Q4 2025 D-Wave Quantum Inc Earnings Call

Speaker #1: Good morning, everyone, and welcome to D-Wave's fourth quarter fiscal year 2025 earnings conference call. Today's conference call is being recorded. At this time, I would like to turn the call over to Kevin Hunt, Senior Director of Investor Relations.

Speaker #1: Please go ahead.

Speaker #2: Thank you, and good morning. With me today are Dr. Alan Baratz, our Chief Executive Officer, and John Markovich, our Chief Financial Officer. Before we begin, I would like to remind everyone that this call will contain forward-looking statements, which are subject to risks and uncertainties, and should be considered in conjunction with cautionary statements contained in our earnings release and the company's most recent periodic SEC reports.

Speaker #2: An on-demand webcast will be available, and a transcript of the conference will be posted on the Investor Relations section of the website within 48 hours after the call.

Speaker #2: During today's call, management will provide certain information that will constitute non-GAAP financial measures under SEC rules. Such as non-GAAP gross profit, non-GAAP gross margin, adjusted EBITDA loss, adjusted net loss, and adjusted net loss per share, and operating metrics such as bookings.

Speaker #2: Reconciliations to GAAP financial measures definitions 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.dwavecuantum.com.

Speaker #2: Given that D-Wave is now fortunate to have 15 sell-side security analysts publishing research on the company, we'd be limited to taking one question from each analyst during the first round of questions, and then time permitting, proceed to a second round of questions where, again, we will have time to or have to limit each analyst to one question.

Speaker #2: I'll now hand over the call to Alan.

Speaker #3: Good morning. And thank you all for joining us today. Fiscal 2025 was not just a strong year for D-Wave. It was an inflection point for the company, and for the quantum computing industry.

Speaker #3: For years, this sector has been defined by unrealized promises, dependence on government grants, and an inability to deliver customer value. In 2025, D-Wave separated itself from that narrative: we delivered proof, we delivered revenue, and we delivered real-world advantage.

Speaker #3: While 2025 was declared the international year of quantum science and technology, for D-Wave it was something more important. The year quantum computing moved decisively from research to real-world impact.

Speaker #3: And we believe that no company advanced that transition more than D-Wave. 2025 was a year of objective proof. Evidence of D-Wave's technical and commercial progress.

Speaker #3: We began the year by closing our first advantage quantum computer system sale to the Eulich supercomputing center, marking the first time a commercial annealing quantum computer was purchased for integration into a national supercomputing facility.

Speaker #3: We then became, and remain, the only quantum computing company to demonstrate quantum supremacy on a useful real-world problem. That result, which was achieved natively on our Advantage quantum processing unit, has not been seen elsewhere.

Speaker #3: This demonstration was an entirely quantum computation, not a hybrid computation. Moreover, no other companies, other than D-Wave, Google, and Quantinuum, have achieved quantum supremacy on any problem.

Speaker #3: Not IBM, not INQ, not Rigetti, not Inflection, not Xanadu, not IQM. All attempts other than D-Wave, Google, and Quantinuum have been spoofed. And only D-Wave's result was on a useful real-world problem.

Speaker #3: Then in May, we launched general availability of our advantage to system. The same system that achieved that supremacy milestone. And critically, we transitioned that technical leadership into commercial performance with record revenue of $24.6 million in fiscal 2025, up $179% year over year, $13.4 million in Q4 bookings, the second highest quarterly bookings in the company's history, and up $471% from the immediately preceding third quarter.

Speaker #3: And a sales opportunity pipeline that expanded by nearly 1,500% year over year. In an industry long on promises, D-Wave is delivering measurable results. And now we have entered 2020 markets.

Speaker #2: The acquisition of Quantum Circuits fundamentally changes the competitive landscape. We believe that it firmly secures D-Wave's position as the world's leading quantum computing company and the only dual platform quantum computing company.

Speaker #2: As a result, we believe that we are the only company to position to address the full quantum computing market. Our dual platform approach is important because it allows D-Wave to be a one-stop shop capable of solving the full range of the complex problems that customers face.

Speaker #2: But let me be clear. This approach is not new. It has been our strategy for five years. We dominate optimization today with annealing quantum computing technology.

Speaker #2: And now, by combining quantum circuits industry-leading dual rail qubit technology with D-Wave's proprietary on-chip cryogenic control, we are also positioned to be the leader in error-corrected gate model systems.

