D-Wave Quantum Inc. QBTS used its second-quarter 2026 earnings call to emphasize two priorities: expanding commercial use of annealing quantum computing and advancing a defined path toward fault-tolerant gate-model systems.
Management also set expectations for a back-end-loaded revenue year, with system deliveries concentrated in the fourth quarter and gate-model commercial applications remaining a longer-term objective.
QBTS Sets a Long Gate-Model Roadmap
President and CEO Alan Baratz said D-Wave is targeting a gate-model system with 100 logical qubits and more than 1 million reliable operations by 2032, which management views as the threshold for initial commercial applications.
Baratz said the company expects a 17-physical-qubit system later in 2026, followed by 49 physical qubits in 2027 and 181 in 2028. A 10-logical-qubit system is targeted for 2030.
He highlighted peer-reviewed work showing roughly 99.9% fidelity for a two-qubit entangling gate with gate times of about 500 nanoseconds, supporting D-Wave's dual-rail architecture and error-correction road map.
D-Wave Pushes Production QCaaS Adoption
Baratz pointed to six customer applications in production. Production applications contributed 37.3% of first-half QCaaS revenues, up from 9.8% a year earlier.
Baratz highlighted AT&T, where an early optimization application reduced processing time from about one hour to less than 15 seconds, and Optum, which had run about 30,000 jobs by mid-June.
In Q&A, Baratz told a ROTH Capital analyst that about 25% to 30% of commercial discussions now involve a line of business directly or from the outset, versus none a year earlier.
QBTS Expects System Revenues to Skew to Q4
CFO John Markovich said third-quarter revenues should rise modestly from the second quarter, while fourth-quarter revenues should increase significantly and account for the majority of 2026 revenues.
Markovich said D-Wave still expects to ship two annealing systems during the balance of the year, both in the fourth quarter, with some installation and calibration revenues carrying into 2027.
He also noted $40.7 million of remaining performance obligations at June 30, with about 57% expected to convert to revenues within 12 months and 72% within two years.
D-Wave Spending Rises With Product Investment
Second-quarter revenues of $3.1 million were essentially flat year over year. Bookings rose 59% to $2.1 million and average booking size increased more than 87%.
GAAP gross margin fell to 55.4% from 63.8%, which Markovich attributed to higher personnel costs. Adjusted EBITDA loss widened to $37.1 million from $20 million as product development and go-to-market spending increased.
Adjusted loss was 10 cents per share compared with the Zacks Consensus Estimate of a loss of 8 cents. Revenues of $3.1 million were below the $3.8 million consensus estimate.
QBTS Q&A Clarifies Commercial Timing
An Evercore analyst asked when gate-model milestones could begin contributing meaningful revenue. Baratz said government contracts are already generating initial gate-model revenues and more than one company has expressed interest in buying a dual-rail system.
Baratz said research-focused system sales could precede broader commercial adoption, while significant gate-model QCaaS revenues are not expected until around the 2032 commercial-relevance milestone.
A Benchmark analyst asked about annealing system economics. CFO John Markovich said pricing ranges from $20 million to $40 million, with research and university systems toward the lower end, and revenue recognition generally spanning about two quarters once a site is ready.
D-Wave Keeps Execution at the Center
Baratz framed D-Wave's position around differentiated technology, enterprise readiness and demonstrated execution, emphasizing production annealing applications alongside measurable gate-model milestones.
Baratz also said the Quantum Circuits integration is progressing well and reiterated that the 17-qubit dual-rail system remains on track for delivery before year-end.
Management's near-term focus remains commercial expansion in annealing, while the gate-model program advances through staged technical milestones.
QBTS Zacks Rank and Style Score Signals
QBTS carries a Zacks Rank #2 (Buy). Its Value Score is F and Growth Score is D. Its Momentum Score is C and its VGM Score is F. Zacks methodology favors Rank #1 (Strong Buy) or #2 stocks paired with A or B Style Scores, so the current combination presents a favorable Rank alongside weak style readings. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Rank reflects earnings estimate revisions over a one-to-three-month horizon, while the Style Scores assess value, growth and momentum characteristics. The Rank can change as analysts revise estimates following the just-reported results.
Research Chief Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
This company targets millennial and Gen Z audiences, generating nearly $1 billion in revenue last quarter alone. A recent pullback makes now an ideal time to jump aboard. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.
Free: See Our Top Stock And 4 Runners UpWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
D-Wave Quantum Inc. (QBTS): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
Zacks Investment Research
