Q1 2025 D-Wave Quantum Inc Earnings Call
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Speaker Change: Good morning everyone and welcome to D-Wave's first quarter of fiscal year 2025 earnings conference call. Today's call is being recorded. At this time I'd like to turn the floor over to Kevin Hunt of the Investor Relations. Please go ahead.
Kevin Hunt: Thank you and good morning. With me today, Dr. Alan Baratz, our chief executive officer, and John Markovich, our chief financial officer.
Kevin Hunt: Before we begin, I'll let you remind everyone that this call may contain four looking statements that should be considered in conjunction with cautionary statements contained in an earned release and a company's most recent periodic SEC report.
Kevin Hunt: During today's call, managed to override certain information that will constitute non-GAAP financial and operational measures under SEC rules such as non-GAAP gross profit, non-GAAP gross margin, adjusted EBITDA and bookings.
Alan: Reconciliation to GAAP financial measures and certain additional information are also included in today's earnings release, which is available in the Investor Relations section of our company website at www.dwavequantum.com I will now hand over the call to Alan.
Alan: Good morning, everyone, and thank you for joining us today. I'm really excited to share our results for the first quarter of fiscal 2025.
Alan: 2025 is shaping up as one of the most significant years in D-Wave history, especially when you consider our technical achievements, our product development milestones, our go-to-market momentum and our financial position.
Alan: highlights of the first quarter include record quarterly revenue driven by the completion of the first Advantage System sale, additional customer applications moving into production.
Alan: Publication of our Quantum Supremacy Result in Science and ongoing achievements against our Aggressive Product Roadmap.
Alan: In terms of some specifics on the financials, our Q1 revenue came in at a record $15 million dollars.
Alan: and we close the quarter with a record $304 million in cash, giving us a very solid cash position that we believe is sufficient for us to reach profitability.
Alan: Let me now walk you through some key business highlights starting with technical achievements.
Alan: On our last call, we proudly shared that we are the first company in the world to demonstrate quantum supremacy on a useful, real world problem.
Alan: As discussed, D-Wave's 1200 cubic prototype advantage to quantum computer performed a complex magnetic material simulation in minutes.
Alan: and with a level of accuracy that would take nearly 1 million years to complete using one of the world's most powerful supercomputers. That supercomputer being the frontier, massively parallel, GPU based Exascale supercomputer at the Oak Ridge National Laboratory.
Alan: In addition, it will require more than the world's annual electricity consumption to solve this problem using that supercomputer.
Speaker Change: We don't believe any other researchers or companies have come close to achieving this demonstration. This work should be celebrated as a significant milestone for the quantum industry and a clear demonstration of quantum outperforming classical computing.
Speaker Change: Building on that demonstration, we recently published a new research paper titled Block Chain with proof of quantum work that used quantum computation to generate and validate block chain
Speaker Change: and reduced electricity costs by up to a factor of 1,000.
Speaker Change: By adding quantum to traditional blockchain computation, the new architecture could enhance blockchain security and efficiency.
Speaker Change: Also, as part of this research, D-Wave scientists deployed the blockchain architecture across four of its cloud-based annealing quantum computers in Canada and the United States, performing distributed quantum computing for the first time.
Speaker Change: This is a very exciting area with potential for broad usage. In fact, we've already been contacted by several blockchain focused organizations interested in potential partnerships, and we are open to discussions with any other interested parties.
Speaker Change: With respect to product development progress, our advantage to a kneeling quantum computer our sixth generation system has achieved important milestones on the path to general availability which is expected by the end of this quarter.
Speaker Change: These milestones include, first, calibration of 4,400 plus cubic processor chips.
Speaker Change: We have completed calibration and benchmarking of several 4,400 plus cubit advantage to quantum processors.
Speaker Change: The Advantage 2 Kippie used have demonstrated impressive performance gains over the existing advanced system, including doubled coherence time for faster time-to-solution.
Speaker Change: A 40% increase in energy scale for higher quality solutions, an increased cubic connectivity from 15 to 20 way to enable solutions to larger problems.
Speaker Change: With these substantial performance enhancements, we believe that Advantage II will be able to solve our customers increasingly complex computational problems, especially in areas such as optimization, AI, and material science. The second milestone is fast and evil.
Speaker Change: This feature offers extended control for notably faster annealing times than previously available, which greatly reduces the impact of external disturbances such as thermal fluctuations in noise that can hinder quantum calculations.
Speaker Change: The Fats and Neal feature paves the way for customers to reproduce and build on D-Waves landmark quantum supremacy results using full scale, coherent and kneeling quantum computing
and the third milestone is error mitigation.
