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Share Name | Share Symbol | Market | Type |
---|---|---|---|
D Wave Quantum Inc | NYSE:QBTS | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.01 | 0.76% | 1.32 | 1.42 | 1.26 | 1.405 | 3,868,971 | 01:00:00 |
Revenue of $2.6 Million, up 50% Sequentially from Q2 Commercial Revenue up 62% Year-Over-Year Total Bookings of $2.9 Million $53.3 Million Cash Balance – Highest in Company’s History
D-Wave Quantum Inc., (NYSE: QBTS) (“D-Wave” or the “Company”) a leader in commercial quantum computing systems, software, and services, today announced financial results for its fiscal third quarter ended September 30, 2023.
“We believe that this is a pivotal moment in quantum computing, as D-Wave leads the industry’s transformative shift from research and developmental experimentation to true delivery of quantum’s enterprise value and utility. Our annealing quantum computing solutions are driving real business impact today, and we believe that our third quarter results reflect a growing recognition that D-Wave is leading the enterprise quantum wave,” said Dr. Alan Baratz, CEO of D-Wave. “Once again, we experienced quarter-over-quarter and year-over-year growth in the number of customer bookings, commercial revenue, and the size of commercial deals. We’re also seeing customers moving from development to deployment of applications, as they are seeing first-hand the business impact and near-term advantage that can be achieved using D-Wave’s annealing quantum computing solutions. That growing commercial success, coupled with our ongoing world-class product development and scientific advancements, reflect, in our opinion, impressive progress across all facets of our business.”
Recent Commercial / Business Highlights
Recent Technical Highlights
Third Quarter Fiscal 2023 Financial Highlights
Financial Results for the Nine Months of Fiscal Year 2023
Balance Sheet and Liquidity
As of September 30, 2023, D-Wave’s consolidated cash balance totaled $53.3 million, an increase of $45.8 million, or 610%, from the $7.5 million consolidated cash balance at the end of the immediately preceding fiscal 2023 second quarter ended June 30, 2023. The $53.3 million cash balance represents the Company’s largest quarter-end cash balance in its history.
During the nine months ended September 30, 2023, D-Wave raised over $94.0 million in debt and equity including $63.5 million in equity, primarily from the Company’s common stock purchase agreement (“Equity Line of Credit” or “ELOC”) with Lincoln Park Capital Fund, LLC (“Lincoln Park”), and $30.5 million in debt, primarily with PSPIB Unitas Investments II Inc., an affiliate of PSP Investments.
As previously disclosed, on June 16, 2022, D-Wave entered into the ELOC with Lincoln Park wherein the Company has the right, but not the obligation, to issue and sell up to $150 million of shares of its common stock to Lincoln Park, subject to certain limitations and satisfaction of certain conditions, over a 3-year period. As of September 30, 2023, D-Wave has $84.4 million in remaining capacity under the ELOC with just over two years remaining under the Lincoln Park ELOC commitment. D-Wave’s ability to raise funds under the ELOC is subject to a number of conditions including having a sufficient number of registered shares and having D-Wave’s stock price above $1.00 per share.
As previously disclosed, on April 13, 2023, D-Wave entered into a $50 million four-year term loan agreement (the “PSP Loan”) with PSPIB Unitas Investments II Inc., an affiliate of PSP Investments. The loan agreement is comprised of three individual tranches of $15 million, $15 million, and $20 million respectively and, to date, D-Wave has drawn the first two tranches totaling $30 million. However, the issuance of the third tranche is subject to certain conditions and, there can be no assurance that the Company will be able to meet the conditions necessary to draw on the third tranche.
Fiscal Year 2023 Outlook
Based on the information available on November 8, 2023, guidance for the full year 2023 is as follows and our guidance is subject to various cautionary factors described below:
Revenue
Adjusted EBITDA Loss
1“Bookings” is an operating metric that is defined as customer orders received that are expected to generate net revenues in the future. We present the operational metric of bookings because it reflects customers' demand for our products and services and to assist readers in analyzing our potential performance in future periods.
