The News: On May 13, D-Wave Quantum Inc., a public quantum annealing computing company founded in 1999 and based in Burnaby, B.C., Canada, and Palo Alto, California, announced its financial results for the first quarter (Q1) of 2024. The company highlighted its fast-anneal feature, the renewal of a multi-year contract with the University of Southern California, and a $1.6 million year-over-year (YoY) increase in first-quarter bookings. See the press release on the D-Wave website.
By the Numbers: All currency figures are in millions.
| Q4 2023 | |||
| Revenue |
$2.465 |
$2.906 |
$1.583 |
| Operating Expenses |
$19.175 |
$18.509 |
$25.111 |
|
Net Loss |
$17.312 | $16.014 |
$24.608 |
| Total Current Assets |
$48.605 |
$59.356 |
$27.459 |
Quantum in Context: D-Wave Q1 2024 Earnings
Analyst Take: Compared to Q4 2023, D-Wave had a consistent quarter to start 2024. Its fast-anneal feature is a notable achievement that will benefit existing users, allowing them to run individual computations faster and more of them.
Unlike other analysts, I would not go so far as to compare fast-anneal with recent results on logical qubits for universal systems. D-Wave is a quantum annealing company, so comparing its computational results to competitors using various modalities to create universal quantum computers is often tricky. A universal system is fully programmable in the sense of a Turing machine. A non-universal system can be very useful but cannot perform arbitrary computations. I described annealing in my Research Note on D-Wave’s Q4 2023 and full-year 2024 earnings.
I’m impressed with D-Wave’s strong Q1 bookings, demonstrating continued demand for its annealing technology.
Quarter Highlights
Compared with the previous quarter, revenue was down about one-half a million dollars. A slight dip in the first quarter is not unusual if a company consumes a good part of its pipeline in the fourth quarter to help make full-year revenue targets. Bookings in the first quarter were a strong $4.5 million compared with IonQ’s $300,000. This is up 54% YoY. I’ll be watching to see if those bookings turn into confirmed revenue as 2024 progresses.
GAAP operating expenses dropped $5.9 million compared with a year ago, though they were up by $666,000 compared with last quarter. D-Wave attributed the YoY decline to decreased expenditures on professional services and marketing. It’s a gamble to reduce marketing, but it’s an area that leadership needs to reevaluate from year to year constantly. Don’t spend on activities and events that are not bringing in leads that translate to revenue but do experiment with new ways to amplify your messages beyond your usual customer base.
Interestingly, CEO Alan Baratz dropped the “computational supremacy” phrase used last quarter and consistently used “quantum supremacy” during the earnings call. Baratz stated that the preprint is still under review for publication by a top journal.
California Success, Not Dreaming
The University of Southern California renewed its multi-year contract with D-Wave, demonstrating continued value and commitment to the platform. I expect that this collaboration will be a model for future arrangements with universities in the US and internationally.
To Emphasize Quantum or Not
In this and other announcements, D-Wave emphasizes that it is a quantum computing company. There are, at most, a handful of quantum annealing vendors, including NEC and Qilimanjaro Quantum Tech. There are many dozens of companies in the universal analog and digital quantum computing market. I think D-Wave should emphasize “quantum computing” much less and focus on the use cases. If they provide excellent results over classical machines for optimization, logistics, or manufacturing, lead with that. Be the specialized hardware and software stack that computes better and faster, if that is the case, and stop forcing comparisons with other quantum vendors, in my opinion.
Key Takeaway: In Q1 2024, D-Wave showed consistent numbers compared with the previous 3 months, with strong bookings. The company continues to innovate, as demonstrated by its new fast anneal feature.
During the conference call, D-Wave did not mention its efforts to create a universal superconducting quantum computer. The company did brief analysts on this topic earlier in the year, and I expect D-Wave will have a progress report during its Qubits conference in Boston from June 17 to 18.
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 Q4 2023 Earnings and Other Numbers
Quantum in Context: IonQ Announces Q1 2024 Earnings
Quantum in Context: Rigetti Q4 2023 Earnings and Other Numbers
Author Information
Dr. Bob Sutor is an expert in quantum technologies with 40+ years of experience. He is the 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.