Speaker Change: We've demonstrated successful quantum error mitigation in the 1200 qubit advantage to annealing quantum computing prototype.
Speaker Change: The technique reduces errors in quantum simulations, producing results consistent with the quantum system maintaining its quantum state coherence for an order of magnitude longer than an unmitigated system.
Speaker Change: This technique is expected to drive performance advancements in the forthcoming full advantage to system and future processors.
Speaker Change: Once we announce GA, DeSilva will become part of the leak quantum cloud service for use by all of our quantum compute as a service customers.
Speaker Change: In addition, just a couple weeks ago, we shared that the physical assembly of a D-Wave Advantage 2 and Nealing Quantum system is complete at Davidson Technologies headquarters in Huntsville, Alabama.
Speaker Change: Installation is now nearing completion of that system undergoes calibration and readiness testing.
Speaker Change: We expect that the Advantage to system will enable Davidson to explore and develop real-world quantum applications, particularly in optimization for some of the U.S. government's most complex problems, and then ultimately deploy those applications in a secure environment.
Speaker Change: Turning to software, we recently introduced new hybrid quantum solver capabilities and additional use cases designed to drive uses of our quantum optimization offering.
Speaker Change: Our hybrid solvers, which are capable of handling problems with up to 2 million variables, now supporting both integer and continuous variables, which opens up the range of use cases that can be addressed with this technology.
Speaker Change: Recent enhancements to the nonlinear hybrid quantum solver include the ability to support continuous variables with linear interactions, thus enabling new kinds of use cases such as budget allocation and resource distribution.
Speaker Change: We've also expanded our collection of optimization use cases, which now includes offer allocation, portfolio optimization, and maintenance repair operations optimization to apply hybrid quantum technology to a growing set of customer problems.
Speaker Change: We also launched an open source toolkit designed to accelerate quantum AI and machine learning innovation
Speaker Change: Available in D-Wave Ocean Software Development Kit, the package enables developers to seamlessly integrate D-Wave Quantum computers with PyTorch, a production great ML framework widely used to build and train deep learning models.
Speaker Change: The toolkit includes a neural network module for using a quantum computer to build and train an AI system known as a restricted Boltzmann machine or an RBM.
Speaker Change: Use to learn patterns and connections from data, RBMs are an AI tool used for tasks, such as making predictions, recommendations, and identifying trends or anomalous.
Speaker Change: Looking ahead, we're making progress on all aspects of our previously communicated product roadmap, which is designed to unlock new customer production application use cases in the Advantage 2 and forthcoming Advantage 3 Quantum Computers and Viamen.
Speaker Change: It focuses on rapid innovation in scaling including increased connectivity and coherence, next-generation digital addressing, and multi-chip process of fabrics to accelerate a path to reaching 100,000
Speaker Change: We're also developing techniques and analog digital quantum computing to advance quantum optimization, quantum AI, and quantum research by adding digital controls to annealing quantum computing processes.
Speaker Change: Lastly, we're continuing our efforts to build scalable, error-corrected gate model processors including leveraging our proprietary cryogenic control capabilities that will likely be required in all superconducting gate model quantum computers.
Now we'll turn into commercial progress.
Speaker Change: And the key metric for assessing a quantum computing vendor's maturity is whether its technology is used in production to fuel daily operations for customers.
Speaker Change: We're excited to have recently announced that Ford Autoson has developed a hybrid quantum application in production, streamlining manufacturing processes for its Ford Transit line of vehicles.
Speaker Change: Using D-Wave technology, Ford Autosign reduced the scheduling time of 1,000 vehicles from 30 minutes to less than 5 minutes as 6 times improvement
Speaker Change: Ford Autocent plans to activate quantum scheduling in additional body shops and extend to other processes, including paint shops, assembly lines, and buffers zones.
Speaker Change: Ford AutoSign joins NTT Dockamo and Paterson Food Group, customers that are also using our systems currently running production applications. We expect additional customer applications to interproduction deployments over the course of 2025.
Speaker Change: In another powerful customer use case example, we announced the successful completion of a proof of concept with the pharmaceutical division of Japan Tobacco, which used the advantage quantum computer with artificial intelligence in the drug discovery process.
Speaker Change: This new approach resulted in molecular structures that are better candidates for subsequent drug development than structures created by purely classical methods. Japan tobacco expects that this could lead to improvements in both the quality and speed of drug development.
Speaker Change: Customer success stories like these and others were on full display at Cubits 2025, our annual user conference which took place on March 31st in April 1st and saw record attendance.
