D-Wave Quantum Inc.

Good morning, everyone, and welcome to D-Wave's fourth quarter fiscal year 2025 earnings conference call. Today's conference call is being recorded. At this time, I would like to turn the call over to Kevin Hunt, Senior Director of 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 will contain forward-looking statements which are subject to risks and uncertainties and should be considered in conjunction with cautionary statements contained in our earnings release and the company's most recent periodic SEC reports. An on-demand webcast will be available and a transcript of a conference will be posted on the investor relations section of the website within 48 hours after the call. During today's call, management will provide certain information that will constitute non-GAAP financial measures under SEC rules. such as non-GAAP gross profit, non-GAAP gross margin, adjusted EBITDA loss, adjusted net loss, and adjusted net loss per share, and operating metrics such as bookings. Reconciliations to GAAP financial measures, definitions, 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. Given that D-Wave is now fortunate to have 15 sell-side security analysts publishing research on the company, We'd be limited to taking one question from each analyst during the first round of questions, and then, time permitting, proceed to a second round of questions where, again, we will have to limit each analyst to one question. I'll now hand over the call to Alan.

Good morning, and thank you all for joining us today. Fiscal 2025 was not just a strong year for D-Wave. It was an inflection point for the company and for the quantum computing industry. For years, this sector has been defined by unrealized promises, dependence on government grants, and an inability to deliver customer value. In 2025, D-Wave separated itself from that narrative. We delivered proof, we delivered revenue, and we delivered real world advantage. While 2025 was declared the international year of quantum science and technology, For D-Wave, it was something more important. The year quantum computing moved decisively from research to real world impact. And we believe that no company advanced that transition more than D-Wave. 2025 was a year of objective proof, evidence of D-Wave's technical and commercial progress. We began the year by closing our first advantage quantum computer system sale to the ULIC Supercomputing Center. marking the first time a commercial annealing quantum computer was purchased for integration into a national supercomputing facility. We then became and remain the only quantum computing company to demonstrate quantum supremacy on a useful real-world problem. That result, which was achieved natively on our Advantage 2 quantum processing unit, has not been successfully challenged for nearly two years after the paper's initial publication. This demonstration was an entirely quantum computation, not a hybrid computation. Moreover, no other companies other than D-Wave, Google, and Quentinium have achieved quantum supremacy on any problem. Not IBM, not INQ, not Rigetti, not Inflection, not Xanadu, not IQM. All attempts other than D-Wave, Google, and Quentinium have been spoofed. And only D-Way's result was on a useful real-world problem. Then in May, we launched general availability of our Advantage 2 system, the same system that achieved that supremacy milestone. And critically, we transitioned that technical leadership into commercial performance with record revenue of $24.6 million in fiscal 2025, up 179% year-over-year. 13.4 million in Q4 bookings, the second highest quarterly bookings in the company's history, and up 471% from the immediately preceding third quarter. And a sales opportunity pipeline that expanded by nearly 1500% year over year. In an industry long on promises, D-Wave is delivering measurable results. And now we have entered 2026 with extraordinary momentum. In January alone, we generated more bookings than in the entirety of fiscal 2025. We closed a $20 million system sale with Florida Atlantic University. We signed a two-year, $10 million enterprise quantum compute as a service agreement with a Fortune 100 company. one of the largest enterprise quantum compute as a service deals in the history of the quantum computing industry. And we completed the acquisition of Quantum Circuits. The acquisition of Quantum Circuits fundamentally changes the competitive landscape. We believe that it firmly secures D-Way's position as the world's leading quantum computing company and the only dual platform quantum computing company. As a result, We believe that we are the only company to position to address the full quantum computing market. Our dual platform approach is important because it allows D-Wave to be a one-stop shop capable of solving the full range of the complex problems that customers face. But let me be clear. This approach is not new. It has been our strategy for five years. We dominate optimization today with annealing quantum computing technology. And now, by combining quantum circuits industry-leading dual-rail CUBA technology with D-Wave's proprietary on-chip cryogenic control, we are also positioned to be the leader in error-corrected gate model systems. Annealing quantum computing remains a strategic focus for D-Wave. Optimization is one of the largest and most immediate commercial opportunities in quantum computing. It spans logistics, defense, telecom, manufacturing, finance, and