In my last analysis of D-Wave Quantum Inc. (NYSE: QBTS ), I issued a Hold rating but was moderately bullish on the individual stock. I estimated 25-35% annual returns through 2030 in bull and base cases, butOliver Rodzianko is an accomplished investment analyst grounded in timeless value principles, specializing in the technology sector with expertise in AI, semiconductors, software, and renewable energy. He focuses on companies with resilient management and lasting competitive advantages, often taking long ...

Core Insights - D-Wave Quantum Inc. experienced significant stock volatility influenced by industry developments and company performance, with shares surging 46.9% recently after a positive earnings report despite a prior plummet due to comments from NVIDIA's CEO regarding the commercialization timeline of quantum computing [1][2][3]. Company Performance - D-Wave reported a net loss of 8 cents per share on sales of $2.3 million, but the forward guidance of expected sales of $10 million for the first quarter significantly exceeded analysts' estimates of $2.55 million [3][4]. - Bookings in the fourth quarter surged 502% to $18.3 million, indicating strong demand and restoring confidence in the quantum computing sector [5]. Industry Context - The quantum computing sector is projected to contribute $1.3 trillion to the economy by 2035, highlighting its potential impact and the importance of advancements in this field for AI training [6]. - D-Wave's recent scientific breakthrough, where its quantum computer outperformed a classical supercomputer in complex simulations, has positively influenced investor sentiment [5]. Market Sentiment - Brokers have raised the highest price target for D-Wave stock to $11 from the last closing price of $6.91, indicating a potential upside of 59.2% [7]. - Despite the optimism, challenges remain as D-Wave reported an EBITDA loss of $56 million in 2024, raising concerns about its leadership position in the emerging quantum computing market [9].

Part I [Business](index=8&type=section&id=Item%201.%20Business) The company develops and delivers commercial annealing and gate-model quantum computers via its QCaaS cloud platform and professional services - D-Wave is the only quantum computing company building both **commercial annealing and gate-model systems** to serve the full quantum total addressable market (TAM)[38](index=38&type=chunk) - Revenue is primarily derived from its **Quantum Computing as a Service (QCaaS) platform**, professional services, and sales of on-premises quantum computers[49](index=49&type=chunk) - The company demonstrated **quantum supremacy on a useful, real-world problem**, solving a complex simulation in minutes that would take a supercomputer nearly one million years[43](index=43&type=chunk)[70](index=70&type=chunk) - The growth strategy focuses on a **verticalized go-to-market model**, advancing quantum science, and improving its dual annealing/gate-model technology platforms[82](index=82&type=chunk) [Overview](index=8&type=section&id=Item%201.%20Business%23Overview) - D-Wave's mission is to solve problems intractable for classical computers using its **commercial-grade annealing quantum solutions**[31](index=31&type=chunk) - The company is focused on transitioning quantum computing from academic research to **enterprise-scale adoption** for real-world commercial problems[32](index=32&type=chunk) - Recent advancements include the **Advantage2™ system prototype** with significant performance improvements and progress in high-coherence fluxonium qubits[34](index=34&type=chunk) [Our Quantum Computers, Developer Tools, and Quantum Hybrid Solvers Delivered via QCaaS](index=11&type=section&id=Item%201.%20Business%23Our%20Quantum%20Computers%2C%20Developer%20Tools%2C%20and%20Quantum%20Hybrid%20Solvers%20Delivered%20via%20QCaaS) - D-Wave's offerings include Advantage™ and Advantage2™ annealing quantum computers accessible via the **Leap™ quantum cloud service with over 99.9% uptime**[49](index=49&type=chunk)[51](index=51&type=chunk) - The **D-Wave Launch™ program** provides professional services to guide customers from problem identification to in-production application deployment[51](index=51&type=chunk) - The company offers a full suite of open-source programming tools through its **Ocean™ software development kit (SDK)** to simplify application creation[53](index=53&type=chunk) [Customers and Applications](index=12&type=section&id=Item%201.