Speaker Change: In-person attendance was up 23% year over year and virtual attendees up nearly 100% year over year
Speaker Change: A number of D-Wave customers presented use cases based on D-Wave technology, including Davidson Technologies, Japan Tobacco, the Ulyx Supercomputing Center, N-D-T-Dokamo, Pusson and Natural University, Quantum Research Sciences, SAS.
The University of Southern California, and more.
Speaker Change: We're also seeing strong interest in the Leap Quantum Launchpad program, which is a three-month trial that provides access to D-Wave Quantum Computing Systems, our Leap Real-Time Quantum Cloud Service, and our team of quantum experts for project support.
Speaker Change: Market demand has been strong with the first customer intending to convert from free trial to paid engagement in less than two months.
Speaker Change: We continue to believe that this program will expand the universe of organizations using quantum to solve the complex problems today.
So, to summarize,
We are executing against our technology roadmaps [inaudible]
and our go-to-market plans.
Speaker Change: And this is beginning to show up in our financial results.
Speaker Change: We are seeing growing interest in D-Wave's quantum computing solutions as evidenced by a nearing of factors including increased website traffic which is up 153% from October of 2024 to March of 2025.
Speaker Change: as well as media coverage with strong news stories mentioning D-Wave up 803% from February
Speaker Change: It is evident to us that the D-Wave message is resonating.
Customers are eager to start exploring and adopting the technology.
Speaker Change: And the world is beginning to recognize the leadership role we're playing in ushering in the area of quantum computing. We could not be more excited about the future of D-Wave. With that, I'll hand it over to John to provide a review of our first quarter fiscal 2025 results.
John: Thank you, Alan, and thank you to everyone taking the time to participate in today's call.
John: In my review of the fiscal 2025 first quarter results, I will be providing non-GAAP operating metrics including bookings as well as non-GAAP financial metrics
John: that include non-GAAP gross profit, non-GAAP gross margins, and adjusted EBITL loss as we believe these metrics improve investors' ability to evaluate our underlying operating performance. These measures are defined in the tables at the bottom of today's earnings press release.
John: with the non-GAAP financial metrics for the most part, adjusting for non-cash and non-recurring expenses.
John: With respect to revenue, revenue in the first quarter of fiscal 2025 totaled a record $15 million dollars.
which represented an increase of $12.5 million or $509%.
John: with the magnitude of the increase highly influenced by the sale of an advantage too.
a kneeling quantum computing system to the ULX Supercomputer Center.
John: They constituted approximately 12.6 million of the quarterly revenue with QCAS and professional services comprising the balance.
John: Bookings for the first quarter were $1.6 million, a decrease of 2.9 million or 64% when compared to the fiscal 2024 first quarter bookings of 4.5 million with professional services bookings comprising more than 50% of the first quarter bookings.
John: With respect to our customers, we continue to broaden and diversify our customer base across commercial research and government organizations.
John: In comparing the most recent trailing four quarters with the immediately pre-saving trailing four quarters, D-Wave had a total of 133 customers compared to a total of 128 customers.
with the 133 customers, including…
69 commercial customers sellers.
John: 25 or 36% of which are Forbes Global 2000 customers where we are seeing some significant pick-up in sales pipeline activity.
52 research customers and 12 government customers
John: With respect to gross profit, our gap gross profit for the fiscal 25th quarter was a record 13.9 million
John: an increase of 12.2 million or 736% from the fiscal 2024 first quarter debt crooks profit of 1.7 million.
John: non-GAAP gross profits for the first quarter was a record 14 million.
John: An increase of $12.2 million or 644% from the fiscal 2024 first quarter non-gab gross profit of $1.9 million.
John: with the magnitude of the year-to-year increase in both gap and non-GAAP growth profit due primarily to the higher margin advantage to system sale.
John: With respect to gross margins, the gap gross margin for the first quarter was 92.5%, an increase to 25.2% from the fiscal 2024 first quarter gap gross margin of 67.3%.
John: The non-GAAP gross margin for the first quarter was 93.6%, an increase is 17% from the fiscal 2024, first quarter non-GAAP gross margin of 76.6%.
John: That loss for the first quarter of fiscal 2025 was $5.4 million or two cents per share, compared with a net loss of 17.3 million or 11 cents per share in the first quarter of fiscal 2024, with the lower net loss driven primarily by the $12.2 million increase in gross profit.
John: There was heavily influenced by the sale of the advantage to annealing quantum computing system.
John: This represents the company's lowest quarterly loss since becoming a public company in August of 2022.
John: from the fiscal 2024-1st quarter, Adjusted You The Da Laws of $12.9 million, with the decrease due primarily to the year-over-year increase in revenue and the associated gross profit.