2“Average Deal Size” is an operating metric that is defined as the average dollar amount per booking.
3“Non-GAAP Gross Profit”, “Non-GAAP Gross Margin”, “Non-GAAP Adjusted Operating Expenses”, and “Adjusted EBITDA Loss”, are non-GAAP financial measures or metrics. Please see the discussion in the section “Non-GAAP Financial Measures” and the reconciliations included at the end of this press release.
4We are not able to reconcile guidance for Adjusted EBITDA Loss to its most directly comparable GAAP measure, Net Loss, and cannot provide an estimated range of net loss for such period without unreasonable efforts because certain items that impact Net Loss, including foreign exchange and the fair value of warrant liabilities, are not within our control or cannot be reasonably predicted.
Third Quarter 2023 Conference Call
In conjunction with this announcement, D-Wave will host a conference call on Thursday, November 9, 2023, at 8:00 a.m. (Eastern Time), to discuss the Company’s financial results and business outlook. The live dial-in number is 1-800-908-9179 (domestic) or 1-312-281-1211 (international). Participating in the call on behalf of the Company will be Chief Executive Officer Alan Baratz and Chief Financial Officer John Markovich.
About D-Wave Quantum Inc.
D-Wave is a leader in the development and delivery of quantum computing systems, software, and services, and is the world’s first commercial supplier of quantum computers. Our mission is to unlock the power of quantum computing today to benefit business and society. We do this by delivering customer value with practical quantum applications for problems as diverse as logistics, artificial intelligence, materials sciences, drug discovery, scheduling, cybersecurity, fault detection, and financial modeling. D-Wave’s technology has been used by some of the world’s most advanced organizations, including Volkswagen, Mastercard, Deloitte, Davidson Technologies, ArcelorMittal, Siemens Healthineers, Unisys, NEC Corporation, Pattison Food Group Ltd., DENSO, Lockheed Martin, Forschungszentrum Jülich, University of Southern California, and Los Alamos National Laboratory.
Non-GAAP Financial Measures
To supplement the financial information presented in accordance with GAAP, we use non-GAAP measures of certain components of financial performance. Each of non-GAAP gross profit, non-GAAP gross margin, Adjusted EBITDA and non-GAAP adjusted operating expenses is a financial measure that is not required by or presented in accordance with GAAP. Management believes that each measure provides investors an additional meaningful method to evaluate certain aspects of such results period over period. The Company defines each of its non-GAAP financial measures as follows:
The presentation of non-GAAP financial measures is not meant to be considered in isolation or as a substitute for the financial results prepared in accordance with GAAP, and our presentation of non-GAAP measures may be different from non-GAAP measures used by other companies. For a reconciliation of non-GAAP gross profit, non-GAAP gross margin, Adjusted EBITDA and non-GAAP adjusted operating expenses to its most directly comparable GAAP measure, please refer to the reconciliations below.
Forward-Looking Statements
Certain statements in this press release are forward-looking, as defined in the Private Securities Litigation Reform Act of 1995. These statements involve risks, uncertainties, and other factors that may cause actual results to differ materially from the information expressed or implied by these forward-looking statements and may not be indicative of future results. Forward-looking statements in this press release include, but are not limited to, statements regarding SOC 2 Type 2 compliance helping to ensure protection of customer data and improving data procurement, expected revenue recognition, and full-year 2023 guidance. These forward-looking statements are subject to a number of risks and uncertainties, including, among others, various factors beyond management’s control, including; our ability to raise funds under the ELOC or meet the conditions necessary to draw on the third tranche of the PSP Loan; our ability to regain compliance with the NYSE’s listing standards and the risk that our securities will not maintain the listing on the NYSE; general economic conditions and other risks; our ability to maintain and expand our customer base and the customer adoption of our solutions; risks within D-Wave’s industry, including anticipated trends, growth rates, and challenges for companies engaged in the business of quantum computing and the markets in which they operate; the outcome of any legal proceedings that may be instituted against us; risks related to the performance of our business and the timing of expected business or financial milestones; unanticipated technological or project development challenges, including with respect to the cost and/or timing thereof; the performance of our products; like our hybrid solvers and software like “zero downtime deployment”; the effects of competition on our business; the risk that we will need to raise additional capital to execute our business plan, which may not be available on acceptable terms or at all; the risk that we may never achieve or sustain profitability; the risk that we are unable to secure or protect our intellectual property; volatility in the price of our securities; the risk that our securities will not maintain the listing on the NYSE; and the numerous other factors set forth in D-Wave’s Annual Report on Form 10-K for its fiscal year ended December 31, 2022 and other filings with the Securities and Exchange Commission. Undue reliance should not be placed on the forward-looking statements in this press release in making an investment decision, which are based on information available to us on the date hereof. We undertake no duty to update this information unless required by law.