%20Business%23Customers%20and%20Applications) - D-Wave's customers include blue-chip companies like **Mastercard, Deloitte, and BASF**, with hundreds of user-built applications developed[41](index=41&type=chunk)[56](index=56&type=chunk) - Pattison Food Group reduced a weekly scheduling task from 80 hours to 15 hours, an **over 80% time saving**, using a quantum hybrid application[58](index=58&type=chunk) - SavantX increased per-crane deliveries at the Port of Los Angeles from 60 to 97 per day, a **62% productivity increase**, by optimizing cargo handling[58](index=58&type=chunk) - NTT DOCOMO reduced mobile network base station congestion by **15%** and completed an optimization task in 40 seconds versus 27 hours classically[58](index=58&type=chunk) [Our Business Strategy and Differentiators](index=15&type=section&id=Item%201.%20Business%23Our%20Business%20Strategy%20and%20Differentiators) - D-Wave differentiates through its **"Quantum Realized" framework**, benchmarking value based on outperformance, reliability, and customer success[70](index=70&type=chunk) - The company is the only quantum provider developing **both annealing and gate-model computers**, offering a full-stack, cross-platform solution[71](index=71&type=chunk)[72](index=72&type=chunk) - A key strategy is its hybrid approach, with **over 200 million problems submitted** to its solvers since the Leap service launched in 2018[74](index=74&type=chunk) - D-Wave became the first full-stack quantum provider to be **SOC 2 Type 2 compliant**, ensuring enterprise-grade security[77](index=77&type=chunk) [Our Growth Strategy](index=17&type=section&id=Item%201.%20Business%23Our%20Growth%20Strategy) - The company's growth strategy is built on three pillars: **Build the business, Advance the science, and Improve the technology**[82](index=82&type=chunk) - D-Wave employs a three-pronged go-to-market model targeting **direct sales, partner channels, and developers**[82](index=82&type=chunk) - The company is prioritizing key vertical markets including **manufacturing, logistics, and financial services** for use cases like scheduling and routing[83](index=83&type=chunk) - D-Wave is actively pursuing government sales and grants, achieving **"awardable" status on the DoD's Tradewinds Solutions Marketplace**[84](index=84&type=chunk) [Competition](index=24&type=section&id=Item%201.%20Business%23Competition) - D-Wave faces competition from large tech companies like **Google and IBM**, other quantum firms, and classical optimization solution providers[114](index=114&type=chunk)[119](index=119&type=chunk) - NIST rated D-Wave's annealing technology at **Technology Readiness Level (TRL) 8**, while other gate-model providers were rated between TRL 1 and TRL 3[116](index=116&type=chunk) - The company differentiates by building **both annealing and gate-model systems** and its track record of delivering scalable systems with business value[113](index=113&type=chunk) [Intellectual Property](index=25&type=section&id=Item%201.%20Business%23Intellectual%20Property) - As of December 31, 2024, D-Wave owned **more than 240 issued U.S. patents** and over 200 additional patents worldwide[122](index=122&type=chunk) - The company's patent portfolio is the **third largest in the world** related to quantum technology[122](index=122&type=chunk) - D-Wave protects its IP through a combination of **patents, trademarks, trade secrets, and contractual agreements**[120](index=120&type=chunk)[123](index=123&type=chunk) [Human Capital Resources](index=27&type=section&id=Item%201.%20Business%23Human%20Capital%20Resources) - As of December 31, 2024, D-Wave had approximately **220 employees**, with 216 being full-time[133](index=133&type=chunk) - Approximately **64% of employees** are based near the R&D headquarters in Burnaby, British Columbia, Canada[133](index=133&type=chunk) - A majority of employees are engaged in R&D, with about **20% holding a PhD**[133](index=133&type=chunk) [Risk Factors](index=28&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant financial, operational, and regulatory risks due to its history of losses and the nascent, competitive quantum market - The company has a history of significant net losses, with an **accumulated deficit of $626.9 million** as of December 31, 2024[142](index=142&type=chunk) - The **immature and competitive quantum computing market** poses risks that it may not develop as expected or that D-Wave's technology could be outpaced[160](index=160&type=chunk)[168](index=168&type=chunk) - The company's technical roadmap relies on **scientific and engineering advances that are not yet available** and may be delayed or never achieved[163](index=163&type=chunk)[165](index=165&type=chunk) - **Cybersecurity attacks, data breaches, or system disruptions** could damage the company's reputation and adversely affect financial results[192](index=192&type=chunk) - The company has previously been notified of **non-compliance with NYSE's minimum stock price requirement** and could face delisting[245](index=245&type=chunk) [Unresolved Staff Comments](index=55&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports that it has no unresolved staff comments from the SEC - Not Applicable[278](index=278&type=chunk) [Cybersecurity](index=55&type=section&id=Item%201C.