D-Wave Quantum Inc.

Good morning, ladies and gentlemen, and welcome to the D-Wave Q2 2024 Earnings Conference Call. At this time, all lines are in listening mode. Following the presentation, we will conduct a question and answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Thursday, November 14, 2024. I would now like to turn the conference over to Kevin Hunt, Investor Relations. Please go ahead.

Thank you and good morning. With me today are Dr. Alan Barrett, our Chief Executive Officer, and John Markovich, our Chief Financial Officer. Before we begin, I would like to remind everyone that this call may contain forward-looking statements and should be considered in conjunction with cautionary statements contained in our earnings release and the company's most recent periodic SEC report. During today's call, management will provide certain information that will constitute non-GAAP financial and operational measures under SEC rules, such as non-GAAP gross profit, non-GAAP gross margin, non-GAAP adjusted operating expenses, adjusted EBITDA loss, and bookings. Reconcilations to GAAP financial measures and certain additional information are also included in today's earnings release, which is available in the investor relations section of our company website at www.dwavequantum.com. I will now hand over the call to Alan.

Thanks, Kevin. and good morning everyone it's great to be with you again and thank you all for joining us today it's an exciting time in the quantum industry with interest levels increasing at a rapid rate and i'm pleased to be able to update you on the momentum that we are seeing here at d-wave interest in our technology continues to grow and we believe it is evident that annealing quantum computing is the critical accelerant to commercial adoption of quantum technology and let me be clear It is our 5,000-qubit Advantage quantum computer, the largest and most powerful quantum computer in the world that is driving this adoption. Moreover, it is showing up in bigger wins like NTT DoCoMo, Japan's largest wireless carrier with more than 87 million subscribers, where a quantum application is slated to move into production. I'd like to start today's business update by highlighting some product and technology advancements. We recently announced that we have completed the calibration of a 4,400, 4,400 qubit Advantage 2 processor, which represents a significant step towards the commercial release of Advantage 2, which is our sixth generation annealing quantum computer. The 4,400 qubit processor provides impressive performance gains over the existing Advantage system, including double coherence time for faster time to solution, a 40% increase in energy scale for higher quality solutions, and increased qubit connectivity from 15 to 20 way to enable solutions to larger problems. With these substantial performance improvements, we believe that the Advantage 2 will be able to solve our customers' increasingly complex computational problems, especially in areas such as optimization, AI, and material science. And the industry is taking note of this remarkable performance. Heather West, quantum analyst at IDC, a premier global market intelligence firm, recently published a very positive report on Advantage 2 called D- Setting New Standards in Quantum Computing Performance. In that piece, she said, and I'm quoting from the piece, to date, D-Wave's quantum annealing systems are one of the few quantum computing technologies used by organizations to run production use cases to gain business value. The range of optimization problems which can be applied to the annealing quantum computer demonstrate a versatility once thought to be limited only to gate-based systems. This versatility will help to expand the adoption of quantum computing to a larger number of potential end users across multiple industries. Consequently, it may be that the long sought after killer use case for quantum is in fact quantum optimization. That's the quote from Heather. I want to add that there's also a large body of evidence that only annealing quantum computing systems will actually be able to deliver a speed up on quantum optimization problems what Heather is calling the killer use case for quantum. As a reminder, we also have an extensive and valuable quantum patent portfolio. This includes over 240 US-granted patents, with the majority covering both annealing and gate model technologies. For example, we own fundamental IP around on-chip control and readout for quantum processors that support addressing and data pipelining on the quantum processor chip. This overcomes a fundamental challenge related to controlling large quantum processors without the need for large numbers of complex and costly IO lines. We're using this technology in our annealing quantum computers today, and it will be required in scaled gate model systems of the future. We continue to make rapid progress on exploring generated AI architectures that directly use quantum processing unit, QPU, samples from quantum distributions to facilitate faster and more energy efficient model training and inference. We have completed the initial designs of transformer and diffusion architectures and are moving toward benchmarking the role of the QPU. We are also directly supporting several customers investigating restricted Boltzmann machine architectures a canonical machine learning approach for generative AI that use samples from the QPU. On the software side of the business, we introduced service level agreements, SLAs, for lead quantum cloud service customers who are transitioning applications into production. We believe D-Wave is the only quantum computing company providing formal SLAs. It's a significant move that reflects LEAP's high levels of availability, reliability, and