D-Wave Quantum Inc. (QBTS) Q2 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
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.
Key Financial Performance
Revenue $3.1 million, an increase of about $900,000 or 42% from the second quarter of fiscal 2024 revenue of $2.2 million. The increase was due to $1 million in revenue associated with the Advantage2 quantum processing unit upgrade for the annealing system.
Bookings $1.3 million, an increase of approximately $600,000 or 92% from the second quarter of 2024 bookings of $700,000. The increase was attributed to an expanding sales pipeline and larger transaction sizes.
GAAP Gross Profit $2 million, an increase of approximately $600,000 or 42% from the second quarter of fiscal 2024 GAAP gross profit of approximately $1.4 million. The increase was due primarily to the growth in revenue.
Non-GAAP Gross Profit $2.2 million, an increase of approximately $600,000 or 39% from the second quarter of fiscal 2024 non-GAAP gross profit of approximately $1.6 million. The difference between GAAP and non-GAAP gross profit is due to noncash stock-based compensation and depreciation expenses.
GAAP Gross Margin 63.8%, a slight improvement from the second quarter of fiscal 2024 GAAP gross margin of 63.6%. The improvement was due to revenue growth.
Non-GAAP Gross Margin 71.8%, a slight decrease of 1.3% from the second quarter of fiscal 2024 non-GAAP gross margin of 73.1%. The decrease was attributed to changes in cost structure.
Net Loss $167.3 million or $0.55 per share, an increase of $149.5 million or $0.45 per share from the second quarter of fiscal 2024 net loss of $17.8 million or $0.10 a share. The increase was primarily due to $142 million in noncash nonoperating charges related to the remeasurement of the company's warrant liability and realized losses from warrant exercises.
Adjusted Net Loss $25.3 million or $0.08 per share, an increase of $5.3 million and a decrease of $0.04 per share from the fiscal 2024 second quarter adjusted net loss of $20 million or $0.12 per share. The increase was due to higher operating expenses.
Adjusted EBITDA Loss $20 million, an increase of $6.1 million or 44% from the second quarter of fiscal 2024 adjusted EBITDA loss of $13.9 million. The increase was due to higher operating expenses reflecting investments for future growth, partly offset by higher gross profit.
Cash Position $819.3 million as of June 30, representing over a 1,900% increase from the fiscal 2024 second quarter consolidated cash balance of $40.9 million and a nearly 170% increase from the immediately prior fiscal 2025 first quarter consolidated cash balance of $304.3 million. The increase was due to over $500 million raised in equity, including proceeds from ATM equity programs, warrant exercises, and an equity line of credit.
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Operating Highlights
Advantage2 Quantum Computer: Launched in May 2025, it is the most advanced and energy-efficient annealing quantum computer, capable of solving complex problems beyond classical computers. It features double coherence time, a 40% increase in energy scale, and increased qubit connectivity from 15 to 20.
Quantum AI Toolkit: Introduced an open-source toolkit integrating D-Wave's quantum computers with PyTorch for machine learning applications. Demonstrated its use in generating simple images, advancing quantum AI capabilities.
South Korea Expansion: Established a strategic relationship with Yonsei University and Incheon Metropolitan City to promote quantum computing adoption and research. Plans include deploying an Advantage2 system at Yonsei University.
Customer Engagements: Signed new and renewing contracts with major organizations like E.ON, GE Vernova, Nikon, NTT Data, and the University of Oxford. Also engaged with a Fortune 500 aerospace company to develop quantum optimization use cases.
Cryogenic Packaging Initiative: Launched a strategic initiative to advance cryogenic packaging for scaling quantum processors, leveraging NASA JPL's expertise.
Quantum Hybrid Applications: Developed a proof of technology with North Wales Police to optimize patrol vehicle deployment, achieving 90% target response times in 10 seconds.
M&A and Investment Plans: With a record cash position of $819.3 million, the company plans to explore strategic acquisitions and accelerate R&D investments in quantum technology and AI.
Go-to-Market Strategy: Focused on increasing discussions for on-premises systems and expanding the Leap Quantum LaunchPad program, which has attracted over 1,300 applications since January 2025.
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Risk or Challenges
Revenue Growth Challenges: Deals are taking longer to close due to complex transaction structures and rigid procurement processes in larger organizations, which could delay revenue realization.
Profitability Concerns: The company reported a significant net loss of $167.3 million in Q2 2025, primarily due to noncash nonoperating charges related to warrant liabilities, which could impact financial stability.
Operational Cost Increases: Non-GAAP operating expenses are expected to increase by approximately 15% in the coming quarters due to investments in R&D, sales, marketing, and cybersecurity, potentially straining cash flow.
Market Misunderstanding: Continued misinformation about the differences between annealing and gate model quantum computing could confuse the market and hinder customer adoption.
Customer Acquisition Challenges: Despite growing interest, the company faces challenges in converting applications from the Leap Quantum LaunchPad program into revenue-generating customers.
Supply Chain and Manufacturing Risks: The company is heavily investing in advanced cryogenic packaging and superconducting processes, which could face delays or technical challenges, impacting product development timelines.
Competitive Pressures: The quantum computing market is highly competitive, and D-Wave's focus on both annealing and gate model systems may stretch resources and dilute focus.