%20Cybersecurity) The company maintains a comprehensive cybersecurity program with board-level oversight, annual risk assessments, and SOC 2 Type 2 compliance - The company's cybersecurity risk management involves **annual risk assessments** and mitigation measures for identified threats[279](index=279&type=chunk) - Board-level oversight is provided by a newly established **Cybersecurity Committee** that offers strategic guidance[285](index=285&type=chunk) - The company's Leap™ quantum cloud system is **SOC 2 Type 2 compliant**, with security policies applied across the entire organization[284](index=284&type=chunk) - The **Chief Financial Officer and head of IT** are primarily responsible for managing cybersecurity risks, reporting quarterly to the Board[286](index=286&type=chunk) [Properties](index=57&type=section&id=Item%202.%20Properties) The company operates three leased facilities in North America for R&D, manufacturing, and fabrication purposes | Location | Size (sq. ft.) | Purpose | Lease Expiration | | :--- | :--- | :--- | :--- | | Burnaby, B.C. | ~42,000 | R&D, Manufacturing, HQ | Dec 2033 | | Richmond, B.C. | ~7,000 | Superconducting Circuit Board Mfg. | Dec 2028 | | Palo Alto, CA | ~6,000 | In-house Fabrication | Jun 2026 | [Legal Proceedings](index=57&type=section&id=Item%203.%20Legal%20Proceedings) The company reports no pending legal proceedings that are likely to have a material adverse effect on its business - As of the filing date, the company is not involved in any legal proceedings that are expected to have a **material adverse effect**[289](index=289&type=chunk) [Mine Safety Disclosures](index=57&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[290](index=290&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=58&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's stock trades on the NYSE, no dividends are planned, and significant unregistered share sales were conducted in FY2024 - The company's common stock and warrants trade on the NYSE under the symbols **"QBTS" and "QBTS.WT"** since August 8, 2022[293](index=293&type=chunk) - D-Wave has a policy of retaining all available funds for business growth and **does not currently intend to pay any cash dividends**[295](index=295&type=chunk) - In FY2024, the company sold **34,860,416 common shares to Lincoln Park for $44.3 million** in unregistered sales[298](index=298&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=59&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Revenue was stable in FY2024, but net loss widened due to non-cash warrant charges, while liquidity improved significantly from equity financing | Metric | FY 2024 | FY 2023 | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | $8.8M | $8.8M | 1% | | Gross Profit | $5.6M | $4.6M | 20% | | Loss from Operations | ($77.2M) | ($80.5M) | (4)% | | Net Loss | ($143.9M) | ($82.7M) | 74% | | Net Loss per Share | ($0.75) | ($0.60) | 25% | - The significant increase in net loss was primarily due to a **$68.5 million non-cash expense** from the change in fair value of warrant liabilities[317](index=317&type=chunk)[327](index=327&type=chunk) | Cash Flow Activity | FY 2024 | FY 2023 | | :--- | :--- | :--- | | Net Cash Used in Operating Activities | ($42.6M) | ($60.6M) | | Net Cash Used in Investing Activities | ($3.1M) | ($0.6M) | | Net Cash Provided by Financing Activities | $182.5M | $95.6M | - The company's liquidity and going concern status improved significantly due to **$214.2 million in net proceeds from equity offerings** in 2024[330](index=330&type=chunk)[566](index=566&type=chunk) - The company **fully repaid its $30.0 million Term Loan** with PSPIB, including $4.3 million in accrued interest, on October 22, 2024[338](index=338&type=chunk)[663](index=663&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=67&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This item is not applicable as the company is a Smaller Reporting Company - Not applicable to Smaller Reporting