performance, underpinning its ability to support commercial-grade applications as customers move into production deployments. In fact, our monitoring data shows that the LEAP service has consistently exceeded 99.9% availability over the past two years, meaning that the service is highly reliable even during periods of high demand. Since the launch of the LEAP service, customers have run nearly 2 million jobs across our three production advantage systems without having to schedule work in advance, endure lengthy queue times, or work around unavailable hardware. All of those things seem to be the norm for other quantum cloud services. Beyond the introduction of SLAs, we also improved the performance of our new nonlinear hybrid quantum solver capable of supporting optimization problems with up to 2 million variables and constraints. For example, on an important customer problem related to capacitated vehicle routing, the problem can now be solved in one fifth of the time. These technology advancements are driving real business solutions. This quarter, we announced a major quantum optimization pilot with NTT DoCoMo in Japan. The pilot was held across three geographic regions in Japan and delivered a 15% reduction in network congestion. And the D-Wave solver completed the required tasks in 40 seconds compared to the 27 hours required for classical compute methods. Upon completion of the pilots, NTT DoCoMo plans to move the annealing quantum computing solution into production across Japan. This will be a major in-production application running on D-Wave technology. And as we've seen with other customers after a successful first application, NTT Docomo is now exploring additional opportunities to deploy annealing across other business units. We believe that we are the only quantum computing company in the world that has quantum applications being used in commercial production deployments. I'd also like to highlight a new AI-related collaboration with Japan Tobacco, where we are building a proof of concept that leverages both quantum computing and AI in the drug discovery process. The company is seeking to create a new process for discovering first-in-class pharmaceutical small compounds, and our annealing solutions show great promise. This past quarter, we also worked with customers on a variety of other hybrid quantum applications, including optimization of manufacturing lines, financial portfolio optimization, optimization of delivery truck routes and scheduling, optimization of agricultural resources and operations, and many others. On the government side of the business, I'm delighted to say that D-Wave has been deemed awardable on the U.S. Department of Defense's Tradewinds Buying Platform, which is designed to accelerate the procurement and adoption of emerging technologies. The designation means that DeWay's annealing quantum computing products and services are now available on the marketplace alongside other offerings like AIML data and analytics capabilities. We also saw continued interest from national security and civilian agencies around near-term quantum applications, highlighted by a U.S. Department of Defense RFI asking for near-term application identification, as well as increased discussions relating to optimization of emergency response, transportation, and other public sector services in the U.S. and abroad. This increased activity showcases government's interest in better understanding how annealing quantum computing can play a pivotal role in solving public sector problems today. Broadening our reach, in September we announced a partnership with Stack, a leading technology consultant in the Middle East, where we will jointly help customers develop and deploy hybrid quantum applications designed to address enterprise optimization and AI problems. We announced this partnership at the first ever Qubits UAE a half-day version of our US-based event, where we showcased a variety of use cases utilizing quantum. And by the way, our next annual Qubits User Conference will take place at the end of March in Scottsdale, Arizona, where we will once again showcase the latest D-Wave quantum technology innovations alongside remarkable stories of customer success spanning quantum optimization, quantum AI, and quantum research. We invite you all to attend and registration is now open. In September, we also announced that D-Wave has joined the Chicago Quantum Exchange as a corporate partner. As the only commercial quantum company, we share CQE's mission of developing practical optimization use cases. We aren't just building cutting edge technology at D-Wave, we're building a company for the long term. In September, we announced that Sophie Ames has joined D-Wave as Chief Human Resources Officer where she will lead our human capital innovation strategy, essential to supporting our go-to-market growth objectives. Sophie brings over 25 years of experience at a variety of public and private international technology and services companies. And in October, we announced the appointment of two tech industry veterans to our board of directors. John DeLullo, CEO at DeepWatch, brings over 30 years of experience at leading technology firms. And Rohit Ghai, CEO of RSA, also brings a wealth of experience from both technology startups and large enterprises across software, services, and security. These are all leaders with an aggressive growth mindset and experience commercializing new technologies. Finally, I will close with a quick comment on our financials. Subsequent to the end of the quarter, we completely paid off our $50 million secured term loan with PSP, and we have nearly $30 million in cash. With that, I will hand the call over to John to provide a review of our third quarter and first nine months of 2024 results. John?