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What changed in D-Wave Quantum Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of D-Wave Quantum Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+464 added−528 removedSource: 10-K (2025-03-14) vs 10-K (2024-03-29)

Top changes in D-Wave Quantum Inc.'s 2024 10-K

464 paragraphs added · 528 removed · 327 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

155 edited+55 added−31 removed75 unchanged
Biggest changeOur Technology Approach Quantum computing technology landscape There are two primary approaches to building quantum computers: • Annealing quantum computation: Heavily inspired by physics and uniquely effective at solving challenging, ubiquitous optimization problems, annealing quantum computation is the first and only approach to date that delivers large-scale quantum computing and is a core of our product platform. • Gate-model computation : Heavily inspired by classical digital computation, gate-model computation replaces classical registers of bits with qubits and performs a series of single and multiqubit operations, or gates, on the registers to run a computation.
Biggest changeWe plan to continue this trajectory and focus on driving additional improvements in coherence, connectivity, and scale in our annealing quantum computing systems to further expand the universe of solvable problems, while using this expertise to build our gate-model system. 18 Our Technology Approach Quantum computing technology landscape There are two primary approaches to building quantum computers: • Annealing quantum computation: Heavily inspired by physics and uniquely effective at solving challenging, ubiquitous optimization problems, annealing quantum computation is the first and only approach to date that delivers large scale commercial quantum computing and is a core of our product platform.
Our cloud-based approach offers customers real-time access to our technology, helping them not only find answers to their computationally challenging problems, but also better navigate unexpected disruptions that arise in business daily.
Our cloud-based approach offers customers real-time access to our technology, helping them not only find answers to their computationally challenging problems, but also better navigate unexpected disruptions that arise in daily business.
Throughout our history, we have demonstrated a successful track record of providing technology and innovation to customers. And we have gathered significant operational and commercial experience for running a quantum computing company at scale. Our hardware and software expertise provides us with a unique capability to address customer needs.
Throughout our history, we have demonstrated a successful track record of providing technology and innovation to customers. We have gathered significant operational and commercial experience for running a quantum computing company at scale. Our hardware and software expertise provides us with a unique capability to address customer needs.
Our Business Model • Three-pronged go-to-market model: Our go-to-market model—across direct sales, partner channels, and developers— extends our ability to scale sales. • Our direct sales strateg y involves: (1) growing our existing customer base by accelerating the path from pre-production to in-production application deployment on Leap, our quantum cloud service; and (2) acquiring net new customers using a customer engagement model, D-Wave Launch, which is a services-enabled journey to the adoption of quantum technology.
Our Business Model • Three-pronged go-to-market model: Our go-to-market model—across direct sales, partner channels, and developers—extends our ability to scale sales. • Our direct sales strateg y involves: (1) growing our existing customer base by accelerating the path from pre-production to in-production application deployment on the Leap quantum cloud service; and (2) acquiring net new customers using a customer engagement model, D-Wave Launch, which is a services-enabled journey to the adoption of quantum technology.
With D-Wave Launch we take our customers along a journey of use-case analysis and problem formulation to a fully implemented proof-of-concept implementation and finally onto a production state, where the devised solution is integrated into the customer’s day-to-day operational workflow. The initial stages of engagement prior to production deployment are considered non-recurring revenue per application.
With D-Wave Launch, we take our customers along a journey of use-case analysis and problem formulation to a fully implemented proof-of-concept deployment and finally onto a production state, where the devised solution is integrated into the customer’s day-to-day operational workflow. The initial stages of engagement prior to production deployment are considered non-recurring revenue per application.
All our systems, tools and products are, and will continue to be, focused on providing an accelerated path to practical, real-world applications that deliver measurable value to our customers. Our Quantum Computers, Developer Tools, and Quantum Hybrid Solvers Delivered via QCaaS We believe we are uniquely positioned to serve the growing market for quantum computing solutions and services.
All our systems, tools and products are, and will continue to be, focused on providing an accelerated path to practical, real-world applications that deliver measurable value to our customers. 8 Our Quantum Computers, Developer Tools, and Quantum Hybrid Solvers Delivered via QCaaS We believe we are uniquely positioned to serve the growing market for quantum computing solutions and services.
We had also registered domain names for websites we use in our business, such as dwavequantum.com, dwavesys.com, qubits.com, and similar variations. In addition to the above, we also protect our intellectual property and other proprietary rights by entering into confidentiality and invention assignment agreements (or similar agreements) with our employees, consultants, collaborators, contractors, and other third parties.
We had also registered domain names for websites we use in our business, such as dwavequantum.com, dwavesys.com, qubits.com, and similar variations. 23 In addition to the above, we also protect our intellectual property and other proprietary rights by entering into confidentiality and invention assignment agreements (or similar agreements) with our employees, consultants, collaborators, contractors, and other third parties.
To date, D-Wave has not experienced any work stoppages, and none of our employees are subject to a collective bargaining agreement or represented by a labor union. 24 Available Information Our Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K (including exhibits), and any amendment to these reports are filed with the SEC.
To date, D-Wave has not experienced any work stoppages, and none of our employees are subject to a collective bargaining agreement or represented by a labor union. Available Information Our Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K (including exhibits), and any amendment to these reports are filed with the SEC.
On August 8, 2022, the common shares and warrants of D-Wave commenced trading on the NYSE under the ticker symbols “QBTS” and “QBTS.WT,” respectively. 23 Governmental Regulations Environmental Regulations We are subject to numerous federal, state, provincial, local, and international environmental laws and regulations, including requirements regarding the protection of the environment and human health.
On August 8, 2022, the common shares and warrants of D-Wave commenced trading on the NYSE under the ticker symbols “QBTS” and “QBTS.WT,” respectively. Governmental Regulations Environmental regulations We are subject to numerous federal, state, provincial, local, and international environmental laws and regulations, including requirements regarding the protection of the environment and human health.
See “Risk Factors— Risks Related to D-Wave Quantum’s Financial Condition and Status as an Early-Stage Company—We have a history of losses and expect to incur significant expenses and continuing losses for the foreseeable future.” Advantage™ quantum computers: we are at the forefront of providing annealing quantum computers.
See “Risk Factors—Risks Related to D-Wave Quantum’s Financial Condition and Status as an Early-Stage Company—We have a history of losses and expect to incur significant expenses and continuing losses for the foreseeable future.” Advantage and Advantage2 quantum computers : We are at the forefront of providing annealing quantum computers.
(“ExchangeCo”), pursuant to which, among other things: (a) Merger Sub merged with and into DPCM, with DPCM surviving as a direct, wholly-owned subsidiary of D-Wave, (b) D-Wave indirectly acquired all of the outstanding share capital of D-Wave Systems and D-Wave Systems became an indirect subsidiary of D-Wave, with D‑Wave becoming a public company and an SEC registrant as successor to DPCM (the "Merger").
(“ExchangeCo”), pursuant to which, among other things: (a) Merger Sub merged with and into DPCM, with DPCM surviving as a direct, wholly-owned subsidiary of D-Wave, (b) D-Wave indirectly acquired all of the outstanding share capital of D-Wave Systems and D-Wave Systems became an indirect subsidiary of D-Wave, with D‑Wave becoming a public company and an SEC registrant as successor to DPCM (the “Merger”).
This means that these architectures are not yet fully error corrected and have severe limitations on the number of 1- and 2-qubit gates that can be performed. Our successful technological offering and trusted commercial readiness are evident as objectively assessed by U.S.
This means that these architectures are not yet fully error corrected and have limitations on the number of 1- and 2-qubit gates that can be performed. Our successful technological offering and trusted commercial readiness are evident as objectively assessed by U.S.
We have accumulated a broad patent portfolio that covers all the main aspects of our technology, including systems and software, and we intend to protect our innovative inventions. 22 Currently, we own all our core intellectual property and do not license in or out any of our material intellectual property.
We have accumulated a broad patent portfolio that covers all the main aspects of our technology, including systems and software, and we intend to protect our innovative inventions. Currently, we own all our core intellectual property and do not license in or out any of our material intellectual property.
As a result, we can work with existing third-party foundries without the need to invest capital in a new fabrication facility. 18 At the same time, some critical elements of the technology are fabricated and tested with our own equipment, in our own facilities.
As a result, we can work with existing third-party foundries without the need to invest capital in a new fabrication facility. At the same time, some critical elements of the technology are fabricated and tested with our own equipment, in our own facilities.
As the only quantum computing company in the world both building commercial annealing quantum computing systems and developing gate-model quantum computing systems, we can help customers benefit from a simplified, cross-platform experience that provides access to the full breadth of potential quantum applications.
As the only quantum computing company in the world building both commercial annealing quantum computing systems and gate-model quantum computing systems, we can help customers benefit from a simplified, cross-platform experience that provides access to the full breadth of potential quantum applications.
These offerings would allow for some minor modifications or customizations for client specific requirements but reduce the time to production, as we will have an established partial solution in place that can be leveraged and built upon.
These offerings would allow for some minor modifications or customizations for client-specific requirements but reduce the time to production, as we expect we will have an established partial solution in place that can be leveraged and built upon.
On March 1, 2023, and January 24, 2024, we entered into amendments to the Semiconductor Line Operation Agreement to revise the pricing and quarterly commitments. Competition The quantum computing market is highly competitive. With new technologies and entrants into the market, we expect competition to continue to increase.
On March 1, 2023, January 24, 2024, and January 24, 2025, we entered into amendments to the Semiconductor Line Operation Agreement to revise the pricing and quarterly commitments. Competition The quantum computing market is highly competitive. With new technologies and entrants into the market, we expect competition to continue to increase.
For the avoidance of doubt, information contained on, or accessible through, our website is not incorporated into, and does not form a part of, this Form 10-K or any other report or document we file with the SEC.
For the avoidance of doubt, information contained on, or accessible through, our website is not incorporated into, and does not form a part of, this Form 10-K or any other report or document we file with the SEC. 25
On February 7, 2022, D-Wave Systems entered into the transaction agreement (the “Transaction Agreement") with DPCM Capital, Inc. (“DPCM”), D-Wave, DWSI Holdings Inc. (“Merger Sub”), DWSI Canada Holdings ULC (“CallCo”), and D-Wave Quantum Technologies Inc.
On February 7, 2022, D-Wave Systems entered into the transaction agreement (the “Transaction Agreement”) with DPCM Capital, Inc. (“DPCM”), D-Wave, DWSI Holdings Inc. (“Merger Sub”), DWSI Canada Holdings ULC (“CallCo”), and D-Wave Quantum Technologies Inc.
We are utilizing our integrated engineering expertise to build a cross-platform quantum service with both annealing and gate-model systems that we believe will be the first and only quantum computing offering to impact full product lifecycles across multiple industries. • Extend our track record of continuous innovation, execution, and operational excellence : We have a strong track record of innovation in building and delivering annealing quantum computing systems to the market.
We are using our integrated engineering expertise to build a cross-platform quantum service with both annealing and gate-model systems that we believe will be the first and only quantum computing offering to impact full product lifecycles across multiple industries. • Extend our track record of continuous innovation, execution, and operational excellence : We have a strong track record of innovation in building and delivering annealing quantum computing systems to the market.
However, we anticipate that there may be unique government classified applications that require stand-alone systems (potentially for both annealing and gate-model systems) on customer premises.
However, we anticipate that there may be unique research and government classified applications that require stand-alone systems (potentially for both annealing and gate-model systems) on customer premises.
As more of these customers enter into production usage, our focus now shifts to reducing the time it takes to get more D-Wave quantum-hybrid solutions into daily workflows. We are doing this by focusing on the Launch process and leveraging any best practices or additional efficiencies that can be implemented across all projects.
As more customers enter into production usage, our focus now shifts to reducing the time it takes to get more D-Wave quantum-hybrid solutions into daily workflows. We are doing this by focusing on the Launch process and leveraging any best practices or additional efficiencies that can be implemented across all projects.
We are now observing a shift in certain quantum use cases, notably optimization-based, that are beginning to move into production, with customers identifying real business problems, developing quantum hybrid proofs-of-concept, piloting them, and then begin running those use cases in production environments, thus fueling daily operations. But we believe that this is just the beginning.
We are now observing a shift in certain quantum use cases, notably optimization-based, that are beginning to move into production, with customers identifying real business problems, developing quantum hybrid proofs-of-concept, piloting them, and then running those use cases in production environments, thus fueling their daily operations. But we believe this is just the beginning.
For over ten years, customers have been using our quantum computers for modelling, testing, and research while also providing a feedback loop that has not only grown into a collection of examples of how the system can be used today, but also provides insight into emerging use cases. These are pre-production use cases.
For over ten years, customers have been using our quantum computers for modeling, testing, and research while also providing a feedback loop that not only has grown into a collection of examples of how the system can be used today, but also provides insight into emerging use cases. These are pre-production use cases.
We also continue to focus on key initiatives to allow for seamless deployment of new Leap service features with no downtime for customers, as well as expansion of our Leap platform to new countries. • Professional services accelerate QCaaS: Our model features a professional services-enabled approach for application discovery and proof-of-concept development, and a QCaaS model for recurring revenue as applications move to production.
We also continue to focus on key initiatives to allow for seamless deployment of new Leap service features with no downtime for customers, as well as the expansion of our Leap platform to new countries. 14 Professional services accelerate QCaaS : Our model features a professional services-enabled approach for application discovery and proof-of-concept development, and a QCaaS model for recurring revenue as applications move to production.
A brief summary of a few of the approaches follows: • The superconducting gate-model approach uses the same basic underlying technology as that found in our qubits.
A brief summary of a few of the approaches follows: 22 • The superconducting gate-model approach uses the same basic underlying technology as that found in our qubits.
Our pending and issued patents target both the hardware and software sides of our business, including systems, qubits and other devices, fabrication, architecture, system software, cryogenics, hybrid quantum computing, and applications of quantum computing. Currently, we own all elements of our core patent portfolio. As of December 31, 2023, we owned four registered U.S. trademarks and seven registered foreign trademarks.
Our pending and issued patents target both the hardware and software sides of our business, including systems, qubits and other devices, fabrication, architecture, system software, cryogenics, hybrid quantum computing, and applications of quantum computing. Currently, we own all elements of our core patent portfolio. As of December 31, 2024, we owned four registered U.S. trademarks and seven registered foreign trademarks.
In Canada, this includes Canada’s Personal Information Protection and Electronic Documents Act ("PIPEDA") and the Personal Information Protection Act in British Columbia. We expect that there will continue to be new or changing laws, regulations, and industry standards concerning privacy, data protection, and information security proposed and enacted in other jurisdictions in which we operate.
In Canada, this includes Canada’s Personal Information Protection and Electronic Documents Act (“PIPEDA”) and the Personal Information Protection Act in British Columbia. We expect that there will continue to be new or changing laws, regulations, and industry standards concerning privacy, data protection, and information security proposed and enacted in other jurisdictions in which we operate.
The computational value of quantum computing underpins the promise of even greater societal and business impact, from the creation of new products and identification of new lines of business to solutions unimagined in drug discovery, weather modelling, global supply chain distribution, financial market portfolio optimization, and new materials.
The computational value of quantum computing underpins the promise of even greater societal and business impact, from the creation of new products and identification of new lines of business to solutions unimagined in drug discovery, weather modeling, global supply-chain distribution, financial market portfolio optimization, and new materials.
As noted in a recent peer-reviewed paper published in Nature Communications , our systems demonstrated a solution to a problem three million times faster than the best-known classical approaches on an application in quantum materials simulation.
As noted in a peer-reviewed paper published in Nature Communications (2021), our systems demonstrated a solution to a problem three million times faster than the best-known classical approaches on an application in quantum materials simulation.
We have an in-house team of superconducting application-specific integrated circuit designers, and we perform all our own superconducting circuit design. All testing and characterization of superconducting circuits is performed in-house at our facilities by a team of scientists trained in cryogenic characterization and operation of superconducting circuits and devices.
We have an in-house team of superconducting application-specific integrated circuit designers, and we design all our own superconducting circuitry. All testing and characterization of superconducting circuits is performed in-house at our facilities by a team of scientists trained in cryogenic characterization and operation of superconducting circuits and devices.
On occasion, a quicker, lighter model is built first, as a demonstrator, in order to identify use case applicability before engaging in a more rigorous proof-of-concept development. Following a successful proof-of-concept implementation, we work with our customers to integrate the full quantum-hybrid solution into their day-to-day workflow and surrounding systems’ infrastructure.
