D-wave reports second quarter and first half 2022 results and provides business update
Burnaby, b.c. & palo alto, calif.--(business wire)--d-wave quantum inc., (nyse: qbts) (“d-wave” or the “company”) a leader in quantum computing systems, software, and service, and the only provider building both annealing and gate-model quantum computers, today announced financial results of its wholly-owned operating subsidiary, d-wave systems inc. (“d-wave systems”), and a business update for its second quarter ended june 30, 2022. “we are pleased to report our first quarterly results as a public company. since the beginning of the year, we have achieved a number of important milestones. in addition to successfully transitioning to a publicly listed company, in the face of a very challenging and volatile market, we continue to expand our customer base with over 95 total customers as of the end of the second quarter, over 55 of which were commercial organizations; launched an updated quantum-hybrid solver; expanded our leap™ quantum cloud physical footprint into the united states and europe; and provided our customers with access to a prototype of our advantage2™ system, showcasing the power of our upcoming 6th generation quantum computer,” said alan baratz, ceo of d-wave. “our commercial momentum is propelled by the new use cases that we are developing with our customers, and we look forward to continuing to unlock the power of quantum-hybrid value for a growing number of use-cases in the coming months and years.” recent commercial / business highlights announced a multi-year strategic alliance with mastercard to develop quantum applications in areas such as consumer loyalty and rewards, cross border settlement, and fraud management announced a number of new customers, including forbes global 2000 customers, to address quantum use cases across manufacturing, logistics, financial services, autonomous driving, and life sciences continued expansion of commercial customer base, with 44% year-over-year increase in commercial customers, during the first half of 2022 announced a new board of directors, led by chairman steven west, and including ceo alan baratz, roger biscay, amy cappellanti-wolf, emil michael, michael rogers and eduard van gelderen completed a transaction with dpcm capital, and began trading on the nyse under the ticker symbol qbts on august 8, 2022 recent technical highlights announced availability of the advantage2™ experimental prototype, which is expected to become our sixth-generation quantum system. the prototype is designed to illustrate the power of the upcoming system, ultimately expected to feature 7,000+ qubits with a new design that enables 20-way connectivity and increased coherence launched the cqm hybrid solver, allowing businesses to solve constrained quadratic optimization problems with continuous variables, expanding the types of use-cases that are able to benefit from quantum-hybrid solutions expanded the leap™ quantum cloud service footprint, with quantum computing systems now physically located in canada, the united states, and europe financial results for the second quarter ended june 30, 2022 revenue for the second quarter of fiscal 2022 was $1,371,000, an increase of $234,000, or 21%, from $1,137,000 in the second quarter of fiscal 2021 gross profit for the second quarter of fiscal 2022 was $785,000, an increase of $96,000, or 14%, from $689,000 in the second quarter of fiscal 2021 operating expenses for the second quarter of fiscal 2022 were $12,770,000, an increase of $2,745,000, or 27%, from $10,025,000 in the second quarter of fiscal 2021 adjusted operating expenses1 for the second quarter of fiscal 2022 were $11,660,000, an increase of $2,167,000, or 23%, from $9,493,000 in the second quarter of fiscal 2021 net loss for the second quarter of fiscal 2022 was $13,198,000, or $0.12 per share, compared with $4,668,000, or $0.04 per share, in the second quarter of fiscal 2021 adjusted ebitda2 for the second quarter of fiscal 2022 was negative $10,835,000, a $2,031,000 or 23% increase, from negative $8,804,000 in the second quarter of fiscal 2021 we are providing adjusted operating expenses and adjusted ebitda as we believe these metrics improve investors’ ability to evaluate our underlying performance. non-gaap measures do not have any standardized meaning under gaap, and therefore may not be comparable to similar measures employed by other companies. adjusted operating expenses is a non-gaap financial measure. for a description of adjusted operating expenses and a reconciliation to operating expenses, the closest comparable gaap financial measure, refer to “non-gaap financial measures” below and the reconciliation table at the end of this release. adjusted ebitda is a non-gaap financial measure. for a description of adjusted ebitda and a reconciliation to net loss, the closest comparable gaap financial measure, refer to “non-gaap financial measures” below and the reconciliation table at the end of this release financial results for the first half of fiscal year 2022 revenue for the six months ended june 30, 2022 was $3,083,000, an increase of $537,000, or 21%, from $2,546,000 in the six months ended june 30, 2021 during the