John: Partially offset by higher operating expenses that are related to the increased investment in our go-to-market and research and development organizations.
Now we'll transition to the balance sheet and liquidity [inaudible]
John: As of March 31st, D-Waves consolidated cash position totaled a record $304.3 million, and as previously reported, we paid off our secured term loan in the fourth quarter last year.
During the fiscal 2025 first quarter, D-Wave raised $146.2 million.
in equity.
John: through its third-at-the-market, common stock issuance program. And as of the end of the quarter, we had $37.8 million in available issuance capacity under the equity line of credit with Lincoln Park Capital Fund with the investment commitment running through October of this year.
John: D-Wave's ability to utilize the lock is subject to a number of conditions including having a sufficient number of registered shares and a stock price being above $1 a share.
John: In addition, we exited the first quarter with a record $207.4 million in shareholder's equity.
To conclude, as we have previously stated,
John: We believe the D-Wave has the opportunity to be the first independent publicly held quantum computing company to achieve sustained profitability and to achieve this milestone with substantially less funding than required by any other independent publicly held quantum computing company.
With that, we will now open the call for questions.
Speaker Change: Thank you. We will now be conducting a question and answer session. We ask that you limit yourself to one question and one follow-up. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tunnel indicate your line is in the question, Q. Thank you.
John: You may press star 2 if you would like to remove your questions from the queue. For participants using speaker equipment, it may be necessary to pick up your hands up before pressing the star keys
Speaker Change: Our first question comes from the line of Harsh Kumar with Piper Sandler. Please proceed with your question
Speaker Change: First of all, strong congratulations on a number of friends, very strong quarter, quantum supremacy, and then also calibration.
Speaker Change: at a product level calibration of your 4,500 advantageous system.
Speaker Change: I had a couple of questions actually, but I'll keep you to two and get back in line. Alan, maybe you could talk about Davidson technology. This sounds to me like another system sale that you've been working on.
Speaker Change: Maybe you could clarify if possible for us if this is another one of the three that you have been referring to previously and then sounds like the system is being calibrated or being assembled right now maybe it could give us an update on where you are when you think it might happen
and then I've got to follow up.
Speaker Change: Sure, Harsh, and thanks for the positive comments up front. So, first of all, Davidson is not.
Speaker Change: One of the other handful of potential system sale opportunities that I commented on during our last earnings call.
Speaker Change: But I also did say that system sales tend to take time [inaudible]
Speaker Change: and so while we have a handful that we are working on and some maybe sooner than others, these are long-lead sales opportunities so it will take us some time to get there but we're encouraged.
by the level of interest.
based on...
in part, the supremacy resolve and the demonstration of-
Speaker Change: Capabilities that the system has when you're able to control more of the operating parameters than possible through the Quantum Cloud Service and so having your own system make sense.
Speaker Change: The direction that you would like to move in as well as the fact that you know we were able to announce that we had completed our first system sale and so we're open for business with that type of business model.
with respect to the partnership with Danny Goodson.
Speaker Change: This really is focused on working together with Davidson to help identify, develop and ultimately deploy applications to support the US government and
specifically defense and security, hard optimization applications.
Speaker Change: With the goal being that initially the system would be a part of the leap environment while the R&D work is being done in a non-
Speaker Change: classified fashion, but ultimately the system would end up in a secured facility to be able to run secure applications. And so that's the nature of the partnership with Davidson.
Speaker Change: Can I ask a follow-up on that before I jump to my second. So the system seems to be based out of Alabama.
Speaker Change: So, can you talk about, so this seems like a tangential offshoot set up a business arrangement outside of the sale, how did the economics work, is it like regular economics like it's just another one of your systems that happens to be on site for another customer?
Speaker Change: So Harsh, we had not disclosed any of the details associated with the economics associated with that partnership, so you know that's just something that
You're going to have to wait for. Sorry. Yeah, I respect that. That's fine. I had a totally different question.
Speaker Change: So, the more I work on quantum computing, the more I realize that error correction.
Speaker Change: and cryogenic control are two big issues in the industry. You guys seem to be a head of others in that.
Speaker Change: And I know it's going to be a mouthful of an answer because it's too big technologies and I'm asking you to discuss but maybe if you could just summarize for us how you stack up an error correction and cryogenic control versus the rest of your fears in quantum.
Speaker Change: So, first of all, we are world leaders in control. In fact, we are the only company in the world.
Speaker Change: that has cryogenic control operational today. And frankly, as I commented previously, at least every superconducting.