On occasion, a quicker, lighter model is built first, as a proof-of-technology, to identify use case applicability before engaging in a more rigorous proof-of-concept development. Following a successful proof-of-concept implementation, we work with our customers to integrate the full quantum-hybrid solution into their day-to-day workflow and surrounding systems’ infrastructure.
We’re pursuing a new go-to-market growth strategy, designed to increase sales and expedite customer applications moving into production. We believe this new GTM approach will better position us to serve markets that are ready to capitalize on the tangible benefits of our quantum computing solutions right now.
We’re pursuing a go-to-market growth strategy designed to increase sales and expedite customer applications moving into production. We believe this GTM approach will better position us to serve markets that are ready to capitalize on the tangible benefits of our quantum computing solutions.
As more and more solutions successfully proceed through our Launch program, we will take advantage of the lessons learned, improving and refining the process as we go. These changes will drive better efficiency and reduce project length and time to production. We are also defining standardized offerings for certain use cases and industries.
As more and more solutions successfully proceed through our Launch program, we will take advantage of the lessons learned, improving and refining the process as we go. We expect these changes will drive better efficiency and reduce project length and time to production. We are also defining standardized templates for certain use cases and industries.
National Institute of Standards and Technology (NIST), which analyzed the quantum technology readiness levels (“TRL”) across multiple quantum technologies in 2021. Using a scale from one to nine, NIST rated our technology at TRL 8 (mature technology) and other gate-model superconducting providers from TRL 1 to TRL 3 (basic and feasibility research).
National Institute of Standards and Technology (“NIST”), which analyzed the quantum technology readiness levels (“TRL”) across multiple quantum technologies in 2021. Using a scale from one to nine, NIST rated our annealing quantum computing technology at TRL 8 (mature technology) and other gate-model superconducting providers from TRL 1 to TRL 3 (basic and feasibility research).
For example, in the pharmaceutical sector, annealing quantum computing systems are best suited for patient trial and supply chain optimization, as well as protein folding, while gate-model systems are best suited to assist with drug discovery. Both systems will likely play a role in quantum machine learning for toxicity mitigation.
For example, in the pharmaceutical sector, annealing quantum computing systems are best suited for patient trial and supply chain optimization, as well as protein folding, while gate-model systems are best suited to assist with drug discovery. Both systems will likely play a role in quantum AI for toxicity mitigation.
This will allow us to have repeatable formulations and solutions for standard business problems and put solutions in place for new customers with those problems in less time using our standard offerings.
We expect this will allow us to have repeatable formulations and solutions for standard business problems and put solutions in place for new customers with those problems in less time using our standard offerings.
In turn, this will enable business and society to harness the value of quantum computing technology. We are more than our innovative products. We are an organization of professionals across many disciplines and boast distinguished domain experts with decades of experience in their respective fields.
In turn, we anticipate this will enable business and society to realize the value of quantum computing technology. We are more than our innovative products. We are an organization of professionals across many disciplines and boast distinguished domain experts with decades of experience in their respective fields.
These standard offerings will both take into consideration the industry-specific regulatory and compliance requirements and eliminate the need for each new project to have to account for these important factors. • Engage partners for increased breadth and speed: We also intend to expand our channel partner and reseller relationships to identify new geographies, customers, and use cases, all of which could potentially utilize our products.
We intend that these standard templates will both take into consideration the industry-specific regulatory and compliance requirements and eliminate the need for each new project to have to account for these important factors. • Engage partners for increased breadth and speed: We also intend to expand our channel partner and reseller relationships to identify new geographies, customers, and use cases, all of which could potentially use our products.
These engagements typically start with our professional services organization working with the customer to build out an actual software implementation running on the Leap quantum cloud service to test if the implementation works correctly and identifies business value to the customer.
These engagements typically start with our professional services organization working with the customer to build out an actual proof-of-concept software implementation running on the Leap quantum cloud service to test if the implementation works correctly and identifies business value to the customer.
To ensure that we have an efficient and sustainable manufacturing process that can continue to scale, we have capacity to expand across all our core technology areas: • In fabrication, our existing foundry can scale to a level significantly higher than our current throughput; • With the release of our D-Wave 2000Q Lower Noise (LN) annealing quantum computer, we demonstrated that a second source fabrication facility can significantly speed up technology development; we continue to explore alternatives for this portion of the supply chain. • Our wiring and input/output manufacturing is in-house and we can scale this capability by adding production staff and resources; and • Room temperature semiconductor electronic systems are designed in-house and built by third-party vendors and with additional funding, electronics manufacturing can easily be scaled.
To ensure that we have an efficient and sustainable manufacturing process that can continue to scale, we have capacity to expand across all our core technology areas: • In fabrication, our existing foundry can scale to a level significantly higher than our current throughput. • With the release of our D-Wave 2000Q LN annealing quantum computer, we demonstrated that a second source fabrication facility can significantly accelerate technology development; we continue to explore alternatives for this portion of the supply chain. 19 • Our wiring and input/output manufacturing is in-house and we can scale this capability by adding production staff and resources. • Room-temperature semiconductor electronic systems have been designed in-house and built by third-party vendors; with additional funding, electronics manufacturing can easily be scaled.
In parallel with developing gate-model quantum computing systems, we will continue to invest in our Advantage annealing program with a clear roadmap for future generations of increasingly more powerful, coherent, and connected annealing quantum computing products.
In parallel with building gate-model quantum computing systems, we will continue to invest in our Advantage annealing program with a clear roadmap for future generations of increasingly larger and more powerful, coherent, and connected annealing quantum computing products.
Our recently announced initiative to develop and bring to market applications that combine the power of generative AI and quantum computing technologies will further extend our customer value, as we launch the commercial era of quantum machine learning.
We believe our recently announced initiative to develop and bring to market applications that combine the power of generative AI and quantum computing technologies will further extend our customer value, as we launch the commercial era of quantum AI.
The goal of this work is to put the quantum hybrid application into full production. At this point, our customer is running the problem in their environment while connected to the Leap quantum cloud service, at full scale, and deriving additional business benefits beyond those identified in the earlier development stages.
The goal of this work is to put the quantum hybrid application into production pilots and full production. At this point, our customer typically runs the problem in their environment while connected to the Leap quantum cloud service, at full scale, and deriving additional business benefits beyond those identified in the earlier development stages.
The prototype D-Wave provided was able to solve the given problem in less than an hour, and is well designed to allow for an easy transition to a full production-quality application. • Davidson Technologies, a technology services company that provides innovative engineering, technical, and management solutions for the Department of Defense, aerospace, and commercial customers, has been working with D-Wave on several quantum-hybrid applications to advance national defense efforts.
The prototype solution D-Wave provided was able to solve the given problem in less than an hour, and is designed to allow for an easy transition to a full production-quality application. • Davidson Technologies, a U.S-based technology services company that provides innovative engineering, technical, and management solutions for the Department of Defense, the aerospace industry, and commercial customers, has been working with D-Wave on several quantum-hybrid applications to advance national defense efforts.
Our main line of business—cloud service—has seen significant year-over-year growth, which we anticipate will continue. Specifically, between 2018, when we introduced our Leap cloud service, and the end of 2023, cloud revenue has grown at a compound annual growth rate of 21 percent.
Our main line of business—cloud service—has seen significant year-over-year growth, which we anticipate will continue. Specifically, between 2018, when we introduced our Leap cloud service, and the end of 2024, cloud revenue has grown at a compound annual growth rate of 24 percent.
Operation Agreements On December 31, 2012, we entered into an agreement with Cypress for the purchase of available capacity of Cypress’ 8” wafer semiconductor line for the purposes of manufacturing wafers as well as services related to the use of such semiconductor line (the “Semiconductor Line Operation Agreement”).
Operation Agreements On December 31, 2012, we entered into an agreement with Cypress Semiconductor Corporation ("Cypress") for the purchase of available capacity of Cypress’ 8-inch wafer semiconductor line for the purposes of manufacturing wafers as well as services related to the use of such semiconductor line (the “Semiconductor Line Operation Agreement”).
An algorithmic solver was used to find the optimal solution to a cost function equation that describes the risk, return, and transaction costs associated with a given portfolio. Utilizing D-Wave’s hybrid solver service, BBVA was able to find the maximum value at the lowest risk in 171 seconds, even with 10382 possible portfolios.
An algorithmic solver was used to find the optimal solution to a cost function equation that describes the risk, return, and transaction costs associated with a given portfolio. Utilizing D-Wave’s hybrid solvers, BBVA was able to find the maximum value at the lowest risk in 171 seconds, even with 10,382 possible portfolios.
In manufacturing, new materials will be designed with gate-model systems, while annealing quantum computing systems will be used to optimize factory automation to deliver new products that feature those new materials.
In manufacturing, new materials may be designed with gate-model systems, while annealing quantum computing systems can be used to optimize factory automation to deliver new products that feature those new materials.
This is despite an increase of 50x in the number of qubits since that first product. The refrigerators’ cryocoolers require the bulk of this power to provide cooling to 4 kelvin.
This is despite an increase of 50 times in the number of qubits since that first product. The refrigerators’ cryocoolers require the bulk of this power to provide cooling to 4 kelvin.
We are singlehandedly leading the transition from an academic endeavor exploring quantum’s potential to enterprise-scale adoption and deployment, solving some of the world’s toughest problems. Based on our strategic decision to bring to market a different type of quantum technology – annealing quantum computing, we hold a first-mover advantage that no other company in the world can claim.
We are driving the transition from academic endeavors exploring quantum’s potential to enterprise-scale adoption and deployment, solving some of the world’s toughest problems. Based on our strategic decision to bring to market a different type of quantum technology— annealing quantum computing, we hold a first-mover advantage that no other company in the world can claim.
Applications include peptide design, employee scheduling, last-mile vehicle routing, job shop scheduling, financial portfolio return optimization, farm-to-market food delivery, digital marketing, organic light-emitting diode (OLED) materials development, financial risk reduction, marketing campaign optimization, shipping container logistics, ribonucleic acid folding, and clinical trial optimization.
Applications include peptide design, employee scheduling, last-mile vehicle routing, production scheduling, financial portfolio return optimization, farm-to-market food delivery, digital marketing, organic light-emitting diode (“OLED”) materials development, financial risk reduction, marketing campaign optimization, shipping container logistics, ribonucleic acid folding, and clinical trial optimization.
Currently, creating these tours takes significant work hours and domain expertise to ensure that all client requirements and federal regulations are considered. For this project, D-Wave developed a hybrid quantum-classical solution utilizing D-Wave's Leap platform to automate the creation of these tours with optimal routes, reducing Momentum's operational costs for producing and running these tours.
Currently, creating these tours takes significant work hours and domain expertise to ensure that all client requirements and federal regulations are considered. For this project, D-Wave developed a hybrid quantum-classical solution deployed in the Leap service to automate the creation of these tours with optimal routes, reducing Momentum's operational costs for producing and running these tours.
In the United States, this includes the California Consumer Privacy Act of 2018 ("CCPA") which came into effect on January 1, 2020. In the European Union and the United Kingdom, this includes the General Data Protection Regulation ("GDPR"), which came into effect in May 2018.
In the United States, this includes the California Consumer Privacy Act of 2018 (“CCPA”) which came into effect on January 1, 2020. In the European Union and the United Kingdom, this includes the General Data Protection Regulation (“GDPR”), which came into effect in May 2018.
This is the only physical implementation of a quantum computing technology that can be utilized for both annealing and gate-model quantum computers. • While there is still a need to further improve error-corrected GMQC theory to reduce overheads, both in physical circuit size and gate sequence depth and to the point where it can truly be practical to implement, we understand that a confluence of new theoretical developments, coupled with our practical quantum computing design experience, will ultimately be necessary to commercialize this technology. • Power consumption and refrigeration: Our annealing quantum computers draw 12 kilowatts of nominal power and have used the same-sized dilution refrigerators for cooling since the 2010 release of the original D-Wave One system.
This is the only physical implementation of a quantum computing technology that can be utilized for both annealing and gate-model quantum computers. • While there is still a need to further improve error-corrected GMQC theory to reduce overheads, both in physical circuit size and gate sequence depth and to the point where it can truly be practical to implement, a confluence of new theoretical developments, coupled with our practical quantum computing design experience, gives us a path to commercializing this technology. 20 • Power consumption and refrigeration: Our annealing quantum computers draw 12 kilowatts of nominal power and have used the same-sized dilution refrigerators for cooling since the 2010 release of the original D-Wave One system.
On average, we achieved a 15 percent increase in utilization across all problem scenarios and time limits, with the highest improvement reaching an impressive 42 percent. • BBVA, a global financial institution, along with financial quantum applications partner Multiverse Computing, set out to identify management strategies that yield the highest Sharpe ratio, a metric reflecting the rate of return at a given level of risk.
On average, we achieved a 15 percent increase in utilization across all problem scenarios and time limits, with the highest improvement reaching an impressive 42 percent. 11 • BBVA, a global financial institution set out to identify management strategies that yield the highest Sharpe ratio, a metric reflecting the rate of return at a given level of risk.
Our efforts across every facet of the business – from scientific research to processor development and hybrid solver advancements to production deployment support – remain squarely focused on helping our customers succeed and derive ROI from quantum computing. 7 Introduction to Quantum Computing While classical computing technology has delivered significant advancements in performance, it has limitations.
Our efforts across every facet of the business—from scientific research to processor development and hybrid solver advancements to production deployment support—remain squarely focused on helping our customers succeed in realizing value from quantum computing. 6 Introduction to Quantum Computing While classical computing technology has delivered significant advancements in performance, it has limitations.
Per-crane deliveries went from 60 to 97 per day following implementation, a 62 percent increase in productivity. • Pattison Food Group, Canada’s largest Western-based provider of food and health products, has successfully used our hybrid solver service in the Leap service, which incorporates the Advantage quantum processing unit (“QPU”), to find solutions to optimization problems in grocery logistics.
Per-crane deliveries went from 60 to 97 per day following implementation, a 62 percent increase in productivity. • Pattison Food Group, Canada’s largest Western-based provider of food and health products, has successfully used hybrid solvers in the Leap service, which incorporate the Advantage quantum processing unit (“QPU”), to find solutions to optimization problems in grocery operations.
As the only company in the world offering annealing quantum computing technology, we will continue to leverage this competitive position and acquire additional customers with optimization use cases across multiple verticals, including financial services, manufacturing and logistics, mobility, and life sciences and pharmaceuticals. 15 • Direct sales, recurring revenue, and expanding partner strategy: We are pursuing multiple revenue streams from our go-to-market model with a focus on five key initiatives.
As the first company in the world offering annealing quantum computing technology, we plan to continue to leverage this competitive position and acquire additional customers with optimization use cases across multiple verticals, including manufacturing, retail, logistics, financial services, telecommunication services, life sciences and pharmaceuticals, and the public sector. 15 • Direct sales, recurring revenue, and expanding partner strategy: We are pursuing multiple revenue streams from our go-to-market model with a focus on five key initiatives.
In addition, thousands of developers around the globe have built early quantum software applications on our systems in areas as diverse as customer offer allocation, resource scheduling, job shop scheduling, vehicle routing, logistics, drug discovery, industrial construction design, portfolio optimization and manufacturing processes, plus many more under development, demonstrating increased recognition of the benefits of quantum computing across industries.
In addition, thousands of developers around the globe have built early quantum software applications on our systems in areas as diverse as customer offer allocation, resource scheduling, factory scheduling, vehicle routing, logistics optimization, drug discovery, industrial construction design, portfolio optimization and maintenance, repair and overhaul optimization, plus many more under development, demonstrating increased recognition of the benefits of quantum computing across industries.
As of December 31, 2023, we owned more than 220 issued U.S. patents, which will expire between 2024 and 2041, and more than 200 additional issued and pending patents worldwide. Our patent portfolio is the third largest patent portfolio in the world related to quantum technology.
As of December 31, 2024, we owned more than 240 issued U.S. patents, which will expire between 2025 and 2043, and more than 200 additional issued and pending patents worldwide. Our patent portfolio is the third largest patent portfolio in the world related to quantum technology.
This can be directly brought to bear on building scalable GMQC technology. • We have developed a mature superconducting VLSI design and manufacturing capability that can immediately be employed for our gate-model program.
This can be directly brought to bear on building scalable GMQC technology. • We have a mature superconducting VLSI design and manufacturing capability that we are employing for our gate-model program.
