D-Wave Quantum Inc. (QBTS) · Quarterly Report (10-Q) SEC Filing

Part I - Financial Information Item 1. Financial Statements D-Wave Quantum Inc. Condensed Consolidated Balance Sheets (Unaudited) June 30,December 31, (In thousands, except share and per share data)20262025 Assets Current assets: Cash and cash equivalents$296,642 $635,347 Marketable investment securities249,573 249,134 Trade accounts receivable, net of allowance for credit losses of $1 and $176 2,019 1,587 Inventories3,488 2,776 Prepaid expenses and other current assets8,872 7,388 Total current assets560,594 896,232 Property and equipment, net22,076 7,841 Operating lease right-of-use assets12,042 6,518 Intangible assets, net211,816 915 Goodwill342,588 Other non-current assets, net9,314 4,307 Total assets$1,158,430 $915,813 Liabilities and stockholders' equity Current liabilities: Trade accounts payable$4,521 $950 Accrued expenses and other current liabilities12,135 15,838 Current portion of operating lease liabilities1,250 1,448 Loans payable, net, current146 134 Deferred revenue, current9,234 2,778 Total current liabilities27,286 21,148 Operating lease liabilities, net of current portion11,826 6,050 Loans payable, net, non-current34,886 35,825 Deferred revenue, non-current1,322 560 Total liabilities75,320 63,583 Commitments and contingencies (Note 12) Stockholders' equity: Common stock, par value $0.0001 per share; 675,000,000 shares authorized at both June 30, 2026 and December 31, 2025; 372,011,420 shares and 358,741,605 shares issued and outstanding as of June 30, 2026 and December 31, 2025, respectively. 37 35 Additional paid-in capital2,140,499 1,843,218 Accumulated deficit(1,048,387)(982,002) Accumulated other comprehensive loss(9,039)(9,021) Total stockholders' equity1,083,110 852,230 Total liabilities and stockholders equity$1,158,430 $915,813 The accompanying notes are an integral part of these condensed consolidated financial statements. 3 D-Wave Quantum Inc. Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited) Six Months Ended June 30, (In thousands, except share and per share data)2026202520262025$3,076 $3,095 $5,934 $18,096 1,372 1,119 2,412 2,243 1,704 1,976 3,522 15,853 28,239 12,694 54,032 22,982 15,388 9,151 35,663 17,108 11,355 6,633 21,832 13,556 54,982 28,478 111,527 53,646 (53,278)(26,502)(108,005)(37,793)5,028 4,311 10,813 7,410 (255)(206)(514)(432) 1,880 (142,048) (138,105)485 (2,884)997 (3,830)5,258 (140,827)13,176 (134,957)(48,020)(167,329)(94,829)(172,750)(8) 28,444 $(48,028)$(167,329)$(66,385)$(172,750)$(0.13)$(0.55)$(0.18)$(0.59)370,840,115 302,288,793 369,165,968 294,398,419 $(48,028)$(167,329)$(66,385)$(172,750)140 787 158 1,285 (7) (160) (16) (16) 117 787 (18)1,285 $(47,911)$(166,542)$(66,403)$(171,465)Additional paid-in capitalAccumulated deficitAccumulated other comprehensive lossTotal stockholders' equity (In thousands, except share data)SharesAmount Balances at March 31, 2026370,038,436 $37 $2,133,730 $(1,000,359)$(9,156)$1,124,252 Issuance of common stock in connection with the Employee Stock Purchase Plan40,686 724 724 Issuance of common stock in connection with exercise of stock options and vesting of RSUs1,932,298 1,520 1,520 Stock-based compensation 11,410 11,410 Tax withholding related to vesting of restricted stock units (6,885) (6,885) Other comprehensive loss 117 117 Net loss (48,028) (48,028) Balances at June 30, 2026372,011,420 $37 $2,140,499 $(1,048,387)$(9,039)$1,083,110 The accompanying notes are an integral part of these condensed consolidated financial statements. 5 D-Wave Quantum Inc. Condensed Consolidated Statements of Stockholders Equity For the Three Months Ended June 30, 2025 (Unaudited) Common stockAdditional paid-in capitalAccumulated deficitAccumulated other comprehensive lossTotal stockholders' equity (In thousands, except share data)SharesAmount Balances at March 31, 2025291,351,403 $29 $849,733 $(632,361)$(10,012)$207,389 Issuance of common stock in connection with the Lincoln Park Purchase Agreement3,873,113 37,787 37,787 Issuance of common stock in at-the-market offerings, net of issuance costs26,344,831 3 390,630 390,633 Issuance of common stock in connection with the Employee Stock Purchase Plan95,331 291 291 Issuance of common stock in connection with exercise of stock options and vesting of RSUs5,614,895 6,837 6,837 Issuance of common stock in connection with exercise of warrants12,558,077 1 216,255 216,256 Stock-based compensation 6,750 6,750 Tax withholding related to vesting of restricted stock units (5,147) (5,147) Foreign currency translation adjustment, net of tax 787 787 Net loss (167,329) (167,329) Balances at June 30, 2025339,837,650 $33 $1,503,136 $(799,690)$(9,225)$694,254 The accompanying notes are an integral part of these condensed consolidated financial statements. 6 D-Wave Quantum Inc. Condensed Consolidated Statements of Stockholders Equity For the Six Months Ended June 30, 2026 (Unaudited) Common stockAdditional paid-in capitalAccumulated deficitAccumulated other comprehensive lossTotal stockholders' equity (In thousands, except share data)SharesAmount Balances at December 31, 2025358,741,605 $35 $1,843,218 $(982,002)$(9,021)$852,230 Equity issued as consideration for acquisition, net10,430,444 2 282,274 282,276 Issuance of common stock in connection with the Employee Stock Purchase Plan40,686 724 724 Issuance of common stock in connection with exercise of stock options and vesting of RSUs2,798,685 1,614 1,614 Stock-based compensation 19,554 19,554 Tax withholding related to vesting of restricted stock units (6,885) (6,885) Other comprehensive loss (18)(18) Net loss (66,385) (66,385) Balances at June 30, 2026372,011,420 $37 $2,140,499 $(1,048,387)$(9,039)$1,083,110 The accompanying notes are an integral part of these condensed consolidated financial statements. 7 D-Wave Quantum Inc. Condensed Consolidated Statements of Stockholders Equity For the Six Months Ended June 30, 2025 (Unaudited) Common stockAdditional paid-in capitalAccumulated deficitAccumulated other comprehensive lossTotal stockholders' equity (In thousands, except share data)SharesAmount Balance at December 31, 2024266,595,867 $27 $700,069 $(626,940)$(10,510)$62,646 Issuance of common stock in connection with the Lincoln Park Purchase Agreement3,873,113 37,787 37,787 Issuance of common stock in at-the-market offerings, net of issuance costs50,948,852 5 536,736 536,741 Issuance of common stock in connection with the Employee Stock Purchase Plan95,331 291 291 Issuance of common stock in connection with exercise of stock options and vesting of RSUs5,766,016 6,860 6,860 Issuance of common stock in connection with exercise of warrants12,558,471 1 216,261 216,262 Stock-based compensation 10,796 10,796 Tax withholding related to vesting of restricted stock units (5,664) (5,664) Foreign currency translation adjustment, net of tax 1,285 1,285 Net loss (172,750) (172,750) Balance at June 30, 2025339,837,650 $33 $1,503,136 $(799,690)$(9,225)$694,254 The accompanying notes are an integral part of these condensed consolidated financial statements. 8 D-Wave Quantum Inc. Condensed Consolidated Statements of Cash Flows (Unaudited) (in thousands)20262025$(66,385)$(172,750)8,536 714 (28,365) 19,132 10,664 699 346 (103) 1,262 467 387 138,105 (1,880) (1,740)1,998 267 (432)(57)(2,605)(762)(455)(1,368)(975)416 (4,371)2,695 7,218 (13,796)(332)(344)(3,134)(1,080)(73,463)(34,565)(252,821) (5,521)(1,187)(149,117) 147,241 959 (363)(129)(260,581)(357) 37,787 536,741 99,319 1,614 6,860 724 291 (6,885)(5,664) (365)(69) (203) (4,819)674,969 158 1,285 (338,705)641,332 635,347 177,980 $296,642 $819,312 $33 $ $282,479 $ $422 $132 $1,996 $ $ $116,943 $6,131 $ $3,133 $ $160 $ LevelAs of June 30, 2026 Assets: U.S. government bonds1$149,573 Time deposits2$100,000 Revenue recognition The Company recognizes revenue in accordance with Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (Topic 606) and accounts for certain contract costs in accordance with FASB s Accounting Standards Codification ( ASC ) 340-40, Other Assets and Deferred Costs-Contracts with Customers. The core principle of ASC 606 is that an entity shall recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To support this core principle, the Company applies the following five step approach: Step 1: Identify the contract with the customer The Company executes signed contracts with customers for services sold through either