D-Wave Quantum Inc. (QBTS) Q3 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call indicates strong revenue growth, improved gross margins, and strategic initiatives in quantum AI and government engagements. Despite a significant net loss, the adjusted figures show improvement. The Q&A highlights potential in national security and defense, and successful trials in optimization problems. The focus on high-margin revenue streams and strategic partnerships, along with optimistic future plans, suggest a positive sentiment. However, the lack of clarity on certain deals and the increase in operating expenses temper the outlook. Overall, the stock is likely to see a positive movement.
Key Financial Performance
Revenue $3.7 million in Q3 2025, an increase of approximately $1.8 million or 100% from Q3 2024 ($1.9 million). The increase was driven by $1.8 million in systems revenue, $1.4 million in QCaaS revenue, and $500,000 in professional services revenue.
Bookings $2.4 million in Q3 2025, an increase of $100,000 or 3% compared to Q3 2024 ($2.3 million). The increase was attributed to higher customer engagement and deal sizes.
GAAP Gross Profit $2.7 million in Q3 2025, an increase of $1.7 million or 156% from Q3 2024 ($1 million). The growth was due to increased revenue and higher-margin systems upgrade revenue.
Non-GAAP Gross Profit $2.9 million in Q3 2025, an increase of $1.6 million or 131% from Q3 2024 ($1.3 million). The increase was driven by higher revenue and margin improvements.
GAAP Gross Margin 71.4% in Q3 2025, an increase of 15.6% from Q3 2024 (55.8%). The improvement was due to higher revenue and better margins from system upgrades.
Non-GAAP Gross Margin 77.7% in Q3 2025, an increase of 10.5% from Q3 2024 (67.2%). The improvement was attributed to higher-margin revenue streams.
Net Loss $140.8 million in Q3 2025, compared to $22.7 million in Q3 2024. The increase was primarily due to $121.9 million in noncash, nonoperating charges related to warrant liability remeasurement and realized losses from warrant exercises.
Adjusted Net Loss $18.1 million in Q3 2025, a decrease of $5.1 million from Q3 2024 ($23.2 million). The improvement was due to adjustments excluding noncash, nonoperating warrant-related charges.
Adjusted EBITDA Loss $20.6 million in Q3 2025, an increase of $6.8 million or 49% from Q3 2024 ($13.8 million). The increase was due to higher operating expenses, partially offset by higher gross profit.
Year-to-Date Revenue $21.8 million for the first 9 months of 2025, an increase of $15.3 million or 235% from the same period in 2024 ($6.5 million). The growth was driven by system sales, QCaaS, and professional services.
Year-to-Date GAAP Gross Profit $18.5 million for the first 9 months of 2025, an increase of $14.4 million or 353% from the same period in 2024 ($4.1 million). The increase was due to higher-margin system sales.
Year-to-Date Non-GAAP Gross Profit $19.2 million for the first 9 months of 2025, an increase of $14.5 million or 304% from the same period in 2024 ($4.7 million). The growth was driven by higher-margin revenue streams.
Year-to-Date GAAP Gross Margin 84.8% for the first 9 months of 2025, an increase of 22.1% from the same period in 2024 (62.7%). The improvement was due to higher-margin system sales.
Year-to-Date Non-GAAP Gross Margin 87.8% for the first 9 months of 2025, an increase of 15.1% from the same period in 2024 (72.7%). The improvement was attributed to higher-margin revenue streams.
Year-to-Date Net Loss $312.7 million for the first 9 months of 2025, compared to $57.8 million in the same period in 2024. The increase was primarily due to $260 million in noncash, nonoperating charges related to warrant liability remeasurement and realized losses from warrant exercises.
Year-to-Date Adjusted Net Loss $52.8 million for the first 9 months of 2025, a decrease of $5.1 million or 8.7% from the same period in 2024 ($57.8 million). The improvement was due to adjustments excluding noncash, nonoperating warrant-related charges.
Year-to-Date Adjusted EBITDA Loss $46.7 million for the first 9 months of 2025, an increase of $6.1 million or 15% from the same period in 2024 ($40.6 million). The increase was due to higher operating expenses, partially offset by higher gross profit.
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Operating Highlights
Advantage2 System: D-Wave announced the Advantage2 system is operational at Davidson Technologies in Alabama, supporting U.S. government and aerospace customers. It is capable of solving mission-critical computational problems beyond classical computers.
Advantage3 Prototype: Fabrication of Advantage3 prototype chips is nearing completion, with testing expected soon. This system focuses on scaling to 100,000 qubits.
