D-Wave Quantum (QBTS) - 2025 Q2 - Quarterly Report

Cautionary Note Regarding Forward-Looking Statements This section warns that the report contains forward-looking statements subject to risks and uncertainties, and actual results may differ materially - The report contains forward-looking statements regarding D-Wave Quantum's future expectations, hopes, beliefs, intentions, or strategies, which are subject to risks and uncertainties that may cause actual results to differ materially[11] - Readers are cautioned not to place undue reliance on these statements, as they are not guarantees of future performance and the Company does not undertake to update them, except as required by law[11] Part I. Financial Information This part presents D-Wave Quantum Inc.'s unaudited condensed consolidated financial statements and management's discussion and analysis Item 1. Financial Statements This section presents the unaudited condensed consolidated financial statements of D-Wave Quantum Inc., including balance sheets, statements of operations, equity, and cash flows Condensed Consolidated Balance Sheets This table provides a snapshot of D-Wave Quantum Inc.'s financial position, detailing assets, liabilities, and equity as of June 30, 2025, and December 31, 2024 Condensed Consolidated Balance Sheets | Metric (in thousands) | June 30, 2025 | December 31, 2024 | Change (Absolute) | Change (%) | | :-------------------- | :------------ | :---------------- | :---------------- | :--------- | | Cash and cash equivalents | $819,312 | $177,980 | $641,332 | 360.3% | | Total current assets | $828,540 | $185,040 | $643,500 | 347.8% | | Total assets | $843,602 | $199,853 | $643,749 | 322.1% | | Total current liabilities | $19,274 | $30,145 | $(10,871) | -36.1% | | Warrant liabilities | $91,037 | $69,875 | $21,162 | 30.3% | | Total liabilities | $149,348 | $137,207 | $12,141 | 8.8% | | Total stockholders' equity | $694,254 | $62,646 | $631,608 | 1008.2% | Condensed Consolidated Statements of Operations and Comprehensive Loss This section details D-Wave Quantum Inc.'s financial performance, including revenue, expenses, and net loss, for the three and six months ended June 30, 2025 and 2024 Statements of Operations and Comprehensive Loss (Three Months) | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Change (Absolute) | Change (%) | | :-------------------- | :------------------------------- | :------------------------------- | :---------------- | :--------- | | Revenue | $3,095 | $2,183 | $912 | 41.8% | | Cost of revenue | $1,119 | $795 | $324 | 40.8% | | Total gross profit | $1,976 | $1,388 | $588 | 42.4% | | Research and development | $12,694 | $8,355 | $4,339 | 51.9% | | General and administrative | $9,151 | $7,471 | $1,680 | 22.5% | | Sales and marketing | $6,633 | $4,401 | $2,232 | 50.7% | | Total operating expenses | $28,478 | $20,227 | $8,251 | 40.8% | | Loss from operations | $(26,502) | $(18,839) | $(7,663) | 40.7% | | Net loss | $(167,329) | $(17,778) | $(149,551) | 841.2% | | Net loss per share, basic and diluted | $(0.55) | $(0.10) | $(0.45) | 450.0% | Statements of Operations and Comprehensive Loss (Six Months) | Metric (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change (Absolute) | Change (%) | | :-------------------- | :----------------------------- | :----------------------------- | :---------------- | :--------- | | Revenue | $18,096 | $4,648 | $13,448 | 289.3% | | Cost of revenue | $2,243 | $1,601 | $642 | 40.1% | | Total gross profit | $15,853 | $3,047 | $12,806 | 420.2% | | Research and development | $22,982 | $16,880 | $6,102 | 36.1% | | General and administrative | $17,108 | $15,037 | $2,071 | 13.8% | | Sales and marketing | $13,556 | $7,485 | $6,071 | 81.1% | | Total operating expenses | $53,646 | $39,402 | $14,244 | 36.2% | | Loss from operations | $(37,793) | $(36,355) | $(1,438) | 4.0% | | Net loss | $(172,750) | $(35,090) | $(137,660) | 392.3% | | Net loss per share, basic and diluted | $(0.59) | $(0.21) | $(0.38) | 181.0% | Condensed Consolidated Statements of Stockholders' Equity (Deficit) This statement tracks changes in D-Wave Quantum Inc.'s equity components, including common stock, additional paid-in capital, and accumulated deficit, for the six months ended June 30, 2025 Condensed Consolidated Statements of Stockholders' Equity (Deficit) | Equity Component (in thousands) | Balance at Dec 31, 2024 | Issuances/Adjustments (6M 2025) | Net Loss (6M 2025) | Balance at Jun 30, 2025 | | :------------------------------ | :---------------------- | :------------------------------ | :----------------- | :---------------------- | | Common stock | $27 | $6 | — | $33 | | Additional paid-in capital | $700,069 | $803,067 | — | $1,503,136 | | Accumulated deficit | $(626,940) | — | $(172,750) | $(799,690) | | Accumulated other comprehensive loss | $(10,510) | $1,285 | — | $(9,225) | | Total stockholders' equity | $62,646 | $804,358 | $(172,750) | $694,254 | - During the six months ended June 30, 2025, the Company issued 50,948,852 common shares from at-the-market offerings, generating $536.7 million in additional paid-in capital[25] - Warrant exercises resulted in the issuance of 12,558,471 common shares and contributed $216.3 million to additional paid-in capital during the six months ended June 30, 2025[25] Condensed Consolidated Statements of Cash Flows This statement summarizes D-Wave Quantum Inc.'s cash inflows and outflows from operating, investing, and financing activities for the six months ended June 30, 2025 and 2024 Condensed Consolidated Statements of Cash Flows | Cash Flow Activity (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change (Absolute) | Change (%) | | :-------------------------------- | :----------------------------- | :----------------------------- | :---------------- | :--------- | | Net cash used in operating activities | $(34,565) | $(26,587) | $(7,978) | 30.0% | | Net cash used in investing activities | $(357) | $(1,809) | $1,452 | -80.3% | | Net cash provided by financing activities | $674,969 | $27,881 | $647,088 | 2320.2% | | Effect of exchange rate changes | $1,285 | $69 | $1,216 | 1762.3% | | Net increase (decrease) in cash | $641,332 | $(446) | $641,778 | -143900.9% | | Cash and cash equivalents at end of period | $819,312 | $40,861 | $778,451 | 1905.2% | Notes to Condensed Consolidated Financial Statements These notes provide additional information and detailed disclosures supporting the unaudited condensed consolidated financial statements Note 1. Description of Business D-Wave Quantum Inc. is a commercial quantum computing company offering professional services, cloud access, and direct sales of its superconducting quantum computer systems - D-Wave Quantum Inc. is a commercial quantum computing company providing professional services and web-based access to its superconducting quantum computer systems via the Leap quantum cloud service[34] - The Company also sells its superconducting quantum computer systems, including its current sixth-generation Advantage2™ system[34] - D-Wave operates three leased facilities in Burnaby, British Columbia; Richmond, British Columbia; and Palo Alto, California[34] Note 2. Basis of Presentation and Summary of Significant Accounting Policies This note outlines the financial statements' preparation basis, key accounting policies, and recent accounting pronouncements, including the recovery of the Zapata Note and SIF Loan accounting - The financial statements are prepared in accordance with U.S. GAAP for interim reporting, with certain information condensed or omitted per SEC instructions[35] - The Company recovered the full principal balance of a $1.0 million convertible note from Zapata Computing, Inc. in June 2025, along with $0.2 million in interest and $0.1 million in legal fees, offsetting a previously recognized credit loss provision[44] - The SIF Loan is accounted for as a liability related to the sale of future revenues, with an effective interest rate of 2.46% as of June 30, 2025, and repayments are revenue-based and capped at 150% of the principal[45][46][87] - The Company monitors developments in new accounting pronouncements, including ASU 2023-09 (Income Tax Disclosures), ASU 2024-03 (Expense Disaggregation Disclosures), and SEC climate disclosure rules, and is evaluating their potential impact[52][54][60] Note 3. Revenue from Contracts with Customers This note disaggregates revenue by product/service type, timing, and geography, detailing contract balances and remaining performance obligations Revenue by Type (Three Months) | Revenue Type (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Change (Absolute) | Change (%) | | :-------------------------- | :------------------------------- | :------------------------------- | :---------------- | :--------- | | System sales | $1,025 | $— | $1,025 | N/A | | QCaaS | $1,241 | $1,779 | $(538) | -30.2% | | Professional services | $785 | $342 | $443 | 129.5% | | Other revenue | $44 | $62 | $(18) | -29.0% | | Total revenue | $3,095 | $2,183 | $912 | 41.8% | Revenue by Type (Six