Form 10-Q - Quarterly report [Sections 13 or 15(d)]

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

________________________

FORM 10-Q

________________________

(Mark One)


x			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2024


o			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ and ____________

Commission file number 001-41468

________________________

D-WAVE QUANTUM INC.

(Exact name of registrant as specified in its charter)

________________________


Delaware			88-1068854
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

2650 East Bayshore Road, Palo Alto, California			94303
(Address of Principal Executive Offices)			(Zip Code)

(604) 630-1428

Registrant's telephone number, including area code

(Former name, former address and former fiscal year, if changed since last report)

________________________

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, par value $0.0001 per share	QBTS	New York Stock Exchange
Warrants, each whole warrant exercisable for 1.4541326 shares of common stock at an exercise price of $11.50	QBTS.WT	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☐

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

APPLICABLE ONLY TO CORPORATE ISSUERS:

As of May 10, 2024, there were outstanding 126,380,683 shares of the registrant’s common stock, par value $0.0001 per share. In addition, there were 44,889,286 exchangeable shares outstanding as of May 10, 2024, which are convertible into shares of common stock on a one for one basis at any time for no consideration.

Table of Contents


		Page

Part I. Financial Information		3
Item 1.	D-Wave Quantum Inc. Financial Statements (Unaudited)	3
	Condensed Consolidated Balance Sheets (Unaudited)
	Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited)
	Condensed Consolidated Statement s of Stockholders’ Deficit (Unaudited)
	Condensed Consolidated Statements of Cash Flows (Unaudited)
	Notes to Condensed Consolidated Financial Statements (Unaudited)
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	30
Item 4.	Controls and Procedures	30

Part II. Other Information		32
Item 1 .	Legal Proceedings	32
Item 1A .	Risk Factors	32
Item 2 .	Unregistered Sales of Equity Securities and Use of Proceeds	32
Item 3 .	Defaults Upon Senior Securities	32
Item 4 .	Mine Safety Disclosures	32
Item 5 .	Other Information	32
Item 6 .	Exhibits and Financial Statement Schedules	32
Signatures		34

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain statements in this Quarterly Report on Form 10-Q (this “Report”) may constitute “forward-looking statements” within the meaning of the federal securities laws, including the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Our forward-looking statements include, but are not limited to, statements regarding D-Wave Quantum’s and D-Wave Quantum’s management team’s expectations, hopes, beliefs, intentions or strategies regarding the future. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. In some cases, you can identify forward-looking statements by the following words: “believe,” “may,” “will,” “could,” “would,” “should,” “expect,” “intend,” “plan,” “anticipate,” “trend,” “believe,” “estimate,” “predict,” “project,” “potential,” “seem,” “seek,” “future,” “outlook,” “forecast,” “projection,” “continue,” “ongoing,” or the negative of these terms or other comparable terminology, although not all forward-looking statements contain these words. These statements involve risks, uncertainties, and other factors that may cause actual results, levels of activity, performance, or achievements to be materially different from the information expressed or implied by these forward-looking statements. We caution you that these statements are based on a combination of facts and factors currently known by us and our projections of the future, which are subject to a number of risks. Factors that might cause or contribute to a material difference include those risks discussed below and in Part I, Item 1A, “Risk Factors” in our most recent Annual Report on Form 10-K and our other filings with the Securities and Exchange Commission (the "SEC”). You should not place undue reliance on these forward-looking statements in making an investment decision with respect to the securities offered under this Report. These forward-looking statements are not intended to serve as, and must not be relied on as, a guarantee, an assurance, a prediction or a definitive statement of fact or probability regarding future performance, events or circumstances. Many of the factors affecting actual performance, events and circumstances are beyond the control of D-Wave Quantum. As a result of a number of known and unknown risks and uncertainties, our actual results or performance may be materially different from those expressed or implied by these forward-looking statements. All forward-looking statements set forth in this Report are qualified by these cautionary statements, and there can be no assurance that the actual results or developments anticipated by the Company will be realized or, even if substantially realized, that they will have the expected consequence to or effects on the Company or its business or operations. The following discussion should be read in conjunction with the Company’s audited Consolidated Financial Statements and related notes thereto included our most recent Annual Report on Form 10-K. These forward-looking statements are based on information available as of the date of this Report, and current expectations, forecasts and assumptions, and involve a number of judgments, risks and uncertainties and are not predictions of actual performance. Accordingly, forward-looking statements should not be relied upon as representing our views as of any subsequent date, and we do not undertake any obligation to update forward-looking statements to reflect events or circumstances after the date they were made, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

Part I - Financial Information

Item 1. Financial Statements

D-Wave Quantum Inc.

Condensed Consolidated Balance Sheets


	March 31,		December 31,
	2024		2023
(In thousands, except share and per share data)	(Unaudited)
Assets
Current assets:
Cash	$	27,304	$	41,307
Trade accounts receivable, net	1,735		1,652
Inventories	2,079		2,078
Prepaid expenses and other current assets	2,569		2,009
Total current assets	33,687		47,046
Property and equipment, net	2,909		2,551
Operating lease right-of-use assets	7,879		8,223
Intangible assets, net	302		179
Other non-current assets	3,828		1,357
Total assets	$	48,605	$	59,356

Liabilities and stockholders' deficit
Current liabilities:
Trade accounts payable	$	1,037	$	1,465
Accrued expenses and other current liabilities	6,007		5,343
Current portion of operating lease liabilities	1,448		1,374
Loans payable, net, current	369		399
Deferred revenue, current	1,999		2,669
Total current liabilities	10,860		11,250
Warrant liabilities	4,282		1,630
Operating lease liabilities, net of current portion	6,978		7,028
Loans payable, net, non-current (including $31,100 and $31,400 as of March 31, 2024 and December 31, 2023, respectively, at fair value)	63,043		63,850
Deferred revenue, non-current	399		79
Total liabilities	$	85,562	$	83,837

Commitments and contingencies (Note 10)
Stockholders' deficit:
Common stock, par value $0.0001 per share; 675,000,000 shares authorized at both March 31, 2024 and December 31, 2023; 161,675,010 shares and 161,113,744 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively.	16		16
Additional paid-in capital	473,870		469,081
Accumulated deficit	(500,373)		(483,061)
Accumulated other comprehensive loss	(10,470)		(10,517)
Total stockholders' deficit	(36,957)		(24,481)
Total liabilities and stockholders’ deficit	$	48,605	$	59,356

The accompanying notes are an integral part of these condensed consolidated financial statements.

D-Wave Quantum Inc.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(Unaudited)


	Three Months Ended March 31,
(In thousands, except share and per share data)	2024		2023
Revenue	$	2,465	$	1,583
Cost of revenue	806		1,162
Total gross profit	1,659		421
Operating expenses:
Research and development	8,525		10,915
General and administrative	7,566		11,296
Sales and marketing	3,084		2,900
Total operating expenses	19,175		25,111
Loss from operations	(17,516)		(24,690)
Other income, net:
Interest expense	(1,140)		(212)
Change in fair value of Term Loan	1,199		—
Gain on investment in marketable equity securities	1,660		—
Change in fair value of warrant liabilities	(2,652)		638
Other income (expense), net	1,137		(142)
Total other income, net	204		284
Net loss	$	(17,312)	$	(24,406)
Net loss per share, basic and diluted	$	(0.11)	$	(0.20)
Weighted-average shares used in computing net loss per share, basic and diluted	161,308,490		123,144,097

Comprehensive loss:
Net loss	$	(17,312)	$	(24,406)
Foreign currency translation adjustment, net of tax	47		(19)
Net comprehensive loss	$	(17,265)	$	(24,425)

The accompanying notes are an integral part of these condensed consolidated financial statements.

D-Wave Quantum Inc.

Condensed Consolidated Statements of Stockholders’ Deficit

For the Three Months Ended March 31, 2024

(Unaudited)


	Common stock		Additional paid-in capital	Accumulated deficit	Accumulated other comprehensive loss	Total stockholders' deficit
(In thousands, except share data)	Shares	Amount
Balance at December 31, 2023	161,113,744	16	469,081	(483,061)	(10,517)	(24,481)
Issuance of common stock under stock-based compensation plans	561,266	—	8	—	—	8
Stock-based compensation	—	—	5,515	—	—	5,515
Tax withholding related to vesting of restricted stock units	—	—	(734)	—	—	(734)
Foreign currency translation adjustment, net of tax	—	—	—	—	47	47
Net loss	—	—	—	(17,312)	—	(17,312)
Balances at March 31, 2024	161,675,010	16	473,870	(500,373)	(10,470)	(36,957)

The accompanying notes are an integral part of these condensed consolidated financial statements.

D-Wave Quantum Inc.

Condensed Consolidated Statements of Stockholders’ Deficit

For the Three Months Ended March 31, 2023

(Unaudited)


	Common stock		Additional paid-in capital	Accumulated deficit	Accumulated other comprehensive loss	Total stockholders' deficit
(In thousands, except share data)	Shares	Amount
Balances at December 31, 2022	113,335,530	11	381,274	(400,346)	(10,402)	(29,463)
Issuance of common stock in connection with the Lincoln Park Purchase Agreement	13,239,654	1	15,682	—	—	15,683
Issuance of common stock under stock-based compensation plans	598,368	—	546	—	—	546
Stock-based compensation	—	—	6,755	—	—	6,755
Short-swing profit settlement	—	—	244	—	—	244
Foreign currency translation adjustment, net of tax	—	—	—	—	(19)	(19)
Net loss	—	—	—	(24,406)	—	(24,406)
Balances at March 31, 2023	127,173,552	12	404,501	(424,752)	(10,421)	(30,660)

The accompanying notes are an integral part of these condensed consolidated financial statements.

D-Wave Quantum Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)


	Three Months Ended March 31,
(in thousands)	2024		2023
Cash flows from operating activities:
Net loss	$	(17,312)	$	(24,406)
Adjustments to reconcile net loss to cash used in operating activities:
Depreciation and amortization	229		339
Stock-based compensation	3,509		6,755
Amortization of operating right-of-use assets	199		206
Non-cash interest expense	1,093		195
Change in fair value of Warrant liabilities	2,652		(638)
Change in fair value of Term Loan	(1,199)		—
Gain on marketable securities	(1,660)		—
Unrealized foreign exchange loss (gain)	(994)		84
Change in operating assets and liabilities:
Trade accounts receivable	(42)		215
Inventories	(19)		(59)
Prepaid expenses and other current assets	(559)		767
Trade accounts payable	(538)		1,858
Accrued expenses and other current liabilities	2,597		1,214
Deferred revenue	(350)		46
Operating lease liability	343		(150)
Other non-current assets	(68)		—
Net cash used in operating activities	(12,119)		(13,574)
Cash flows from investing activities:
Purchase of property and equipment	(305)		(64)
Purchase of convertible note (Note 4)	(1,000)		—
Sales of marketable equity securities (Note 4)	254		—
Expenditures for internal-use software	(67)		—
Purchase of software	(87)		(12)
Net cash used in investing activities	(1,205)		(76)
Cash flows from financing activities:
Proceeds from Lincoln Park Purchase Agreement	—		15,683
Proceeds from issuance of common stock upon exercise of stock options	8		546
Payment of tax withheld for common stock issued under stock-based compensation plans	(734)		—
Short swing profit settlement	—		244
Debt payments	—		(881)
Net cash provided by (used in) financing activities	(726)		15,592
Effect of exchange rate changes on cash and cash equivalents	47		(19)
Net increase (decrease) in cash and cash equivalents	(14,003)		1,923
Cash and cash equivalents at beginning of period	41,307		7,065
Cash and cash equivalents at end of period	$	27,304	$	8,988
Supplemental disclosure of non-cash investing and financing activities:
Inventory applied to capital projects	$	18	$	—
Operating lease right-of-use assets recognized in exchange for new operating lease obligations	365		—
Purchases of property and equipment included in accounts payable	234		—
Bonus settled in vested share based compensation awards	2,006		—

The accompanying notes are an integral part of these condensed consolidated financial statements.

D-Wave Quantum Inc.

Notes to Condensed Consolidated Financial Statements

1. DESCRIPTION OF BUSINESS

D-Wave Quantum Inc. ("D-Wave" or the “Company”) was incorporated under the General Corporation Law of the State of Delaware on January 24, 2022. The Company was formed for the purpose of effecting a merger between DPCM Capital, Inc. (“DPCM”), D-Wave Systems Inc. (“D-Wave Systems”), and certain other affiliated entities through a series of transactions (the “Merger”) pursuant to the definitive agreement entered into on February 7, 2022 (the “Transaction Agreement”). On August 5, 2022, in conjunction with the Merger, DPCM and D-Wave Systems became wholly-owned subsidiaries of, and are operated by, the Company. Upon the completion of the Merger, the Company succeeded to all of the operations of its predecessor, D-Wave Systems.

D-Wave is a commercial quantum computing company that provides customers with a full suite of professional services and web-based access to its superconducting quantum computer systems and integrated software environment through its cloud service, LeapTM. Historically, the Company has developed its own annealing superconducting quantum computer and associated software, and its current generation quantum system is the AdvantageTM system.

D-Wave has three operating facilities, which it leases, in North America. These facilities are located in Burnaby, British Columbia, Richmond, British Columbia, and Palo Alto, California.

2. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The unaudited interim condensed consolidated financial statements and accompanying notes have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") for interim financial reporting and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Certain information and footnote disclosure normally included in annual financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to instructions, rules and regulations prescribed by the United States Securities and Exchange Commission ("SEC"). In the opinion of the Company, the unaudited financial information for the interim periods presented reflects all adjustments, which are normal and recurring, necessary for a fair presentation of the condensed consolidated statements of operations and comprehensive loss, condensed consolidated balance sheets, and condensed consolidated statements of cash flows. Interim results should not be regarded as indicative of results that may be expected for any other period or the entire year.

The interim condensed consolidated financial statements included herein have been prepared on the same basis as the audited annual consolidated financial statements and reflect all adjustments (consisting of normal recurring adjustments) which are, in the opinion of management, necessary for a fair presentation of the financial position, results of operations and cash flows for the interim periods presented. These unaudited interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K as of and for the year ended December 31, 2023 filed with the SEC on March 29, 2024.

Principles of Consolidation

The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in the condensed consolidated financial statements upon consolidation.

Liquidity and Going Concern

The Company has prepared its condensed consolidated financial statements assuming that it will continue as a going concern. Since its inception, the Company has incurred net losses and negative cash flows from operations. As of March 31, 2024, the Company had an accumulated deficit of $500.4 million. For the three months ended March 31, 2024 and 2023, the Company incurred a net loss of $17.3 million and $24.4 million, respectively, and the Company had net cash outflows from operating activities of $12.1 million and $13.6 million, respectively. As of March 31, 2024, the Company had cash of $27.3 million and working capital (current assets less current liabilities) of $22.8 million. Additionally, total liabilities exceeded total assets at March 31, 2024 by $37.0 million. The Company expects to incur additional operating losses and negative cash flows from operating activities as it continues to expand its commercial operations and research and development programs.

On April 13, 2023 (the "Closing Date"), the Company finalized a Term Loan and Security Agreement ("Term Loan") with PSPIB Unitas Investments II Inc. ("PSPIB" or the "Lender"), a related party to the Company's largest shareholder. The Term Loan, outlined in Note 6 - Loans payable, net, provides $50.0 million in three tranches, with financial performance requirements. The first two tranches of $15.0 million each were disbursed on April 14, 2023, and July 13, 2023, respectively. The third tranche of $20.0 million is contingent on meeting specific criteria, including a non-dilutive financing closure. There can be no assurance that the Company will be able to meet the conditions necessary to draw on the third tranche. As of March 31, 2024, the Company was in compliance with the covenants under the Term Loan.

In conjunction with the Merger, the Company and D-Wave Systems entered into a purchase agreement with Lincoln Park Capital Fund, LLC ("Lincoln Park") on June 16, 2022 (the "Purchase Agreement") which provides D-Wave the sole right, but not the obligation, to direct Lincoln Park to buy specified dollar amounts up to $150 million of D-Wave's common stock, par value $0.0001 per share through November 1, 2025. The Purchase Agreement may provide the Company and D-Wave with additional liquidity to fund the business, subject to the conditions set forth in the agreement, including volume limitations tied to periodic market prices, ownership limitations restricting Lincoln Park from owning more than 9.9% of the then total outstanding share of common stock of the Company, par value $0.0001, (the "Common Shares") and a floor price of $1.00 at or below which the Company may not sell to Lincoln Park any Common Shares. When the Company sells shares to Lincoln Park, Lincoln Park may resell all, some, or none of those Common Shares at any time or from time to time in its discretion. During the three months ended March 31, 2024, the Company did not issue any Common Shares to Lincoln Park under the Purchase Agreement. In order for the Company to issue Common Shares under the Purchase Agreement, the Company's share price must be above the floor price of $1.00. There is no assurance that the floor price will not fall below $1.00 preventing the Company from being able to make sales to Lincoln Park in the future.

To the extent that sufficient capital is not obtained through the cash received in connection with the proceeds of the Term Loan or the issuance of Common Shares under the Purchase Agreement with Lincoln Park, management will be required to obtain additional capital through the issuance of debt and/or equity, or other arrangements. However, there can be no assurance that D-Wave will be able to raise additional capital when needed or under acceptable terms. The issuance of additional equity may dilute existing stockholders and newly issued shares may contain senior rights and preferences compared to the currently outstanding common stock. Any future debt may contain covenants and limit D-Wave’s ability to pay dividends or make other distributions to stockholders. If D-Wave is unable to obtain additional financing, operations will be scaled back or discontinued.

As of December 31, 2023, the Company was not in compliance with certain continued listing standards of the New York Stock Exchange ("NYSE"). On March 1, 2024, the NYSE provided D-Wave with a notification letter of recompliance based on a calculation of the Company’s average closing share price for the 30 trading days ended February 29, 2024, which reflected an average closing share price above the NYSE’s $1.00 minimum requirement. D-Wave will continue to be traded on the NYSE, subject to its continued compliance with all applicable listing standards.

If the Company is unable to maintain compliance with the continued listing standards of the NYSE and is not able to cure any violations within the time periods allotted by the NYSE, if any, it will result in the delisting of the Company’s common stock from the NYSE, which could negatively impact the trading price, trading volume and liquidity of, and have other material adverse effects on, the Company’s common stock and its ability to raise capital.

In connection with the Company’s assessment of going concern considerations in accordance with Financial Accounting Standard Board’s Accounting Standards Codification (“ASC”) Topic 205-40, “Basis of Presentation—Going Concern”, management has determined that the Company's liquidity condition raises substantial doubt about the Company’s ability to continue as a going concern, which is considered to be for a period of one year from the issuance of these financial statements. These condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of this uncertainty. Such adjustments could be material.