This marked an inflection point that allowed far larger, more complex, business-scale problems to be solved on our systems. And in 2021, we released performance upgrades to the Advantage system and added a new hybrid solver to make it easier to solve problems with constraints.
This marked an inflection point that allowed far larger, more complex, business-scale problems to be solved on our systems. 12 And in 2021, we released performance upgrades to the Advantage system and added the constrained quadratic model (“CQM”) hybrid solver to make it easier to solve problems with constraints.
Current ion trap systems are in the range of about 20 qubits.
Current ion trap systems are in the range of about 35 qubits.
Built from our decades of quantum innovation, we offer a full stack of quantum systems, software and services capable of solving highly complex problems today. Our relentless commitment to innovation and invention means that we’re laser-focused on continuously building quantum solutions that push the boundaries of what’s possible.
Built upon our decades of quantum innovation, we offer a full stack of quantum systems, software and services capable of solving highly complex problems today. Our relentless commitment to innovation and invention means that we are laser-focused on continuously building quantum solutions that push the boundaries of what is possible.
As noted in the peer-reviewed paper published in Nature Communications in 2021, our systems have demonstrated a three-million-times speed-up over the best-known classical approaches on an application in quantum materials simulation.
In addition, we have shown in the peer-reviewed paper published in Nature Communications in 2021 that our systems have demonstrated a three-million-times speed-up over the best-known classical approaches on an application in quantum materials simulation.
See “—Our Quantum Computers, Developer Tools and Quantum Hybrid Solvers Delivered via QCaaS—D-Wave Launch on-board to quantum computing program” for additional information. 16 • Reducing time to production: As an independent, full-stack quantum computing platform and solutions provider, D-Wave is unique in having a large number of commercial customers with a steadily increasing proportion using D-Wave quantum-hybrid solutions within their day-to-day production workflow.
See “Our Quantum Computers, Developer Tools and Quantum Hybrid Solvers Delivered via QCaaS—D-Wave Launch TM on-board to quantum computing program” for additional information. 16 • Reduce time to production: As an independent, full-stack quantum computing platform and solutions provider, D-Wave is unique in having many commercial customers with a steadily increasing proportion of those using D-Wave quantum-hybrid solutions within their day-to-day production workflow.
In 2024, we introduced the Advantage2 TM quantum computer, our sixth-generation annealing quantum computer, with a 1,200+ qubit experimental prototype that is demonstrating significant performance gains on hard optimization problems and is expected to be particularly powerful for new use cases such as machine learning. Our Business Strategy and Differentiators We are the Practical Quantum Computing Company for a reason.
In 2024, we introduced the Advantage2 quantum computer, our sixth-generation annealing quantum computer, with a 1,200+ qubit experimental prototype that is demonstrating significant performance gains on hard optimization problems and is expected to be particularly powerful for new use cases such as machine learning.
As annealing quantum computing becomes more powerful and gate-model systems begin to come online over the next seven to ten years, other pre-production and production use cases are expected to emerge. As of 2024, hundreds of user-built early applications have been developed to run on our annealing quantum computing systems and in our hybrid solver service.
As annealing quantum computing becomes more powerful and gate-model systems come online in the future, other pre-production and production use cases are expected to emerge. As of 2025, hundreds of user-built early applications have been developed to run on our annealing quantum computing systems and in our hybrid solver service.
Business optimization problems use constraints, such as the distance a truck can travel before running out of gas (rather than assuming the truck can run indefinitely). In October 2021, we also announced a preview of our next-generation quantum computing platform, which will include both annealing and gate-model quantum computers.
Business optimization problems use constraints, such as the distance a truck is able to travel before running out of gas. In October 2021, we also announced a preview of our next-generation quantum computing platform, which will include both annealing and gate-model quantum computers.
The key elements of this strategy are: 17 • Continue to invest in our differentiated annealing quantum computing technology : As discussed above, while our technology approach encompasses both annealing and gate-model technologies, we are the only company that builds and commercially delivers production-scale annealing quantum computers.
The key elements of this strategy are: • Continue to invest in our differentiated annealing quantum computing technology : As discussed above, while our technology approach encompasses both annealing and gate-model technologies, we are the first company to build and commercially deliver production-scale annealing quantum computers.
Our customers have included a highly diversified global portfolio of blue-chip enterprise companies, including Mastercard, Deloitte, BASF, Volkswagen, Unisys, Siemens Healthineers, Davidson Technologies, ArcelorMittal, Pattison Food Group (formerly Save-On-Foods), DENSO, BBVA, NEC Corporation ("NEC"), and Lockheed Martin.
Our customers have included a highly diversified global portfolio of blue-chip enterprise companies, including Mastercard, Deloitte, BASF, Unisys, Siemens Healthineers, NTT DOCOMO, Ford Otosan, Interpublic Group, Davidson Technologies, ArcelorMittal, Pattison Food Group (formerly Save-On-Foods), DENSO, BBVA, and NEC Corporation (“NEC”).
This dual-system approach is crucial to serving the full quantum total addressable market (“TAM”), as different types of quantum systems benefit different types of quantum applications: annealing quantum computing systems are optimal for optimization problems, which today account for approximately 25 percent of the quantum TAM (as defined in “Our Growth Strategy” below); gate-model systems are best for differential equations, such as those in quantum chemistry; and both annealing and gate-model systems can solve linear algebraic and factoring problems, such as those in cryptography.
This dual-system approach is crucial to serving the full quantum total addressable market (“TAM”), as different types of quantum systems benefit different types of quantum applications: annealing quantum computing systems are optimal for optimization problems; gate-model systems are best for differential equations, such as those in quantum chemistry; and both annealing and gate-model systems can solve linear algebraic and factoring problems, such as those in cryptography.
All of this contributes to acceleration in the use of, and demand for, quantum computing. The need for quantum computing solutions is here today, and we believe D-Wave is well positioned to capture a significant portion of the commercial quantum computing market.
The need for quantum computing solutions is here today, and we believe D-Wave is well positioned to capture a significant portion of the commercial quantum computing market.
Current neutral atom efforts are at the several hundred qubit scale. • The photonic approach uses photons of light for qubits. These technologies are in the development stage, with little detail available on their level of integration or roadmaps. All the above gate-model approaches are in the noisy intermediate-scale quantum (“NISQ”) era.
Current neutral atom efforts are at the several hundred qubit scale. • The photonic approach uses photons of light for qubits. These technologies are in the development stage. All the above gate-model approaches are in the noisy intermediate-scale quantum (“NISQ”) era.
As of December 31, 2023, we had more than 200 employees across our systems, software, sales, marketing, and corporate teams. Approximately 64 percent of D-Wave’s employees are based near our research and development headquarters in Burnaby, British Columbia, Canada.
As of December 31, 2024, we had approximately 220 employees across our systems, software, sales, marketing, and corporate teams, including 216 full-time employees. Approximately 64 percent of D-Wave’s employees are based near our research and development headquarters in Burnaby, British Columbia, Canada.
D-Wave’s 20-plus years of reliable operation : We have been delivering commercial quantum computers for longer than many of our competitors have been in existence. Our experience allows us to operate a field-tested service and support organization that can anticipate many technical challenges of quantum system deployment. Our Leap quantum cloud service currently offers more than 99 percent uptime.
D-Wave’s track record of reliable operation : We have been delivering commercial quantum computers for longer than many of our competitors have been in existence. Our experience allows us to operate a field-tested service and support organization that can anticipate many technical challenges of quantum system deployment.
Secure access and data protection : We implement industry-accepted controls and technology and combine enterprise-grade security features with comprehensive audits of our applications, systems, and networks to ensure customer data is protected. As of December 22, 2023, we are SOC 2 Type 2 compliant and received a report from a third-party auditor that contains no exceptions.
Secure access and data protection : We implement industry-accepted controls and technology and combine enterprise-grade security features with comprehensive audits of our applications, systems, and networks to ensure customer data is protected. As of December 22, 2023, we became SOC 2 Type 2 compliant.
These are customers on the forefront of massive digitization efforts, as they incorporate cutting-edge technologies designed to optimize the supply chain and identify new processes that fuel operational efficiencies and cost savings.
Early adopter customers are on the forefront of massive digitization efforts, as they incorporate cutting-edge technologies designed to optimize their operations and identify new processes and products that fuel operational efficiencies, cost savings and increased revenue.
Spanning a wide range of diverse industries, these applications include examples in airline scheduling, quantum chemistry simulation, manufacturing optimization, preventative health care, portfolio optimization, and logistics. 10 Our annealing quantum computer runs an algorithm that natively solves optimization problems. As a result, a growing collection of use cases tend to fall into the optimization category.
Spanning a wide range of diverse industries, these applications include examples in workforce scheduling, resource optimization, production scheduling, logistics routing, and portfolio optimization. Our annealing quantum computer runs an algorithm that natively solves optimization problems. As a result, a growing collection of use cases tends to fall into the optimization category.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIf securities or industry analysts do not publish research, or publish inaccurate or unfavorable research, about D-Wave Quantum’s business, the price and trading volume of D-Wave Quantum’s securities could decline. The trading market for D-Wave Quantum’s securities will be influenced by the research and reports that industry or securities analysts may publish about D-Wave Quantum, its business, market or competitors.
Biggest changeThe trading market for D-Wave Quantum’s securities will be influenced by the research and reports that industry or securities analysts may publish about D-Wave Quantum, its business, market or competitors. Securities and industry analysts currently publishing research on D-Wave Quantum may not continue to, and additional securities and industry analysts may never, publish research on D-Wave Quantum.
Factors that could have an adverse impact on the availability of these components include: • our inability to enter into agreements with suppliers on commercially reasonable terms, or at all; • difficulties of suppliers ramping up their supply of materials to meet our requirements; • a significant increase in the price of one or more components, including due to industry consolidation occurring within one or more component supplier markets or as a result of decreased production capacity at manufacturers; • any reductions or interruption in supply, including due to technological problems, equipment malfunctions, regulatory actions or disruptions on our global supply chain as a result of large scale public health restrictions or geopolitical factors, which we have experienced, and may in the future experience; • financial problems of either contract manufacturers or component suppliers; • significantly increased freight charges, or raw material costs and other expenses associated with our business; • a failure to develop our supply chain management capabilities and recruit and retain qualified professionals; • a failure to adequately authorize procurement of inventory; • a failure to adequately maintain our or our suppliers’ manufacturing equipment; or • a failure to appropriately cancel, reschedule, or adjust our requirements based on our business needs.
Factors that could have an adverse impact on the availability of these components include: • our inability to enter into agreements with suppliers on commercially reasonable terms, or at all; • difficulties of suppliers ramping up their supply of materials to meet our requirements; • a significant increase in the price of one or more components, including due to industry consolidation occurring within one or more component supplier markets or as a result of decreased production capacity at manufacturers; • any reductions or interruption in supply, including due to technological problems, equipment malfunctions, regulatory actions or disruptions on our global supply chain as a result of large scale public health restrictions or geopolitical factors, which we have experienced, and may in the future experience; 32 • financial problems of either contract manufacturers or component suppliers; • significantly increased freight charges, or raw material costs and other expenses associated with our business; • a failure to develop our supply chain management capabilities and recruit and retain qualified professionals; • a failure to adequately authorize procurement of inventory; • a failure to adequately maintain our or our suppliers’ manufacturing equipment; or • a failure to appropriately cancel, reschedule, or adjust our requirements based on our business needs.
Factors affecting the trading price of our securities may include: • actual or anticipated fluctuations in our quarterly financial results or the quarterly financial results of companies perceived to be similar to it; • changes in the market’s expectations about our operating results; • success of competitors; • our operating results failing to meet the expectation of securities analysts or investors in a particular period; • changes in financial estimates and recommendations by securities analysts concerning D-Wave Quantum or the industries in which D-Wave Quantum operates; • operating and share price performance of other companies that investors deem comparable to D-Wave Quantum; • D-Wave Quantum’s ability to market new and enhanced products and technologies on a timely basis; 53 • changes in laws and regulations affecting our business; • our ability to meet compliance requirements; • commencement of, or involvement in, litigation involving D-Wave Quantum; • changes in D-Wave Quantum’s capital structure, such as future issuances of securities or the incurrence of additional debt; • the volume of Common Shares available for public sale; • any changes in our board of directors or management; • sales of substantial amounts of Common Shares by our directors, executive officers or significant stockholders or the perception that such sales could occur; and • general economic and political conditions such as recessions, interest rates, international currency fluctuations and acts of war or terrorism.
Factors affecting the trading price of our securities may include: • actual or anticipated fluctuations in our quarterly financial results or the quarterly financial results of companies perceived to be similar to it; • changes in the market’s expectations about our operating results; • success of competitors; • our operating results failing to meet the expectation of securities analysts or investors in a particular period; • changes in financial estimates and recommendations by securities analysts concerning D-Wave Quantum or the industries in which D-Wave Quantum operates; • operating and share price performance of other companies that investors deem comparable to D-Wave Quantum; • D-Wave Quantum’s ability to market new and enhanced products and technologies on a timely basis; • changes in laws and regulations affecting our business; • our ability to meet compliance requirements; • commencement of, or involvement in, litigation involving D-Wave Quantum; • changes in D-Wave Quantum’s capital structure, such as future issuances of securities or the incurrence of additional debt; • the volume of Common Shares available for public sale; • any changes in our board of directors or management; • sales of substantial amounts of Common Shares by our directors, executive officers or significant stockholders or the perception that such sales could occur; and • general economic and political conditions such as recessions, interest rates, international currency fluctuations and acts of war or terrorism.
Acquisitions and investments involve a number of risks, such as: • use of resources that are needed in other areas of our business; 37 • in the case of an acquisition, implementation or remediation of controls, procedures and policies of the acquired company; • in the case of an acquisition, difficulty integrating the accounting systems and operations of the acquired company, including potential risks to our corporate culture; • in the case of an acquisition, coordination of product, engineering and selling and marketing functions, including difficulties and additional expenses associated with supporting legacy services and products and hosting infrastructure of the acquired company, as applicable, difficulties associated with supporting new products or services, difficulty converting the customers of the acquired company onto our platform and difficulties associated with contract terms, including disparities in the revenues, licensing, support or professional services model of the acquired company; • in the case of an acquisition, retention and integration of employees from the acquired company; • in the case of an acquisition, past intellectual property infringement or data security issues arising from the acquired company; • unforeseen costs or liabilities; • adverse effects on our existing business relationships with customers as a result of the acquisition or investment; • the possibility of adverse tax consequences; • litigation or other claims arising in connection with the acquired company or investment; and • in the case of foreign acquisitions, the need to integrate operations across different cultures and languages and to address the particular economic, currency, political and regulatory risks associated with specific countries.
Acquisitions and investments involve a number of risks, such as: • use of resources that are needed in other areas of our business; • in the case of an acquisition, implementation or remediation of controls, procedures and policies of the acquired company; • in the case of an acquisition, difficulty integrating the accounting systems and operations of the acquired company, including potential risks to our corporate culture; • in the case of an acquisition, coordination of product, engineering and selling and marketing functions, including difficulties and additional expenses associated with supporting legacy services and products and hosting infrastructure of the acquired company, as applicable, difficulties associated with supporting new products or services, difficulty converting the customers of the acquired company onto our platform and difficulties associated with contract terms, including disparities in the revenues, licensing, support or professional services model of the acquired company; • in the case of an acquisition, retention and integration of employees from the acquired company; • in the case of an acquisition, past intellectual property infringement or data security issues arising from the acquired company; • unforeseen costs or liabilities; • adverse effects on our existing business relationships with customers as a result of the acquisition or investment; • the possibility of adverse tax consequences; • litigation or other claims arising in connection with the acquired company or investment; and • in the case of foreign acquisitions, the need to integrate operations across different cultures and languages and to address the particular economic, currency, political and regulatory risks associated with specific countries.
The market price of Common Shares has fluctuated significantly and may continue to do so in response to numerous factors, many of which are beyond its control, including: • actual or anticipated fluctuations in its revenue or other operating metrics; • changes in the financial guidance provided to the public or D-Wave Quantum’s failure to meet this guidance; • failure of securities analysts to initiate or maintain coverage of D-Wave Quantum, changes in financial estimates by any securities analysts who follow D-Wave Quantum, or its failure to meet the estimates or the expectations of investors; • changes in accounting standards, policies, guidelines, interpretations, or principles; • the economy as a whole and market conditions in its industry; 50 • rumors and market speculation involving D-Wave Quantum or other companies in its industry; • announcements by D-Wave Quantum or its competitors of significant innovations, acquisitions, strategic partnerships, joint ventures, or capital commitments; • new laws or regulations or new interpretations of existing laws or regulations applicable to its business; • lawsuits threatened or filed against us; • other events or factors, including those resulting from war, incidents of terrorism, or responses to these events; • the expiration of contractual lock-up or market standoff agreements; and • sales of additional Common Shares by D-Wave Quantum or its stockholders.
