D-Wave Quantum Inc.

Good day and welcome to the D-Wave third quarter 2025 earnings call. All participants will be in a listen-only mode. Should you need assistance, please signal conference specialists by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touchtone phone. And to withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Mr. Kevin Hunt, Senior Director of Investor Relations. Please go ahead, sir.

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 reports. 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 loss, adjusted net loss, adjusted net loss for share, 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.duaofquantum.com. I will now hand over the call to Alan.

Good morning, everyone, and thank you for joining us today. I'm really pleased to share D-Way's third quarter 2025 results, which reflect the ongoing momentum we've seen across all key business metrics, including revenue, gross profit, bookings, and a healthy cash balance. I will walk you through several of our recent business and technical highlights, starting with our continued commercial traction. The United Nations declared 2025 to be the International Year of quantum science and technology, and it is evident that the world is watching the quantum industry in general and the waves specifically. Our esteemed leadership team has been invited to speak at events across the globe in order to address the growing interest in our quantum solutions. From Tokyo to Berlin and Taiwan to Miami, businesses, research institutions, and governments around the world are eager to learn more about D-Wave, our incredibly powerful yet energy efficient technology, and the impact it is starting to have for customers right now in solving complex computational problems that are outside the reach of classical computers. Just weeks ago, D-Wave announced its participation as a founder of the Q Alliance, An initiative designed to create a quantum hub in Italy that advances scientific discovery, industrial transformation, and digital sovereignty in the country. A core objective of the Q Alliance is the development of a state-of-the-art quantum computing and research facility in Lombardy, Italy. In support of that effort, D-Wave announced a 10 million euro contract for a D-Wave Advantage 2 annealing quantum computer in the region. Ensuring accessibility for Italy scientific community academia and industry in partnership with the Italian government and the queue alliance agreement includes acquisition of 50% capacity of an advantage to system for five years, with the option to purchase the full system. We expect to deploy the system sometime in 2026. While other quantum companies are telling investors that sales really don't matter. We beg to differ. Sales and customer success are key to business growth and driving shareholder value in the near and long term. Our market presence allows us to learn directly from customers and rapidly enhance our systems to address their needs. D-Wave offers the only quantum computers that have demonstrated advantage on a useful real world problem and can support customer applications in production today. Our customer portfolio includes one of the world's largest airlines, one of the world's largest chemical companies, one of the world's leading mobile carriers, and one of the world's largest payment companies. So as other quantum companies remain in R&D mode, we are laser focused on a path to profitability built on customer value. We signed a number of new and renewing customer engagements in the third quarter. for both commercial and research applications. These engagements include one of the largest US-based international airlines, Skywater, the nation's largest pure plate semiconductor foundry, Japan Tobacco's pharmaceutical division, which is exploring new quantum AI applications in drug discovery, Yapikredi, one of the leading banks in Turkey, and Korean Quantum Computing, a company specializing in quantum computing R&D quantum security solutions, and AI infrastructure in Korea. We continue to work with a myriad of organizations on quantum computing applications across a diverse set of use cases. Most notably, in the past quarter, we worked with BASF, one of the world's leading chemical companies, completing a proof of concept project that used a hybrid quantum application to optimize manufacturing workflows in a BASF liquid filling facility. The hybrid quantum technology set a new benchmark for manufacturing efficiency, allowing a reduction of production scheduling time from 10 hours to just seconds. One of their key operational challenges involves scheduling liquids unloading onto filling lines for customer orders across several different products. While this may sound like a simple problem, it is in fact a very complex optimization problem that involves dozens of single chemical tanker trucks and hundreds of customer orders on fulfillment lines that require careful timing and coordination. The challenges often exceeded the capabilities of a classical only optimization approach, and our solution outperformed substantially with latency reduced by 14 percent, setup time reduced by 9 percent, and tank unloading durations reduced by up to 18 percent. During our last earnings call, I spoke to you about a hybrid proof of technology with North Wales Police to optimize deployment of patrol vehicles. I'm pleased to report that the POT was successfully completed in the third quarter with a hybrid quantum application that significantly outperformed classical results. Our hybrid solution enabled North Wales Police to respond to over 90% of incidents within their target response time, reduced average incident response time by nearly 50%, and reduced police vehicle coordination time from four months to four minutes, which significantly improves real-time adaptability. North Wales police noted that the application could be scaled nationally. It is a valuable example of how our hybrid quantum computing solutions are beginning to