Use of estimates

The preparation of the condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses and the disclosure of contingent assets and liabilities in the Company’s condensed consolidated financial statements and accompanying notes as of the date of the condensed consolidated financial statements. The most significant estimates and assumptions are used in determining: (i) inputs used to recognize revenue over time relating to hours estimated to complete the remaining performance obligations, (ii) fair value of financial instruments, and (iii) long term revenue forecasts used in the accounting for the SIF Loan (see below and Note 6 for further information). These estimates and assumptions are based on current facts, historical experience and various other factors believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the recording of expenses that are not readily apparent from other sources. On an ongoing basis, management evaluates its estimates as there are changes in circumstances, facts, and experience.

The Company’s accounting estimates and assumptions may change over time in response to risks and uncertainties, including uncertainty in the current economic environment due to inflation, increased interest rates, Ukraine/Russia conflict, the Israel-Hamas War, and any evolutions thereof. The change could be material in future periods. As of the date of issuance of these condensed consolidated financial statements, the Company is not aware of any specific event or circumstances that would require the Company to update estimates, judgments or revise the carrying value of any assets or liabilities. Actual results may differ from those estimates or assumptions.

Investment in securities

The Company holds investments in the equity securities of privately held companies, which are valued based on their original cost. Adjustments are made for observable price changes in orderly transactions involving identical or similar securities of the same issuer, as there are no quoted market prices available.

The Company also holds an investment in a convertible note (the "Note") of Zapata Computing, Inc. ("Zapata"). (see Note 4 for further information). The Company accounts for the Note as a loan receivable pursuant to ASC 310, as the Note does not meet the definition of a security. As of March 31, 2024, the common stock into which the Note is convertible was not readily convertible to cash, and so the conversion feature was not bifurcated from the debt host. The loan receivable was recorded at cost.

Sales of future revenues

On November 20, 2020, the Company entered into an agreement with the Canada Strategic Innovation Fund ("SIF"), wherein SIF committed to providing a conditionally repayable loan to the Company in the amount of up to C$40.0 million (the "SIF Loan"). The SIF Loan is conditionally repayable according to a revenue-based formula. See Note 6 for additional information concerning the SIF Loan.

The accounting treatment for the SIF Loan considers the "sale of future revenues" guidance outlined in ASC 470-10-25. The debt arising from the SIF Loan was recorded at face value and will be amortized using the effective interest method, leading to the accrual of interest expenses over the estimated term of the SIF Loan. The amortization schedule is based on projected cash flows derived from the Company's long-term revenue forecast. Subsequent changes in forecasted cash flows will be accounted for under the catch-up method, which entails adjusting the accrued interest portion of the principal balance through earnings to reflect the effective interest rate. The liability is classified as non-current, as the current forecast indicates that repayments will not commence within the 12 months following the balance sheet date.

As the SIF Loan is originated through a government program, a market rate of interest is not imputed in accordance with the scope limitations of ASC 835.

Term Loan fair value option election

The Company determined that it is eligible for the fair value option election in connection with the Term Loan. The Term Loan meets the definition of a “recognized financial liability” which is an acceptable financial instrument eligible for the fair value option under ASC 825. At the date of issuance, the fair value of the Term Loan was derived from the instrument’s implied discount rate at inception. The fair value option election was made to enhance the relevance and transparency of information presented related to the features embedded in the Term Loan.

Changes in the fair value of the Term Loan, other than changes associated with the Company's own credit risk, are recorded as gains or losses in the Company’s condensed consolidated statements of operations and comprehensive loss in each reporting period. Changes in fair value attributable to the Company's own credit risk are recorded in other comprehensive income or loss in the Company's condensed consolidated statements of operations and comprehensive loss in each reporting period; there have been no such changes for the three months ended March 31, 2024. Under the fair value option, debt issuance costs are recorded in other expense in the Company’s condensed consolidated statements of operations and comprehensive loss.

The Term Loan is subject to certain repayment and prepayment provisions which the Company has considered in their valuation analysis. The valuation analysis performed as of March 31, 2024 did not consider any amendments to the Term Loan that occurred subsequent to March 31, 2024 (See Note 6). To estimate the fair value of the Term Loan under the optional prepayment scenario, we have utilized the binomial lattice model. Additionally, we have employed a Monte Carlo simulation model to forecast both the probability for an event of default in the valuation analysis which would result in a mandatory prepayment of the outstanding principal and accrued and unpaid interest and the probability of the issuance of Common Shares under the Purchase Agreement to determine the estimated proceeds to be paid to the Lender along with a mandatory prepayment premium of 10%.

Fair value of financial instruments

Certain assets and liabilities are carried at fair value under U.S. GAAP. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. Financial assets and liabilities carried at fair value are to be classified and disclosed in one of the following three levels of the fair value hierarchy, of which the first two are considered observable and the last is considered unobservable:

•Level 1—Quoted prices in active markets for identical assets or liabilities.

•Level 2—Observable inputs (other than Level 1 quoted prices), such as quoted prices in active markets for similar assets or liabilities, quoted prices in markets that are not active for identical or similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data.

•Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to determining the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques.

The categorization of a financial instrument within the valuation hierarchy is based on the lowest level of input that is significant to the fair value measurement. The Company recognizes transfers between levels of the fair value hierarchy on the date of the event or change in circumstances that caused the transfer. The Company did not transfer any assets or liabilities in or out of Level 3 during the three months ended March 31, 2024 or 2023.

The following table presents information about the Company’s liabilities that are measured at fair value on a recurring basis as of March 31, 2024 and indicates the place in the fair value hierarchy of the valuation inputs the Company utilized to determine each such fair value (in thousands):


Description	Level	As of March 31, 2024
Liabilities:
Warrant Liabilities – Public Warrants	1	$	2,370
Warrant Liabilities – Private Placement Warrants	2	$	1,912
Term Loan	3	$	31,100

The Warrants are accounted for as liabilities in accordance with ASC 815-40 and are presented within warrant liabilities in the condensed consolidated balance sheets. The warrant liabilities are measured at fair value at inception and on a recurring basis, with changes in fair value presented within change in fair value of warrant liabilities in the condensed consolidated statements of operations and comprehensive loss.

For periods subsequent to the detachment of the Public Warrants from the Units, the close price of the Public Warrants was used as the fair value of the Warrants as of each relevant date. The subsequent measurements of the Public Warrants after the detachment of the Public Warrants from the Units are classified as Level 1 fair value measurements due to the use of an observable market quote in an active market. The subsequent measurements of the Private Warrants after the detachment of the Public Warrants from the Units are classified as Level 2 fair value measurements due to the use of an observable market quote for the Public Warrants, which are considered to be a similar asset in an active market.

As noted above, the Company elected the fair value option for the Term Loan. The valuation of the Term Loan is classified as Level 3 fair measurements, attributable to the utilization of the Monte Carlo simulation, recognized as a Level 3 valuation technique.

Recent accounting pronouncements issued and adopted

No recently issued accounting pronouncements that the Company has adopted have had a material effect on the Company's results of operations, cash flows or financial condition.

Recent accounting pronouncements not yet adopted

Segment Reporting

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting--Improvements to Reportable Segment Disclosures, which requires incremental disclosures about a public entity’s reportable segments but does not change the definition of a segment or the guidance for determining reportable segments. The new guidance requires disclosure of significant segment expenses that are (1) regularly provided to (or easily computed from information regularly provided to) the chief operating decision maker and (2) included in the reported measure of segment profit or loss. The new standard also allows companies to disclose multiple measures of segment profit or loss if those measures are used to assess performance and allocate resources. The guidance will first be effective in our annual disclosures for the year ending December 31, 2024, and will be adopted retrospectively unless impracticable. Early adoption is permitted. We are in the process of assessing the impact of ASU 2023-07 on our disclosures.

Income Tax Disclosures

In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures, which requires disaggregated information about our effective tax rate reconciliation as well as information on income taxes paid. The new guidance will first be effective in our annual disclosures for the year ending December 31, 2025, and should be applied on a prospective basis with the option to apply retrospectively. Early adoption is permitted. We are in the process of assessing the impact of ASU 2023-09 on our disclosures.

3. REVENUE FROM CONTRACTS WITH CUSTOMERS

Disaggregation of revenue

Nature of Products and Services

The following table depicts the disaggregation of revenue by type of products or services and timing of transfer of products or services (in thousands):


	Three Months Ended March 31,
	2024		2023
Type of products or services
QCaaS	$	1,692	$	1,168
Professional services	639		293
Other revenue*	134		122
Total revenue	$	2,465	$	1,583
Timing of revenue recognition
Revenue recognized over time	$	2,405	$	1,542
Revenue recognized at a point in time	60		41
Total revenue	$	2,465	$	1,583

*Other revenue includes training, support, maintenance and printed circuit board sales. For the three months ended March 31, 2023, training and maintenance have been reclassified from professional services to other revenue.

Geographic Information

The following table presents a summary of revenue by geography for the years ended March 31, 2024 and 2023, based on customer location:


	Three Months Ended March 31,
	2024		2023
United States	$	723	$	247
Germany	512		288
Japan	325		308
Other	905		740
Total revenue	$	2,465	$	1,583

"Other" includes the rest of Europe, the Middle East, Africa, Asia, Canada and Australia where the revenue from a single country is not greater than 10% of total consolidated revenue. The Company has not had any sales in China, Russia or Ukraine.

Significant customers

The Company had significant customers during the three months ended March 31, 2024 and 2023. A significant customer is defined as one that comprises up to ten percent or more of total revenues in a particular year or ten percent of outstanding accounts receivable balance as of the period end.

The tables below present the significant customers on a percentage of total revenue basis for the three months ended March 31, 2024 and 2023.


	Three Months Ended March 31,
	2024		2023
Customer A	18	%	15	%
Customer B	—		13	%

As of each of March 31, 2024 and 2023, there were three significant customers, respectively, that comprised ten percent or more of outstanding accounts receivable balances.

Contract balances

The following table provides information about account receivable, contract assets and liabilities as of March 31, 2024 and December 31, 2023 (in thousands):


	As of March 31, 2024		As of December 31, 2023
Trade accounts receivable and contract assets, net:
Trade account receivable, excluding unbilled receivables	$	1,098	$	644
Contract asset for unbilled receivables	637		1,008

Contract liabilities:
Deferred revenue, current	$	1,999	$	2,669
Deferred revenue, non-current	399		79
Customer deposit1	45		45
Total contract liabilities	$	2,443	$	2,793

1Customer deposit is included in accrued expenses and other current liabilities on the condensed consolidated balance sheets.

The allowance for credit loss was immaterial as of March 31, 2024 and December 31, 2023. Write-offs were immaterial during the three months ended March 31, 2024 and 2023.

The revenue recognized in the condensed consolidated statements of operations and comprehensive loss that was included in the contract liability balance at the beginning of each period was $1.4 million and $1.2 million for the three months ended March 31, 2024 and 2023, respectively.

Changes in deferred revenue from contracts with customers were as follows (in thousands):


	Three Months Ended March 31,
	2024		2023
Balance at beginning of period	$	2,748	$	1,790
Deferral of revenue	2,113		1,166
Recognition of deferred revenue	(2,463)		(1,120)
Balance at end of period	$	2,398	$	1,836

Remaining performance obligations

A significant number of the Company’s product and service sales are short-term in nature with a contract term of one year or less. For those contracts, the Company has utilized the practical expedient in ASC 606-10-50-14 exempting the Company from disclosure of the transaction price allocated to remaining performance obligations if the performance obligation is part of a contract that has an original expected duration of one year or less.

As of March 31, 2024, the aggregate amount of remaining performance obligations that were unsatisfied or partially unsatisfied related to customer contracts was $7.4 million, of which approximately 57% is expected to be recognized to revenue in the next 12 months, 91% is expected to be recognized to revenue in the next two years and substantially all of the remainder will be recognized within three years. Revenues allocated to remaining performance obligations represents the transaction price of noncancellable orders for which service has not been performed, which include deferred revenue and the amounts that will be invoiced and recognized as revenues in future periods from open contracts and excludes unexercised renewals.

4. BALANCE SHEET DETAILS

Inventories

Inventories consisted of the following (in thousands):


	As of March 31, 2024		As of December 31, 2023
Raw materials	$	2,054	$	2,052
Work-in-process	25		26
Total inventories	$	2,079	$	2,078

Prepaid expenses and other current assets

Prepaid expenses and other current assets consisted of the following (in thousands):


	As of March 31, 2024		As of December 31, 2023*
Prepaid services	$	736	$	386
Prepaid software	588		543
Prepaid insurance	537		490
Prepaid rent	148		150
Other	560		440
Total prepaid expenses and other current assets	$	2,569	$	2,009

*Certain amounts presented in the table above as of December 31, 2023 have been reclassified to conform to the current period presentation.

Other non-current assets

Other non-current assets consisted of the following (in thousands):


	As of March 31, 2024		As of December 31, 2023
Investment in equity securities	$	2,574	$	1,168
Loan receivable	1,021		—
Long-term deposits	189		189
Contract acquisition costs	44		—
Total	$	3,828	$	1,357

On January 5, 2024, one of the Company's equity interest investments was acquired by another entity and based on the transaction terms, was considered an observable price change. Consequently, the carrying value of the Company's investment was adjusted based on the consideration received, resulting in a net gain of approximately $1.7 million, recorded in other income during the three months ended March 31, 2024.

On February 8, 2024, the Company entered into a collaboration arrangement with Zapata to develop and bring to market commercial applications that combine generative AI and quantum computing technologies. Simultaneously, Zapata purchased a multi-year subscription to the Company's Leap quantum cloud service. As part of the collaboration, the Company purchased a convertible Senior Secured Note (the "Note") with a principal amount of $1.0 million from Zapata. The Note matures on December 15, 2026, and bears interest at 15% per annum. The Note is prepayable without penalty after December 15, 2025 or if the aggregate value of Zapata's convertible notes outstanding falls below $3.0 million. The Note is convertible into Zapata common stock at the Company's option at a conversion price of $8.50, subject to adjustment for stock splits, recapitalizations, and other similar corporate transactions.

Accrued expenses and other current liabilities

Accrued expenses and other current liabilities consisted of the following (in thousands):


	As of March 31, 2024		As of December 31, 2023*
Accrued compensation and related benefits	$	2,080	$	3,245
Accrued professional services	1,420		1,092
Other accruals	2,507		1,006
Total accrued expenses and other current liabilities	$	6,007	$	5,343

*Certain amounts presented in the table above as of December 31, 2023 have been reclassified to conform to the current period presentation.

5. PROPERTY AND EQUIPMENT, NET

Property and equipment, net consisted of the following (in thousands):


	As of March 31, 2024		As of December 31, 2023
Quantum computer systems	$	13,712	$	13,712
Lab equipment	6,822		6,839
Computer equipment	3,973		3,703
Leasehold improvements	1,075		1,075
Furniture and fixtures	381		381
Construction-in-progress	1,176		894
Total property and equipment	27,139		26,604
Less: Accumulated depreciation	(24,230)		(24,053)
Total property and equipment, net	$	2,909	$	2,551

Depreciation expense for the three months ended March 31, 2024 and 2023 was $0.2 million and $0.3 million, respectively.

6. LOANS PAYABLE, NET

As of March 31, 2024 and December 31, 2023, loans payable, net, consisted of the SIF Loan, the TPC loan (as defined below) and the Term Loan. The following tables show the component of loans payable (in thousands):


	Effective Interest Rate	As of March 31, 2024		As of December 31, 2023
Loans payable, net, current:
TPC Loan, due 2024	Interest free	$	369	$	399
Total loans payable, net, current		$	369	$	399
Loans payable, net, non-current:
SIF Loan1	Interest free	$	31,574	$	32,072
Term Loan, due 2027	11.00%	31,100		31,400
TPC Loan, due 2025	Interest free	369		378
Total loans payable, net, non-current		$	63,043	$	63,850

1Refer below for additional information on the SIF Loan repayment period and effective interest rate.

The following table shows the component of the Company's non-current indebtedness carried at fair value and amortized cost:


	As of March 31, 2024		As of December 31, 2023
SIF Loan	$	31,574	$	32,072
TPC Loan, due 2025	369		378
Total loans payable, net, non-current, at amortized cost	31,943		32,450
Fair value option - Term Loan	31,100		31,400
Total loans payable, net, non-current	$	63,043	$	63,850

TPC loan

In the period spanning 2010 through 2021, the Company received funding totaling C$12.5 million from Technology Partnerships Canada (the "TPC Loan"). On November 23, 2020, an amendment forgave C$5.0 million of unpaid accrued debt principal and interest from prior years. Additionally, the amendment waived the interest charge on the remaining C$2.5 million of principal and revised the repayment schedule to C$0.5 million due annually on each April 30 through 2025.

The estimated fair value of the TPC Loan (Level 2) at March 31, 2024 was $0.7 million. The fair value of the TPC Loan was valued using a discounted cash flow model, with key inputs relating to terms, discount rate and expectations for defaults and prepayments.

SIF Loan

On November 20, 2020, the Company entered into the SIF Loan. As of December 31, 2023, the Company had received the full C$40.0 million in eight tranches between November 2020 and December 2023. Funds from the SIF Loan are to be used for projects involving the adaptation of research findings for commercial applications that have the potential for market disruption; development of current product and services through the implementation of new or incremental technology that will enhance the Company’s competitive capability; and development of process improvements which reduce the environmental footprint of current production through the use of new or improved technologies.

Principal and interest amounts to be repaid under the SIF Loan are determined using a revenue-based formula, and are capped at 150% of the principal amount (the "Repayment Cap"). Repayments are due in up to 15 annual installments, commencing on April 30 of the second fiscal year following the fiscal year in which the Company first reports annual revenue of at least $70.0 million (the "Benchmark Year"). If the Company fails to reach $70.0 million in annual revenue after 14 years from origination, or if the total of the 15 revenue-based annual installments is less than the principal amount, any remaining repayment obligation will be forgiven.

Repayments of the SIF Loan can also be triggered upon default of the agreement, termination of the agreement, or upon a change of control that has not been approved by the Canadian government. As of March 31, 2024, the Company is not aware of events that would trigger default or termination of the agreement.

The gross proceeds of the SIF Loan were recorded as a liability related to the sale of future revenues (see Note 2 - Basis of Presentation and Summary of Significant Accounting Policies). As of March 31, 2024 and December 31, 2023, the Company calculated a weighted average effective interest rate for all tranches of 2.46% and 2.46%, respectively based on the most recent revenue projections at each reporting date.

The estimated fair value of the SIF Loan (Level 3) at March 31, 2024 was $5.1 million. The fair value of SIF Loan was valued using a discounted cash flow model, with significant assumptions relating to the amount and timing of future revenue for the Company and the appropriate discount rate.

