By Mackenzie Tatananni
D-Wave Quantum logged record first-quarter record revenue and posted a narrower quarterly loss. The stock soared.
Revenue was $15 million in the first quarter, representing a 509% increase from the $12.5 million recorded a year earlier. The figure handily topped the $10.5 million analysts had expected, according to FactSet.
While operating expenses climbed 31% to $25.2 million in the quarter, the company's net loss narrowed to $5.4 million from $17.3 million a year earlier. The change was largely driven by the $12.2 million sale of a quantum computing system, D-Wave said.
Deferred revenue, or money received upfront for future products and services, declined to $5.5 million from $18.7 million, indicating the company was fulfilling its obligations to customers and reducing its liabilities.
D-Wave ended the session up 51% to $10.42 on Thursday. The benchmark S&P 500 was up 0.6%.
CEO Alan Baratz described the quarter as "arguably the most significant in D-Wave's history." One of the most notable achievements was the sale of an Advantage quantum machine to the Jülich Supercomputing Centre in Germany, which delivered a boost to revenue.
"From a numbers perspective, it was all about the system sale," Baratz said in an interview with Barrons. "Up until the end of last year, our business model was focused exclusively on professional services and quantum-computers-as-a-service."
While that's still a viable approach, "it takes time to build that business," Baratz explained. "As you bring more and more customers on over time, you build a base of recurring revenue. When you sell a system, you get that quick hit of revenue. And frankly, until recently we didn't really see that opportunity for D-Wave."
The installation of the Advantage quantum machine accounted for most of the recognized revenue in the quarter. However, the sale set in motion other revenue streams that have yet to materialize, including ongoing service and maintenance and upgrades to futures generations of hardware.
Other highlights included a controversial peer-reviewed paper published in the journal Science in March. D-Wave said its Advantage2 system could solve a problem in 20 minutes that would take one of the world's most powerful supercomputers nearly 1 million years.
These claims were hotly contested by scientists from the Center for Computational Quantum Physics, but other researchers asserted that D-Wave's overarching beyond-classical argument held true.
It seems all publicity is good publicity. In combination with the Jülich sale, the paper "generated a lot more interest" in D-Wave's operations, Baratz said.
"When we put out the quantum supremacy result, it got the attention of supercomputing centers and national labs around the world who came to us and said, "Hey, that's a really interesting result. We'd like to duplicate it,'" Baratz said.
Without providing details, the CEO indicated the company was in discussion with a number of potential customers, including those in the airline and mobile gaming industries.
D-Wave's current clients include Mastercard and NTT Docomo, Japan's largest wireless carrier. However, quantum computing has yet to have its breakout moment, and the technology won't be commercially scalable for years to come.
Management noted that D-Wave's consolidated cash balance totaled $304.3 million as of March 31 and was "sufficient to fund the company to profitability."
The strong first-quarter print came on the heels of similarly encouraging results from pure-play peer IonQ on Wednesday. The company posted a narrower quarterly loss and first-quarter revenue that topped analysts' forecasts. Shares closed up 9.3% on Thursday.
Write to Mackenzie Tatananni at mackenzie.tatananni@barrons.com
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May 08, 2025 16:39 ET (20:39 GMT)
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