0001907982-26-000059
SEC filingRevenue fell 81% to $2.9M due to absence of system sales; operating loss widened to $54.7M on higher R&D and acquisition costs.
For the three months ended March 31, 2026, D-Wave reported revenue of $2.9 million, an 81% decline from $15.0 million in the prior-year period. The drop was entirely attributable to the absence of system sales, which had contributed $12.6 million in Q1 2025. Subscription (QCaaS) and professional services revenue each increased by approximately $0.2 million, but were insufficient to offset the system sales gap. Gross profit fell 87% to $1.8 million, resulting in a gross margin of 63.6%, down from 92.5% in the prior year, as the revenue mix shifted away from high-margin system sales toward lower-margin services.
Operating expenses surged 125% to $56.5 million. Research and development expenses rose 151% to $25.8 million, driven by higher personnel costs ($5.8M), stock-based compensation ($3.1M), and fabrication costs ($2.6M). General and administrative expenses increased 155% to $20.3 million, largely due to $6.7 million in acquisition-related professional fees (related to the Quantum Circuits acquisition), higher personnel expenses ($2.5M), and acquisition-related insurance ($1.8M). Sales and marketing expenses grew 51% to $10.5 million, led by marketing spend ($1.3M), personnel costs ($1.0M), and stock-based compensation ($0.7M). The operating loss widened to $54.7 million from $11.3 million.
Other income, net, improved to $7.9 million from $5.9 million, primarily due to a $1.9 million gain on investment in marketable securities and higher interest income ($2.7M), partially offset by the absence of a $3.9 million gain on warrant liabilities (warrants were redeemed in November 2025). A $28.5 million income tax benefit, driven by deferred tax liabilities assumed in the Quantum Circuits acquisition, reduced the net loss to $18.4 million from $5.4 million in the prior year.
The MD&A discusses three revenue streams: QCaaS, professional services, and system sales. In Q1 2026, system sales generated no revenue, compared to $12.6 million in Q1 2025. Management attributes the decline to the timing of revenue recognition, noting that system sales are inherently irregular and intermittent. QCaaS revenue increased by $0.2 million, reflecting ongoing efforts to grow subscription-based cloud access. Professional services also increased by $0.2 million, serving as a strategic enabler for QCaaS adoption. The company expects QCaaS to become a larger share of total revenue over time, though professional services may cause quarterly fluctuations.
D-Wave expects to continue incurring significant operating losses as it invests in R&D (annealing and gate-model quantum computers, bump bond process, Leap service enhancements) and go-to-market initiatives. Management anticipates R&D, G&A, and sales and marketing expenses to increase in absolute dollars for the foreseeable future. Gross margins are expected to improve over the long term as QCaaS (lower delivery cost) becomes a larger mix, but may fluctuate due to the timing of system sales. No quantitative guidance was provided. The company completed the acquisition of Quantum Circuits Inc. in January 2026, which added gate-model technology and contributed to a near-term cash outflow of $250.8 million in investing activities. Liquidity was supported by prior equity raises, and no additional financing activities were noted in the current quarter.
As of March 31, 2026, D-Wave held $338.2M in cash and equivalents and $250.2M in marketable securities (U.S. government bonds), for a total liquidity of $588.4M. This reflects a significant decline from December 31, 2025 ($635.3M cash + $249.1M securities = $884.4M), primarily due to the $256.0M cash consideration for the Quantum Circuits acquisition. Total assets rose to $1.20B from $915.8M, driven by $342.6M goodwill and $215.3M intangible assets. Total debt was $35.6M, mostly the SIF loan ($35.2M) with an effective interest rate of 2.61%. Shareholders' equity increased to $1.12B from $852.2M, aided by $282.3M equity issued in the acquisition and $8.1M stock-based compensation.
The company has no material purchase commitments disclosed. Operating lease obligations are modest, with total operating lease costs of $1.0M in Q1 2026. Deferred revenue totaled $11.6M, and remaining performance obligations (RPO) were $42.4M, with 54% expected within 12 months. The SIF loan is conditionally repayable based on revenue, with a repayment cap of 150% of the C$40.0M principal; no repayments are currently due as annual revenue has not reached the $70M benchmark.
No share buybacks or dividends were reported. Debt decreased slightly by $0.4M net. Capital expenditures were minimal; the cash flow statement (outside notes) shows $1.1M in property and equipment purchases, but this is not detailed in the notes. The primary capital allocation event was the Quantum Circuits acquisition, using $256.0M cash and $282.0M equity.
The company operates as a single segment. Revenue by geography: United States $1.69M (59%), Japan $0.38M, Germany $0.18M, Canada $0.14M, other $0.47M. Revenue by type: system sales $0.09M, QCaaS $1.76M, professional services $0.98M, other $0.03M. The decline from $15.0M in Q1 2025 was due to a large one-time system sale in the prior year.
Net loss for Q1 2026 was $18.4M, with operating cash outflow of $45.0M, indicating non-cash adjustments (depreciation, deferred tax benefit, stock compensation) partially offsetting but working capital changes consuming cash. Key non-cash items: deferred income tax benefit of $28.4M reduced the loss, while stock compensation of $8.0M added back. Working capital swings included a $7.3M increase in receivables, $1.5M inventory build, and $2.9M decrease in accrued expenses. Deferred revenue increased $8.2M, providing a positive offset.
Capex of $1.2M was modest relative to operating cash burn, but the major cash use was the $250.8M acquisition (net of cash acquired) in investing activities. Financing activities were nearly neutral. The large cash decrease was funded from existing cash reserves. Compared to prior year, operating cash outflow more than doubled, driven by higher net loss and adverse working capital changes, despite a larger deferred tax benefit. The acquisition significantly altered the cash flow profile and future cash generation potential.