Speaker #2: Annealing quantum computing remains a strategic focus for D-Wave. Optimization is one of the largest and most immediate commercial opportunities in quantum computing. It spans logistics, defense, telecom, manufacturing, finance, and energy virtually every major industry.

Speaker #2: And optimization problems require annealing quantum computing. D-Wave has demonstrated material performance advantages over classical approaches across a multitude of optimization use cases. We are running production workloads today.

Speaker #2: To our knowledge, no gate model quantum computing company has demonstrated a practical advantage over classical systems for optimization. And academic literature suggests they likely never will.

Speaker #2: We're also seeing early promise with customers exploring annealing quantum computing's impact on AI and blockchain. Two areas with enormous commercial potential. Annealing is not a stepping stone.

Speaker #2: It's a commercially proven architecture with expanding performance gains. And with our advantage three system in development, we expect to further extend that performance gap.

Speaker #2: Annealing dominates optimization today and we believe that it will continue to dominate as the market expands. Now let's talk about gate model. Most superconducting competitors are pursuing legacy transmon architectures that require massive physical qubit overhead for effective error correction.

Speaker #2: And complex wiring schemes that will struggle to scale economically. That occur. With a ratio detection, this technology delivers gate fidelities that exceed 99.9%, bringing trapped ion fidelities along with superconducting execution speeds to today's gate model algorithm developers.

Speaker #2: Our ratio detection and our observed erasure rate of 0.5% allow us to deliver logical qubits with an order of magnitude fewer physical qubits compared to architectures without this capability.

Speaker #2: Error correction is essential to unlocking broad quantum utility and we believe that the dual rail technology offers the fastest path to large-scale error-corrected architectures.

Speaker #2: I can't emphasize this enough. The dual rail technology allows us to achieve superconducting speed with the fidelity of ion trap or neutral atom approaches.

Speaker #2: This is an industry game changer unmatched by any other gate model vendor today. The implications of D-Wave's dual rail technology are profound. Our approach achieves logical qubit ratios of roughly one logical qubit for every 100 to 200 physical qubits, compared to about one logical qubit for every 1,000 to 2,000 physical qubits in conventional superconducting designs.

Speaker #2: What's equally remarkable are the gate speeds. Dual rail gate speeds are 1,000 times faster than ion trap or neutral atom systems. The fidelity of ion trap or neutral atom approaches with the speed of superconducting.

Speaker #2: That's a fundamental improvement in the metrics that matter. Speed matters. Error correction overhead matters. Scalability matters. And D-Wave now holds advantages in each. But our gate model innovations don't stop there.

Speaker #2: In January, D-Wave demonstrated that the on-chip cryogenic control currently being used in its advantage quantum computers can.

We are the only company to demonstrate realworld Quantum Supremacy on a useful problem. We are the only company running production applications for Forbes Global 2000. Enterprise customers we are the only dual platform Quantum Computing company with a commercially proven annealing quantum computer generating meaningful revenue, and a differentiated superconducting gate model platform with a credible Pathway to full error correction

Others are still pursuing proof of concept. We have proof of commercialization

others are dependent on Long development. Timelines, Government, funding and sustained, Capital Market support. We're building a business with commercial customers, contracts and expanding bookings.

as this is made product development decisions that focus on either superconducting speed or ion trap and neutral atom Fidelity we can deliver both

As the market matures Capital will flow toward companies with operating leverage, commercial, validation, and Technical defensibility.

We believe dwave is uniquely positioned at that intersection.

The quantum industry will not support dozens of long-term winners. It will support a handful of durable platforms and we intend to be 1 of them fiscal 2025 marked the moment when dwave moved from participant to front runner.

The momentum we are seeing in early 2026, suggests that this Gap is widening.

With that, I'll hand the call over to John to provide a review of our fourth quarter and fiscal 2025 results. John

Thank you, Alan. And thank you to everyone for taking the time to participate in today's call, in my review of the fiscal year, 25 and fourth quarter results, I will be providing non-gaap operating metrics including bookings as well as non-gaap Financial measures that include non-gaap versus profit, non-gaap gross margins, adjusted, net loss, adjusted, net loss, per share.

$5 million in Qcast subscription revenue and $2.7 million in Professional Services revenue.

I would like to highlight several aspects of dwa's Revenue that clearly distinguishes the company from a number of other so-called Quantum field companies. First all of our

And we do not give Grant invest or lend funds to any of our customers that they utilize or intend to utilize towards the purchase of our products, and or services.

