D-Wave Quantum Inc.

Previous wording

You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our unaudited condensed consolidated financial statements and the accompanying notes contained in Part I, Item I of this Report, as well as our Annual Report on Form 10-K for the year ended December 31, 2025 filed with the SEC on February 26, 2026. The following discussion contains forward-looking statements based upon current expectations that involve risks, uncertainties and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including risks described in this Report, and the risk factors discussed in our Annual Report on Form 10-K for the year ended December 31, 2025 and our other filings with the SEC. Our historical results are not necessarily indicative of the results that may be expected for any period in the future. In this section, unless otherwise specified, the terms “we”, “our”, “us”, D-Wave" or the "Company" refer to D-Wave Quantum Inc. and its subsidiaries following the closing of the Merger (the "Closing") while "D-Wave Systems" refers to D-Wave Systems Inc. prior to the Closing. All other capitalized terms have the meanings ascribed thereto elsewhere in this Report. All dollar amounts are expressed in thousands of United States dollars (“$”), unless otherwise indicated.

Current wording

You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our unaudited condensed consolidated financial statements and the accompanying notes contained in Part I, Item 1 of this Report, as well as our Annual Report on Form 10-K for the year ended December 31, 2025 filed with the SEC on February 26, 2026. The following discussion contains forward-looking statements based upon current expectations that involve risks, uncertainties and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including risks described in this Report, and the risk factors discussed in our Annual Report on Form 10-K for the year ended December 31, 2025 and our other filings with the SEC. Our historical results are not necessarily indicative of the results that may be expected for any period in the future. In this section, unless otherwise specified, the terms “we”, “our”, “us”, “D-Wave” or the “Company” refer to D-Wave Quantum Inc. and its subsidiaries following the closing of the Merger while “D-Wave Systems” refers to D-Wave Systems Inc. prior to such closing. All other capitalized terms have the meanings ascribed thereto elsewhere in this Report. All dollar amounts are expressed in thousands of United States dollars (“$”), unless otherwise indicated.

Previous wording

We have four operating facilities, which we lease, in North America. These facilities are located in Burnaby, British Columbia, Richmond, British Columbia, Palo Alto, California, and New Haven, Connecticut. In addition, we plan to transition our corporate headquarters before the end of 2026 from Palo Alto, California to Boca Raton, Florida, and open a key U.S. R&D facility in Boca Raton, Florida under a new lease agreement.

Current wording

We have four operating facilities, which we lease, in North America. These facilities are located in Burnaby, British Columbia, Richmond, British Columbia, Palo Alto, California, and New Haven, Connecticut. In addition, we plan to transition our corporate headquarters before the end of 2026 from Palo Alto, California to Boca Raton, Florida, and open a key U.S. R&D facility there under a new lease agreement.

Previous wording

During the three months ended March 31, 2026 and 2025, we generated revenue totaling $2.9 million and $15.0 million, respectively. We have incurred significant operating losses since inception. For the three months ended March 31, 2026 and 2025, our operating losses were $54.7 million and $11.3 million, respectively, and our net losses were $46.8 million and $5.4 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. As of March 31, 2026, we had an accumulated deficit of $1.0 billion.

Current wording

During the six months ended June 30, 2026 and 2025, we generated revenue totaling $5.9 million and $18.1 million, respectively. We have incurred significant operating losses since inception. For the six months ended June 30, 2026 and 2025, our operating losses were $108.0 million and $37.8 million, respectively, and our net losses were $66.4 million and $172.8 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. As of June 30, 2026, we had an accumulated deficit of $1.0 billion.

Previous wording

Revenue from quantum computing system sales is recognized over time during the installation period using an input method, with progress measured based on costs incurred to date relative to total estimated costs, a percentage-of-completion approach, as the Company concludes that the criteria for over-time revenue recognition under ASC 606 are met. Revenue from system upgrade projects is also recognized over time using an input method, measuring progress based on costs incurred to date relative to total estimated costs. This approach is applied to system sales and upgrade projects that span multiple reporting periods and meet the criteria for over-time revenue recognition in accordance with ASC 606. Both revenue from quantum computing system sales and revenue from system upgrade projects are classified within system sales in our financial statements.