Gate Model Development: D-Wave is advancing its gate model program, including the fabrication of fluxonium qubits and superconducting control chips, aiming for scalable gate model systems with cryogenic control.
Q-Alliance Partnership: D-Wave partnered with the Italian government and Q-Alliance to establish a quantum hub in Italy, including a EUR 10 million contract for an Advantage2 system.
Global Presence: D-Wave expanded its global presence with events in Tokyo, Berlin, Taiwan, and Miami, and hosted its first Qubits Japan User Conference.
Customer Engagements: Signed new and renewing contracts with major organizations, including a U.S.-based airline, SkyWater, Japan Tobacco, Yapi Kredi, and Korea Quantum Computing.
Hybrid Quantum Applications: Demonstrated significant operational efficiencies in projects with BASF and North Wales Police, reducing production scheduling time and improving response times.
Superconducting Technology Focus: D-Wave emphasized its focus on superconducting technology for both annealing and gate model systems, citing advantages in speed and scalability.
Commercial Readiness: Positioned itself as the only quantum company with commercially ready systems solving real-world problems today, unlike competitors still in R&D mode.
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Risk or Challenges
Market Conditions: The company faces competitive pressures from other quantum computing companies, some of which are focused on gate model systems. D-Wave's emphasis on annealing systems may face challenges in market perception and adoption, especially as competitors tout their own technological advantages.
Regulatory Hurdles: The company is entering into agreements with international governments and organizations, such as the Italian government and Q-Alliance. These partnerships may expose the company to regulatory risks and compliance challenges in different jurisdictions.
Supply Chain Disruptions: D-Wave relies on superconducting technology, which leverages established supply chains. However, any disruptions in these supply chains could impact the scalability and cost-effectiveness of their quantum systems.
Economic Uncertainties: The company is heavily investing in R&D and expanding its operations globally. Economic downturns or reduced funding availability could impact its ability to sustain these investments and achieve profitability.
Strategic Execution Risks: D-Wave is pursuing a dual approach with both annealing and gate model quantum systems. Balancing these two strategies and ensuring successful execution could pose significant challenges. Additionally, the company’s focus on commercial applications over R&D may limit its appeal to certain market segments.
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Guidance & Outlook
Deployment of Advantage2 System in Italy: D-Wave announced a EUR 10 million contract for a D-Wave Advantage2 annealing quantum computer in Lombardy, Italy, expected to be deployed in 2026. The agreement includes acquisition of 50% capacity of the system for 5 years, with an option to purchase the full system.
Advantage3 Prototype Development: Fabrication of Advantage3 prototype chips is nearing completion, with circuits expected for testing this quarter. The focus is on scaling to 100,000 qubits with increased connectivity and coherence.
Gate Model Development: D-Wave is advancing its gate model program, including the fabrication of fluxonium qubits and superconducting control chips. The company aims to demonstrate scalable control of gate model qubits, which could lead to the first scalable gate model system with cryogenic control.
Expansion of QCaaS Revenue Capacity: D-Wave has over $100 million in annual QCaaS revenue capacity, supported by four production systems. The company is at an early stage of developing this business, with significant operating leverage potential.
Pipeline and Future Opportunities: The company’s pipeline remains strong, with large opportunities for system sales and QCaaS deals. Recent bookings include a EUR 10 million European agreement and a high six-figure booking with a major U.S.-based international airline.
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Shareholder Return Plan
The selected topic was not discussed during the call.
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Key Q&A
Q:Can you talk about the significance of the U.S. government engagement and whether this indicates a shift in their approach?
A:The company is not seeking R&D funding from the U.S. government but is focusing on areas where their quantum systems can provide value, such as military logistics, research placement, and equipment maintenance. There is a growing realization in key government areas about the value their systems can deliver.
Q:Can you provide more details on the gate model product, including the timeline, fidelity, and qubit count?
A:The company is using superconducting fluxonium qubits controlled with magnetic flux, which they believe have advantages over transmon qubits. They have fabricated high-quality fluxonium qubit chips and cryogenic control chips, aiming to demonstrate cryogenic control of gate model qubits within the next year. A scaled error-corrected gate model system is expected in 5-10 years.
Q:How does the company plan to contribute to national security and defense initiatives like the Golden Dome?
A:The company is exploring application areas that could benefit national security and defense, focusing on solving hard problems that deliver value today. They are working with Davidson to secure their system for classified applications, potentially making it the first quantum computer certified for classified government use.
