D-Wave Quantum Inc. (NASDAQ:QBTS), the world's first commercial quantum computing company, has reported its financial results for the first quarter of fiscal year 2024, showcasing impressive growth and operational progress. The company's innovative annealing quantum computing technology continues to gain traction, with strong customer demand and a robust pipeline of new applications.
In the first quarter of 2024, D-Wave reported revenue of $2.5 million, a 56% increase compared to the same period in the prior year. This marked the highest year-over-year quarterly revenue growth percentage for the company over the last two years. The company's net loss for the quarter was $17.3 million, a significant improvement from the $24.4 million net loss reported in the first quarter of 2023. D-Wave's annual net income for the fiscal year 2023 was -$82,715,000, while its annual revenue was $8,758,000. The company's annual operating cash flow and free cash flow for fiscal year 2023 were -$60,649,000 and -$61,279,000, respectively.
Bookings for the first quarter of 2024 totaled $4.5 million, a 54% increase from the $2.9 million in bookings reported in the same period of the prior year, and a 43% sequential increase from the $3.1 million in bookings reported in the fourth quarter of fiscal 2023. This represents D-Wave's eighth consecutive quarter of year-over-year growth in quarterly bookings.
The company's commercial traction continues to strengthen, with the total number of commercial customers increasing from 69 in the prior four-quarter period to 75 in the most recent four-quarter period. Additionally, the number of Forbes Global 2000 customers increased from 22 to 25, representing 33% of the total number of commercial customers. Revenue from commercial customers increased by 51% or $2.2 million, and revenue from Forbes Global 2000 customers increased by 50% or approximately $900,000, now constituting 27% of total revenue.
D-Wave's Chief Executive Officer, Dr. Alan Baratz, highlighted the company's progress, stating, "It's clear that D-Wave's momentum has remained strong since we spoke just two months ago. We continue to propel the business forward, hitting critical product performance milestones, working with our customers to build proofs of concept and applications that address real-world challenges now and educating governments around the world about the critical role annealing quantum computing can play today."
Business Overview
D-Wave is a commercial quantum computing company that provides customers with a full suite of professional services and web-based access to its superconducting quantum computer systems and integrated software environment through its Leap™ quantum cloud service. The company has developed its own annealing superconducting quantum computer and associated software, with its current generation quantum system being the D-Wave Advantage™ system.
D-Wave's business model is focused primarily on generating revenue from providing customers access to its quantum computing systems via the cloud in the form of quantum computing as a service (QCaaS) products, and from providing professional services wherein the company assists its customers in identifying and implementing quantum computing applications.
The company has three operating facilities, which it leases, in North America, located in Burnaby, British Columbia, Richmond, British Columbia, and Palo Alto, California.
Operational Highlights
During the first quarter of 2024, D-Wave achieved several key operational milestones that showcase the company's technological leadership and growing commercial traction:
1. Introduced the powerful new Fast Anneal feature, which helps users perform quantum computations at unprecedented speeds, greatly reducing the impact of external disturbances such as thermal fluctuations and noise that often hinder quantum calculations. This feature has been well-received by customers, with over 530,000 problems submitted using Fast Anneal since its launch in mid-April.
2. Continued progress on the development of its Advantage2 quantum system, including the recent yielding of 4,800+ qubit processors, a significant step towards the company's goal of delivering a 7,000+ qubit system.
3. Demonstrated quantum supremacy on real-world problems using its Advantage2 quantum computer, a groundbreaking achievement that has generated significant interest from government and academic institutions worldwide.
4. Renewed its multi-year partnership with the University of Southern California's prestigious Viterbi School of Engineering, which will continue to house the D-Wave Advantage quantum computer, facilitating ongoing exploration and adoption of annealing quantum computing solutions.
5. Saw growing interest from government and research institutions, driven by the passage of the FY '24 National Defense Authorization Act and the introduction of the National Defense Quantum Acceleration Act, which aim to accelerate the adoption of quantum computing technology, including annealing quantum computing and quantum hybrid technologies.
Geographic and Segment Breakdown
D-Wave's revenue is generated primarily from customers located in the United States, Germany, and Japan, which collectively accounted for 63% of total revenue in the first quarter of 2024. The remaining 37% of revenue came from other regions, including the rest of Europe, the Middle East, Africa, Asia, Canada, and Australia.
In terms of revenue breakdown by product and service type, the company's QCaaS offerings accounted for 69% of total revenue in the first quarter of 2024, while professional services made up 26% and other revenue, including training, support, maintenance, and printed circuit board sales, contributed the remaining 5%.
Guidance and Outlook
For the full fiscal year 2024, D-Wave is reiterating its guidance for the adjusted EBITDA loss to be less than the fiscal 2023 adjusted EBITDA loss of $54.3 million. The company believes it has the opportunity to be the first independent publicly-held quantum computing company to achieve sustained profitability, and to do so with substantially less funding than required by any other independent publicly-held quantum computing company.
Risks and Challenges
While D-Wave has demonstrated impressive progress, the company faces several risks and challenges common to the quantum computing industry, including:
1. Technological and scientific uncertainty: Quantum computing is a rapidly evolving field, and there are still significant technical and scientific hurdles to overcome before the technology can reach its full potential.
2. Competition: D-Wave faces competition from other quantum computing companies, as well as traditional computing giants, who are also investing heavily in quantum research and development.
3. Regulatory and policy changes: The quantum computing industry is subject to various regulatory and policy changes, which could impact the company's operations and growth prospects.
4. Liquidity and capital requirements: D-Wave requires significant capital to fund its research, development, and commercialization efforts. The company's ability to raise additional capital on favorable terms is crucial for its long-term success.
5. Talent acquisition and retention: Attracting and retaining top talent in the highly competitive quantum computing field is a key challenge for D-Wave.
Despite these risks, D-Wave's strong technological capabilities, growing commercial traction, and experienced management team position the company well to navigate the challenges and capitalize on the significant opportunities in the quantum computing market.
Conclusion
D-Wave Quantum Inc. has delivered an impressive performance in the first quarter of fiscal year 2024, showcasing strong revenue growth, improved profitability, and continued commercial momentum. The company's innovative annealing quantum computing technology is gaining traction with customers across various industries, and its partnership with government and academic institutions is opening up new avenues for growth.
As D-Wave continues to push the boundaries of quantum computing and deliver real-world solutions, the company is well-positioned to capitalize on the vast potential of this transformative technology. With a robust product roadmap, a growing customer base, and a focus on operational efficiency, D-Wave is poised to solidify its position as a leader in the quantum computing industry.