Fiscal 2025 bookings were $18.7 million, a decrease of 22%, or $5.2 million, from fiscal 2024 bookings of $23.9 million. Keep in mind that the 2024 bookings included an eight-figure booking from the company's first system sale.

Subsequent to the end of fiscal 2025 dwave has closed over 32.8 million in additional bookings. That includes a 20 million system sale to Florida, Atlantic University and a 10 million dollar. 2-year Enterprise licensed deal with a Fortune 100 company.

With respect to the diversity of our customer base. In fiscal 2025 d-wave, recognized revenue from over 135 individual customers.

Encompassing over 70 commercial customers that includes. Over 2 dozen Forbes, Global 2000 Enterprises, the average revenue per commercial, customer increased by 20% over fiscal 24. And the total revenue recognized from Forbes. Global 2000, customers increased by 70% on a year-over-year basis with the average Forbes Global 2000 deal size up. 90% on a year-over-year. Basis Gap groups profit for fiscal. 25 was 20.3 million in increase of 14.7 million or 265% from fiscal 24. Gaap gross profit of 5.6 million with the in.

Increased due primarily to a higher margin, quantum computer system during the year.

Non-gaap gross profits for fiscal, 25 was 21.1 Million an increase of 14.7 million or 229% from the prior year. Non-gaap gross profit of 6.4 million. For fiscal. 25 was 82.6%, an increase of 19.6% from fiscal 24. Gaap gross, margin of 63% with the increase. Again, due primarily to a higher margin, quantum computer system sale during the year.

Fiscal 25, non-gaap gross margin was 86% and increase of 13.2% from the prior year. Non-gaap gross margin of 72.8% again the difference between gaap and non-gaap gross profit and gross margin is limited to non-cash stock based compensation and depreciation and amortization expenses that are excluded from the non-gaap gross profit and gross margin measures.

Net loss for fiscal, 2025 was 355, million or a11 per share. Compared with the fiscal 24, loss of 143.9 million or 75 cents per share.

The increase in net loss is primarily driven by 250.5 million in non-cash. Non-operating charges related to the re-measurement of the company's warrant liability as well as realized losses. Stemming from more exercises. Both directly related to the increase of the price of the company's warrants in common stock.

Excluding this non-cash re-measurement charge the adjusted net loss for fiscal. 25 was 84.5 million or 26 cents per share an increase of 8.9 million or 11.8% when compared to the fiscal 24. Adjusted, net loss of 75.6 million or 39 cents per share the reduction in net loss per share was due to a higher issued in a standing number of common shares in 25. When compared to 24

City, but Dal lost for fiscal, 25 with 71.8 million and increase of 15.8 million, or 28% from the fiscal 24, adjusted Dal, loss of 56 million, with the increased loss, due primarily to higher operating expenses, partially offset by higher gross profit. Now, I will move on to the fourth quarter.

Revenue the fourth quarter total, 2.8 million and

To the year earlier, uh, quarter of 18.3 million that included the 8 figure system sale that, I referenced earlier on a sequential quarter to quarter basis, bookings, increased 11 million, or 471% from the immediately preceding fiscal 25/3 quarter. Bookings of 2.4 million with the increase due primarily to the previously announced 10 million euro booking for a multi-year, 15% 50% capacity commitment for a d-wave advantage to a kneeling, quantum computer system, to support the development of a Lombardy, Italy, based

State-of-the-art Quantum Computing and research facility.

GAAP gross profit for fiscal '24 Q4 was $1.8 million, an increase of approximately $100,000, or 21%, from the fiscal '24 fourth quarter gross profit of $1.5 million, with the increase due primarily to the growth in revenue.

For the fourth quarter, non-GAAP gross profit was $2 million, an increase of approximately $300,000, or 17%, from the prior year fourth quarter non-GAAP gross profit of $1.7 million.

GAAP gross margin for the fiscal 2025 fourth quarter was 64.8%, an increase of 1% from the fiscal 2024 fourth quarter GAAP gross profit margin of 63.8%.

For the fourth quarter of the non-gaap gross margin was 71.8%. A decrease of 1.2% from the fiscal 24, fourth quarter, non-gaap growth, margin of 73%.