Current wording

Revenue from quantum computing system sales and system upgrade projects is recognized over time during the installation or upgrade period using an input method, with progress measured based on costs incurred to date relative to total estimated costs, a percentage-of-completion approach, as the Company concluded that the criteria for over-time revenue recognition under ASC 606 are met. This approach is applied to system sales and upgrade projects that span multiple reporting periods and meet the criteria for over-time revenue recognition in accordance with ASC 606. Both revenue from quantum computing system sales and revenue from system upgrade projects are classified within system sales in our financial statements.

Previous wording

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 Leap service, operate our quantum computing systems, and deliver our professional services. Over the long term, we expect QCaaS to become a larger component of our revenue mix and gross margin to improve, reflecting the lower delivery costs of QCaaS relative to professional services. In addition, our revenue mix may also shift toward quantum computing system sales in certain periods. As a result, gross margins may fluctuate depending on the relative contribution of QCaaS, system sales, and professional services in a given period.

Current wording

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 Leap service, install and operate our quantum computing systems, and deliver our professional services. Over the long term, we expect QCaaS to become a larger component of our revenue mix and gross margin to improve, reflecting the lower delivery costs of QCaaS relative to professional services. In addition, our revenue mix may also shift toward quantum computing system sales in certain periods. As a result, gross margins may fluctuate depending on the relative contribution of QCaaS, system sales, and professional services in a given period.

Previous wording

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 intend to continue to make significant investments in our sales and marketing organization to drive additional revenue, expand our global customer base, and broaden our brand awareness. We expect our sales and marketing expenses to continue to increase in absolute dollars for the foreseeable future. However, non-cash stock-based compensation expenses may cause upward and downward fluctuations in these costs from time to time.

Current wording

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 intend to continue to make significant investments in our sales and marketing organization to drive additional revenue, expand our global customer base, and broaden our brand awareness.

Previous wording

Cost of revenue decreased by $0.1 million, or 7%, to $1.0 million for the three months ended March 31, 2026 as compared to $1.1 million for the three months ended March 31, 2025. The decrease in cost of revenue was primarily due to a decrease in system sales-related costs.

Current wording

Cost of revenue increased by $0.3 million, or 23%, to $1.4 million for the three months ended June 30, 2026 as compared to $1.1 million for the three months ended June 30, 2025. The increase in cost of revenue was primarily due to an increase in personnel costs of $0.4 million, partially offset by a decrease in infrastructure costs of $0.1 million.

Previous wording

Research and development expenses increased by $15.5 million, or 151%, to $25.8 million for the three months ended March 31, 2026 compared to $10.3 million for the three months ended March 31, 2025. The increase was primarily driven by increases in personnel costs of $5.8 million, stock-based compensation expense of $3.1 million and fabrication costs of $2.6 million.

Current wording

Research and development expenses increased by $15.5 million, or 122%, to $28.2 million for the three months ended June 30, 2026 compared to $12.7 million for the three months ended June 30, 2025. The increase was primarily driven by increases in personnel costs of $5.2 million, depreciation and amortization expense of $4.1 million and stock-based compensation expense of $2.9 million.

Previous wording

Interest income increased by $2.7 million, or 87%, to $5.8 million for the three months ended March 31, 2026 as compared to $3.1 million for the three months ended March 31, 2025. The increase was driven primarily by interest earned on higher cash and cash equivalent balances and the Company’s investment in short-term government debt.

Current wording

Interest income increased by $0.7 million, or 17%, to $5.0 million for the three months ended June 30, 2026 as compared to $4.3 million for the three months ended June 30, 2025. The increase was driven primarily by interest earned on higher cash and cash equivalent balances and the Company’s investment in short-term government debt.

Previous wording

Other income (expense), net increased by $1.5 million or 154%, to a net other expense of $0.5 million for the three months ended March 31, 2026 as compared to a net other income of $0.9 million for the three months ended March 31, 2025. The increase was primarily driven by the impact of net foreign exchange gain of $1.4 million driven by appreciation of the U.S. Dollar against certain foreign currencies.

Current wording

Other income (expense), net increased by $3.4 million or 117%, to a net other income of $0.5 million for the three months ended June 30, 2026 as compared to a net other expense of $2.9 million for the three months ended June 30, 2025. The increase was primarily driven by the impact of net foreign exchange gain in the prior period of $3.3 million resulting from appreciation of the U.S. Dollar against certain foreign currencies.