Q:Can you explain the Q-Alliance transaction and the option for SQT to purchase the system?
A:Details on how the purchase would occur are not finalized. The EUR 10 million contract for half the system's capacity over 5 years does not imply a simple doubling for full system purchase. Purchasing the system includes additional benefits and a pricing premium.
Q:Could the Q-Alliance deal model become a blueprint for future deals?
A:Yes, this model could be replicated for building global presence and transitioning towards system purchases. A similar approach was used with the Jülich Supercomputing Center, and discussions are ongoing with other entities like Korea.
Q:What are the expectations for R&D and sales/marketing investments in the near future?
A:Operating expenses are expected to increase by approximately 15% sequentially, with most of the incremental spend in R&D. The company is accelerating its gate model program and investing in go-to-market strategies, including system sales and professional services.
Q:What is the company's stance on ancillary quantum opportunities like communications, timing, and security keys?
A:The company is focused solely on quantum computing and does not view ancillary opportunities like quantum interconnects, sensing, or quantum key distribution as central to their operations.
Q:What are SkyWater and the airline company using the company's technology for?
A:SkyWater is using the technology for optimization problems in their operations. The specific applications for the airline company have not been disclosed.
Q:What is the tone and progress in trial-to-production conversions for optimization problems?
A:The company is engaging with larger companies to address more challenging optimization problems. Successful proofs of concept are leading to inquiries about deals bundling multiple proofs of concept and production applications, indicating progress towards an inflection point in their professional services and QCaaS business.
Q:Review of Unclear Management Responses
A:The company avoided providing specific details on how the Q-Alliance system purchase would work, including whether money spent on the EUR 10 million contract would be credited. Additionally, they did not disclose the specific applications being worked on with the airline company or provide details on how often BASF runs their program.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Alliance
BASF
Boca Raton
IBM study
Italy
Police
Quantum AI
Qubits Japan
Tobacco division
Tokyo
advantage term
airline
archive
atom
chain
chemical company
computer market
computer quantum
concept Japan
coordination
customer order
discovery
drug
event
example quantum
fidelity
gate speed
hour
implementation
incident response
ion trap
liquid filling
method quantum
model system
optimization approach
quantum company
reach
region
solution world
QBTS Transcript
D-Wave Quantum Inc. (QBTS) Q1 2026 Earnings Call Transcript
Positive5-12
The earnings call showed a strong financial performance with a 25% increase in revenue and improved gross margins. Operating expenses decreased, and there was a notable improvement in adjusted EBITDA loss. Bookings rose by 20%, indicating strong customer acquisition and retention. The lack of strategic initiatives or risks discussed may limit the upside, but overall, the financial metrics suggest a positive sentiment, likely leading to a 2% to 8% stock price increase.
D-Wave Quantum Inc. (QBTS) Q4 2025 Earnings Call Transcript
Positive2-26
The earnings call highlights several positive aspects: ongoing product development, a strong pipeline, and strategic government opportunities. The Q&A section reveals some uncertainties, such as unclear timelines and retention rates, but these are outweighed by the positive sentiment around new contracts, system scalability, and the company's market positioning. The absence of negative financial indicators and the potential for significant government contracts suggest a positive outlook for stock price movement.
D-Wave Quantum Inc. (QBTS) Q3 2025 Earnings Call Transcript
Positive11-6
The earnings call indicates strong revenue growth, improved gross margins, and strategic initiatives in quantum AI and government engagements. Despite a significant net loss, the adjusted figures show improvement. The Q&A highlights potential in national security and defense, and successful trials in optimization problems. The focus on high-margin revenue streams and strategic partnerships, along with optimistic future plans, suggest a positive sentiment. However, the lack of clarity on certain deals and the increase in operating expenses temper the outlook. Overall, the stock is likely to see a positive movement.
D-Wave Quantum Inc. (QBTS) Q2 2025 Earnings Call Transcript
Positive8-7
The earnings call reveals strong financial performance, including record revenue and a robust cash position, which supports future profitability. Product development is promising, with the Advantage2 system demonstrating quantum supremacy. While M&A strategies and quantum AI milestones lack specificity, the company's strategic priorities and advancements in cryogenic technology are positive. The Q&A section highlights a focus on growth through acquisitions and R&D, with a high customer retention rate. Overall, the sentiment is positive, with potential for stock price appreciation over the next two weeks.
QBTS Slides
QBTS Report
Frequently Asked Questions
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