BURNABY, B.C. & PALO ALTO, Calif. – July 20, 2023 – D-Wave Quantum Inc., (NYSE: QBTS) (“D-Wave” or the “Company”) a leader in commercial quantum computing systems, software, and services, today announced select unaudited preliminary financial results for its fiscal second quarter ended June 30, 2023. All references in this press release related to revenue and bookings are approximate and estimated due to the preliminary nature of the announcement and are subject to normal quarter-end accounting review.
2023 Second Quarter Preliminary Revenue
Preliminary fiscal second quarter revenue is expected to be in a range of $1,650,000 to $1,800,000 compared with the FactSet analyst consensus estimate of $2,281,000 with the shortfall due primarily to the timing of revenue recognition on certain professional services contracts. As the Company outlined in its earnings release for its first fiscal quarter ended March 31, 2023, the timing of revenue recognition associated with its professional services contracts may vary from period to period. However, D-Wave is generally paid in advance of the completion of its professional services engagements and the corresponding revenue recognition timeframe.
2023 Second Quarter and First Half Bookings
Total bookings for the fiscal second quarter ended June 30, 2023, were $2.5 million, an increase of $1.5 million, or 146%, from bookings of $1.0 million in the fiscal second quarter ended June 30, 2022. This represents D-Wave’s fifth consecutive quarter of year-over-year growth in bookings. For the first six months of fiscal 2023, bookings totaled $5.4 million, an increase of $3.7 million, or 209%, from bookings of $1.8 million in the first six months of fiscal 2022. During the first half of the year, D-Wave signed new and/or expanded agreements with customers including Interpublic Group, Unisys Corporation, and VINCI Energies.
2023 Second Quarter and First Half Average Deal Sizes
During the fiscal second quarter ended June 30, 2023, D-Wave’s average deal size increased by 136% when compared to the fiscal second quarter ended June 30, 2022. For the first six months of fiscal 2023, D-Wave’s average deal size increased by 252% when compared to the first six months of fiscal 2022.
Balance Sheet and Liquidity
On July 13, 2023, D-Wave closed the second $15 million tranche of its $50 million four-year term loan with PSPIB Unitas Investments II Inc., an affiliate of PSP Investments, which brings the total advances received under the loan to $30 million. In addition, the loan agreement has been amended to eliminate the mandatory prepayment of the loans outstanding with respect to issuance of common stock under the ELOC up to $50 million if issued prior to October 18, 2023. However, there can be no assurances that the Company will be able to meet the conditions necessary to draw on the third tranche.
Fiscal Year 2023 Outlook Update
As a result primarily of the timing of revenue recognition associated with professional services contracts, as well as current market conditions, we are updating the full year 2023 guidance provided in our 2023 first quarter earnings release dated May 19, 2023. Our guidance is subject to various cautionary factors described below. Based on the information available on July 20, 2023, guidance for the full year 2023 is as follows:
- We expect the fiscal 2023 revenue to be in a range of $11 million to $13 million.
- We expect the fiscal 2023 Adjusted EBITDA to be less than negative $58 million.
“We believe that enterprise adoption of quantum computing is accelerating, as evidenced by our year-over-year and YTD uptick and growth in bookings. We’re seeing an increased appetite for our quantum solutions by companies from all sectors – technology, life sciences, media and advertising, energy, just to name a few – recognizing the value our annealing quantum computing solutions can bring to solving tough business challenges and fueling operational excellence today,” said Dr. Alan Baratz, CEO of D-Wave. “On top of our commercial momentum, we’re also encouraged by the flurry of US legislative proposals we believe are designed to quicken the adoption of near-term quantum computing solutions. As the first commercial quantum computing company, we believe that D-Wave is well-positioned to support both public and private sectors with our cloud-based, commercial-grade, and production-ready quantum solutions.”
We are providing bookings, average deal size and Adjusted EBITDA as we believe these metrics improve investors’ ability to evaluate our underlying performance. Non-GAAP and operating measures do not have any standardized meaning under GAAP, and therefore may not be comparable to similar measures employed by other companies.
- “Bookings” is an operating measure that is defined as customer orders received that are expected to generate net revenues in the future. We present the operational metric of bookings because it reflects customers' demand for our products and services and to assist readers in analyzing our performance in future period.
- “Average deal size” is an operating measure that is defined as both QCaaS and professional services bookings.
- Adjusted EBITDA is a non-GAAP financial measure. For a description of Adjusted EBITDA, refer to “Non-GAAP Financial Measures” below.
We are not able to reconcile guidance for Adjusted EBITDA to its most directly comparable GAAP measure, net loss, and cannot provide an estimated range of net loss for such period without unreasonable efforts because certain items that impact net loss, including foreign exchange and stock-based compensation, are not within our control or cannot be reasonably predicted.
