D-Wave Quantum Inc.

Good morning, everyone, and welcome to D-Wave's first quarter of fiscal year 2025 earnings conference call. Today's call is being recorded. At this time, I'd like to turn the floor over to Kevin Hunt of the Investor Relations. Please go ahead.

Thank you, and good morning. With me today are Dr. Alan Barris, our Chief Executive Officer, and John Harkovich, our Chief Financial Officer. Before we begin, I'd like to remind everyone that this call may contain forward-looking statements that 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, adjusted EBITDA, and bookings. Reconciliations 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.voa.com. I'll now hand over the call to Alan.

Good morning, everyone, and thank you for joining us today. I'm really excited to share our results for the first quarter of fiscal 2025. 2025 is shaping us. as one of the most significant years in D-Wave's history, especially when you consider our technical achievements, our product development milestones, our go-to-market momentum, and our financial position. Highlights of the first quarter include record quarterly revenue driven by the completion of the first advantage system sale, additional customer applications moving into production, publication of our quantum supremacy results in science, and ongoing achievements against our aggressive product roadmap. The health of our business remains strong. In terms of some specifics on the financials, our Q1 revenue came in at a record $15 million, and we closed the quarter with a record $304 million in cash, giving us a very solid cash position that we believe is sufficient for us to reach profitability. Let me now walk you through some key business highlights, starting with technical achievements. On our last call, we proudly shared that we are the first company in the world to demonstrate quantum supremacy on a useful real-world problem. As discussed, B-Wave's 1,200-qubit prototype of N2 quantum computer performed a complex magnetic material simulation in minutes, and with a level of accuracy that will take nearly 1 million years to complete using one of the world's most powerful supercomputers, that supercomputer being the Frontier massively parallel GPU-based exascale supercomputer at the Oak Ridge National Laboratory. In addition, it will require more than the world's annual electricity consumption to solve this problem using that supercomputer. We don't believe any other researchers or companies have come close to achieving this demonstration. This work should be celebrated as a significant milestone for the quantum industry and a clear demonstration of quantum outperforming classical computing. Building on that demonstration, we recently published a new research paper titled Blockchain with Proof of Quantum Work that used quantum computation to generate and validate blockchain hashes. We believe this research, which leveraged techniques from our quantum supremacy demonstration, indicates that using quantum computations for hashing and proof of work could potentially require a fraction of the electricity used by classical resources alone and reduce electricity costs by up to a factor of 1,000. By adding quantum to traditional blockchain computations, the new architecture could enhance blockchain security and efficiency. Also, As part of this research, DOA scientists deployed the blockchain architecture across four of its cloud-based and healing quantum computers in Canada and the United States, performing distributed quantum computing for the first time. This is a very exciting area with potential for broad usage. In fact, we've already been contacted by several blockchain-focused organizations interested in potential partnerships, and we are open to discussions with any other interested parties. With effective product development progress, our Advantage 2 annealing quantum computer, our sixth generation system, has achieved important milestones on the path to general availability, which is expected by the end of this quarter. These milestones include, first, calibration of 4,400-plus qubit classifications. We have completed calibration and benchmarking of several 4,400-plus qubit Advantage 2 quantum processors. The Advantage 2 QPUs have demonstrated 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 ways to enable solutions to larger problems. With these substantial performance enhancements, we believe that Advantage True will be able to solve our customers' increasingly complex computational problems, especially in areas such as optimization, AI, and material science. The second milestone is fast annealing. This feature offers extended controls for notably faster annealing times than previously available. which greatly reduces the impact of external disturbances such as thermal fluctuations in noise that can hinder quantum calculations. The fast and yield feature paves the way for customers to reproduce and build on D-Wave's landmark quantum supremacy results using full-scale, coherent, and yielding quantum computing available on the Advantage 2 system. And the third milestone is error mitigation. We demonstrated successful quantum error mitigation in the 1200 qubit Advantage 2 annealing quantum computing prototype. The technique reduces errors in quantum simulations, producing results consistent with the quantum system maintaining a quantum state coherence for an order of magnitude longer than an unmitigated system. This technique is expected to drive performance advances in the forthcoming full Advantage 2 system and future processes. Once we announce GA, the system will become part of the lead quantum cloud service for use by all of our quantum computer-to-service customers. In addition, just a couple weeks ago, we shared that the physical assembly of a D-Wave Advantage 2 annealing quantum system is complete at Davidson Technologies Headquarters in Huntsville, Alabama. Installation is now nearing completion and the drag system undergoes calibration and readiness testing. We expect that the Advantage 2 system will