Months) | Revenue Type (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change (Absolute) | Change (%) | | :-------------------------- | :----------------------------- | :----------------------------- | :---------------- | :--------- | | System sales | $13,672 | $— | $13,672 | N/A | | QCaaS | $2,774 | $3,471 | $(697) | -20.1% | | Professional services | $1,562 | $1,034 | $528 | 51.1% | | Other revenue | $88 | $143 | $(55) | -38.5% | | Total revenue | $18,096 | $4,648 | $13,448 | 289.3% | Geographic Revenue (Six Months) | Geographic Revenue (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change (Absolute) | Change (%) | | :-------------------------------- | :----------------------------- | :----------------------------- | :---------------- | :--------- | | Germany | $13,990 | $1,005 | $12,985 | 1292.0% | | United States | $1,207 | $1,361 | $(154) | -11.3% | | Japan | $638 | $449 | $189 | 42.1% | | Canada | $572 | $545 | $27 | 5.0% | | Switzerland | $552 | $304 | $248 | 81.6% | | United Kingdom | $227 | $197 | $30 | 15.2% | | Other | $911 | $787 | $124 | 15.7% | | Total revenue | $18,096 | $4,648 | $13,448 | 289.3% | - Customer A accounted for 76% of total revenue for the six months ended June 30, 2025, up from 18% in the prior year period[65] Contract Balances | Contract Balance (in thousands) | As of June 30, 2025 | As of December 31, 2024 | Change (Absolute) | Change (%) | | :------------------------------ | :------------------ | :---------------------- | :---------------- | :--------- | | Deferred revenue, current | $4,906 | $18,686 | $(13,780) | -73.7% | | Deferred revenue, non-current | $654 | $670 | $(16) | -2.4% | | Total contract liabilities | $5,560 | $19,404 | $(13,844) | -71.3% | - As of June 30, 2025, remaining performance obligations totaled $5.3 million, with approximately 79% expected to be recognized as revenue within the next 12 months[70] Note 4. Balance Sheet Details This note provides detailed breakdowns of inventories, prepaid expenses, other current assets, and accrued liabilities, including the recovery of the Zapata Note Inventories | Inventory (in thousands) | As of June 30, 2025 | As of December 31, 2024 | Change (Absolute) | Change (%) | | :----------------------- | :------------------ | :---------------------- | :---------------- | :--------- | | Raw materials | $2,446 | $1,677 | $769 | 45.9% | | Work-in-process | $2 | $9 | $(7) | -77.8% | | Total inventories | $2,448 | $1,686 | $762 | 45.2% | Prepaid Expenses and Other Current Assets | Prepaid Expenses (in thousands) | As of June 30, 2025 | As of December 31, 2024 | Change (Absolute) | Change (%) | | :------------------------------ | :------------------ | :---------------------- | :---------------- | :--------- | | Prepaid services | $2,058 | $977 | $1,081 | 110.6% | | Interest receivable | $995 | $— | $995 | N/A | | Prepaid software | $928 | $845 | $83 | 9.8% | | Total prepaid expenses and other current assets | $5,338 | $3,954 | $1,384 | 35.0% | - In June 2025, the Company recovered the full principal balance of a $1.0 million convertible note from Zapata Computing, Inc., along with $0.2 million in interest and $0.1 million in legal fees, offsetting a previously recorded credit loss provision[78] Accrued Expenses and Other Current Liabilities | Accrued Liabilities (in thousands) | As of June 30, 2025 | As of December 31, 2024 | Change (Absolute) | Change (%) | | :--------------------------------- | :------------------ | :---------------------- | :---------------- | :--------- | | Accrued compensation and related benefits | $7,308 | $5,499 | $1,809 | 32.9% | | Accrued professional services | $1,485 | $529 | $956 | 180.7% | | Other accruals | $2,789 | $2,756 | $33 | 1.2% | | Total accrued expenses and other current liabilities | $11,582 | $8,784 | $2,798 | 31.8% | Note 5. Property and Equipment, Net This note details the components of property and equipment, net, and reports the depreciation expense for the periods presented Property and Equipment, Net | Property and Equipment (in thousands) | As of June 30, 2025 | As of December 31, 2024 | Change (Absolute) | Change (%) | | :------------------------------------ | :------------------ | :---------------------- | :---------------- | :--------- | | Quantum computer systems | $13,781 | $14,471 | $(690) | -4.8% | | Lab equipment | $7,140 | $6,862 | $278 | 4.1% | | Computer equipment | $4,918 | $4,701 | $217 | 4.6% | | Total property and equipment, net | $4,504 | $4,133 | $371 | 9.0% | - Depreciation expense for the three months