D-Wave Quantum Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
September 30,
December 31,
(In thousands of U.S. dollars, except share and per share data)
2023
2022
Assets
Current assets:
Cash
$
53,317
$
7,065
Trade accounts receivable, net
763
757
Inventories
2,244
2,196
Prepaid expenses and other current assets
1,870
3,907
Total current assets
58,194
13,925
Property and equipment, net
1,879
2,294
Operating lease right-of-use assets
8,560
9,133
Intangible assets, net
195
244
Other noncurrent assets
1,351
1,351
Total assets
$
70,179
$
26,947
Liabilities and stockholders' (deficit) equity
Current liabilities:
Trade accounts payable
$
1,541
$
3,756
Accrued expenses and other current liabilities
9,604
8,640
Loans payable, current
30,006
1,671
Deferred revenue, current
2,177
1,781
Total current liabilities
43,328
15,848
Warrant liabilities
1,971
1,892
Operating lease liabilities, net of current portion
6,884
7,301
Loans payable, noncurrent
9,108
7,811
Deferred revenue, noncurrent
92
9
Total liabilities
61,383
32,861
Commitments and contingencies
Stockholders' (deficit) equity:
Common stock par value $0.0001 per share; 675,000,000 shares authorized at September 30, 2023 and December 31, 2022; 155,288,763 shares and 113,335,530 shares issued and outstanding as of September 30, 2023 and December 31, 2022.
15
11
Additional paid-in capital
462,385
381,274
Accumulated deficit
(443,132
)
(376,797
)
Accumulated other comprehensive loss
(10,472
)
(10,402
)
Total stockholders' (deficit) equity
8,796
(5,914
)
Total liabilities and stockholders’ equity
$
70,179
$
26,947
D-Wave Quantum Inc.
Condensed Consolidated Statements of Operations and Comprehensive Loss
(Unaudited)
For the three months ended September 30,
For the nine months ended September 30,
(In thousands of U.S. dollars, except share and per share data)
2023
2022
2023
2022
Revenue
$
2,562
$
1,695
$
5,852
$
4,778
Cost of revenue
1,033
654
3,197
1,858
Total gross profit
1,529
1,041
2,655
2,920
Operating expenses:
Research and development
9,459
7,507
29,922
21,799
General and administrative
8,003
5,925
28,875
13,566
Sales and marketing
2,474
2,773
7,862
5,982
Total operating expenses
19,936
16,205
66,659
41,347
Loss from operations
(18,407
)
(15,164
)
(64,004
)
(38,427
)
Other income (expense), net:
Interest expense
(1,247
)
(1,069
)
(2,482
)
(3,588
)
Change in fair value of warrant liabilities
1,433
2,603
(79
)
2,603
Government assistance
1,051
-
1,051
-
Change in fair value of Term Loan
1,701
-
1,356
-
Term Loan debt issuance costs
(725
)
-
(2,118
)
-
Lincoln Park Purchase Agreement issuance costs
—
(629
)
—
(629
)
Other income (expense), net
365
948
(59
)
1,301
Total other income (expense), net
2,578
1,853
(2,331
)
(313
)
Net loss
$
(15,829
)
$
(13,311
)
$
(66,335
)
$
(38,740
)
Net loss per share, basic and diluted
$
(0.12
)
$
(0.11
)
$
(0.50
)
$
(0.32
)
Weighted-average shares used in computing net loss per share, basic and diluted