first half of fiscal 2022, d-wave had 56 commercial customers, an increase of 17, or 44%, from 39 commercial customers in the first half of fiscal 2021. during the first half of fiscal 2022, d-wave had 97 total customers, an increase of 29, or 43%, from 68 total customers in the first half of fiscal 2021. gross profit for the six months ended june 30, 2022 was $1,914,000, an increase of $114,000, or 6%, from $1,800,000 for the six months ended june 30, 2021 operating expenses for the first half of fiscal 2022 were $24,544,000, an increase of $4,443,000, or 22%, from $20,101,000 in the first half of fiscal 2021 adjusted operating expenses for the first half of fiscal 2022 were $22,319,000, an increase of $3,283,000, or 17%, from $19,036,000 in the first half of fiscal 2021 net loss for the six months ended june 30, 2022 was $24,815,000, or $0.22 per share, compared with $13,496,000, or $0.12 per share, in the six months ended june 30, 2021 adjusted ebitda for the first half of fiscal 2022 was negative $20,325,000, an increase of $3,101,000, or 18%, from negative $17,224,000 for the first half of fiscal 2021 committed equity facility on june 16, 2022, d-wave entered into a common stock purchase agreement with lincoln park capital fund, llc (“lincoln park”). under the agreement, the company has the right, but not the obligation, to issue and sell up to $150 million of shares of its common stock to lincoln park, subject to certain limitations and satisfaction of certain conditions, over a 3-year period. the company issued 127,180 shares of common stock to lincoln park as consideration for lincoln park’s commitment to purchase shares of company common stock under the agreement. further details have been provided in the company’s form s-4 registration statement (as amended, the “registration statement”) previously filed with the securities and exchange commission. fiscal year 2022 outlook based on information available as of august 16, 2022, d-wave is providing the following guidance for full year fiscal 2022: revenue is expected to be in the range of $7.0 million to $9.0 million adjusted ebitda is expected to be less than negative $49 million1 we are not able to reconcile guidance for adjusted ebitda to its most directly comparable gaap measure, net loss, and cannot provide an estimated range of net loss for such period without unreasonable efforts because certain items that impact net loss, including foreign exchange and stock-based compensation, are not within our control or cannot be reasonably predicted. second quarter 2022 conference call in conjunction with this announcement, d-wave will host a conference call on tuesday, august 16, 2022, at 4:30 p.m. (eastern time), to discuss such financial results and its business outlook. the live dial-in number is 1-877-407-3982 (domestic) or 1-201-493-6780 (international), conference id code 13732159. a live webcast and subsequent replay of the call will also be available on the “investor relations” page of the company’s website at: http://ir.dwavesys.com/. about d-wave quantum inc. d-wave is a leader in the development and delivery of quantum computing systems, software, and services, and is the world’s first commercial supplier of quantum computers—and the only company building both annealing quantum computers and gate-model quantum computers. our mission is to unlock the power of quantum computing today to benefit business and society. we do this by delivering customer value with practical quantum applications for problems as diverse as logistics, artificial intelligence, materials sciences, drug discovery, scheduling, cybersecurity, fault detection, and financial modeling. d-wave’s technology is being used by some of the world’s most advanced organizations, including nec corporation, volkswagen, denso, lockheed martin, forschungszentrum jÜlich, university of southern california, and los alamos national laboratory. non-gaap financial measures to supplement the financial information presented in accordance with gaap, we use non-gaap measures of certain components of financial performance. each of adjusted ebitda and adjusted operating expenses is a financial measure that is not required by or presented in accordance with gaap. management believes that this measure provides investors an additional meaningful method to evaluate certain aspects of such results period over period. adjusted ebitda is defined as net loss before interest expense, income tax expense (benefit), depreciation and amortization expense, stock-based compensation, remeasurements of liability-classified warrants, and other nonrecurring nonoperating income and expenses. we use adjusted ebitda to measure the operating performance of our business, excluding specifically identified items that we do not believe directly reflect our core operations and may not be indicative of our recurring operations. adjusted operating expenses is defined as operating expenses before depreciation and amortization expense and stock-based compensation expense. we use adjusted operating expenses to measure our operating expenses, excluding items we do not believe directly reflect our core operations. the presentation of non-gaap financial measures is not meant to