ended June 30, 2025, was $0.3 million, up from $0.2 million in the prior year period, and for the six months ended June 30, 2025, was $0.6 million, up from $0.4 million[81] Note 6. Loans Payable, Net This note details the TPC and SIF loans, including the TPC Loan's full repayment and the SIF Loan's revenue-based repayment terms, and confirms the Term Loan's extinguishment - The TPC Loan, totaling C$12.5 million, was fully repaid on April 24, 2025[83] - The SIF Loan, a C$40.0 million conditionally repayable loan, has a revenue-based repayment formula capped at 150% of the principal, with an estimated weighted average effective interest rate of 2.46% as of June 30, 2025[84][85][87] - The Term Loan with PSPIB Unitas Investments II Inc. was fully repaid and extinguished on October 22, 2024, including $30.0 million in principal and $4.3 million in accrued PIK interest, resulting in no remaining obligations under this facility[90][92] Note 7. Warrant Liabilities This note details the Company's Public and Private Warrants, including outstanding numbers, exercise terms, redemption conditions, and significant exercises - During the six months ended June 30, 2025, 8,636,509 warrants were exercised, leading to the issuance of 12,558,471 common shares and generating $99.3 million in cash proceeds[95] - As of June 30, 2025, the Company had 9,280,047 warrants outstanding, each exercisable for 1.4541326 common shares at an exercise price of $11.50 (approx. $7.91 per share), expiring on August 5, 2027[96][97] - The Company may redeem outstanding Public Warrants under specific conditions, including if the common share price exceeds $18.00 or $10.00, with options for cashless exercise[99] Note 8. Stock-Based Compensation This note outlines equity incentive plans, summarizes stock option and RSU activity, details the ESPP, and presents stock-based compensation expense by category Stock Option Activity | Stock Option Activity (in thousands, except share data) | As of Dec 31, 2024 | Granted | Exercised | Forfeited and expired | As of Jun 30, 2025 | | :------------------------------------------------------ | :----------------- | :------ | :-------- | :-------------------- | :----------------- | | Number of options outstanding | 10,984,738 | — | (4,202,187) | (6,118) | 6,776,433 | | Weighted average exercise price ($) | 1.67 | — | 1.65 | 4.73 | 1.67 | | Aggregate intrinsic value ($) | 75,270 | — | — | — | 87,857 | Restricted Stock Unit (RSU) Activity | RSU Activity (in thousands, except share data) | As of Dec 31, 2024 | Granted | Forfeited and expired | Vested | As of Jun 30, 2025 | | :--------------------------------------------- | :----------------- | :------ | :-------------------- | :----- | :----------------- | | Number of RSUs unvested | 8,787,022 | 4,773,987 | (166,418) | (2,499,947) | 10,894,644 | | Weighted average Grant Date Fair Value ($) | 2.25 | 9.28 | 4.88 | 2.47 | 5.24 | Stock-Based Compensation Expense | Stock-Based Compensation Expense (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Change (Absolute) | Change (%) | | :---------------------------------------------- | :------------------------------- | :------------------------------- | :---------------- | :--------- | | Cost of revenue | $231 | $154 | $77 | 50.0% | | Research and development | $2,329 | $1,311 | $1,018 | 77.7% | | General and administrative | $3,083 | $2,248 | $835 | 37.1% | | Sales and marketing | $1,028 | $508 | $520 | 102.4% | | Total stock-based compensation | $6,671 | $4,221 | $2,450 | 58.0% | - As of June 30, 2025, total unrecognized stock-based compensation cost was $52.5 million, to be recognized over a weighted-average period of approximately 3.41 years[110] Note 9. Commitments and Contingencies This note addresses the Company's lease obligations and confirms no material litigation or pending claims as of June 30, 2025 - Total operating lease costs were $0.5 million for the three months ended June 30, 2025, and $1.0 million for the six months ended June 30, 2025[111] - As of June 30, 2025, the Company was not subject to any material litigation or pending litigation claims[114] Note 10. Net Loss Per Share This note presents the computation of basic and diluted net loss per share, noting that potentially dilutive securities are anti-dilutive due to the Company's loss position Net Loss Per Share (Three Months) | Metric (in thousands, except share and per share data) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :----------------------------------------------------- | :------------------------------- | :------------------------------- | | Net