D-Wave Reports Third Quarter Results

PALO ALTO, Calif. and BURNABY, British Columbia, Nov. 9, 2023 – D-Wave Quantum Inc., a leader in commercial quantum computing systems, software, and services, today announced financial results for its fiscal third quarter ended September 30, 2023.

Dr. Alan Baratz, CEO of D-Wave, stated: “We believe that this is a pivotal moment in quantum computing, as D-Wave leads the industry’s transformative shift from research and developmental experimentation to true delivery of quantum’s enterprise value and utility. Our annealing quantum computing solutions are driving real business impact today, and we believe that our third quarter results reflect a growing recognition that D-Wave is leading the enterprise quantum wave.

“Once again, we experienced quarter-over-quarter and year-over-year growth in the number of customer bookings, commercial revenue, and the size of commercial deals. We’re also seeing customers moving from development to deployment of applications, as they are seeing first-hand the business impact and near-term advantage that can be achieved using D-Wave’s annealing quantum computing solutions. That growing commercial success, coupled with our ongoing world-class product development and scientific advancements, reflect, in our opinion, impressive progress across all facets of our business.”

Third Quarter Fiscal 2023 Financial Highlights

Revenue: Revenue for the third quarter of fiscal 2023 was $2.6 million, an increase of $0.9 million, or 51%, from fiscal 2022 third quarter Revenue of $1.7 million, and an increase of $0.9 million, or 50%, from the immediately preceding fiscal 2023 second quarter Revenue of $1.7 million. Given the nature of our professional services engagements, the timing of Revenue recognition associated with our professional services contracts may vary from period to period.
Bookings: Bookings for the third quarter of fiscal 2023 were $2.9 million, an increase of $1.0 million, or 53%, from fiscal 2022 third quarter Bookings of $1.9 million, and an increase of $0.4 million, or 16%, from the immediately preceding fiscal 2023 second quarter Bookings of $2.5 million. This represents D-Wave’s sixth consecutive quarter of year-over-year growth in Bookings.
Average Deal Size: In comparing the most recent four quarters with the immediately preceding four quarters, the Average Deal Size per booking increased by 172% for commercial customers and 178% for all customers.
Commercial Traction: In comparing the last four fiscal quarters with the immediately preceding four fiscal quarters:
- revenue derived from commercial customers increased by $2.2 million, or 62%;
- average revenue per commercial customer increased by 68%;
- commercial revenue as a percentage of total revenue increased to 70% from 50%; and
- we had 73 commercial customers compared to 76 commercial customers, including nearly two dozen Forbes Global 2000 companies.
Customers: Over the last four quarters, we had a total of 123 revenue producing customers compared with 121 revenue producing customers in the immediately preceding four quarters, with total customers including commercial, educational and government accounts.
GAAP Gross Profit: GAAP Gross Profit for the third quarter of fiscal 2023 was $1.5 million, an increase of $0.5 million, or 47%, from the third quarter of fiscal 2022 GAAP Gross Profit of $1.0 million, and an increase of $0.8 million, or 117%, from the immediately preceding fiscal 2023 second quarter GAAP Gross Profit of $0.7 million with the increase due primarily to the growth in revenue.
GAAP Gross Margin: GAAP Gross Margin for the third quarter of fiscal 2023 was 7%, representing the second consecutive quarter of sequential quarter-to-quarter improvement in GAAP Gross Margins due primarily to the growth in revenue. The 59.7% GAAP Gross Margin for the third quarter of fiscal 2023 was 1.7% lower than the 61.4% GAAP Gross Margin for the third quarter of fiscal 2022 with the decrease due entirely to higher non-cash stock-based compensation expense in the third quarter of fiscal 2023 cost of sales.
Non-GAAP Gross Profit: Non-GAAP Gross Profit for the third quarter of fiscal 2023 was $1.9 million, an increase of $0.8 million, or 72%, from the third quarter of fiscal 2022 Non-GAAP Gross Profit of $1.1 million, and an increase of $0.9 million, or 95%, from the immediately preceding fiscal 2023 second quarter Non-GAAP Gross Profit of $1.0 million with the increase due primarily to higher revenue. 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 third quarter of fiscal 2023 was 6%, an increase of 9.2% from the third quarter of fiscal 2022 Non-GAAP Gross Margin of 66.4% and an increase of 17.5% from the immediately preceding fiscal 2023 second quarter Non-GAAP Gross Margin of 58.1% with the increase due primarily to higher Revenue. 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 third quarter of fiscal 2023 were $19.9 million compared with $16.2 million in the third quarter of fiscal 2022 with the increase due primarily to higher non-cash stock-based compensation expense and higher public company and headcount-related expenses. On a sequential quarter-to-quarter basis, the $19.9 million in fiscal 2023 third quarter GAAP Operating Expenses represents the second consecutive quarter of sequential quarter-to-quarter decreases in GAAP Operating Expenses driven primarily by lower general and administrative expenses.
Non-GAAP Adjusted Operating Expense: Non-GAAP Adjusted Operating Expenses for the third quarter of fiscal 2023 were $13.5 million compared with $14.2 million in the year earlier fiscal 2022 third On a sequential quarter-to-quarter basis, the $13.5 million in fiscal 2023 third quarter Non-GAAP Adjusted Operating Expenses represents the second consecutive quarter of sequential quarter-to-quarter decreases in Non-GAAP Adjusted Operating Expenses across all of the operating expense categories. The difference between GAAP and Non-GAAP Adjusted Operating Expenses is primarily non-cash stock-based compensation expense, non-recurring one-time expenses, and amortization and depreciation expense.
Net Loss: Net Loss for the third quarter of fiscal 2023 was $15.8 million, or $0.12 per share, compared with a Net Loss of $13.3 million, or $0.11 per share, in the third quarter of fiscal 2022. On a sequential quarter-to-quarter basis, the $15.8 million in fiscal 2023 third quarter Net Loss represents the second consecutive quarter of sequential quarter-to-quarter improvement in Net Loss that was driven by higher gross profit in combination with lower operating expenses.
Adjusted EBITDA Loss: Adjusted EBITDA Loss for the third quarter of fiscal 2023 was $11.6 million, a decrease of $1.4 million, or 11%, compared with the $13.0 million Adjusted EBITDA Loss in the fiscal 2022 third On a sequential quarter-to-quarter basis, the $11.6 million in fiscal 2023 third quarter Adjusted EBITDA Loss represents the second consecutive quarter of sequential quarter-to-quarter improvement in Adjusted EBITDA Loss.

Fiscal Year 2023 Outlook

Based on the information available on November 8, 2023, guidance for the full year 2023 is as follows and this guidance is subject to various cautionary factors:

Revenue