its direct sales force or various reseller channels. Payment terms vary by arrangement and may include net 30 to 60-day terms, milestone billings, advance payments, and installment payments. In arrangements with re-sellers of the Company s services, the re-seller is considered the customer and the Company does not have any contractual relationships with the re-sellers end users. For these arrangements, revenue is recognized at the amount charged to the re-seller. Upon initiation of a customer contract, an assessment is conducted by the Company regarding the customer's ability to pay for the services and/or products provided. This assessment encompasses various factors such as the customer's creditworthiness and past transaction history. Furthermore, periodic evaluations of customers' financial conditions are performed by the Company. The Company generally does not provide rights of return unless explicitly stated in the underlying contract. Step 2: Identify the performance obligations The Company s contracts with customers often include multiple performance obligations. The Company's revenue contracts typically include one or more of the following performance obligations: 12 Subscription access to its Leap service Professional services related to the development and implementation of quantum computing applications Quantum computing systems, including related installation, calibration, commissioning, and customer-specific upgrade services when those promises are not separately identifiable Ongoing support and maintenance services Quantum computing application or system training Customer options, renewals, or future upgrade rights that may represent material rights. The Company evaluates whether promised goods and services are distinct and therefore separate performance obligations, or whether they should be combined into a single performance obligation because they are not separately identifiable in the context of the contract. Step 3: Determine the transaction price The transaction price is the amount of consideration to which the Company expects to be entitled in exchange for transferring goods and services to the customer. Transaction prices may include fixed consideration, variable consideration, milestone payments, advance payments, installment payments, or other contractual amounts. The Company evaluates whether variable consideration exists, including price concessions, credits, or service-level credits, and includes such amounts in the transaction price only to the extent that it is probable that a significant reversal of cumulative revenue recognized will not occur. The Company also evaluates whether payments to or on behalf of a customer should be accounted for as consideration payable to a customer rather than as a separate expense. The Company assesses whether the contract contains a significant financing component by considering the difference between the promised consideration and the cash selling price of the promised goods or services, the timing of payments relative to transfer of control, the reason for that timing difference, and the discount rate that would apply in a separate financing transaction between the parties at contract inception. The Company has elected the practical expedient that permits an entity not to recognize a significant financing component if the time between the transfer of a good or service and payment is one year or less. When a significant financing component exists, the Company adjusts the transaction price to reflect the cash selling price of the promised goods or services and recognizes the financing effect separately from revenue using the effective-interest method. The Company excludes from revenue government-assessed and imposed taxes on goods and services that are invoiced to customers. Step 4: Allocate the transaction price to the performance obligations When the Company determines that its contracts with customers contain multiple performance obligations, for these arrangements, the Company allocates the transaction price based on the relative standalone selling price ( SSP ) basis method by comparing the SSP of each distinct performance obligation to the total value of the contract. The Company uses SSP for products and services sold together in a contract to determine whether there is a variable consideration (e.g. discount) to be allocated based on the relative SSP of the various products and services. In instances where SSP is not directly observable, such as when the Company does not sell the product or service separately, the Company determines the SSP by considering its overall pricing objectives and market conditions, including cost plus a reasonable margin. Significant pricing practices taken into consideration include the Company s discounting practices, the customer demographic, price lists, the Company's go-to-market strategy, historical and current sales, and contract prices. In instances where the Company does not sell or price a product or service separately, the Company maximizes the use of observable inputs by using information that may include market conditions. When a contract includes a material right, the Company estimates the SSP of that option and allocates a portion of the transaction price to the material right. Revenue allocated to a material right is deferred and recognized when the related option is exercised or when the option expires unexercised. Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation The Company recognizes revenue when or as control of the promised good or service transfers to the customer. The Company s Leap service and support and maintenance services are obligations that are satisfied over time by providing the customer with ongoing access to the Company s resources. The Company uses the straight-line measure of progress to recognize revenue as these performance obligations are satisfied evenly over the respective service periods. 13 The Company s professional services constitute an activity that creates benefits that the customer receives as the work is being performed. Therefore, professional services revenue is recognized over time using the labor hours incurred as input measure of progress. Revenue from quantum computing system sales is generally recognized over time during the installation period using an input method, with progress measured based on costs incurred to date relative to total estimated costs, as the Company concludes that the criteria for over-time revenue recognition under ASC 606 are met. Revenue from system upgrade projects is also recognized over time using an input method, measuring progress based on costs incurred to date relative to total estimated costs. In applying a cost-to-cost measure of progress, the Company includes only those costs that depict performance in transferring control to the customer and excludes costs associated with abnormal inefficiencies or wasted materials. The Company s training performance obligations are satisfied at a point in time when control of the service transfers from the Company to the customer. Revenue allocated to a material-right performance obligation is not recognized when the base contract is executed. Instead, the allocated amount is recognized when the customer exercises the option and the underlying promised goods or services are transferred, or when the option expires unexercised. Contract assets and contract liabilities The timing of revenue recognition, billings and cash collections may result in accounts receivable, contract assets, and contract liabilities (deferred revenue) on the Company s consolidated balance sheets. A receivable is recorded in the period in which the Company provides services when it has an unconditional right to payment. Contract assets arise when the Company has transferred goods or services to the customer but the right to payment is conditional on something other than the passage of time. Contract liabilities (also referred to as deferred revenue) arise when the Company receives consideration before transferring the related goods or services. Deferred revenue is classified as current or non-current based on the expected timing of revenue recognition. When a significant financing component exists, the Company separately recognizes the financing element as interest income or interest expense, as applicable, rather than as revenue. Our contract acquisition costs