The market price of Common Shares has fluctuated significantly and may continue to do so in response to numerous factors, many of which are beyond its control, including: • actual or anticipated fluctuations in its revenue or other operating metrics; • changes in the financial guidance provided to the public or D-Wave Quantum’s failure to meet this guidance; • failure of securities analysts to initiate or maintain coverage of D-Wave Quantum, changes in financial estimates by any securities analysts who follow D-Wave Quantum, or its failure to meet the estimates or the expectations of investors; • changes in accounting standards, policies, guidelines, interpretations, or principles; • the economy as a whole and market conditions in its industry; • rumors and market speculation involving D-Wave Quantum or other companies in its industry; • announcements by D-Wave Quantum or its competitors of significant innovations, acquisitions, strategic partnerships, joint ventures, or capital commitments; • new laws or regulations or new interpretations of existing laws or regulations applicable to its business; • lawsuits threatened or filed against us; • other events or factors, including those resulting from war, incidents of terrorism, or responses to these events; • the expiration of contractual lock-up or market standoff agreements; and • sales of additional Common Shares by D-Wave Quantum or its stockholders.
Our current competitors include: 31 • large, well-established tech companies that generally compete in all of our markets, including Google, Quantinuum, IBM, Microsoft, Intel and AWS; • companies based in countries such as China, Russia, Canada, the United States, Australia and the United Kingdom, and those in the European Union as of the date of this Form 10-K and we believe additional countries in the future; • less-established public and private companies with competing technology, including companies located outside the United States; • existing or new entrants seeking to enter the quantum annealing space; and • new or emerging entrants seeking to develop competing technologies.
Our current competitors include: • large, well-established tech companies that generally compete in all of our markets, including Google, Quantinuum, IBM, Microsoft, Intel and AWS; • companies based in countries such as China, Russia, Canada, the United States, Australia and the United Kingdom, and those in the European Union as of the date of this Form 10-K and we believe additional countries in the future; • less-established public and private companies with competing technology, including companies located outside the United States; • existing or new entrants seeking to enter the quantum annealing space; and • new or emerging entrants seeking to develop competing technologies.
Any claims of intellectual property infringement or other intellectual property violations, even those without merit, could: 45 • be expensive and time consuming to defend; • cause us to cease making, licensing or using our platform or products that incorporate the challenged intellectual property; • require us to modify, redesign, reengineer or rebrand our platform or products, if feasible; • cause significant delays in introducing new or enhanced services or technology; • divert management’s attention and resources; or • require us to enter into royalty or licensing agreements in order to obtain the right to use a third party’s intellectual property.
Any claims of intellectual property infringement or other intellectual property violations, even those without merit, could: • be expensive and time consuming to defend; • cause us to cease making, licensing or using our platform or products that incorporate the challenged intellectual property; • require us to modify, redesign, reengineer or rebrand our platform or products, if feasible; • cause significant delays in introducing new or enhanced services or technology; • divert management’s attention and resources; or • require us to enter into royalty or licensing agreements in order to obtain the right to use a third party’s intellectual property.
For example, we may face additional risks relating to: • lack of familiarity and burdens and complexity involved with complying with multiple, conflicting and changing foreign laws, standards, regulatory requirements, tariffs, export controls and other barriers; • difficulties in ensuring compliance with countries’ multiple, conflicting and changing privacy, data security, international trade, customs and sanctions laws; • differing technology standards; and • new and uncertain protection for intellectual property rights in some countries.
For example, we may face additional risks relating to: 37 • lack of familiarity and burdens and complexity involved with complying with multiple, conflicting and changing foreign laws, standards, regulatory requirements, tariffs, export controls and other barriers; • difficulties in ensuring compliance with countries’ multiple, conflicting and changing privacy, data security, international trade, customs and sanctions laws; • differing technology standards; and • new and uncertain protection for intellectual property rights in some countries.
Our ability to produce and scale our annealing and gate model quantum computers is dependent also upon components we must source from the electronics and semiconductor industries. Shortages or supply interruptions in any of these components will adversely impact our financial performance. 29 Our platform and products depend on the ability to access and integrate with third-party cloud providers.
Our ability to produce and scale our annealing and gate model quantum computers is dependent also upon components we must source from the electronics and semiconductor industries. Shortages or supply interruptions in any of these components will adversely impact our financial performance. Our platform and products depend on the ability to access and integrate with third-party cloud providers.
This is also true for our quantum-hybrid solvers in that they must also continue to deliver value compared to classical approaches. 34 We use quantum-classical hybrid solutions to get the customer the optimal answer to their particular problem. Since quantum computing is a new form of computing, some customers may want to understand the details of how our products operate.
This is also true for our quantum-hybrid solvers in that they must also continue to deliver value compared to classical approaches. We use quantum-classical hybrid solutions to get the customer the optimal answer to their particular problem. Since quantum computing is a new form of computing, some customers may want to understand the details of how our products operate.
As a result, we may be required to price below our targets in the future, which could adversely affect our revenue, gross margin, profitability, cash flows and financial condition. 33 Competitive pressures may put pressure on our pricing, which may require us to reduce our pricing in order to provide competitively priced access to our products and services.
As a result, we may be required to price below our targets in the future, which could adversely affect our revenue, gross margin, profitability, cash flows and financial condition. Competitive pressures may put pressure on our pricing, which may require us to reduce our pricing in order to provide competitively priced access to our products and services.
If the market for quantum computers in general does not develop as expected, or develops more slowly than expected, our business, prospects, financial condition and operating results could be harmed. We have focused our efforts on the optimization market with our annealing quantum computers, and in the near term expect our business to grow from this market.
If the market for quantum computers in general does not develop as expected, or develops more slowly than expected, our business, prospects, financial condition and operating results could be harmed. 33 We have focused our efforts on the optimization market with our annealing quantum computers, and in the near term expect our business to grow from this market.
Furthermore, failure to comply with export or import controls or with economic sanctions may expose us to government investigations and penalties, which could harm our business, operating results and financial condition. 42 Governmental decisions with respect to perceived national security risks associated with quantum computing technology could impede the selling of our products and services.
Furthermore, failure to comply with export or import controls or with economic sanctions may expose us to government investigations and penalties, which could harm our business, operating results and financial condition. Governmental decisions with respect to perceived national security risks associated with quantum computing technology could impede the selling of our products and services.
In addition, other competitors might be able to compete with us by bundling their other products and services in a way that does not allow us to offer a competitive solution. Additionally, we must be able to achieve our objectives in a timely manner lest quantum computing lose ground to competitors, including competing technologies.
In addition, other competitors might be able to compete with us by bundling their other products and services in a way that does not allow us to offer a competitive solution. 31 Additionally, we must be able to achieve our objectives in a timely manner lest quantum computing lose ground to competitors, including competing technologies.
We, therefore, may not be able to engage in any of the foregoing transactions unless we obtain the consent required by these agreements. Furthermore, our future working capital, borrowings or equity financing could be unavailable to repay or refinance the amounts outstanding under any of these agreements. In addition, we may also incur additional indebtedness in the future.
We, therefore, may not be able to engage in any of the foregoing transactions unless we obtain the consent required by these agreements. Furthermore, our future working capital, borrowings or equity financing could be unavailable to repay or refinance the amounts outstanding under any of these agreements. 45 In addition, we may also incur additional indebtedness in the future.
However, because this is proprietary and trade secret information we cannot or may not want to share, we may lose customers as a result. Real or perceived errors, failures or bugs in our products and services could materially and adversely affect our operating results, financial condition and growth prospects.
However, because this is proprietary and trade secret information we cannot or may not want to share, we may lose customers as a result. 34 Real or perceived errors, failures or bugs in our products and services could materially and adversely affect our operating results, financial condition and growth prospects.
We include limitation of liability provisions in our standard subscription agreements; however, such provisions may not be enforceable or adequate and may not otherwise protect us from any such liabilities or damages with respect to any claim related to a cybersecurity incident or other potential claim referred to above.
We include limitation of liability provisions in our standard subscription and services agreements; however, such provisions may not be enforceable or adequate and may not otherwise protect us from any such liabilities or damages with respect to any claim related to a cybersecurity incident or other potential claim referred to above.
All of these implications could adversely affect our revenue, results of operations, business and financial condition. We are subject to United States, Canadian and foreign anti-corruption, anti-bribery and similar laws, and non-compliance with such laws may subject us to criminal or civil liability and harm our business.
All of these implications could adversely affect our revenue, results of operations, business and financial condition. 41 We are subject to United States, Canadian and foreign anti-corruption, anti-bribery and similar laws, and non-compliance with such laws may subject us to criminal or civil liability and harm our business.
While we were able to bring the Company back in compliance with the NYSE listing requirements within the six-month window for recompliance on both occasions, it is possible that this may occur again and we will not be able to bring the Company back in compliance within such window or at all.
While we were able to bring the Company back in compliance with the NYSE listing requirements within the six-month window for recompliance on all occasions, it is possible that this may occur again and we will not be able to bring the Company back in compliance within such window or at all.
Any problems with the transmission of increased data and requests could result in harm to our brand or reputation. 28 Our growth has placed, and will likely continue to place, a significant strain on our managerial, administrative, operational, financial and other resources.
Any problems with the transmission of increased data and requests could result in harm to our brand or reputation. Our growth has placed, and will likely continue to place, a significant strain on our managerial, administrative, operational, financial and other resources.
Our management and other personnel have and will need to continue to devote a substantial amount of time to these compliance initiatives. Moreover, we expect these rules and regulations to substantially increase our legal and financial compliance costs and to make some activities more time-consuming and costly.
Our management and other personnel have devoted and will need to continue to devote a substantial amount of time to these compliance initiatives. Moreover, we expect these rules and regulations to substantially increase our legal and financial compliance costs and to make some activities more time-consuming and costly.
Furthermore, regulations governing domain names may not protect our trademarks or similar proprietary rights. We enter into confidentiality and intellectual property agreements with our employees and consultants and enter into confidentiality agreements with the parties with whom we have strategic relationships and business alliances.
Furthermore, regulations governing domain names may not protect our trademarks or similar proprietary rights. 43 We enter into confidentiality and intellectual property agreements with our employees and consultants and enter into confidentiality agreements with the parties with whom we have strategic relationships and business alliances.
The computing industry is quickly evolving and we may invest significantly in particular functionality or integrations that may become obsolete in the future, and any future product offerings, features or enhancements that we develop may be unsuccessful.
The quantum computing industry is quickly evolving and we may invest significantly in particular functionality or integrations that may become obsolete in the future, and any future product offerings, features or enhancements that we develop may be unsuccessful.
See “ —Risks Related to D-Wave Quantum’s Business and Industry ” Broad market and industry factors may materially harm the market price of our securities irrespective of our operating performance.
See “ —Risks Related to D-Wave Quantum’s Business and Industry ” 52 Broad market and industry factors may materially harm the market price of our securities irrespective of our operating performance.
Prior to the Transaction, we had never been required to test our internal controls within a specified period and, as a result, we may experience difficulty in meeting these reporting requirements in a timely manner. 47 The process of building our accounting and financial functions and infrastructure has, and will continue to, require significant additional professional fees, internal costs and management efforts.
Prior to the Transaction, we had never been required to test our internal controls within a specified period and, as a result, we may experience difficulty in meeting these reporting requirements in a timely manner. 46 The process of building our accounting and financial functions and infrastructure has, and will continue to, require significant additional professional fees, internal costs and management efforts.
Their limited experience in dealing with the increasingly complex laws pertaining to public companies could be a significant disadvantage in that it is likely that an increasing amount of their time may be devoted to these activities which will result in less time being devoted to the management and growth of the post-combination company.
Their limited experience in dealing with the increasingly complex laws pertaining to public companies could be a significant disadvantage in that it is likely that an increasing amount of their time may be devoted to these activities which will result in less time being devoted to the management and growth of the company.
We currently offer our platform in 39 countries and our international sales are a substantial and critical part of our current business and future growth plans. Our international sales and the use of our platform in various countries subject us to risks that we do not generally face with respect to domestic sales within North America.
We currently offer our platform in 42 countries and our international sales are a substantial and critical part of our current business and future growth plans. Our international sales and the use of our platform in various countries subject us to risks that we do not generally face with respect to domestic sales within North America.
Risks Related to D-Wave Quantum’s Business and Industry The immature market for quantum computing may lead to us misreading market demand and the timeframes it will take to close customer contracts and grow revenue, which would adversely affect our business, results of operations and financial condition.
Risks Related to D-Wave Quantum’s Business and Industry The immature market for quantum computing may lead to us misread market demand and the timeframes it will take to close customer contracts and grow revenue, which would adversely affect our business, results of operations and financial condition.
We derive substantially all of our revenue from our cloud-based quantum computing platform and professional services, which we expect to continue for the foreseeable future. As such, the market acceptance of our platform is critical to our continued success.
We derive much of our revenue from our cloud-based quantum computing platform and professional services, which we expect to continue for the foreseeable future. As such, the market acceptance of our platform is critical to our continued success.
On October 20, 2023, we were notified by the NYSE that we are not in compliance with Section 802.01C of the NYSE Listed Company Manual because the average closing price of our Common Shares was less than $1.00 over a consecutive 30 trading-day period.
On October 2, 2024, we were notified by the NYSE that we are not in compliance with Section 802.01C of the NYSE Listed Company Manual because the average closing price of our Common Shares was less than $1.00 over a consecutive 30 trading-day period.
We have no experience in scaling our cloud services infrastructure or professional services globally. We may not be able to cost-effectively manage the scale of our cloud services infrastructure or professional services at a scale or quality consistent with customer demand in a timely or economical manner. We are currently constructing advanced generations of our products.
We may not be able to cost-effectively manage the scale of our cloud services infrastructure or professional services at a scale or quality consistent with customer demand in a timely or economical manner. We are currently constructing advanced generations of our products.
In making such forecasts, we rely on data provided by industry sources and customers, among other things, that we have not independently verified and such data may not be accurate, and any inaccuracy will affect the accuracy of our forecasts. The accuracy of our forecasts may also be affected by human error in the interpretation of such data.
In making such forecasts, we rely on data provided by industry sources and customers, among other things, that we have not independently verified and such data may not be accurate, and any inaccuracy will affect the accuracy of our forecasts.
On March 1, 2024, the NYSE notified us that we had regained compliance based on a calculation of the Company’s average closing share price for the 30 trading days ended February 29, 2024, which reflected an average closing share price above the NYSE’s $1.00 minimum requirement.
On November 1, 2024, the NYSE notified us that we had regained compliance based on a calculation of the Company’s average closing share price for the 30 trading days ended October 31, 2024, which reflected an average closing share price above the NYSE’s $1.00 minimum requirement.
Evolving and scaling our business and operations places increased demands on our management as well as our financial and operational resources to: • effectively manage organizational change; • design scalable processes; • accelerate and/or refocus research and development activities; • expand supply chain and distribution capacity, and ultimately expand manufacturing capacity; • increase sales and marketing efforts; • scale and manage our professional services; • broaden customer-support and services capabilities; • maintain or increase operational efficiencies; • scale support operations in a cost-effective manner; • implement appropriate operational and financial systems; and • maintain effective financial disclosure controls and procedures. 30 We may not be able to scale our products and services as necessary to meet market demand.
Evolving and scaling our business and operations places increased demands on our management as well as our financial and operational resources to: • effectively manage organizational change; • design scalable processes; • accelerate and/or refocus research and development activities; • expand supply chain and distribution capacity, and ultimately expand manufacturing capacity; • increase sales and marketing efforts; • scale and manage our professional services; • broaden customer-support and services capabilities; • maintain or increase operational efficiencies; • scale support operations in a cost-effective manner; • implement appropriate operational and financial systems; and • maintain effective financial disclosure controls and procedures.
If any of our current or potential partners elect to not utilize our products or services, or reduce their current or potential use of our technology in favor of competing products, we may have to change our product strategies, which could have a material and adverse effect on our business, operating results and financial condition.
