D-Wave Computing Inc. has just reported its Q4 2023 and full year 2023 financial results. While the numbers are important, the highlight of the report for us was that the company now has two customers in regular production usage of their cloud service with two additional ones scheduled to start in a few months. While the other quantum hardware providers have many customers doing experimentation, training or running proof-of-concepts, we are not aware of any other quantum company that has customers using their quantum systems in regular daily production. We will discuss this in more detail later in this article, but first, here are the numbers.

The company continued moderate growth in the fourth quarter as compared to the revenue in the previous and year ago quarters. Revenue for the full year 2023 also had growth of about 22%. The company was able to keep a lid on operating expenses in the quarter and showed decreases from the previous and year ago quarters. However, for the full year the company showed a significant increase in Net Loss due to increased G&A as a result of being a public company as well as increased non-cash stock-based compensation expenses. For 2024, the one area where the company expects to increase spending is in Sales & Marketing. The company has recently brought on a Chief Revenue Officer and is focusing their sales efforts on vertical segments including manufacturing, logistics, and government QCaaS applications. (See our recent articles here and here.)

The company made a point of saying that their business model is based upon revenue QCaaS (Quantum Computing as a Service) and professional services. They are no longer seeking to sell complete systems to cusotmers for on-premise use. Although a system sale can provide a one-time boost to a quarter’s revenue, it doesn’t provide the same type of continuing revenue that they can obtain with QCaaS. Also, unlike some quantum companies, D-Wave is obtains little revenue from government R&D grants.

But perhaps the most interesting number in their report was the substantial increase in bookings which increased in Q4 by 34% over the year ago quarter and 89% for the full year 2023 as compared to 2022. The company anticipates continued significant books growth and indicated that the Q1 2024 bookings should exceed $4.3 million. The company also reported an increase in the number of customers servicing 133 in 2023 versus 120 in 2022, including 78 commercial customers and 27 Fortune Global 200 customers.

On the technical side, the company reported it has made available an early prototype of their 1200 qubit Advantage 2 quantum annealer available on the Leap cloud service. Although this process has fewer qubits than the predecessor Advantage series, the company indicates it actually provides better performance due to the higher levels of qubit connectivity and qubit coherence times in that processor. The full size Advantage 2 processor will have 7000 qubits and we expect it to become available in 2025. The company also announced it has completed an experiment to demonstrate quantum supremacy using their Advantage 2 system for a problem involving the simulation of nonequilibrium dynamics of a magnetic spin system. In this paper they have performed a calculation which is not possible to do with a classical computer. A pre-print paper has been posted on arXiv at Computational supremacy in quantum simulation (arxiv.org) and the company has submitted the paper to a refereed technical journal for publication. The company also mentioned that they are teaming with Zapata AI to research quantum-enabled machine learning applications using the D-Wave processors.

Getting back to customer engagements, the company announced that two customers put their applications into regular production use in Q4. One was for employee scheduling and another was for delivery driver scheduling. They have two additional customers that will put their applications into production in the next few months for applications involving promotional tour routing and customer rewards program optimization. D-Wave is emphasizing that these applications are providing impactful time and cost savings to their customers and they expect to have even more customers enter regular production later this year and in 2025. Customers they have indicated they are working with include Bridgestone Corp., Ford Otosan, Julich Supercomputing Centre, Quantum Algorithms Institute, Qunova Computing, SavantX, UKRI National Quantum Computing Centre, Vinci Energies, Pattison Food Group, Davidson, and IPG.

On a strategic note, the company mentioned that they have the third largest quantum patent portfolio globally with over 200 U.S. granted patents and over 500 worldwide patents. At this time, they have no competition for the quantum annealing processors they have been working on for the part 15 years and believe that this large head start along with the patent protection will protect them from others entering the quantum annealing market.

For more information about D-Wave’s announcement, you can view their press release announcing the results here and a companion Q4 2023 Investor Presentation that can be be accessed here.

March 29, 2024