represent incremental direct costs of obtaining a contract, primarily consisting of commissions and other incremental contract acquisition costs. When these costs are determined to be recoverable, we defer and amortize them over the contract term. Unamortized contract acquisition costs are included in other non-current assets, net on the condensed consolidated balance sheets, with related amortization expense recorded in sales and marketing expenses on the condensed consolidated statements of operations and comprehensive loss. The Company has elected to apply the practical expedient to expense contract acquisition costs as incurred when the expected amortization period is one year or less. Cost of revenue Cost of revenue for services consists of expenses related to delivering the Company s services, consisting of direct labor costs, including stock-based compensation, direct services costs and depreciation and amortization related to the Company s quantum computing systems and related software. These costs are expensed as incurred, as they relate to performance obligations that are being simultaneously satisfied as the work is performed. Cost of revenue for quantum computing systems includes direct manufacturing costs, such as materials and labor for system production, as well as expenses related to installation, calibration, warranty, and support. Additionally, it includes shipping and handling costs associated with delivering the systems. For system arrangements recognized over time using a cost-to-cost input method, cost of revenue also includes customer-specific fulfillment costs that directly relate to satisfying the performance obligation, including installation-enablement and site-preparation activities incurred after contract execution. Such costs are recognized in a manner consistent with the Company s measure of progress. 14 Business Combination The Company accounts for business combinations using the acquisition method of accounting, which requires the consideration transferred to be measured at fair value and allocated to the identifiable assets acquired and liabilities assumed based on their estimated acquisition-date fair values. On January 20, 2026, the Company completed the acquisition of Quantum Circuits, Inc. ( Quantum Circuits ), which was accounted for as a business combination under ASC 805. In connection with the acquisition, the Company recognized developed technology and trademarks as identifiable finite-lived intangible assets, both of which were valued using the relief-from-royalty method with the assistance of an independent valuation specialist. The excess of the purchase price over the estimated fair values of the identifiable net assets acquired was recorded as goodwill. If the accounting for a business combination is incomplete at the end of a reporting period, provisional amounts are recorded and may be adjusted during the measurement period, not to exceed one year from the acquisition date, for new information about facts and circumstances that existed as of the acquisition date. The results of operations of acquired businesses are included in the Company s results beginning on the acquisition date. Acquisition-related costs incurred by the Company are expensed as incurred, while seller transaction expenses reimbursed by the Company are included in consideration transferred. Net loss per share Basic net loss per common share is computed by dividing the net loss available to common stockholders (the numerator) by the weighted-average number of shares of common stock, par value $0.0001 per share ( Common Shares ) outstanding (the denominator) during the period. Diluted net loss per common share is computed by dividing the net loss available to common stockholders adjusted by any preferred stock dividends declared during the period by the weighted average number of Common Shares and potential Common Shares outstanding when the impact is not antidilutive. Contingently issuable shares are included in basic Earnings Per Share ( EPS ) only when there is no circumstance under which those shares would not be issued. Shares issuable for little or no cash consideration are considered outstanding Common Shares and included in the computation of basic EPS. Recent accounting pronouncements issued and adopted None. Recent accounting pronouncements not yet adopted Expense Disaggregation Disclosures In November 2024, the FASB issued ASU 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, requiring public entities to disclose additional information about specific expense categories in the notes to the financial statements on an interim and annual basis. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and for interim periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact of adopting ASU 2024-03. Capitalized Internal-Use Software Costs In September 2025, the FASB issued ASU 2025-06, Accounting for Internal-Use Software Costs (Subtopic 350-40): Clarifying the Application of Capitalization Guidance, which amends the guidance on capitalizing costs related to internal-use software. ASU 2025-06 requires public entities to apply the disclosure requirements in ASC 360-10, Property, Plant, and Equipment, to capitalized internal-use software costs, regardless of how those costs are presented in the financial statements. The update is effective for fiscal years beginning after December 15, 2027, and interim reporting periods within those annual reporting periods, with early adoption permitted. The Company is currently evaluating the impact of adopting ASU 2025-06. Government Grants In December 2025, the FASB issued ASU 2025-10, Government Grants (Topic 832): Accounting for Government Grants Received by Business Entities, which establishes comprehensive guidance for recognizing, measuring, presenting, and disclosing government grants received by business entities. Under this update, entities must apply specific recognition and measurement principles for both monetary and tangible non-monetary government grants, with the accounting outcome dependent on whether the grant is related to an asset or to income. ASU 2025-10 does not apply to not-for-profit entities and employee benefit plans and excludes certain types of transactions such as exchange transactions and government guarantees. The amendments are effective for fiscal years beginning after December 15, 2028, with early adoption permitted, and the Company is currently evaluating the impact of adopting ASU 2025-10. 15 3. BUSINESS COMBINATION On January 20, 2026, the Company completed the acquisition of all of the issued and outstanding equity interests of Quantum Circuits, a privately held developer of superconducting gate-model quantum computing technology, pursuant to the Agreement and Plan of Merger dated January 6, 2026. The acquisition is intended to enhance the Company s gate-model quantum computing capabilities by adding Quantum Circuits' dual-rail qubit technology and related intellectual property, together with complementary error-detection capabilities, to the Company s scalable control systems, cryogenic infrastructure and cloud platform. The acquisition has been accounted for as a business combination under ASC 805, Business Combinations, with the Company identified as the accounting acquirer. The Company incurred total acquisition-related costs of $12.2 million, including $2.9 million incurred during the year ended December 31, 2025. These costs were accounted for separately from the business combination and expensed as incurred in general and administrative expenses on the condensed consolidated statements of operations and comprehensive loss. Seller transaction expenses reimbursed by the Company were included in consideration transferred, while severance-related payments were recognized separately in post-combination compensation expense. In addition, the portion of replacement awards attributable to post-combination service will be recognized as compensation expense over the remaining service period. The acquisition date was January 20, 2026, which is the date on which the Company obtained control of Quantum Circuits. The fair value of consideration transferred was $538.5 million, consisting of cash and equity consideration measured as of the acquisition date. The fair value of the Company s Common Shares issued as consideration was based on the January 20, 2026 share price of $27.04 