Speaker Change: for our annealing quantum computers. That's why we are able to control 5,000 qubits with just a couple of hundred I.O. lines and why we believe we'll be able to control even 100,000 qubits with just a couple of hundred I.O. lines.
Speaker Change: So everybody in the supercomputing, quantum computing space will ultimately need this capability in order to be able to scale their processes and we're the only company in the world that has it today.
Speaker Change: and we've got a significant patent portfolio basically built around that capability.
Speaker Change: or level of error correction that's required by gate model quantum computers.
Speaker Change: and so while we've developed some error mitigation technologies that are very useful for annealing quantum computing, we have not built the kind of error correction that is required for gate models.
Speaker Change: Under our gate model program, we are working on that today, but unlike Craig's in a control where we have it in hand, almost commercial grade, we don't yet have that for gate model systems. We don't yet have error correction for gate model systems.
Speaker Change: Thank you. Our next question comes from the line of Craig Ellis with the Riley Securities. Please proceed with your question.
Craig Ellis: Yeah, thanks for taking the question and congratulations guys on the...
Speaker Change: Technical and Financial Accomplishments in the Quarter. Alan, I wanted to start with you with the first question you mentioned.
Speaker Change: that there were numerous blockchain applications, partnerships that were inbound and it sounds like initially engaged. Can you just provide more color on the opportunity that you see?
Speaker Change: Yeah, so Craig, we're not blockchain experts.
Speaker Change: And as a result, while we've developed an architecture and prototyped it and have it operational today that we think
Hood B.
of Real Value to the blockchain industry.
Speaker Change: We're not going to pursue that ourselves, we would pursue that only in partnership with some organization that for which that really is their focus and their business.
Speaker Change: when a number of companies and investors, frankly, who have expertise and are interested in the space, approached us to talk about actual applications and opportunities to leverage this technology.
Speaker Change: and so we are working through that to make a determination around what would be the best way if it all to commercialize this.
AI and Machine Learning, both Model Training and Infrareds.
Speaker Change: What's interesting to us and really compelling about the blockchain and AI opportunities is we actually think they drive the system sale model of our business more than the quantum compute as a service model of our business.
Speaker Change: and so, while quantum optimization and supporting customers that had applications that they need to run in support of their day-to-day business operations, really continues to be a QCAS, quantum computer is a service-oriented business, we think blockchain and AI will kind of enhance the system's self-component of the model, but I have to caution you, it's early days.
Speaker Change: Certainly, and the continuous compute nature of blockchain and AI, make it understandable why.
Speaker Change: There might be more of a system sale interest there. John , I'll switch to you for the second question and it's really a clarification and then a follow up the clarification on the 93.6% gross margin.
Speaker Change: Super High level. Is that a proxy for how the model could work when we have?
Speaker Change: A full system sale in the quarter where there's some one-time items that might have benefited that. And then you did mention that there's been an uptick and pipeline activity. If you could just elaborate on that, that would be great. Thank you.
Sure. Generally, it is a proxy, Craig, but as we've previously outlined...
Speaker Change: We have a database of one system sale being this one, so each deal is going to have unique elements to it.
Speaker Change: The gross margins will clearly be higher than what our average consolidated gross margin is as we just demonstrated in the first quarter.
Speaker Change: Having said that, there could be some variability relative to what we saw here in the first quarter, but generally they'll be higher than the QCAST margins that are typically in the 70 to 80% range.
Your second question has to do with pipeline pipeline.
Yes, John .
Yes, so we're seeing a very, very healthy sales pipeline.
Speaker Change: and what is most interesting about it is we now have...
A fair number of larger organizations.
Um...
including a number of Ford's Global 2000 companies.
Speaker Change: That's the positive element of what's happening in the pipeline, but associated with that these deals typically take longer because you're dealing with larger organizations that have, in
Speaker Change: I will also point out with respect to our customer count numbers that I provided earlier.
Speaker Change: that over the last two sequential quarters we've seen an increase in the average revenue per commercial customer as well as the average revenue per government customer.
Speaker Change: So, although the customer count has not increased dramatically, underlying that is a growth in the average revenue per commercial account and government account over the last two sequential quarters.
Speaker Change: Thank you. Our next question comes from the line of Quinn Bolton with Mead and Moon Company, please.
at the feet with your questions.
[inaudible]
Speaker Change: Hey guys, let me also offer my congratulations on both the financial and technical milestones in the quarter. I don't share if it's for John or Alan, but just a clarification on the system sale I think last quarter when you discuss this sale you mention that there's an option for an upgrade.
Speaker Change: to the Advantage to Processor. In today's script, you're saying that you have installed an Advantage to System, and so I'm wondering.