If any of our current or potential partners elect to not utilize our products or services, or reduce their current or potential use of our technology in favor of competing products, we may have to change our product strategies, which could have a material and adverse effect on our business, operating results and financial condition. 29 Currency exchange rate fluctuations may negatively affect our results of operations.
Currency exchange rate fluctuations may negatively affect our results of operations. Our revenues are denominated in U.S. dollars, while some of our operating expenses, including relating to employees, are incurred in Canadian dollars. As a result, our results of operations will be adversely impacted by an increase in the value of the Canadian dollar relative to the U.S. dollar.
Our revenues are denominated in U.S. dollars, while some of our operating expenses, including relating to employees, are incurred in Canadian dollars. As a result, our results of operations will be adversely impacted by an increase in the value of the Canadian dollar relative to the U.S. dollar.
On October 24, 2023, we notified the NYSE that we intend to cure the stock price deficiency and to return to compliance with the NYSE continued listing standard.
On October 4, 2024, we notified the NYSE that we intend to cure the stock price deficiency and to return to compliance with the NYSE continued listing standard.
We are implementing measures designed to improve our internal control over financial reporting to remediate this material weakness including adding additional qualified accounting personnel with experience with complex GAAP and SEC rules, engaging consultants to assist with the financial statement close process, and segregating duties among accounting personnel to enable adequate review controls.
We have implemented measures designed to improve our internal control over financial reporting to remediate future material weaknesses including adding additional qualified accounting personnel with experience with complex GAAP and SEC rules, engaging consultants to assist with the financial statement close process, and segregating duties among accounting personnel to enable adequate review controls.
For example, investments that result in “control” of a “U.S. business” by a “foreign person” (in each case, as such terms are defined in 31 C.F.R. Part 800) always are subject to CFIUS jurisdiction.
For example, investments that result in “control” of a “U.S. business” by a “foreign person” (in each case, as such terms are defined in 31 C.F.R. Part 800) that pose a national security concern may be subject to CFIUS jurisdiction.
If we cannot provide reliable financial reports or prevent fraud, our business and results of operations could be harmed, investors could lose confidence in our reported financial information and we could be subject to sanctions or investigations by the NYSE, the SEC or other regulatory authorities. We have identified a material weakness in our internal control over financial reporting.
If we cannot provide reliable financial reports or prevent fraud, our business and results of operations could be harmed, investors could lose confidence in our reported financial information and we could be subject to sanctions or investigations by the NYSE, the SEC or other regulatory authorities.
A failure to implement and maintain effective internal control over financial reporting could result in errors in our consolidated financial statements that could result in a restatement of our financial statements, and could cause us to fail to meet our reporting obligations, any of which could diminish investor confidence in us and cause a decline in the price of our common stock.
As of December 31, 2024, the material weakness has been remediated, however, a failure to implement and maintain effective internal control over financial reporting could result in errors in our consolidated financial statements that could result in a restatement of our financial statements, and could cause us to fail to meet our reporting obligations, any of which could diminish investor confidence in us and cause a decline in the price of our common stock.
Litigation of this type could result in substantial costs and diversion of management’s attention and resources, which could have a material adverse effect on D-Wave’s business, financial condition, and results of operations. Any adverse determination in litigation could also subject D-Wave to significant liabilities.
Litigation of this type could result in substantial costs and diversion of management’s attention and resources, which could have a material adverse effect on D-Wave’s business, financial condition, and results of operations.
In addition, any changes in service levels from our hosting provider may adversely affect our ability to meet our customers’ requirements. 32 Any of the above circumstances or events may harm our reputation, cause customers to stop using our products, impair our ability to attract new customers and increase revenue from existing customers, subject us to financial penalties and liabilities under our service level agreements and otherwise harm our revenue, business, results of operations and financial condition.
Any of the above circumstances or events may harm our reputation, cause customers to stop using our products, impair our ability to attract new customers and increase revenue from existing customers, subject us to financial penalties and liabilities under our service level agreements and otherwise harm our revenue, business, results of operations and financial condition.
Our operations, business, customers and partners could be adversely affected by climate change. The physical risks of climate change include rising average global temperatures, rising sea levels and an increase in the frequency and severity of extreme weather events and natural disasters.
There are increasing and rapidly evolving concerns over the risks of climate change and related environmental sustainability matters. Our operations, business, customers and partners could be adversely affected by climate change. The physical risks of climate change include rising average global temperatures, rising sea levels and an increase in the frequency and severity of extreme weather events and natural disasters.
Our success depends, in significant part, on our ability to engage our customers through all phases of our engagement model (discovery, proof of concept, pilot deployment and full production) and collaboratively work with our customers and demonstrate the value of our technology. This engagement model was introduced in early 2021 and is a shift from our historical sales model.
Our success depends, in significant part, on our ability to engage our customers through all phases of our engagement model (discovery, proof of concept, pilot deployment and full production) and collaboratively work with our customers and demonstrate the value of our technology.
We rely on our brand and trademarks to identify our platform and to differentiate our platform and services from those of our competitors, and if we are unable to adequately protect our trademarks third parties may use our brand names or trademarks similar to ours in a manner that may cause confusion in the market, which could decrease the value of our brand and adversely affect our business and competitive advantages. 44 Policing unauthorized use of our intellectual property and misappropriation of our technology and trade secrets is difficult and we may not always be aware of such unauthorized use or misappropriation.
We rely on our brand and trademarks to identify our platform and to differentiate our platform and services from those of our competitors, and if we are unable to adequately protect our trademarks third parties may use our brand names or trademarks similar to ours in a manner that may cause confusion in the market, which could decrease the value of our brand and adversely affect our business and competitive advantages.
To the extent our technology is deemed a matter of national security, our business could be subject to increased restrictions or regulations, our customer and supplier base may be restricted, our TAM may be reduced and our business, operating results and financial condition could be harmed.
To the extent our technology is deemed a matter of national security, our business could be subject to increased restrictions or regulations, our customer and supplier base may be restricted, our TAM may be reduced and our business, operating results and financial condition could be harmed. 42 We are subject to requirements relating to environmental and safety regulations which could adversely affect our business, results of operation and reputation.
To the extent that we do not effectively address capacity constraints, either through our hosting provider or an alternative provider of cloud infrastructure, our business, results of operations and financial condition may be adversely affected.
To the extent that we do not effectively address capacity constraints, either through our hosting provider or an alternative provider of cloud infrastructure, our business, results of operations and financial condition may be adversely affected. In addition, any changes in service levels from our hosting provider may adversely affect our ability to meet our customers’ requirements.
This was the second time in 2023 that the Company was notified of its non-compliance with NYSE listing requirements due to the average closing price of its Common Shares falling below the $1.00 threshold.
This was the first time in 2024 and the third time since the Company became a publicly traded company that the Company was notified of its non-compliance with NYSE listing requirements due to the average closing price of its Common Shares falling below the $1.00 threshold.
If we are unable to continue to meet customer demands or to achieve more widespread market acceptance of relevant solutions in general or our platform in particular, our business operations, financial results, and growth prospects will be materially and adversely affected.
If we are unable to continue to meet customer demands or to achieve more widespread market acceptance of relevant solutions in general or our platform in particular, our business operations, financial results, and growth prospects will be materially and adversely affected. 36 Contracts with government entities subject us to risks, including early termination, audits, investigations, sanctions and penalties.
The scalability and flexibility of our platform depends on the functionality of our technology and network infrastructure and its ability to handle increased traffic and demand for processing and bandwidth.
The growth we have experienced in our business places significant demands on our operational infrastructure. The scalability and flexibility of our platform depends on the functionality of our technology and network infrastructure and its ability to handle increased traffic and demand for processing and bandwidth.
Any significant change to applicable laws, regulations or industry practices regarding the collection, use, retention, security or disclosure of such content, or regarding the manner in which the express or implied consent of such persons for the collection, use, retention or disclosure of such content is obtained, could increase our costs and require us to modify our services and features, possibly in a material manner, which we may be unable to complete and may limit our ability to store and process user data or develop new services and features.
Any significant change to applicable privacy, data protection, and/or information security laws, regulations or industry practices could increase our costs and require us to modify our services and features, possibly in a material manner, which we may be unable to complete and may limit our ability to store and process user data or develop new services and features.
Changes in tax laws or regulations that are applied adversely to us may materially adversely affect our business, prospects, financial condition and operating results.
Outcomes from these audits could have an adverse effect on our operating results and financial condition. 51 Changes in tax laws or regulations that are applied adversely to us may materially adversely affect our business, prospects, financial condition and operating results.
Whether CFIUS has jurisdiction to review an acquisition or investment transaction depends on, among other factors, the nature and structure of the transaction, including the level of beneficial ownership interest and the nature of any information or governance rights involved.
Whether CFIUS has jurisdiction to review an acquisition or investment transaction depends on, among other factors, the nature and structure of the transaction, the nature of the U.S. business, and the foreign person and its level of interest or governance rights.
Securities and industry analysts currently publishing research on D-Wave Quantum may not continue to, and additional securities and industry analysts may never, publish research on D-Wave Quantum. If the number of securities or industry analysts is reduced or coverage is eliminated, D-Wave Quantum’s share price and trading volume would likely be negatively impacted.
If the number of securities or industry analysts is reduced or coverage is eliminated, D-Wave Quantum’s share price and trading volume would likely be negatively impacted.
System failures, interruptions, delays in service, catastrophic events, inadequate infrastructure and resulting interruptions in the availability or functionality of our products and services could harm our reputation or subject us to significant liability, and adversely affect our business, financial condition and operating results. 38 Our brand, reputation and ability to attract, retain and serve our customers are also dependent upon the reliable performance of our platform, including our underlying technical infrastructure.
System failures, interruptions, delays in service, catastrophic events, inadequate infrastructure and resulting interruptions in the availability or functionality of our products and services could harm our reputation or subject us to significant liability, and adversely affect our business, financial condition and operating results.
Acquisitions and investments may also result in dilutive issuances of equity securities, which could adversely affect our share price, or result in issuances of securities with superior rights and preferences to our common shares or the incurrence of debt with restrictive covenants that limit our future uses of capital in pursuit of business opportunities.
Acquisitions and investments may also result in dilutive issuances of equity securities, which could adversely affect our share price, or result in issuances of securities with superior rights and preferences to our common shares or the incurrence of debt with restrictive covenants that limit our future uses of capital in pursuit of business opportunities. 38 We may not be able to identify acquisition or investment opportunities that meet our strategic objectives, or to the extent such opportunities are identified, we may not be able to negotiate terms with respect to the acquisition or investment that are acceptable to us.
In connection with the preparation and audit of D-Wave's financial statements as of and for the fiscal year ended December 31, 2023 and 2022, material weaknesses were identified in our internal control over financial reporting.
We may identify additional material weaknesses in our internal controls over financing reporting which we may not be able to remedy in a timely manner. In connection with the preparation and audit of D-Wave's financial statements as of and for the fiscal year ended December 31, 2023 and 2022, material weaknesses were identified in our internal control over financial reporting.
Investors may find our securities less attractive because we will rely on these exemptions, which may result in a less active trading market for the Common Shares and the price of the Common Shares may be more volatile. 54 In the future, we may become a “controlled company” within the meaning of the rules of the NYSE.
Investors may find our securities less attractive because we will rely on these exemptions, which may result in a less active trading market for the Common Shares and the price of the Common Shares may be more volatile. Item 1B. Unresolved Staff Comments Not Applicable.
In addition, some of our customers require us to notify them of data security breaches. Security compromises experienced by our competitors, by our customers or by us may lead to public disclosures, which may lead to widespread negative publicity.
Many governments have enacted laws requiring companies to provide notice of data security incidents involving certain types of personal data. In addition, some of our customers require us to notify them of data security breaches. Security compromises experienced by our competitors, by our customers or by us may lead to public disclosures, which may lead to widespread negative publicity.
Our business could be harmed if we fail to manage growth effectively. If we fail to manage growth effectively, our business, results of operations and financial condition could be harmed. We anticipate that a period of significant expansion will be required to address potential growth. This expansion will place a significant strain on our management, operational and financial resources.
We anticipate that a period of significant expansion will be required to address potential growth. This expansion will place a significant strain on our management, operational and financial resources. Expansion will require significant cash investments and management resources.
In addition, we may be subject to audits of our income, sales and other taxes by U.S. federal, state, and local and foreign taxing authorities. Outcomes from these audits could have an adverse effect on our operating results and financial condition.
In addition, we may be subject to audits of our income, sales and other taxes by U.S. federal, state, and local and foreign taxing authorities.
If we fail to remedy this weakness or maintain an effective system of internal controls, then our ability to produce timely and accurate financial statements or comply with applicable regulations could be adversely affected. We may identify additional material weaknesses in our internal controls over financing reporting which we may not be able to remedy in a timely manner.
If we experience additional material weaknesses or deficiencies in the future or otherwise fail to maintain an effective system of internal controls, then our ability to produce timely and accurate financial statements or comply with applicable regulations could be adversely affected.
Unfavorable conditions in our industry or the global economy, including uncertain geopolitical conditions such as inflation, recessions and war, among others, could limit our ability to grow our business and negatively affect our results of operations.
While we have implemented measures intended to prevent or mitigate such interruptions, such measures may not be successful in preventing service interruptions in the future. 39 Unfavorable conditions in our industry or the global economy, including uncertain geopolitical conditions such as inflation, recessions and war, among others, could limit our ability to grow our business and negatively affect our results of operations.
The successful assertion of one or more large claims against us that exceed available insurance coverage, or the occurrence of changes in our insurance policies, including premium increases or the imposition of large deductible or co-insurance requirements, would harm our business. 36 Many governments have enacted laws requiring companies to provide notice of data security incidents involving certain types of personal data.
The successful assertion of one or more large claims against us that exceed available insurance coverage, or the occurrence of changes in our insurance policies, including premium increases or the imposition of large deductible or co-insurance requirements, would harm our business.
Despite efforts to create security barriers to such threats, it is not feasible, as a practical matter, for us to entirely mitigate these risks.
Despite efforts to create security barriers to such threats, it is not feasible, as a practical matter, for us to entirely mitigate these risks, as the techniques used to obtain unauthorized access to or compromise of our systems change frequently.
We may be unsuccessful in navigating such risks, which could have a material adverse impact on our business operations, financial results and growth plans. If we engage in acquisitions, divestitures, strategic investments or strategic partnerships and fail to achieve favorable results, our business, financial condition and operating results could be harmed.
We may be unsuccessful in navigating such risks, which could have a material adverse impact on our business operations, financial results and growth plans.
These unpaid or paid efforts may not attract a sufficient volume and quality of traffic to our cloud-based services and, in the future, we may be required to increase our marketing spend to achieve our volume and quality of traffic targets.
These unpaid or paid efforts may not attract a sufficient volume and quality of traffic to our cloud-based services and, in the future, we may be required to increase our marketing spend to achieve our volume and quality of traffic targets. 28 We depend on our ability to retain existing senior management and other key employees and qualified, skilled personnel and to attract new individuals to fill these roles as needed.
The impact of these requirements could also make it more difficult for us to attract and retain qualified persons to serve on our board of directors, our board committees or as executive officers. 49 Risks Related to Ownership of the Common Shares D-Wave will have broad discretion in the use of its cash, cash equivalents and investments, and it may invest or spend such amounts in ways with which you may not agree or in ways which may not yield a return.
Risks Related to Ownership of the Common Shares D-Wave will have broad discretion in the use of its cash, cash equivalents and investments, and it may invest or spend such amounts in ways with which you may not agree or in ways which may not yield a return.
Failure to satisfy these or any other conditions in the Term Loan could prevent us from receiving the available funds under the third tranche, which would negatively impact our financial condition. 27 If we do not adequately fund our research and development efforts or use research and development teams effectively or build a sufficient number of annealing quantum computer production systems, we may not be able to achieve our technological goals, build sufficient systems, meet customer and market demand, or compete effectively and our business and operating results may be harmed.
If we do not adequately fund our research and development efforts or use research and development teams effectively or build a sufficient number of annealing quantum computer production systems, we may not be able to achieve our technological goals, build sufficient systems, meet customer and market demand, or compete effectively and our business and operating results may be harmed.
Alternatively, if a court were to find the choice of forum provision contained in the D-Wave Quantum Charter to be inapplicable or unenforceable in an action, D-Wave Quantum may incur additional costs associated with resolving such action in other jurisdictions, which could harm D-Wave Quantum’s business, results of operations, and financial condition.
