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Founded in 1999, D-Wave (QBTS) specializes in developing and delivering quantum computing systems, software, and services, focusing on both annealing and gate-model quantum computers. It is recognized as the world’s first commercial supplier of quantum computers, commanding a market capitalization of $1.62 billion.
D-Wave has secured its first sale of an on-premise quantum computing system to Forschungszentrum Jülich, a leading German national research institution specializing in high-performance computing. This milestone marks a significant step in the company’s expansion strategy, reinforcing its position as a key player in the quantum computing landscape. Additionally, D-Wave has introduced the “Quantum Uplift” initiative, a newly designed sales strategy aimed at capitalizing on the rising dissatisfaction among customers with competing quantum solutions.
However, is this enough to warrant a reversal in the company’s share price decline? The stock is down 18% in the year to date after surging nearly 300% over the past 52 weeks.
Moreover, does D-Wave have the wherewithal to capture a portion of the soon-to-be highly lucrative quantum computing market? Let’s have a closer look.
D-Wave Reported Narrowing Losses in Q3
D-Wave reported a narrowing of losses in the most recent quarter with a loss per share of $0.11 compared to $0.12 in the prior year. Cash outflow from operating activities also decreased to $44.7 million from $45.9 million in the year-ago period as D-Wave ended the quarter with a cash balance of $29.3 million, much lower than its short-term debt levels of $2.3 million.
However, a 27% yearly drop in revenues to $1.9 million created concern is cause for concern. A major driver of this decline was its professional services revenue, which was down 80% year-over-year in the third quarter.
Strategic Drivers
D-Wave’s financial position is showing gradual improvement, with its strategic initiatives poised to strengthen its long-term prospects.
A key example is the introduction of the LaunchPad program, which grants eligible participants a three-month trial to access its Advantage annealing quantum computing system, the Leap quantum cloud platform, and expert technical support from the company’s specialists in quantum optimization. Over the years, D-Wave’s annealing quantum computing technology has garnered significant traction, with more than 100 commercial, government, and research clients collectively submitting over 200 million computational problems to its Advantage quantum systems.
In addition, D-Wave has forged a strategic partnership with Carahsoft, a leading government IT solutions provider, to expand the reach of its quantum technology within the public sector. This collaboration grants D-Wave access to Carahsoft’s extensive reseller network and multiple procurement channels, potentially accelerating customer acquisition. Furthermore, the company recently completed the calibration of its sixth-generation annealing quantum processor, the Advantage2, which boasts over 4,400 qubits — marking a significant advancement from the 1,200-plus-qubit prototype introduced earlier this year. The new system offers notable improvements in coherence, connectivity, and energy scaling, enhancing its computational capabilities.
D-Wave’s technology has broad applicability across various industries, including logistics, artificial intelligence, materials science, pharmaceuticals, and financial modeling. Its client base comprises an impressive roster of blue-chip organizations such as Mastercard (MA), Deloitte, Siemens (SIEGY), and Lockheed Martin (LMT), positioning the company as a formidable player in the quantum computing landscape.
Analyst Opinion
Thus, analysts have deemed the stock a “Strong Buy” with a mean target price of $7, which is just above its current trading price. However, the high target price of $11 denotes upside potential of about 61% from current levels. Out of seven analysts covering the stock, six have a “Strong Buy” rating and one has a “Moderate Buy” rating.
