D-Wave Quantum (QBTS) Q2 FY26 earnings call: guidance and Q&A

Inquired about the pipeline for QCaaS annealing customers, especially for Fortune 500 companies, given the AT&T announcement.

The pipeline is expanding rapidly, and D-Wave is closing larger deals with major corporations like AT&T and Optum, often starting with one application and then growing to multiple. The company does not provide pipeline details but notes strong interest for both QCaaS and systems.

“what I can say is that we have a very strong pipeline for both QCaaS and systems, but it's especially interesting for QCaaS because it is very large corporations that are coming to us with interest from the outset in multiple applications.”

asked by Troy Jensen · answered by Alan Baratz

Asked if Q2 was the first quarter of revenue recognition for the two-year $10 million deal and how to think about QCaaS trajectory.

Revenue recognition for the $10 million deal commenced in Q1. This deal serves as a prototype for future QCaaS engagements, starting with an initial application, demonstrating value, and then expanding to explore multiple other applications.

“We commenced the rev rec on that in the first quarter. And the only thing I'll say beyond that is that, that is the prototype, if you like, for where we're headed with QCaaS in the sense that it started with an initial application.”

asked by John McPeake · answered by John Markovich

Sought more color on AT&T's initial annealing applications, the number of quantum operations, and what gate program interest means for quantum operations.

Clarified that only D-Wave's annealing systems deliver commercial production value today, while gate systems are in R&D. Explained that the concept of 'operations over the network' or 'number of operations' doesn't apply to annealing, which solves problems by submitting an application and receiving results, unlike gate systems with algorithmic operations.

“Only our annealing quantum computers are capable of running commercial production scale applications. ... The only thing we do is run the annealing algorithm to solve the problem. And sometimes it's like one machine instruction. So the concept of number of operations for annealing quantum computer doesn't really apply and operations over the network doesn't really apply.”

asked by Steven (for Krish Sankar) · answered by Alan Baratz

Asked if Optum skipping the PoC stage and moving directly to production is an outlier or a continuing trend for future customers.

The ability to skip the PoC stage depends on the customer's readiness with data access. If data is readily available and value can be demonstrated early, it's possible. Not all customers will follow this model, but some will, depending on their internal capabilities.

“it depends a little bit on, frankly, the readiness of the customer with respect to data access. ... I'm not sure I say what we did with Optum is the prototype for everything going forward. But I think there are other customers that will fall into that model and some that won't.”

asked by Shadi Mitwalli · answered by Alan Baratz

Sought to understand the implications of the Nature paper, particularly the Lambda-10 target and the engineering work required to operationalize the results for the gate-model roadmap.

The Nature paper validates that D-Wave's dual-rail technology combines superconducting speed (nanosecond gate times) with high fidelity (99.9%), which is unique among superconducting approaches. This technical foundation, demonstrated on an 8-qubit system, gives confidence in achieving efficient error correction (Lambda of 10) as systems scale, leading to significant error rate reductions (e.g., 2,000-fold for the 181-qubit system).

“The Nature paper is very significant and really demonstrates in a sound technical way what we've been saying since we acquired Quantum Circuits, which is that the dual-rail technology represents the best of both worlds. Specifically, the ability to process operations to run gates at superconducting speeds... But at the same time, to demonstrate the fidelity, 99.9% currently that you would typically see in trapped ions or neutral atoms.”

asked by Kingsley Crane · answered by Alan Baratz

Asked how to think about potential revenues (PDK, emulation, QCaaS, system sales) associated with gate-model milestones, particularly before logical qubits are delivered.

Initial gate-model revenue comes from government funding. The next step is likely system sales to universities or research institutions interested in the dual-rail technology's error detection. Significant commercial QCaaS revenue for gate-model systems is not expected until 2032, when 100 logical qubits and millions of reliable operations are achieved.

“First of all, let's talk about government funding that's happening today on our gate-model system. ... I suspect that the step after just sort of government contracts would be some system sales to maybe universities or research institutions that are interested in working with the dual-rail technology. ... I don't think we see significant QCaaS revenue on those systems until we get back out into the 2032 time frame.”

asked by Mark Lipacis · answered by Alan Baratz

Inquired if QCaaS discussions are increasingly with individual business units versus central quantum IT teams, indicating deeper deployment of resources.

There has been a transition, with 25% to 30% of discussions now directly with line-of-business teams, or with innovation teams bringing LOBs in upfront. This shift is driven by the increasing number of large Fortune 100 customers using D-Wave's systems in production, making the value proposition more tangible.

“That transition has occurred. ... I'd say now we're at the point where maybe 25% to 30% are with the line of business, either directly with the line of business or the innovation team brings the line of business in right upfront. So we are seeing that transition.”

asked by Sujeeva De Silva · answered by Alan Baratz

Asked about the progress of Quantum Circuits integration, the ability to commercialize gate-model systems by the stated timeline, and whether the annealing and gate-model customer pipelines overlap.

Quantum Circuits integration has gone extremely well, with technology sharing between annealing and gate-model programs. D-Wave is on track to deliver the 17-qubit dual-rail system by year-end. The customer pipeline is mixed, with annealing customers showing interest in gate-model systems, new companies inquiring about gate-model, and some former Quantum Circuits contacts now interested in annealing, indicating synergies.

“First of all, the integration with Quantum Circuits has gone extremely well. ... We're still on track to deliver the 17 cubit dual-rail system before the end of this year. ... The pipeline, it's mixed. We've got annealing customers that are asking about our gate-model systems. And we've got companies that we haven't talked to before that are asking about our gate-model systems.”

asked by Harsh Kumar · answered by Alan Baratz