8-K: D-Wave Quantum Reports Strong Growth in Q4 and Full Year 2023, Driven by Bookings and Revenue Increases

D-Wave Quantum Inc. announced a 21% increase in Q4 revenue and an 89% increase in full-year bookings, alongside improvements in gross margins and reduced operating expenses.

Summary

• D-Wave Quantum Inc. reported its financial results for the fourth quarter and full year ended December 31, 2023, showing significant year-over-year growth.
• The company's Q4 revenue reached $2.9 million, a 21% increase compared to the same period in 2022, and full-year revenue was $8.8 million, a 22% increase year-over-year.
• Bookings for Q4 grew by 34% year-over-year to $3.1 million, and full-year bookings surged by 89% to $11.5 million.
• D-Wave's GAAP gross margin for Q4 was 67.7%, up from 56.9% in the prior year, and non-GAAP gross margin reached 80.2%, up from 72.6%.
• Operating expenses decreased by 17% in Q4 compared to the previous year, driven by lower non-cash stock-based compensation expenses.
• The company's net loss for Q4 was $16.0 million, a 12% improvement from the $18.2 million loss in the same quarter of 2022.
• Adjusted EBITDA loss for Q4 was $10.9 million, a 24% improvement from the $14.4 million loss in the same quarter of 2022.
• D-Wave ended 2023 with $41.3 million in cash and $82.1 million in available equity issuance capacity.
• The company expects Q1 2024 bookings to be at least $4.3 million, representing a minimum 36% growth over Q4 2023.
• D-Wave anticipates its 2024 adjusted EBITDA loss to be less than the $54.3 million loss reported in 2023.

Sentiment

Score: 8

Explanation: The document presents a positive outlook with strong growth in key metrics, improved financial performance, and strategic partnerships. However, the company is still loss-making and has risks associated with capital raising.

Positives

• D-Wave experienced significant growth in both revenue and bookings, indicating strong market demand.
• The company has consistently improved its gross margins, demonstrating better cost management and pricing strategies.
• Operating expenses have decreased, contributing to a reduction in net loss and adjusted EBITDA loss.
• D-Wave has secured new customer engagements and partnerships, expanding its market reach.
• The company has made advancements in its technology, including the launch of the Advantage2 prototype.
• D-Wave has a strong cash position and access to additional capital through its Equity Line of Credit.
• The company is seeing increased commercial traction with more customers and higher revenue from commercial clients.
• D-Wave is moving customer applications into production, demonstrating the practical use of its technology.
• The company has a growing number of Forbes Global 2000 customers.

Negatives

• Despite improvements, D-Wave continues to report a net loss and adjusted EBITDA loss.
• GAAP gross margin for the full year decreased by 6.5% due to higher non-cash stock-based compensation expenses.
• Full year GAAP operating expenses increased by $21.5 million year-over-year.
• The company's ability to draw on the third tranche of the PSP loan is subject to certain conditions.
• The company's ability to raise funds under the ELOC is subject to a number of conditions including having a sufficient number of registered shares and having D-Waves stock price above $1.00 per share.

Risks

• D-Wave's ability to raise funds under the ELOC is subject to conditions, including maintaining a stock price above $1.00.
• The company's ability to draw on the third tranche of the PSP loan is subject to certain conditions.
• The company faces risks related to maintaining and expanding its customer base and the adoption of its solutions.
• There are risks associated with the performance of D-Wave's products and the timing of expected business or financial milestones.
• The company may need to raise additional capital to execute its business plan, which may not be available on acceptable terms.
• D-Wave may never achieve or sustain profitability.
• The company faces risks related to securing and protecting its intellectual property.
• There is volatility in the price of D-Wave's securities.
• The company's securities may not maintain their listing on the NYSE.

Future Outlook

D-Wave expects fiscal 2024 adjusted EBITDA loss to be less than the $54.3 million loss in 2023 and anticipates first quarter 2024 bookings to be at least $4.3 million.

Management Comments

• Our momentum is undeniable, said Dr. Alan Baratz, CEO of D-Wave.
• We believe all these achievements are propelling us forward to solidify D-Waves position as the commercial quantum category builder and leader.

Industry Context

D-Wave is positioning itself as a leader in the commercial quantum computing space, focusing on practical applications and partnerships to drive adoption. The company's focus on quantum annealing and hybrid solutions aligns with the growing interest in near-term quantum technologies.

Comparison to Industry Standards

• D-Wave's 89% year-over-year growth in bookings significantly outpaces the growth rates of many other quantum computing companies, which are often still in the research and development phase.
• The company's focus on commercial applications and moving customer projects into production sets it apart from competitors primarily focused on hardware development.
• While D-Wave's revenue is still relatively low compared to established tech companies, its growth trajectory and increasing gross margins indicate a positive trend.
• The company's partnerships with major players like Deloitte and NEC suggest a growing recognition of its technology's potential in the broader market.
• D-Wave's demonstration of quantum supremacy on real-world problems, as claimed in the document, is a significant milestone that few other companies have achieved.

Management Changes

Stakeholder Impact

• Shareholders will likely view the strong growth in revenue and bookings positively.
• Employees may benefit from the company's growth and strategic direction.
• Customers will have access to more advanced quantum computing solutions.
• Partners will benefit from the company's expanding market reach and technology advancements.
• Creditors will be interested in the company's improved financial performance and cash position.

Next Steps

• D-Wave will host a conference call on March 28, 2024, to discuss the financial results and business outlook.
• The company will continue to focus on moving customer applications into production.
• D-Wave will continue to develop and commercialize its quantum technology, including the Advantage2 system.
• The company will continue to pursue strategic partnerships to expand its market reach.

Key Dates

Keywords

quantum computing, quantum annealing, bookings, revenue, gross margin, EBITDA, financial results, quantum technology, cloud service, customer applications