Companies[355](index=355&type=chunk) [Financial Statements and Supplementary Data](index=67&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section refers to the audited consolidated financial statements and related reports included later in the Form 10-K - This item incorporates by reference the financial statements, notes, and auditor's report commencing on **page 104** of the report[356](index=356&type=chunk) [Changes in and Disagreements With Accountants on Accounting and Financial Disclosure](index=68&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20With%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company changed its independent auditor from PwC to Grant Thornton in 2023, with no disagreements on accounting principles reported - PricewaterhouseCoopers LLP (Canada) **declined to stand for re-election**, and their term ended on August 10, 2023[358](index=358&type=chunk) - **Grant Thornton LLP was engaged** as the new independent registered public accounting firm on August 24, 2023[360](index=360&type=chunk) - There were **no disagreements with PwC** on accounting principles, though prior reports contained a going concern paragraph[359](index=359&type=chunk) [Controls and Procedures](index=69&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that disclosure controls were effective as of year-end 2024, having remediated a prior-year material weakness - Management concluded that **disclosure controls and procedures were effective** as of December 31, 2024[364](index=364&type=chunk) - A **material weakness in internal control** over the financial statement close process, identified as of December 31, 2023, was successfully remediated[366](index=366&type=chunk)[367](index=367&type=chunk) - Remediation steps included **hiring senior finance personnel**, enhancing training, and engaging external consultants[367](index=367&type=chunk) [Other Information](index=70&type=section&id=Item%209B.%20Other%20Information) No directors or officers adopted, modified, or terminated a Rule 10b5-1 trading arrangement during the fourth quarter of 2024 - **No directors or officers** adopted, modified, or terminated Rule 10b5-1 trading arrangements during Q4 2024[369](index=369&type=chunk) Part III [Directors, Executive Officers, and Corporate Governance](index=71&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%2C%20and%20Corporate%20Governance) The company details its board structure, executive leadership, and corporate governance framework, including four board committees and a Code of Conduct - The Board of Directors is divided into **three classes serving staggered three-year terms**[373](index=373&type=chunk) - The company's executive leadership includes **Alan Baratz (President & CEO)**, John M. Markovich (CFO), and Diane Nguyen (General Counsel)[389](index=389&type=chunk) - The Board has four standing committees: **Audit, Compensation, Nominating and Governance, and Cybersecurity**[373](index=373&type=chunk)[376](index=376&type=chunk) - A **Code of Conduct** is in place for all directors, officers, and employees, available on the company's investor relations website[408](index=408&type=chunk) [Executive Compensation](index=79&type=section&id=Item%2011.%20Executive%20Compensation) This section details compensation for Named Executive Officers, which includes base salary, equity awards, and incentive plan payments 2024 Named Executive Officer Compensation | Name and Principal Position | Year | Salary ($) | Stock Awards ($) | Option Awards ($) | Non-Equity Incentive Plan Comp. ($) | Total ($) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Alan E. Baratz, President & CEO | 2024 | 575,000 | 630,000 | — | 517,500 | 1,722,500 | | John M. Markovich, CFO | 2024 | 430,000 | 315,000 | — | 283,360 | 1,028,360 | | Diane Nguyen, General Counsel | 2024 | 310,000 | 378,000 | 162,000 | 151,800 | 1,001,800 | - Non-employee directors receive an **annual cash retainer of $35,000** and an **annual RSU grant valued at $140,000**[433](index=433&type=chunk) - The Board adopted a **clawback policy** in compliance with NYSE requirements to recover erroneously awarded incentive-based compensation[440](index=440&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=88&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) This section details beneficial share ownership, with directors and executive officers as a group owning 2.9% of common shares Beneficial Ownership of Directors and Executive Officers | Beneficial Owner | Number of Shares Beneficially Owned | Percentage Ownership | | :--- | :--- | :--- | | Alan Baratz | 5,122,604 | 1.8% | | John M. Markovich | 2,130,410 | * | | Diane Nguyen | 457,711 | * | | Steven M. West | 441,329 | * | | All Directors and Executive Officers as a Group (10 individuals) | 8,334,681 | 2.9% | - The **2022 Equity Incentive Plan** authorizes an initial 16,965,849 shares, with an annual "evergreen" increase of up to 5% of outstanding shares[457](index=457&type=chunk) - The **2022 Employee Stock Purchase Plan (ESPP)** reserves an initial 8,036,455 shares, allowing purchases at a discount of up to 15%[472](index=472&type=chunk)[473](index=473&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=98&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) The company discloses its policy for related person transactions, including a now-repaid loan from a major shareholder, and confirms director independence - The Board maintains a written policy for the review and approval of **related person transactions over $120,000**[497](index=497&type=chunk)[498](index=498&type=chunk) - The company entered into a **$50 million Term Loan with PSPIB**, a related party, and fully repaid the drawn amount in October 2024[509](index=509&type=chunk)[512](index=512&type=chunk) - The Board of Directors has determined that **six of its directors are independent** under NYSE listing standards[517](index=517&type=chunk) [Principal Accountant Fees and Services](index=101&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) This section details fees paid to auditors Grant Thornton and PwC for fiscal years 2024 and 2023, all pre-approved by the Audit Committee Accountant Fees (USD) | Fee Category | 2024 (Grant Thornton) | 2023 (Grant Thornton) | 2023 (PwC) | | :--- | :--- | :--- | :--- | | Audit Fees | $714,000 | $475,000 | $536,000 | | Audit Related Fees | — | — | $8,000 | | Tax Fees | — | — | $255,000 | | All Other Fees | — | — | — | | **Total Fees** | **$714,000** | **$475,000** | **$799,000** | - The Audit Committee's policy is to **pre-approve all audit and non-audit services** provided by the independent auditor[527](index=527&type=chunk) Part IV [Exhibits, Financial Statement Schedules](index=103&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) This section lists all financial statements, schedules, and exhibits filed with the Form 10-K, including key corporate and material contracts - This item provides a comprehensive list of all **exhibits filed with the annual report**, including governance documents and material contracts[529](index=529&type=chunk)[530](index=530&type=chunk) [Form 10-K Summary](index=108&type=section&id=Item%2016.%20Form%2010-K%20Summary) The company has elected not to provide a summary for its Form 10-K - The Company has **elected not to provide summary information**[535](index=535&type=chunk) Financial Statements [Consolidated Balance Sheets](index=112&type=section&id=Consolidated%20Balance%20Sheets) Total assets grew to $199.9 million in 2024, driven by increased cash, while stockholders' equity turned positive due to financing activities Consolidated Balance Sheet Highlights (in thousands) | Account | Dec 31, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $177,980 | $41,307 | | Total current assets | $185,040 | $47,046 | | **Total assets** | **$199,853** | **$59,356** | | **Liabilities & Equity** | | | | Total current liabilities | $30,145 | $11,250 | | Warrant liabilities | $69,875 | $1,630 | | Loans payable, net, non-current | $30,128 | $63,850 | | **Total liabilities** | **$137,207** | **$83,837** | | **Total stockholders' equity (deficit)** | **$62,646** | **($24,481)** | [Consolidated Statements of Operations and Comprehensive Loss](index=113&type=section&id=Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) Revenue was flat at $8.8 million in FY2024, while net loss increased to $143.9 million due to a large non-cash warrant liability charge Consolidated Statement of Operations Highlights (in thousands) | Account | FY 2024 | FY 2023 | | :--- | :--- | :--- | | Revenue | $8,827 | $8,758 | | Total gross profit | $5,563 | $4,622 | | Loss from operations | ($77,223) | ($80,546) | | Change in fair value of warrant liabilities | ($68,245) | $262 | | **Net loss** | **($143,879)** | **($82,715)** | | **Net loss per share, basic and diluted** | **($0.75)** | **($0.60)** | [Consolidated Statements of Stockholders' Equity (Deficit)](index=115&type=section&id=Consolidated%20Statements%20of%20Stockholders'%20Equity%20(Deficit)) Stockholders' equity improved from a $24.5 million deficit to a $62.6 million positive balance, driven by significant capital raising activities - Stockholders' equity