Economic Uncertainties: Macroeconomic conditions could impact customer budgets and willingness to invest in quantum computing solutions, affecting sales and revenue.
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Guidance & Outlook
Revenue Expectations: Revenue for the second quarter of fiscal 2025 totaled $3.1 million, an increase of about $900,000 or 42% from the second quarter of fiscal 2024. Revenue from the Advantage2 upgrade is expected to be substantially complete by the end of this year.
Capital Expenditures: D-Wave is accelerating key investment initiatives, including superconducting bump bond processes, upgrading superconducting printed circuit board advanced packaging manufacturing operations, and increasing wafer fabrication runs to support building Advantage3 prototypes and improving qubit coherence times.
Market Trends and Business Segment Performance: D-Wave is seeing growing interest in quantum optimization customer engagements across both commercial and government sectors, including U.S. Defense. The company is also expanding its professional services organization to support this demand.
Strategic Plans: D-Wave is investing in quantum AI research and development programs and expanding its geographical footprint for professional services. The company is also pursuing strategic acquisitions to propel its business further and faster.
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Shareholder Return Plan
The selected topic was not discussed during the call.
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Key Q&A
Q:What types of M&A does the company believe would make sense, and what is the timing for pursuing this growth angle?
A:The company has not disclosed specific M&A strategies but has made it a strategic priority with $800 million in the bank. The focus areas include accelerating R&D and product development in areas like gate model and quantum AI. The goal is to start announcing acquisitions this year, but timing depends on external factors.
Q:What is the importance of the cryogenic news to the company's roadmap?
A:The cryogenic advancements are crucial for scaling annealing systems to 100,000 qubits and developing gate model systems. The company has made faster-than-expected progress in this area, leveraging NASA Jet Propulsion Laboratory's capabilities to build production capabilities for multichip annealing processes and gate model systems.
Q:What are the details and significance of the Advantage2 system?
A:Advantage2 is the first system to demonstrate true quantum supremacy by solving a real-world problem that cannot be solved classically. It features increased interconnect, longer coherence time, and higher energy scale, enabling faster and more accurate solutions. The company plans to upgrade its Quantum Cloud service and on-premise systems to Advantage2, with a pipeline of 6-7 systems.
Q:Can you elaborate on the developer tools released and their capabilities?
A:The company introduced AI developer tools integrating PyTorch and a Discrete Variational Autoencoder, enabling mapping data into a discrete latent space. This approach aligns with the quantum processor's discrete data handling, potentially delivering better models faster and with lower energy consumption. The tools are part of a broader quantum AI strategy.
Q:What are the next milestones or activities in quantum AI?
A:The company has not announced specific milestones beyond recent developments. However, it is working on modern AI approaches like transformer and diffusion models, aiming to leverage quantum systems for these methods in the future.
Q:What is the company's approach to offering libraries or pre-built models for customers?
A:The company is considering offering libraries or pre-built models, similar to NVIDIA's approach, but currently focuses on working with customers on their data and applications. The decision to pursue this strategy depends on customer agreements and the need for domain expertise.
Q:How has the U.S. government's stance on quantum annealing evolved, and what are the company's thoughts on DARPA's Quantum Benchmarking Initiative?
A:The U.S. government has been slow in adopting quantum annealing, despite its potential for solving critical problems. The company criticizes DARPA's Quantum Benchmarking Initiative for focusing solely on gate model quantum computing, arguing that annealing is better suited for many government applications. It suggests creating a separate program for non-gate model approaches.
Q:Has the company's philosophy on the timing of bringing a gate model to market changed?
A:The company believes a commercially viable gate model quantum computer requires error correction and scaling, which are still years away. The focus is on reducing risk and clarifying the roadmap rather than accelerating the timeline.
Q:What is the company's customer retention rate, and how does it grow with customers?
A:The retention rate is over 90%. The company distinguishes between 'do-it-yourself' customers, who renew access for experimentation, and larger customers engaged through professional services. It focuses on moving customers from experimentation to production and expanding relationships with larger clients.
Q:How is the company evaluating increased R&D and marketing investments?
A:The company has doubled its sales and technical account management team and is building its professional services team. Incremental R&D investments are being made in areas like advanced cryogenic packaging and quantum AI. Future investments depend on validating returns from current efforts.
Q:What is the status of Triumph's use of Advantage2 and potential system sales?
A:Triumph is using the Advantage2 system for generative AI in particle acceleration and has seen good results. The company is growing its relationship with Triumph but has not disclosed specific system sales beyond ongoing discussions.
Q:Review of Unclear Management Responses
A:Management avoided providing specific details on the timing of M&A activities, stating that it depends on external factors. They also did not disclose specific milestones for quantum AI beyond general areas of focus. Additionally, they did not provide clarity on whether they will pursue offering pre-built models or libraries for customers, stating it is under consideration.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
AI toolkit
Baratz
Capital Group
Center
Co Research
Corp
Craig Hallum
Group LLC
Hallum Capital
Inc Research
JPL
LLC Research
LaunchPad program
Quantum Computing
Research Division
Securities Inc
Yonsei University
aerospace
annealing gate
computer problem
developer
development initiative
development quantum
initiative Wave
model quantum
model system
niche
optimization problem
packaging
premise
problem AI
proof technology
quantum processor
road map
set
type quantum
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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