show real-world potential across private and public sectors. Earlier this year, we announced the successful completion of a proof of concept with Japan Tobacco's Pharmaceutical Division. They used D-Wave's quantum technology and AI to improve the drug discovery process. We are now taking that work a step further with a second proof of concept with Japan Tobacco for molecular discovery through quantum AI. They are running a significant number of problems to help expedite the drug discovery process, and they are receiving sub-second responses from the D-Wave quantum computer. which is leading to improved performance versus classical computing alone for the large language model training. This work demonstrates that these hybrid LLN models produce more valid generated molecules compared to classical only methods. And we believe that no other quantum computer on the market today can produce such results. This work could have a significant impact on speed to market for new drugs, which in turn could drive better patient outcomes. Our results show that quantum annealing is the most effective method of quantum optimization. A recent IBM study showed a family of multi-objective optimization problems where gate model quantum optimization could compete with classical approaches. We threw this problem at our Advantage 2 processor and found that it was 1,000 times faster than all the classical and quantum approaches in the IBM study, in addition to finding higher quality solutions. You can read the full research paper on the archive. Against the backdrop of heightened global awareness around quantum computing and increasing exposure for D-Wave, we held our first-ever Qubits Japan user conference in Tokyo in September. The response was fantastic, as Dr. Trevor Lamping, our chief development officer, and I addressed a very enthusiastic audience representing many of Japan's leading companies and academic institutions. We were also honored to welcome Hitotoshi Nishimori as a presenter. Hitotoshi is widely recognized as the father of annealing quantum technology and the first to propose the concept nearly 30 years ago. Given the success of Qubits Japan, we are exploring hosting Qubits events in other regions going forward. And our global Qubits 2026 conference will take place on January 27th and 28th, 2026 in just a couple of months in Boca Raton, Florida. Registration is now open, and I hope to see many of you there in person. Let me now turn to technology. As we drive important development work that is focused on helping customers realize the value of quantum computing now and in the future, before I get to some specific product updates, I want to take a moment to discuss the underlying technologies or modalities that implement both of the two primary architectural approaches to quantum computing systems. That is annealing and gate model. As I believe there's a lot of misinformation and lack of understanding in this area. These technologies relate to how qubits are implemented. There are four primary methods for implementation, whether for gate or annealing. These implementation technologies are superconducting, ion trap, neutral atom, and photonics. We believe that one will clearly emerge victorious in the long run, and that approach is superconducting. There are few reasons why we believe superconducting will win. The first is gate speed, with superconducting gates estimated to be 1,000 to 10,000 times faster compared to the other major technologies. While approaches like ion trap or neutral atom may hold some near-term advantages in terms of qubit fidelity, We believe that gap will substantially close over time. We do not believe that the gate speed advantage will change materially. So over the long term, superconducting is expected to have a massive performance advantage over competing approaches when one looks at the speed fidelity tradeoff. We recently heard an ion trap company spend hours discussing their technology advantages at an analyst event. But not once did they mention gate speed. With a potential performance disadvantage of up to 10,000 times, I can see why they might have forgotten to discuss that key metric. The second advantage for superconducting involves scalability and the role that manufacturing will play. Superconducting builds upon 50 years of integrated circuit manufacturing and packaging technology development that supports classical computing technology. Superconducting leverages these established supply chains which we believe will provide the ability to scale faster and at a much lower cost. Other approaches require entirely new supply chains, which will likely require massive investments, extensive technological challenges, and long timelines until maturity as they attempt to scale. Those are the primary reasons why D-Wave chose superconducting technology for both our annealing and our gate model development programs. Unlike a model systems which will require error correction and that's a probably five plus years away from being truly commercial ready our kneeling systems are available for commercial commercial use today. It is also worth noting that much of the proven superconducting technology we developed for a kneeling systems will likely also provide a competitive advantage for our gay bottle system. More than 60% of our patent portfolio relates to superconducting technology that we believe could apply in either annealing or gate systems. The cryogenic control I discussed last quarter is a perfect example of a patented technology that, to our knowledge, no other gate model company has today and will almost certainly need to compete effectively with DOA's future gate model systems. So now I'll turn to specific product development milestones. We're making solid progress in a number of areas, including our gate model program. As you are aware, D-Wave is the only company in the world building both annealing and gate model quantum computers. That's the only company that is currently positioned