energy, virtually every major industry. And optimization problems require annealing quantum computing. D-Wave has demonstrated material performance advantages over classical approaches across a multitude of optimization use cases. We are running production workloads today. To our knowledge, no gate model quantum computing company has demonstrated a practical advantage over classical systems for optimization. And academic literature suggests they likely never will. We're also seeing early promise with customers exploring annealing quantum computing's impact on AI and blockchain, two areas with enormous commercial potential. Annealing is not a stepping stone. It's a commercially proven architecture with expanding performance gains. And with our Advantage 3 system in development, we expect to further extend that performance gap. Annealing dominates optimization today, and we believe that it will continue to dominate as the market expands. Now let's talk about game model. Most superconducting competitors are pursuing legacy Transmon architectures that require massive physical qubit overhead for effective error correction and complex wiring schemes that will struggle to scale economically. With quantum circuits, D-Wave takes a different path. The quantum circuits deal is transformational. With it, we believe that D-Wave gains a decisive architectural advantage. Dr. Rav Shulkov, the inventor of the transmon qubit used by nearly every superconducting competitor move beyond that architecture to develop dual-rail qubits with built-in erasure detection that identifies 90% of errors that occur. With erasure detection, this technology delivers gate fidelities that exceed 99.9%, bringing trapped ion fidelities along with superconducting execution speeds to today's gate model algorithm developers. Our erasure detection and our observed erasure rate of 0.5% allow us to deliver logical qubits with an order of magnitude fewer physical qubits compared to architectures without this capability. Error correction is essential to unlocking broad quantum utility, and we believe that the dual rail technology offers the fastest path to large scale error corrected architectures. I can't emphasize this enough. The dual rail technology allows us to achieve superconducting speed with the fidelity of ion trap or neutral atom approaches. This is an industry game changer unmatched by any other gate model vendor today. The implications of DOA's dual rail technology are profound. Our approach achieves logical qubit ratios of roughly one logical qubit for every 100 to 200 physical qubits. compared to about one logical qubit for every 1,000 to 2,000 physical qubits in conventional superconducting designs. What's equally remarkable are the gauge speeds. Dual rail gauge speeds are 1,000 times faster than ion trap or neutral atom systems. The fidelity of ion trap or neutral atom approaches with the speed of superconducting. That's a fundamental improvement in the metrics that matter. Speed matters. error correction overhead matters, scalability matters, and D-Wave now holds advantages in each. But our gate model innovations don't stop there. In January, D-Wave demonstrated that the on-chip cryogenic control currently being used in its advantage quantum computers can be used to control gate model qubits without loss of fidelity. This industry-first milestone advances the development of commercially viable gate model quantum computers by providing a path to significantly reduce the wiring required to control large numbers of qubits. We're now working on leveraging this technology to provide full qubit control at scale. This would ultimately enable the ability to control gate model systems with multiple orders of magnitude fewer control lines than required by competing superconducting gate model systems. That difference is not incremental. It's architectural. It's essential. As we discussed at the time of the quantum circuits acquisition, we have an eight qubit gate model system available to select customers today and we expect the 17 qubit system later in 2026. We've already seen tremendous interest from customers and expect to start generating some quantum compute as a service revenue from our gate model systems this year, while also building a pipeline of gate model system sales opportunities for delivery beginning in 2027. So in addition to accelerating commercial momentum that we see with our advantage to annealing system, we expect our gate model offering to deliver a small but growing stream of revenue in 2026. We believe that the quantum circuits acquisition positions D-Wave as the leading contender to deliver the first fully error corrected scalable superconducting gate model quantum computer. This effectively doubles our long-term addressable market by delivering both annealing and gate model quantum computing solutions. What's also particularly noteworthy is our rapidly accelerating commercial traction, which reflects a differentiated strategy from most all other quantum computing companies. At our Qubits conference in January, our largest and most successful user conference ever, We announced a $20 million Advantage 2 system sale with Florida Atlantic University, as well as a two-year, $10 million enterprise QCAS agreement with a Fortune 100 company, one of the most significant enterprise deals in the history of the quantum computing industry. This is not research revenue. It represents commercial adoption by a growing collection