Net loss for the fourth quarter of fiscal. 25 was 42.3 million or 12 cents per share, a decrease of 43.8 million or 25 cents per share from the fiscal 24, fourth quarter, net loss of 86.1 million or 37 cents per share the decrease in. Net loss was primarily due to a decrease of 57.7 million

A non-cash non-operating, charges related to the remeasurement of the company's warrant liability. Partially offset by higher operating expenses. Excluding this charge the fourth quarter adjusted. Net loss was 31.8 million or 9 cents per share and in

Under 2, ATM, programs, and ELO program. And from the every 1st 2025 D waste Consolidated cash and marketable, securities, balance totaled, 884.5, million representing a 397% from the year earlier, Consolidated, cash balance of 178 million. The 6% increase from the immediately, prior fiscal 25. Third quarter Consolidated, cash balance of 836.2 million during the fourth quarter, the company received 63.7 million

In cash proceeds from the exercise of warrants as previously, announced subsequent to year year end. We invested 250 million in cash in conjunction with the acquisition of quantum circuits. And we believe that our remaining liquidity is sufficient to support a fully funded plan to profitability.

With respect to 2026.

However, I would like to provide some parameters.

With respect to bookings. We are obviously off to a tremendous start with fiscal 2026, year-to-date bookings already. Exceeding our annual bookings for any year in the company's history is Alan noted earlier our sales opportunity pipeline entering 2026 was up nearly 1500 percent to the beginning of 2025 that includes a 700% increase in the total number of perspectives sales transaction, and we continue to see interest in potential system. Sales not only for our advantage to annealing system, but also for our dual rail gate model Quantum systems. However, as we have previously noted, the system sales process is fairly complex, and the sales cycle is usually lengthy and duration.

With respect to revenue recognition on system sales, please, keep in mind that most of these transactions will involve site preparation, installation, calibration, and other key steps before, the systems are fully operational that are likely to Encompass multiple months and possibly quarters depending on the unique. Elements of a particular system. Transaction as a result, a revenue recognition on system sales is on a percentage of completion basis.

In addition, we anticipate that most system sales transactions will involve a multi-year service and maintenance Revenue component and some may include a multi-year leap Cloud access component.

With respect to the recently announced 10 million Enterprise qcast agreement. This Revenue will be recognized rather than over a 2-year timeframe commencing in the current quarter, the 10 million euro booking in Italy will be recognized rapidly over 5 years commencing, once the system is fully installed, which we expect will be in the second half of this year.

To summarize, we expect incrementally, higher Revenue, growth in the second half of this year when compared to the first half.

With respect to operating expenses, we intend to continue to invest aggressively in both our annealing and gate model technology development initiatives that consists primarily of research and development, headcount fabrication expenses and to some degree Capital expenditures as we previously outlined approximately 65, research and development professionals. Join view wave through the quantum circuits acquisition, and we intend to expand this New Haven, Connecticut Base gate model team by, at least 50% over the course of this year. In addition, we will be making significant headcount and capital Investments at our recently announced us R&D facility in Boca Raton, Florida.

Where we intend to expand our kneeling R&D team and eventually to install 1 or more annealing systems to support our leap cloud service offering.

Lastly, given the recent formation of our Government business unit, we will be making meaningful investments in this area, given the magnitude of opportunities that we see here over the course of fiscal '26. We expect to increase quarterly operating expenses by approximately 15% sequentially over the immediately prior fiscal quarter.

in conclusion as we have previously stated, we continue to believe that dwave 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 other independent publicly held Quantum Computing companies,

With that operator, please open the call for questions.

Thank you. We will now begin the question and answer session. To ask a question, you may press star then 1 on your touchtone phone.

If you are using a speaker-phone please pick up your handset before pressing any keys. If at any time your question has been addressed and you would like to withdraw your question. Please press star then to as a reminder, please limit yourself to 1 question and req, should you have a follow-up at this time? We will pause momentarily to assemble our roster.

Our first question comes from harsh Kumar of Piper Sandler. Please go ahead.

Or should I just think of this as you just need a lot less like 10x less?