per share. Consideration transferred was allocated to the tangible and intangible assets acquired and liabilities assumed based on their fair values as of the acquisition date. Management estimated the fair value of tangible and intangible assets and liabilities in accordance with the applicable accounting guidance for business combinations and utilized the services of third-party valuation consultants. The initial allocation of the consideration transferred is based on a preliminary valuation and may be adjusted as additional information becomes available during the measurement period. Balances subject to adjustment primarily include the valuations of acquired assets (tangible and intangible), liabilities assumed, as well as tax-related matters. During the measurement period, the Company may record adjustments to the provisional amounts recognized. The allocation of the consideration transferred will be finalized within the measurement period (up to one year from the acquisition date). The following table summarizes the consideration transferred (in thousands): Amounts Cash consideration$256,030 Equity consideration282,039 Pre-acquisition portion of replacement equity awards439 Acquisition Consideration$538,508 16 As of the acquisition date, the Company recognized the identifiable assets acquired and liabilities assumed based on their estimated fair values as follows (in thousands): Amounts Assets: Cash and cash equivalents$3,209 Prepaid expenses and other current assets849 Property and equipment, net5,272 Operating lease right-of-use assets92 Intangible assets217,150 Goodwill342,588 Total assets$569,160 Liabilities: Accounts payable$(1,579) Current portion of right-of-use liability(77) Accrued and other current liabilities(631) Deferred Tax Liability(28,365) Total liabilities$(30,652) Total purchase price$538,508 The recognition of deferred tax liabilities in connection with the acquisition resulted in the release of certain preexisting valuation allowances on deferred tax assets, which was recorded as a deferred tax benefit on the condensed consolidated statements of operations and comprehensive loss. Identifiable Intangible Assets The Company identified two finite-lived intangible assets, developed technology and trademarks. The fair values assigned to the acquired developed technology and trademarks were estimated with the assistance of an independent third-party valuation specialist using the relief-from-royalty method, which estimates the value of an intangible asset based on the present value of the hypothetical royalty payments that the Company is relieved from paying by owning the asset rather than licensing it from a third party. Significant assumptions used in the valuations included projected revenues attributable to the acquired technology and trademarks, selected market-based royalty rates, estimated useful lives, expectations regarding technological obsolescence and the continued use of the Quantum Circuits brand, applicable tax rates and discount rates commensurate with the risks associated with the projected cash flows. Developed technology was assigned a useful life of 15 years and trademarks were assigned a useful life of 2 years. These intangible assets are being amortized on a straight-line basis over their respective useful lives. The following table summarizes the acquired intangible assets (in thousands): AmountsUseful life Developed technology$216,700 15 years Trademarks4502 years Total intangible assets$217,150 Goodwill Goodwill represents the excess of the purchase price over the fair value of the identifiable net assets acquired and reflects expected synergies, going-concern value, workforce-related value, and other future economic benefits that do not qualify for separate recognition. This goodwill is not deductible for income tax purposes. 17 Pro forma information (unaudited) The following unaudited pro forma financial information presents the combined results of operations of the Company and Quantum Circuits as if the acquisition had occurred on January 1, 2025. The unaudited pro forma information includes adjustments for items directly attributable to the acquisition, including incremental amortization expense related to acquired intangible assets of $0.7 million and $7.3 million for the six months ended June 30, 2026 and 2025, respectively, and non-recurring acquisition-related costs of $9.3 million assumed to have been incurred during the six months ended June 30, 2025. The unaudited pro forma results do not reflect any operating efficiency or potential cost savings which may result from the integration of Quantum Circuits. Accordingly, these unaudited pro forma results are presented for informational purposes only and are not necessarily indicative of what the actual results of operation of the combined company would have been if the acquisition had occurred as of January 1, 2025. Three Months Ended June 30,Six Months Ended June 30, (In thousands, except share and per share data)2026202520262025 Revenue$3,076 $3,195 $5,934 $18,296 Loss from operations(53,278)(35,730)(101,920)(65,660) Net loss$(47,844)$(176,586)$(60,125)$(200,682) Net loss per share, basic and diluted$(0.13)$(0.56)$(0.16)$(0.66) Weighted-average number of shares outstanding used to compute net loss per share, basic and diluted370,840,115312,719,237370,318,503304,828,863 Quantum Circuits Revenue and Net Loss The following table represents Quantum Circuits' revenue and losses included in the Company's condensed consolidated statements of operations and comprehensive loss subsequent to the Quantum Circuits acquisition date (in thousands): Period from January 20, 2026 through June 30, 2026 Revenue$250 Net loss$(15,986) 4. 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): Six Months Ended June 30, 2026202520262025$255 $1,025 $341 $13,672 1,860 1,241 3,619 2,774 929 785 1,912 1,562 32 44 62 88 $3,076 $3,095 $5,934 $18,096 $2,797 $3,082 $5,614 $5,419 279 13 320 12,677 $3,076 $3,095 $5,934 $18,096 Six Months Ended June 30, 2026202520262025$2,175 $710 $3,865 $1,207 137 156 519 638 127 1,186 302 13,990 130 268 271 572 507 775 977 1,690 $3,076 $3,095 $5,934 $18,096 Six Months Ended June 30, 202620252026202541 % %35 % % %35 % %76 % %11 % % %As of December 31, 2025 Trade accounts receivable and contract assets, net: Trade accounts receivable, net of allowance for credit losses and excluding unbilled receivables$1,553 $1,021 Unbilled receivable contract asset466 566 Contract acquisition costs3,325 940 Capitalized fulfillment costs717 Total contract assets$6,061 $2,527 Contract liabilities: Deferred revenue, current$9,234 $2,778 Deferred revenue, non-current1,322 560 $10,556 $3,338 19 The allowance for credit losses related to trade accounts receivable was nominal as of June 30, 2026 and December 31, 2025. During the three and six months ended June 30, 2026, the Company recorded no write-offs of accounts receivable deemed uncollectible, respectively. During each of the three and six months ended June 30, 2025, the Company recorded $0.1 million write-offs of accounts receivable deemed uncollectible. 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 $2.0 million and $14.6 million for the six months ended June 30, 2026 and 2025, respectively. Changes in deferred revenue from contracts with customers were as follows (in thousands): Six Months Ended June 30, 20262025 Balance at beginning of period$3,338 $19,356 Deferral of revenue13,103 4,313 Recognition of deferred revenue(5,885)(18,109) Balance at end of period$10,556 $5,560 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 June 30, 2026, the aggregate amount of remaining performance obligations that were unsatisfied or partially unsatisfied related to customer contracts was $40.7 million, of which approximately 57% is expected to be recognized to revenue in the next 12 months and 72% is expected to be recognized to revenue in the next two years with the remainder to be recognized thereafter. 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. 