Speaker Change: Did the system sale price you recognized? Did that include the upgrade option or is that upgrade option for the QPU still available to be deployed sometime later this year or next?
Speaker Change: So, sorry, I think you confused two different things here. The EULIC system installation that has been handed over to EULIC is an advantage system.
with the option to upgrade to Advantage 2.
Speaker Change: The Davidson system is an advantage to system installed from the outset.
Speaker Change: And so, yes, the upgrade of the system at ULIC is still to be done.
Speaker Change: Okay, maybe I misheard. I thought in the script you would refer to the UXism and it's advantage to my apologies, but that option is still available for later this year. Alan, the second question I had is you talked about NTT Dockamo Patterson and...
Ford AutoSign, moving to production. Can you just discuss?
Speaker Change: Applications, how are you feeling about converting additional customers or more applications that the three I mentioned into production over the course of the year. Thank you.
Speaker Change: Yeah, so I can't give you any specifics. You know, we've talked in the past about what's involved in progressing a customer from proof of concept, through to benchmarking, through to, you know, kind of the
Speaker Change: Work that needs to be done on their internal infrastructure environment in order to move the application into production all on the past.
Speaker Change: to moving into production and that just takes some time. That having been said, maybe the best way to think about this is to think about all the entities.
Reded as Companies, or…
Partners or...
Speaker Change: institutions that showed up at Cubans and were on stage in one way or another either giving a presentation or as a part of the keynote and panel discussions, what have you. These are all companies that we are working with.
Speaker Change: and that can give you a sense of what the pipeline might look like on the path to production.
Speaker Change: Thank you. Our next question comes from the line of Suji DeSilva. Please withdraws capital partners, please proceed with your question.
Sujit Dasilva: Good morning, Alan, good morning, John . Congrats on all the progress here.
Sujit Dasilva: I think, John , and Alan, you talked about the increasing revenue per customer. Can you talk about the shape that's taking anecdotally? Are you seeing maybe one application going to two or is it more that you're seeing one application getting the customer bought into the approach and then kind of looking to?
Spread it across multiple applications. What do you see more anecdotally?
John , do you want to take that?
Sure. I mean, typically, Suji, we're starting with one application.
Speaker Change: The objective is to get the first application into production as quickly as possible.
Speaker Change: Suji, I think the only thing I might add to that is that part of the reason why we're seeing this growth is that as John commented, we're starting to now engage with larger companies.
Speaker Change: by a small amount of quantum computer service and do it yourself, kind of effort and that of course drives a lot of deals for us.
Speaker Change: Okay, John , thanks for that color. And then I think you mentioned John with the funding level you have now that you're funded to profitability. Can you give us some help here on what your thoughts are and what a revenue run rate might be when you reach profitability and within that?
Speaker Change: What the mix at that point might be on an annual basis, maybe advantage systems versus a service revenue?
Sujit Dasilva: A quick answer to Suji is, we've not quantified what that revenue run rate is as it relates to achieving profitability, nor have we provided any timing. What we have outlined, and we did this in a January press release, based upon the closing of the most recent ATM, that we have sufficient liquidity to get us to that point in time of sustained profitability and positive cash flow.
Speaker Change: Thank you. Our next question comes from the line of Tyler Anderson with Craig Hallam. Please proceed with your question.
Tyler Anderson: Good morning, gentlemen. Congratulations and thank you for taking my question. And specifically, congratulations on the error mitigation. I was just wondering if this is available as a library for customers who purchase systems.
Speaker Change: and if you could quote the coherence time difference between the 1.2K and the 4.4K processors that you're seeing.
Speaker Change: Okay, so first of all, the coherence times on the 1.2 and 4.4 are the same.
So, these are both ...
Speaker Change: Advantage to processors where the chips were fabricated using essentially the same fabrication process and the same materials.
Speaker Change: The only difference is the number of qubits on the chip.
Speaker Change: So what drives the coherence time is the materials and the fab process and basically the reduction
Speaker Change: through that fat process. So, since these chips are using the same process, the same materials, they essentially have the same coherence time with one being 1200 qubits on the chip and the other being 4400 qubits on the chip.
Speaker Change: with respect to error mitigation. The error mitigation essentially gives us the effect of a 10X.
Speaker Change: and with error mitigation, we get another 10X on Advantage 2. So that would put advantage to a 20X over Advantage, or 10X.
Advantage to error mitigated versus not error mitigated.
But in my comments, I said for material simulation problems.
Speaker Change: So, the air mitigation technique works for certain classes of problems. It's particularly good for simulation problems.