Needed to achieve Quantum utility um, is much lower given the Dual rail technology combined with our cryogenic control technology. So the Dual rail technology gives us very high gate fidelities on par with, you know, some of the best in the industry, uh, including trapped ion and neutral atom. But while preserving the Thousand Times speed advantage of superconducting over, uh, the other modalities. But because of the higher fidelities, we are able to error correct with many fewer physical cubits per logical qubit. So that is a uh, complexity reduction advantage. And then when you add the on chip cryogenic control, and what we believe will ultimately allow us to

Control. Um, you know

Hundreds of thousands or, you know, more cubits with just hundreds of iol lines versus hundreds of thousands of iol lines, as with other superconducting approaches. Again a dramatic reduction, uh, in the complexity we believe that this this combination will allow us to uh, build and deploy scaled error corrected, um, superconducting gate model systems ahead of anybody else. And we believe that obviously ultimately superconducting will lead because of the speed advantage.

Our next question comes from Quinn, Bolton of nidam and Co please go ahead.

Hey guys, I'll also offer a congratulations on a, a great 2025. Um, I guess John, I just wanted to come back. I know you're not giving guidance per se for 26, but as we think about the integration of qci now into the business, can you give us any sort of, um, you know?

Points to to how much op you would expect to incur.

in 2026 with that acquisition is, is the

So the sequential 15% growth in in Opex that includes uh, qci uh expansion in uh, not only their R&D team, but other uh expenses including uh fabrication expenses uh, as well as uh some uh Capital expenditures. So the answer to your question is, yes, 15% fully includes the incremental costs associated with qci

Our next question comes from Kinsley crane of canaccord. Please go ahead.

Hi, thanks for taking the question. Congrats on the the really strong momentum. Um, John for you qcast. It's moderated a bit, the past year with system sales driving growth. I'm just wondering if you have a sense of what you think, uh, an ideal net retention rate for that segment can be or what that could be this next year. And then if you know, stride hyper new ml integration capabilities, could change that upsell conversation at all with existing customers. Thanks.

Incrementally more visibility on the growth in the overall QCast than what we've seen in the past.

And John, maybe, maybe I'll just chime in as well. Um, especially given the comment about the stride solver. Um, so Kingsley. You know, we've been saying all along that assistant sales and Q has a very complimentary models for us. And that the system sales, um, for now are larger deals and nearer term Revenue recognition versus the qas deals, which are uh, a bit smaller and recognized radically over a multi-year period in general. Um, however, we are really beginning to see an increase in the size of qas deals. Um, I started signaling this last year. When I said we're now looking at larger companies, uh, doing larger deals with us including potentially, uh, Enterprise, all you can eat licenses and that

2 year, 10 million dollar Fortune 100 company deal that uh we closed uh at the beginning of this year is the first example of that um that is starting to transition qas into larger. Enterprise licensed deals, now revenue for those deals still gets recognized radically

So, the revenue recognition is generally over a longer period of time than the system sales. But we're really now starting to see the growth in the size of those qas deals. So I think that, you know, as we look to the future, we will continue to see larger system, sales deals and qas Deals earlier revenue, revenue recognition on the system sales and the qas. But I think we're gonna really start to see qas picking up the pace as we as we begin to do more Enterprise licenses.

Our next question.

Yeah, thanks for taking the question on for Marco passes. Um, maybe just um, around Quantum circuits and and how it's playing into that, you know, kind of sales pipeline increase, that, that you're talking to, I saw that you closed, you know, a little bit north of 2 million in bookings for for for for TCI in in January and so um, Can can you speak a little bit to the the levels of Engagement that you're seeing? And you know, I don't know if there's any, you know, kind of qualification around like what that book of business, you know, kind of looks like from a backlog of um you know that that's folding in as as we enter the 2026 year.

Uh, January to do that or you want to take it?

No, I'm happy to, uh, as we, uh, articulated, when we first announced the, the transaction Joe that we do expect Revenue contribution over the course of this year, uh, from Quantum circuits. Uh, on the, uh, Professional Service is and qcast side. Uh, they also have a book of business, uh, that is, uh, government related. Um, and they, they actually have some Revenue last year, that was government related. So, that's where we expect Revenue contributions from, uh, Quantum circuits this year. And then, as we've previously outlined, we all also expect to start to develop a sales this year for potential systems and sales.

And, and the only other thing I'll say is, we are seeing a lot of interest in the, uh, um, dual rail systems, um, including the 8 qubit system that we have operational day with some early customers using it and, uh, in the 17th later this year. So, you know, a number of our, current annealing, customers have expressed interest in that system, in addition to the ining system. So we're quite encouraged by the interest that we're seeing.

Our next question comes from Chris Sankar of TD Cowen. Please go ahead.