loss attributable to common stockholders | $(167,329) | $(17,778) | | Weighted-average common stock outstanding | 302,288,793 | 172,139,085 | | Net loss per share, basic and diluted | $(0.55) | $(0.10) | Net Loss Per Share (Six Months) | Metric (in thousands, except share and per share data) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------------------------- | :----------------------------- | :----------------------------- | | Net loss attributable to common stockholders | $(172,750) | $(35,090) | | Weighted-average common stock outstanding | 294,398,419 | 166,723,787 | | Net loss per share, basic and diluted | $(0.59) | $(0.21) | - Potentially dilutive securities, including warrants, stock options, and unvested restricted stock units, totaling 32.3 million for the six months ended June 30, 2025, were excluded from diluted EPS calculations as they were anti-dilutive[116] Note 11. Segment and Geographic Information This note confirms the Company operates as a single segment and provides a breakdown of long-lived assets by geographic area - The Company operates as one operating segment, managed on a consolidated basis, with the CODM using consolidated net loss to assess overall performance[117] Long-Lived Assets by Geographic Area | Long-Lived Assets (in thousands) | As of June 30, 2025 | As of December 31, 2024 | Change (Absolute) | Change (%) | | :------------------------------- | :------------------ | :---------------------- | :---------------- | :--------- | | Canada | $10,883 | $11,005 | $(122) | -1.1% | | United States | $470 | $381 | $89 | 23.4% | | Other | $66 | $8 | $58 | 725.0% | | Total long-lived assets | $11,419 | $11,394 | $25 | 0.2% | Note 12. Subsequent Events This note discloses significant post-quarter-end events, including a new operating lease, additional warrant exercises, and an equipment financing agreement - On July 1, 2025, the Company entered into a new operating lease commitment for a mixed-use property, expected to commence in Q1 2026, with estimated right-of-use assets and lease liabilities of approximately $1.0 million[120] - Subsequent to quarter-end, 1,308,658 warrants were exercised, resulting in the issuance of 1,902,962 common shares and $15.0 million in cash proceeds[121] - On August 1, 2025, the Company entered into an equipment financing agreement for a conditional commitment of $13.8 million, with an initial draw of $0.5 million and a warrant issued to the lender for 21,563 common shares[122] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on D-Wave Quantum Inc.'s financial condition and results of operations for the three and six months ended June 30, 2025 and 2024 Overview D-Wave is a commercial quantum computing company offering QCaaS, professional services, and direct sales of its superconducting annealing quantum computer systems - D-Wave is a commercial quantum computing company offering QCaaS, professional services, and direct sales of its superconducting annealing quantum computer systems, including the D-Wave Advantage2™ system[125] Key Financial Metrics | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenue | $3,100 | $2,200 | $18,100 | $4,600 | | Net losses | $(167,300) | $(17,800) | $(172,800) | $(35,100) | - The Company expects to continue incurring significant losses due to ongoing investments in research and development and go-to-market initiatives, with an accumulated deficit of $799.7 million as of June 30, 2025[126] Macroeconomic Environment Unfavorable macroeconomic conditions could impact business investments in D-Wave's products, though no material effect has been observed to date - Unfavorable macroeconomic conditions, including inflation, interest rate changes, and geopolitical conflicts, could negatively impact business investments in D-Wave's products, though no material effect has been observed to date[127] - The Company is evaluating the potential impacts of the recently enacted One Big Beautiful Bill Act (OBBBA), which includes tax changes, but does not anticipate a material impact on its financial statements[128] Key Components of Results of Operations This section details the primary drivers of D-Wave Quantum Inc.'s revenue and expenses, outlining recognition policies and expected trends for each component Revenue Revenue is primarily generated from QCaaS subscriptions, professional services, and sales of superconducting quantum computer systems - Revenue is primarily derived from QCaaS cloud platform