Speaker Change: Okay, great. Thank you. That's good color. And could you discuss whether the David installation has been garnering system cell attention from crimes or the government? Because it seemed like your installation stole some thunder from other events in the area and they had to change their day. And then how much of that system cells in Q2 is a percent?
or any color on that.
Speaker Change: Okay, so again, we haven't disclosed any of the terms of the Davidson relationship.
Speaker Change: So, I can't go into any detail there. What I will say is that we have an enormous amount of interest in systems.
Speaker Change: from governments and supercomputing centers around the world, but frankly less so in the United States.
Speaker Change: We've talked about this before, but there is a strong, gay model bias.
in the U.S. government.
That is something that we are working hard to address.
and, you know, we're making incremental progress.
but we are not there yet.
We believe it's a huge mistake.
Speaker Change: on the part of the U.S. government because frankly other governments around the world are looking at quantum computing to help solve important hard problems today, recognizing that a kneeling can do that while gate model can and a U.S.
Speaker Change: You know, in my view, admittedly, somewhat biased is falling way behind on this and really needs to get that sorted out.
Speaker Change: So, I would not say that we're seeing a lot of interest from the US government in system sales at this point in time.
Speaker Change: And our next question comes from the line of Harsh Kumar, a follow-up question. Please proceed with your question.
Speaker Change: So I think Helen, you might have just answered my question. I was going to ask you about the change in the US government, what you're seeing but I think you just answered that one. So I'll let that be. You did talk about blockchain, hashing and that you will need a partner, like a strong partner that you will work with. That's the only way it seems like you want to go to the market on that. [inaudible]
I was curious if you might share.
Speaker Change: What kind of characteristics would you look for in a partner for something like that? Would it be like a crypto exchange? I don't even know that much about blockchain. Maybe you could just educate us a little bit on what kind of partner you will need. [inaudible]
Speaker Change: Sure, so let me just make a further comment on the U.S. government since you started there.
Speaker Change: The Trump administration is still relatively new, not even all of his appointments have been installed yet, including in areas that are technology related and so we are hopeful.
Speaker Change: in looking at all forms of quantum computing, as well as looking at near-term applications versus long-term research.
Speaker Change: and we're starting to see a little bit of turnover in some of the key positions that, frankly, have been...
Speaker Change: Part of the challenge that we've been facing so we're hopeful but you know we're not there yet and so you know we just need to see how this will play out over the next several months and of course we continue to be very focused and we'll see you in the next video.
Speaker Change: on helping to educate and engage with the US government because, frankly, we want to be helpful and we think we can be helpful and we'd like to get that level of engagement and support.
Speaker Change: with the September blockchain. So it's not only about cryptocurrency, Harsh, it's about protecting
Speaker Change: Assets, Protecting, Important Information, you know, Elon Musk has talked about putting the...
Speaker Change: The US government ledger on a blockchain. The important elements of blockchain are that A, it's very secure.
Speaker Change: and B, it's immutable. You can't change it, right? So it's a great way to kind of enshrine important information in a way that can be modified or subverted in some way.
Speaker Change: And so, you know, you could put health records in a block chain, for example, you could put financial ledgers in a block chain. These are all interesting and useful applications.
and so on.
Speaker Change: You know, the type of partner, we're kind of open-minded on it, but you know it could go the root of application-oriented or it could go to the root of kind of generic service. And we're still trying to work through that.
Very helpful, Alan. Thank you.
Speaker Change: Thank you. Our next question is another follow-up question from the line of Tyler Anderson. Please proceed with your question.
Tyler Anderson: Thanks for taking my follow-up, guys. If you're gay on a kneeling or you're gay alone system, can the gay law be toggled through software, or does this require a hard work week? And if it's hardware, does this take a long time and can non-research customers do this themselves?
Speaker Change: and does it require, like, new gods and controls within the delusion fridge?
Speaker Change: Okay, I'm not sure I understand your question, but let me make some comments and then if I have not addressed it, feel free to kind of refine the question.
Speaker Change: So, our annealing quantum computer and our gate model development work are two separate quantum computing systems. They are very different architectures.
Speaker Change: There's a lot of technology, underlying technology that can be leveraged.
Speaker Change: From the annealing quantum system into the gate model quantum system, but they are different architecture, they are different hardware systems.
Speaker Change: So it's not the case that you can take our annealing quantum computer and somehow toggle it to run as a game analysis and that is not the case
Speaker Change: as I said, two different architectures, two different hardware systems, but synergy between them in the sense that important technologies that we developed for annealing like cryogenic control can be applied in development of the gate model system.
