D-Wave Quantum Inc

D-Wave Quantum Inc. (NYSE: QBTS) is a quantum computing company, which is engaged in the development and delivery of quantum computing systems, software, and services. The Company builds and delivers the systems, cloud services, application development tools, and professional services to support the end-to-end quantum computing journey for enterprises and developers. The Company's products include The Leap and The Advantage. 

Recent Business and Financial Updates

• Hybrid-Quantum Application Deployment with NTT DOCOMO D-Wave has entered into a significant partnership with NTT DOCOMO, Japan’s leading mobile phone operator, for the deployment of a hybrid-quantum application. Utilizing D-Wave’s annealing quantum computing solutions, this initiative aims to optimize mobile network performance by mitigating signal congestion across base stations. This optimization is expected to enhance signal transmission efficiency and reduce equipment costs, demonstrating the practical application of quantum computing in telecommunications.
• Collaborative Efforts in Drug Discovery with Japan Tobacco Inc. In an innovative collaboration, D-Wave and Japan Tobacco Inc. (JT) are conducting a proof-of-concept project that combines quantum computing technology with artificial intelligence (AI) to revolutionize the drug discovery process. This project focuses on creating a novel method for discovering ‘first-in-class’ pharmaceutical compounds, potentially transforming the landscape of drug discovery and development.
• Recognition by the US Department of Defense’s Tradewinds Platform D-Wave’s annealing quantum computing technology has been acknowledged as “awardable” on the US Department of Defense’s Tradewinds buying platform. This platform facilitates the rapid procurement and adoption of emerging technologies, positioning D-Wave prominently within the realm of advanced AI, machine learning, and analytics capabilities.
• Advancements in Quantum Processing Technology The calibration of D-Wave’s 4,400-qubit Advantage2 processor marks a pivotal milestone toward its commercial release. This next-generation processor, with nearly four times the qubit count of its predecessor, enhances problem-solving capacity and performance. Key improvements include doubled qubit coherence, a 40% increase in energy scale, and enhanced qubit connectivity, which collectively enable the tackling of more complex computational problems.
• Service-Level Agreements for Leap™ Quantum Cloud Service D-Wave has introduced service-level agreements (SLAs) tailored for customers of the Leap™ quantum cloud service transitioning applications into production. As the only quantum computing company offering formal SLAs, D-Wave ensures high availability, reliability, and performance, supporting commercial-grade quantum and hybrid-quantum applications during production deployments.
• Integration of Generative AI and Quantum Processing D-Wave is advancing the integration of generative AI architectures with quantum processing unit (QPU) samples for efficient model training and inference. Initial designs of transformer and diffusion architectures are complete, with ongoing benchmarking to evaluate QPU roles. Additionally, collaborations with customers are underway on restricted Boltzmann machine architectures, a foundational approach for generative AI utilizing QPU samples.
• Public Sector Applications and Performance Benchmarks D-Wave has published new benchmarking vignettes that showcase the enhanced performance of its nonlinear hybrid quantum solver in complex scheduling and assignment problems. The solver's efficiency in solving a capacitated vehicle routing problem in significantly less time highlights its practical applicability across various industries. Increased interest from national security and civilian agencies further underscores its relevance in optimizing emergency response and public sector services.
• Strategic Partnership and Chicago Quantum Exchange Membership D-Wave announced a strategic partnership with Staque to accelerate the adoption of annealing quantum computing in the Middle East, highlighted at the inaugural Qubits UAE event. Additionally, D-Wave has joined the Chicago Quantum Exchange (CQE) as a corporate partner, contributing to materials science research, quantum education, and practical optimization use cases in manufacturing and logistics.
• Financial Performance and Leadership Expansion D-Wave’s go-to-market strategy includes launching the quantum optimization market category, with extensive resources on key use cases. Recent advancements in materials simulation have opened new market opportunities with research and government customers. The company has expanded its leadership team, appointing Sophie Ames as Chief Human Resources Officer and adding new board members John DiLullo and Rohit Ghai, signaling readiness for the next growth phase.
• Third Quarter Fiscal 2024 Financial Highlights D-Wave reported USD1.9 million in revenue for Q3 fiscal 2024, a 27% decrease from the same period in fiscal 2023. Quantum Computing as a Service (QCaaS) revenue increased by 41% to USD1.6 million, while professional services revenue declined by 80% to USD0.3 million. Bookings decreased by 22% to USD2.3 million. The customer base grew to 132, including 27 Forbes Global 2000 companies. Revenue from the government sector increased by 66%, and the research sector saw a 47% rise, while commercial revenue decreased by 4%.
• Detailed Financial Performance Analysis GAAP gross profit for Q3 fiscal 2024 was USD1.0 million, a 32% decrease from the same period in fiscal 2023. Non-GAAP gross profit fell by 35% to USD1.3 million. Operating expenses rose by 9% to USD21.7 million due to higher professional fees and go-to-market investments. The net loss for Q3 fiscal 2024 was USD22.7 million, a 41% increase from the previous year. Adjusted EBITDA loss for the quarter was USD13.8 million, reflecting a 19% increase due to lower revenue and higher operating expenses.
• Nine-Month Fiscal Year 2024 Financial Overview For the nine months ended September 30, 2024, D-Wave’s revenue increased by 11% to USD6.5 million, with QCaaS revenue rising by 52% to USD5.1 million. Professional services revenue declined by 42% to USD1.3 million. GAAP gross profit for this period rose by 54% to USD4.1 million, while GAAP gross margin improved to 62.7%. Non-GAAP gross profit and margin also saw significant increases. Operating expenses decreased by 8% to USD61.1 million, contributing to a reduced net loss of USD57.8 million. Adjusted EBITDA loss decreased by 6% to USD40.6 million, driven by higher gross profit and lower administrative expenses.
• Balance Sheet, Liquidity, and Fiscal Year 2024 Outlook As of September 30, 2024, D-Wave’s cash balance totaled USD29.3 million. Subsequent to the quarter, the company repaid a USD50 million term loan. The USD175 million shelf registration and USD100 million ATM program provide significant issuance capacity. The Equity Line of Credit with Lincoln Park Capital offers additional funding potential, subject to conditions. For fiscal year 2024, D-Wave anticipates an improved Adjusted EBITDA loss and expects better financial performance in the fourth quarter.