increased from a deficit of **($24.5M) at YE 2023 to a positive balance of $62.6M at YE 2024**[555](index=555&type=chunk) - The increase was primarily due to proceeds from common stock issuance, including **$44.3M from the Purchase Agreement and $169.9M from ATM Agreements**[555](index=555&type=chunk) - The positive impact of financing was offset by the **net loss of $143.9M** for fiscal year 2024[555](index=555&type=chunk) [Consolidated Statements of Cash Flows](index=116&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash from financing of $182.5 million far outpaced cash used in operations, resulting in a $136.7 million net increase in cash Consolidated Statement of Cash Flows Highlights (in thousands) | Cash Flow Activity | FY 2024 | FY 2023 | | :--- | :--- | :--- | | Net cash used in operating activities | ($42,643) | ($60,649) | | Net cash used in investing activities | ($3,141) | ($630) | | Net cash provided by financing activities | $182,450 | $95,636 | | **Net increase in cash and cash equivalents** | **$136,673** | **$34,242** | | **Cash and cash equivalents at end of period** | **$177,980** | **$41,307** |

Financial Data and Key Metrics Changes - Revenue for fiscal year 2024 was $8.8 million, essentially flat compared to fiscal year 2023 revenue of $8.8 million [30] - Bookings for fiscal year 2024 reached a record $23.9 million, an increase of 128% from fiscal year 2023 bookings of $10.5 million [30] - GAAP gross profit for fiscal year 2024 was $5.6 million, a 20% increase from fiscal year 2023 gross profit of $4.6 million [31] - Net loss for fiscal year 2024 was $143.9 million, compared to a net loss of $82.7 million in fiscal year 2023 [32] - Adjusted EBITDA loss for fiscal year 2024 was $56 million, an increase of 3% from the adjusted EBITDA loss of $54.3 million in fiscal year 2023 [33] Business Line Data and Key Metrics Changes - The fourth quarter revenue totaled $2.3 million, a decrease of 21% from the fourth quarter of fiscal year 2023 revenue of $2.9 million [34] - Bookings for the fourth quarter were a record $18.3 million, an increase of over 500% compared to the fourth quarter of fiscal year 2023 bookings of $3 million [34] - Non-GAAP gross profit for the fourth quarter was $1.7 million, a decrease of 28% from the fourth quarter of fiscal year 2023 non-GAAP gross profit of $2.3 million [34] Market Data and Key Metrics Changes - D-Wave had a total of 135 customers in fiscal year 2024, compared to 133 customers in fiscal year 2023 [30] - The customer base included 59 research institution and government customers in 2024, up from 55 in fiscal year 2023 [30] - The number of commercial customers was 76 in fiscal year 2024, down from 78 in fiscal year 2023 [30] Company Strategy and Development Direction - D-Wave aims to be the first pure play quantum company to reach profitability with less cash invested than competitors [10] - The company is focusing on a quantum compute as a service model for the majority of its commercial customers while also pursuing system sales [18] - D-Wave is developing a sixth generation annealing quantum computer, Advantage 2, which is expected to deliver significant performance gains [15] Management's Comments on Operating Environment and Future Outlook - Management highlighted the importance of the recent demonstration of quantum supremacy as a significant milestone for the quantum industry [57] - The company expects to see increased interest in system sales and believes that the recent achievements will positively impact customer engagement [49] - Management anticipates fiscal year 2025 Q1 revenue to exceed $10 million, driven by the sale of an Advantage annealing quantum computer [39] Other Important Information - D-Wave's cash balance exceeded $300 million, which is believed to be sufficient to reach sustained profitability [10] - The company completed two separate ATM programs in the fourth quarter that brought in a total of $175 million in gross proceeds [25] - D-Wave announced a quantum uplift program to attract organizations dissatisfied with competitors' quantum systems [22] Q&A Session Summary Question: Insights on Advantage 2's impact on existing commercial engagements - Management confirmed that Advantage 2's capabilities will enhance performance for existing customers and attract new ones [44] Question: Future system sales and revenue expectations - Management indicated ongoing discussions with three other institutions for potential system sales, but did not provide specific revenue guidance [50] Question: Impact of recent publications on industry