Speaker Change: 2nd thing I'll say is our annealing quantum computers are very far advanced today. Advantage
Speaker Change: generation, annealing quantum computer. And they are commercial systems today. In fact, they're the only quantum computers in the world that are truly commercial today, supporting customer business applications and production. Our gate model system is still in the early R&D phase. Now,
Speaker Change: The only other thing I'll say is I did talk about digital analog controls in our annealing.
Speaker Change: Quantum Computer. And that may be where your question came from. So...
Speaker Change: One of the things that we have been able to demonstrate is the ability to take our annealing quantum computer and perform some digital operations on it Do not think of this as
Speaker Change: You know, all the gate model operating controls and operations, that's not the case, but some of them
Speaker Change: like being able to directly excite a qubit, or being able to take the state of one qubit and move it to another qubit.
Speaker Change: These are some gate model controls that when applied to an annealing quantum computer.
can actually deliver some very interesting capabilities for optimization applications.
Speaker Change: And so what we're working on is applying some digital controls, read that as some of the gate quantum controls to the annealing fabric.
Speaker Change: to improve some of the capabilities of the annealing quantum system but separate from that building a full gate model of quantum computer.
Speaker Change: Okay, so just to reaffirm quickly and I got one more follow-up, so...
Speaker Change: Can somebody swap out the QPU with the existing control hardware that they have that they bought a previous system or do they need to buy a full new system?
Speaker Change: Okay, if what you want to do is to upgrade from one annealing quantum computer to another, for example, from advantage to an advantage too.
Speaker Change: That's essentially a chip change in some minor I-O modifications, but not a whole new system.
Speaker Change: If what you want to do is go from an advantage, a kneeling quantum computer to say a D-Wave gate model quantum computer at some point in the future, you would not need a new dilution refrigerator, but you would need to change out both the chip and pretty much all of the I.O. in control.
Speaker Change: Okay. And then for your advantage to the 4,000 cube at one, is it accessible to certain customers? Are you generating revenues on that? Or are you...
I'm still waiting to release this broadly.
Speaker Change: Okay, so we have the 1200 qubit prototype advantage to end our lead quantum cloud service that any customer can use today.
are 4400 qubit
Full Scale Advantage to Quantum Computers
We will make generally available.
before the end of this court.
Speaker Change: before the end of Q2. At that point, it will be a part of our quantum cloud service for any customers to make use of it, as well as kind of being the primary processor that we would use in any remote installations. [inaudible]
Awesome. Thank you. I appreciate you taking my questions.
Speaker Change: Thank you. Our next question is another follow-up question from the line of Craig Ellis. Please
Speaker Change: with your question.
Speaker Change: Thanks for taking the follow up. Alan, at Cupid's 25, you presented a long-term technology roadmap that included scaling up to, I believe it was, 20K and 100K Cupid System. Can you just elaborate a little bit on the reaction you got from customers and partners at the event and share the event on that roadmap?
Yeah, I mean, as you'd expect it, excitement.
Speaker Change: I mean, the truth of the matter is, and I think I've talked about this before [inaudible]
Speaker Change: Obviously, with more cubits and more connectivity, we are able to solve larger and more complex problems on the quantum computer.
Today,
the way we saw
Roger!
Speaker Change: and more complex problems that can be solved natively on the quantum computers by using our hybrid solvers.
It's a very-
Speaker Change: Powerful Technology, but the more of the problem that we can solve natively on the quantum computer, the greater the advantage over classical. And so, while we have, you know...
[inaudible]
Speaker Change: Many customers that today through the hybrid solvers are seeing improvements over classical solutions and as a result, they're seeing a good honor of why and that's why we've got three customers with applications in production and more that are on the path to production.
Speaker Change: If we were able to solve war or all of the problems on the quantum computer, the improvement would be significantly larger, right, and even stronger ROI.
Speaker Change: So the excitement is around the ability to, on the one hand, enable additional use cases that aren't yet possible and on the other hand see increased
Speaker Change: Benefit over Classical for things where benefit is already today being seen.
That's helpful. Thank you.
Speaker Change: Thank you. This concludes our question and answer session. I'd like to turn the floor back over to Dr. Baratz for closing comments
Dr. Baratz: Okay, so thank you all again for taking the time to be here with us today. Frankly, we see only tailwinds as we continue to place the trail with Quantum Computing Innovation and Adoption.
Dr. Baratz: I've never been more confident in our business, our technology, our commercial opportunities, and our truly remarkable teams.
Dr. Baratz: So thanks again for taking the time to join us today.
Dr. Baratz: This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation and have a wonderful day.
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