Alternatively, if a court were to find the choice of forum provision contained in the D-Wave Quantum Charter to be inapplicable or unenforceable in an action, D-Wave Quantum may incur additional costs associated with resolving such action in other jurisdictions, which could harm D-Wave Quantum’s business, results of operations, and financial condition. 50 Because D-Wave Quantum has no current plans to pay cash dividends on Common Shares for the foreseeable future, you may not receive any return on investment unless you sell Common Shares for a price greater than that which you paid for it.
The United States, Canada, the European Union, the United Kingdom and other jurisdictions in which we operate are increasingly adopting or revising privacy, information security and data protection laws and regulations that could have a significant impact on our current and planned privacy, data protection and information security-related practices, our collection, use, sharing, retention and safeguarding of customer, consumer and/or employee information, as well as any other third-party information we receive, and some of our current or planned business activities.
We are subject to an increasingly complex, and sometimes conflicting, set of legal obligations related to privacy, data protection, information security in the United States, Europe, Canada, and other countries where we do business, and there will continue to be new proposed laws and regulations and changes to existing legal frameworks that could have a significant impact on our current and planned privacy, data protection and information security-related practices, our collection, use, sharing, retention and safeguarding of customer, consumer, employee, and other third-party information we receive, as well as some of our current or planned business activities.
Investments that involve the acquisition of, or investment in, a U.S. business by a non-U.S. investor may be subject to U.S. laws that regulate foreign investments in U.S. businesses and access by foreign persons to technology developed and produced in the United States.
Future investments in D-Wave Quantum Common Shares may be subject to U.S. foreign investment regulations. Investments that involve the acquisition of, or investment in, a U.S. business by a non-U.S. investor may be subject to U.S. laws that regulate foreign investments in certain U.S. businesses.
Furthermore, patent applications filed in foreign countries are subject to laws, rules and procedures that differ from those of the United States, and thus we cannot be certain that foreign patent applications related to issued United States patents will be issued.
Furthermore, patent applications filed in foreign countries are subject to laws, rules and procedures that differ from those of the United States, and thus we cannot be certain that foreign patent applications related to issued United States patents will be issued. 44 Even if our patent applications succeed and we are issued patents in accordance with them, it is still uncertain whether these patents will be contested, circumvented, invalidated or limited in scope in the future.
We may in the future make acquisitions, divestitures or certain investments. Any transactions that we enter into could be material to our financial condition and results of operations. The process of acquiring and integrating another company or technology could create unforeseen operating difficulties and expenditures.
If we engage in acquisitions, divestitures, strategic investments or strategic partnerships and fail to achieve favorable results, our business, financial condition and operating results could be harmed. We may in the future make acquisitions, divestitures or certain investments. Any transactions that we enter into could be material to our financial condition and results of operations.
If our products or services fail to perform as expected, customers may delay orders or terminate further orders, each of which could adversely affect our sales and brand and could adversely affect our business, prospects and results of operations.
If our products or services fail to perform as expected, customers may delay orders or terminate further orders, each of which could adversely affect our sales and brand and could adversely affect our business, prospects and results of operations. 30 If we cannot evolve and scale our business and operations effectively, we may not be able to execute our business strategies in a cost-effective manner and our business, financial condition, profitability and results of operations could be adversely affected.
See “Our products and services are dependent upon our relationship with third-party providers and any disruption of or interference with our use of such third-party providers would adversely affect our business, results of operations and financial condition. ” Scaling our business is heavily dependent on our ability to build and maintain relationships with consulting and service partners and assist them in establishing or expanding their business by developing solutions that utilize our products and services.
Scaling our business is heavily dependent on our ability to build and maintain relationships with consulting and service partners and assist them in establishing or expanding their business by developing solutions that utilize our products and services.
Our operations rely on information technology systems for the use, storage and transmission of sensitive and confidential information with respect to our customers, our customers’ customers, our employees and other third parties.
Our operations rely on information technology systems for the use, storage and transmission of sensitive and confidential information with respect to our customers, our customers’ customers, our employees and other third parties. Cyberattacks and other malicious internet-based activity continue to increase, and cloud-based platform providers of products and services have been and are expected to continue to be targeted.
It is possible that we will be required to expand our employee base and hire additional employees to support our operations as a public company, which will increase our operating costs in future periods. 46 If we are unable for any reason to meet the continued listing requirements of the NYSE, such action or inaction could result in a delisting of our securities.
It is possible that we will be required to expand our employee base and hire additional employees to support our operations as a public company, which will increase our operating costs in future periods.
As of December 31, 2023, there were 17,916,609 Warrants outstanding, with each Warrant exercisable for 1.4541326 Common Shares, subject to adjustment, at $11.50 per Common Share. Such Warrants, if exercised, would increase the number of issued and outstanding Common Shares and be dilutive to the Common Shares then outstanding.
As of December 31, 2024, there were 17,916,462 Warrants outstanding, with each Warrant exercisable for 1.4541326 Common Shares, subject to adjustment, at $11.50 per Warrant or approximately $7.91 per Common Share.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeSpecifically, the board of directors’ audit committee, is responsible for overseeing management's risk assessment and risk management policies, which include management of cybersecurity risk management processes. Our Chief Financial Officer and the head of our IT department are primarily responsible for managing our cybersecurity risks, mitigation strategies and responses to any such issues that may arise.
Biggest changeOur Chief Financial Officer and the head of our IT department, both of whom are primarily responsible for managing our cybersecurity risks, mitigation strategies and responses to any such issues that may arise, collaborate with the Cybersecurity Committee and report to the entire Board on a quarterly basis, or more frequently as needed.
For additional information regarding risks from cybersecurity threats, please refer to Item 1A, “Risk Factors,” in this annual report on Form 10-K. 56 Governance Our board of directors addresses the Company’s cybersecurity risk management as part of its general oversight function.
For additional information regarding risks from cybersecurity threats, please refer to Item 1A, “Risk Factors,” in this Form 10-K. Governance Our board of directors addresses the Company’s cybersecurity risk management as part of its general oversight function.
Similarly, our policies regarding cybersecurity and IT systems are relevant for SOC 2 Type 2 compliance, but also apply to everyone in the entire organization. We have not encountered cybersecurity challenges that have materially impaired our operations or financial standing.
Similarly, our policies regarding cybersecurity and IT systems are relevant for SOC 2 Type 2 compliance, but also apply to everyone in the entire organization. We have not currently identified any cybersecurity challenges that have materially impaired our operations or financial standing.
We enlist third-party service providers to support us in conducting information security reviews of our infrastructure, and the evaluation of our company policies. These providers furnish comprehensive reports that delineate potential risks, categorized by criticality and associated level of effort.
We enlist third-party service providers to support us in conducting information security reviews of our infrastructure, and the evaluation of our company policies. These providers undertake comprehensive evaluations that delineate potential risks, categorized by criticality and associated level of effort.
A partnership exists between these aforementioned individuals and departments so that identified issues are addressed in a timely manner and incidents are escalated to the appropriate parties as required.
A partnership exists between these aforementioned individuals and departments so that identified issues are addressed in a timely manner and incidents are escalated to the appropriate parties as required. The Company’s incident response plan is tested and adjusted regularly or in response to a particular incident or significant threats where appropriate.
Our Chief Financial Officer oversees the Company’s IT department and has extensive experience in managing IT organizations and securing cybersecurity insurance coverages. The head of our IT department drives our strategic IT initiatives and cybersecurity risks assessments, drawing upon over two decades of enterprise technology management expertise.
The head of our IT department drives our strategic IT initiatives and cybersecurity risks assessments, drawing upon over two decades of enterprise technology management expertise. 54 Our Chief Financial Officer and the head of our IT department oversee our cybersecurity policies and processes, including those described above.
Following these risk assessments, we re-examine our systems and processes to ensure that reasonable safeguards are in place to minimize identified risks and address any issues that arise. The head of our IT department, who reports to our Chief Financial Officer, works with management to continuously evaluate and address cybersecurity risks in alignment with our business objectives and operational needs.
Following these risk assessments, we re-examine our systems and processes to ensure that reasonable safeguards are in place to minimize identified risks and address any issues that arise.
Our Chief Financial Officer and the head of our IT department oversee our cybersecurity policies and processes, including those described above. The Company’s overall risks and assessments are monitored by a cross functional team composed of members of senior management, security, legal, information technology and financial reporting.
The Company’s overall risks and assessments are monitored by a cross functional team composed of members of senior management, security, legal, information technology and financial reporting, which evaluates risks associated with assets such as infrastructure, software, people, processes, and data.
As part of our overall risk management system, we monitor and test our safeguards and train our employees on these safeguards, in collaboration with IT and management. Personnel at all levels receive regular mandatory training on our cybersecurity policies and practices.
The head of our IT department, who reports to our Chief Financial Officer, works with management to continuously evaluate and address cybersecurity risks in alignment with our business objectives and operational needs. 53 As part of our overall risk management system, we monitor and test our safeguards and train our employees on these safeguards, in collaboration with IT and management.
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Personnel at all levels receive regular mandatory training on our cybersecurity policies and practices, no less than once per quarter. Key safeguards include, but are not limited to, access controls, authentication, third-party security obligations, and other technical and organizational measures.
Added
In addition, the Company maintains policies and procedures for backups, business continuity, and disaster recovery, and regularly tests its policies and procedures to ensure they allow for timely recovery and restoration of backups and the availability of critical resources..
Added
T he Company conducts due diligence prior to engaging a vendor to provide services and requires the vendor to contractually commit to appropriate data protection measures, depending on the nature of the services provided. As part of the software request and vendor evaluation process, we ensure there is a secure method for transmitting data.
Added
This includes verifying that encryption is in place both in transit and at rest. Additionally, we require vendors to provide a SOC 2 Type 2 report, which we review to confirm that security controls have been audited and validated. These measures help ensure that third-party vendors maintain appropriate safeguards for handling and sharing confidential information.
Added
While the board of directors’ audit committee is responsible for overseeing management's risk assessment and risk management policies generally, to enhance oversight and governance in this area, the board of directors has recently established a standing committee (the “Cybersecurity Committee”), that will advise on cybersecurity matters and provide strategic guidance and direction for our cybersecurity program.
Added
The Cybersecurity Committee will convene as necessary to address critical or emerging cybersecurity concerns and to ensure alignment on approach.
Added
In the event of an incident, the Company has developed an incident response plan, which sets forth the steps to be followed from incident detection and assessment to mitigation, recovery and notification and reporting, including notifying functional areas (e.g. legal), as well as senior leadership and the Board, as appropriate.
Added
Our Chief Financial Officer oversees the Company’s IT department and has extensive experience in managing IT organizations and securing cybersecurity insurance coverages, which we currently maintain.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeOur in-house fabrication activities are performed in a facility in Palo Alto, California, where we lease approximately 6,000 square feet of space under an agreement that expires in June, 2025. We believe our current and planned facilities are adequate for the foreseeable future.
Biggest changeOur in-house fabrication activities are performed in a facility in Palo Alto, California, where we lease approximately 6,000 square feet of space under an agreement that expires in June 2026. We believe our current and planned facilities are adequate for the foreseeable future.
We also lease approximately 7,000 square feet of space in Richmond, B.C., outside of Vancouver, under an agreement that expires in December 2024. That facility is used to develop and manufacture proprietary superconducting circuit boards for internal consumption, and for customer sales.
We also lease approximately 7,000 square feet of space in Richmond, B.C., outside of Vancouver, under an agreement that expires in December 2028. That facility is used to develop and manufacture proprietary superconducting circuit boards for internal consumption, and for customer sales.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeMine Safety Disclosures Not applicable. 57 Part II
Biggest changeMine Safety Disclosures Not applicable. 55 Part II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeAs of December 31, 2023, we have sold an aggregate number of 44,026,644 Common Shares to Lincoln Park pursuant to the Purchase Agreement (excluding the Common Shares paid in respect of the Commitment Fee) for aggregate consideration of $67.9 million. Item 6. [Reserved]
Biggest changeUnregistered Sales of Equity Securities During the year ended December 31, 2024, we have sold an aggregate number of 34,860,416 Common Shares to Lincoln Park pursuant to the Purchase Agreement (excluding the Common Shares paid in respect of the Commitment Fee) for aggregate consideration of $44.3 million.
Any future determination to pay dividends will be made at the discretion of our board of directors, subject to applicable laws and will depend upon, among other factors, our results of operations, financial condition, contractual restrictions and capital requirements. Issuer Purchases of Equity Securities None. Performance Graph Not applicable.
Any future determination to pay dividends will be made at the discretion of our board of directors, subject to applicable laws and will depend upon, among other factors, our results of operations, financial condition, contractual restrictions and capital requirements. Issuer Purchases of Equity Securities None. Stock Performance Graph Not applicable.
Unregistered Sales of Equity Securities There were no unregistered sales of equity securities which have not been previously disclosed in a Quarterly Report on Form 10-Q or a Current Report on Form 8-K during the fiscal year ended December 31, 2023.
There were no other unregistered sales of equity securities which have not been previously disclosed in a Quarterly Report on Form 10-Q or a Current Report on Form 8-K during the fiscal year ended December 31, 2024. Item 6. [Reserved] 56
Holders of Record On March 28, 2024, the last reported sales prices of the Common Shares and Warrants were $2.10 and $0.22, respectively. As of March 28, 2024, there were approximately 111 holders of record of our Common Shares, approximately 32 holders of record of our Exchangeable Shares and 1 holders of record of our Warrants.
Holders of Record On March 12, 2025, the last reported sales prices of the Common Shares and Warrants were $5.82 and $2.44, respectively. As of March 12, 2025, there were approximately 89 holders of record of our Common Shares, approximately 23 holders of record of our Exchangeable Shares and 1 holders of record of our Warrants.
Added
The issuances under the Lincoln Park Purchase Agreement were exempt from registration under the Securities Act in reliance on Section 4(a)(2) of the Securities Act, including Regulation D and Rule 506 promulgated thereunder, as transactions by an issuer not involving a public offering.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeResults of Operations The following table sets forth our results of operations for the periods indicated (in thousands): Year ended December 31, (In thousands, except share and per share data) 2023 2022 Revenue $ 8,758 $ 7,173 Cost of revenue 4,136 2,923 Total gross profit 4,622 4,250 Operating expenses: Research and development 37,878 32,101 General and administrative 37,014 21,539 Sales and marketing 10,276 10,068 Total operating expenses 85,168 63,708 Loss from operations (80,546) (59,458) Other income (expense), net: Interest expense (37) (2,335) Change in fair value of Term Loan 640 — Term Loan debt issuance costs (2,118) — Change in fair value of warrant liabilities 262 6,173 Lincoln Park Purchase Agreement issuance costs — (629) Other income, net (916) 2,547 Total other income, net (2,169) 5,756 Net loss $ (82,715) $ (53,702) Foreign currency translation adjustment, net of tax (115) 41 Net comprehensive loss $ (82,830) $ (53,661) Comparison of the Year Ended December 31, 2023 and 2022 Revenue Revenue increased by $1.6 million, or 22%, to $8.8 million for the year ended December 31, 2023 as compared to $7.2 million for the year ended December 31, 2022, with the increase due primarily to an increase of $2.3 million in professional services revenue, primarily driven by an increase in projects that enable our customers to identify and implement applications that leverage our QCaaS cloud platform, offset by a decrease in QCaaS revenue of $0.7 million, due to non-renewal for several customer contracts that were partially replaced with new customer contracts.
Biggest changeResults of Operations The following table sets forth our results of operations for the periods indicated (in thousands): Year Ended December 31, Variance (In thousands, except share and per share data) 2024 2023 Amount % Revenue $ 8,827 $ 8,758 $ 69 1 % Cost of revenue 3,264 4,136 (872) (21) % Total gross profit 5,563 4,622 941 20 % Operating expenses: Research and development 35,300 37,878 (2,578) (7) % General and administrative 32,422 37,014 (4,592) (12) % Sales and marketing 15,064 10,276 4,788 47 % Total operating expenses 82,786 85,168 (2,382) (3) % Loss from operations (77,223) (80,546) 3,323 (4) % Other income (expense), net: Interest expense (3,897) (37) (3,860) 10,432 % Change in fair value of Term Loan (645) 640 (1,285) (201) % Term Loan debt issuance costs — (2,118) 2,118 (100) % Gain on investment in marketable securities 1,495 — 1,495 100% Change in fair value of warrant liabilities (68,245) 262 (68,507) (26,148) % Other income (expense), net 4,636 (916) 5,552 (606) % Total other income (expense), net (66,656) (2,169) (64,487) 2,973 % Net loss $ (143,879) $ (82,715) $ (61,164) 74 % Foreign currency translation adjustment 7 (115) 122 (106) % Net comprehensive loss $ (143,872) $ (82,830) $ (61,042) 74 % Revenue Revenue for the year ended December 31, 2024 remained consistent to the prior year.
