D-Wave Quantum (QBTS) Q4 FY25 earnings call: guidance and Q&A

How does D-Wave's built-in error correction in gate-model systems translate into a time-to-market advantage, specifically regarding qubit requirements?

Alan Baratz confirmed a timing advantage due to reduced complexity. The dual-rail technology offers high gate fidelities, allowing error correction with significantly fewer physical qubits per logical qubit. Combined with on-chip cryogenic control, which reduces I/O lines, this dramatically simplifies building and deploying scaled error-corrected superconducting gate-model systems faster than competitors.

“The dual rail technology gives us very high gate fidelities on par with some of the best in the industry, including trapped ion and neutral atom, but while preserving the 1,000x speed advantage of superconducting over the other modalities. But because of the higher fidelities, we are able to error correct with many fewer physical qubits per logical qubit.”

asked by Harsh Kumar · answered by Alan Baratz

Is the expected OpEx for the QCI team fully factored into the 15% sequential OpEx growth guidance for FY26?

John Markovich confirmed that the 15% sequential growth in OpEx fully includes the QCI expansion, covering their R&D team, other expenses, fabrication expenses, and some capital expenditure.

“Quinn, my comments earlier in terms of the sequential 15% growth in OpEx, that includes QCI expansion in not only their R&D team, but other expenses, including fabrication expenses as well as some capital expenditure. So the answer to your question is yes, that 15% fully includes the incremental costs associated with QCI.”

asked by Quinn Bolton · answered by John Markovich

What is the ideal net retention rate for the QCaaS segment, and how might new ML integration capabilities impact upsell conversations?

John Markovich stated that D-Wave does not publish retention rates but noted a shift towards substantially larger QCaaS transactions, like the Italy system and Fortune 100 deal, providing more growth visibility. Alan Baratz added that QCaaS deals are growing in size, transitioning to larger enterprise licenses, though revenue recognition remains ratable.

“But what I can tell you is when you take a look at the composition of the QCaaS over the last 2 years, keep in mind that a significant component of our QCaaS in '24 was Julich, and that transitioned to a system sale. And when you take a look at the bookings that we recently announced, including the 50% utilization of the system in Italy as well as the enterprise QCaaS deal, we're starting to see substantially larger transactions that give us incrementally more visibility on the growth in the overall QCaaS than what we've seen in the past.”

asked by William Kingsley Crane · answered by John Markovich

How is D-Wave mitigating risks from IonQ acquiring SkyWater, and does QCI use the same foundry?

Alan Baratz clarified that QCI's dual-rail technology is not fabricated at SkyWater. For annealing, SkyWater only handles wiring, not the critical active components. While IonQ has given assurances, D-Wave is skeptical and actively seeking alternative fab support.

“So currently, the dual rail technology is not fabricated at SkyWater. And for our annealing technology, SkyWater does fabricate the wiring, but they do not fabricate the active components, the Josephson junctions, which is, in some sense, the most important and sensitive technology fabrication component from an IP perspective.”

asked by Sreekrishnan Sankarnarayanan · answered by Alan Baratz

How are customer conversations evolving for QCaaS, and what metrics are customers focused on when evaluating quantum solutions?

Alan Baratz stated that D-Wave's annealing systems are the only ones delivering commercial value and production use today. Customer engagement starts with an initial application, where D-Wave has high confidence in delivering strong ROI. This success then drives interest in other applications and leads to larger deals, such as the Fortune 100 enterprise license.

“Well, I mean, first of all, the annealing quantum systems are the only ones that can actually deliver any commercial value today on real-world problems. And they're the only ones that are used in production by customers today. No other quantum computer is capable of that level of computation and commercial ROI.”

asked by Kevin Garrigan · answered by Alan Baratz

What is D-Wave's capacity for handling multiple large enterprise QCaaS deals, and how quickly can more capacity be added if needed?

Alan Baratz stated that D-Wave has ample capacity in its Leap quantum cloud service, with four quantum computers currently available, each capable of supporting $25 million to $30 million in annual revenue. This is sufficient for 'minimum tens of enterprise deals.' New systems can be built in 3-4 months with components, and D-Wave is investing in parallel installation capabilities.

“We have plenty of capacity in our Leap quantum cloud service to support, I mean, minimum tens of enterprise deals. Our quantum computers are very capital efficient. Each quantum computer can support $25 million to $30 million of revenue per year. We've got 4 of them available today.”

asked by Troy Jensen · answered by Alan Baratz

Can you elaborate on the strength of the sales pipeline, where it's coming from, and the typical lifecycle for converting pipeline opportunities into confirmed revenue or orders?

Alan Baratz indicated a very robust pipeline for both system sales (exceeding one per year) and QCaaS/professional services deals. He noted engagement with much larger companies (airlines, healthcare, chemical) on larger deals that are progressing faster. He deferred on specific revenue recognition timelines due to varying deal structures.

“I mean, honestly, when we talked about this at the beginning of last year, I said expect maybe one a year for the foreseeable future. Our pipeline for system sales right now is very robust. So we're beyond 1 a year at this point in time.”

asked by David Williams · answered by Alan Baratz