5. MARKETABLE INVESTMENT SECURITIES The Company holds investments in time deposits and in U.S. government bonds, which are classified as available-for-sale. The following table presents the components of the Company's available-for-sale debt securities as of June 30, 2026 and December 31, 2025: Amortized CostUnrealized Estimated Fair Value GainsLosses As of June 30, 2026 U.S. government bonds $149,595 $ $22 $149,573 Time deposits$100,000 $ $ $100,000 As of December 31, 2025 U.S. government bonds $248,980 $154 $ $249,134 During the three months ended June 30, 2026, $150.0 million of available-for-sale debt securities matured. As of June 30, 2026, the Company held $249.6 million of available-for-sale debt securities, all of which had contractual maturities of one year or less. As of June 30, 2026, accrued interest receivable related to available-for-sale debt securities totaled $1.8 million, and was excluded from the disclosed amortized cost basis. Accrued interest receivable is recorded in prepaid expenses and other current assets on the condensed consolidated balance sheets. 20 6. BALANCE SHEET DETAILS Inventories Inventories consisted of the following (in thousands): As of June 30, 2026As of December 31, 2025 Raw materials$3,393 $2,746 Work-in-process95 30 Total inventories$3,488 $2,776 Prepaid expenses and other current assets Prepaid expenses and other current assets consisted of the following (in thousands): As of June 30, 2026As of December 31, 2025 Prepaid services$1,705 $1,339 Interest receivable2,855 3,093 Prepaid software1,730 1,550 Prepaid insurance282 421 Prepaid rent323 182 Other1,977 803 Total prepaid expenses and other current assets$8,872 $7,388 Other non-current assets, net Other non-current assets, net consisted of the following (in thousands): As of June 30, 2026As of December 31, 2025 Investment in equity securities$4,232 $2,391 Deferred financing costs742 725 Long-term deposits298 251 Contract acquisition costs, net4,042 940 Total $9,314 $4,307 Equity Securities During the six months ended June 30, 2026, an observable transaction occurred in the class of securities held by the Company in one of our privately-held equity investees. Consequently, the carrying value of the Company s investment was adjusted based on the transaction price, resulting in a net gain of $1.9 million, recorded in gain on investment in marketable securities, net on the condensed consolidated statements of operations and comprehensive loss. Deferred financing costs The deferred financing costs are deferred issuance costs related to the Equipment Financing Agreement. See Note 9 - Loans payable, net for additional information. Accrued expenses and other current liabilities Accrued expenses and other current liabilities consisted of the following (in thousands): As of June 30, 2026As of December 31, 2025 Accrued compensation and related benefits$7,941 $10,348 Accrued professional services3,040 4,086 Other accruals1,154 1,404 Total accrued expenses and other current liabilities$12,135 $15,838 21 7. PROPERTY AND EQUIPMENT, NET Property and equipment, net consisted of the following (in thousands): As of June 30, 2026As of December 31, 2025 Quantum computer systems$17,153 $15,028 Lab equipment10,540 7,555 Computer equipment5,738 5,659 Leasehold improvements2,482 2,407 Furniture and fixtures554 541 Construction-in-progress7,264 2,514 Total property and equipment43,731 33,704 Less: Accumulated depreciation(21,655)(25,863) Total property and equipment, net$22,076 $7,841 Depreciation expense for the three months ended June 30, 2026 and 2025 was $1.0 million and $0.3 million, respectively. Depreciation expense for the six months ended June 30, 2026 and 2025 was $1.8 million and $0.6 million, respectively. 8. INTANGIBLE ASSETS, NET Intangible assets, net consisted of the following (in thousands): As of June 30, 2026As of December 31, 2025 Developed technology$216,700 $ Trademarks450 Acquired software528 1,335 Internally developed software1,361 907 Other intangible assets46 46 Total intangible assets219,085 2,288 Less: Accumulated amortization(7,269)(1,373) Total intangible assets, net$211,816 $915 Intangible assets are amortized on a straight-line basis over estimated useful lives ranging from 2.0 to 15.0 years, depending on the asset class, as described in Note 2 - Basis of Presentation and Summary of Significant Accounting Policies. Amortization expense for the three months ended June 30, 2026 and 2025 was $3.7 million and $0.04 million, respectively. Amortization expense for the six months ended June 30, 2026 and 2025 was $6.7 million and $0.1 million, respectively. Future Amortization As of June 30, 2026, estimated future amortization expense is as follows (in thousands): Amounts 2026 (remaining)$7,524 202714,919 202814,608 202914,465 203014,447 Thereafter145,196 22 9. LOANS PAYABLE, NET Loans payable, net consisted of the following (in thousands): Effective Interest RateAs of June 30, 2026As of December 31, 2025 Loans payable, net, current: Equipment Financing Term Loan, current16.45%$146 $134 Total loans payable, net, current$146 $134 Loans payable, net, non-current: SIF LoanVariable1 $34,662 $35,525 Equipment Financing Term Loan, non-current224 300 Total loans payable, net, non-current$34,886 $35,825 1Refer below for additional information on the SIF Loan repayment period and effective interest rate. SIF Loan On November 20, 2020, the Company entered into the SIF Loan and subsequently received the full C$40.0 million in eight tranches between November 2020 and December 2023. Funds from the SIF Loan were used for various research and development projects. 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 June 30, 2026, the Company is not aware of any 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 June 30, 2026 and December 31, 2025, the Company calculated a weighted average effective interest rate for all tranches of 2.61% based on the most recent long-term revenue projections at each reporting date. The estimated fair value of the SIF Loan (Level 3) at June 30, 2026 was $17.9 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 revenues and the appropriate discount rate. Equipment Financing Term Loan On August 1, 2025, the Company entered into an equipment financing agreement (the Equipment Financing Agreement ). The agreement provides for a total conditional commitment of $13.8 million, with an initial draw of $0.5 million made upon execution. Amounts drawn under the agreement are recognized as a term loan (the Equipment Financing Term Loan ). The remaining commitment is available until February 1, 2027, which may be extended to August 1, 2027 if at least $11.5 million is drawn by that date. A commitment fee of 1% of the total conditional commitment was paid to the financial institution providing the Equipment Financing Agreement (the Lender ) upon the initial draw. The Lender also received a ten-year warrant to purchase 21,563 Common Shares at an exercise price of $16.05 per share. A non-utilization fee of 3% will apply to the undrawn portion of the first $11.5 million as of the termination date (either February 1, 2027 or August 1, 2027, as applicable). The interest rate for each draw is fixed upon execution and is based on a spread of approximately 3.4% over the Prime Rate (which was 7.5% at signing), subject to a minimum rate of 10.9%, which is the rate applied to the initial draw. The Lender holds a first-priority security interest in all financed equipment. 23 Debt issuance costs, including the commitment fee, legal and documentation costs, and the warrant value, are recorded as deferred issuance costs and reclassified to a contra-liability as draws are made. The End-of-Term Payment (4.0% of the total amount financed under the Equipment Financing Agreement) is accreted as part of the loan s effective interest rate. Deferred issuance costs are reviewed for recoverability, and any unamortized costs related to canceled draws or terminated facilities are expensed immediately. Cash payments for debt issuance costs are classified as financing activities in the condensed consolidated statements of cash flows. As of June 30, 2026, the Company had drawn $0.5 million under the Equipment Financing Agreement. The carrying amount of the outstanding equipment financing at June 30, 2026 was $0.4 million, measured at amortized cost. As of June 30, 2026, only a minimal portion of the deferred issuance costs had been reclassified to debt discount related to the initial draw and $0.7 million of deferred issuance costs remained unallocated. The estimated fair value of the Equipment Financing Term Loan approximates its carrying value (Level 2) and was $0.4 million at June 30, 2026. The fair value of the Equipment Financing Term Loan was valued using a discounted cash flow model, with key inputs relating to terms, discount rate and expectations for defaults and prepayments. TPC Loan During 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 TPC Loan was fully repaid on April 24, 2025. 