Historically, we have developed our own annealing superconducting quantum computer and associated software, and our current generation quantum system is the D-Wave Advantage TM .
Historically, we have developed our own annealing superconducting quantum computer and associated software, and our current generation quantum system is the D-Wave Advantage TM system.
In instances where SSP is not directly observable, such as when we don't sell the product or service separately, we determine the SSP by considering its overall pricing objectives and market conditions, including cost plus a reasonable margin.
In instances where SSP is not directly observable, such as when we don't sell the product or service separately, we determine the SSP by considering overall pricing objectives and market conditions, including cost plus a reasonable margin.
Macroeconomic and Business Environment Unfavorable conditions in the economy in the United States, Canada and abroad, including conditions resulting from changes in gross domestic product growth, financial and credit market fluctuations, banking collapses and related uncertainty, international trade relations, political turmoil, natural catastrophes, outbreaks of contagious diseases, warfare and terrorist attacks on the United States, Europe or elsewhere, including military actions affecting Russia, Ukraine, Israel or elsewhere, could cause a decrease in business investments on our products and negatively affect the growth of our business and our results of operations.
Macroeconomic Environment Unfavorable conditions in the economy in the United States, Canada and abroad, including conditions resulting from changes in inflationary pressure, gross domestic product growth, financial and credit market fluctuations, banking collapses and related uncertainty, international trade relations, political turmoil, natural catastrophes, outbreaks of contagious diseases, warfare and terrorist attacks on the United States, Europe or elsewhere, including military actions affecting Russia, Ukraine, Israel or elsewhere, could cause a decrease in business investments on our products and negatively affect the growth of our business and our results of operations.
Our performance obligations are as follows: • Subscription sales to access our QCaaS cloud platform; • Professional services related to the development and implementation of quantum computing applications; • Quantum computing application training; • Application support and maintenance; and • Printed circuit boards.
Our performance obligations are as follows: • Subscription sales to access our QCaaS cloud platform; • Professional services related to the development and implementation of quantum computing applications; • Quantum computing systems; • Quantum computing application training; • Application support and maintenance; and • Printed circuit boards.
See Note 9 - Leases to the accompanying consolidated financial statements for further discussion of the nature and timing of cash obligations due under these leases. Critical Accounting Estimates Our consolidated financial statements included in this Form 10-K have been prepared in accordance with accounting principles generally accepted in the United States.
See Note 8 - Leases to the accompanying consolidated financial statements for further discussion of the nature and timing of cash obligations due under these leases. Critical Accounting Estimates Our consolidated financial statements included in this Form 10-K have been prepared in accordance with accounting principles generally accepted in the United States.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk Not applicable to Smaller Reporting Companies. 68
Item 7A. Quantitative and Qualitative Disclosures About Market Risk Not applicable to Smaller Reporting Companies.
Our business model is focused primarily on generating revenue from providing customers access to our quantum computing systems via the cloud in the form of QCaaS products, and from providing professional services wherein we assist our customers in identifying and implementing quantum computing applications. We have three operating facilities, which we lease, in North America.
Our business model is focused primarily on generating revenue from providing customers access to our quantum computing systems via the cloud in the form of quantum computing as a service ("QCaaS") products, and from providing professional services wherein we assist our customers in identifying and implementing quantum computing applications. We have three operating facilities, which we lease, in North America.
We expect our research and development expenses will increase on an absolute dollar basis for the foreseeable future as we continue to invest in research and development efforts to enhance the performance of our annealing quantum computers, to complete the development of our gate model quantum computer, and to broaden the functionality, improve the reliability, availability and scalability of our QCaaS cloud platform.
We expect our research and development expenses will trend upward on an absolute dollar basis for the foreseeable future as we continue to invest in research and development efforts to enhance the performance of our annealing quantum computers, to complete the development of our gate model quantum computer, and to broaden the functionality, improve the reliability, availability and scalability of our QCaaS cloud platform.
In conjunction with the Merger, the Company and D-Wave Systems entered into a purchase agreement with Lincoln Park on June 16, 2022 (the "Purchase Agreement") which provides D-Wave the sole right, but not the obligation, to direct Lincoln Park to buy specified dollar amounts up to $150.0 million of D-Wave's common stock, par value $0.0001 per share through November 1, 2025 .
Lincoln Park Purchase Agreement In conjunction with the Merger with DPCM, the Company and D-Wave Systems entered into a purchase agreement with Lincoln Park Capital Fund, LLC on June 16, 2022 (the "Purchase Agreement") which provides D-Wave the sole right, but not the obligation, to direct Lincoln Park to buy specified dollar amounts up to $150 million of D-Wave's common stock, par value $0.0001 per share through November 1, 2025 .
We expect our cost of revenue as a percentage of total revenue to decrease over time due to a higher mix of QCaaS revenue that has a lower cost to deliver compared to professional service revenue. Operating Expenses Our operating expenses consist of research and development, general and administrative, and sales and marketing expenses.
We expect our cost of revenue as a percentage of total revenue to trend downward over time due to a higher mix of QCaaS revenue that has a lower cost to deliver compared to professional service revenue. Operating Expenses Our operating expenses consist of research and development, general and administrative, and sales and marketing expenses.
The Purchase Agreement may provide the Company and D-Wave with additional liquidity to fund the business, subject to the conditions set forth in the agreement, including volume limitations tied to periodic market prices, ownership limitations restricting Lincoln Park from owning more than 9.9% of the then total outstanding Common Shares and a floor price of $1.00 at or below which the Company may not sell to Lincoln Park any Common Shares.
The Purchase Agreement may provide the Company and D-Wave with additional liquidity to fund the business, subject to the conditions set forth in the agreement, including volume limitations tied to periodic market prices, ownership limitations restricting Lincoln Park from owning more than 9.9% of the then total outstanding share of common stock of the Company, par value $0.0001, (the "Common Shares") and a floor price of $1.00 at or below which the Company may not sell to Lincoln Park any Common Shares.
These facilities are located in Burnaby, British Columbia, Richmond, British Columbia, and Palo Alto, California. During the years ended December 31, 2023 and 2022, we generated revenue totaling $8.8 million and $7.2 million, respectively. We have incurred significant operating losses since inception.
These facilities are located in Burnaby, British Columbia, Richmond, British Columbia, and Palo Alto, California. During the years ended December 31, 2024 and 2023, we generated revenue totaling $8.8 million and $8.8 million, respectively. We have incurred significant operating losses since inception.
For the years ended December 31, 2023 and 2022, our net losses were $82.7 million and $53.7 million, respectively. We expect to continue to incur significant losses for the foreseeable future as we continue to invest in a number of research and development programs as well as a variety of go-to-market initiatives.
For the years ended December 31, 2024 and 2023, our net losses were $143.9 million and $82.7 million, respectively. We expect to continue to incur significant losses for the foreseeable future as we continue to invest in a number of research and development programs as well as a variety of go-to-market initiatives.
See Note 8 to the accompanying consolidated financial statements for additional information concerning the SIF Loan. 67 The accounting treatment for the SIF Loan considers the "sale of future revenues" guidance outlined in ASC 470-10-25.
See Note 7 to the accompanying consolidated financial statements for additional information concerning the SIF Loan. 64 The accounting treatment for the SIF Loan considers the "sale of future revenues" guidance outlined in ASC 470-10-25.
We expect our total cost of revenue to increase in absolute dollars in future periods, corresponding to our anticipated growth in revenue and necessary to support our customers and to maintain the QCaaS cloud offering, operate our quantum computing systems, and to deliver our professional services.
We expect our total cost of revenue to trend upward in absolute dollars in future periods, corresponding to our anticipated growth in revenue and the higher costs that are necessary to support our customers, maintain the QCaaS cloud offering, operate our quantum computing systems, and deliver our professional services.
We are a leader in the development and delivery of quantum computing systems, software and services, and we are the world’s first commercial supplier of quantum computers—and the only company developing both annealing quantum computers and gate-model quantum computers. During the year ended December 31, 2022, we initiated the development of a gate-model quantum computing system.
We are a leader in the development and delivery of quantum computing systems, software and services, and we are the world’s first commercial supplier of quantum computers—and the only company developing both annealing quantum computers and gate-model quantum computers.
For the years ended December 31, 2023 and 2022, the Company incurred a net loss of $82.7 million and $53.7 million, respectively, and the Company had net cash outflows from operating activities of $60.6 million and $45.2 million, respectively.
For the years ended December 31, 2024 and 2023, the Company incurred a net loss of $143.9 million and $82.7 million, respectively, and the Company had net cash outflows from operating activities of $42.6 million and $60.6 million, respectively.
Changes in the fair value of the Term Loan, other than changes associated with the Company's own credit risk, are recorded as gains or losses in the Company’s consolidated statements of operations and comprehensive loss in each reporting period.
Changes in the fair value of the Term Loan, excluding changes due to the Company's own credit risk, were recorded as gains or losses in the Company’s consolidated statements of operations and comprehensive loss in each reporting period.
Cash Flows The following table sets forth our cash flows for the periods indicated (in thousands): Year Ended December 31, 2023 2022 Net cash (used in) provided by: Operating Activities $ (60,649) $ (45,226) Investing Activities (630) (498) Financing Activities 95,636 43,265 Effect of exchange rate changes on cash and cash equivalents (115) 41 Net (decrease) increase in cash and cash equivalents $ 34,242 $ (2,418) Cash Flows Used in Operating Activities Our cash flows from operating activities are significantly affected by the growth of our business, and are primarily related to research and development, sales and marketing and general and administrative activities.
Cash Flows The following table sets forth our cash flows for the periods indicated (in thousands): Year Ended December 31, 2024 2023 Net cash provided by (used in): Operating Activities $ (42,643) $ (60,649) Investing Activities (3,141) (630) Financing Activities 182,450 95,636 Effect of exchange rate changes on cash and cash equivalents 7 (115) Net increase in cash and cash equivalents $ 136,673 $ 34,242 62 Cash Flows Used in Operating Activities Our cash flows from operating activities are significantly affected by the growth of our business, and are primarily related to research and development, sales and marketing and general and administrative activities.
For the year ended December 31, 2023 and 2022, the Company recognized gains related to catch-up method adjustments to the accrued interest portion of the loans payable, net balance of $2.9 million and $0.6 million, respectively.
For the year ended December 31, 2024 and 2023, the Company recognized gains related to catch-up method adjustments to the accrued interest portion of the loans payable, net balance of $0.2 million and $2.9 million, respectively, which are included in interest expense on the consolidated statements of operations and comprehensive loss.
Cash Flows Provided by Financing Activities 66 Net cash provided by financing activities during the year ended December 31, 2023 was $95.6 million, an increase of $52.4 million from cash provided by financing activities of $43.3 million for the year ended December 31, 2022.
Cash Flows Provided by Financing Activities Net cash provided by financing activities during the year ended December 31, 2024 was $182.5 million, an increase of $86.8 million from $95.6 million for the year ended December 31, 2023.
If in the future we receive government grants and research incentives, which have historically offset a portion of research and development costs, these costs could decrease in absolute dollars.
If in the future we receive government grants and research incentives, which have historically offset a portion of research and development costs, these costs could decrease in absolute dollars. Also, non-cash share based compensation expenses may cause downward fluctuations in these costs from time to time.
The fair value of the warrant liabilities varies primarily with the trading price of the Public Warrants listed on the New York Stock Exchange.
The fair value of the warrant liabilities varies primarily with the trading price of the Public Warrants listed on the New York Stock Exchange (see Note 2 and Note 10 to the accompanying condensed consolidated financial statements).
The increase was largely driven by the net impact of foreign exchange gains and losses. 64 Liquidity and Capital Resources Since its inception, the Company has incurred net losses and negative cash flows from operations. As of December 31, 2023, the Company had an accumulated deficit of $483.1 million.
Since its inception, the Company has incurred net losses and negative cash flows from operations. As of December 31, 2024 and 2023 , the Company had an accumulated deficit of $626.9 million and $483.1 million, respectively.
We expect that QCaaS revenue, as a percentage of total revenue, will increase due to an increasing number of QCaaS agreements being driven by the completion of professional services engagements yielding production applications that require QCaaS services, as well as by customers that choose to access our Leap cloud service without utilizing our professional services organization.
Revenue from quantum computing system is recognized at a point in time when control transfers to the customer, typically upon delivery or installation, based on the terms of the sales contract. 57 We expect that QCaaS revenue, as a percentage of total revenue, will increase due to an increasing number of QCaaS agreements being driven by the completion of professional services engagements yielding production applications that require QCaaS services, as well as by customers that choose to access our Leap TM cloud service without utilizing our professional services organization.
Following the Closing, the Common Shares and Warrants of D-Wave commenced trading on the NYSE under the ticker symbols “QBTS” and “QBTS.WT,” respectively. We are a commercial quantum computing company that provides customers with a full suite of professional services and web-based access to our superconducting quantum computer systems and integrated software environment through our cloud service, Leap TM .
Overview We are a commercial quantum computing company that provides customers with a full suite of professional services and web-based access to our superconducting quantum computer systems and integrated software environment through our Leap TM quantum cloud service.
As of December 31, 2023, the Company had cash of $41.3 million and working capital (current assets less current liabilities) of $35.8 million . Additionally, total liabilities exceeded total assets at December 31, 2023 by $24.5 million.
As of December 31, 2024 and 2023, the Company had cash and cash equivalents of $178.0 million and $41.3 million, respectively, and working capital (current assets less current liabilities) of $154.9 million and $35.8 million, respectively.
For the year ended December 31, 2023, net cash used in operating activities was $60.6 million, an increase of $15.4 million from cash used in operating activities of $45.2 million for the year ended December 31, 2022.
For the year ended December 31, 2024, net cash used in operating activities was $42.6 million, a decrease of $18.0 million from $60.6 million for the year ended December 31, 2023.
However, in future periods we expect general and administrative expenses to increase in absolute dollars as we continue to invest in more comprehensive compliance and governance functions, increased IT security and compliance, and expanded internal controls over financial reporting in accordance with the Sarbanes-Oxley Act. 61 Sales and Marketing Sales and marketing expenses consist primarily of personnel-related expenses, including salaries, benefits and stock-based compensation for personnel, direct advertising, marketing and promotional material costs, sales commission expense, consulting fees and allocated facility costs for our sales and marketing functions.
We expect our general and administrative expenses to increase in absolute dollars for the foreseeable future as we continue to invest in more comprehensive compliance and governance functions, increased IT security and compliance, and expanded internal controls over financial reporting in accordance with the Sarbanes-Oxley Act of 2002.
Cash Flows Used in Investing Activities Net cash used in investing activities during the year ended December 31, 2023 was $0.6 million, representing additions of $0.6 million in property and equipment.
Cash Flows Used in Investing Activities Net cash used in investing activities during the year ended December 31, 2024 was $3.1 million, an increase of $2.5 million from $0.6 million for the year ended December 31, 2023.
Sales and Marketing Expenses Year Ended December 31, Change (In thousands, except percentages) 2023 2022 Amount % Sales and marketing $ 10,276 $ 10,068 $ 208 2 % Sales and marketing expenses increased by $0.2 million, or 2%, to $10.3 million for the year ended December 31, 2023 as compared to $10.1 million for the year ended December 31, 2022.
Sales and Marketing Expenses Sales and marketing expenses increased by $4.8 million, or 47%, to $15.1 million for the year ended December 31, 2024 as compared to $10.3 million for the year ended December 31, 2023.
When the Company sells shares to Lincoln Park, Lincoln Park may resell all, some, or none of those Common Shares at any time or from time to time in its discretion.
When the Company sells shares to Lincoln Park, Lincoln Park may resell all, some, or none of those Common Shares at any time or from time to time in its discretion. During the year ended December 31, 2024, the Company has received $44.3 million in proceeds through the issuance of 34,860,416 Common Shares to Lincoln Park under the Purchase Agreement.
The increase was primarily due to increased personnel costs and professional fees of $2.1 million and $0.2 million, respectively, offset by decreased stock-based compensation expenses of $2.0 million.