perception - Management noted that the recent achievement has positively influenced both the academic community and commercial entities, despite some resistance [56] Question: Breakdown of revenue recognition from the Jülich system sale - Management clarified that revenue from the Jülich system sale will be recognized in the first quarter following installation and acceptance [105] Question: Future revenue models for system sales - Management stated that future deals will be tailored to customer needs, affecting the structure of revenue recognition [75] Question: Potential for scaling and R&D acceleration - Management expressed interest in accelerating R&D efforts, particularly in scaling quantum systems and exploring gate model opportunities [86]

分组1 - D-Wave Quantum Inc. reported a quarterly loss of $0.37 per share, significantly worse than the Zacks Consensus Estimate of a loss of $0.09, representing an earnings surprise of -311.11% [1] - The company posted revenues of $2.31 million for the quarter ended December 2024, which was 3.27% above the Zacks Consensus Estimate, but down from $2.91 million in the same quarter last year [2] - D-Wave Quantum shares have declined approximately 30.7% since the beginning of the year, contrasting with the S&P 500's decline of -4.8% [3] 分组2 - The current consensus EPS estimate for the upcoming quarter is -$0.09 on revenues of $2.66 million, and for the current fiscal year, it is -$0.38 on revenues of $15.42 million [7] - The Zacks Industry Rank for Internet - Software is in the top 31% of over 250 Zacks industries, indicating that the industry outlook can significantly impact stock performance [8]

Financial Performance - Fiscal 2024 Q4 bookings reached at least $18 million, a 500% increase from $3 million in Q4 2023[7] - Total bookings for fiscal year 2024 exceeded $23 million, representing a 120% increase over fiscal year 2023[7] - The company ended fiscal year 2024 with a record cash position of approximately $178 million[7]

Core Viewpoint - D-Wave Quantum (QBTS) is expected to report a decline in fourth-quarter revenues and losses, but the company is benefiting from increased adoption of its quantum computing solutions and expanding customer base across various sectors [2][4][5]. Financial Performance - The Zacks Consensus Estimate for fourth-quarter revenues is $2.24 million, reflecting a year-over-year decline of 23.16% [2]. - The consensus estimate for loss is 9 cents per share, unchanged over the past 30 days, compared to a loss of 10 cents per share in the same quarter last year [2]. Customer Base and Demand - D-Wave Quantum has broadened its customer base to 132 clients across commercial, government, and research sectors, with significant revenue increases of 66% from government customers and 47% from research customers in Q3 2024 [6]. - The company anticipates improved bookings in Q4 2024 due to rising demand for its quantum computing services [5]. Product Advancements - The completion of the 4,400-qubit Advantage 2 processor is expected to drive customer interest and technology adoption in the upcoming quarter [7]. - Key clients, such as NTT DOCOMO, are moving into production with quantum applications, which is likely to enhance revenues and customer engagement [8]. Stock Performance - QBTS shares have surged 124% over the past 12 months, outperforming the broader Zacks Computer and Technology sector, which returned 5.5% [9]. - Compared to peers like IBM and Alphabet, which gained 29.9% and 19.8% respectively, QBTS has shown stronger performance [11]. Valuation Concerns - D-Wave Quantum shares are currently considered overvalued, with a forward 12-month price/sales ratio of 66.8X, significantly higher than its median of 12.10X and the sector's 5.70X [12]. Partnerships and Innovations - Partnerships with companies like Carahsoft and Zapata Computing are expected to contribute to growth in Q4 2024 [15]. - A recent collaboration with Staque introduced a commercial hybrid-quantum application for optimizing autonomous agriculture vehicles, which may positively impact performance [16]. Competitive Landscape - D-Wave Quantum faces increasing competition from companies like Rigetti Computing, IBM, Google, and IonQ, which are advancing their quantum technologies [17][20]. - The launch of Rigetti's 84-qubit Ankaa-3 system highlights the competitive pressures in the quantum computing market [18]. Market Sentiment - Influential tech leaders express skepticism about the near-term utility of quantum computing, which adds to the uncertainty surrounding the market [20][21].