Previous wording

Revenue decreased by $12.1 million, or 81%, to $2.9 million for the three months ended March 31, 2026 as compared to $15.0 million for the three months ended March 31, 2025. The decrease was primarily driven by a decrease in system sales of $12.6 million, partially offset by an increase in QCaaS revenue of $0.2 million and an increase in professional service revenue of $0.2 million. The decrease in system sales was primarily due to the timing of revenue recognition, as $12.6 million of system sales was recognized in the three months ended March 31, 2025, with no comparable system sales recognized in the current period.

Current wording

Revenue decreased by $12.2 million, or 67%, to $5.9 million for the six months ended June 30, 2026 as compared to $18.1 million for the six months ended June 30, 2025. The decrease was primarily driven by a decrease in system sales of $13.3 million, partially offset by an increase in QCaaS revenue of $0.8 million and an increase in professional services revenue of $0.4 million. The decrease in system sales was primarily due to the timing of progress recognized under the percentage-of-completion method on the system contracted for delivery in each period.

Previous wording

General and administrative expenses increased by $12.3 million, or 155%, to $20.3 million for the three months ended March 31, 2026 as compared to $8.0 million for the three months ended March 31, 2025. The increase was primarily driven by an increase in professional fees of $6.7 million (largely comprised of transaction expenses from the Acquisition), an increase in personnel expenses of $2.5 million and acquisition-related insurance expenses of $1.8 million.

Current wording

General and administrative expenses increased by $18.6 million, or 108%, to $35.7 million for the six months ended June 30, 2026 as compared to $17.1 million for the six months ended June 30, 2025. The increase was primarily driven by an increase in professional fees of $7.2 million (largely comprised of transaction expenses from the Acquisition), an increase in personnel expenses of $4.6 million and acquisition-related insurance expenses of $2.1 million.

Previous wording

Gain on investment in marketable securities, net was a gain of $1.9 million for the three months ended March 31, 2026 as compared to no gain or loss for the three months ended March 31, 2025. The gain in the current period was attributable to an observable price change resulting from a third-party transaction involving the Company’s investment in a privately-held company. Accordingly, the carrying value of the investment was adjusted based on the transaction price, resulting in a net gain. There was no similar activity for the three months ended March 31, 2025.

Current wording

Gain on investment in marketable securities, net was a gain of $1.9 million for the six months ended June 30, 2026 as compared to no gain or loss for the six months ended June 30, 2025. The gain in the current period was attributable to an observable price change resulting from a third-party transaction involving the Company’s investment in a privately-held company. Accordingly, the carrying value of the investment was adjusted based on the transaction price, resulting in a net gain. There was no similar activity for the six months ended June 30, 2025.

Previous wording

The change in fair value of warrant liabilities was zero for the three months ended March 31, 2026 as compared to a decrease of $3.9 million for the three months ended March 31, 2025. The fair value of the warrant liabilities varied primarily with the trading price of the Public Warrants, which were listed on the New York Stock Exchange. The trading price of the Public Warrants decreased during the three months ended March 31, 2025, generally in line with the decline in the trading price of the Common Shares, resulting in a corresponding decrease in the fair value of the warrant liabilities. The Company had no Public Warrants outstanding following the redemption of all remaining warrants on November 19, 2025 pursuant to the Warrant Agreement.

Current wording

The change in fair value of warrant liabilities was zero for the six months ended June 30, 2026 as compared to a decrease of $138.1 million for the six months ended June 30, 2025. The fair value of the warrant liabilities varied primarily with the trading price of the Public Warrants, which were listed on the NYSE. The trading price of the Public Warrants decreased during the six months ended June 30, 2025, generally in line with the decline in the trading price of the Common Shares, resulting in a corresponding decrease in the fair value of the warrant liabilities. The Company had no Public Warrants outstanding following the redemption of all remaining warrants on November 19, 2025 pursuant to the Warrant Agreement.

Previous wording

Income tax benefit, net was $28.5 million for the three months ended March 31, 2026 as compared to zero for the three months ended March 31, 2025. The increase was primarily driven by deferred tax liabilities assumed in connection with the Quantum Circuits acquisition. The deferred tax liabilities provided an additional source of taxable income required to utilize existing deferred tax assets, which resulted in the partial release of the valuation allowance against the deferred tax assets.