10. WARRANT LIABILITIES Public and Private Warrants In conjunction with the Merger, the Company assumed 10,000,000 Public Warrants and 8,000,000 Private Warrants. As part of the Merger, each Public Warrant and Private Warrant that was issued and outstanding immediately prior to the Merger was automatically and irrevocably converted into one warrant of the Company. Each such Warrant was exercisable at an exercise price of $11.50 (the Warrant Exercise Price ) for 1.4541326 Common Shares, or an approximate exercise price per Common Share of $7.91, subject to adjustments. The Warrants were exercisable only for a whole number of Common Shares, and no fractional shares were issuable. The Warrants were originally scheduled to expire on August 5, 2027, unless earlier redeemed or liquidated. Warrant Exercises During the year ended December 31, 2025, 17,645,147 Warrants were exercised by holders in accordance with the Warrant Agreement. As a result of these exercises, during the year ended December 31, 2025, the Company issued 25,658,383 Common Shares. In connection with the exercises, during the year ended December 31, 2025, the Company received cash proceeds of $202.9 million and reclassified $340.4 million, representing the fair value of the warrant liabilities at the time of exercise, from warrant liabilities to additional paid-in capital. The fair value of the liability pertaining to the exercised Warrants was remeasured immediately prior to exercise, and the change in fair value was recognized within change in fair value of warrant liabilities in the condensed consolidated statements of operations and comprehensive loss. Redemption of Warrants On November 19, 2025, the Company redeemed the 270,820 remaining outstanding Public Warrants at a redemption price of $0.01 per warrant. The redemption was effected pursuant to the terms of the Warrant Agreement following the Company s satisfaction of the applicable share price performance condition. As a result of the redemption, the Public Warrants ceased trading on the New York Stock Exchange prior to the redemption date and were subsequently delisted. There were no Public or Private Warrants outstanding at June 30, 2026. 24 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. The warrant agreement was terminated on November 28, 2022. As of the termination date of the agreement, approximately 40% of the warrants had vested, resulting in warrants exercisable for up to 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 $2.16 per Common Share until November 29, 2026. As of June 30, 2026, no additional Warrant Preferred Shares were vested or were probable of vesting. Warrants Issued in Connection with Equipment Financing In connection with the Equipment Financing Agreement, the Company issued warrants to purchase 21,563 Common Shares, as further described in Note 9 - Loans payable, net. 11. STOCK-BASED COMPENSATION 2020 Equity Incentive Plan In April 2020, the Board of Directors of D-Wave Systems approved the 2020 Equity Incentive Plan (the 2020 Plan ) which provides for the grant of qualified incentive stock options ( ISO ) and non-qualified stock options ( NSO ), restricted stock, RSUs or other awards to the Company s employees, officers, directors, advisors, and outside consultants. Following the Merger, awards outstanding under the 2020 Plan continued to be governed by the 2020 Plan; however, the Company will not grant any further awards under the 2020 Plan. 2022 Equity Incentive Plan On August 5, 2022, the shareholders approved the D-Wave Quantum Inc. 2022 Equity Incentive Plan (the 2022 Plan ), which became effective immediately upon the closing of the Merger. While the 2022 Plan allows for the issuance of awards with a service condition, a performance condition, a market condition, or some combination of the three, to date, the Company has only issued awards subject to a service condition. Awards issued under the 2022 Plan have vesting periods ranging from under 1 year to 4 years from the original grant date, and all awards issued to date under the 2022 Plan will expire 10 years from the original grant date. Share-based compensation awards are settled by issuing new shares. Common stock option activity The following table summarizes the Company s stock option activity during the periods presented (in thousands except share and per share data): Number of optionsWeighted average exercise price ($)Weighted average remaining contractual term (years)Aggregate intrinsic value ($) Outstanding as of December 31, 20253,608,1701.90 6.3687,511 Granted592,3922.64 Exercised(1,331,936)1.21 Forfeited and expired(16,748)2.31 Outstanding as of June 30, 20262,851,8782.37 6.5261,653 Options exercisable as of June 30, 20261,884,3452.43 5.8140,623 Options unvested as of June 30, 2026967,5332.25 7.9021,030 25 Restricted stock unit awards The following table summarizes the RSU activity and related information under the 2022 Plan: Number of RSUsWeighted average Grant Date Fair Value ($) Unvested as of December 31, 20258,215,915 6.56 Granted3,293,489 21.56 Forfeited and expired(151,630)18.80 Vested(1,951,810)6.14 Unvested as of June 30, 20269,405,964 11.71 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): Six Months Ended June 30, 2026202520262025$279 $231 $464 $373 5,092 2,3299,6653,7834,100 3,083 6,0904,9001,642 1,028 2,9131,608$11,113 $6,671 $19,132 $10,664 2025$(48,028)$(167,329)370,840,115 302,288,793 $(0.13)$(0.55) 20262025$(66,385)$(172,750)369,165,968 294,398,419 $(0.18)$(0.59) 20262025 5,387,118 8,107,302 1,155,713 1,155,713 21,563 2,851,878 6,776,433 9,405,964 10,894,644 13,435,118 32,321,210 As of December 31, 2025$18,754 $13,802 15,326 515 38 42 $34,118 $14,359 Variance (In thousands, except share and per share data)20262025Amount% Revenue$3,076 $3,095 $(19)(1)% Cost of revenue1,372 1,119 253 23 % Total gross profit1,704 1,976 (272)(14)% Operating expenses: Research and development28,239 12,694 15,545 122 % General and administrative15,388 9,151 6,237 68 % Sales and marketing11,355 6,633 4,722 71 % Total operating expenses54,982 28,478 26,504 93 % Loss from operations(53,278)(26,502)(26,776)101 % Other income (expense), net: Interest income5,028 4,311 717 17 % Interest expense(255)(206)(49)24 % Gain on investment in marketable securities, net n/a Change in fair value of warrant liabilities (142,048)142,048 (100)% Other income (expense), net485 (2,884)3,369 (117)% Total other income (expense), net5,258 (140,827)146,085 (104)% Loss before income taxes(48,020)(167,329)119,309 (71)% Income tax benefit (provision), net(8) (8)n/a Net loss(48,028)(167,329)119,301 (71)% Foreign currency translation adjustment140 787 (647)(82)% Unrealized losses on available-for-sale securities(7) (7)n/a Reclassification adjustment for realized gains (losses) included in net income(16) (16)n/a Net comprehensive loss$(47,911)$(166,542)$118,631 (71)% Revenue Revenue remained consistent at $3.1 million for the three months ended June 30, 2026 as compared to $3.1 million for the three months ended June 30, 2025. System sales decreased by $0.8 million, offset by an increase in QCaaS revenue of $0.6 million and an increase in professional services revenue of $0.2 million. The decrease in system sales was primarily due to variability in the timing and extent of system installation activities in each period. Cost of Revenue Cost of revenue increased by $0.3 million, or 23%, to $1.4 million for the three months ended June 30, 2026 as compared to $1.1 million for the three months ended June 30, 2025. The increase in cost of revenue was primarily due to an increase in personnel costs of $0.4 million, partially offset by a decrease in infrastructure costs of $0.1 million. Operating Expenses Research and Development Expenses Research and development expenses increased by $15.5 million, or 122%, to $28.2 million for the three months ended June 30, 2026 compared to $12.7 million for the three months ended June 30, 2025. The increase was primarily driven by increases in personnel costs of $5.2 million, depreciation and amortization expense of $4.1 million and stock-based compensation expense of $2.9 million. 