subscriptions, professional services for quantum application development, and sales of superconducting quantum computer systems[129] - QCaaS revenue is recognized ratably over contract terms (1 month to 2 years), professional services revenue over time based on percentage of completion, and system sales revenue at a point in time upon control transfer, or over time for system upgrade projects[129][130] - While QCaaS revenue is expected to increase long-term, professional services revenue has grown more rapidly in the short term, serving as a strategic enabler for QCaaS growth[131] Cost of Revenue Cost of revenue includes direct and indirect expenses for QCaaS, professional services, and system sales, expected to increase in absolute dollars but decline long-term as a percentage of revenue - Cost of revenue includes personnel, stock-based compensation, cloud platform maintenance, and depreciation for QCaaS and professional services, as well as manufacturing, installation, warranty, and shipping costs for quantum computing systems[132][133] - Total cost of revenue is expected to increase in absolute dollars, with a short-term rise as a percentage of total revenue due to higher professional services proportion, but a long-term decline as QCaaS becomes a larger share[134] Operating Expenses Operating expenses, including R&D, G&A, and sales & marketing, are expected to trend upward in absolute dollars due to continued investments and compliance needs Research and Development R&D expenses, focused on enhancing quantum computers and the QCaaS platform, are expected to increase due to ongoing technology investments - R&D expenses include personnel, fabrication, lab supplies, and cloud computing resources, with ongoing efforts to enhance annealing quantum computers, develop gate model quantum computers, and improve the QCaaS platform[136][137] - R&D expenses are expected to trend upward in absolute dollars due to continued investment in technology advancements, though government grants could offset some costs[137] General and Administrative G&A expenses, primarily personnel and professional services, are expected to increase due to investments in compliance, IT security, and internal controls - G&A expenses consist mainly of personnel-related costs and outside professional services (legal, audit, accounting, insurance), and allocated facility costs[138] - G&A expenses are expected to increase in absolute dollars due to investments in compliance, IT security, and expanded internal controls to meet Sarbanes-Oxley Act requirements[139] Sales and Marketing Sales and marketing expenses are expected to increase due to significant investments planned to drive revenue, expand the customer base, and enhance brand awareness - Sales and marketing expenses include personnel, direct advertising, marketing, promotional materials, sales commissions, and consulting fees[140] - The Company intends to make significant investments in its sales and marketing organization to drive revenue, expand its global customer base, and broaden brand awareness, expecting these expenses to increase in absolute dollars[140] Results of Operations This section provides a detailed financial comparison of D-Wave Quantum Inc.'s performance for the three and six months ended June 30, 2025 and 2024 Comparison of the Three Months Ended June 30, 2025 and 2024 For the three months ended June 30, 2025, revenue increased by 42% to $3.1 million, but net loss widened substantially to $167.3 million, primarily due to warrant liabilities Financial Performance (Three Months Ended June 30) | Metric (in thousands) | 3M Ended Jun 30, 2025 | 3M Ended Jun 30, 2024 | Change (Absolute) | Change (%) | | :-------------------- | :-------------------- | :-------------------- | :---------------- | :--------- | | Revenue | $3,095 | $2,183 | $912 | 41.8% | | Cost of revenue | $1,119 | $795 | $324 | 40.8% | | Research and development | $12,694 | $8,355 | $4,339 | 51.9% | | General and administrative | $9,151 | $7,471 | $1,680 | 22.5% | | Sales and marketing | $6,633 | $4,401 | $2,232 | 50.7% | | Interest expense | $(206) | $(1,160) | $954 | -82.2% | | Change in fair value of warrant liabilities | $(142,048) | $2,195 | $(144,243) | -6571.4% | | Other income (expense), net | $1,427 | $458 | $969 | 211.6% | | Net loss | $(167,329) | $(17,778) | $(149,551) | 841.2% | - Revenue increased by $0.9 million (42%) due to a $1.0 million system upgrade project and a $0.4 million increase in professional service revenue, partially offset by a $0.5 