D-Wave Quantum (QBTS) - 2025 Q4 - Annual Report

Financial Performance - As of December 31, 2025, the accumulated deficit was $982.0 million, up from $626.9 million in 2024, indicating significant financial losses[157] - For the years ended December 31, 2025 and 2024, net losses were $355.1 million and $143.9 million, respectively, with net cash outflows from operating activities of $72.0 million and $42.6 million[157] - The company expects to incur additional operating losses and negative cash flows as it expands commercial operations and R&D programs, with significant expenses anticipated over the next several years[158] - The company has a history of losses and anticipates continuing to incur significant expenses, which may adversely affect stockholders' equity and market price of common shares[158] Market and Growth Risks - The company’s estimates of market opportunity and growth forecasts are subject to significant uncertainty and may not accurately reflect future performance[161] - The quantum computing industry is in its early stages and characterized by volatility, with potential negative impacts on business growth if market development does not meet expectations[196] - The market for the company's technology is rapidly evolving, and failure to adapt could hinder growth and market development[183] - The adoption of quantum computing by developers and customers is crucial for future demand, and delays in technology advancements could limit market acceptance[199] Operational Challenges - The company must effectively manage growth to avoid strains on operational and financial resources, which could impact revenue and expenses[162] - The company faces risks in scaling its operations and managing organizational change to meet market demand for quantum computing technology[173] - Supply chain issues could delay product introductions and significantly disrupt operations, impacting financial results[192] - The company relies on third-party suppliers for components necessary for quantum computing technology, and any supply interruptions could negatively impact financial performance[168] Technological Development - The company plans to make an initial gate-model quantum computer generally available in 2026, but the product roadmap may not be realized as quickly as anticipated[153] - The company is constructing advanced generations of products, facing significant technological and logistical challenges in the advanced technology industry[175] - Achieving "quantum advantage" is critical for the company's success, but no current quantum computers have reached this milestone, which may hinder customer purchases[200] Compliance and Regulatory Risks - Compliance with government contracting requirements, such as the Cybersecurity Maturity Model Certification (CMMC), may increase operational costs and expose the company to liability[223] - The company may face significant liabilities and costs due to compliance failures with government contracting laws, including potential penalties under the False Claims Act[224] - Changes in privacy and data protection laws may require modifications to services, potentially limiting the ability to store and process user data, adversely affecting revenue and operations[247] Financial Market and Shareholder Concerns - The price of the company's Common Shares fluctuated between $3.74 and $46.75 per share in 2025, indicating significant volatility[285] - The company has no current plans to pay cash dividends on its Common Shares for the foreseeable future, which may affect investor returns[292] - The company ceased to qualify as an "emerging growth company" as of December 31, 2025, which will increase its legal and financial compliance costs[305] - The trading price of the company's Common Shares may be influenced by broad market and industry factors, which could harm investor confidence[301] Cybersecurity and Operational Risks - The company faces cybersecurity risks that could damage its reputation and financial results, as operations depend on secure information technology systems[208] - Service interruptions and system failures could lead to loss of revenue and damage to the company's reputation[238] - The use of generative AI tools introduces potential security and operational risks, which the company is actively managing[215] Strategic Partnerships and Acquisitions - The acquisition of Quantum Circuits on January 20, 2026, may lead to operational integration challenges that could adversely affect financial results[176] - The company has formed a new business unit to drive adoption of quantum computing products with the U.S. government, indicating a strategic focus on government sales[216] - Contracts with government entities present risks such as longer sales cycles and increased purchasing power, which could adversely affect business operations[217] Economic and Environmental Factors - Economic conditions, including inflation and geopolitical tensions, may negatively impact customer purchasing behavior and overall business growth[239] - Climate change and related environmental risks could disrupt operations and increase expenses, impacting business performance[240] - Rising inflation and interest rates could increase operational costs and adversely affect the market price of the company's shares[241] Intellectual Property Risks - The company may face challenges in protecting its intellectual property rights, which are crucial for maintaining competitive advantage[261] - Unauthorized use of technology and intellectual property could harm competitive positioning, with potential litigation being costly and distracting[263] - The company faces risks related to patent applications that may not result in issued patents, potentially affecting its ability to prevent competitors from commercializing similar products[264]