32 General and Administrative Expenses General and administrative expenses increased by $6.2 million, or 68%, to $15.4 million for the three months ended June 30, 2026 as compared to $9.2 million for the three months ended June 30, 2025. The increase was primarily driven by increases in personnel expenses of $2.0 million, stock-based compensation expense of $1.0 million, and software costs of $0.6 million. In addition, the prior period included a $1.0 million bad debt recovery that did not recur. Sales and Marketing Expenses Sales and marketing expenses increased by $4.8 million, or 71%, to $11.4 million for the three months ended June 30, 2026 as compared to $6.6 million for the three months ended June 30, 2025. The increase was primarily driven by increases in personnel costs of $2.5 million, marketing expenses of $0.9 million and stock-based compensation expense of $0.6 million. Other Income (Expense), net Interest income Interest income increased by $0.7 million, or 17%, to $5.0 million for the three months ended June 30, 2026 as compared to $4.3 million for the three months ended June 30, 2025. The increase was driven primarily by interest earned on higher cash and cash equivalent balances and the Company s investment in short-term government debt. Interest Expense Interest expense increased modestly to $0.3 million for the three months ended June 30, 2026 as compared to $0.2 million for the three months ended June 30, 2025. Change in fair value of warrant liabilities The change in fair value of warrant liabilities was zero for the three months ended June 30, 2026 as compared to $142.0 million for the three months ended June 30, 2025. The Company had no Public Warrants outstanding following the redemption of all remaining warrants on November 19, 2025 pursuant to the Warrant Agreement. 33 Other income (expense), net Other income (expense), net increased by $3.4 million or 117%, to a net other income of $0.5 million for the three months ended June 30, 2026 as compared to a net other expense of $2.9 million for the three months ended June 30, 2025. The increase was primarily driven by the impact of net foreign exchange gain in the prior period of $3.3 million resulting from appreciation of the U.S. Dollar against certain foreign currencies. Comparison of the Six Months Ended June 30, 2026 and 2025 The following table sets forth our results of operations for the periods indicated (in thousands): Six Months Ended June 30,Variance (In thousands, except share and per share data)20262025Amount% Revenue$5,934 $18,096 $(12,162)(67)% Cost of revenue2,412 2,243 169 8 % Total gross profit3,522 15,853 (12,331)(78)% Operating expenses: Research and development54,032 22,982 31,050 135 % General and administrative35,663 17,108 18,555 108 % Sales and marketing21,832 13,556 8,276 61 % Total operating expenses111,527 53,646 57,881 108 % Loss from operations(108,005)(37,793)(70,212)186 % Other income (expense), net: Interest income10,813 7,410 3,403 46 % Interest expense(514)(432)(82)19 % Gain on investment in marketable securities, net1,880 1,880 n/a Change in fair value of warrant liabilities (138,105)138,105 (100)% Other income (expense), net997 (3,830)4,827 126 % Total other income (expense), net13,176 (134,957)148,133 (110)% Loss before income taxes(94,829)(172,750)77,921 (45)% Income tax benefit (provision), net28,444 28,444 n/a Net loss(66,385)(172,750)106,365 (62)% Foreign currency translation adjustment158 1,285 (1,127)(88)% Unrealized losses on available-for-sale securities(160) (160)n/a Reclassification adjustment for realized gains (losses) included in net income(16) (16)n/a Net comprehensive loss$(66,403)$(171,465)$105,062 (61)% Revenue Revenue decreased by $12.2 million, or 67%, to $5.9 million for the six months ended June 30, 2026 as compared to $18.1 million for the six months ended June 30, 2025. The decrease was primarily driven by a decrease in system sales of $13.3 million, partially offset by an increase in QCaaS revenue of $0.8 million and an increase in professional services revenue of $0.4 million. The decrease in system sales was primarily due to the timing of progress recognized under the percentage-of-completion method on the system contracted for delivery in each period. Cost of Revenue Cost of revenue increased by $0.2 million, or 8%, to $2.4 million for the six months ended June 30, 2026 as compared to $2.2 million for the six months ended June 30, 2025. The increase in cost of revenue was primarily due to an increase in personnel-related costs. 34 Operating Expenses Research and Development Expenses Research and development expenses increased by $31.0 million, or 135%, to $54.0 million for the six months ended June 30, 2026 compared to $23.0 million for the six months ended June 30, 2025. The increase was primarily driven by increases in personnel costs of $10.8 million, depreciation and amortization of $7.4 million and stock-based compensation expense of $6.1 million. General and Administrative Expenses General and administrative expenses increased by $18.6 million, or 108%, to $35.7 million for the six months ended June 30, 2026 as compared to $17.1 million for the six months ended June 30, 2025. The increase was primarily driven by an increase in professional fees of $7.2 million (largely comprised of transaction expenses from the Acquisition), an increase in personnel expenses of $4.6 million and acquisition-related insurance expenses of $2.1 million. Sales and Marketing Expenses Sales and marketing expenses increased by $8.2 million, or 61%, to $21.8 million for the six months ended June 30, 2026 as compared to $13.6 million for the six months ended June 30, 2025. The increase was primarily driven by increases in personnel costs of $3.6 million, marketing expenses of $2.1 million, and stock-based compensation expense of $1.3 million. Other Income (Expense), net Interest income Interest income increased by $3.4 million, to $10.8 million for the six months ended June 30, 2026 as compared to $7.4 million for the six months ended June 30, 2025. The increase was driven primarily by interest earned on higher cash and cash equivalent balances and the Company s investment in short-term government debt. Interest expense Interest expense increased modestly to $0.5 million for the six months ended June 30, 2026 as compared to $0.4 million for the six months ended June 30, 2025. Gain on investment in marketable securities, net Gain on investment in marketable securities, net was a gain of $1.9 million for the six months ended June 30, 2026 as compared to no gain or loss for the six months ended June 30, 2025. The gain in the current period was attributable to an observable price change resulting from a third-party transaction involving the Company s investment in a privately-held company. Accordingly, the carrying value of the investment was adjusted based on the transaction price, resulting in a net gain. There was no similar activity for the six months ended June 30, 2025. Change in fair value of warrant liabilities The change in fair value of warrant liabilities was zero for the six months ended June 30, 2026 as compared to a decrease of $138.1 million for the six months ended June 30, 2025. The fair value of the warrant liabilities varied primarily with the trading price of the Public Warrants, which were listed on the NYSE. The trading price of the Public Warrants decreased during the six months ended June 30, 2025, generally in line with the decline in the trading price of the Common Shares, resulting in a corresponding decrease in the fair value of the warrant liabilities. The Company had no Public Warrants outstanding following the redemption of all remaining warrants on November 19, 2025 pursuant to the Warrant Agreement. Other income (expense), net Other income (expense), net increased by $4.8 million or 126%, to a net other income of $1.0 million for the six months ended June 30, 2026 as compared to a net other expense of $3.8 million for the six months ended June 30, 2025. The increase was primarily driven by the impact of net foreign exchange gain in the prior period of $4.8 million resulting from appreciation of the U.S. Dollar against certain foreign currencies. Income tax benefit (provision), net Income tax benefit (provision), net was $28.4 million for the six months ended June 30, 2026 as compared to zero for the six months ended June 30, 2025. The increase was primarily driven by deferred tax liabilities assumed in connection with the Quantum Circuits acquisition. The deferred tax liabilities provided an additional source of taxable income required to utilize existing deferred tax assets, which resulted in the partial release of the valuation allowance against the deferred tax assets. 