D-Wave (QBTS) Q1 2026 Earnings Transcript

Image source: The Motley Fool.

DATE

May 12, 2026

CALL PARTICIPANTS

- Chief Executive Officer — Alan Baratz

- Chief Financial Officer — John Markovich

Full Conference Call Transcript

Alan Baratz: Good morning, everyone, and thank you for joining us. I want to begin by sharing a few perspectives on the quantum computing landscape. As Lynas Turbus, the creator of Linux, once said, Talk is cheap, Show me the code. That idea feels especially relevant in quantum computing today as excitement rises, competition increases and investors are looking for proof, not just promise. As quantum computing attracts increasing investor attention, the sector is generating significant excitement but also significant noise. New entrants, new public listings and ambitious and some might argue very overstated technology and product claims are drawing attention. In this environment, it is more important than ever to distinguish hype from execution.

As the field grows more crowded, the conversation is shifting from who is participating to who is positioned to deliver. Customers are looking for technology that can give them a competitive edge today. Researchers want cutting-edge tools that can accelerate discoveries now, and investors are working diligently to separate signal from noise in a sector that can sometimes generate more headlines than evidence or results.

As the CEO of one of the world's first and leading quantum computing companies, I believe that it is important to help educate the market on the realities of quantum computing's true near-term capabilities and commercial traction as well as the strengths and trade-offs of the different quantum computing modalities as this market continues to take shape. Let me be direct. Many still view e-Wave through an outdated lens, but I think it's time for a vision check. We believe we are the clear leader in quantum computing today, a market that Boston Consulting Group, BCG, projects to be in excess of $800 billion.

A full 1/4 of that market is optimization, which is uniquely addressed by annealing quantum computing, where we are the only player. This is not a niche technology or market as some like to characterize it. It is estimated by BCG to be a whopping $100 billion to $220 billion opportunity. For comparison, that's as big as either the global semiconductor equipment market or the global cybersecurity market. For those who say that D-Wave is addressing a niche market, stop spreading competitive misinformation and start doing your homework. Do you think that the global semiconductor equipment and cybersecurity markets are niche? I don't.

What's more, D-Wave is now also a leading player in gate model quantum computing through our acquisition of Quantum Circuits in January of this year. This means that we are the only company in the world that can participate in the full addressable market for quantum computing with both annealing and gate model quantum computers. We are building a highly differentiated pure-play quantum computing company with proven commercial traction today. For those valuing us on only our annealing technology and products, I would say you're off by a factor of two. Our unique market position reflects our rapidly advancing gate model progress, which has greatly accelerated given Quantum Circuit's industry-first dual rail qubit technology.

It is imperative that you all understand the profound potential that this has on our business and ensure that the models you're using to evaluate the company take into account this newly acquired technology. With dual rail qubits built-in error detection, we believe that our gate model quantum computing systems will set a new standard on quantum performance, efficiency and scalability. Our dual rail gate model technology is a meaningful differentiator for D-Wave and in our view, one of the most important developments in quantum computing today.

It brings together super connecting speed, the fidelity associated with ion traps and neutral atoms and a clear path to scale with our proprietary on-chip cryogenic control technology, a combination that the market should be paying much closer attention to. This combination is a revolutionary approach to the development of a gate model quantum computer. Trucked ions or neutral atoms are like a bicycle. They're simple, reliable and efficient, but very slow. Superconducting is like a piston propeller airplane, much more complicated and far less reliable, but much faster. In fact, there was recent research from Google and then separately from John Presco at Caltech and Atonic that brings this to life.

The Google team showed a way to break the Bitcoin protocol with 500,000 superconducting qubits. Then the Presco team showed how you could do it with only 10,000 neutral atom qubits, much more efficient. But what wasn't highlighted was that the Google computation would take about 9 minutes on a superconducting quantum computer. This computation would take many months, months on a neutral atom quantum computer. At that speed, they really aren't breaking the Bitcoin protocol. But this demonstrates the point that superconducting is much faster, actually 1,000x faster, but less efficient, requiring more physical qubits to error correct. Well, D-Wave dual rail qubits provide the best of both worlds. Again, the best of both worlds.

Think a jet airplane. -- still much faster than trapped ions or neutral atoms, but much more reliable and efficient than an old piston airplane. You get the speed of superconducting with the efficiency of ions or atoms. This is truly revolutionary. And the implications are significant. more reliable computation, more efficient error correction and a potentially faster, lower overhead path to building useful quantum systems. With built-in ratio detection, these qubits can identify roughly 90% of errors as they occur with an observed erasure rate of just 0.5%. We have also demonstrated greater than 99.9% fidelity while reducing the number of physical qubits needed for a logical qubit by up to an order of magnitude.

Our advantage becomes even stronger when dual rail is combined with Vie way's proprietary on-chip cryogenic control. This gives us a path to significantly reduce the wiring required to control large numbers of qubits and ultimately enables full qubit control at scale with multiple orders of magnitude fewer control lines than competing superconducting gate model systems. Any technology that doesn't solve this issue will not achieve utility because it can't feasibly control without requiring football field-sized installations. The combination of speed, fidelity and scalability is what makes this such an important development. It is not just better qubit design.

It is a more scalable system architecture, which is why you should see dual rail technology as a clear competitive advantage for D-Wave. I'm excited to share with you today more visibility into our gate model road map. We are targeting our dual rail gate model road map to extend to 100 logical qubits by the end of 2032. By the end of 2028, we plan to have approximately 175 physical qubits, which will allow us to demonstrate our quantum error correction technology as well as logical operations. Beyond this, the integration with D-Wave's scalable control is expected to take us to 10 logical qubits by 2030, followed by 100 logical qubits 2 years later.