Term Loan

On April 13, 2023, the Company entered into the Term Loan with PSPIB, a related party to the Company's largest shareholder. Under the Term Loan, term loans in aggregate principal amount of $50.0 million are to be made available to the Company in three tranches, subject to certain terms and conditions.

The Term Loan matures on March 31, 2027, is secured by a first-priority security interest in substantially all of the Company's assets and contains certain operational and financial covenants, including a financial covenant that measures the Company's revenue against certain minimum percentages of budgeted revenue per quarter. The Term Loan is subject to a 2% drawdown fee and requires that any proceeds from the issuance of Common Shares under the Purchase Agreement be applied towards the repayment of advances under the Term Loan. Such repayments are subject to a premium payment equal to 10% of the amount then prepaid to the Lender, in addition to the regular prepayment premium applicable on that date, except as modified by the amendment to the Term Loan as discussed below. The Term Loan is subject to a prepayment premium due to the Lender equal to 3% of the amount prepaid/repaid within the first year of the Closing Date, 2% in the second year, 1% in the third year and no prepayment premium thereafter. At the Company's discretion, the Term Loan bears interest on a monthly basis at either (i) 10.0% payable in cash, or (ii) 11.0% payable in kind ('PIK'), with the latter added to the principal value of the Term Loan. For the three months ended March 31, 2024, the Company recognized $0.9 million in PIK interest expense related to the Term Loan. The PIK interest expense is included in interest expense on the condensed consolidated statements of operations and comprehensive loss.

Prior to PSPIB's advance of the first tranche, the Company satisfied several closing conditions including the provision of a cash flow forecast and the board of directors' retention of an advisor. The first and second tranche of the Term Loan, each in an aggregate principal amount of $15.0 million, were advanced to D-Wave on April 14, 2023 and July 13, 2023, respectively, with the third tranche of $20.0 million to be made automatically available to the Company subject to the satisfaction of certain conditions. PSPIB has agreed to waive certain covenants under the Term Loan that the Company did not meet, including the minimum revenue financial covenant for the fiscal quarters ended June 30, 2023 and September 30, 2023. As of March 31, 2024, the Company was in compliance with the covenants of the Term Loan.

The availability of the third tranche is subject to the Company closing a $25.0 million non-dilutive financing on terms reasonably acceptable to the Lender, the intellectual property valuation report submitted as a condition precedent to the second tranche remaining satisfactory to the Lender and providing a board-approved operating budget for 2023 through 2027 by August 31, 2023 that is satisfactory to the Lender. The deadline to provide the operating budget was extended to December 31, 2023 from August 31, 2023 by the fourth amendment to the Term Loan dated October 6, 2023, and the budget was provided prior to the extended deadline. There can be no assurance that the Company will be able to meet the conditions necessary to draw on the third tranche.

The Term Loan was amended such that the Company may issue up to $50.0 million under the Purchase Agreement without the requirement to pay down the Term Loan to the extent that the proceeds under the Purchase Agreement were received prior to December 31, 2023. On February 7, 2024, the fifth amendment of the Term Loan was entered into to amend Section 1.1 “Permitted Investments” to include the investment in Zapata in the form of a senior secured promissory note (see Note 4 for further information). As amended, the Term Loan requires that any proceeds from the issuance of Common Shares under the Purchase Agreement in excess of $50.0 million shall be applied towards the repayment of advances under the Term Loan in addition to a premium payment equal to 10% of the amount then prepaid to the Lender. On April 16, 2024, the Term Loan was further amended that the Company may issue up to $30.0 million under the Purchase Agreement without the requirement to pay down the Term Loan to the extent that the proceeds under the Purchase Agreement are received between April 16, 2024 and September 30, 2024. Refer to Note 12 - Subsequent events for further details.

Any unrealized gain or loss on the Term Loan is included in change in fair value of term loan on the condensed consolidated statements of operations and comprehensive loss.

The Term Loan was classified as a Level 3 fair value measurement and measured using the binomial lattice model and the Monte Carlo simulation model. Key inputs for the simulations are summarized below.


			As of March 31, 2024
Weighted-average risk-free rate			5.47% Range: 5.46% to 5.49%
Default Trigger Event probability			5.00% on July 1 2024
ELOC financing trigger event probability			25.00% from December 31, 2023 through July 1, 2024
Weighted-average market yield rate (Default Trigger Event)			15.85%
Weighted-average market yield rate (Call Option)			14.38% Range: 11.86% to 15.74%
Weighted-average market yield volatility			5.00%

The following table summarizes the difference between the fair value and the amortized cost of the Term Loan as of March 31, 2024:


	Amortized Cost		Unrealized Gains		Fair Value
Term Loan, due 2027	$	32,939	$	1,839	$	31,100

The following table summarizes the changes in the Term Loan:


	Three months ended March 31, 2024
Beginning balance	$	31,400

PIK interest expenses	899
Change in fair value	(1,199)
Ending balance	$	31,100

7. WARRANT LIABILITIES

Public and Private Warrants

In conjunction with the Merger, the Company assumed 10,000,000 DPCM public warrants (the "Public Warrants") and 8,000,000 DPCM private warrants (the "Private Warrants", collectively the "Warrants"). During the three months ended March 31, 2024, no DPCM public or private warrants were exercised.

As of March 31, 2024, the Company has 17,916,609 Warrants outstanding. As part of the Merger, each DPCM Public Warrant and Private Warrant that was issued and outstanding immediately prior to the Merger was automatically and irrevocably converted into one D-Wave Quantum warrant. The Warrants are subject to the terms and conditions of the warrant agreement entered into between DPCM, Continental Stock Transfer & Trust Company and the Company (the “Warrant Agreement Amendment” as specified in the Transaction Agreement).

Each such Warrant will be exercisable at an exercise price of $11.50 for 1.4541326 Common Shares, or an approximate exercise price per Common Share of $7.91, subject to adjustments. The Warrants may be exercised for a whole number of shares of the Company. No fractional shares will be issued upon exercise of the Warrants. The Warrants will expire on August 5, 2027, or earlier upon redemption or liquidation.

The Private Warrants are identical to the Public Warrants except that the Private Warrants are exercisable on a cashless basis and are non-redeemable so long as they are held by the initial purchasers or their permitted transferees. If the Private Warrants are held by someone other than the initial purchasers or their permitted transferees, the Private Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants.

The Company may redeem the Public Warrants:

•in whole and not in part;

• at $0.10 per warrant upon a minimum of 30 days’ prior written notice of redemption; provided that holders will be able to exercise their warrants on a cashless basis prior to redemption and receive that number of shares based on the redemption date and the fair market value of the Common Share;

• if, and only if, the last reported sales price of the shares of the Common Shares for any twenty (20) trading days within the thirty (30) trading-day period ending on the third trading day prior to the date on which a notice of redemption is given equals or exceeds $10.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalization and the like) (the "Reference Value");

•if the Reference Value is less than $18.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalization and the like), the Private Warrants must also be concurrently called for redemption on the same terms as the outstanding Public Warrants, as described above; and

• if, and only if, there is an effective registration statement covering the issuance of the Common Shares issuable upon exercise of the warrants and a current prospectus relating thereto available throughout the 30-day period after written notice of redemption is given, or an exemption from registration is available.

If the Company calls the Public Warrants for redemption, management will have the option to require all holders that wish to exercise the Public Warrants to do so on a “cashless basis,” as described in the warrant agreement. The exercise price and number of the Common Shares issuable upon exercise of the warrants may be adjusted in certain circumstances including in the event of a stock dividend, or recapitalization, reorganization, merger or consolidation. However, the warrants will not be adjusted for issuance of the Common Shares at a price below its exercise price. Additionally, in no event will the Company be required to net cash settle the warrants.

D-Wave Systems Warrant Transaction Agreements

In November 2020, contemporaneously with a revenue arrangement, D-Wave Systems entered into a contract pursuant to which D-Wave Systems agreed to cancel a previously issued warrant with a customer and replace it with a warrant to acquire up to 3,247,637 shares of its Class A Preferred Shares (the “Warrant Preferred Shares”), subject to certain vesting requirements. The warrant agreement was amended on August 5, 2022, contemporaneously with the closing of the Merger, to convert the Warrant Preferred Shares to a warrant to acquire up to 2,889,282 Common Shares of the Company in accordance with the Conversion Ratio of 0.889657 (the "Conversion Ratio") established in the Merger. The warrants vest based on various contractual milestones. As of the termination date of the agreement, approximately 40% of the warrants had vested, resulting in warrants exercisable into 1,155,713 Common Shares remaining after the termination date. The vested warrants will remain exercisable for up to 1,155,713 Common Shares at an exercise price of $2.16 per Common Share until November 29, 2026. As of March 31, 2024, no additional Warrant Preferred Shares were vested or probable of vesting.

8. STOCK-BASED COMPENSATION

2020 Equity Incentive Plan

In April 2020, the Board of Directors of D-Wave Systems approved the 2020 Equity Incentive Plan (the "2020 Plan") which provides for the grant of qualified ISO and NSO, restricted stock, RSU or other awards to the Company’s employees, officers, directors, advisors, and outside consultants. After the closing of the Merger effective August 5, 2022, no additional awards were issued under the 2020 Plan. Stock options granted under the 2020 Plan will be converted applying the Conversion Ratio to the underlying common stock at the exercise date.

2022 Equity Incentive Plan

On August 5, 2022, the shareholders approved the D-Wave Quantum Inc. 2022 Equity Incentive Plan (the “2022 Plan”), which became effective immediately upon the closing of the Merger. While the 2022 Plan allows for the issuance of awards with a service condition, a performance condition, a market condition, or some combination of the three, to date, the Company has only issued awards subject to a service condition. Awards issued under the 2022 Plan have vesting periods ranging from under one year to four years from the original grant date, and all awards issued to date under the 2022 Plan will expire ten years from the original grant date.

Share-based compensation awards are settled by issuing new shares.

Common stock option activity

The following table summarizes the Company’s stock option activity during the periods presented (in thousands except share and per share data):


	Number of options	Weighted average exercise price ($)	Weighted average remaining contractual term (years)	Aggregate intrinsic value ($)
Outstanding as of December 31, 2023	11,464,447	1.64	6.80	—
Granted	2,921,082	1.30	—	—
Exercised	(10,443)	0.91	—	9
Forfeited and expired	(122,179)	3.35	—	—
Outstanding as of March 31, 2024	14,252,907	1.56	7.23	12,718
Options exercisable as of March 31, 2024	11,573,180	1.29	6.83	11,406
Options unvested as of March 31, 2024	2,679,727	2.74	8.93	—

As of March 31, 2024, out of the total 14,252,907 options that have been issued and are currently outstanding, 10,447,710 options were granted under the 2020 Plan. These options will be converted applying the Conversion Ratio into a maximum of 9,294,878 Common Shares upon exercise.

Restricted stock unit awards

The following table summarizes the RSU activity and related information under the 2022 Plan:


	Number of Outstanding	Weighted average Grant Date Fair Value ($)	Weighted average remaining contractual term (years)	Aggregate intrinsic value ($)
Unvested as of December 31, 2023	7,045,813	3.13	9.08	6,201
Granted	5,362,486	1.79	—	—
Forfeited and expired	(156,738)	2.73	—	—
Vested	(1,791,317)	0.73	—	—
Unvested as of March 31, 2024	10,460,244	2.86	12.55	21,339

Employee Stock Purchase Plan

During the three months ended March 31, 2024, no common shares were issued under the ESPP.

Stock-based compensation expense

The following table summarizes the stock-based compensation expense classified in the condensed consolidated statements of operations and comprehensive loss as follows (in thousands):


	Three Months Ended March 31,
	2024		2023
Cost of revenue	$	175	$	377
Research and development	1,121		2,760
General and administrative	1,958		3,294
Sales and marketing	255		324
Total stock-based compensation	$	3,509	$	6,755

As of March 31, 2024, total unrecognized stock-based compensation cost, net of estimated forfeitures, related to our unvested stock awards was $30.2 million. This amount is based on an estimated future forfeiture rate of 2.7% per year and will be recognized over a weighted-average period of approximately 1.67 years.

9. PROMISSORY NOTE - RELATED PARTY

Term Loan

On April 13, 2023, the Company entered into the Term Loan, by and between the Company and PSPIB, a related party to the Company's largest shareholder. Refer to Note 6 - Loans payable, net for further description of the Term Loan.

Promissory notes

On February 28, 2022, an affiliate of DPCM issued an unsecured promissory note of up to $1.0 million to the Sponsor (the "Affiliate Note") for additional working capital. $0.2 million was drawn on the Affiliate Note. As part of the Merger, the Company assumed and amended the Affiliate Note. The Affiliate Note had been fully repaid as of December 31, 2023.

Similarly, on April 13, 2022, DPCM obtained an unsecured promissory note of up to $1.0 million from the Sponsor (the "DPCM Note") for additional working capital. $0.2 million was drawn on the DPCM Note. The Company also assumed and amended this note. The Affiliate Note had been fully repaid as of December 31, 2023.

These transactions are considered related party transactions as they involve affiliates of the Company.

Short swing profit settlement

During the three months ended March 31, 2023, the Company recorded approximately $0.2 million related to the short swing profit settlement remitted by a shareholder of the Company under Section 16(b) of the Securities Exchange Act of 1934, as amended. The Company recognized the proceeds as an increase to additional paid-in-capital in the condensed consolidated statements of stockholders’ deficit, as well as in financing activities in the condensed consolidated statements of cash flows for the three months ended March 31, 2023.

10. COMMITMENTS AND CONTINGENCIES

Lease obligations

The Company primarily enters into leases for office space that are classified as operating leases. During the three months ended March 31, 2024 and 2023, total operating lease costs were $0.5 million and $0.4 million, respectively.

Litigation

From time to time, the Company may become involved in various legal proceedings in the ordinary course of its business and may be subject to third-party infringement claims.

In the normal course of business, the Company may agree to indemnify third parties with whom it enters into contractual relationships, including customers, lessors, and parties to other transactions with the Company, with respect to certain matters. The Company has agreed, under certain conditions, to hold these third parties harmless against specified losses, such as those arising from a breach of representations or covenants, other third-party claims that the Company’s products, when used for their intended purposes, infringe the intellectual property rights of such other third parties, or other claims made against certain parties. It is not possible to determine the maximum potential amount of liability under these indemnification obligations due to the Company’s limited history of prior indemnification claims and the unique facts and circumstances that are likely to be involved in each particular claim.

As of March 31, 2024 and 2023, the Company was not subject to any material litigation or pending litigation claims.

11. NET LOSS PER SHARE

The following table sets forth the computation of the basic and diluted net loss per share attributable to common stockholders for the three months ended March 31, 2024 and 2023 (in thousands, except share and per share data):


	Three Months Ended March 31,
	2024		2023
Numerator:
Net loss attributable to common stockholders - basic and diluted	$	(17,312)	$	(24,406)
Denominator:
Weighted-average common stock outstanding	161,308,490		123,144,097
Net loss per share attributable to common stockholders - basic and diluted	$	(0.11)	$	(0.20)

For the three months ended March 31, 2024 and 2023 the Company’s potentially dilutive securities were stock options, the Warrant Shares, the Public Warrants and Private Warrants and the unvested restricted stock unit awards.

Since the Company was in a loss position for all periods presented, basic net loss per share is the same as diluted net loss per share for all periods as the inclusion of all potential common shares outstanding would have been anti-dilutive.

Potentially dilutive securities (upon conversion) that were not included in the diluted per share calculations because they would be anti-dilutive were as follows:


	Three Months Ended March 31,
	2024	2023
Public Warrants as converted to Common Shares (Note 7)	14,420,065	14,420,065
Private Warrants as converted to Common Shares (Note 7)	11,633,060	11,633,060
D-Wave Systems Warrant Shares as converted to Common Shares (Note 7)	1,155,713	2,889,282
Stock options issued and outstanding	13,100,076	13,026,724
Unvested restricted stock unit awards	10,460,244	—
Total	50,769,158	41,969,131

12. SUBSEQUENT EVENTS

The Company has evaluated all events occurring through May 13, 2024, the date on which the condensed consolidated financial statements were issued, and during which time, nothing has occurred outside the normal course of business operations that would require disclosure except the following:

Sixth Amendment to Term Loan

On April 16, 2024, the Company entered into the sixth amendment to the Term Loan (the “Amendment”) with PSPIB.

The Amendment provides for an additional period for which no prepayment of the advances under the Term Loan is required with respect to aggregate gross proceeds of up to $30 million received by the Company pursuant to the share issuances under the Purchase Agreement or the Universal Shelf (as defined in the Term Loan) between April 16, 2024 and September 30, 2024 (the "Second Prepayment Exemption"). Additionally, the Amendment allows for an additional prepayment premium exemption with respect to aggregate gross proceeds up to $20 million received by the Company pursuant to the Purchase Agreement or the Universal Shelf subsequently to the receipt of aggregate gross proceeds of $30 million under the Second Prepayment Exemption. Under such additional prepayment premium exemption, the additional premium included in the Prepayment Premium (as defined in the Term Loan) and equal to 10% of the amount then prepaid to PSPIB for any mandatory prepayment pursuant to Section 2.3(a)(ii) under the Purchase Agreement will not be applicable.

Subsequent to the Amendment, the Company issued 9,616,070 Common Shares in connection with the Purchase Agreement for total proceeds of $13.4 million.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion is intended to assist you in understanding our present business and the results of operations together with our present financial condition. This section should be read 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, 2023 filed with the Securities and Exchange Commission on March 29, 2024. 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 between DPCM Capital, Inc. ("DPCM"), D-Wave Systems Inc., and certain other affiliated entities through a series of transactions (the "Merger") on August 5, 2022 (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.

Overview

We are a commercial quantum computing company that provides customers with a full suite of professional services and web-based access to our superconducting quantum computer systems and integrated software environment through our LeapTM quantum cloud service. Historically, we have developed our own annealing superconducting quantum computer and associated software, and our current generation quantum system is the D-Wave AdvantageTM system. We are a leader in the development and delivery of quantum computing systems, software and services, and we are the world’s first commercial supplier of quantum computers—and the only company developing both annealing quantum computers and gate-model quantum computers.

Our business model is focused primarily on generating revenue from providing customers access to our quantum computing systems via the cloud in the form of quantum computing as a service ("QCaaS") products, and from providing professional services wherein we assist our customers in identifying and implementing quantum computing applications. We have three operating facilities, which we lease, in North America. These facilities are located in Burnaby, British Columbia, Richmond, British Columbia, and Palo Alto, California.

