D-Wave Quantum (QBTS) reported flat Q2 2026 revenue of $3.1 million, despite a $5.4 billion valuation anticipating growth. While cloud subscriptions and services grew, hardware sales were minimal, and overall revenue declined over the trailing twelve months.
The company’s adjusted EBITDA loss widened, and gross margins decreased due to rising personnel costs. However, a substantial backlog of $40.7 million and an expectation of a strong fourth quarter, driven by system shipments, offer potential for future revenue realization. D-Wave maintains a healthy cash position, mitigating immediate financial concerns.
D-Wave Quantum (QBTS) Stock: What Investors Might Be Missing Amidst Valuation Concerns
October 12th, 2026 · by Trefis Team
D-Wave Quantum (QBTS) recently reported its second-quarter 2026 revenue, which stood at $3.1 million. This figure is notably flat compared to the previous year, a stark contrast to the substantial $5.4 billion market valuation the company commands. Investors appear to be pricing in significant future growth, making this revenue stagnation a point of concern. While the overall top line remained unchanged, the company did see robust double-digit growth in its cloud subscriptions and professional services segments. This begs the question: why is D-Wave's total revenue treading water?
D-Wave's Revenue Sources: A Closer Look
A significant portion of D-Wave's revenue does not stem from the sale of its quantum computers. In the second quarter, revenue from systems and other sources amounted to approximately $300,000. This is a modest figure, especially considering that a single annealing system is priced between $20 million and $40 million.
The growth in other areas of the business is substantial. Subscriptions for D-Wave's quantum cloud service surged by 50% year-over-year, and professional services experienced an increase of over 18%. The flat total revenue suggests that the decline in systems revenue has effectively canceled out these positive trends.
The sales cycle for physical hardware, like quantum computers, is inherently long. During the second-quarter 2026 earnings call, management highlighted that system delivery timelines are often dictated by site selection processes. Following site finalization, each machine requires manufacturing, installation, and calibration.
Looking at the trailing twelve months, D-Wave's revenue performance has been weaker than flat, with a 44% decline. This is largely attributed to an 81% drop in first-quarter revenue compared to the prior year, a significant deviation from its three-year average growth rate of 37.7% annually.
Widening Adjusted EBITDA Loss
D-Wave's expenses rose during the quarter without a commensurate increase in revenue. The company's adjusted EBITDA loss widened by 85% year-over-year. Management attributed this expansion primarily to increased spending on product development and sales personnel. The gross margin also saw a decrease, falling to 55.4% from 63.8% in the previous year, with personnel costs cited as the main contributing factor.
The company's stock has already experienced a significant downturn, with D-Wave shares losing 59% over the past twelve months, while the S&P 500 posted a 17.0% gain. Despite this decline, the stock continues to trade at a P/S ratio of 434.9 times sales, a steep valuation compared to the S&P 500's 3.1. This valuation suggests an expectation of substantial future revenue growth.
Anticipating a Stronger Fourth Quarter
D-Wave has a considerable backlog of orders that have yet to be recognized as revenue. As of June 30, 2026, the company's backlog reached $40.7 million, marking a remarkable 668% increase from the previous year. Management anticipates that approximately 57% of this backlog will convert into revenue within the next twelve months.
Furthermore, the company expects to ship two annealing systems in 2026, with both likely to be delivered in the fourth quarter. Guidance for the third quarter indicates a modest increase in revenue compared to the second quarter, although the results for the third quarter have not yet been reported. The company's projections indicate that the fourth quarter will account for the majority of the year's total revenue.
D-Wave is in a strong financial position to weather this period, holding $546.2 million in cash and marketable securities at the end of June, with a debt-to-market value ratio of only 0.9%.
While investors have valid reasons to closely monitor D-Wave's revenue figures, the current situation appears to be more of a timing challenge than a fundamental demand issue. Any delays in system deliveries could push revenue recognition further into the future, with management already noting that some revenue from 2026 system shipments will be booked in 2027. A significantly stronger fourth quarter, as projected by management, would demonstrate the successful conversion of D-Wave's backlog into realized sales.
Navigating the QBTS Investment Landscape
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