D-Wave Quantum's Q1 Earnings: The Real Story Is in the Subscription Surge, Not the Headline Revenue Miss

D-Wave's Q1 revenue fell short of expectations at $2.9M, but quantum-computing-as-a-service revenue soared 2,015% to $1.8M, and backlog hit $42.4M, signaling a strong pivot to recurring revenue.

A 2,015% leap in quantum-computing-as-a-service revenue provides the most telling number from D-Wave Quantum’s latest quarterly report. That surge to $1.8 million, alongside $1 million in professional services, underscores a deliberate pivot toward recurring revenue streams even as overall sales disappointed.

The headline figures told a harsher story. Revenue landed at $2.9 million for the first quarter, well short of the $4.2 million consensus estimate and down 81% from the prior year. That comparison, however, was distorted by the $12.6 million sale of an annealing quantum computer booked in the year-ago period – a one-off transaction that obscured the underlying shift in business model.

The net loss widened to $18.4 million from $5.4 million, but on a per-share basis D-Wave beat expectations with a loss of $0.05 against a consensus forecast of $0.08. The better-than-expected bottom line prevented the stock from a sharper selloff; shares still fell 7.11% to close at €19.05 on Tuesday. On a one-month view the equity remains up 53%, though year-to-date it has shed 20.7%.

The Backlog Tells a Different Tale

Investors are now focusing on what lies ahead. D-Wave recorded $33.4 million in new bookings during the quarter, a dramatic jump from $1.6 million a year earlier. Two contracts accounted for the bulk: a $20 million purchase commitment from Florida Atlantic University for an annealing quantum computer, and a two-year, $10 million quantum-computing-as-a-service deal with an unnamed Fortune 100 company.

These orders swelled the company’s remaining performance obligations to $42.4 million, up from $6.4 million at the end of the first quarter of 2024. Management expects roughly 54% of that backlog to convert into revenue within the next 12 months, and about 71% within two years. The recognition schedule suggests a modest second quarter followed by a much stronger second half.

“This is less a structural problem and more a matter of timing,” wrote Jefferies analyst Kevin Garrigan, who maintained a buy rating and a $45 price target on the stock. The $588.4 million in cash and marketable securities – 93% higher than a year earlier – provides ample runway for D-Wave to execute its pipeline conversion.

Scaling Costs and New Technology

The expansion comes at a price. Operating expenses rocketed 125% to $56.5 million, including $9.1 million in one-time costs tied to the acquisition of Quantum Circuits. That deal gave D-Wave access to superconducting gate-model systems designed for error correction, broadening its technological arsenal beyond its traditional annealing approach. The road map targets roughly 175 physical qubits by the end of 2028, with a later system incorporating logical qubits for fault-tolerant applications.

A $28.5 million tax benefit from the acquisition helped cushion the quarterly loss, but the underlying trend remains clear: D-Wave is investing heavily in both hardware and commercial reach. Mizuho analyst Vijay Rakesh noted that government funding in the U.K. – roughly $2.7 billion – and about $1 billion in Canada could sustain sector demand through 2034.

What Comes Next

D-Wave will take its case directly to investors and users over the next few weeks. The company is hosting its first investor day on June 1 at the New York Stock Exchange, where executives will discuss technology road maps, product plans, and the path to sustainable growth. On June 18, the firm will stage its Qubits Europe conference in London, featuring live demonstrations and real-world applications.

Between those events, analysts will be watching whether the subscription-driven revenue model can deliver the predictable growth the market is demanding. The record backlog and strong cash position suggest the building blocks are in place. The test now is execution – turning those $33.4 million in new orders into the kind of quarterly revenue that leaves no room for doubt.