Yeah. Hi thanks for taking my question. I just want to find out like obviously 1 of your competitors is buying. 1 of your foundries, kind of wondering how you're looking at risk mitigation and also dust qci use the same Foundry as cubits or is there a different Foundry?

From an IP perspective. Uh, the Active Components, we fabricate ourselves, um, in our R&D facilities, uh, and skywater. Does the wiring, uh, and on Dual rail technology Sky water is not involved at all. So, um, my view on the enqueue um uh, acquisition of Sky water, is that um, you know, on the 1 hand, they're saying all the right things relative to continuing to work, uh, together, exactly as we have been and we should not be concerned uh, about uh, anything changing as a result of this transaction. Uh, on the other hand,

Uh, we are skeptical and we are concerned. Uh, and so we are actively working on, uh, other sources of Fab support for our systems.

Our next question comes from Kevin.

Aragan of Jeffrey's please go ahead.

Yeah. Hey Alan. And John let me echo. My congrats on the on all the progress. Hey, you know, you talked a little bit about it in a previous question, but on the qcast side, I mean, how are customer conversations evolving? And what metrics are are customers really focused on 1 of evaluating Quantum as a solution? I mean, is it all about kind of speed up time? Or is it you know, convenience or just your Quantum meal or just far better than anything out there?

Well, I mean, first of all, the annealing quantum systems are the only ones that can actually deliver any commercial value today on on real world problems. Um, and they're the only ones that are used in production by customers today. No other quantum computer is capable of that, uh, level of, uh, computation and and Commercial Roi. Um, and uh, the way this evolves is that we basically, engage with customer on an initial application, and we've gotten very good at being able to identify upfront, whether the application, uh, that they're interested in, or, uh, other applications that they're dealing with will benefit from our systems or not. So now, now unlike in the past, when we start an initial application development with a customer, we have a very high degree of confidence that they're going to be.

Be able to see a very strong Roi, um, and then that is what allows us to, uh, basically validate for them the benefits and the value, they can get from working with us that then allows us to move, more rapidly to getting that initial application in production. And then that would generate interest in other applications. So the Fortune 100 deals that we did that started with a first application.

They were blown away by the results that we achieved including a dramatic uh Improvement in their bottom lines based on using this technology. Um, and then they came back and said, okay, we've got quite a few other applications, we want an all you can eat license. Um, we are now starting to see some other large companies, um, uh see similar benefits from the initial application and talking about similar kinds of engagements.

Our next question comes from Ruben Roy of Steel. Please go ahead.

Yes, thanks. Uh, congrats Alan and John on the progress on it. Uh, these are probably a little bit longer term in nature questions but

Wondering, uh, with your kneeling customers, obviously, you have a lot of commercial customers on the alien and kneeling side. Have you started to have some conversations on potential longer term? Uh, you know, road map opportunities with, uh, gate model, qci Computing, with those, um, you know, success stories on the analing side and then the second part of that question is

And again, it's probably pretty early here, but you've got the Dual platform approach. Are there opportunities in your view to combine a kneeling and gate, uh, to to come up with, um,

Like to uh um look at in the context of your gate model technology, um, you know, our our customers understand, the difference between a kneeling and gate, they understand the types of problems that require a kneeling versus a types of problems that require gate, we've kind of educated on that them on that, they're pretty Savvy on that. Uh, and so they recognize that they've got other problems that potentially, uh, could demonstrate, uh, benefit from gate and they have started to engage us on those discussions. Um, and then, you know, the the only other thing I'll say relative to your second question uh and I shouldn't because we said only 1 question per but it's an easy 1 uh not yet. Um, there's some early evidence based on the fact that we've integrated some digital controls it read that as some gate operations into our annealing systems and we're seeing some very interesting scientific results uh based on that. So maybe but it's way too soon.

To be thinking of that as a viable commercial opportunity.

Our next question comes from Troy Jensen of Cantor Fitzgerald, please go ahead.

