s fifth consecutive quarter of sequential quarter-to-quarter growth in bookings and the fourth consecutive quarter of year-over-year growth in bookings.
Average Deal Size: During the first quarter of fiscal 2023, D-Wave’s average deal size (comprised of both QCaaS and Professional Services bookings) increased by 430% when compared to the first quarter of fiscal 2022. On a sequential quarter-to-quarter basis, the average size deal increased in each of the last five quarters and increased by 68% from the fourth quarter of fiscal 2022 to the first quarter of fiscal 2023
Customers: Over the last four quarters, we had 65 revenue producing commercial customers compared with 63 commercial customers in the immediately preceding four quarters with commercial revenue increasing by 30% between the two periods. Over the last four quarters, we had a total of 109 revenue producing customers compared with 106 total customers in the immediately preceding four quarters, with total customers including commercial, educational and government accounts.
GAAP Gross Profit: GAAP gross profit for the first quarter of fiscal 2023 was $421,000, a decrease of $676,000, or 61.6%, from the first quarter of fiscal 2022 GAAP gross profit of $1.1 million, with the decrease due primarily to lower revenue and significantly higher non-cash stock-based compensation expense in the first quarter of fiscal 2023 cost of sales.
GAAP Gross Margin: GAAP gross margin for the first quarter of fiscal 2023 was 26.6%, a decrease of 37.4% from the 64.0% GAAP gross margin for the first quarter of fiscal 2022 with the decrease due primarily to lower revenue and significantly higher non-cash stock-based compensation expense in the first quarter of fiscal 2023 cost of sales.
Non-GAAP Gross Profit: Non-GAAP gross profit for the first quarter of fiscal 2023 was $852,000, a decrease of $317,000, or 27.1%, from the first quarter of fiscal 2022 non-GAAP gross profit of $1.2 million. The difference between GAAP and non-GAAP gross profit is limited to non-cash stock-based compensation and depreciation expenses that are excluded from the non-GAAP gross profit.
Non-GAAP Gross Margin: Non-GAAP gross margin for the first quarter of fiscal 2023 was 53.8%, a decrease of 14.4% from the first quarter of fiscal 2022 non-GAAP gross margin of 68.2%. The difference between GAAP and non-GAAP gross margin is limited to non-cash stock-based compensation and depreciation expenses that are excluded from the non-GAAP gross margin.
GAAP Operating Expenses: GAAP operating expenses for the first quarter of fiscal 2023 were $25.1 million compared with $12.0 million in the first quarter of fiscal 2022 with the year-over-year increase including $5.6 million in non-cash stock-based compensation expense and higher public company and headcount-related expenses.
Non-GAAP Adjusted Operating Expenses: Non-GAAP operating expenses for the first quarter of fiscal 2023 were $17.8 million compared with $10.9 million in the year earlier fiscal 2022 first quarter with the difference between GAAP and non-GAAP operating expenses being primarily non-cash stock-based compensation expense and depreciation.
Net Loss: Net loss for the first quarter of fiscal 2023 was $24.6 million, or $0.20 per share, compared with a net loss of $11.7 million, or $0.09 per share, in the first quarter of fiscal 2022.
Adjusted EBITDA: Adjusted EBITDA for the first quarter of fiscal 2023 was negative $16.9 million, compared with a negative $9.8 million in the fiscal 2022 first quarter with the increase due primarily to higher public company and headcount-related expenses.

D-Wave is providing non-GAAP gross profit, non-GAAP gross margin, adjusted operating expenses and Adjusted EBITDA as the Company believes these metrics improve investors’ ability to evaluate underlying performance. Non-GAAP measures do not have any standardized meaning under GAAP, and therefore may not be comparable to similar measures employed by other companies.

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Source: D-Wave