D-Wave Quantum Inc

D-Wave Quantum Inc. (NYSE: QBTS) is a quantum computing company engaged in the development and delivery of quantum computing systems, software and services. The Company builds and delivers the systems, cloud services, application development tools, and professional services to support the end-to-end quantum computing journey for enterprises and developers. Its products include The Leap and The Advantage.

Recent Financial and Business Updates:

Financial Highlights for the First Quarter of Fiscal 2023

• Revenue: In the first quarter of fiscal 2023, the company's revenue was USD 1.6 million, representing a decrease of USD 130,000 or 7.6% compared to the first quarter of fiscal 2022. The variability in revenue recognition is due to the nature of professional services engagements, leading to timing differences in booked revenue from period to period.
• Bookings: The first quarter of fiscal 2023 saw bookings amounting to USD 2.9 million, marking a significant increase of USD 2.2 million or 297% compared to the first quarter of fiscal 2022. This marks the fifth consecutive quarter of sequential quarter-to-quarter growth in bookings and the fourth consecutive quarter of year-over-year growth.
• Average Deal Size: During the first quarter of fiscal 2023, the average deal size, comprising both QCaaS and Professional Services bookings, surged by 430% compared to the first quarter of fiscal 2022. On a sequential quarter-to-quarter basis, the average deal size has consistently increased for the past five quarters, with a 68% increase from the fourth quarter of fiscal 2022 to the first quarter of fiscal 2023.
• Customers: Over the last four quarters, the company had 65 revenue-producing commercial customers, showing growth compared to 63 customers in the immediately preceding four quarters. Commercial revenue increased by 30% between the two periods. Additionally, the company had a total of 109 revenue-producing customers over the last four quarters, compared to 106 total customers in the immediately preceding four quarters, encompassing commercial, educational, and government accounts.
• GAAP Gross Profit: The GAAP gross profit for the first quarter of fiscal 2023 was USD 421,000, a decline of USD 676,000 or 61.6% from the first quarter of fiscal 2022. The decrease is primarily attributed to lower revenue and significantly higher non-cash stock-based compensation expense in the cost of sales for the first quarter of fiscal 2023.
• GAAP Gross Margin: The GAAP gross margin for the first quarter of fiscal 2023 was 26.6%, showing a decrease of 37.4% compared to the 64.0% GAAP gross margin in the first quarter of fiscal 2022. The decline is mainly due to lower revenue and significantly higher non-cash stock-based compensation expense in the first quarter of fiscal 2023 cost of sales.
• Net Loss: The net loss for the first quarter of fiscal 2023 amounted to USD 24.6 million, or USD 0.20 per share, compared to a net loss of USD 11.7 million, or USD 0.09 per share, in the first quarter of fiscal 2022.
• As of March 31, 2023, the company had a consolidated cash balance of USD 9 million. On April 13, 2023, the company secured a USD 50 million four-year term loan agreement with PSPIB Unitas Investments II Inc., an affiliate of PSP Investments. The initial advance under the term loan was USD 15 million, and two additional advances of USD 15 million and USD 20 million respectively are expected, subject to certain terms and conditions. The initial USD 15.0 million tranche is projected to provide sufficient cash runway until the second USD 15.0 million tranche.
  

Recent Commercial/Business Highlights:

• The company signed new and expanded engagements with prominent clients, including Forbes Global 2000 companies and industry leaders such as Interpublic Group, Unisys US, POLARISqb, and Quantum Algorithms Institute.
• The first quarter bookings grew by 297% year-over-year, achieving the fifth consecutive quarter of sequential quarter-to-quarter growth and the fourth consecutive quarter of year-over-year growth.
• The average deal size, incorporating both QCaaS and Professional Services bookings, increased by 430% year-over-year and by 68% sequentially from Q4 to Q1, showing consistent growth for the past five quarters.
• The company successfully completed the SOC 2 Type 1 audit, a crucial step in support of commercial and production readiness, ensuring the protection of customer data.
  

Technical Observation (on the daily chart)

Currently, the stock is near an important resistance range of USD 2.80-USD 3.30, from where price has taken resistances in the past. A breakout in upward direction from this range would likely initiate a new short-term trend in the up direction with targets of USD 4.00-USD 4.30. The RSI (14 period) momentum indicator is at a value of 64.73, correcting from over bought levels, with expectations of some consolidation or a healthy correction before the continuation of the upward momentum. Moreover, the price is currently positioned above both the 21-day SMA and 50-day SMA trend-following indicators, which may act as dynamic short-term support levels.

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As per the above-mentioned price action, recent key business and financial updates, momentum in the stock over the last month, and technical indicators analysis, a ‘Watch’ rating has been given to D-Wave Quantum Inc. (NYSE: QBTS) at the current price of USD 2.81 as of July 20, 2023, at 08:50 am PDT with further analysis once price breaks the mentioned resistance on the upside.

Individuals can evaluate the stock based on the support and resistance levels provided in the report in case of keen interest taking into consideration the risk-reward scenario. 

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing. 

Related Risk: This report may be looked at from a high-risk perspective and a recommendation is provided for a short duration. This report is solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc. 

How to Read the Charts?

The Green colour line reflects the 21-period simple moving average (SMA) while the red line indicates the 50- period simple moving average (SMA). SMA helps to identify existing price trends. If the prices are trading above the 21-period and 50-period moving average, then it shows prices are currently trading in a bullish trend.

The Black colour line in the chart’s lower segment reflects the Relative Strength Index (14-Period) which indicates price momentum and signals momentum in trend. A reading of 70 or above suggests overbought status while a reading of 30 or below suggests an oversold status.

The Blue colour bars in the chart’s lower segment show the volume of the stock. The volume is the number of shares that changed hands during a given day. Stocks with high volumes are more liquid than stocks with lesser volume as liquidity in stocks helps in easier and faster execution of the order.

The Orange colour lines are the trend lines drawn by connecting two or more price points and used for trend identification purposes. The trend line also acts as a line of support and resistance.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock. 

Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock. 

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices. 

The reference date for all price data, currency, technical indicators, support, and resistance levels is July 20, 2023. The reference data in this report has been partly sourced from REFINITIV. 

Abbreviations

CMP: Current Market Price

SMA: Simple Moving Average

RSI: Relative Strength Index

USD: United States dollar 

Note: Trading decisions require a thorough analysis by individual. Technical reports in general chart out metrics that may be assessed by individuals before any stock evaluation. The above are illustrative analytical factors used for evaluating the stocks; other parameters can be looked at along with additional risks per se. Past performance is neither an indicator nor a guarantee of future performance.