million decrease in QCaaS revenue[142] - General and administrative expenses increased by $1.7 million, primarily due to higher professional fees ($1.2 million), personnel expenses ($1.0 million), and stock-based compensation ($0.8 million), partially offset by a $1.2 million decrease in bad debt expenses from the Zapata Note recovery[145] - Net loss significantly increased by $149.6 million, primarily driven by a $142.0 million increase in the fair value of warrant liabilities, correlated with the appreciation of the Company's common stock[141][150] Comparison of the Six Months Ended June 30, 2025 and 2024 For the six months ended June 30, 2025, revenue surged by 289% to $18.1 million, but net loss expanded to $172.8 million, largely influenced by warrant liabilities Financial Performance (Six Months Ended June 30) | Metric (in thousands) | 6M Ended Jun 30, 2025 | 6M Ended Jun 30, 2024 | Change (Absolute) | Change (%) | | :-------------------- | :-------------------- | :-------------------- | :---------------- | :--------- | | Revenue | $18,096 | $4,648 | $13,448 | 289.3% | | Cost of revenue | $2,243 | $1,601 | $642 | 40.1% | | Research and development | $22,982 | $16,880 | $6,102 | 36.1% | | General and administrative | $17,108 | $15,037 | $2,071 | 13.8% | | Sales and marketing | $13,556 | $7,485 | $6,071 | 81.1% | | Interest expense | $(432) | $(2,300) | $1,868 | -81.2% | | Change in fair value of warrant liabilities | $(138,105) | $(457) | $(137,648) | 30120.0% | | Other income (expense), net | $3,580 | $1,595 | $1,985 | 124.5% | | Net loss | $(172,750) | $(35,090) | $(137,660) | 392.3% | - Revenue increased by $13.4 million (289%) primarily due to $13.7 million in system sales and a $0.5 million increase in professional service revenue, partially offset by a $0.7 million decrease in QCaaS revenue[153] - Sales and marketing expenses increased by $6.1 million (81%), driven by higher personnel costs ($3.4 million), marketing expenses ($1.3 million), and stock-based compensation ($0.8 million)[157] - Net loss increased by $137.7 million, largely attributable to a $138.1 million increase in the fair value of warrant liabilities, which correlated with the appreciation of the Company's common stock[152][161] Liquidity and Capital Resources The Company significantly enhanced its liquidity through various equity offerings and warrant exercises, while also fully repaying its Term Loan - Under the Lincoln Park Purchase Agreement, the Company issued 3,873,113 common shares, generating $37.8 million in net proceeds, completing 100% of available issuances by June 30, 2025[163] - The Company completed multiple at-the-market (ATM) offerings ($100M, $75M, $150M, $400M ATM) by June 30, 2025, collectively raising significant net proceeds through common stock issuances[164][165][166][167] - During the six months ended June 30, 2025, warrant exercises resulted in the issuance of 12,558,471 common shares and $99.3 million in cash proceeds[170] - The Company fully repaid and extinguished the Term Loan with PSPIB on October 22, 2024, including $30.0 million in principal and $4.3 million in accrued PIK interest[171] Cash Flows Net cash used in operating activities increased, investing activities decreased, and financing activities significantly increased due to equity offerings and warrant exercises Cash Flow Summary | Cash Flow Activity (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change (Absolute) | Change (%) | | :-------------------------------- | :----------------------------- | :----------------------------- | :---------------- | :--------- | | Net cash used in operating activities | $(34,565) | $(26,587) | $(7,978) | 30.0% | | Net cash used in investing activities | $(357) | $(1,809) | $1,452 | -80.3% | | Net cash provided by financing activities | $674,969 | $27,881 | $647,088 | 2320.2% | - Net cash used in operating activities increased by $8.0 million to $34.6 million, primarily due to a $137.7 million increase in net loss, partially offset by a $144.9 million increase in noncash items (mainly warrant liabilities fair value change) and a $15.2 million decrease in cash absorbed by working capital[174] - Net cash provided by financing activities increased by $647.1 million to $675.0 million, driven by $527.6 million from at-the-market offerings and $99.3 million from warrant exercises[176] Contractual Obligations and Commitments No material changes to contractual obligations were reported as of June 30, 2025, compared to the prior annual report - No material