To The Moon

$D-Wave Quantum Inc.(QBTS)$ is expected to release its quarterly earnings result for Q4 2024 on 13 March 2025 before the market open.

The consensus estimate for the Q4 2024 revenues is expected to come in at $2.24 million, indicating a decline of 23.16% year over year.

The consensus estimate for earnings per share is currently expected to come in at a loss of 6 cents per share. It is the similar to same period one year ago.

D-Wave Quantum (QBTS) Last Neutral Earnings Call Saw A Significant Rise Of 202.25%

QBTS saw its share price jump by 202.25% since its last neutral earnings call on 14 Nov 2024.

The earnings call highlighted significant advancements in quantum computing technology and strategic partnerships, particularly with NTT Docomo and government agencies. However, these positives were offset by a decline in overall revenue and bookings, along with increased net losses. The sentiment is mixed with notable technological progress and strategic gains, but financial challenges remain.

D-Wave Quantum (QBTS) Guidance On Net Loss Narrowing

During the D-Wave Q3 2024 earnings call, the company provided several key financial and operational metrics along with strategic insights. D-Wave reported a Q3 revenue of $1.9 million, a decline of 27% from the previous year, attributed to a decrease in professional services revenue, although Quantum Computing as a Service (QCaaS) revenue increased by 41% to $1.6 million due to higher average revenue per customer. Bookings for the quarter amounted to $2.3 million, down 22% year-over-year, with expectations for improved bookings in Q4. The company's non-GAAP gross profit for the quarter was $1.3 million, with a non-GAAP gross margin of 67.2%.

Despite a net loss of $22.7 million for the quarter, D-Wave reiterated its fiscal 2024 adjusted EBITDA loss guidance of less than $54.3 million. Additionally, the company highlighted its technological advancements, notably the calibration of a 4,400-qubit Advantage 2 processor, and significant customer engagements, including a quantum optimization pilot with NTT DOCOMO, which demonstrated a 15% reduction in network congestion. D-Wave also emphasized its strategic government collaborations and the expansion of its customer base globally.

D-Wave Quantum (QBTS) Price Target

Based on 5 Wall Street analysts offering 12 month price targets for D-Wave Quantum in the last 3 months. The average price target is $8.63 with a high forecast of $11.00 and a low forecast of $7.00. The average price target represents a 60.41% change from the last price of $5.38.

If we were to look at how QBTS share price have been moving, these are some factors that have been influencing the share price I think.

Pre-Revenue Stage: D-Wave remains unprofitable, with limited near-term revenue visibility. Its valuation hinges on long-term potential, not current fundamentals.

Technological Uncertainty: Quantum annealing may face competition from gate-model or classical-hybrid solutions. Skepticism about annealing’s scalability or utility could weigh on sentiment.

Dilution Risk: QBTS may need to raise more capital via stock offerings, diluting existing shareholders.

These factors could create volatilty for QBTS, but if QBTS could overcome these challenges then QBTS could be a good bet for the long term.

Key Metrics to Evaluate for QBTS Q4 2024:

Revenue Growth

Commercial Adoption: D-Wave focuses on quantum annealing for optimization problems. Look for revenue growth driven by enterprise contracts, government partnerships, or cloud platform usage (Leap Quantum Cloud Service).

Revenue from commercial customers decreased by $200,000 or 4%, with a shift in focus to government and research customers.

Recurring vs. One-Time Revenue: Progress in transitioning from pilot projects to recurring revenue streams (subscriptions, long-term contracts). QCaaS revenue for the third quarter was $1.6 million, a 41% increase from the previous year, driven by a higher average revenue per customer.

Total revenue for the third quarter decreased by $700,000 or 27% from the previous year, impacted by a decline in professional services revenue.

Bookings and Backlog: Quantum computing companies often rely on multi-year contracts. Strong bookings or growing backlog could signal future revenue stability.

Bookings for the third quarter totaled $2.3 million, a decrease of $600,000 or 22% compared to the previous year.

Gross Margin: D-Wave’s gross margins are typically negative due to high R&D and hardware costs. Improvement here would indicate scaling efficiency or software/service revenue growth.

Net loss for the third quarter was $22.7 million, an increase from the previous year's $16.1 million, primarily due to lower revenue and higher operating expenses.

Cash Burn and Liquidity

QBTS had ~$34M in cash as of Q2 2023. Monitor cash burn rate and any capital raises. Sustainability is critical for pre-profitability quantum firms.

R&D Progress

Updates on quantum annealing advancements (e.g., qubit count, error correction) or hybrid solvers. Technical milestones could boost investor confidence. D-Wave completed the calibration of a 4,400 qubit Advantage 2 processor, offering performance gains over the existing system, such as double coherence time and a 40% increase in energy scale.

Partnerships and Use Cases

Expansion of partnerships with enterprises (e.g., Volkswagen, Mastercard) or governments. Real-world applications (logistics, drug discovery, financial modeling) validate commercial viability. D-Wave announced a quantum optimization pilot with NTT Docomo in Japan, which achieved a 15% reduction in network congestion and plans to move the solution into production.

Industry and Strategic Factors

Quantum Computing Competition:

D-Wave competes with gate-model quantum leaders (IBM, Google, Rigetti) and annealing-focused peers. Its differentiation lies in near-term optimization use cases.

D-Wave appointed tech industry veterans John DiLullo and Rohit Ghai to its Board of Directors, and Sophie Ames as Chief Human Resources Officer.

Government Funding:

Quantum initiatives (e.g., U.S. CHIPS Act, EU Quantum Flagship) may provide grants or contracts. D-Wave’s ability to secure public funding is a key catalyst. D-Wave has been deemed awardable on the U.S. Department of Defense's Tradewinds buying platform and is seeing increasing interest from national security and civilian agencies.

Market Sentiment:

Quantum stocks are highly volatile and driven by hype cycles. Positive news (technical breakthroughs, major contracts) could disproportionately impact the stock.

Technical Analysis - Exponential Moving Average (EMA)

From the technicals, we are seeing QBTS traded sideways while market faced selloff, and it is currently below 12-EMA, and the bulls are trying to defend the 26-EMA.

There have been some potential signal from RSI as it is moving towards the overbought region, this could mean better momentum, but I would think these factors might move the share price either way.

Here are the two scenarios which I would be watching.

Bull Case: Accelerated enterprise adoption, new government contracts, reduced cash burn, and progress toward profitability. Stock surges on optimism.

Bear Case: Slower-than-expected commercial traction, increased competition, or liquidity concerns. Investors lose patience with lack of revenue growth.

Summary

D-Wave Quantum’s Q4 2024 earnings will depend on its ability to demonstrate commercial traction, secure partnerships, and manage cash burn. While quantum computing is a high-risk, high-reward sector, D-Wave’s niche in optimization problems could position it as a long-term player if it achieves scalability.

I would be focusing on these factors:

1. Commercial adoption metrics (revenue, bookings),

2. Technical milestones,

3. Balance sheet health.

Appreciate if you could share your thoughts in the comment section whether you think QBTS could post better than expected earnings with positive guidance on its commercial adoption.

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.