Core Viewpoint - Wall Street anticipates a year-over-year increase in earnings for D-Wave Quantum Inc. despite lower revenues, with a focus on how actual results will compare to estimates [1][2]. Earnings Expectations - The upcoming earnings report is expected to show a quarterly loss of $0.09 per share, reflecting a 10% improvement year-over-year, while revenues are projected to be $2.24 million, down 23% from the previous year [3]. - The earnings report is scheduled for release on March 13, 2025, and could influence stock movement based on whether results exceed or fall short of expectations [2]. Estimate Revisions - The consensus EPS estimate has remained unchanged over the last 30 days, indicating a stable outlook from covering analysts [4]. - The Most Accurate Estimate for D-Wave Quantum is lower than the Zacks Consensus Estimate, resulting in an Earnings ESP of -22.22%, suggesting a bearish sentiment among analysts [10][11]. Earnings Surprise Prediction - The Zacks Earnings ESP model indicates that a positive reading is a strong predictor of an earnings beat, particularly when combined with a Zacks Rank of 1, 2, or 3 [8]. - D-Wave Quantum currently holds a Zacks Rank of 3, making it challenging to predict an earnings beat conclusively [11]. Historical Performance - In the last reported quarter, D-Wave Quantum was expected to post a loss of $0.10 per share but actually reported a loss of $0.11, resulting in a surprise of -10% [12]. - The company has not beaten consensus EPS estimates in any of the last four quarters [13]. Conclusion - While the potential for an earnings beat exists, D-Wave Quantum does not appear to be a compelling candidate for such an outcome, and investors should consider other factors before making decisions [16].

Core Viewpoint - D-WAVE QUANTUM (QBTS) shares are currently overvalued, indicated by a Value Score of F, with a forward 12-month price/sales (P/S) ratio of 90.31X, significantly higher than its median of 14.26X and the sector's 6.49X [1][2]. Company Performance - QBTS shares have surged 554.8% in the trailing six months, outperforming the broader Zacks Computer and Technology sector's return of 13.7% and the Internet - Software industry's appreciation of 38.7% [3][4]. - QBTS has outperformed peers like IBM and Alphabet, which gained 33.2% and 14.2% respectively in the same period, attributed to its expanding clientele and influence in quantum computing [5]. Market Dynamics - The global quantum computing market is expected to grow at a CAGR of 20.1% from 2024 to 2030, indicating a robust growth trajectory for the industry [11]. - QBTS' Quantum Computing-as-a-Service revenues grew 41% year over year, totaling $1.6 million in Q3 2024, driven by higher average revenue per customer [7]. Strategic Initiatives - In January, QBTS launched the Leap Quantum LaunchPad program, offering a three-month free trial of its technology to accelerate quantum application deployment [8]. - QBTS has formed partnerships with companies like Carahsoft and Zapata Computing, which have been significant growth drivers, particularly in the public sector [12]. Customer Base and Revenue Growth - QBTS has a diverse customer base of 132 across commercial, government, and research sectors, with a 66% revenue increase from government customers and a 47% increase from research customers in Q3 2024 [13]. - The Zacks Consensus Estimate for 2025 revenues is projected at $15.42 million, reflecting a 76.22% year-over-year increase [14]. Competitive Landscape - QBTS faces growing competition from companies like Rigetti Computing, IBM, Google, and IonQ, which are advancing in quantum technologies [16]. - Rigetti launched its 84-qubit Ankaa-3 system, enhancing its market position and potentially challenging QBTS [17]. Market Sentiment - Influential tech leaders, including Meta's CEO Mark Zuckerberg, express skepticism about the near-term utility of quantum computing, adding to market uncertainty [18][19]. Conclusion - The stretched valuation and stiff competition are expected to pressure QBTS shares in the near term, with a Zacks Rank 3 (Hold) suggesting a cautious approach for investors [20].

Investment Strategy - The company employs a contrarian investment style, focusing on high-risk, illiquid options and shares [1] - The investment portfolio is split approximately 50%-50% between shares and call options [1] - The investment timeframe typically ranges from 3 to 24 months [1] Stock Selection Criteria - The company targets stocks that have recently experienced sell-offs due to non-recurrent events, particularly when insiders are buying shares at lower prices [1] - Fundamental analysis is utilized to assess the health of companies, including their leverage and financial ratios compared to sector and industry averages [1] - Professional background checks are conducted on insiders who purchased shares after sell-offs [1] Technical Analysis - Technical analysis is used to optimize entry and exit points for positions, employing multicolor lines for support and resistance levels on weekly charts [1] - Trend lines are drawn in multicolor patterns to aid in analysis [1]