Second Quarter 2023 Conference Call
In conjunction with this announcement, D-Wave will host a conference call on Thursday, August 10, 2023, at 4:30 p.m. (Eastern Time), to discuss such financial results and its business outlook. The live dial-in number is 1-888-999-5318 (domestic) or 1-848-280-6460 (international), conference ID code 13738032. A live webcast and subsequent replay of the call will also be available on the “Investors” page of the Company’s website at: http://ir.dwavesys.com/
Financial Disclosure Advisory
The Company has not yet completed its reporting process for its 2023 second fiscal quarter ended June 30, 2023. The preliminary results presented herein are based on its reasonable estimates and the information available to it as of the date hereof and, because of their preliminary nature, in certain cases, the Company has provided ranges, rather than specific amounts. As such, the company's actual results may materially vary from the preliminary results presented herein and will not be finalized until the company reports its final results for second quarter fiscal 2023 after the completion of its normal quarter end accounting procedures including the execution of its internal controls over financial reporting. In addition, any statements regarding the company's estimated financial performance for the second quarter of fiscal 2023 do not present all information necessary for an understanding of the company's financial condition and results of operations as of and for the quarterly period ended June 30, 2023.
About D-Wave Quantum Inc.
D-Wave is a leader in the development and delivery of quantum computing systems, software, and services, and is the world’s first commercial supplier of quantum computers—and the only company building both annealing quantum computers and gate-model quantum computers. Our mission is to unlock the power of quantum computing today to benefit business and society. We do this by delivering customer value with practical quantum applications for problems as diverse as logistics, artificial intelligence, materials sciences, drug discovery, scheduling, cybersecurity, fault detection, and financial modeling. D-Wave’s technology is being used by some of the world’s most advanced organizations, including Volkswagen, Mastercard, Deloitte, Davidson Technologies, ArcelorMittal, Siemens Healthineers, Unisys, NEC Corporation, Pattison Food Group Ltd., DENSO, Lockheed Martin, Forschungszentrum Jülich, University of Southern California, and Los Alamos National Laboratory.
Non-GAAP Financial Measures
To supplement the financial information presented in accordance with GAAP, we use non-GAAP measures of certain components of financial performance. Adjusted EBITDA is a financial measure that is not required by or presented in accordance with GAAP. Management believes that such measure provides investors an additional meaningful method to evaluate certain aspects of such results period over period. Adjusted EBITDA is defined as net loss before interest expense, income tax expense (benefit), depreciation and amortization expense, stock-based compensation, remeasurements of liability-classified warrants, and other nonrecurring nonoperating income and expenses. We use Adjusted EBITDA to measure the operating performance of our business, excluding specifically identified items that we do not believe directly reflect our core operations and may not be indicative of our recurring operations. The presentation of non-GAAP financial measures is not meant to be considered in isolation or as a substitute for the financial results prepared in accordance with GAAP, and our presentation of non-GAAP measures may be different from non-GAAP measures used by other companies.
Certain statements in this press release are forward-looking, as defined in the Private Securities Litigation Reform Act of 1995. These statements involve risks, uncertainties, and other factors that may cause actual results to differ materially from the information expressed or implied by these forward-looking statements and may not be indicative of future results. Forward-looking statements in this press release include, but are not limited to, statements regarding actual results for the second fiscal quarter ended June 30, 2023, D-Wave’s payment in advance of professional service contracts, full-year 2023 guidance and third quarter revenue guidance, and customer demand for D-Wave products. These forward-looking statements are subject to a number of risks and uncertainties, including, among others, the variability of professional service revenues; profitability of new customer contracts; D-Wave’s ability to draw on the third tranche of the term loan with PSPIB Unitas Investments II Inc.; general economic conditions and other risks; our ability to expand our customer base and the customer adoption of our solutions; risks within D-Wave’s industry, including anticipated trends, growth rates, and challenges in those businesses and the markets in which they operate; the outcome of any legal proceedings that may be instituted against us; risks related to the performance of our business and the timing of expected business or financial milestones; unanticipated technological or project development challenges, including with respect to the cost and or timing thereof; the performance of our products; the effects of competition on our business; the risk that we will need to raise additional capital to execute our business plan, which may not be available on acceptable terms or at all; the risk that we may never achieve or sustain profitability; the risk that we are unable to secure or protect our intellectual property; volatility in the price of our securities; and the numerous other factors set forth in D-Wave’s Annual Report on Form 10-K for its fiscal year ended December 31, 2022 and other filings with the Securities and Exchange Commission. Undue reliance should not be placed on the forward-looking statements in this press release, which are based on information available to us on the date hereof. We undertake no duty to update this information unless required by law.