During the three months ended March 31, 2024 and 2023, we generated revenue totaling $2.5 million and $1.6 million, respectively. We have incurred significant operating losses since inception. For the three months ended March 31, 2024 and 2023, our net losses were $17.3 million and $24.4 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, 2024, we had an accumulated deficit of $500.4 million.

Macroeconomic Environment

Unfavorable conditions in the economy in the United States, Canada and abroad, including conditions resulting from changes in gross domestic product growth, financial and credit market fluctuations, banking collapses and related uncertainty, international trade relations, political turmoil, natural catastrophes, outbreaks of contagious diseases, warfare and terrorist attacks on the United States, Europe or elsewhere, including military actions affecting Russia, Ukraine, Israel or elsewhere, could cause a decrease in business investments on our products and negatively affect the growth of our business and our results of operations.

The recent trends towards rising inflation may materially adversely affect our business and corresponding financial position and cash flows. Inflationary factors, interest rates and overhead costs may adversely affect our operating results. High interest and inflation rates also present a recent challenge impacting the U.S. and Canadian economies and could make it more difficult for us to obtain traditional financing on acceptable terms, if at all, in the future. Although we do not believe that inflation has had a material impact on our financial position or results of operations to date, we may experience increases in the near future (especially if inflation rates remain high or continue to rise) on our operating costs, including our labor, due to supply chain constraints and employee availability and wage increases, which may result in additional stress on our working capital resources.

Key Components of Results of Operations

Revenue

We currently generate our revenue primarily through subscription sales to access our QCaaS cloud platform and professional services related to the development and implementation of quantum computing applications. QCaaS revenue is recognized on a ratable basis over the contract term, which generally ranges from one month to two years. Professional services revenue is recognized over time on a percentage of completion basis using the costs incurred input measure of progress.

We expect that QCaaS revenue, as a percentage of total revenue, will increase due to an increasing number of QCaaS agreements being driven by the completion of professional services engagements yielding production applications that require QCaaS services, as well as by customers that choose to access our Leap cloud service without utilizing our professional services organization.

Cost of Revenue

Our cost of revenue consists of all direct and indirect expenses related to providing our QCaaS offering and delivering our professional services, such as personnel-related expenses, including stock-based compensation, costs associated with maintaining the cloud platform on which we provide the QCaaS product and depreciation and amortization related to our quantum computing systems and related software.

We expect our total cost of revenue to trend upward in absolute dollars in future periods, corresponding to our anticipated growth in revenue and necessary to support our customers and to maintain the QCaaS cloud offering, operate our quantum computing systems, and to deliver our professional services. In the short term, decreases in share based compensation expenses may offset the expected long-term upward trend. We expect our cost of revenue as a percentage of total revenue to trend downward over time due to a higher mix of QCaaS revenue that has a lower cost to deliver compared to professional service revenue.

Operating Expenses

Our operating expenses consist of research and development, general and administrative, and sales and marketing expenses.

Research and Development

Research and development expenses consist primarily of personnel-related expenses, including salaries, benefits and stock-based compensation for personnel, fabrication costs, lab supplies, and cloud computing resources and allocated facility costs for our research and development functions. Unlike a standard computer, design and development efforts continue throughout the useful life of our quantum computing systems to ensure proper calibration and optimal functionality. Research and development expenses also include purchased hardware components, fabrication and software costs related to quantum computing systems constructed for research purposes that do not have a high probability of providing near-term future economic benefits, and may have no alternate future use. We currently do not capitalize any research and development expenses.

We expect our research and development expenses will trend upward on an absolute dollar basis for the foreseeable future as we continue to invest in research and development efforts to enhance the performance of our annealing quantum computers, to complete the development of our gate model quantum computer, and to broaden the functionality, improve the reliability, availability and scalability of our QCaaS cloud platform. If in the future we receive government grants and research incentives, which have historically offset a portion of research and development costs, these costs could decrease in absolute dollars. Also, in the short term, decreases in share based compensation expenses may offset the expected long-term upward trend.

General and Administrative

General and administrative expenses consist primarily of personnel-related expenses, including salaries, benefits and stock-based compensation for personnel and outside professional services expenses including legal, audit and accounting services, insurance, other administrative expenses and allocated facility costs for our administrative functions.

We expect our general and administrative expenses to decrease in absolute dollars in the near term due to significant investments in scaling up our ability to operate as a public company made in prior years. However, in longer term future periods we expect general and administrative expenses to increase in absolute dollars as we continue to invest in more comprehensive compliance and governance functions, increased IT security and compliance, and expanded internal controls over financial reporting in accordance with the Sarbanes-Oxley Act.

Sales and Marketing

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 expenses like stock-based compensation could decrease these costs in the short term.

Results of Operations

The following table sets forth our results of operations for the periods indicated (in thousands):


	Three Months Ended March 31,
(In thousands, except share and per share data)	2024		2023
Revenue	$	2,465	$	1,583
Cost of revenue	806		1,162
Total gross profit	1,659		421
Operating expenses:
Research and development	8,525		10,915
General and administrative	7,566		11,296
Sales and marketing	3,084		2,900
Total operating expenses	19,175		25,111
Loss from operations	(17,516)		(24,690)
Other income, net:
Interest expense	(1,140)		(212)
Change in fair value of Term Loan	1,199		—
Gain on investment in marketable equity securities	1,660		—
Change in fair value of warrant liabilities	(2,652)		638
Other income (expense), net	1,137		(142)
Total other income, net	204		284
Net loss	$	(17,312)	$	(24,406)
Foreign currency translation adjustment, net of tax	47		(19)
Net comprehensive loss	$	(17,265)	$	(24,425)

Comparison of the Three Months Ended March 31, 2024 and 2023

Revenue

Revenue increased by $0.9 million, or 56%, to $2.5 million for the three months ended March 31, 2024 as compared to $1.6 million for the three months ended March 31, 2023, with the increase due primarily to an increase in QCaaS revenue of $0.5 million, due to an increase in the number of QCaaS customers and average revenue per QCaaS customer, as well as an increase of $0.3 million in professional services revenue, primarily driven by an increase in projects that enable our customers to identify and implement applications that leverage our QCaaS cloud platform.

Cost of Revenue

Cost of revenue decreased by $0.4 million, or 31%, to $0.8 million for the three months ended March 31, 2024 as compared to $1.2 million for the three months ended March 31, 2023. The decrease in cost of revenue was primarily driven by a decrease in non-cash stock-based compensation, personnel costs and quantum computing infrastructure costs of $0.2 million, $0.1 million and $0.1 million, respectively.

Operating Expenses

Research and Development Expenses


	Three Months Ended March 31,				Change
(In thousands, except percentages)	2024		2023		Amount		%
Research and development	$	8,525	$	10,915	$	(2,390)	(22)	%

Research and development expenses decreased by $2.4 million, or 22%, to $8.5 million for the three months ended March 31, 2024 compared to $10.9 million for the three months ended March 31, 2023. In particular, the decrease was primarily driven by decreases in stock-based compensation expenses of $1.6 million, fabrication expenses of $0.3 million, other personnel costs of $0.2 million and facilities expenses of $0.2 million.

General and Administrative Expenses


	Three Months Ended March 31,				Change
(In thousands, except percentages)	2024		2023		Amount		%
General and administrative	$	7,566	$	11,296	$	(3,730)	(33)	%

General and administrative expenses decreased by $3.7 million, or 33%, to $7.6 million for the three months ended March 31, 2024 as compared to $11.3 million for the three months ended March 31, 2023. The decrease was primarily driven by decreases in professional fees of $2.1 million, stock-based compensation expense of $1.3 million and insurance costs of $0.3 million, partially offset by an increase in personnel costs of $0.4 million.

Sales and Marketing Expenses


	Three Months Ended March 31,				Change
(In thousands, except percentages)	2024		2023		Amount		%
Sales and marketing	$	3,084	$	2,900	$	184	6	%

Sales and marketing expenses remained steady for the three months ended March 31, 2024, in comparison to the same period in 2023.

Other Income (Expense), net

Interest Expense


	Three Months Ended March 31,				Change
(In thousands, except percentages)	2024		2023		Amount		%
Interest expense	$	(1,140)	$	(212)	$	(928)	438	%

Interest expense increased by $0.9 million, or 438%, to $1.1 million for the three months ended March 31, 2024 as compared to $0.2 million for the three months ended March 31, 2023. The increase is primarily due to accrued interest related to the Term Loan, which commenced in the second quarter of 2023. Refer to Note 6 to the accompanying unaudited condensed consolidated financial statements for further details.

Change in fair value of Term Loan


	Three Months Ended March 31,				Change
(In thousands, except percentages)	2024		2023		Amount		%
Change in fair value of Term Loan	$	1,199	$	—	$	1,199	n/a

Change in fair value of Term Loan increased by $1.2 million for the three months ended March 31, 2024 as compared to zero for the three months ended March 31, 2023. As previously mentioned, on April 13, 2023, the Company entered into a Term Loan with PSPIB. The Company opted for the fair value option for accounting the Term Loan (see Note 2 to the accompanying condensed consolidated financial statements). Changes in the fair value of the Term Loan, excluding changes due to the Company's own credit risk, are recorded as gains or losses in the Company’s condensed consolidated statements of operations and comprehensive loss in each reporting period. The fair value of the Term Loan varies primarily based on the market yield rate, market yield volatility, probability for an event of default and the probability of the issuance of shares of D-Wave’s common stock, par value $0.0001, (the "Common Share") under a purchase agreement with Lincoln Park on June 16, 2022 (the "Purchase Agreement").

Gain on investment in marketable equity securities


	Three Months Ended March 31,				Change
(In thousands, except percentages)	2024		2023		Amount		%
Gain on investment in marketable equity securities	$	1,660	$	—	$	1,660	n/a

Gain on investment in marketable equity securities increased by $1.7 million for the three months ended March 31, 2024 as compared to zero for the three months ended March 31, 2023. On January 5, 2024, an investee of the Company was acquired for a combination of cash and stock in an orderly transaction. Consequently, the carrying value of the Company's investment was adjusted based on the consideration received, resulting in a net gain of $1.7 million.

Change in fair value of warrant liabilities


	Three Months Ended March 31,				Change
(In thousands, except percentages)	2024		2023		Amount		%
Change in fair value of warrant liabilities	$	(2,652)	$	638	$	(3,290)	(516)	%

Fair value of warrant liabilities increased by $2.7 million for the three months ended March 31, 2024 as compared to a decrease of $0.6 million for the three months ended March 31, 2023. The fair value of the warrant liabilities varies primarily with the trading price of the Public Warrants listed on the New York Stock Exchange (see Note 2 to the accompanying condensed consolidated financial statements).

Other income (expense), net


	Three Months Ended March 31,				Change
(In thousands, except percentages)	2024		2023		Amount		%
Other income (expense), net	$	1,137	$	(142)	$	1,279	(901)	%

Other income (expense), net increased by $1.3 million or 901%, to $1.1 million for the three months ended March 31, 2024 as compared to $(0.1) million for the three months ended March 31, 2023. The increase was primarily driven by the net impact of foreign exchange gains and losses of $1.1 million and increase in interest income of $0.2 million.

Liquidity and Capital Resources

Since its inception, the Company has incurred net losses and negative cash flows from operations. As of March 31, 2024, the Company had an accumulated deficit of $500.4 million. For the three months ended March 31, 2024 and 2023, the Company incurred a net loss of $17.3 million and $24.4 million, respectively, and the Company had net cash outflows from operating activities of $12.1 million and $13.6 million, respectively. As of March 31, 2024, the Company had cash of $27.3 million and working capital (current assets less current liabilities) of $22.8 million. Additionally, total liabilities exceeded total assets at March 31, 2024 by $37.0 million. The Company expects to incur additional operating losses and negative cash flows from operating activities as it continues to expand its commercial operations and research and development programs.

In conjunction with the Merger, the Company and D-Wave Systems entered into the Purchase Agreement with Lincoln Park Capital Fund, LLC ("Lincoln Park") on June 16, 2022, which provides D-Wave the sole right, but not the obligation, to direct Lincoln Park to buy specified dollar amounts up to $150.0 million of D-Wave's common stock, par value $0.0001 per share through November 1, 2025. The Purchase Agreement may provide the Company and D-Wave with additional liquidity to fund the business, subject to the conditions set forth in the agreement, including volume limitations tied to periodic market prices, ownership limitations restricting Lincoln Park from owning more than 9.9% of the then total outstanding Common Shares and a floor price of $1.00 at or below which the Company may not sell to Lincoln Park any Common Shares. When the Company sells shares to Lincoln Park, Lincoln Park may resell all, some, or none of those Common Shares at any time or from time to time in its discretion. During the three months ended March 31, 2024, the Company did not issue any Common Shares to Lincoln Park under the Purchase Agreement. In order for the Company to issue Common Shares under the Purchase Agreement, the Company's share price must be above the floor price of $1.00. There is no assurance that the floor price will not fall below $1.00 preventing the Company from being able to make sales to Lincoln Park in the future.

Cash Flows

The following table sets forth our cash flows for the periods indicated (in thousands):


	Three Months Ended March 31,
	2024		2023
Net cash provided by (used in):
Operating Activities	$	(12,119)	$	(13,574)
Investing Activities	(1,205)		(76)
Financing Activities	(726)		15,592
Effect of exchange rate changes on cash and cash equivalents	47		(19)
Net increase (decrease) in cash and cash equivalents	$	(14,003)	$	1,923

Cash Flows Used in Operating Activities

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.

For the three months ended March 31, 2024, net cash used in operating activities was $12.1 million, a decrease of $1.5 million from $13.6 million for the three months ended March 31, 2023. The change is primarily due to a decrease in net loss of $7.1 million, offset by a decrease in noncash items of $3.1 million and a decrease in cash released from working capital of $2.5 million. The decrease in noncash items was primarily due to a decrease in stock-based compensation of $3.2 million, an increase in fair value of Term Loan of $1.2 million and a gain on marketable securities of $1.7 million, offset by a net increase in fair value of warrant liabilities of $3.3 million.

Cash Flows Used in Investing Activities

Net cash used in investing activities during the three months ended March 31, 2024 was $1.2 million, an increase of $1.1 million in cash used in investing activities from $0.1 million for the three months ended March 31, 2023. The increase is primarily due to purchase of convertible note of $1.0 million and an increase in purchase of property and equipment of $0.2 million. On February 8, 2024, the Company purchased a convertible Senior Secured Note with a principal amount of $1.0 million from Zapata. Refer to Note 2 and Note 4 to the unaudited condensed consolidated financial statements for further details.

Cash Flows Provided by (Used in) Financing Activities

Net cash used in financing activities during the three months ended March 31, 2024 was $0.7 million, a decrease of $16.3 million from cash provided by financing activities of $15.6 million for the three months ended March 31, 2023. The decrease is primarily due to absence of Common Shares issuance to Lincoln Park under the Purchase Agreement during the three months ended March 31, 2024 and the payment of tax withheld for common stock issued under stock-based compensation plans of $0.7 million.

Contractual Obligations and Commitments

As of March 31, 2024, there have been no material changes with regard to contractual obligations from those disclosed in our "Management's Discussion and Analysis on Financial Condition and Results of Operations—Contractual Obligations and Commitments" in our Annual Report on Form 10-K for the year ended December 31, 2023.

Critical Accounting Estimates

There have been no material changes to our critical accounting policies from those disclosed in our "Management's Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Estimates" in our Annual Report on Form 10-K for the year ended December 31, 2023.

Recently Issued and Adopted Accounting Standards

A discussion of recent accounting pronouncements is included in Note 2 to our unaudited condensed consolidated financial statements included elsewhere in this Form 10-Q.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Not applicable to Smaller Reporting Companies.

Item 4. Controls and Procedures

Limitations on Effectiveness of Controls and Procedures

In designing and evaluating our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.

Evaluation of Disclosure Controls and Procedures

In accordance with the Exchange Act Rules 13a-15(e) and 15d-15(e), we carried out an evaluation, under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of March 31, 2024. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, due to a material weakness in our internal control over financial reporting specifically related to D-Wave’s control environment in relation to our financial statement close process (i.e., lack of sufficient accounting and financial reporting personnel with requisite knowledge and experience in the application of complex areas of GAAP and SEC rules to facilitate accurate and timely financial reporting and to perform sufficient review over certain financial statement areas), as previously disclosed in Item 9A of our Annual Report on Form 10-K for the year ended December 31, 2023, our disclosure controls and procedures were not effective as of the end of the period covered by this Report.

Notwithstanding the material weakness described above, we have concluded that our unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q are fairly stated in all material respects in accordance with U.S. GAAP for the periods presented therein.

Remediation Efforts on Previously Reported Material Weakness

The Company is devoting significant time, attention, and resources to remediating the above material weakness. The Company has undertaken and continues to execute the following steps intended to remediate the material weakness described above and strengthen our internal controls, specifically:

•The Company hired experienced finance and accounting executives in the positions of SVP Finance, VP Corporate Controller, and Senior Manager of Financial Reporting and Technical Accounting.

•The Company continues to develop accounting personnel with a level of accounting knowledge and experience in the application of US GAAP commensurate with our financial reporting requirements and the complexity of our operations and transactions, including providing adequate training and supervision to our staff.

•The Company has engaged external specialists as needed to provide assistance in accounting for significant, non-routine or complex transactions.

•The Company has engaged external consultants to assist the Company in designing, implementing, and monitoring an appropriate system of internal control.

The Company has made significant progress in addressing the previously identified material weakness, however the material weakness will not be considered remediated until our remediation plan has been fully implemented, the applicable controls have operated for a sufficient period of time, and we have concluded, through testing, that the newly implemented and enhanced controls have been designed and operating effectively for a sufficient period of time.

Changes in Internal Control Over Financial Reporting

Other than the ongoing remediation to address the material weakness described above, there was no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act), during the three months ended March 31, 2024 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Part II

Item 1. Legal Proceedings

From time to time, we may become involved in legal proceedings arising in the ordinary course of business. There are currently no pending or threatened legal proceedings or claims against us that, in our opinion, are likely to have a material adverse effect on our business, operating results, financial condition or cash flows. Defending such proceedings is costly and can impose a significant burden on management and team members. The results of any future litigation cannot be predicted with certainty, but regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors.

Item 1A. Risk Factors

There have been no material changes from the risk factors set forth in our Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the SEC on March 29, 2024.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

Securities Trading Plans of Directors and Executive Officers

During the three months ended March 31, 2024, none of the Company’s directors or officers adopted, modified, or terminated a “Rule 10b5-1 trading arrangement” or a “non-Rule 10b5-1 trading arrangement”, as such terms are defined under Item 408 of Regulation S-K.

Item 6. Exhibits and Financial Statement Schedules

Exhibit No.

