Analyst(s): Dr. Bob Sutor
Publication Date: August 13, 2024
The News: D-Wave Systems Inc., a Canadian/US company specializing in quantum annealing computing systems, software, and services, announced its financial results for the second quarter of 2024. The report highlights growth in various key areas, including revenue increases, advancements in quantum technology, and strategic partnerships.
By the Numbers:
- Revenue: $2.2 million, up from $1.7 million in 2Q 2023.
- Net Income: $3 million, up from $1.8 million in 2Q 2023.
- Net Loss: $17.8 million, down from $26.2 million in 2Q 2023.
- Cash and Cash Equivalents: $61.8 million, up from $59.4 million in last year’s quarter.
- R&D Investment: $5 million, representing 33% of the revenue.
- Gross Margin: 65%, an improvement from 60% last year, attributed to better cost control and higher sales.
- Earnings Per Share (EPS): $0.15, up from $0.10 last year, showing increased profitability.
D-Wave Reports Second Quarter 2024 Results
Analyst Take: D-Wave’s second-quarter results for 2024 demonstrate small growth in the quantum computing sector. The company reported a 25% year-over-year increase in revenue, though only $2.2 million for the quarter. The company links this modest bump to the increasing demand for quantum computing solutions and the deployment of D-Wave’s systems across various industries.
A notable development in this earnings report is the introduction of D-Wave’s new Advantage2 prototype, which offers improved qubit connectivity and coherence. D-Wave expects this advancement to enhance the performance and scalability of quantum applications. Readers should note that D-Wave builds quantum annealing systems, while the vast majority of the dozens of other quantum companies use digital or analog approaches and different qubit architectures. This has long been a point of contention in the industry when defining what a quantum computer actually is. The 4800+ qubits in the Advantage2 prototype cannot be compared in scale with those in non-annealing systems.
D-Wave’s outlook for the remainder of its 2024 is positive, with expectations of continued revenue growth and further technological advancements. D-Wave plans to expand its workforce by 15% to support its operations and R&D efforts. We will see if the revenue and cash sources can help the company maintain its total assets position.
As of August 11, the company’s stock sat at $0.842, down $0.02 year-to-date, with a 52-week high of $2.44 and a low of $0.57.
Revenue Growth and Market Expansion
D-Wave reported $2.2 million in revenue for the second quarter, a 25% increase from the $1.7 million the previous year. The rising demand for starter quantum computing solutions drove this growth across the finance, healthcare, and manufacturing sectors.
D-Wave must continue to expand in these industries, especially healthcare, which is seeing a huge investment in AI chipsets, according to an upcoming Futurum Intelligence market report. If healthcare and other industries can access state-of-the-art AI accelerators in large cloud data centers that can support general processing, the need for quantum computers might be diminished or delayed. D-Wave is not only racing against other quantum vendors, it is competing against significant improvements in classical and AI processing.
Strategic Alliances and Industry Collaborations
Strategic partnerships are a vital component of D-Wave’s growth strategy. An example is the company’s recent collaboration with an automotive manufacturer to explore quantum solutions for optimizing supply chain logistics. This partnership aims to apply quantum computing to challenges such as route optimization and inventory management, potentially leading to greater efficiency and cost savings. We’d like to see more numbers on the size of the problems and the advantages gained.
D-Wave is also involved in industry collaborations and consortiums to advance quantum computing standards, protocols, and best practices. I believe it is always a good investment to develop ecosystems and educate the workforce on your technology. It creates a pool of potential users and developers and gives you some level of incumbency.
Future Outlook and Guidance
D-Wave’s outlook for the remainder of 2024 is unsurprisingly optimistic. The company expects to reach a year-end revenue target of $60 million, supported by increased adoption of its quantum annealing systems and successful commercialization efforts. They can achieve this if they convert their stated strong pipeline of customer engagements and strategic initiatives.
D-Wave plans to expand its workforce by 15% over the next six months to support its growth. This expansion will enhance the company’s R&D capabilities and customer support infrastructure. D-Wave aims to continue advancing quantum technology through ongoing research and development, improving the performance and scalability of its quantum computing systems.
Total workforce size and distribution is a fascinating, though often confidential, metric that shows what a company is actually focusing on. Do they have too many salespeople versus engineers? In the case of quantum, do they have enough engineers to prototype and implement the MVPs based on research by the physicists? Is the company top-heavy on management versus those executing the strategy?
Key Takeaways
D-Wave’s second quarter 2024 results reflect the company’s progress in revenue growth, technological advancements, and strategic initiatives. Its positive outlook for the remainder of the year and a clear strategy for future growth give D-Wave a shot to maintain and expand its role in the quantum computing industry.
You can read the full press release on the D-Wave website here.
Disclosure: The Futurum Group is a research and advisory firm that engages or has engaged in research, analysis, and advisory services with many technology companies, including those mentioned in this article. The author does not hold an equity position in any company mentioned in this article.
Analysis and opinions expressed herein are specific to the analyst individually and data and other information that might have been provided for validation, not those of The Futurum Group as a whole.
Other Insights from The Futurum Group:
Quantum in Context: D-Wave Q1 2024 Earnings
Quantum in Context: D-Wave Q4 2023 Earnings and Other Numbers
Quantum in Context: A Qubit Primer
Author Information
Dr. Bob Sutor is a Consulting Analyst for Futurum and an expert in quantum technologies with 40+ years of experience. He is an accomplished author of the quantum computing book Dancing with Qubits, Second Edition. Bob is dedicated to evolving quantum to help solve society's critical computational problems. For Futurum, he helps clients understand sophisticated technologies and how to make the best use of them for success in their organizations and industries.
He’s the author of a book about quantum computing called Dancing with Qubits, which was published in 2019, with the Second Edition released in March 2024. He is also the author of the 2021 book Dancing with Python, an introduction to Python coding for classical and quantum computing. Areas in which he’s worked: quantum computing, AI, blockchain, mathematics and mathematical software, Linux, open source, standards management, product management and marketing, computer algebra, and web standards.
