D-Wave Quantum Q3 Earnings Call Highlights

Key Points

• Third-quarter revenue rose 21% year over year to $4.5 million, driven by subscription and professional-services growth, while bookings fell 19% to $1.9 million. Year-to-date bookings increased 611% to $37.4 million, including a $20 million Florida Atlantic University system sale.
• Profitability came under pressure: gross margin declined to 52.9%, operating expenses rose 84% to $55.9 million, and adjusted EBITDA loss widened to $37.7 million. Cash and marketable securities totaled $503.4 million at quarter-end, down 40% year over year, largely reflecting the Quantum Circuits acquisition.
• D-Wave reported $38.3 million in remaining performance obligations and a sales pipeline up more than 75% from the prior quarter. It is advancing annealing and gate-model systems and signed an agreement for access to up to $100 million in federal funding, subject to milestones; it had received none by quarter-end.

D-Wave Quantum NASDAQ: QBTS reported third-quarter 2026 revenue of $4.5 million, up 21% from a year earlier, as growth in quantum computing subscriptions and professional services helped offset a decline in quarterly bookings.

Bookings fell 19% year over year to $1.9 million in the quarter, but rose 611% to $37.4 million for the first nine months of 2026. The year-to-date total included a $20 million system sale to Florida Atlantic University, which D-Wave expects to deliver in the fourth quarter.

CEO Alan Baratz said the company is working to expand commercial use of its existing annealing quantum computers while developing gate-model systems. Acting CFO Greg Golkov said the sales pipeline’s dollar value rose more than 75% from the end of the second quarter and had more than tripled since the end of 2025, driven by interest in system sales.

Revenue Growth and Wider Operating Loss

D-Wave recognized revenue from more than 100 customers in the third quarter. Commercial enterprises accounted for 52% of revenue, compared with 31% a year earlier, Golkov said.

Quantum computing-as-a-service subscriptions generated $2.2 million, up 56% year over year. Professional services revenue rose 318% to $2 million, primarily reflecting a significant engagement with a Fortune 100 customer and paid gate-model research projects. Systems and other revenue totaled approximately $360,000.

GAAP gross margin declined to 52.9% from 71.4% a year earlier, primarily because professional services accounted for a larger share of revenue and carried lower margins. GAAP operating expenses increased 84% to $55.9 million, driven by higher personnel costs and other expenses.

The company reported a net loss of $48.2 million, or $0.13 per share, compared with a loss $91.8 million larger a year earlier. Golkov attributed much of the improvement to a $122 million reduction in noncash charges associated with remeasuring the company’s warrant liability in 2025. Adjusted EBITDA loss widened by $17 million to $37.7 million, primarily because of higher operating expenses.

Cash and marketable securities totaled $503.4 million at Sept. 30, down 40% year over year. Golkov said the decline was primarily due to approximately $253 million used to acquire Quantum Circuits in January 2026.

System Sales and Customer Deployments

Remaining performance obligations totaled $38.3 million at the end of September, more than 13 times the year-earlier balance. D-Wave expects to recognize 59% of that amount as revenue within 12 months and 71% within 24 months.

Golkov said a substantial portion of the Florida Atlantic University system sale is expected to be recognized upon delivery in the fourth quarter. Additional revenue is expected over the installation period, likely in early 2027, with smaller recurring amounts from maintenance and cloud access over several years.

Baratz said NTT DOCOMO deployed its second production application using D-Wave’s hybrid quantum technology during the quarter. Both NTT applications were developed by the customer and run relatively infrequently, he said. D-Wave is also working with other enterprises pursuing production applications, including UnitedHealth Group’s Optum and AT&T.

In October, D-Wave delivered an Advantage2 annealing system for installation in Como, Italy. Swiss Quantum Technology SA funded the system, which Baratz said is intended to support application development, workforce skills and commercial adoption.

Baratz expects system sales, cloud services, professional services and sales through partners to grow in 2027, though he did not provide numerical guidance. He said system sales could represent a larger share of bookings and revenue because individual deals are typically larger and revenue is generally recognized over a shorter period than cloud services.

Technology Roadmap and Government Funding

D-Wave completed the design of a dual-chip annealing processor and was releasing it for fabrication during the week of the call, Baratz said. The company is also developing scalable input-output controls as it works toward larger annealing systems with 20,000 and ultimately 100,000 qubits.

On gate-model development, Baratz said D-Wave is on track to complete a 17-qubit system and is discussing orders for delivery in 2027 with both existing and new customers. Its longer-term roadmap targets a first fully error-corrected, fault-tolerant logical qubit by 2028 and 100 logical qubits capable of reliably executing more than 1 million operations by 2032.

D-Wave also signed a definitive agreement with the U.S. Department of Commerce providing access to up to $100 million in CHIPS and Science Act funding, subject to milestones. Golkov said the company had not received any of the funds as of the end of the third quarter.

Partnerships and Supply Chain

D-Wave extended its relationship with SkyWater through a multiyear semiconductor development and manufacturing agreement. Baratz said the agreement gave D-Wave confidence that its intellectual property would be protected and that skilled SkyWater personnel would remain involved, while the company continues to qualify additional suppliers.

A separate proof-of-technology project using D-Wave’s technology to optimize maintenance schedules at SkyWater’s fabrication facility reduced lot delays by up to 30%, Baratz said. The project is moving to a proof of concept that will incorporate additional operational constraints.

D-Wave also announced relationships with CGI and LG CNS aimed at helping enterprises develop and deploy quantum applications. Baratz said partner-driven business is just getting started and is expected to begin coming online in 2027 rather than immediately becoming a major component of sales.

About D-Wave Quantum (NASDAQ:QBTS)

D-Wave Quantum develops quantum computing systems, software and services for commercial, government and research users. The company focuses on quantum annealing, an approach designed to help solve complex optimization and sampling problems, and offers hybrid tools that combine quantum processing with classical computing. Its offerings include Advantage quantum computers, the Leap quantum cloud service, and software for building and running applications. D-Wave's technology is used to explore challenges such as scheduling, resource allocation and supply-chain optimization.

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