The decrease was primarily driven by decreases in professional fees of $3.8 million, stock-based compensation expense of $3.2 million and insurance costs of $1.0 million, partially offset by an increase in personnel expenses of $2.3 million and credit loss expenses of $1.3 million.
All other capitalized terms have the meanings ascribed thereto elsewhere in this Form 10-K.
All other capitalized terms have the meanings ascribed thereto elsewhere in this Form 10-K. All dollar amounts are expressed in thousands of United States dollars (“$”), unless otherwise indicated.
The Company expects to incur additional operating losses and negative cash flows from operating activities as it continues to expand its commercial operations and research and development programs. On August 5, 2022, the Company completed a Merger with DPCM. The Company received gross proceeds of $49.0 million from the PIPE Investment (as defined below) and the DPCM trust account.
The Company expects to incur additional operating losses and negative cash flows from operating activities as it continues to expand its commercial operations and research and development programs.
There is no assurance that the floor price will not fall below $1.00 preventing the Company from being able to make sales to Lincoln Park in the future. 65 To the extent that sufficient capital is not obtained through the cash received in connection with the proceeds of the Term Loan or the issuance of Common Shares under the Purchase Agreement with Lincoln Park, management will be required to obtain additional capital through the issuance of debt and/or equity, or other arrangements.
In order for the Company to issue Common Shares under the Purchase Agreement, the Company's share price must be above the floor price of $1.00. There is no assurance that the floor price will not fall below $1.00 preventing the Company from being able to make sales to Lincoln Park in the future.
Cost of Revenue Cost of revenue increased by $1.2 million, or 41%, to $4.1 million for the year ended December 31, 2023 as compared to $2.9 million for the year ended December 31, 2022. The increase in cost of revenue was primarily driven by investments made to support a higher volume of services.
Cost of Revenue Cost of revenue decreased by $0.9 million, or 21%, to $3.3 million for the year ended December 31, 2024 as compared to $4.1 million for the year ended December 31, 2023. The decrease in cost of revenue was primarily driven by a decrease in non-cash stock-based compensation of $0.6 million and personnel costs of $0.2 million.
Change in fair value of warrant liabilities Year Ended December 31, Change (In thousands, except percentages) 2023 2022 Amount % Change in fair value of warrant liabilities $ 262 $ 6,173 $ (5,911) 100 % Change in fair value of warrant liabilities decreased by $5.9 million for the year ended December 31, 2023 as compared to $6.2 million for the year ended December 31, 2022.
Change in fair value of warrant liabilities The fair value of warrant liabilities increased by $68.5 million for the year ended December 31, 2024 as compared to a decrease of $0.3 million for the year ended December 31, 2023.
The increase was driven by investments made to scale up our ability to operate as a public company and was primarily comprised of increases in stock-based compensation expense, other personnel costs, professional fees, insurance costs, and facilities expenses of $8.7 million, $0.8 million, $4.0 million, $1.3 million, and $0.4 million, respectively.
The increase was primarily driven by increases in personnel costs of $3.3 million, stock-based compensation expense of $0.8 million, travel expenses of $0.4 million and marketing expenses of $0.3 million.
Term Loan debt issuance costs Year Ended December 31, Change (In thousands, except percentages) 2023 2022 Amount % Term Loan debt issuance costs $ (2,118) $ — $ (2,118) n/a Change in Term Loan debt issuance costs increased by $2.1 million for the year ended December 31, 2023 as compared to zero for the year ended December 31, 2022.
Term Loan debt issuance costs Term Loan debt issuance costs decreased by $2.1 million for the year ended December 31, 2024 as compared to the year ended December 31, 2023, as there were no advances on the Term Loan during the year ended December 31, 2024.
The Company opted for the fair value option for accounting the Term Loan (See Note 2 to the accompanying consolidated financial statements). Changes in the fair value of the Term Loan, excluding changes due to the Company's own credit risk, are recorded as gains or losses in the Company’s consolidated statements of operations and comprehensive loss in each reporting period.
The Company opted for the fair value option for accounting for the Term Loan (see Note 2 to the accompanying consolidated financial statements ).
Other Income (Expense), net Interest Expense Year Ended December 31, Change (In thousands, except percentages) 2023 2022 Amount % Interest expense $ (37) $ (2,335) $ 2,298 (98) % Interest expense decreased by $2.3 million, or 98%, to $37 thousand for the year ended December 31, 2023 as compared to $2.3 million for the year ended December 31, 2022.
Other Income (Expense), net Interest Expense Interest expense increased by $3.9 million, or 10,432%, to $3.9 million for the year ended December 31, 2024 as compared to $37.0 thousand for the year ended December 31, 2023. The increase is primarily due to interest expenses related to the Term Loan and the SIF Loan.
The change is primarily due to an increase in net loss of $29.0 million and an increase in net cash used to settle accounts payable of $6.2 million, offset by increases on noncash charges related to stock-based compensation of $12.8 million and decreases in noncash income related to the change in fair value of warrant liabilities of $5.9 million.
The increase in noncash items was primarily due to an increase in change in fair value of warrant liabilities of $68.5 million, partially offset by a decrease in stock-based compensation of $6.3 million, an increase in unrealized foreign exchange gain of $4.3 million, and a gain on marketable securities of $1.5 million.
In connection with the Company’s assessment of going concern considerations in accordance with Financial Accounting Standard Board’s Accounting Standards Codification (“ASC”) Topic 205-40, “ Basis of Presentation—Going Concern” , management has determined that the Company's liquidity condition raises substantial doubt about the Company’s ability to continue as a going concern, which is considered to be for a period of one year from the issuance of these financial statements.
As a result of these considerations, management has assessed the Company's liquidity under Financial Accounting Standards Board’s ASC Topic 205-40, “Basis of Presentation—Going Concern,” and determined that it has sufficient capital resources to meet its obligations for at least the next 12 months and does not anticipate any conditions that would raise substantial doubt about the Company's ability to continue as a going concern.
Other income (expense), net Year Ended December 31, Change (In thousands, except percentages) 2023 2022 Amount % Other income (expense), net $ (916) $ 2,547 $ (3,463) (136) % Other income (expense), net increased by $3.5 million or 136%, to $0.9 million for the year ended December 31, 2023 as compared to $2.5 million for the year ended December 31, 2022.
As the trading price of the Public Warrants appreciates, generally in correlation with the trading price of the Company’s common stock, the fair value of the warrant liabilities increases. 60 Other income (expense), net Other income (expense), net increased by $5.6 million or 606%, to a net other income of $4.6 million for the year ended December 31, 2024 as compared to net other expense of $0.9 million for the year ended December 31, 2023.
The decrease is due to an increase in the benefit from the catch-up method adjustment (see Note 8 to the accompanying consolidated financial statements) on the Company's SIF Loan to $2.9 million from $0.6 million in the comparable period. 63 Change in fair value of Term Loan Year Ended December 31, Change (In thousands, except percentages) 2023 2022 Amount % Change in fair value of Term Loan $ 640 $ — $ 640 n/a Change in Change in fair value of Term Loan increased by $0.6 million for the year ended December 31, 2023 as compared to zero for the year ended December 31, 2022.
Change in fair value of Term Loan The fair value of Term Loan increased by $0.6 million for the year ended December 31, 2024 as compared to a decrease of $0.6 million for the year ended December 31, 2023. On April 13, 2023, the Company entered into a Term Loan with PSPIB.
The fair value of the Term Loan varies primarily based on the market yield rate, market yield volatility, probability for an event of default and the probability of the issuance of Common Shares under the Purchase Agreement.
The fair value of the Term Loan varied primarily based on the market yield rate, market yield volatility, and the probabilities of various settlement scenarios. The Company fully repaid and extinguished the Term Loan on October 22, 2024.
On April 13, 2023 (the "Closing Date"), the Company entered into a Term Loan and Security Agreement (the "Term Loan"), by and between the Company and PSPIB Unitas Investments II Inc., ("PSPIB" or the "Lender"), a related party to the Company's largest shareholder.
("PSPIB" or the "Lender"), a related party to the Company's largest shareholder as of December 31, 2024, that was initially entered into on April 13, 2023 (the "Closing Date"). The Term Loan, outlined in Note 7 - Loans payable, net to the consolidated financial statements, provided for $50.0 million in three tranches, subject to certain terms and conditions.
Although we do not believe that inflation has had a material impact on our financial position or results of operations to date, we may experience increases in the near future (especially if inflation rates remain high or continue to rise) on our operating costs, including our labor, due to supply chain constraints and employee availability and wage increases, which may result in additional stress on our working capital resources. 60 Key Components of Results of Operations Revenue We currently generate our revenue primarily through subscription sales to access our QCaaS cloud platform and professional services related to the development and implementation of quantum computing applications.
However, to date, these unfavorable conditions have not affected our business. Key Components of Results of Operations Revenue We currently generate our revenue primarily through subscription sales to access our QCaaS cloud platform and professional services related to the development and implementation of quantum computing applications and delivery of quantum computing application training.
Removed
All dollar amounts are expressed in thousands of United States dollars (“$”), unless otherwise indicated. 58 Overview On February 7, 2022, D-Wave Systems entered into the Transaction Agreement with DPCM, D-Wave, Merger Sub, CallCo, and ExchangeCo, pursuant to which, among other things: (a) Merger Sub merged with and into DPCM, with DPCM surviving as a direct, wholly-owned subsidiary of D-Wave, (b) D-Wave indirectly acquired all of the outstanding share capital of D-Wave Systems and D-Wave Systems became an indirect subsidiary of D-Wave, with D-Wave becoming a public company and an SEC registrant as successor to DPCM (the "Merger").
Added
As of December 31, 2024, we had an accumulated deficit of $626.9 million.
Removed
D-Wave was incorporated as a corporation organized and existing under the DGCL on January 24, 2022. The Company was formed for the purpose of effecting a merger between DPCM, D-Wave, and certain other affiliated entities through a series of transactions constituting the Merger pursuant to the Transaction Agreement.
Added
However, quantum computing system revenue may have an outsized impact on our revenue and shift our product mix during the period when such revenue is recognized, though this revenue is expected to be irregular and intermittent.
Removed
The closing of the Merger occurred on August 5, 2022 and is herein referred to as “the Closing.” On the date of the Closing, DPCM and D-Wave Systems became wholly-owned subsidiaries of, and are operated, by D-Wave. Upon the completion of the Merger, D-Wave succeeded to all of the operations of its predecessor, D-Wave Systems.
Added
Cost of revenue for quantum computing systems includes direct manufacturing costs, such as materials and labor for system production, as well as expenses related to installation, warranty, and support. Additionally, it includes shipping and handling costs associated with delivering the systems. These costs are also expensed as incurred.
Removed
As of December 31, 2023, we had an accumulated deficit of $483.1 million. The Transaction Agreement and PIPE Financing As noted above, the Merger pursuant to the Transaction Agreement was consummated on August 5, 2022.
Added
However, non-cash stock-based compensation expenses may cause upward and downward fluctuations in these costs from time to time. 58 Sales and Marketing Sales and marketing expenses consist primarily of personnel-related expenses, including salaries, benefits and stock-based compensation for personnel, direct advertising, marketing and promotional material costs, sales commission expense, consulting fees and allocated facility costs for our sales and marketing functions.
Removed
While the legal acquirer in the Transaction Agreement is D-Wave Quantum Inc., for financial accounting and reporting purposes under GAAP, D-Wave Systems is the accounting acquirer and the Merger is accounted for as a “reverse recapitalization.” A reverse recapitalization does not result in a new basis of accounting and the financial statements of D-Wave represent the continuation of our financial statements in many respects.
Added
However, non-cash stock-based compensation expenses may cause upward and downward fluctuations in these costs from time to time.
Removed
Under this method of accounting, DPCM is treated as the “acquired” company for financial reporting purposes.
Added
QCaaS revenue increased by $1.9 million, primarily due to an increase in the average revenue per QCaaS customer. This was offset by a decrease of $1.9 million in professional service revenue, as a result of the timing of closing new professional services engagements.
Removed
For accounting purposes, D-Wave Systems will be deemed to be the accounting acquirer in the transaction and, consequently, the transaction is treated as a recapitalization of D-Wave Systems (i.e., a capital transaction involving the issuance of stock by D-Wave Quantum Inc. for the stock of D-Wave Systems Inc.).
Added
Operating Expenses Research and Development Expenses Research and development expenses decreased by $2.6 million, or 7%, to $35.3 million for the year ended December 31, 2024 compared to $37.9 million for the year ended December 31, 2023.
Removed
As a result of the Merger, all of the shares of D-Wave Systems common stock issued and outstanding immediately prior to the closing of the Merger (including D-Wave Systems common shares resulting from D-Wave Systems preferred stock conversion) were converted into an aggregate of 99,736,752 Common Shares (including Exchangeable Shares).
Added
The decrease was primarily driven by a decrease in stock-based compensation expenses of $3.2 million, partially offset by an increase in personnel costs of $0.4 million and professional fees of $0.4 million. 59 General and Administrative Expenses General and administrative expenses decreased by $4.6 million, or 12%, to $32.4 million for the year ended December 31, 2024 as compared to $37.0 million for the year ended December 31, 2023.
Removed
Additionally, all of the shares of DPCM Class A Common Stock and Class B Common Stock held by DPCM issued and outstanding immediately prior to the Closing were converted into an aggregate of 4,327,512 Common Shares.
Added
The Company fully repaid and extinguished the Term Loan on October 22, 2024, including $30.0 million in principal and $4.3 million in accrued payable in kind ("PIK") interest.
Removed
Upon consummation of the Merger, the most significant change in our reported financial position and results of operations was an increase in cash of $49.0 million in gross proceeds from the Merger and PIPE Financing netted against transaction costs of approximately $14.2 million. 59 In connection with the Merger, approximately 29.1 million shares of DPCM Class A Common Stock were redeemed, which represented a significant portion of the publicly traded shares of DPCM outstanding immediately prior to the Merger and resulted in only approximately $9.0 million of cash from the DPCM Trust Account becoming available to us.
Added
Additionally, the increase in interest expense reflects a decrease in the interest expense benefit from the catch-up method adjustment recorded in 2023 on the SIF Loan, which amounted to $2.9 million in the prior year. Refer to Note 7 to the accompanying consolidated financial statements for further details.
Removed
As discussed elsewhere in this Form 10-K, we entered into the Purchase Agreement, pursuant to which Lincoln Park agreed to purchase up to $150.0 million of Common Shares through the Purchase Agreement (subject to certain limitations contained in the Purchase Agreement) from time to time over a 36-month period, to assist us in meeting our capital requirements.
Added
Gain (loss) on investment in marketable equity securities Gain (loss) on investment in marketable equity securities increased by $1.5 million for the year ended December 31, 2024 as compared to zero for the year ended December 31, 2023.
Removed
However, we may not sell any Common Shares to Lincoln Park unless and until the price of our Common Shares subsequently exceeds the Floor Price of $1.00. Common Shares that may be resold into the public markets pursuant to the Purchase Agreement could have a significant negative impact on the trading price of our Common Shares.
Added
On January 5, 2024, an investee of the Company was acquired for a combination of cash and stock in an observable orderly transaction.
Removed
We have also filed the Resale Registration Statement registering the issuance to and/or resale by certain third parties unrelated to the Purchase Agreement of certain securities issued prior to, or in connection with, the Merger.
Added
Consequently, the carrying value of the Company's investment was adjusted based on the consideration received, resulting in a net gain of $1.7 million, partially offset by a loss associated with the fair value of the conversion feature of the Zapata Note.
Removed
The Common Shares registered for resale from time to time pursuant to the Resale Registration Statement represent a substantial majority of the number of the Common Shares outstanding as of December 31, 2023.
Added
The increase was primarily driven by the impact of net foreign exchange gains driven by appreciation of the U.S. Dollar against the Canadian Dollar of $4.0 million, and an increase in interest income of $1.4 million due primarily to interest earned on higher cash and cash equivalent balances.
Removed
The shareholders selling pursuant to the Resale Registration Statement will determine the timing, pricing and rate at which they sell such Common Shares into the public market and such sales could have a significant negative impact on the trading price of our Common Shares.
Added
Liquidity and Capital Resources In our Annual Report on Form 10-K for the year ended December 31, 2023 and our Quarterly Report on Form 10-Q for the three and nine months ended September 30, 2024 , we disclosed that there was substantial doubt about our ability to continue as a going concern due to recurring losses, liquidity concerns, debt covenant uncertainties, and reliance on external financing.

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