enable Davidson to explore and develop real-world quantum applications, particularly in optimization, for some of the U.S. government's most complex problems, and then ultimately deploy those applications in a secure environment. Turning to software, we recently introduced new hybrid quantum solver capabilities and additional use cases designed to drive uses of our quantum optimization offerings. Our hybrid solvers, which are capable of handling problems with up to 2 million variables, now support both integer and continuous variables, which opens up the range of use cases that can be addressed with this technology. Recent enhancements to the nonlinear hybrid quantum solver include the ability to support continuous variables with linear interactions, thus enabling new kinds of use cases such as budget allocation and resource distributions. We've also expanded our collection of optimization use cases, which now includes proper allocations, portfolio optimization, and maintenance repair operations optimization to apply hybrid spawning technology to a growing set of customer problems. We also launched an open source toolkit designed to accelerate quantum AI and machine running innovation. Available in D-Wave's Ocean Software Development Kit, The package enables developers to seamlessly integrate B-Wave quantum computers with PyTorch, a production-grade ML framework widely used to build and train deep learning models. The toolkit includes a neural network module for using a quantum computer to build and train an AI system known as a Restricted Boltzmann Machine, or an RBM. Used to learn patterns and connections from data, RBMs are an AI tool used for tasks such as making predictions, recommendations, and identifying trends or anomalies. Looking ahead, we're making progress on all aspects of our previously communicated product roadmap, which is designed to unlock new customer production application use cases in the Advantage 2 and forthcoming Advantage 3 quantum computers and beyond. It focuses on rapid innovation in scaling, including increased connectivity and coherence, next-generation digital addressing, and multi-chip processor staffers to accelerate a path reaching 100,000 qubits. We're also developing techniques in analog digital quantum computing to advance quantum optimization, quantum AI, and quantum research by adding digital controls to annealing quantum computing processors. Lastly, we're continuing our efforts to build scalable, error-corrected gate model processes, including leveraging our proprietary cryogenic control capabilities that will likely be required in all superconducting gate model quantum computers. Now I'll turn to commercial progress. A key metric for assessing a quantum computing vendor's maturity is whether its technology is used in production to fuel daily operations for customers. We're excited to have recently announced that Ford Autosan has developed a hybrid quantum application in production, streamlining manufacturing processes for its Ford Transit line of vehicles. Using D-Wave technology, Ford Autosan reduced the scheduling time of 1,000 vehicles from 30 minutes to less than five minutes at six times improvement. Ford Autosan plans to activate quantum scheduling in additional body shops and extend to other processes, including pay shots, assembly lines, and buffer zones. Ford AutoSign joins NTT Docomo and Patterson Food Group, customers that are also using our systems currently running production applications. We expect additional customer applications to enter production deployments over the course of 2025. In another powerful customer use case example, we announced the successful completion of a proof of concept with the pharmaceutical division of Japan Tobacco, which used the advanced quantum computer with artificial intelligence in the drug discovery process. This new approach resulted in molecular structures that are better candidates for subsequent drug development than structures created by purely classical methods. Japan Tobacco expects that this could lead to improvements in both the quality and speed of drug development. Customer success stories like these and others were on full display at Qubits 2025, our annual user conference, which took place on March 31st and April 1st and saw record attendance. In-person attendance was up 23% year-over-year and virtual attendees up nearly 100% year-over-year. A number of D-Wave customers presented use cases based on D-Wave technology, including Davidson Technologies, Japan Tobacco, the UL Supercomputing Center, MDT Docomo, Hussain National University, Quantum Research Sciences, SAS, the University of Southern California, and more. We're also seeing strong interest in the LEAP Quantum Launchpad Program, which is a three-month trial that provides access to UA's quantum computing systems, our LEAP real-time quantum cloud service, and our team of quantum experts for project support. Market demand has been strong, with the first customer intending to convert from free trial to paid engagement in less than two months. We continue to believe that this program will expand the universe of organizations using quantum to solve their complex problems today. So to summarize, we are executing against our technology roadmaps and our go-to-market plans, and this is beginning to show up in our financial results. We are seeing growing interest in D-Wave's quantum computing solutions, as evidenced by a myriad of factors, including increased website traffic, which is up 153% from October of 2024 to March of 2025, as well as media coverage, with strong news stories mentioning D-Wave up 803% from February to March of 2025. It is evident to us that the D-Wave message is resonating. Customers are eager to start exploring and adopting the technology, and the world is beginning to recognize the leadership role we're playing in ushering in the area of quantum computing. We should not be more excited about the future of D-Wave. With that, I'll hand it over to John to provide a review of our first quarter fiscal 2025 results.