10-Q: D-Wave Quantum Reports Soaring Revenue, Increased Losses

D-Wave Quantum Inc. reported a significant increase in revenue for the nine months ended September 30, 2025, driven by system sales, but also experienced a substantial rise in net losses due to warrant liability fair value changes and increased operating expenses.

Summary

• Revenue for the three months ended September 30, 2025, increased by 100% to $3.7 million, up from $1.9 million in the prior year period.
• Revenue for the nine months ended September 30, 2025, increased by 235% to $21.8 million, up from $6.5 million in the prior year period.
• Net loss for the three months ended September 30, 2025, was $(140.0) million, compared to $(22.7) million in the prior year period.
• Net loss for the nine months ended September 30, 2025, was $(312.7) million, compared to $(57.8) million in the prior year period.
• Cash and cash equivalents stood at $836.2 million as of September 30, 2025, a significant increase from $178.0 million at December 31, 2024.
• The accumulated deficit reached $(939.7) million as of September 30, 2025.
• The substantial increase in net loss was primarily driven by a non-cash change in the fair value of warrant liabilities, which increased by $121.9 million for the three months and $260.0 million for the nine months ended September 30, 2025.
• System sales were the primary driver of revenue growth for the nine-month period, contributing $15.5 million.
• All available issuances under the Lincoln Park Purchase Agreement and four at-the-market (ATM) offerings ($100M, $75M, $150M, $400M) were completed.
• A mandatory redemption of outstanding Public Warrants was announced subsequent to the quarter end, effective November 19, 2025.

Sentiment

Score: 4

Explanation: While the company achieved substantial revenue growth and successfully raised significant capital, the net losses increased dramatically, primarily due to the non-cash revaluation of warrant liabilities. Operating expenses also rose considerably, and QCaaS revenue declined, which is contrary to management's expectations for long-term growth. The strong cash position is a positive, but the underlying operational losses and the non-cash warrant impact create a cautious outlook.

Positives

• Achieved significant revenue growth of 100% for Q3 2025 ($3.7 million) and 235% for 9M 2025 ($21.8 million), primarily driven by system sales.
• Maintained a strong cash and cash equivalents balance of $836.2 million as of September 30, 2025, significantly up from $178.0 million at December 31, 2024.
• Successfully completed all available capital raises under the Lincoln Park Purchase Agreement and four at-the-market (ATM) offerings, providing substantial liquidity.
• Recovered the full principal balance of $1.0 million, plus $0.2 million in interest and $0.1 million in legal fees, from the previously written-off Zapata Note in June 2025.
• Interest expense decreased by 83% for Q3 2025 and 82% for 9M 2025 due to the full repayment and extinguishment of the Term Loan in October 2024.
• Gross profit increased by 156% for Q3 2025 and 353% for 9M 2025, indicating improved profitability on revenue generated.
• Entered into a new equipment financing agreement for a total conditional commitment of $13.8 million, providing flexible capital for future equipment purchases.

Negatives

• Reported a substantial increase in net loss to $(140.0) million for Q3 2025 from $(22.7) million in Q3 2024, and to $(312.7) million for 9M 2025 from $(57.8) million in 9M 2024.
• Experienced a significant non-cash increase in the fair value of warrant liabilities by $(121.9) million for Q3 2025 and $(260.0) million for 9M 2025, primarily due to the appreciation of the company's common stock.
• Operating expenses rose considerably, with Research and Development increasing by 62% for Q3 2025 and 45% for 9M 2025, and Sales and Marketing increasing by 85% for Q3 2025 and 82% for 9M 2025.
• QCaaS revenue decreased by $0.2 million for Q3 2025 and $0.9 million for 9M 2025, contrary to management's expectation for it to increase.
• The accumulated deficit grew to $(939.7) million as of September 30, 2025, reflecting ongoing operational losses.

Risks

• The company expects to continue incurring significant operating losses for the foreseeable future due to ongoing investments in research and development programs and go-to-market initiatives.
• Unfavorable macroeconomic conditions, including inflation, interest rate changes, and geopolitical conflicts, could negatively affect business investments in the company's products and overall growth.
• The future of climate disclosure rules is uncertain due to legal challenges and the SEC's withdrawal of support, but state and international jurisdictions have enacted or proposed their own requirements, which the company must monitor and evaluate for potential impact.
• The company may become involved in various legal proceedings in the ordinary course of business, including third-party infringement claims, which can be costly and burdensome, diverting management resources.
• Indemnification obligations to third parties (customers, lessors, etc.) could result in significant liabilities, the maximum potential amount of which is difficult to determine due to limited history of claims and unique circumstances.
• Warrant holders who do not exercise their Warrants by the Redemption Time of November 19, 2025, will lose their rights, except to receive a redemption price of $0.01 per Warrant.