changes to contractual obligations were reported as of June 30, 2025, compared to the Annual Report on Form 10-K for the year ended December 31, 2024[177] Critical Accounting Estimates This section highlights critical accounting estimates, specifically focusing on revenue recognition for system upgrade projects, which requires significant judgment in cost estimation - Revenue from system upgrade projects is recognized over time using an input method based on costs incurred relative to total estimated costs, requiring significant judgment in cost estimation[179] - Revisions to total estimated project costs are accounted for in the period identified and can result in cumulative catch-up adjustments to revenue; estimated contract losses are recognized immediately[179] Recently Issued and Adopted Accounting Standards Information regarding recently issued and adopted accounting pronouncements is provided in Note 2 to the unaudited condensed consolidated financial statements - Details on recently issued and adopted accounting pronouncements are included in Note 2 of the condensed consolidated financial statements[180] Item 3. Quantitative and Qualitative Disclosures About Market Risk This item is not applicable to D-Wave Quantum Inc. as it qualifies as a Smaller Reporting Company - This section is not applicable to the Company as it is a Smaller Reporting Company[181] Item 4. Controls and Procedures Management evaluated the effectiveness of the Company's disclosure controls and procedures as of June 30, 2025, concluding they were effective - As of June 30, 2025, the Company's disclosure controls and procedures were evaluated as effective in providing reasonable assurance that information required for SEC reports is recorded, processed, summarized, and reported timely[185] - No material changes in internal control over financial reporting occurred during the three months ended June 30, 2025[186] Part II. Other Information This part contains other information, including legal proceedings, risk factors, equity sales, defaults, and exhibits Item 1. Legal Proceedings The Company is not currently involved in any material pending or threatened legal proceedings or claims - There are no pending or threatened legal proceedings or claims against the Company that are likely to have a material adverse effect on its business, operating results, financial condition, or cash flows[188] Item 1A. Risk Factors The Company will lose its "emerging growth company" and "smaller reporting company" statuses, increasing compliance costs and reporting requirements - The Company will cease to qualify as an "emerging growth company" as of December 31, 2025, and as a "smaller reporting company" beginning with the Q1 2026 Form 10-Q[194][195] - Losing these statuses means the Company will no longer benefit from reduced disclosure requirements, leading to increased legal and financial compliance costs[196] - The increased reporting requirements could divert management attention and, if not complied with timely, harm the business and cause the common share price to decline[196] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds There were no unregistered sales of equity securities or use of proceeds to report during the period - No unregistered sales of equity securities or use of proceeds were reported[197] Item 3. Defaults Upon Senior Securities The Company reported no defaults upon senior securities during the period - No defaults upon senior securities were reported[198] Item 4. Mine Safety Disclosures This item is not applicable to the Company - This section is not applicable to the Company[199] Item 5. Other Information Two directors adopted Rule 10b5-1 trading arrangements for the sale of common stock issuable upon RSU vesting - During the three months ended June 30, 2025, directors Rohit Ghai and John DiLullo adopted Rule 10b5-1 trading arrangements for the sale of common stock issuable upon vesting of restricted stock units[201][202] Item 6. Exhibits This section lists all exhibits filed as part of the Form 10-Q, including severance policies, employment agreements, and certifications - The report includes various exhibits such as severance policies, employment agreement amendments, CEO and CFO certifications, and Inline XBRL documents[203] Signatures The report was duly signed on August 7, 2025, by John M. Markovich, Chief Financial Officer of D-Wave Quantum Inc - The report was duly signed on August 7, 2025, by John M. Markovich, Chief Financial Officer of D-Wave Quantum Inc[206][208]