to address the entire market opportunity for quantum. We see this as a competitive advantage that will give our customers quantum solutions that can address the full spectrum of their computational problems. As part of our gate model development initiative, We recently completed the fabrication of conflux sonium qubit chips and superconducting control chips. And we are now bonding the two to demonstrate scalable control of gate model qubits. This is a very important D-Wave advantage, sorry, this is a very important advantage that D-Wave has over any of our competitors, as we believe this work will enable the first ever scalable gate model system with cryogenic control. And why is that important? Well, to provide any real computational utility with a superconducting gate model system, you need scale. And we believe cryogenic control provides the fastest path to large-scale gate model technology. On the annealing quantum computing side of our business, earlier this week we announced that the Advantage 2 system installed at Davidson Technology Headquarters in Huntsville, Alabama, is now operational. This is a significant step in advancing the US government's near-term use of D-Waze quantum computing technology. The system is capable of addressing mission-critical computational problems that are beyond the reach of classical computers. Together with Davidson, we are already exploring quantum use cases in areas such as radar detection, resource deployment, military logistics optimization, material science, and AI. and look forward to continuing our collaborative work focused on national security and defense. The Advantage 2 system, which we made commercially available earlier this year, is an engineering marvel, our most highly performant quantum computer yet, and the only quantum computer that has demonstrated quantum supremacy on a useful real-world problem. A testament to its technical achievements, D-Wave was recently named as winner in Fast Company's 2025 Next Big Things in Tech Awards. This is a very prestigious award that recognizes emerging technologies with the potential to profoundly impact industries. D-Wave was acknowledged for showing what quantum computing can do right now. This is something we have been highlighting for several years given the production readiness of our technology compared to others and is gratifying to see industry recognition that, unlike all other quantum companies, D-Wave has commercial solutions capable of solving real-world problems today, not five or ten years from now, but today. Finally, turning to our annealing roadmap, fabrication of our Advantage 3 prototype chips is nearing completion, and we expect circuits for testing this quarter. As a reminder, our work on Advantage 3 is focused on innovation and scaling, including increased connectivity and coherence, next-generation addressing, and multi-chip processor fabric to accelerate our path to 100,000 qubits. In summary, the first nine months of 2025 have been remarkable for D-Wave. We demonstrated quantum supremacy, sold our first Advantage system, introduced the Advantage 2 system to market, furthered development of our gate model program, advanced the exploration of quantum and AI, worked with research and commercial customers on a variety of groundbreaking applications that go beyond the reach of classical, increased our cash position by over $650 million and much more. Our pipeline remains strong with large opportunities for both system sales and quantum computers of service deals. And with more than $800 million in cash on our balance sheets, We remain well positioned to expand our business both organically and through M&A. We look forward to seeing many of you at upcoming investor conferences and in January in Boca Raton at Qubits 2026. But before I hand it over to John, there's one more thing that I want to say. We recently had a fair amount of chest pounding from quantum leaders. Let me be clear. Anyone who characterizes quantum annealing as not real quantum is either intellectually incapable of understanding the physics and science or is chosen to put their head in the sand because they are worried about the competitive threat. Let's look at the facts. There is only one quantum computer in the world that has demonstrated the ability to solve an important, useful problem that can't be solved classically. Not a synthetic problem, but a useful problem. And that's our D-Wave Advantage 2 system. When we announced this breakthrough work, there were research teams that tried to downplay the significance. But they never computed anything classically that we hadn't already computed classically and included in our science paper. Moreover, their scaling claims were ridiculous. And we have demonstrated that they are totally flawed through experimental results using their code. And this has been published on the archive. But it's not just that we are the only ones that have demonstrated true advantage. We are the only ones that have shown that we can do better than classical at all. Think about that. There is no other quantum computer that has been able to demonstrate anything better than classical, let alone supremacy. For example, a quantum company that I mentioned previously, recently touted multi-optimization results claiming as good as classical. Not better, but as good as. We've run those same problems 1,000 times faster than both their quantum computer and their classical approaches. You can find that on the archive as well. And it's not just about power. It's also about availability. Our systems are online with high uptime providing sub-second response times. Other systems are frequently down, and when they are up, they regularly have multi-hour queuing delays. So let's ask this question. Which systems are the real deal, and which are toys, and noisy toys at that? Only D-Wave is the real deal. With that, I'll hand the call over to John to provide a review of our third quarter and first nine months of 2025 results. John?