be considered in isolation or as a substitute for the financial results prepared in accordance with gaap, and our presentation of non-gaap measures may be different from non-gaap measures used by other companies. for a reconciliation of each of adjusted ebitda and adjusted operating expenses to its most directly comparable gaap measure, please refer to the reconciliations below. forward-looking statements this press release contains forward-looking statements within the meaning of the private securities litigation reform act of 1995, which statements are based on beliefs and assumptions and on information currently available. in some cases, you can identify forward-looking statements by the following words: “may,” “will,” “could,” “would,” “should,” “expect,” “intend,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “project,” “potential,” “continue,” “ongoing,” or the negative of these terms or other comparable terminology, although not all forward-looking statements contain these words. these statements involve risks, uncertainties, and other factors that may cause actual results, levels of activity, performance, or achievements to be materially different from the information expressed or implied by these forward-looking statements. we caution you that these statements are based on a combination of facts and factors currently known by us and our projections of the future, which are subject to a number of risks. forward-looking statements in this press release include, but are not limited to, statements regarding the company’s future growth and innovations; the increased adoption of quantum computing solutions and expansion of related market opportunities and use cases and our customer base; our advantage2™ experimental prototype; and our expectations relating to revenue and adjusted ebitda for the second half of fiscal 2022. we cannot assure you that the forward-looking statements in this press release will prove to be accurate. these forward-looking statements are subject to a number of risks and uncertainties, including, among others, various factors beyond management’s control, including general economic conditions and other risks, our ability to expand our customer base and the customer adoption of our solutions, and the uncertainties and factors set forth in the sections entitled “risk factors” and “cautionary note regarding forward-looking statements” in the registration statement, as well as factors associated with companies, such as d-wave, that are engaged in the business of quantum computing, including anticipated trends, growth rates, and challenges in those businesses and in the markets in which they operate; the outcome of any legal proceedings that may be instituted against us; risks related to the performance of our business and the timing of expected business or financial milestones; unanticipated technological or project development challenges, including with respect to the cost and or timing thereof; the performance of the our products; the effects of competition on our business; the risk that we will need to raise additional capital to execute our business plan, which may not be available on acceptable terms or at all; the risk that we may never achieve or sustain profitability; the risk that we are unable to secure or protect our intellectual property; volatility in the price of our securities; and the risk that our securities will not maintain the listing on the nyse. furthermore, if the forward-looking statements contained in this press release prove to be inaccurate, the inaccuracy may be material. in addition, you are cautioned that past performance may not be indicative of future results. in light of the significant uncertainties in these forward-looking statements, you should not place undue reliance on these statements in making an investment decision or regard these statements as a representation or warranty by any person we will achieve our objectives and plans in any specified time frame, or at all. the forward-looking statements in this press release represent our views as of the date of this press release. we anticipate that subsequent events and developments will cause our views to change. however, while we may elect to update these forward-looking statements at some point in the future, we have no current intention of doing so except to the extent required by applicable law. you should, therefore, not rely on these forward-looking statements as representing our views as of any date subsequent to the date of this press release. condensed consolidated balance sheets (unaudited) june 30, december 31, (in thousands of u.s. dollars, except share and per share data) 2022 2021 assets current assets: cash and cash equivalents $ 10,466 $ 9,483 trade accounts receivable, net 918 421 receivable research incentives 2,451 4,774 inventories 2,148 2,114 prepaid expenses and other current assets 1,529 1,116 deferred offering costs 5,671 1,250 total current assets $ 23,183 $ 19,158 property and equipment, net 2,772 3,249 operating lease right-of-use assets 8,118 8,578 intangible assets, net 262 272 other noncurrent assets 1,350 1,353 total assets $ 35,685 $ 32,610 liabilities and stockholders' equity current liabilities: trade accounts payable 2,483 2,109 accrued expenses and other current liabilities 8,295 3,614 current portion of operating lease liabilities 1,573 1,687 loans payable, current 21,353 220 deferred revenue, current 2,595 2,665 total current liabilities 36,299 10,295 operating lease liabilities, net of current portion 6,556 6,990 loans payable, noncurrent 12,903 12,233 deferred revenue, noncurrent 20 54 other noncurrent liabilities — 18 total liabilities $ 55,778 $ 29,590 commitments and contingencies stockholders' equity: non-redeemable convertible preferred stock, no par value; unlimited number of shares authorized as of june 30, 2022 and december 31, 2021; 137,765,828 shares issued and outstanding as of june 30, 2022 and december 31, 2021, respectively. 