D-Wave Quantum (QBTS)2023-05-19 15:32Financial Data and Key Metrics Changes - Revenue in Q1 2023 was $1.6 million, a decrease of $129,000 or 7.5% compared to Q1 2022 [10] - Non-GAAP gross profit for Q1 was $852,000, a decrease of $317,000 or 27.1% from $1.2 million in Q1 2022 [14] - GAAP operating expenses in Q1 were $25.1 million, compared to $12 million in the same period last year [15] - Net loss for Q1 was $24.6 million or $0.20 per share, compared to a net loss of $11.7 million or $0.09 per share in Q1 2022 [51] - Adjusted EBITDA for Q1 was a negative $16.9 million, compared to a negative $9.8 million in Q1 2022 [51] Business Line Data and Key Metrics Changes - Quantum Computing as a Service (QCaaS) revenue totaled $1.2 million in Q1, representing 74% of total revenue, down from 81% in the previous year [11] - Bookings for Q1 were $2.9 million, an increase of 297% compared to Q1 2022, marking the fifth consecutive quarter of growth [24][31] - The average deal size for QCaaS and Professional Services combined increased by 430% year-over-year and by 68% sequentially from Q4 to Q1 [6] Market Data and Key Metrics Changes - The company has 65 revenue-producing commercial customers, up from 63 in the previous four quarters, with commercial revenue increasing by 30% [13] - Total customers, including commercial, educational, and government accounts, increased to 109 from 106 in the previous four quarters [13] Company Strategy and Development Direction - D-Wave is positioned as the only company offering quantum annealing technology commercially, aiming to accelerate the adoption of quantum computing [4] - The company is focusing on integrating quantum technology with artificial intelligence and machine learning to optimize business processes [8] - D-Wave is developing its next-generation system, Advantage 2, which is expected to feature over 7,000 qubits and improved coherence [27] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving revenue guidance of $12 million to $13 million for the full fiscal year, representing year-over-year growth of 67% to 80% [17] - The company noted that customer interest in quantum computing is growing, with many companies recognizing the need to adopt quantum solutions now [85] - Management emphasized that the sales cycle is shortening, with more inbound inquiries leading to faster deal closures [48][90] Other Important Information - D-Wave raised approximately $20 million under the Equity Line of Credit (ELOC), including $15.7 million in Q1 2023 [16] - The company completed a $50 million secured term loan agreement, with an initial advance of $15 million received [52] Q&A Session Summary Question: What are the drivers behind the revenue recognition for professional services? - Management clarified that the complexity of professional services agreements affects revenue recognition timing, but there have been no fundamental changes in agreement structures [19] Question: How is the company addressing issues related to AI hallucinations? - Management indicated that their feature selection work in AI could help mitigate hallucinations by filtering out irrelevant data [40][59] Question: What is the outlook for deal sizes and customer engagement? - Management noted that while deal sizes are increasing, the focus is on helping current customers move to production and upselling services [82] Question: How does the company plan to achieve its EBITDA guidance? - Management stated that achieving the EBITDA target will depend on revenue growth and improved gross margins as the mix shifts towards higher-margin QCaaS [106] Question: Is the economic environment impacting the sales cycle? - Management reported no significant impact from the economic environment, with increased awareness of D-Wave's commercial quantum computing capabilities [72]