Hey gentlemen. Congrats on all the momentum here. Um Alan, I totally agree with you. I guess my best take away from cubits. 26. Was it was just dozens of customers out there that have kind of piloted programs and seemed ready to kind of move forward. So my question, I don't like it's multiple 8, figure Enterprise qcast deals? Um, can you talk about like, you know, how much capacity do you guys have, you know, with your existing kneeling computers in the time that they take to launch, you know more if you need to you know Ram quickly.

yeah, we we have

plenty of capacity in our leap Quantum cloud, service to support. I, you know, I mean, minimum 10 of Enterprise deals, um, you know, our quantum computers are, uh, very Capital efficient, uh, each uh, quantum computer can support 25 to 30 million of Revenue per year. Um, we've got 4 of them available today, so, you know, we've got plenty of Revenue capacity for, uh, for these kinds of deals. Um, but you know, deploying another system. Uh, you know, the capital cost is only about a couple of million dollars and, you know, the build time I mean once we have the component tree is like 3 to 4 months. So you know, with some lead time we have no problem deploying additional systems

Our next question comes from Craig Ellis of B Riley Securities. Please go ahead.

Yeah, thanks for taking the question and guys. Congratulations on the real strong execution. Ellen, I wanted to ask you a higher level question and I'll rewind the clock a little bit. I think it was 3 quarters ago, you told us to expect increased R&D and go to market. Spend and here we are now able to show proof that we've got Andy Lane Crow control, applicability to gate and we start the year with I think around 45 million in trailing.

For 5 months, bookings, which is extremely robust. So the question is,

is that signs of execution of what you were pointing to or were you expecting something else? And as we start the year, if you can give us any color on what you see in the pipeline on the system side and with that, all you can eat new or offering. It would be greatly appreciated. Thank you. And um, so so the short answer is yes, that you know, our investments were designed to accelerate work on our advantage 3 system uh which includes analog digital capability, as well as uh multi-chip for

Are scaling to 100,000 cubits and then to really start accelerating work on the gate model system. 1 of the key elements that we uniquely, we're bringing to the table was on chip cryogenic control and so on R&D side yes, the Investments are playing out as we had planned and on the go to market side. You said it. I mean you know we're making really good progress. It's it's robust at this point in time our pipeline has grown significantly and we're feeling quite good about uh what we what we can expect to see this year. So the investments in go to market are playing out exactly as we expected as well.

Of rosenblat Securities. Please go ahead.

Thanks guys. Great work.

Uh, like what you're doing, a question on, um, Advantage 3. Could you do you have any more information about circuit, tests? Any, um,

Any information that you could give us relative to how you're progressing there and what the capabilities might be relative to Advantage to thank you. Yeah. Um, so I I, I got a call out to 2p elements. Uh, you know, 1 analysts digital the other multi-chip, obviously with each generation of system it's more. It's more connectivity and higher coherence times. Um, but functionally, um, the big things for Advantage 3 are, uh, putting some digital controls into the, uh, analing fabric, as well as a multi-chip for scaling far more rapidly. We've got our, uh, first chips back, uh, that incorporate the analog digital controls. Uh, and we are close to having uh, our first chips that uh, demonstrate multi-chip interconnect. So we're making good progress on all fronts.

Our next question comes from David Williams of Benchmark. Please go ahead.

Hey, good morning. Let me also echo my my congrats on execution here. Um, maybe Alan, can you speak to some of the the pipeline that you talked about, uh, in the script? Just a strength there where that's coming from and, and really what you're hearing customers and and how quickly can this pipeline turn into uh maybe confirmed revenue, or those orders can come in? Just kind of that life cycle of that, uh, of that, that pipeline. Thanks. Yeah, I'm not, I'm not going to address the revenue piece because that's all based on the revenue recognition, uh, policies of the company, and, and different deals, have different recognition timelines. But as far as closing the deals, I mean, we've got a strong pipeline for those system sales. I mean, honestly, you know, when we talked about this at the beginning of last year, I said, expect maybe 1 a year for the foreseeable future. You know our pipeline for system sales right now is very robust. Um, so you know, we're you know, we're we're Beyond 1 a year uh, at this point in time.

And then the same is kind of true on uh qas and Professional Services deals. I mean you know I I talked a little bit about it. You know, 1 of the world's largest airline companies, 1 of the world's largest healthcare companies, largest chemical companies. I mean, we are um you know closing deals with much larger company.

Companies uh these are much larger deals from the outset and we're progressing through them much faster. So very strong, go to market uh environment for us right now.

Our next question comes from Anton. Lgo of web Bush Securities. Please go ahead.

Good morning and thanks for the question. And also when I echo my congratulations on on the progress and in 2025 so there's been reports that you know, the P pentagon's budget would increase significantly.

