D-Wave Revenue Stalls as Operating Costs Climb

D-Wave Quantum reported $3.1 million in second-quarter revenue, essentially unchanged from a year earlier, as operating expenses climbed 93% to $55 million. The results underscore the gap between the company’s current sales and its investment in growth.

The weak comparison partly reflects a lumpy business. First-half revenue fell 67% to $5.9 million, but the year-earlier period included $13.7 million from D-Wave’s first annealing-system sale. That one large deal makes recurring sales harder to judge from headline totals.

Orders offer a more encouraging signal, though they are not yet recognized revenue. D-Wave booked $35.5 million in the first half, including a $20 million system sale, and said it expects to recognize that sale in later quarters. Its remaining contracted work reached $40.7 million at June 30.

The company expects about 57% of that contracted work to become revenue within 12 months. But bookings depend on customers moving from orders to deliveries and services, while revenue is recorded as D-Wave fulfills its contracts. The timing can leave quarterly sales volatile.

Recurring cloud revenue remains small. Production applications generated $1.3 million of QCaaS revenue in the first half, or 37.3% of that service revenue. The share was up from 9.8% a year earlier, suggesting more use beyond testing, but not yet a large sales base.

Spending is rising faster than sales. Adjusted EBITDA loss widened to $37.1 million in the second quarter, from $20 million a year earlier. D-Wave attributed higher costs to product development and sales efforts, while its Quantum Circuits acquisition also added expenses.

D-Wave had $546.2 million in cash and marketable securities at June 30. More than 90% of the year-over-year decline in that balance reflected cash paid for Quantum Circuits, the company said. Investors will watch whether the large order backlog converts into revenue while the company builds its cloud business and expands its technology roadmap.