Description

Incorporated by Reference Exhibits

Filer

Form

Exhibit

Filing Date

10.1†

Fifth Amendment to Loan and Security Agreement, dated as of February 7, 2024, by and between PSPIB Unitas Investments II Inc. and D-Wave Quantum Inc.

D-Wave Quantum Inc.

10-K

10.66

March 29, 2024

10.2†

Third Amendment to the Lease, dated as of February 14, 2024, between Embarcadero Joint Venture and D-Wave Commercial Inc.

D-Wave Quantum Inc.

10-K

10.67

March 29, 2024

10.3

Sixth Amendment to Loan and Security Agreement, dated as of April 16, 2024, by and between PSPIB Unitas Investments II Inc. and D-Wave Quantum Inc.

D-Wave Quantum Inc.

8-K

10.1

April 19, 2024

10.4†#

Amendment to the Full-Time Employment Agreement, dated as of August 20, 2021, between D-Wave Commercial Inc. and John Markovich, dated April 19, 2024.

D-Wave Quantum Inc.

8-K

10.2

April 19, 2024

10.5†#

Amendment to the Full-Time Employment Agreement, dated as of March 4, 2022, between D-Wave Commercial Inc. and Diane Nguyen, dated April 17, 2024.

D-Wave Quantum Inc.

8-K

10.3

April 19, 2024

31.1*

Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a), promulgated under the Securities Exchange Act of 1934, as amended.

31.2*

Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a), promulgated under the Securities Exchange Act of 1934, as amended.

32.1**

Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2**

Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS*

Inline XBRL Instance Document

101.SCH*

Inline XBRL Taxonomy Extension Schema Document.

101.CAL*

Inline XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF*

Inline XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB*

Inline XBRL Taxonomy Extension Labels Linkbase Document.

101.PRE*

Inline XBRL Taxonomy Extension Presentation Linkbase Document.

104*

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

* Filed herewith.

** Furnished with this report in accordance with Item 601(b)(32) of Regulation S-K, this exhibit is not deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section. Such certifications will not be deemed incorporated by reference into any filing under the Securities Act, except to the extent that the registrant specifically incorporates it by reference.

# Indicates management contract or compensatory plan or arrangement.

† Certain portions of this exhibit (indicated by “[*****]”) have been redacted pursuant to Regulation S-K, Item 601(a)(6).

Signatures

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


	D-Wave Quantum Inc.

May 13, 2024	By:	/s/ John M. Markovich
		John M. Markovich
		Chief Financial Officer
		(Principal Financial and Accounting Officer)

Exhibit 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 302 OF

THE SARBANES-OXLEY ACT OF 2002

I, Alan Baratz, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of D-Wave Quantum Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) and internal control over financial reporting (as defined in Exchange Act Rules 13a–15(f) and 15d–15(f)) for the registrant and have:

a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


Dated: May 13, 2024	By:	/s/ Alan Baratz
		Alan Baratz
		President and Chief Executive Officer
		(Principal Executive Officer)

Exhibit 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL AND ACCOUNTING OFFICER

PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 302 OF

THE SARBANES-OXLEY ACT OF 2002

I, John M. Markovich, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of D-Wave Quantum Inc.;

b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


Dated: May 13, 2024	By:	/s/ John M. Markovich
		John M. Markovich
		Chief Financial Officer
		(Principal Financial and Accounting Officer)

Exhibit 32.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of D-Wave Quantum Inc. (the “Company”) on Form 10-Q for the period ended March 31, 2024 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Alan Baratz, President & Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.


Dated: May 13, 2024	By:	/s/ Alan Baratz
		President and Chief Executive Officer
		(Principal Executive Officer)

Exhibit 32.2

CERTIFICATION OF PRINCIPAL FINANCIAL AND ACCOUNTING OFFICER

PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of D-Wave Quantum Inc. (the “Company”) on Form 10-Q for the period ended March 31, 2024 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, John M. Markovich, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.


Dated: May 13, 2024	By:	/s/ John M. Markovich
		Chief Financial Officer
		(Principal Financial and Accounting Officer)

Cover - shares	3 Months Ended
Cover - shares	Mar. 31, 2024	May 10, 2024
Document Information [Line Items]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Mar. 31, 2024
Document Transition Report	false
Entity File Number	001-41468
Entity Registrant Name	D-WAVE QUANTUM INC.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	88-1068854
Entity Address, Address Line One	2650 East Bayshore Road
Entity Address, City or Town	Palo Alto
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	94303
City Area Code	604
Local Phone Number	630-1428
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	true
Entity Ex Transition Period	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		126,380,683
Entity Central Index Key	0001907982
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2024
Document Fiscal Period Focus	Q1
Amendment Flag	false
Common stock, par value $0.0001 per share
Document Information [Line Items]
Title of 12(b) Security	Common stock, par value $0.0001 per share
Trading Symbol	QBTS
Security Exchange Name	NYSE
Warrants, each whole warrant exercisable for 1.4541326 shares of common stock at an exercise price of $11.50
Document Information [Line Items]
Title of 12(b) Security	Warrants, each whole warrant exercisable for 1.4541326 shares of common stock at an exercise price of $11.50
Trading Symbol	QBTS.WT
Security Exchange Name	NYSE

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023
Current assets:
Cash	$ 27,304	$ 41,307
Trade accounts receivable, net	1,735	1,652
Inventories	2,079	2,078
Prepaid expenses and other current assets	2,569	2,009
Total current assets	33,687	47,046
Property and equipment, net	2,909	2,551
Operating lease right-of-use assets	7,879	8,223
Intangible assets, net	302	179
Other non-current assets	3,828	1,357
Total assets	48,605	59,356
Current liabilities:
Trade accounts payable	1,037	1,465
Accrued expenses and other current liabilities	6,007	5,343
Current portion of operating lease liabilities	1,448	1,374
Loans payable, net, current	369	399
Deferred revenue, current	1,999	2,669
Total current liabilities	10,860	11,250
Warrant liabilities	4,282	1,630
Operating lease liabilities, net of current portion	6,978	7,028
Loans payable, net, non-current (including $31,100 and $31,400 as of March 31, 2024 and December 31, 2023, respectively, at fair value)	63,043	63,850
Deferred revenue, non-current	399	79
Total liabilities	85,562	83,837
Commitments and contingencies (Note 10)
Stockholders' deficit:
Common stock, par value $0.0001 per share; 675,000,000 shares authorized at both March 31, 2024 and December 31, 2023; 161,675,010 shares and 161,113,744 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively.	16	16
Additional paid-in capital	473,870	469,081
Accumulated deficit	(500,373)	(483,061)
Accumulated other comprehensive loss	(10,470)	(10,517)
Total stockholders' deficit	(36,957)	(24,481)
Total liabilities and stockholders’ deficit	$ 48,605	$ 59,356

Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023
Statement of Financial Position [Abstract]
Loans payable, net, non-current, fair value	$ 31,100	$ 31,400
Common stock, par value (in usd per share)	$ 0.0001	$ 0.0001
Common stock, authorized (in shares)	675,000,000	675,000,000
Common stock, issued (in shares)	161,675,010	161,113,744
Common stock, outstanding (in shares)	161,675,010	161,113,744

Condensed Consolidated Statements of Operations and Comprehensive Loss - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Income Statement [Abstract]
Revenue	$ 2,465	$ 1,583
Cost of revenue	806	1,162
Total gross profit	1,659	421
Operating expenses:
Research and development	8,525	10,915
General and administrative	7,566	11,296
Sales and marketing	3,084	2,900
Total operating expenses	19,175	25,111
Loss from operations	(17,516)	(24,690)
Other income, net:
Interest expense	(1,140)	(212)
Change in fair value of Term Loan	1,199	0
Gain on investment in marketable equity securities	1,660	0
Change in fair value of warrant liabilities	(2,652)	638
Other income (expense), net	1,137	(142)
Total other income, net	204	284
Net loss	$ (17,312)	$ (24,406)
Net loss per share, basic (in usd per share)	$ (0.11)	$ (0.20)
Net loss per share, diluted (in usd per share)	$ (0.11)	$ (0.20)
Weighted-average shares used in computing net loss per share, basic (in shares)	161,308,490	123,144,097
Weighted-average shares used in computing net loss per share, diluted (in shares)	161,308,490	123,144,097
Comprehensive loss:
Net loss	$ (17,312)	$ (24,406)
Foreign currency translation adjustment, net of tax	47	(19)
Net comprehensive loss	$ (17,265)	$ (24,425)

Condensed Consolidated Statements of Stockholders’ Deficit - USD ($) $ in Thousands	Total	Common stock	Additional paid-in capital	Accumulated deficit	Accumulated other comprehensive loss
Common stock, balance (in shares) at Dec. 31, 2022		113,335,530
Opening Balance at Dec. 31, 2022	$ (29,463)	$ 11	$ 381,274	$ (400,346)	$ (10,402)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock in connection with the Lincoln Park Purchase Agreement (in shares)		13,239,654
Issuance of common stock in connection with the Lincoln Park Purchase Agreement	15,683	$ 1	15,682
Issuance of common stock under stock-based compensation plans (in shares)		598,368
Issuance of common stock under stock-based compensation plans	546		546
Stock-based compensation	6,755		6,755
Short-swing profit settlement	244		244
Foreign currency translation adjustment, net of tax	(19)				(19)
Net loss	(24,406)			(24,406)
Common stock, balance (in shares) at Mar. 31, 2023		127,173,552
Closing Balance at Mar. 31, 2023	$ (30,660)	$ 12	404,501	(424,752)	(10,421)
Common stock, balance (in shares) at Dec. 31, 2023	161,113,744	161,113,744
Opening Balance at Dec. 31, 2023	$ (24,481)	$ 16	469,081	(483,061)	(10,517)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock under stock-based compensation plans (in shares)		561,266
Issuance of common stock under stock-based compensation plans	8	$ 0	8
Stock-based compensation	5,515		5,515
Tax withholding related to vesting of restricted stock units	(734)		(734)
Foreign currency translation adjustment, net of tax	47				47
Net loss	$ (17,312)			(17,312)
Common stock, balance (in shares) at Mar. 31, 2024	161,675,010	161,675,010
Closing Balance at Mar. 31, 2024	$ (36,957)	$ 16	$ 473,870	$ (500,373)	$ (10,470)

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Cash flows from operating activities:
Net loss	$ (17,312)	$ (24,406)
Adjustments to reconcile net loss to cash used in operating activities:
Depreciation and amortization	229	339
Stock-based compensation	3,509	6,755
Amortization of operating right-of-use assets	199	206
Non-cash interest expense	1,093	195
Change in fair value of Warrant liabilities	2,652	(638)
Change in fair value of Term Loan	(1,199)	0
Gain on marketable securities	(1,660)	0
Unrealized foreign exchange loss (gain)	(994)	84
Change in operating assets and liabilities:
Trade accounts receivable	(42)	215
Inventories	(19)	(59)
Prepaid expenses and other current assets	(559)	767
Trade accounts payable	(538)	1,858
Accrued expenses and other current liabilities	2,597	1,214
Deferred revenue	(350)	46
Operating lease liability	343	(150)
Other non-current assets	(68)	0
Net cash used in operating activities	(12,119)	(13,574)
Cash flows from investing activities:
Purchase of property and equipment	(305)	(64)
Purchase of convertible note (Note 4)	(1,000)	0
Sales of marketable equity securities (Note 4)	254	0
Expenditures for internal-use software	(67)	0
Purchase of software	(87)	(12)
Net cash used in investing activities	(1,205)	(76)
Cash flows from financing activities:
Proceeds from Lincoln Park Purchase Agreement	0	15,683
Proceeds from issuance of common stock upon exercise of stock options	8	546
Payment of tax withheld for common stock issued under stock-based compensation plans	(734)	0
Short swing profit settlement	0	244
Debt payments	0	(881)
Net cash provided by (used in) financing activities	(726)	15,592
Effect of exchange rate changes on cash and cash equivalents	47	(19)
Net increase (decrease) in cash and cash equivalents	(14,003)	1,923
Cash and cash equivalents at beginning of period	41,307	7,065
Cash and cash equivalents at end of period	27,304	8,988
Supplemental disclosure of non-cash investing and financing activities:
Inventory applied to capital projects	18	0
Operating lease right-of-use assets recognized in exchange for new operating lease obligations	365	0
Purchases of property and equipment included in accounts payable	234	0
Bonus settled in vested share based compensation awards	$ 2,006	$ 0

DESCRIPTION OF BUSINESS	3 Months Ended
DESCRIPTION OF BUSINESS	Mar. 31, 2024
Organization, Consolidation and Presentation of Financial Statements [Abstract]
DESCRIPTION OF BUSINESS	1. DESCRIPTION OF BUSINESS D-Wave Quantum Inc. ("D-Wave" or the “Company”) was incorporated under the General Corporation Law of the State of Delaware on January 24, 2022. The Company was formed for the purpose of effecting a merger between DPCM Capital, Inc. (“DPCM”), D-Wave Systems Inc. (“D-Wave Systems”), and certain other affiliated entities through a series of transactions (the “Merger”) pursuant to the definitive agreement entered into on February 7, 2022 (the “Transaction Agreement”). On August 5, 2022, in conjunction with the Merger, DPCM and D-Wave Systems became wholly-owned subsidiaries of, and are operated by, the Company. Upon the completion of the Merger, the Company succeeded to all of the operations of its predecessor, D-Wave Systems. D-Wave is a commercial quantum computing company that provides customers with a full suite of professional services and web-based access to its superconducting quantum computer systems and integrated software environment through its cloud service, LeapTM. Historically, the Company has developed its own annealing superconducting quantum computer and associated software, and its current generation quantum system is the AdvantageTM system. D-Wave has three operating facilities, which it leases, in North America. These facilities are located in Burnaby, British Columbia, Richmond, British Columbia, and Palo Alto, California.

BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

3 Months Ended

Mar. 31, 2024

Accounting Policies [Abstract]

BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

2. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

Principles of Consolidation

Liquidity and Going Concern

Use of estimates

Investment in securities

Sales of future revenues

As the SIF Loan is originated through a government program, a market rate of interest is not imputed in accordance with the scope limitations of ASC 835.

Term Loan fair value option election

Fair value of financial instruments

•Level 1—Quoted prices in active markets for identical assets or liabilities.


Description	Level	As of March 31, 2024
Liabilities:
Warrant Liabilities – Public Warrants	1	$	2,370
Warrant Liabilities – Private Placement Warrants	2	$	1,912
Term Loan	3	$	31,100

Recent accounting pronouncements issued and adopted

No recently issued accounting pronouncements that the Company has adopted have had a material effect on the Company's results of operations, cash flows or financial condition.

Recent accounting pronouncements not yet adopted

Segment Reporting

Income Tax Disclosures

REVENUE FROM CONTRACTS WITH CUSTOMERS

3 Months Ended

Mar. 31, 2024

Revenue from Contract with Customer [Abstract]

REVENUE FROM CONTRACTS WITH CUSTOMERS

3. REVENUE FROM CONTRACTS WITH CUSTOMERS

Disaggregation of revenue

Nature of Products and Services

The following table depicts the disaggregation of revenue by type of products or services and timing of transfer of products or services (in thousands):


	Three Months Ended March 31,
	2024		2023
Type of products or services
QCaaS	$	1,692	$	1,168
Professional services	639		293
Other revenue*	134		122
Total revenue	$	2,465	$	1,583
Timing of revenue recognition
Revenue recognized over time	$	2,405	$	1,542
Revenue recognized at a point in time	60		41
Total revenue	$	2,465	$	1,583

Geographic Information

The following table presents a summary of revenue by geography for the years ended March 31, 2024 and 2023, based on customer location:


	Three Months Ended March 31,
	2024		2023
United States	$	723	$	247
Germany	512		288
Japan	325		308
Other	905		740
Total revenue	$	2,465	$	1,583

Significant customers

The tables below present the significant customers on a percentage of total revenue basis for the three months ended March 31, 2024 and 2023.


	Three Months Ended March 31,
	2024		2023
Customer A	18	%	15	%
Customer B	—		13	%

As of each of March 31, 2024 and 2023, there were three significant customers, respectively, that comprised ten percent or more of outstanding accounts receivable balances.

Contract balances

The following table provides information about account receivable, contract assets and liabilities as of March 31, 2024 and December 31, 2023 (in thousands):


	As of March 31, 2024		As of December 31, 2023
Trade accounts receivable and contract assets, net:
Trade account receivable, excluding unbilled receivables	$	1,098	$	644
Contract asset for unbilled receivables	637		1,008

Contract liabilities:
Deferred revenue, current	$	1,999	$	2,669
Deferred revenue, non-current	399		79
Customer deposit1	45		45
Total contract liabilities	$	2,443	$	2,793

1Customer deposit is included in accrued expenses and other current liabilities on the condensed consolidated balance sheets.

The allowance for credit loss was immaterial as of March 31, 2024 and December 31, 2023. Write-offs were immaterial during the three months ended March 31, 2024 and 2023.

Changes in deferred revenue from contracts with customers were as follows (in thousands):


	Three Months Ended March 31,
	2024		2023
Balance at beginning of period	$	2,748	$	1,790
Deferral of revenue	2,113		1,166
Recognition of deferred revenue	(2,463)		(1,120)
Balance at end of period	$	2,398	$	1,836

Remaining performance obligations

BALANCE SHEET DETAILS

3 Months Ended

Mar. 31, 2024

Organization, Consolidation and Presentation of Financial Statements [Abstract]

BALANCE SHEET DETAILS

4. BALANCE SHEET DETAILS

Inventories

Inventories consisted of the following (in thousands):


	As of March 31, 2024		As of December 31, 2023
Raw materials	$	2,054	$	2,052
Work-in-process	25		26
Total inventories	$	2,079	$	2,078

Prepaid expenses and other current assets

Prepaid expenses and other current assets consisted of the following (in thousands):


	As of March 31, 2024		As of December 31, 2023*
Prepaid services	$	736	$	386
Prepaid software	588		543
Prepaid insurance	537		490
Prepaid rent	148		150
Other	560		440
Total prepaid expenses and other current assets	$	2,569	$	2,009

*Certain amounts presented in the table above as of December 31, 2023 have been reclassified to conform to the current period presentation.

Other non-current assets

Other non-current assets consisted of the following (in thousands):


	As of March 31, 2024		As of December 31, 2023
Investment in equity securities	$	2,574	$	1,168
Loan receivable	1,021		—
Long-term deposits	189		189
Contract acquisition costs	44		—
Total	$	3,828	$	1,357

Accrued expenses and other current liabilities

Accrued expenses and other current liabilities consisted of the following (in thousands):


	As of March 31, 2024		As of December 31, 2023*
Accrued compensation and related benefits	$	2,080	$	3,245
Accrued professional services	1,420		1,092
Other accruals	2,507		1,006
Total accrued expenses and other current liabilities	$	6,007	$	5,343

*Certain amounts presented in the table above as of December 31, 2023 have been reclassified to conform to the current period presentation.