35 Liquidity and Capital Resources The Company has historically raised capital through equity issuances, including at-the-market ( ATM ) offerings, an Equity Line of Credit ( ELOC ) with Lincoln Park Capital Fund ( Lincoln Park ), and warrant exercises. As of December 31, 2025, the Company had completed all issuances under its prior equity programs, including the ELOC and its ATM sales agreements. During the year ended December 31, 2025, the Company received significant net proceeds from these programs, as well as from warrant exercises, which strengthened its liquidity position. The Company has no Public Warrants outstanding during 2026 following the redemption of all remaining warrants in November 2025 pursuant to the Warrant Agreement. In addition, the Company entered into the Equipment Financing Agreement in August 2025, which provides a conditional commitment of up to $13.8 million to finance certain capital equipment purchases. Refer to Note 9 - Loans payable, net to the condensed consolidated financial statements for additional information. Cash Flows The following table sets forth our cash flows for the periods indicated (in thousands): 20262025$(73,463)$(34,565)(260,581)(357)(4,819)674,969 158 1,285 $(338,705)$641,332 As of June 30, 2026 Foreign denominated monetary assets and liabilitiesOI&E $(4,523) Interest Rate Risk We had cash, cash equivalents, and short-term investments of $546.2 million as of June 30, 2026. We hold our cash and cash equivalents for working capital and general corporate purposes. Our cash and cash equivalents are held in cash and checking deposits, money market funds, and U.S. government securities. Our investments are held in short-term U.S. government securities. The primary objective of our investment activities is to preserve principal while at the same time maximizing yields without significantly increased risk. To achieve this objective, we invest in highly liquid securities depending on our strategic cash needs. Due to the nature of these instruments, we believe that we do not have any material exposure to changes in the fair value due to changes in interest rates. Declines in interest rates, however, would reduce our future interest income. Further, in the event of a significant decline in interest rates, we would consider taking actions to mitigate our exposure to the change. 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. Disclosure Controls and Procedures We maintain disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act that are designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is (1) recorded, processed, summarized and reported, within the time periods specified in the SEC s rules and forms and (2) accumulated and communicated to our management, including our principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. 37 Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act), as of the end of the period covered by this Report. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that as of June 30, 2026, our disclosure controls and procedures were effective in providing reasonable assurance that information required to be disclosed in our reports filed under the Exchange Act was recorded, processed, summarized and reported within the time periods prescribed by SEC rules and regulations, and that such information was accumulated and communicated to our management to allow timely decisions regarding required disclosure. Accordingly, we believe that the consolidated financial statements included in this Report do fairly present, in all material respects, our financial position, results of operations and cash flows for the periods presented. Changes in Internal Control Over Financial Reporting There has been 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 June 30, 2026 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. 38 Part II - Other Information 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. 39 Item 1A. Risk Factors Except as set forth below, 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, 2025, as filed with the SEC on February 26, 2026: The following risk factor is amended and restated in its entirety to read as follows: If we are unable for any reason to meet the continued listing requirements of Nasdaq, such action or inaction could result in a delisting of our Common Shares. From August 5, 2022 through July 24, 2026, our Common Shares were listed on the NYSE. In July 2026, we voluntarily transferred the listing and trading of our Common Shares from the NYSE to Nasdaq, retaining the ticker symbol QBTS . The listing and trading of our Common Shares on the NYSE ended as of market close on July 24, 2026 and trading of our Common Shares on Nasdaq began at market open on July 27, 2026. We were notified by the NYSE on three occasions, most recently in October 2024, that we were not in compliance with the NYSE's continued listing requirements because the average closing price of our Common Shares was less than $1.00 over a consecutive 30 trading-day period. Such notices had no immediate impact on the listing of our Common Shares, which continued to be listed and traded on the NYSE and on each occasion we regained compliance with the NYSE listing requirements during the period allowed to regain compliance. Following the transfer of the listing of our Common Shares to Nasdaq, we are subject to similar Nasdaq continued listing requirements. If we cannot remain in compliance with the Nasdaq listing requirements, or cannot regain compliance if we become non-compliant in the future, our Common Shares will be delisted from Nasdaq. The delisting of our Common Shares from Nasdaq would likely make it more difficult for us to raise capital on favorable terms in the future, would likely have a negative effect on the price of our securities and would impair our stockholders' ability to sell or purchase our securities when they wish to do so. In the event of a delisting, actions taken by us to restore compliance with listing requirements may not allow our securities to become listed again, stabilize the market price or improve the liquidity of our securities, prevent such securities from dropping below any minimum bid price requirement or prevent future non-compliance with the Nasdaq listing requirements. Item 2. Unregistered Sales of Equity Securities and Use of Proceeds None. Item 3. Defaults Upon Senior Securities None. 40 Item 4. Mine Safety Disclosures Not applicable. Item 5. Other Information Securities Trading Plans of Directors and Executive Officers From time to time, some of the Company s directors or executive officers may determine that it is advisable to diversify their investments for personal financial planning reasons or may seek liquidity for other reasons and may sell Common Shares. To effect such sales, from time to time, some of the Company s directors or executive officers may enter into trading plans that are designed to comply with the Company s Amended and Restated Securities Trading Policy and intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) of the Exchange Act. During the three months ended June 30, 2026, the following executive officer of the Company adopted a Rule 10b5-1 trading arrangement, as such term is defined under Item 408 of Regulation S-K: Name and Title of Director or Executive OfficerDate of AdoptionExpiration Date of Trading Arrangement1 Aggregate Number of Securities to be Sold John M. Markovich, Executive Vice President & Chief Financial Officer June 16, 2026March 15, 2027 Up to 495,374 Common Shares 1 The trading arrangement may end earlier if all transactions under the trading arrangement are completed prior to the expiration date. During the three months ended June 30, 2026, none of the Company's directors or other executive officers adopted a Rule 10b5-1 trading arrangement, and none of the Company s directors or executive officers modified or terminated a Rule 10b5-1 trading arrangement or adopted, modified, or terminated a non-Rule 10b5-1 trading arrangement, as such terms are defined under Item 408 of Regulation S-K. 41