133,222,318
116,256,805
131,373,959
122,337,727
Comprehensive loss:
Net loss
$
(15,829
)
$
(13,311
)
$
(66,335
)
$
(38,740
)
Foreign currency translation adjustment, net of tax
15
56
(70
)
18
Comprehensive loss
$
(15,814
)
$
(13,255
)
$
(66,405
)
$
(38,722
)
D-Wave Quantum Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Nine months ended September 30,
(in thousands of U.S. dollars)
2023
2022
Cash flows from operating activities:
Net loss
$
(66,335
)
$
(38,740
)
Adjustments to reconcile net loss to cash used in operating activities:
Depreciation and amortization
828
1,038
Stock-based compensation
17,362
3,355
Amortization of operating right of use assets
573
493
Government assistance
(1,051
)
-
Non-cash interest expense
2,405
1,616
Non-cash final fee payment for Venture Loan
-
1,808
Non-cash Lincoln Park Purchase Agreement issuance costs
-
629
Change in fair value of Warrant liabilities
79
(2,603
)
Change in fair value of Term Loan
(1,356
)
-
Debt issuance costs netted from Term Loan proceeds
993
-
Unrealized foreign exchange loss (gain)
(15
)
(1,226
)
Other non-cash activities
35
266
Change in operating assets and liabilities:
Trade accounts receivable
7
1
Research incentives receivable
-
1,448
Inventories
(235
)
(684
)
Deferred offering costs
-
1,250
Prepaid expenses and other current assets
2,035
(3,815
)
Trade accounts payable
(2,267
)
614
Accrued expenses and other current liabilities
965
1,704
Deferred revenue
479
(1,051
)
Operating lease liabilities, net of current portion
(412
)
(442
)
Net cash used in operating activities
(45,910
)
(34,339
)
Cash flows from investing activities:
Purchase of property and equipment
(141
)
(249
)
Purchase of software
(35
)
(67
)
Net cash used in investing activities
(176
)
(316
)
Cash flows from financing activities:
Proceeds from issuance of common stock from the PIPE investment
-
40,000
Merger, net of redemption and transaction costs
-
4,100
Transaction costs paid directly by D-Wave Systems
-
(6,528
)
Proceeds from exercise of public warrants
-
910
Proceeds from promissory note - related party
-
420
Payment on directors and officers financing arrangement
(1,449
)
(864
)
Proceeds from Lincoln Park Purchase Agreement
61,346
-
Proceeds from government assistance
1,487
3,124
Proceeds from issuance of common stock in connection with ESPP
273
-
Proceeds from issuance of common stock upon exercise of stock options
1,890
141
Proceeds from debt financing
29,007
19,870
Debt payments
(390
)
(20,000
)
Venture Loan interest and final payment fee
-
(1,808
)
Government loan payment
-
(398
)
Short swing profit settlement
244
-
Net cash provided by financing activities
92,408
38,967
Effect of exchange rate changes on cash and cash equivalents
(70
)
(31
)
Net (decrease) increase in cash and cash equivalents
46,252
4,281
Cash and cash equivalents at beginning of period
7,065
9,483
Cash and cash equivalents at end of period
$
53,317
$
13,764
D-Wave Quantum Inc.
