Needham analyst Quinn Bolton reiterated the Buy rating on D-Wave Quantum Inc. (NYSE:QBTS), raising the price forecast from $8.50 to $13.
On Thursday, the company reported revenue of $15 million for the quarter ended March 31, a more than sixfold increase on a year-over-year basis. The revenue boost was largely driven by the first recognized sale of its Advantage quantum computing system to a major research institution and increased client adoption of its hybrid quantum solutions.
Bolton pointed out several key developments.
The sale of the Advantage system contributed to a strong revenue beat and a notable boost in next-generation gross margin, which came in at 93.6%, well above the Street estimate of 74.3%.
This indicates that system sales generate significantly higher margins compared to QCaaS revenue, the analyst writes.
The company also completed the installation of its Advantage2 system at Davidson in Alabama. Additionally, Bolton highlighted the company’s ongoing progress in quantum blockchain, including efforts to secure a partner for its go-to-market strategy.
Finally, the analyst noted that commercial interest has increased since the company’s quantum supremacy demonstration last quarter.
Bolton observed that D-Wave is making progress in the quantum blockchain space and is actively looking for a partner to help build a go-to-market strategy, which could lead to significant system sales opportunities if successful.
He mentioned that Ford Otosan is moving its deployment into production, with plans to expand across several factories.
According to Bolton, D-Wave’s growing technology portfolio and emphasis on practical, commercial use cases will likely drive stronger customer adoption and revenue growth.
However, he cautioned that since the company remains EBITDA-negative, investors should expect ongoing dilutive financing rounds until it reaches EBITDA break-even.
Price Action: QBTS shares are trading higher by 2.16% to $10.64 at last check Friday.
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