PROPERTY AND EQUIPMENT, NET

3 Months Ended

Mar. 31, 2024

Property, Plant and Equipment [Abstract]

PROPERTY AND EQUIPMENT, NET

5. PROPERTY AND EQUIPMENT, NET

Property and equipment, net consisted of the following (in thousands):


	As of March 31, 2024		As of December 31, 2023
Quantum computer systems	$	13,712	$	13,712
Lab equipment	6,822		6,839
Computer equipment	3,973		3,703
Leasehold improvements	1,075		1,075
Furniture and fixtures	381		381
Construction-in-progress	1,176		894
Total property and equipment	27,139		26,604
Less: Accumulated depreciation	(24,230)		(24,053)
Total property and equipment, net	$	2,909	$	2,551

Depreciation expense for the three months ended March 31, 2024 and 2023 was $0.2 million and $0.3 million, respectively.

LOANS PAYABLE, NET

3 Months Ended

Mar. 31, 2024

Debt Disclosure [Abstract]

LOANS PAYABLE, NET

6. LOANS PAYABLE, NET


	Effective Interest Rate	As of March 31, 2024		As of December 31, 2023
Loans payable, net, current:
TPC Loan, due 2024	Interest free	$	369	$	399
Total loans payable, net, current		$	369	$	399
Loans payable, net, non-current:
SIF Loan1	Interest free	$	31,574	$	32,072
Term Loan, due 2027	11.00%	31,100		31,400
TPC Loan, due 2025	Interest free	369		378
Total loans payable, net, non-current		$	63,043	$	63,850

1Refer below for additional information on the SIF Loan repayment period and effective interest rate.

The following table shows the component of the Company's non-current indebtedness carried at fair value and amortized cost:


	As of March 31, 2024		As of December 31, 2023
SIF Loan	$	31,574	$	32,072
TPC Loan, due 2025	369		378
Total loans payable, net, non-current, at amortized cost	31,943		32,450
Fair value option - Term Loan	31,100		31,400
Total loans payable, net, non-current	$	63,043	$	63,850

TPC loan

SIF Loan

Term Loan

Any unrealized gain or loss on the Term Loan is included in change in fair value of term loan on the condensed consolidated statements of operations and comprehensive loss.


			As of March 31, 2024
Weighted-average risk-free rate			5.47% Range: 5.46% to 5.49%
Default Trigger Event probability			5.00% on July 1 2024
ELOC financing trigger event probability			25.00% from December 31, 2023 through July 1, 2024
Weighted-average market yield rate (Default Trigger Event)			15.85%
Weighted-average market yield rate (Call Option)			14.38% Range: 11.86% to 15.74%
Weighted-average market yield volatility			5.00%

The following table summarizes the difference between the fair value and the amortized cost of the Term Loan as of March 31, 2024:


	Amortized Cost		Unrealized Gains		Fair Value
Term Loan, due 2027	$	32,939	$	1,839	$	31,100

The following table summarizes the changes in the Term Loan:


	Three months ended March 31, 2024
Beginning balance	$	31,400

PIK interest expenses	899
Change in fair value	(1,199)
Ending balance	$	31,100

WARRANT LIABILITIES	3 Months Ended
WARRANT LIABILITIES	Mar. 31, 2024
Other Liabilities Disclosure [Abstract]
WARRANT LIABILITIES	7. WARRANT LIABILITIES Public and Private Warrants In conjunction with the Merger, the Company assumed 10,000,000 DPCM public warrants (the "Public Warrants") and 8,000,000 DPCM private warrants (the "Private Warrants", collectively the "Warrants"). During the three months ended March 31, 2024, no DPCM public or private warrants were exercised. As of March 31, 2024, the Company has 17,916,609 Warrants outstanding. As part of the Merger, each DPCM Public Warrant and Private Warrant that was issued and outstanding immediately prior to the Merger was automatically and irrevocably converted into one D-Wave Quantum warrant. The Warrants are subject to the terms and conditions of the warrant agreement entered into between DPCM, Continental Stock Transfer & Trust Company and the Company (the “Warrant Agreement Amendment” as specified in the Transaction Agreement). Each such Warrant will be exercisable at an exercise price of $11.50 for 1.4541326 Common Shares, or an approximate exercise price per Common Share of $7.91, subject to adjustments. The Warrants may be exercised for a whole number of shares of the Company. No fractional shares will be issued upon exercise of the Warrants. The Warrants will expire on August 5, 2027, or earlier upon redemption or liquidation. The Private Warrants are identical to the Public Warrants except that the Private Warrants are exercisable on a cashless basis and are non-redeemable so long as they are held by the initial purchasers or their permitted transferees. If the Private Warrants are held by someone other than the initial purchasers or their permitted transferees, the Private Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants. The Company may redeem the Public Warrants: •in whole and not in part; • at $0.10 per warrant upon a minimum of 30 days’ prior written notice of redemption; provided that holders will be able to exercise their warrants on a cashless basis prior to redemption and receive that number of shares based on the redemption date and the fair market value of the Common Share; • if, and only if, the last reported sales price of the shares of the Common Shares for any twenty (20) trading days within the thirty (30) trading-day period ending on the third trading day prior to the date on which a notice of redemption is given equals or exceeds $10.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalization and the like) (the "Reference Value"); •if the Reference Value is less than $18.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalization and the like), the Private Warrants must also be concurrently called for redemption on the same terms as the outstanding Public Warrants, as described above; and • if, and only if, there is an effective registration statement covering the issuance of the Common Shares issuable upon exercise of the warrants and a current prospectus relating thereto available throughout the 30-day period after written notice of redemption is given, or an exemption from registration is available. If the Company calls the Public Warrants for redemption, management will have the option to require all holders that wish to exercise the Public Warrants to do so on a “cashless basis,” as described in the warrant agreement. The exercise price and number of the Common Shares issuable upon exercise of the warrants may be adjusted in certain circumstances including in the event of a stock dividend, or recapitalization, reorganization, merger or consolidation. However, the warrants will not be adjusted for issuance of the Common Shares at a price below its exercise price. Additionally, in no event will the Company be required to net cash settle the warrants. D-Wave Systems Warrant Transaction Agreements In November 2020, contemporaneously with a revenue arrangement, D-Wave Systems entered into a contract pursuant to which D-Wave Systems agreed to cancel a previously issued warrant with a customer and replace it with a warrant to acquire up to 3,247,637 shares of its Class A Preferred Shares (the “Warrant Preferred Shares”), subject to certain vesting requirements. The warrant agreement was amended on August 5, 2022, contemporaneously with the closing of the Merger, to convert the Warrant Preferred Shares to a warrant to acquire up to 2,889,282 Common Shares of the Company in accordance with the Conversion Ratio of 0.889657 (the "Conversion Ratio") established in the Merger. The warrants vest based on various contractual milestones. As of the termination date of the agreement, approximately 40% of the warrants had vested, resulting in warrants exercisable into 1,155,713 Common Shares remaining after the termination date. The vested warrants will remain exercisable for up to 1,155,713 Common Shares at an exercise price of $2.16 per Common Share until November 29, 2026. As of March 31, 2024, no additional Warrant Preferred Shares were vested or probable of vesting.

STOCK-BASED COMPENSATION

3 Months Ended

Mar. 31, 2024

Share-Based Payment Arrangement [Abstract]

STOCK-BASED COMPENSATION

8. STOCK-BASED COMPENSATION

2020 Equity Incentive Plan

2022 Equity Incentive Plan

Share-based compensation awards are settled by issuing new shares.

Common stock option activity

The following table summarizes the Company’s stock option activity during the periods presented (in thousands except share and per share data):


	Number of options	Weighted average exercise price ($)	Weighted average remaining contractual term (years)	Aggregate intrinsic value ($)
Outstanding as of December 31, 2023	11,464,447	1.64	6.80	—
Granted	2,921,082	1.30	—	—
Exercised	(10,443)	0.91	—	9
Forfeited and expired	(122,179)	3.35	—	—
Outstanding as of March 31, 2024	14,252,907	1.56	7.23	12,718
Options exercisable as of March 31, 2024	11,573,180	1.29	6.83	11,406
Options unvested as of March 31, 2024	2,679,727	2.74	8.93	—

Restricted stock unit awards

The following table summarizes the RSU activity and related information under the 2022 Plan:


	Number of Outstanding	Weighted average Grant Date Fair Value ($)	Weighted average remaining contractual term (years)	Aggregate intrinsic value ($)
Unvested as of December 31, 2023	7,045,813	3.13	9.08	6,201
Granted	5,362,486	1.79	—	—
Forfeited and expired	(156,738)	2.73	—	—
Vested	(1,791,317)	0.73	—	—
Unvested as of March 31, 2024	10,460,244	2.86	12.55	21,339

Employee Stock Purchase Plan

During the three months ended March 31, 2024, no common shares were issued under the ESPP.

Stock-based compensation expense

The following table summarizes the stock-based compensation expense classified in the condensed consolidated statements of operations and comprehensive loss as follows (in thousands):


	Three Months Ended March 31,
	2024		2023
Cost of revenue	$	175	$	377
Research and development	1,121		2,760
General and administrative	1,958		3,294
Sales and marketing	255		324
Total stock-based compensation	$	3,509	$	6,755

PROMISSORY NOTE - RELATED PARTY	3 Months Ended
PROMISSORY NOTE - RELATED PARTY	Mar. 31, 2024
Related Party Transactions [Abstract]
PROMISSORY NOTE - RELATED PARTY	9. PROMISSORY NOTE - RELATED PARTY Term Loan On April 13, 2023, the Company entered into the Term Loan, by and between the Company and PSPIB, a related party to the Company's largest shareholder. Refer to Note 6 - Loans payable, net for further description of the Term Loan. Promissory notes On February 28, 2022, an affiliate of DPCM issued an unsecured promissory note of up to $1.0 million to the Sponsor (the "Affiliate Note") for additional working capital. $0.2 million was drawn on the Affiliate Note. As part of the Merger, the Company assumed and amended the Affiliate Note. The Affiliate Note had been fully repaid as of December 31, 2023. Similarly, on April 13, 2022, DPCM obtained an unsecured promissory note of up to $1.0 million from the Sponsor (the "DPCM Note") for additional working capital. $0.2 million was drawn on the DPCM Note. The Company also assumed and amended this note. The Affiliate Note had been fully repaid as of December 31, 2023. These transactions are considered related party transactions as they involve affiliates of the Company. Short swing profit settlement During the three months ended March 31, 2023, the Company recorded approximately $0.2 million related to the short swing profit settlement remitted by a shareholder of the Company under Section 16(b) of the Securities Exchange Act of 1934, as amended. The Company recognized the proceeds as an increase to additional paid-in-capital in the condensed consolidated statements of stockholders’ deficit, as well as in financing activities in the condensed consolidated statements of cash flows for the three months ended March 31, 2023.

COMMITMENTS AND CONTINGENCIES	3 Months Ended
COMMITMENTS AND CONTINGENCIES	Mar. 31, 2024
Commitments and Contingencies Disclosure [Abstract]
COMMITMENTS AND CONTINGENCIES	10. COMMITMENTS AND CONTINGENCIES Lease obligations The Company primarily enters into leases for office space that are classified as operating leases. During the three months ended March 31, 2024 and 2023, total operating lease costs were $0.5 million and $0.4 million, respectively. Litigation From time to time, the Company may become involved in various legal proceedings in the ordinary course of its business and may be subject to third-party infringement claims. In the normal course of business, the Company may agree to indemnify third parties with whom it enters into contractual relationships, including customers, lessors, and parties to other transactions with the Company, with respect to certain matters. The Company has agreed, under certain conditions, to hold these third parties harmless against specified losses, such as those arising from a breach of representations or covenants, other third-party claims that the Company’s products, when used for their intended purposes, infringe the intellectual property rights of such other third parties, or other claims made against certain parties. It is not possible to determine the maximum potential amount of liability under these indemnification obligations due to the Company’s limited history of prior indemnification claims and the unique facts and circumstances that are likely to be involved in each particular claim. As of March 31, 2024 and 2023, the Company was not subject to any material litigation or pending litigation claims.

NET LOSS PER SHARE

3 Months Ended

Mar. 31, 2024

Earnings Per Share [Abstract]

NET LOSS PER SHARE

11. NET LOSS PER SHARE


	Three Months Ended March 31,
	2024		2023
Numerator:
Net loss attributable to common stockholders - basic and diluted	$	(17,312)	$	(24,406)
Denominator:
Weighted-average common stock outstanding	161,308,490		123,144,097
Net loss per share attributable to common stockholders - basic and diluted	$	(0.11)	$	(0.20)

Potentially dilutive securities (upon conversion) that were not included in the diluted per share calculations because they would be anti-dilutive were as follows:


	Three Months Ended March 31,
	2024	2023
Public Warrants as converted to Common Shares (Note 7)	14,420,065	14,420,065
Private Warrants as converted to Common Shares (Note 7)	11,633,060	11,633,060
D-Wave Systems Warrant Shares as converted to Common Shares (Note 7)	1,155,713	2,889,282
Stock options issued and outstanding	13,100,076	13,026,724
Unvested restricted stock unit awards	10,460,244	—
Total	50,769,158	41,969,131

SUBSEQUENT EVENTS	3 Months Ended
SUBSEQUENT EVENTS	Mar. 31, 2024
Subsequent Events [Abstract]
SUBSEQUENT EVENTS	12. SUBSEQUENT EVENTS The Company has evaluated all events occurring through May 13, 2024, the date on which the condensed consolidated financial statements were issued, and during which time, nothing has occurred outside the normal course of business operations that would require disclosure except the following: Sixth Amendment to Term Loan On April 16, 2024, the Company entered into the sixth amendment to the Term Loan (the “Amendment”) with PSPIB. The Amendment provides for an additional period for which no prepayment of the advances under the Term Loan is required with respect to aggregate gross proceeds of up to $30 million received by the Company pursuant to the share issuances under the Purchase Agreement or the Universal Shelf (as defined in the Term Loan) between April 16, 2024 and September 30, 2024 (the "Second Prepayment Exemption"). Additionally, the Amendment allows for an additional prepayment premium exemption with respect to aggregate gross proceeds up to $20 million received by the Company pursuant to the Purchase Agreement or the Universal Shelf subsequently to the receipt of aggregate gross proceeds of $30 million under the Second Prepayment Exemption. Under such additional prepayment premium exemption, the additional premium included in the Prepayment Premium (as defined in the Term Loan) and equal to 10% of the amount then prepaid to PSPIB for any mandatory prepayment pursuant to Section 2.3(a)(ii) under the Purchase Agreement will not be applicable. Subsequent to the Amendment, the Company issued 9,616,070 Common Shares in connection with the Purchase Agreement for total proceeds of $13.4 million.

Pay vs Performance Disclosure - USD ($) $ in Thousands	3 Months Ended
Pay vs Performance Disclosure - USD ($) $ in Thousands	Mar. 31, 2024	Mar. 31, 2023
Pay vs Performance Disclosure
Net loss	$ (17,312)	$ (24,406)

Insider Trading Arrangements	3 Months Ended
Insider Trading Arrangements	Mar. 31, 2024
Trading Arrangements, by Individual
Rule 10b5-1 Arrangement Adopted	false
Non-Rule 10b5-1 Arrangement Adopted	false
Rule 10b5-1 Arrangement Terminated	false
Non-Rule 10b5-1 Arrangement Terminated	false

BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)	3 Months Ended
	Mar. 31, 2024
Accounting Policies [Abstract]
Basis of Presentation	Basis of Presentation The unaudited interim condensed consolidated financial statements and accompanying notes have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") for interim financial reporting and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Certain information and footnote disclosure normally included in annual financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to instructions, rules and regulations prescribed by the United States Securities and Exchange Commission ("SEC"). In the opinion of the Company, the unaudited financial information for the interim periods presented reflects all adjustments, which are normal and recurring, necessary for a fair presentation of the condensed consolidated statements of operations and comprehensive loss, condensed consolidated balance sheets, and condensed consolidated statements of cash flows. Interim results should not be regarded as indicative of results that may be expected for any other period or the entire year. The interim condensed consolidated financial statements included herein have been prepared on the same basis as the audited annual consolidated financial statements and reflect all adjustments (consisting of normal recurring adjustments) which are, in the opinion of management, necessary for a fair presentation of the financial position, results of operations and cash flows for the interim periods presented. These unaudited interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K as of and for the year ended December 31, 2023 filed with the SEC on March 29, 2024.
Principles of Consolidation	Principles of Consolidation The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in the condensed consolidated financial statements upon consolidation.
Use of estimates	Use of estimates The preparation of the condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses and the disclosure of contingent assets and liabilities in the Company’s condensed consolidated financial statements and accompanying notes as of the date of the condensed consolidated financial statements. The most significant estimates and assumptions are used in determining: (i) inputs used to recognize revenue over time relating to hours estimated to complete the remaining performance obligations, (ii) fair value of financial instruments, and (iii) long term revenue forecasts used in the accounting for the SIF Loan (see below and Note 6 for further information). These estimates and assumptions are based on current facts, historical experience and various other factors believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the recording of expenses that are not readily apparent from other sources. On an ongoing basis, management evaluates its estimates as there are changes in circumstances, facts, and experience. The Company’s accounting estimates and assumptions may change over time in response to risks and uncertainties, including uncertainty in the current economic environment due to inflation, increased interest rates, Ukraine/Russia conflict, the Israel-Hamas War, and any evolutions thereof. The change could be material in future periods. As of the date of issuance of these condensed consolidated financial statements, the Company is not aware of any specific event or circumstances that would require the Company to update estimates, judgments or revise the carrying value of any assets or liabilities. Actual results may differ from those estimates or assumptions.
Investment in securities	Investment in securities The Company holds investments in the equity securities of privately held companies, which are valued based on their original cost. Adjustments are made for observable price changes in orderly transactions involving identical or similar securities of the same issuer, as there are no quoted market prices available. The Company also holds an investment in a convertible note (the "Note") of Zapata Computing, Inc. ("Zapata"). (see Note 4 for further information). The Company accounts for the Note as a loan receivable pursuant to ASC 310, as the Note does not meet the definition of a security. As of March 31, 2024, the common stock into which the Note is convertible was not readily convertible to cash, and so the conversion feature was not bifurcated from the debt host. The loan receivable was recorded at cost.
Sales of future revenues and Term Loan fair value option election	Sales of future revenues On November 20, 2020, the Company entered into an agreement with the Canada Strategic Innovation Fund ("SIF"), wherein SIF committed to providing a conditionally repayable loan to the Company in the amount of up to C$40.0 million (the "SIF Loan"). The SIF Loan is conditionally repayable according to a revenue-based formula. See Note 6 for additional information concerning the SIF Loan. The accounting treatment for the SIF Loan considers the "sale of future revenues" guidance outlined in ASC 470-10-25. The debt arising from the SIF Loan was recorded at face value and will be amortized using the effective interest method, leading to the accrual of interest expenses over the estimated term of the SIF Loan. The amortization schedule is based on projected cash flows derived from the Company's long-term revenue forecast. Subsequent changes in forecasted cash flows will be accounted for under the catch-up method, which entails adjusting the accrued interest portion of the principal balance through earnings to reflect the effective interest rate. The liability is classified as non-current, as the current forecast indicates that repayments will not commence within the 12 months following the balance sheet date. As the SIF Loan is originated through a government program, a market rate of interest is not imputed in accordance with the scope limitations of ASC 835. Term Loan fair value option election The Company determined that it is eligible for the fair value option election in connection with the Term Loan. The Term Loan meets the definition of a “recognized financial liability” which is an acceptable financial instrument eligible for the fair value option under ASC 825. At the date of issuance, the fair value of the Term Loan was derived from the instrument’s implied discount rate at inception. The fair value option election was made to enhance the relevance and transparency of information presented related to the features embedded in the Term Loan. Changes in the fair value of the Term Loan, other than changes associated with the Company's own credit risk, are recorded as gains or losses in the Company’s condensed consolidated statements of operations and comprehensive loss in each reporting period. Changes in fair value attributable to the Company's own credit risk are recorded in other comprehensive income or loss in the Company's condensed consolidated statements of operations and comprehensive loss in each reporting period; there have been no such changes for the three months ended March 31, 2024. Under the fair value option, debt issuance costs are recorded in other expense in the Company’s condensed consolidated statements of operations and comprehensive loss. The Term Loan is subject to certain repayment and prepayment provisions which the Company has considered in their valuation analysis. The valuation analysis performed as of March 31, 2024 did not consider any amendments to the Term Loan that occurred subsequent to March 31, 2024 (See Note 6). To estimate the fair value of the Term Loan under the optional prepayment scenario, we have utilized the binomial lattice model. Additionally, we have employed a Monte Carlo simulation model to forecast both the probability for an event of default in the valuation analysis which would result in a mandatory prepayment of the outstanding principal and accrued and unpaid interest and the probability of the issuance of Common Shares under the Purchase Agreement to determine the estimated proceeds to be paid to the Lender along with a mandatory prepayment premium of 10%.
Fair value of financial instruments	Fair value of financial instruments Certain assets and liabilities are carried at fair value under U.S. GAAP. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. Financial assets and liabilities carried at fair value are to be classified and disclosed in one of the following three levels of the fair value hierarchy, of which the first two are considered observable and the last is considered unobservable: •Level 1—Quoted prices in active markets for identical assets or liabilities. •Level 2—Observable inputs (other than Level 1 quoted prices), such as quoted prices in active markets for similar assets or liabilities, quoted prices in markets that are not active for identical or similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data. •Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to determining the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques. The categorization of a financial instrument within the valuation hierarchy is based on the lowest level of input that is significant to the fair value measurement. The Company recognizes transfers between levels of the fair value hierarchy on the date of the event or change in circumstances that caused the transfer. The Company did not transfer any assets or liabilities in or out of Level 3 during the three months ended March 31, 2024 or 2023. The Warrants are accounted for as liabilities in accordance with ASC 815-40 and are presented within warrant liabilities in the condensed consolidated balance sheets. The warrant liabilities are measured at fair value at inception and on a recurring basis, with changes in fair value presented within change in fair value of warrant liabilities in the condensed consolidated statements of operations and comprehensive loss. For periods subsequent to the detachment of the Public Warrants from the Units, the close price of the Public Warrants was used as the fair value of the Warrants as of each relevant date. The subsequent measurements of the Public Warrants after the detachment of the Public Warrants from the Units are classified as Level 1 fair value measurements due to the use of an observable market quote in an active market. The subsequent measurements of the Private Warrants after the detachment of the Public Warrants from the Units are classified as Level 2 fair value measurements due to the use of an observable market quote for the Public Warrants, which are considered to be a similar asset in an active market. As noted above, the Company elected the fair value option for the Term Loan.
Recent accounting pronouncements issued and adopted and not yet adopted	Recent accounting pronouncements issued and adopted No recently issued accounting pronouncements that the Company has adopted have had a material effect on the Company's results of operations, cash flows or financial condition. Recent accounting pronouncements not yet adopted Segment Reporting In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting--Improvements to Reportable Segment Disclosures, which requires incremental disclosures about a public entity’s reportable segments but does not change the definition of a segment or the guidance for determining reportable segments. The new guidance requires disclosure of significant segment expenses that are (1) regularly provided to (or easily computed from information regularly provided to) the chief operating decision maker and (2) included in the reported measure of segment profit or loss. The new standard also allows companies to disclose multiple measures of segment profit or loss if those measures are used to assess performance and allocate resources. The guidance will first be effective in our annual disclosures for the year ending December 31, 2024, and will be adopted retrospectively unless impracticable. Early adoption is permitted. We are in the process of assessing the impact of ASU 2023-07 on our disclosures. Income Tax Disclosures In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures, which requires disaggregated information about our effective tax rate reconciliation as well as information on income taxes paid. The new guidance will first be effective in our annual disclosures for the year ending December 31, 2025, and should be applied on a prospective basis with the option to apply retrospectively. Early adoption is permitted. We are in the process of assessing the impact of ASU 2023-09 on our disclosures.

BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

3 Months Ended

Mar. 31, 2024

Accounting Policies [Abstract]

Liabilities measured at fair value on a recurring basis


Description	Level	As of March 31, 2024
Liabilities:
Warrant Liabilities – Public Warrants	1	$	2,370
Warrant Liabilities – Private Placement Warrants	2	$	1,912
Term Loan	3	$	31,100

REVENUE FROM CONTRACTS WITH CUSTOMERS (Tables)

3 Months Ended

Mar. 31, 2024

Revenue from Contract with Customer [Abstract]

Disaggregation of revenue

The following table depicts the disaggregation of revenue by type of products or services and timing of transfer of products or services (in thousands):


	Three Months Ended March 31,
	2024		2023
Type of products or services
QCaaS	$	1,692	$	1,168
Professional services	639		293
Other revenue*	134		122
Total revenue	$	2,465	$	1,583
Timing of revenue recognition
Revenue recognized over time	$	2,405	$	1,542
Revenue recognized at a point in time	60		41
Total revenue	$	2,465	$	1,583

The following table presents a summary of revenue by geography for the years ended March 31, 2024 and 2023, based on customer location:


	Three Months Ended March 31,
	2024		2023
United States	$	723	$	247
Germany	512		288
Japan	325		308
Other	905		740
Total revenue	$	2,465	$	1,583

Significant customers

The tables below present the significant customers on a percentage of total revenue basis for the three months ended March 31, 2024 and 2023.


	Three Months Ended March 31,
	2024		2023
Customer A	18	%	15	%
Customer B	—		13	%

Contract balances and revenue recognized

The following table provides information about account receivable, contract assets and liabilities as of March 31, 2024 and December 31, 2023 (in thousands):


	As of March 31, 2024		As of December 31, 2023
Trade accounts receivable and contract assets, net:
Trade account receivable, excluding unbilled receivables	$	1,098	$	644
Contract asset for unbilled receivables	637		1,008

Contract liabilities:
Deferred revenue, current	$	1,999	$	2,669
Deferred revenue, non-current	399		79
Customer deposit1	45		45
Total contract liabilities	$	2,443	$	2,793

1Customer deposit is included in accrued expenses and other current liabilities on the condensed consolidated balance sheets.

Changes in deferred revenue from contracts with customers were as follows (in thousands):


	Three Months Ended March 31,
	2024		2023
Balance at beginning of period	$	2,748	$	1,790
Deferral of revenue	2,113		1,166
Recognition of deferred revenue	(2,463)		(1,120)
Balance at end of period	$	2,398	$	1,836

BALANCE SHEET DETAILS (Tables)

3 Months Ended

Mar. 31, 2024

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Inventories

Inventories consisted of the following (in thousands):


	As of March 31, 2024		As of December 31, 2023
Raw materials	$	2,054	$	2,052
Work-in-process	25		26
Total inventories	$	2,079	$	2,078

Prepaid expenses and other current assets

Prepaid expenses and other current assets consisted of the following (in thousands):


	As of March 31, 2024		As of December 31, 2023*
Prepaid services	$	736	$	386
Prepaid software	588		543
Prepaid insurance	537		490
Prepaid rent	148		150
Other	560		440
Total prepaid expenses and other current assets	$	2,569	$	2,009

*Certain amounts presented in the table above as of December 31, 2023 have been reclassified to conform to the current period presentation.

Other noncurrent assets

Other non-current assets consisted of the following (in thousands):


	As of March 31, 2024		As of December 31, 2023
Investment in equity securities	$	2,574	$	1,168
Loan receivable	1,021		—
Long-term deposits	189		189
Contract acquisition costs	44		—
Total	$	3,828	$	1,357

Accrued expenses and other current liabilities

Accrued expenses and other current liabilities consisted of the following (in thousands):


	As of March 31, 2024		As of December 31, 2023*
Accrued compensation and related benefits	$	2,080	$	3,245
Accrued professional services	1,420		1,092
Other accruals	2,507		1,006
Total accrued expenses and other current liabilities	$	6,007	$	5,343

*Certain amounts presented in the table above as of December 31, 2023 have been reclassified to conform to the current period presentation.

PROPERTY AND EQUIPMENT, NET (Tables)

3 Months Ended

Mar. 31, 2024

Property, Plant and Equipment [Abstract]

Property and equipment, net

Property and equipment, net consisted of the following (in thousands):


	As of March 31, 2024		As of December 31, 2023
Quantum computer systems	$	13,712	$	13,712
Lab equipment	6,822		6,839
Computer equipment	3,973		3,703
Leasehold improvements	1,075		1,075
Furniture and fixtures	381		381
Construction-in-progress	1,176		894
Total property and equipment	27,139		26,604
Less: Accumulated depreciation	(24,230)		(24,053)
Total property and equipment, net	$	2,909	$	2,551

LOANS PAYABLE, NET (Tables)

3 Months Ended

Mar. 31, 2024

Debt Disclosure [Abstract]

Components of loans payable

The following tables show the component of loans payable (in thousands):


	Effective Interest Rate	As of March 31, 2024		As of December 31, 2023
Loans payable, net, current:
TPC Loan, due 2024	Interest free	$	369	$	399
Total loans payable, net, current		$	369	$	399
Loans payable, net, non-current:
SIF Loan1	Interest free	$	31,574	$	32,072
Term Loan, due 2027	11.00%	31,100		31,400
TPC Loan, due 2025	Interest free	369		378
Total loans payable, net, non-current		$	63,043	$	63,850

1Refer below for additional information on the SIF Loan repayment period and effective interest rate.

The following table shows the component of the Company's non-current indebtedness carried at fair value and amortized cost:


	As of March 31, 2024		As of December 31, 2023
SIF Loan	$	31,574	$	32,072
TPC Loan, due 2025	369		378
Total loans payable, net, non-current, at amortized cost	31,943		32,450
Fair value option - Term Loan	31,100		31,400
Total loans payable, net, non-current	$	63,043	$	63,850

The following table summarizes the changes in the Term Loan:


	Three months ended March 31, 2024
Beginning balance	$	31,400

PIK interest expenses	899
Change in fair value	(1,199)
Ending balance	$	31,100

Schedule of fair value assumptions


			As of March 31, 2024
Weighted-average risk-free rate			5.47% Range: 5.46% to 5.49%
Default Trigger Event probability			5.00% on July 1 2024
ELOC financing trigger event probability			25.00% from December 31, 2023 through July 1, 2024
Weighted-average market yield rate (Default Trigger Event)			15.85%
Weighted-average market yield rate (Call Option)			14.38% Range: 11.86% to 15.74%
Weighted-average market yield volatility			5.00%

Schedule of fair value and the amortized cost

The following table summarizes the difference between the fair value and the amortized cost of the Term Loan as of March 31, 2024:


	Amortized Cost		Unrealized Gains		Fair Value
Term Loan, due 2027	$	32,939	$	1,839	$	31,100

STOCK-BASED COMPENSATION (Tables)

3 Months Ended

Mar. 31, 2024

Share-Based Payment Arrangement [Abstract]

Stock option activity

The following table summarizes the Company’s stock option activity during the periods presented (in thousands except share and per share data):


	Number of options	Weighted average exercise price ($)	Weighted average remaining contractual term (years)	Aggregate intrinsic value ($)
Outstanding as of December 31, 2023	11,464,447	1.64	6.80	—
Granted	2,921,082	1.30	—	—
Exercised	(10,443)	0.91	—	9
Forfeited and expired	(122,179)	3.35	—	—
Outstanding as of March 31, 2024	14,252,907	1.56	7.23	12,718
Options exercisable as of March 31, 2024	11,573,180	1.29	6.83	11,406
Options unvested as of March 31, 2024	2,679,727	2.74	8.93	—

RSU activity and related information

The following table summarizes the RSU activity and related information under the 2022 Plan:


	Number of Outstanding	Weighted average Grant Date Fair Value ($)	Weighted average remaining contractual term (years)	Aggregate intrinsic value ($)
Unvested as of December 31, 2023	7,045,813	3.13	9.08	6,201
Granted	5,362,486	1.79	—	—
Forfeited and expired	(156,738)	2.73	—	—
Vested	(1,791,317)	0.73	—	—
Unvested as of March 31, 2024	10,460,244	2.86	12.55	21,339

Stock-based compensation expense

The following table summarizes the stock-based compensation expense classified in the condensed consolidated statements of operations and comprehensive loss as follows (in thousands):


	Three Months Ended March 31,
	2024		2023
Cost of revenue	$	175	$	377
Research and development	1,121		2,760
General and administrative	1,958		3,294
Sales and marketing	255		324
Total stock-based compensation	$	3,509	$	6,755

NET LOSS PER SHARE (Tables)

3 Months Ended

Mar. 31, 2024

Earnings Per Share [Abstract]

Computation of basic and diluted net loss per share


	Three Months Ended March 31,
	2024		2023
Numerator:
Net loss attributable to common stockholders - basic and diluted	$	(17,312)	$	(24,406)
Denominator:
Weighted-average common stock outstanding	161,308,490		123,144,097
Net loss per share attributable to common stockholders - basic and diluted	$	(0.11)	$	(0.20)

Potentially dilutive securities

Potentially dilutive securities (upon conversion) that were not included in the diluted per share calculations because they would be anti-dilutive were as follows:


	Three Months Ended March 31,
	2024	2023
Public Warrants as converted to Common Shares (Note 7)	14,420,065	14,420,065
Private Warrants as converted to Common Shares (Note 7)	11,633,060	11,633,060
D-Wave Systems Warrant Shares as converted to Common Shares (Note 7)	1,155,713	2,889,282
Stock options issued and outstanding	13,100,076	13,026,724
Unvested restricted stock unit awards	10,460,244	—
Total	50,769,158	41,969,131

DESCRIPTION OF BUSINESS (Details)	Mar. 31, 2024 facility
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Number of operating facilities	3

BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Narrative (Details)			3 Months Ended
	Feb. 07, 2024	Apr. 13, 2023 USD ($) tranche	Mar. 31, 2024 USD ($) $ / shares	Mar. 31, 2023 USD ($)	Dec. 31, 2023 USD ($) tranche $ / shares	Dec. 31, 2023 CAD ($) tranche	Jul. 13, 2023 USD ($)	Jun. 16, 2022 USD ($) $ / shares	Nov. 20, 2020 CAD ($)
Accounting Policies [Line Items]
Accumulated deficit			$ 500,373,000		$ 483,061,000
Net loss			17,312,000	$ 24,406,000
Net cash outflows from operations			12,119,000	$ 13,574,000
Cash			27,304,000		$ 41,307,000
Working capital deficit			22,800,000
Total liabilities exceeded assets			$ 37,000,000
ELOC, right to sell common stock								$ 150,000,000
Common stock, par value (in usd per share) \| $ / shares			$ 0.0001		$ 0.0001			$ 0.0001
ELOC, ownership restriction percentage								9.90%
ELOC, floor stock price (in usd per share) \| $ / shares								$ 1.00
Term Loan, due 2027 \| Line of credit
Accounting Policies [Line Items]
Face amount		$ 50,000,000
Debt, number of tranches \| tranche		3
Debt, premium payment, percentage of amount prepaid	10.00%	10.00%
Term Loan, due 2027 \| Line of credit \| Debt Instrument, Tranche One
Accounting Policies [Line Items]
Face amount		$ 15,000,000
Term Loan, due 2027 \| Line of credit \| Debt Instrument, Tranche Two
Accounting Policies [Line Items]
Face amount							$ 15,000,000
Term Loan, due 2027 \| Line of credit \| Debt Instrument, Tranche Three
Accounting Policies [Line Items]
Face amount		$ 20,000,000
SIF Loan
Accounting Policies [Line Items]
Face amount						$ 40,000,000			$ 40,000,000
Debt, number of tranches \| tranche					8	8

BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Fair Value of Financial Instruments (Details) - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023
Liabilities:
Warrants	$ 4,282	$ 1,630
Term Loan	31,100	31,400
Term Loan, due 2027 \| Line of credit
Liabilities:
Term Loan	31,100	$ 31,400
Fair Value, Inputs, Level 1 \| Public Warrants
Liabilities:
Warrants	2,370
Fair Value, Inputs, Level 2 \| Private Warrants
Liabilities:
Warrants	1,912
Fair Value, Inputs, Level 3 \| Term Loan, due 2027 \| Line of credit
Liabilities:
Term Loan	$ 31,100

REVENUE FROM CONTRACTS WITH CUSTOMERS - Disaggregation of Revenue (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Disaggregation of Revenue [Line Items]
Total revenue	$ 2,465	$ 1,583
United States
Disaggregation of Revenue [Line Items]
Total revenue	723	247
Germany
Disaggregation of Revenue [Line Items]
Total revenue	512	288
Japan
Disaggregation of Revenue [Line Items]
Total revenue	325	308
Other
Disaggregation of Revenue [Line Items]
Total revenue	905	740
Revenue recognized over time
Disaggregation of Revenue [Line Items]
Total revenue	2,405	1,542
Revenue recognized at a point in time
Disaggregation of Revenue [Line Items]
Total revenue	60	41
QCaaS
Disaggregation of Revenue [Line Items]
Total revenue	1,692	1,168
Professional services
Disaggregation of Revenue [Line Items]
Total revenue	639	293
Other revenue
Disaggregation of Revenue [Line Items]
Total revenue	$ 134	$ 122