189,881 189,881 common stock, no par value; unlimited number of shares authorized as of june 30, 2022 and december 31, 2021; 3,341,327 and 3,166,949 shares issued and outstanding as of june 30, 2022 and december 31, 2021, respectively. 2,811 2,610 additional paid-in capital 147,779 146,240 accumulated deficit (350,083 ) (325,268 ) accumulated other comprehensive loss (10,481 ) (10,443 ) total stockholders' equity $ (20,093 ) $ 3,020 total liabilities and stockholders’ equity $ 35,685 $ 32,610 d-wave systems inc. condensed consolidated statements of operations and comprehensive loss (unaudited) for the three months ended june 30, for the six months ended june 30, (in thousands, except share and per share data) 2022 2021 2022 2021 revenue $ 1,371 $ 1,137 $ 3,083 $ 2,546 cost of revenue 586 448 1,169 746 total gross profit 785 689 1,914 1,800 operating expenses: research and development 7,072 6,291 13,599 12,775 general and administrative 3,959 2,508 7,606 5,030 sales and marketing 1,739 1,226 3,339 2,296 total operating expenses 12,770 10,025 24,544 20,101 loss from operations (11,985 ) (9,336 ) (22,630 ) (18,301 ) other income (expense), net: interest expense (1,746 ) (207 ) (2,538 ) (385 ) government assistance — 4,586 — 4,586 other income (expense), net 533 289 353 604 total other income (expense), net (1,213 ) 4,668 (2,185 ) 4,805 net loss $ (13,198 ) $ (4,668 ) $ (24,815 ) $ (13,496 ) net loss per share, basic and diluted $ (0.12 ) $ (0.04 ) $ (0.22 ) $ (0.12 ) weighted-average shares used in computing net loss per share, basic and diluted 112,023,503 111,877,937 111,981,014 111,865,630 comprehensive loss: net loss $ (13,198 ) $ (4,668 ) $ (24,815 ) $ (13,496 ) foreign currency translation adjustment, net of tax — — — — net comprehensive loss $ (13,198 ) $ (4,668 ) $ (24,815 ) $ (13,496 ) d-wave systems inc. condensed consolidated statements of cash flows (unaudited) six months ended june 30, (in thousands) 2022 2021 cash flows from operating activities: net loss $ (24,815 ) $ (13,496 ) adjustments to reconcile net loss to cash used in by operating activities: depreciation and amortization 705 747 stock-based compensation 1,600 330 amortization of operating right of use assets 459 497 provision for excess and obsolete inventory 265 219 non-cash interest expense 1,955 385 non-cash final fee payment for venture loan 583 — unrealized foreign exchange loss (gain) (349 ) 44 change in operating assets and liabilities: trade accounts receivable (505 ) (126 ) research incentives receivable (851 ) (5,339 ) inventories (301 ) 39 prepaid expenses and other current assets (4,449 ) (288 ) trade accounts payable 107 (1,764 ) accrued expenses and other current liabilities 4,578 (733 ) deferred revenue (54 ) (324 ) operating lease liabilities (427 ) (459 ) net cash used in operating activities (21,499 ) (20,268 ) cash flows from investing activities: purchase of property and equipment (175 ) (1,069 ) purchase of software (43 ) (196 ) net cash used in investing activities (218 ) (1,265 ) cash flows from financing activities: proceeds from government program 3,178 13,458 proceeds from debt financing 19,870 — proceeds from issuance of common stock upon exercise of stock options 141 67 debt payments (424 ) (398 ) net cash provided by financing activities 22,765 13,127 effect of exchange rate changes on cash and cash equivalents (65 ) 262 net (decrease) increase in cash and cash equivalents 983 (8,144 ) cash and cash equivalents at beginning of period $ 9,483 $ 21,335 cash and cash equivalents at end of period $ 10,466 $ 13,191 supplemental disclosure of noncash investing and financial activities: acquisition of property and equipment included in accounts payable $ 3 $ 21 unpaid deferred costs $ 3,734 $ — 2022 2021 2022 2021 $ 12,770 $ 10,025 $ 24,544 $ 20,101 (294 ) (363 ) (625 ) (735 ) (816 ) (169 ) (1,600 ) (330 ) $ 11,660 $ 9,493 $ 22,319 $ 19,036 2022 2021 2022 2021 $ (13,198 ) $ (4,668 ) $ (24,815 ) $ (13,496 ) 334 363 705 747 816 169 1,600 330 1,746 207 2,538 385 - (4,586 ) - (4,586 ) (533 ) (289 ) (353 ) (604 ) $ (10,835 ) $ (8,804 ) $ (20,325 ) $ (17,224 ) (1) government assistance reflects the imputed benefit arising from the difference between the market rate of interest and the rate of interest charged on the government loans. other income (expense), net consists primarily of foreign exchange gains and losses, and is included in the above table to facilitate the reconciliation of adjusted ebitda to net loss.