of the world's largest companies. D-Wave is currently engaged with some of the world's leading airlines, payment companies, telecom operators, defense contractors, chemical companies, healthcare companies, aerospace companies, and more. Customers are no longer asking if quantum will be useful someday. They are asking how quickly they can deploy it. The U.S. government is also taking note. To support escalating government interest in both our annealing and gate model technologies, we recently launched a dedicated U.S. government solutions business unit. Unlike other quantum companies that are focused primarily on securing federal R&D grants and characterizing those as commercial revenue, our strategy is very straightforward. Solve real mission critical problems now and derive government revenue today. At Qubits, we demonstrated a missile defense simulation in collaboration with Davidson Technologies and Anduril. For a 500 missile attack simulation, we showed a 10 times faster time to solution, a 9% to 12% improvement in threat mitigation, and a 45% to 60% additional missile intercepts. As complexity increased, DOA's technological advantage increased. This is operational relevance. Anduril's president and chief business officer, Matthew Steckman, spoke during my Qubits keynote and indicated that he was surprised at how fast and mature DOA's technology is. And he suggested that there are a lot of potential for collaboration going forward. We believe that there is significant opportunity in U.S. government applications across both our annealing and gate model platforms. We're also seeing growing interest in system sales. In addition to annealing quantum computing system related agreements with ULIC in Germany, Q Alliance in Italy, and Florida Atlantic University in the U.S., We continue to advance discussions in South Korea as well as with additional HPC academic and government institutions. On the gate model side, we expect to see the development of a multi-million dollar R&D system sales pipeline for 2027. For both our annealing and gate model computers, these are premium priced systems with high gross margin profiles. Underpinning all of DUA's technical and commercial traction is a very strong leadership team with decades of deep expertise in their respective areas of focus. We recently brought on Jack Sears, Jr. to lead U.S. Government Solutions, Stan Black as our Chief Information Security Officer, and as I previously mentioned, Dr. Rob Shulkoff, who brings world-class superconducting leadership and maintains strong ties with Yale University. Our Chief Development Officer, Dr. Trevor Lanting, will oversee product development across both annealing and gate systems, ensuring integration, speed, and execution. The strength of our management team and its track record of success are key to maximizing D-Wave's near-term opportunities and long-term growth. Our operational footprint and workforce also continue to expand, with the announcement that D-Wave's headquarters will relocate from Palo Alto, California to Boca Raton, Florida later this year. where we will also open a major US-based R&D center. With this expansion, D-Wave will operate three main R&D hubs, Burnaby, British Columbia, New Haven, Connecticut, and Boca Raton, Florida. We are building a distributed innovation footprint designed to attract top-tier quantum talent, provide bi-coastal redundancy in case of disaster recovery, and ultimately lead the next era of computing. Let me close with a broader industry observation. Quantum computing is entering a new phase. The first phase was scientific exploration. The second phase was capital formation. The next phase will be commercial separation. Over the next several years, we expect that this industry will consolidate around a small number of companies that can demonstrate three things, real performance advantage, real commercial adoption, and a scalable, economically viable architecture. Many will not make that transition. D-Wave already has. We are the only company to demonstrate real world quantum supremacy on a useful problem. We are the only company running production applications for Forbes Global 2000 enterprise customers. We are the only dual platform quantum computing company with a commercially proven annealing quantum computer generating meaningful revenue and a differentiated superconducting gate model platform with a credible pathway to full error correction. Others are still pursuing proof of concept. We have proof of commercialization. Others are dependent on long development timelines, government funding, and sustained capital market support. We're building a business with commercial customers, contracts, and expanding bookings. Others have made product development decisions that focus on either superconducting speed or ion trap and neutral atom fidelity. We can deliver both. As the market matures, capital will flow toward companies with operating leverage, commercial validation, and technical defensibility. We believe D-Wave is uniquely positioned at that intersection. The quantum industry will not support dozens of long-term winners. It will support a handful of durable platforms, and we intend to be one of them. Fiscal 2025 marked the moment when D-Wave moved from participant to frontrunner. The momentum, we are seeing in early 2026 suggested this gap is widening with that i'll hand the call over to john to provide a review of our fourth quarter and fiscal 2025 results john.