This acceleration in our road map is based upon the unique opportunity provided by the recent merging of Quantum circuit expertise in engineering high coherence superconducting quantum devices with D-Wave's extensive toolbox for scaling superconducting quantum processors. With 100 logical qubits, we expect e-Wave to capture as much of the gate model market as any other gate model quantum computing company. There's something else that investors need to see more clearly about road maps in this industry. You've seen companies revise time lines, change milestone frameworks and move the goalpost as the technical realities and complexities of scaling become clearer. We couldn't be more different.

The road map we are sharing is built on demonstrated technology, known engineering pathways and milestones that we believe are achievable with a high degree of confidence. We are not publishing dates for effect. We'll provide more detail on our product road map and how it compares to other gate model quantum computing modalities like neutral atoms, tracks and photonics at our upcoming Investor Day on June 1 at the NYSE and online, and we encourage you to attend. Our category leadership position is further solidified by our dominance in annealing quantum computing, clearly a foundational strength for the company. This is grounded in a long track record of innovation and product delivery across 6 generations of systems.

Our annealing quantum computers are being deployed today in real customer problems. They are trusted by some of the world's largest companies across manufacturing, aerospace, health care, telecommunications and other sectors as well as by leading scientific researchers using our systems to accelerate discovery. This is real work, driving real value right now. Beyond optimization, we're very excited by what we're seeing in the area of blockchain. We recently collaborated with Postquant Labs on the development and launch of its quantum classical blockchain testNet, which is now live.

The testNet is designed to support the development of a global quantum blockchain standard and to assess how quantum computing could contribute to a more secure and energy-efficient blockchain in a distributed network. More than 18,500 people have signed up to participate in the TestNet. It currently includes more than 1,600 nodes, one of which is D-Wave's Advantage2 annealing quantum computer with the rest made up of CPUs and GPUs. Our Advantage I QPU is currently outperforming the classical nodes and winning the majority of the blocks. Together with Postpot Labs, we are launching a detailed benchmarking study to further quantify the advantage. We're also seeing promising work in the area of quantum AI and machine learning.

Shionogi, a Japan-based pharmaceutical company, is working on a multistage progress project that applies AI to drug discovery, where identifying drug-like molecules with the right activity, chemical properties and synthetic accessibility is extremely challenging, particularly for classical machine learning methods. The work is focused on using D-Wave's annealing quantum computers as part of the large language model training process with the second phase of the project delivering a tenfold increase in the number of desirable molecules compared with the results generated using a classical machine learning algorithm. Shionogi is now moving into the next phase of the project with the ultimate goal of real-world adoption.

We believe that these early results, along with emerging work by other customers exploring quantum computing to improve AI performance, position Z-Wave as an important first mover at the intersection of quantum and AI. Together, these examples show that annealing quantum computing is expanding commercially, opening new application areas and continuing to demonstrate real-world value today. Not only can our annealing quantum computers uniquely address the significant and important optimization market, we are close to being able to demonstrate their value in AI and blockchain. We continue to expand the capabilities of our annealing quantum computers. We recently published research outlining powerful new multicolor annealing protocols that enable some gate model operations within our commercial Advantage 2 systems.

We also launched these features with key customers to enable them to perform fundamental research in quantum simulation. These protocols enable researchers to use D-Wave's annealing GPU to model quantum systems and explore fundamentally new behavior that can be extremely difficult, if not impossible, to study with classical techniques. On our last quarterly earnings call, I said that 2025 was an inflection point for D-Wave, and our results continue to support that view. Last year marked a period of clear technical progress and accelerating commercial momentum, including a triple-digit increase in our sales pipeline that continued to expand through the first quarter. Today, that momentum is translating into measurable business outcomes.

As discussed, in January alone, we signed 2 landmark agreements, a $20 million system sale to Florida Atlantic University and the industry's first $10 million enterprise license quantum computing as a Service deal. We have previously covered those transactions, so I won't repeat the details here, but I will emphasize their impact as they help to drive record first quarter bookings. During the first quarter, we closed bookings of $33.4 million, a nearly 2,000% increase over Q1 bookings a year ago and up 149% from the very strong bookings in the fourth quarter of 2025.

With regard to system sales, I also want to point out that while I originally shared with you that we expect to sell 1 system per year, the pipeline is much stronger. We're now expecting 2 or 3 system deals per year with expected delivery of at least 2 systems this year in 2026. Before I hand the call over to John to provide deeper details on our first quarter results, there are 5 key points that I want you to keep in mind about what makes V-Wave different. First, D-Wave is the only dual platform quantum computing company.

We are developing both annealing and gate model quantum computing systems, which we believe uniquely positions us to participate in the full addressable quantum computing market over time. Second, Anealing quantum computing is better suited for optimization than gate model quantum computing. By its nature, it is uniquely built to solve optimization problems, an area that represents a significant share of the overall quantum computing opportunity and one where D-Wave is exceptionally well positioned to lead. Third, our customers are using our annealing quantum computing systems in production right now. They're solving hard computational problems that directly affect operations. This is not experimentation. It is commercial deployment by several Forbes Global 2000 companies.

Fourth, Z-Wave is the first company to solve a hard computational problem beyond classical computing's reach on a real-world useful problem, evidenced by our quantum supremacy results published in Science last March. And fifth, our dual rail date model technology changes the game. It combines super connecting speed, high-performance fidelity and a clear path to scale in a way we believe is highly differentiated. It is increasingly clear that the winners in quantum will be the companies that combine technical differentiation, commercial proof and the ability to execute at scale. We believe D-Wave is one of those companies, a