Reconciliation of Gross Profit to Non-GAAP Gross Profit
For the Three & Nine Months Ended September 30, 2023 and 2022
For the three months ended September 30,
For the nine months ended September 30,
(in thousands of U.S. dollars)
2023
2022
2023
2022
Gross Profit
$
1,529
$
1,041
$
2,655
$
2,920
Gross Margin
59.7
%
61.4
%
45.4
%
61.1
%
Excluding:
Depreciation and Amortization (1)
54
40
163
121
Stock-based compensation (2)
353
45
963
80
Non-GAAP Gross Profit
$
1,936
$
1,126
$
3,781
$
3,121
Non-GAAP Gross Margin
75.6
%
66.4
%
64.6
%
65.3
%
(1)
Depreciation and Amortization reflects the Depreciation and Amortization record in Cost of Revenue only, which differs from the total Depreciation and Amortization set forth in the Condensed Consolidated Statement of Cash Flows that also includes Depreciation and Amortization recorded in Operating Expenses.
(2)
Stock based compensation reflects the stock based compensation recorded in Cost of Revenue only, which differs from the total stock based compensation set forth in the Condensed Consolidated Statement of Cash flows that also includes stock based compensation recorded in Operating Expenses.
D-Wave Quantum Inc.
Reconciliation of Operating Expenses to Non-GAAP Operating Expenses
For the Three & Nine Months Ended September 30, 2023 and 2022
For the three months ended September 30,
For the nine months ended September 30,
(in thousands of U.S. dollars)
2023
2022
2023
2022
Operating expenses
$
19,936
$
16,205
$
66,659
$
41,347
Excluding:
Depreciation and Amortization (1)
173
296
665
917
Stock-based compensation (2)
5,531
1,736
16,399
3,275
Non-recurring one time expenses (3)
714
-
2,396
-
Non-GAAP Operating Expenses
$
13,518
$
14,173
$
47,199
$
37,155
(1)
Depreciation and Amortization reflects the Depreciation and Amortization record in the Operating Expenses only, which differs from the total Depreciation and Amortization set forth in the Condensed Consolidated Statement of Cash Flows that also includes Depreciation and Amortization recorded in Cost of Revenue.
(2)
Stock based compensation reflects the stock based compensation recorded in Operating Expenses only, which differs from the total stock based compensation set forth in the Condensed Consolidated Statement of Cash flows that also includes stock based compensation recorded in Cost of Revenue.
(3)
Non-recurring expenses related to legal, consulting, and accounting fees.
D-Wave Quantum Inc.
Reconciliation of Net Loss to Adjusted EBITDA
For the Three & Nine Months Ended September 30, 2023 and 2022
For the three months ended September 30,
For the nine months ended September 30,
(in thousands of U.S. dollars)
2023
2022
2023
2022
Net loss
$
(15,829
)
$
(13,311
)
$
(66,335
)
$
(38,740
)
Excluding:
Depreciation and Amortization
227
336
828
1,038
Stock-based compensation
5,884
1,781
17,362
3,355
Interest expense (1)
1,247
1,069
2,482
3,588
Change in fair value of warrant liabilities
(1,433
)
(2,603
)
79
(2,603
)
Government assistance
(1,051
)
-
(1,051
)
-
Change in fair value of Term Loan
(1,701
)
-
(1,356
)
-
Term Loan debt issuance costs
725
-
2,118
-
Lincoln Park Purchase Agreement issuance costs
—
629
—
629
Other (income) expense, net (2)
(365
)
(948
)
59
(1,301
)
Non-recurring one time expenses (3)
714
-
2,396
-
Adjusted EBITDA
$
(11,582
)
$
(13,047
)
$
(43,418
)
$
(34,034
)
(1)
Interest expense primarily reflects the accrued interest associated with the below market interest rate government loans as if they were interest-bearing at market rates of interest, the paid-in-kind interest associated with the term loan agreement with PSPIB Unitas Investments II Inc. entered into on April 13, 2023 and the interest and amortization of the final fee associated with the Venture Loan with PSPIB Unitas Investments II Inc. that was entered into on March 3, 2022.
(2)
Other Income (expense), net consists primarily of foreign exchange gains and losses.
(3)
Non-recurring expenses related to legal, consulting, and accounting fees.
View source version on businesswire.com: https://www.businesswire.com/news/home/20231109502105/en/
Investor Contact: Kevin Hunt ir@dwavesys.com
Media Contact: Alex Daigle media@dwavesys.com
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