D-Wave Quantum Inc. Q3 FY2025 earnings call

• Commercial traction: Participated in Q-Alliance, invited to global events, and has customers like major airlines, chemical companies, etc. - Technical highlights: Advantage2 system operational at Davidson Technologies, fabrication of fluxonium Qubits chips for gate model, superconducting technology chosen for its gate speed, scalability, and use of established supply chains. - Customer engagements: Signed EUR 10 million agreement for Advantage2 in Europe, completed proof-of-concepts with North Wales Police, BASF, Japan Tobacco, etc.

In the third quarter of fiscal 2025, revenue totaled $3.7 million, an increase from $1.9 million in the third quarter of 2024. This was composed of $1.8 million in systems revenue, $1.4 million in QCaaS revenue, and $500,000 in professional services revenue. Bookings for the third quarter were $2.4 million, an increase from $2.3 million in the third quarter of 2024. For the first 9 months of fiscal 2025, revenue was $21.8 million, an increase from $6.5 million in the same period in 2024. Bookings for the 9 months were $5.3 million, a decrease from $5.6 million in 2024. The revenue model includes three components: QCaaS (cloud-based recurring subscription revenue), professional services (fixed-priced short-term engagements), and system sales (highly scalable commercial-grade systems). QCaaS has over 100 customers, nearly 48% being commercial, with $100 million in annual revenue capacity. System sales are distinct from others, with advantaged systems used for real problems.

• The EUR 10 million European agreement will be recognized ratably over 5 years starting when the system becomes operational. - Sales pipeline has larger average deal sizes than last year. - Operating expenses for the balance of the year will increase ~15% sequentially, with majority in R&D. - No specific guidance beyond current indications for the first half of 2026 regarding OpEx growth.

Q: Harsh Kumar asked about the shift in U.S. government attention and significance of national security work.

A: Alan Baratz stated that D-Wave's approach is different from others, focusing on using annealing quantum computers to provide value to the government in areas like military logistics, not seeking R&D funding.

Q: Troy Jensen inquired about the gate model product timeline and qubit count/fidelity.

A: Alan Baratz explained that D-Wave uses fluxonium qubits, has fabricated fluxonium qubit chips and cryogenic control chips, with first demonstrations expected in the coming year and a scaled error-corrected gate model system still years out.

Q: David Williams asked about the Davidson relationship and national security initiatives.

A: Alan Baratz mentioned work with Davidson cuts across application areas and the next step is securing the system for classified government applications.

Q: Quinn Bolton questioned the Q-Alliance transaction details on system purchase.

A: Alan Baratz stated details on purchase not closed, but noted customers get benefits with system purchase and title transfer.

Q: Kingsley Crane asked about the Q-Alliance deal as a blueprint for future deals.

A: Alan Baratz said it could be a blueprint, similar to the Jülich Supercomputing Center model, building presence globally.

Q: Craig Ellis asked about R&D and sales/marketing investment and first half of 2026 expectations.

A: John Markovich said operating expenses will increase ~15% sequentially with majority in R&D; Alan Baratz mentioned accelerating gate model program and go-to-market efforts for system sales and professional services.

Q: Sujeeva De Silva asked about ancillary quantum opportunities.

A: Alan Baratz stated D-Wave is laser-focused on quantum computing, not focused on ancillary areas like quantum communications or key distribution.

Q: Tyler Perry Anderson asked about specific customer applications like SkyWater, airline, and BASF.

A: Alan Baratz mentioned SkyWater is for optimization problems, details on airline applications not disclosed, and BASF's proof-of-concept is in production but specifics on how often the program is run weren't detailed.

Q: Unknown Analyst asked about trial to conversion to production on optimization side.

A: Alan Baratz said larger companies are engaging for larger optimization problems, and there's an inflection point with inquiries about bundling proofs of concept and production applications.