Current wording

Income tax benefit (provision), net was $28.4 million for the six months ended June 30, 2026 as compared to zero for the six months ended June 30, 2025. The increase was primarily driven by deferred tax liabilities assumed in connection with the Quantum Circuits acquisition. The deferred tax liabilities provided an additional source of taxable income required to utilize existing deferred tax assets, which resulted in the partial release of the valuation allowance against the deferred tax assets.

Previous wording

The Company has historically raised capital through equity issuances, including at-the-market (“ATM”) offerings, a purchase agreement with Lincoln Park, and warrant exercises.

Current wording

The Company has historically raised capital through equity issuances, including at-the-market (“ATM”)offerings, an Equity Line of Credit (“ELOC”) with Lincoln Park Capital Fund (“Lincoln Park”), and warrant exercises.

Previous wording

As of December 31, 2025, the Company had completed all issuances under its prior equity programs, including the Lincoln Park purchase agreement and its ATM sales agreements. During the year ended December 31, 2025, the Company received significant net proceeds from these programs, as well as from warrant exercises, which strengthened its liquidity position.

Current wording

As of December 31, 2025, the Company had completed all issuances under its prior equity programs, including the ELOC and its ATM sales agreements. During the year ended December 31, 2025, the Company received significant net proceeds from these programs, as well as from warrant exercises, which strengthened its liquidity position.

Previous wording

The Company had no Public Warrants outstanding as of March 31, 2026 following the redemption of all remaining warrants in November 2025 pursuant to the Warrant Agreement.

Current wording

The Company has no Public Warrants outstanding during 2026 following the redemption of all remaining warrants in November 2025 pursuant to the Warrant Agreement.

Previous wording

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. Our operating cash flows are also affected by our working capital needs to support growth in personnel-related expenditures and fluctuations in accounts payable, accounts receivable and other current assets and liabilities.

Current wording

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. Our operating cash flows are also affected by our working capital needs and fluctuations in our working capital balances.

Previous wording

For the three months ended March 31, 2026, net cash used in operating activities was $45.0 million, an increase of $25.7 million from $19.3 million for the three months ended March 31, 2025. The change is primarily due to an increase in net loss of $12.9 million, offset by an increase in cash released from working capital of $8.3 million (primarily related to the recognition of deferred revenue) and a decrease in noncash items added back to net loss of $21.0 million (primarily related to higher deferred income tax, stock-based compensation and depreciation and amortization).

Current wording

For the six months ended June 30, 2026, net cash used in operating activities was $73.5 million, an increase of $38.9 million from $34.6 million for the six months ended June 30, 2025. The change is primarily due to a decrease in net loss of $106.4 million, offset by an increase in cash released from working capital of $9.2 million (primarily related to the recognition of deferred revenue) and a decrease in noncash items added back to net loss of $154.5 million (primarily related to decreased non-cash charges related to remeasurement of the warrant liability, offset by increased non-cash deferred tax benefits).

Previous wording

Net cash used in investing activities during the three months ended March 31, 2026 was $252.1 million, an increase of $251.6 million from $0.5 million for the three months ended March 31, 2025. The increase primarily reflects cash consideration for the Acquisition of $250.8 million during the three months ended March 31, 2026, which did not occur during the three months ended March 31, 2025.

Current wording

Net cash used in investing activities during the six months ended June 30, 2026 was $260.6 million, an increase of $260.2 million from $0.4 million for the six months ended June 30, 2025. The increase primarily reflects cash consideration for the Acquisition of $252.8 million during the six months ended June 30, 2026. There was no similar activity during the six months ended June 30, 2025.

Previous wording

Net cash used by financing activities during the three months ended March 31, 2026 was $0.1 million, as compared to net cash provided by financing activities of $145.6 million for the three months ended March 31, 2025. The change is primarily due to a decrease in proceeds from the issuance of Common Shares pursuant to at-the-market offerings of $146.1 million.

Current wording

Net cash used by financing activities during the six months ended June 30, 2026 was $4.8 million, as compared to net cash provided by financing activities of $675.0 million for the six months ended June 30, 2025. The change is primarily due to a decrease in proceeds from the issuance of Common Shares pursuant to equity offerings of $574.5 million, and a decrease in proceeds from warrant exercises of $99.3 million.