Technical Observation (on the daily chart):

The Relative Strength Index (RSI) over a 14-day period stands at a value of 47.52, currently recovered from overbought zone, with expectations of a consolidation or an upward momentum from the near important support zone of USD 5.00-USD 5.50. Additionally, the stock's current positioning is above both the 50-period SMA and 200-period SMA, which may serve as dynamic short to medium-term support levels.  

D-Wave has made significant strides in 2024, securing key partnerships, including with NTT DOCOMO for hybrid-quantum applications in mobile networks and Japan Tobacco Inc. for quantum-driven drug discovery. The company continues to advance its quantum technology, including the launch of the 4,400-qubit Advantage2 processor, and strengthening its Leap™ Quantum Cloud Service. Financially, D-Wave reported a decline in Q3 revenue, with QCaaS revenue growing 41%, but a wider net loss due to higher operating expenses. Despite these challenges, the company’s strong liquidity, strategic partnerships, and growing market interest position it well for long-term growth in quantum computing. As per the above-mentioned price action, recent key business and financial updates, momentum in the stock over the last month, and technical indicators analysis, a ‘Speculative Buy’ rating has been given for D-Wave Quantum Inc. (NYSE: QBTS) at the closing market price of USD 5.79, as on January 15, 2025. 

Individuals can evaluate the stock based on the support and resistance levels provided in the report in case of keen interest taking into consideration the risk-reward scenario. 

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing.

Related Risk: This report may be looked at from a high-risk perspective and a recommendation is provided for a short duration. This report is solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc. 

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance level is January 15, 2025. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: Target Price refers to a price level that the stock is expected to reach as per the relative valuation method and or technical analysis taking into consideration both short-term and long-term scenarios.

Note 5: ‘Kalkine reports are prepared based on the stock prices captured either from the New York Stock Exchange (NYSE), NASDAQ Capital Markets (NASDAQ), and or REFINITIV. Typically, all sources (NYSE, NASDAQ, or REFINITIV) may reflect stock prices with a delay which could be a lag of 15-20 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.