In Sue, fiscal 2027. And with some of that budget like these be allocated to Quantum Technologies. Can you tell us a bit more about the magnitude of the opportunity ahead and that how that might benefit you pursue, particularly given your new government business unit. Thank you. Yeah, yeah. So so just, uh, you know, quickly, um, first of all, we are not primarily pursuing, uh, you know, R&D research, grants, this isn't about the government, funding us to build our systems. We've got, you know, plenty of liquidity to be able to fund our R&D roadmap what we are focused on is helping the government solve their hard computational problems today. And in fact, uh, you know, we've got a very interesting pipeline there. I, I'll be, I'll be very Frank with you. When, uh, we talked about the Davidson androl d.

Deals at Cubits. And, um, uh, you know, Andrew talked about what they had seen in using our system that generated a very significant inflow of interest, uh, in leveraging our systems to solve hard problems within the US government. So we're feeling, uh, like, you know, we've got the wind to our back right now, and with Jack Sears on board and building that government business—basically having a place where we can engage and, uh, and deliver for the US government—we're feeling quite good about the opportunity.

Shannon of Craig Hall. Please go ahead.

Hi guys, this is Tyler Anderson on for Richard. Thank you for taking my question. So, you mentioned that you have 50% of the capacity of your system booked. When we're thinking about future new systems that are coming online for the Advantage 3 and beyond, is there a potential where we see multiple of those systems come online right away? And that way you can,

Have that capacity reserved for customers that you're talking to today? Are you having those conversations just want to get some color on that?

Yes, to Tyler. First of all? Um, I when you say 50%, the only, uh, the only time we've talked about 50% of capacity, was in the queue Alliance deal in Italy. Uh, they purchased 50% capacity of uh, an advantage 2 system, uh, in general in our cloud service today. Uh, you know where we're not yet even at 50% capacity. We've got a plenty of capacity in our leap cloud service to support our, uh, Professional Services engagements, and quantum computers as a service customers. Um, when we bring a new system to Market, we tried to, uh, upgrade all our Cloud systems as quickly as possible. Um, and in the past because the numbers have been relatively small, we've just done them 1 at a time. However, now that we are seeing a lot more interest in system sales, uh, we

Are making some investment in that the team and the capabilities to do installation, so that we can uh, uh, so that we don't have to serialize. We can uh do more in parallel, going forward. So the answer is yes.

My question comes from David Lou of mu go ahead.

Hi, I'm going for Vijay. Thanks for taking the question, congrats on the strong momentum here. Um, my question I wanted to ask is

You guys called out the interest and momentum in systems growth going into 26 as well as the Enterprise structure for 2 calf. So, how should we think about qcast and the hardware, uh, sales mix going forward and maybe uh, in relation to that, um, the Opex number as well for the year, thanks.

Hey John, do you want to take that?

Sure, is, with respect to the Opex number, as I articulated earlier. Uh, in my, my comments were based upon our Consolidated Opex. Uh, my, uh, my comments were that we're expecting, uh, Opex to grow at 15% sequentially quarter to quarter over the course of the uh, the fiscal year. Um, and then with respect to the mix, the mix is going to be uh, entirely a function of uh, the composition and magnitude of the bookings. Which, as we

Uh, articulated in the past. You know, we expect that in the foreseeable future to be relatively lumpy where, you know, we could have a substantially higher, uh, qcast Enterprise mix in any given quarter than we have, uh, you know, systems, uh, bookings. And then, as Alan mentioned earlier, each 1 of these deals has, uh, or could have unique Revenue recognition, uh, elements, uh, to it. Uh, for instance, the percentage of completion on a, on a systems installation. So, uh, the answer is, uh, expect that mix to be, uh, Lumpy

this concludes

conclusion and answers.

Closing remarks.

Thank you. Um, so in closing let me reiterate that dwave is different.

We're pulling away from the quantum Computing pack as demonstrated by our undeniable commercial traction, and our remarkable technical leadership. Dwave is the only dual platform. Quantum Computing company capable of, delivering both annealing and gay bottle systems. The only company with quantum computers that have demonstrated Quantum Supremacy on a useful real world problem. The only company that has customer applications in production. Now, the only company with highly differentiated gate model technology that delivers the remarkable speed of superconducting and the Fidelity of high and trap or neutral, atom approaches a

Powerful combination and positions dwave to win in the error, corrected gate model race.

2026 is the year of dwave quantum. The year, we emerge as a defining company in the quantum era.