Future Outlook

The company expects to continue incurring significant operating losses for the foreseeable future as it invests heavily in research and development programs and go-to-market initiatives. Total cost of revenue is projected to trend upward in absolute dollars, aligning with anticipated revenue growth and increased support for customers, QCaaS maintenance, system operations, and professional services. Gross margin is expected to be higher through the end of 2025 due to system sales, with longer-term improvements anticipated as QCaaS becomes a larger revenue component. Research and development, general and administrative, and sales and marketing expenses are all expected to increase in absolute dollars as the company enhances its quantum computing systems, expands compliance functions, and broadens its market presence. The company is also assessing the impact of new accounting pronouncements related to income tax disclosures, expense disaggregation, and capitalized internal-use software costs, and is actively monitoring state and international climate disclosure requirements.

Management Comments

• "We expect to continue to incur significant losses for the foreseeable future as we continue to invest in a number of research and development programs as well as a variety of go-to-market initiatives."
• "While we expect that QCaaS revenue would increase both in dollar terms and as a share of total revenue (excluding system sales), as of the end of the period covered by this Form 10-Q, professional services revenue has grown more rapidly—both in dollar terms and as a share of total revenue (excluding system sales)."
• "We continue to view professional services as a strategic enabler for long-term QCaaS growth."
• "In the near term, we expect our gross margin to be higher through the end of 2025, primarily due to system sales recognized since the first quarter of 2025, which carry higher margins."
• "Over the longer term, as QCaaS becomes a larger component of our revenue mix, we expect gross margin to improve, reflecting the lower delivery costs of QCaaS relative to professional services."

Industry Context

D-Wave Quantum Inc. operates as the world's first commercial supplier of quantum computers and is uniquely positioned as the only company building both annealing and gate-model quantum computers. Its technology is applied across critical areas like optimization, artificial intelligence, and research, highlighting its role in advancing frontier technologies. The company's engagement with climate disclosure regulations, despite federal uncertainties, reflects a broader industry trend towards increased environmental, social, and governance (ESG) reporting, driven by state and international mandates.

Legal Proceedings

• Currently, 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.
• Defending legal proceedings is costly and can impose a significant burden on management and team members.
• The results of any future litigation cannot be predicted with certainty, but litigation can have an adverse impact due to defense and settlement costs, diversion of management resources, and other factors.

Stakeholder Impact

• Shareholders: Experienced significant dilution from ATM offerings and warrant exercises, but also benefited from substantial capital raised. Warrant holders who do not exercise by November 19, 2025, will lose their rights, except for a nominal redemption price. Increased net losses could negatively impact share price.
• Employees: Stock-based compensation remains a component of overall compensation. Continued investment in R&D and go-to-market initiatives suggests ongoing employment opportunities and growth.
• Customers: Ongoing investments in R&D aim to enhance product performance and expand the QCaaS platform, potentially benefiting customers with improved services and capabilities.
• Creditors: The full repayment of the Term Loan reduces debt obligations, while the new equipment financing agreement establishes new creditor relationships and provides capital for asset acquisition.

Next Steps

• Warrant holders may exercise their Warrants until November 19, 2025, after which unexercised Warrants will be void (except for a $0.01 redemption price).
• The remaining commitment of $13.8 million under the Equipment Financing Agreement is available until February 1, 2027, extendable to August 1, 2027.
• Continue to invest in research and development to enhance annealing quantum computers, develop gate model quantum computers, advance superconducting bump bond processes, upgrade printed circuit board packaging manufacturing, and improve the QCaaS cloud platform.
• Continue to invest in more comprehensive compliance and governance functions, increased IT security, and expanded internal controls over financial reporting.
• Continue to make significant investments in the sales and marketing organization to drive additional revenue, expand the global customer base, and broaden brand awareness.
• Actively monitor developments and evaluate the potential impact of state and international climate disclosure requirements on operations and reporting obligations.
• Assess the impact of adopting new accounting standards: ASU 2023-09 (Income Tax Disclosures), ASU 2024-03 (Expense Disaggregation Disclosures), and ASU 2025-06 (Capitalized Internal-Use Software Costs).

Key Dates

Recommendation

D-Wave Quantum Inc. demonstrates strong revenue growth, particularly from system sales, and has significantly bolstered its cash reserves through successful capital raises. The repayment of the Term Loan also reduces financial risk. However, the company continues to incur substantial operating losses, which dramatically increased due to the non-cash revaluation of warrant liabilities. The decline in QCaaS revenue, contrary to management's long-term strategy, is a concern. The mandatory redemption of warrants introduces uncertainty for warrant holders. Given the mixed financial performance, high cash burn, and the speculative nature of the quantum computing industry, a "Hold" recommendation is appropriate for investors who are already invested and believe in the long-term potential, but new investors should exercise caution due to the significant risks and ongoing losses.

Keywords

Quantum computing, D-Wave, QBTS, SEC filing, 10-Q, financial results, revenue, net loss, warrant liabilities, capital raise, ATM offering, stock options, R&D, sales and marketing, corporate governance, climate disclosure, Advantage2, Leap cloud service