REVENUE FROM CONTRACTS WITH CUSTOMERS - Significant Customers (Details) - Revenue benchmark - Customer concentration risk	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Customer A
Concentration Risk [Line Items]
Concentration risk, percentage	18.00%	15.00%
Customer B
Concentration Risk [Line Items]
Concentration risk, percentage	0.00%	13.00%

REVENUE FROM CONTRACTS WITH CUSTOMERS - Narrative (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue recognized	$ 1.4	$ 1.2
Remaining performance obligation	$ 7.4
Remaining performance obligation, percentage to be recognized in next 12 months	57.00%
Remaining performance obligation, percentage to be recognized in next two years	91.00%
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-04-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Remaining performance obligation, period	3 years
Three customers \| Accounts receivable \| Customer concentration risk
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Concentration risk, percentage	10.00%	10.00%

REVENUE FROM CONTRACTS WITH CUSTOMERS - Receivables, Contract Assets and Liabilities (Details) - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023
Trade accounts receivable and contract assets, net:
Trade account receivable, excluding unbilled receivables	$ 1,098	$ 644
Contract asset for unbilled receivables	637	1,008
Contract liabilities:
Deferred revenue, current	1,999	2,669
Deferred revenue, non-current	399	79
Customer deposit	45	45
Total contract liabilities	$ 2,443	$ 2,793

REVENUE FROM CONTRACTS WITH CUSTOMERS - Change in Deferred Revenue (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Contract With Customer, Liability [Roll Forward]
Balance at beginning of period	$ 2,748	$ 1,790
Deferral of revenue	2,113	1,166
Recognition of deferred revenue	(2,463)	(1,120)
Balance at end of period	$ 2,398	$ 1,836

BALANCE SHEET DETAILS - Inventories (Details) - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Raw materials	$ 2,054	$ 2,052
Work-in-process	25	26
Total inventories	$ 2,079	$ 2,078

BALANCE SHEET DETAILS - Prepaid Expenses and Other Current Assets (Details) - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Prepaid services	$ 736	$ 386
Prepaid software	588	543
Prepaid insurance	537	490
Prepaid rent	148	150
Other	560	440
Total prepaid expenses and other current assets	$ 2,569	$ 2,009

BALANCE SHEET DETAILS - Other Noncurrent Assets (Details) - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Investment in equity securities	$ 2,574	$ 1,168
Loan receivable	1,021	0
Long-term deposits	189	189
Contract acquisition costs	44	0
Total	$ 3,828	$ 1,357

BALANCE SHEET DETAILS - Narrative (Details) - USD ($)		3 Months Ended
BALANCE SHEET DETAILS - Narrative (Details) - USD ($)	Jan. 05, 2024	Mar. 31, 2024	Mar. 31, 2023	Feb. 08, 2024
Debt Instrument [Line Items]
Gain (loss) on investments	$ 1,700,000	$ 1,660,000	$ 0
Zapata Senior Secured Convertible Notes
Debt Instrument [Line Items]
Note receivable, principal amount				$ 1,000,000
Note receivable, interest rate				15.00%
Note receivable, prepayable without penalty, aggregate value, maximum				$ 3,000,000
Note receivable, conversion price (in usd per share)				$ 8.50

BALANCE SHEET DETAILS - Accrued Expenses and Other Current Liabilities (Details) - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Accrued compensation and related benefits	$ 2,080	$ 3,245
Accrued professional services	1,420	1,092
Other accruals	2,507	1,006
Total accrued expenses and other current liabilities	$ 6,007	$ 5,343

PROPERTY AND EQUIPMENT, NET (Details) - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023
Property, Plant and Equipment [Line Items]
Total property and equipment	$ 27,139	$ 26,604
Less: Accumulated depreciation	(24,230)	(24,053)
Total property and equipment, net	2,909	2,551
Quantum computer systems
Property, Plant and Equipment [Line Items]
Total property and equipment	13,712	13,712
Lab equipment
Property, Plant and Equipment [Line Items]
Total property and equipment	6,822	6,839
Computer equipment
Property, Plant and Equipment [Line Items]
Total property and equipment	3,973	3,703
Leasehold improvements
Property, Plant and Equipment [Line Items]
Total property and equipment	1,075	1,075
Furniture and fixtures
Property, Plant and Equipment [Line Items]
Total property and equipment	381	381
Construction-in-progress
Property, Plant and Equipment [Line Items]
Total property and equipment	$ 1,176	$ 894

PROPERTY AND EQUIPMENT, NET - Narrative (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Property, Plant and Equipment [Abstract]
Depreciation expense	$ 0.2	$ 0.3

LOANS PAYABLE, NET - Components of Loans Payable (Details) - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023	Apr. 13, 2023
Debt Instrument [Line Items]
Total loans payable, net, current	$ 369	$ 399
Total loans payable, net, non-current	63,043	63,850
Total loans payable, net, non-current, at amortized cost	31,943	32,450
Fair value option - Term Loan	31,100	31,400
TPC Government Loans \| Other notes payable
Debt Instrument [Line Items]
Total loans payable, net, current	369	399
Total loans payable, net, non-current	369	378
Total loans payable, net, non-current, at amortized cost	369	378
SIF Loan \| Other notes payable
Debt Instrument [Line Items]
Total loans payable, net, non-current	31,574	32,072
Total loans payable, net, non-current, at amortized cost	$ 31,574	32,072
Term Loan, due 2027 \| Line of credit
Debt Instrument [Line Items]
Interest rate	11.00%		10.00%
Total loans payable, net, non-current	$ 31,100	31,400
Fair value option - Term Loan	$ 31,100	$ 31,400

LOANS PAYABLE, NET - Narrative (Details)					3 Months Ended	144 Months Ended
LOANS PAYABLE, NET - Narrative (Details)	Apr. 16, 2024 USD ($)	Feb. 07, 2024 USD ($)	Apr. 13, 2023 USD ($) tranche	Nov. 20, 2020 USD ($) installment	Mar. 31, 2024 USD ($)	Dec. 31, 2021 CAD ($)	Dec. 31, 2023 CAD ($) tranche	Oct. 06, 2023 USD ($)	Jul. 13, 2023 USD ($)	Nov. 23, 2020 CAD ($)	Nov. 20, 2020 CAD ($)
TPC Government Loans \| Fair Value, Inputs, Level 2
Debt Instrument [Line Items]
Loans					$ 700,000
TPC Government Loans \| Other notes payable
Debt Instrument [Line Items]
Proceeds from loan						$ 12,500,000
Debt forgiven										$ 5,000,000
Debt forgiveness, interest waived principal										2,500,000
Annual principal payment										$ 500,000
SIF Loan
Debt Instrument [Line Items]
Face amount							$ 40,000,000				$ 40,000,000
Debt, number of tranches \| tranche							8
Repayment rate				150.00%							150.00%
Repayment, number of installments \| installment				15
Repayment benchmark year, revenue				$ 70,000,000
Repayment benchmark year, period				14 years							14 years
Weighted average effective interest rate					2.46%		2.46%
SIF Loan \| Fair Value, Inputs, Level 2
Debt Instrument [Line Items]
Loans, fair value					$ 5,100,000
Term Loan, due 2027 \| Line of credit
Debt Instrument [Line Items]
Face amount			$ 50,000,000
Debt, number of tranches \| tranche			3
Loans, fair value					$ 31,100,000
Debt, drawdown fee percentage			2.00%
Debt, premium payment, percentage of amount prepaid		10.00%	10.00%
Interest rate			10.00%		11.00%
Debt, interest rate, payable in kind			11.00%
PIK interest expenses					$ 899,000
Debt, subject to closing non-dilutive financing, amount			$ 25,000,000
Proceeds from issuance of common stock, over which debt repayment is required and premium percentage does not apply								$ 50,000,000
Proceeds from issuance of common stock threshold, over which debt repayment is required and prepayment premium percentage applies		$ 50,000,000
Term Loan, due 2027 \| Line of credit \| Subsequent Event
Debt Instrument [Line Items]
Debt, premium payment, percentage of amount prepaid	10.00%
Proceeds from issuance of common stock, over which debt repayment is required and premium percentage does not apply	$ 30,000,000
Term Loan, due 2027 \| Line of credit \| Debt Instrument, Repayment Period One
Debt Instrument [Line Items]
Debt, prepayment premium, percentage			3.00%
Term Loan, due 2027 \| Line of credit \| Debt Instrument, Repayment Period Two
Debt Instrument [Line Items]
Debt, prepayment premium, percentage			2.00%
Term Loan, due 2027 \| Line of credit \| Debt Instrument, Repayment Period Three
Debt Instrument [Line Items]
Debt, prepayment premium, percentage			1.00%
Term Loan, due 2027 \| Line of credit \| Debt Instrument, Tranche One
Debt Instrument [Line Items]
Face amount			$ 15,000,000
Term Loan, due 2027 \| Line of credit \| Debt Instrument, Tranche Two
Debt Instrument [Line Items]
Face amount									$ 15,000,000
Term Loan, due 2027 \| Line of credit \| Debt Instrument, Tranche Three
Debt Instrument [Line Items]
Face amount			$ 20,000,000

LOANS PAYABLE, NET - Schedule of Fair Value Assumptions (Details) - Level 3 - Term Loan - Line of credit	Mar. 31, 2024
Weighted-average risk-free rate
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Debt instrument, measurement input	0.0547
Default Trigger Event probability
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Debt instrument, measurement input	0.0500
ELOC financing trigger event probability
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Debt instrument, measurement input	0.2500
Weighted-average market yield rate (Default Trigger Event)
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Debt instrument, measurement input	0.1585
Weighted-average market yield rate (Call Option)
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Debt instrument, measurement input	0.1438
Weighted-average market yield volatility
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Debt instrument, measurement input	0.0500
Minimum \| Weighted-average risk-free rate
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Debt instrument, measurement input	0.0546
Minimum \| Weighted-average market yield rate (Call Option)
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Debt instrument, measurement input	0.1186
Maximum \| Weighted-average risk-free rate
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Debt instrument, measurement input	0.0549
Maximum \| Weighted-average market yield rate (Call Option)
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Debt instrument, measurement input	0.1574

LOANS PAYABLE, NET - Schedule of Fair Value and the Amortized Cost (Details) - Term Loan, due 2027 - Line of credit $ in Thousands	Mar. 31, 2024 USD ($)
Debt Instrument [Line Items]
Amortized Cost	$ 32,939
Unrealized Gains	1,839
Fair Value	$ 31,100

LOANS PAYABLE, NET - Schedule of Changes in Loans (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Loans payable
Change in fair value	$ 1,199	$ 0
Term Loan \| Line of credit
Loans payable
Beginning balance	31,400
PIK interest expenses	899
Change in fair value	(1,199)
Ending balance	$ 31,100

WARRANT LIABILITIES (Details)		3 Months Ended
WARRANT LIABILITIES (Details)	Aug. 05, 2022 $ / shares shares	Mar. 31, 2024 USD ($) day $ / shares shares	Nov. 28, 2022 shares	Nov. 30, 2020 $ / shares shares	Aug. 13, 2020
Class of Warrant or Right [Line Items]
Warrants exercised (in shares)		0
Warrants outstanding (in shares)		17,916,609
Number of warrants into which each warrant was converted (in shares)		1
Warrants, exercise price, prior to exchange ratio (in usd per share) \| $ / shares		$ 11.50
Exchange ratio	1.4541326
Warrants, exercise price (in usd per share) \| $ / shares		7.91
Warrants, redemption price (in usd per share) \| $ / shares		$ 0.10
Warrants, redemption notice period		30 days
Warrants, redemption share price threshold trading days \| day		20
Warrants, redemption share price threshold consecutive trading days		30 days
Sale of stock, price (in usd per share) \| $ / shares	$ 10.00
Reference value (in usd per share) \| $ / shares		$ 18.00
Warrants, number of shares issuable (in shares)			1,155,713
Conversion ratio	0.889657
Public Warrants
Class of Warrant or Right [Line Items]
Merger, warrants assumed (in shares)	10,000,000
Private Warrants
Class of Warrant or Right [Line Items]
Merger, warrants assumed (in shares)	8,000,000
Preferred stock warrants
Class of Warrant or Right [Line Items]
Warrants, exercise price (in usd per share) \| $ / shares				$ 2.16
Warrants, number of shares issuable (in shares)	2,889,282			3,247,637
Warrants vested, percentage					40.00%
Warrants vested, fair value \| $		$ 0

STOCK-BASED COMPENSATION - Narrative (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2024	Dec. 31, 2023
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Expiration period	10 years
Outstanding (in shares)	14,252,907	11,464,447
Shares to be issued upon exercise (in shares)	9,294,878
Unrecognized compensation cost related to unvested stock awards	$ 30.2
Future forfeiture rate (as a percent)	2.70%
Period for recognition of compensation cost	1 year 8 months 1 day
Equity Incentive Plan 2020
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Outstanding (in shares)	10,447,710
Minimum
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Vesting period	1 year
Maximum
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Vesting period	4 years

STOCK-BASED COMPENSATION - Stock Options Activity (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2024	Dec. 31, 2023
Number of options
Balance (in shares)	11,464,447
Granted (in shares)	2,921,082
Exercised (in shares)	(10,443)
Forfeited (in shares)	(122,179)
Balance (in shares)	14,252,907	11,464,447
Exercisable (in shares)	11,573,180
Unvested (in shares)	2,679,727
Weighted average exercise price ($)
Balance (in usd per share)	$ 1.64
Granted (in usd per share)	1.30
Exercised (in usd per share)	0.91
Forfeited (in usd per share)	3.35
Balance (in usd per share)	1.56	$ 1.64
Exercisable (in usd per share)	1.29
Unvested (in usd per share)	$ 2.74
Weighted average remaining contractual term (years)
Balance	7 years 2 months 23 days	6 years 9 months 18 days
Exercisable	6 years 9 months 29 days
Unvested	8 years 11 months 4 days
Aggregate intrinsic value ($)
Balance	$ 12,718	$ 0
Exercised	9
Exercisable	11,406
Unvested	$ 0

STOCK-BASED COMPENSATION - RSU Awards (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2024	Dec. 31, 2023
Share-Based Compensation Arrangement by Share-Based Payment Award, Equity Instruments Other than Options, Additional Disclosures [Abstract]
Weighted average remaining contractual term (years)	12 years 6 months 18 days	9 years 29 days
RSUs
Number of Outstanding
Unvested (in shares)	7,045,813
Granted (in shares)	5,362,486
Forfeited (in shares)	(156,738)
Vested (in shares)	(1,791,317)
Unvested (in shares)	10,460,244	7,045,813
Weighted average Grant Date Fair Value ($)
Unvested (in usd per share)	$ 3.13
Granted (in usd per share)	1.79
Forfeited (in usd per share)	2.73
Vested (in usd per share)	0.73
Unvested (in usd per share)	$ 2.86	$ 3.13
Share-Based Compensation Arrangement by Share-Based Payment Award, Equity Instruments Other than Options, Additional Disclosures [Abstract]
Aggregate intrinsic value	$ 21,339	$ 6,201

STOCK-BASED COMPENSATION - Stock-based compensation expense (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Share-Based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Total stock-based compensation	$ 3,509	$ 6,755
Cost of revenue
Share-Based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Total stock-based compensation	175	377
Research and development
Share-Based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Total stock-based compensation	1,121	2,760
General and administrative
Share-Based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Total stock-based compensation	1,958	3,294
Sales and marketing
Share-Based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Total stock-based compensation	$ 255	$ 324

PROMISSORY NOTE - RELATED PARTY (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2024	Apr. 13, 2022	Feb. 28, 2022
Related Party Transaction [Line Items]
Short-swing profit settlement	$ 244
Affiliated Entity \| Affiliate Note
Related Party Transaction [Line Items]
Unsecured promissory note				$ 1,000
Cumulative amount drawn		$ 200
Affiliated Entity \| DCPM Note
Related Party Transaction [Line Items]
Unsecured promissory note			$ 1,000
Cumulative amount drawn		$ 200
Beneficial Owner
Related Party Transaction [Line Items]
Short-swing profit settlement	$ 200

COMMITMENTS AND CONTINGENCIES (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Commitments and Contingencies Disclosure [Abstract]
Operating lease cost	$ 0.5	$ 0.4

NET LOSS PER SHARE - Computation (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Numerator:
Net loss attributable to common stockholders - basic	$ (17,312)	$ (24,406)
Net loss attributable to common stockholders - diluted	$ (17,312)	$ (24,406)
Denominator:
Weighted-average common stock outstanding, basic (in shares)	161,308,490	123,144,097
Weighted-average common stock outstanding, diluted (in shares)	161,308,490	123,144,097
Net loss per share attributable to common stockholders - basic (in usd per share)	$ (0.11)	$ (0.20)
Net loss per share attributable to common stockholders - diluted (in usd per share)	$ (0.11)	$ (0.20)

NET LOSS PER SHARE - Potentially Dilutive Securities (Details) - shares	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Potentially dilutive securities (in shares)	50,769,158	41,969,131
Warrants \| Public Warrants
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Potentially dilutive securities (in shares)	14,420,065	14,420,065
Warrants \| Private Warrants
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Potentially dilutive securities (in shares)	11,633,060	11,633,060
Warrants \| Common Share Warrants
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Potentially dilutive securities (in shares)	1,155,713	2,889,282
Options
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Potentially dilutive securities (in shares)	13,100,076	13,026,724
RSUs
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Potentially dilutive securities (in shares)	10,460,244	0

SUBSEQUENT EVENTS (Details) - USD ($)				1 Months Ended
SUBSEQUENT EVENTS (Details) - USD ($)	Apr. 16, 2024	Feb. 07, 2024	Apr. 13, 2023	May 13, 2024	Oct. 06, 2023
Term Loan, due 2027 \| Line of credit
Subsequent Event [Line Items]
Proceeds from issuance of common stock, over which debt repayment is required and premium percentage does not apply					$ 50,000,000
Debt, premium payment, percentage of amount prepaid		10.00%	10.00%
Subsequent Event
Subsequent Event [Line Items]
Issuance of stock (in shares)				9,616,070
Proceeds from stock issuance				$ 13,400,000
Subsequent Event \| Term Loan, due 2027 \| Line of credit
Subsequent Event [Line Items]
Proceeds from issuance of common stock, over which debt repayment is required and premium percentage does not apply	$ 30,000,000
Additional proceeds from issuance of common stock, over which debt repayment is required and premium percentage does not apply	$ 20,000,000
Debt, premium payment, percentage of amount prepaid	10.00%

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