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Luke Kawa

D-Wave Quantum drops after larger-than-expected quarterly loss

D-Wave Quantum is down in premarket trading after reporting mixed second-quarter results.

For a relatively small-growth company, posting top-line growth is a must-have. The Palo Alto-based quantum computing firm was able to do just that, with quarterly sales of $3.1 million, above estimates for $2.54 million and up 42% from the same quarter a year ago. Bookings also nearly doubled versus Q4 2024 to $1.3 million.

The company’s net loss widened sharply to $0.55 per share, but the big reason for the red ink blunts the impact: it’s a result of the fair value of its warrant liabilities rising by $142 million. Effectively, the company’s income statement is hurt by virtue of its stock price going up a lot in the second quarter.

However, adjusted EBITDA, which removes the impact of these changes to warrant liabilities, was also worse than anticipated, at a $20 million loss, driven by a bigger-than-expected jump in operating expenses.

“During the quarter, we brought to market our sixth-generation quantum computer, signed a memorandum of understanding related to the acquisition of an on-premises system in South Korea, completed physical assembly of the previously announced system at Davidson Technologies, introduced a collection of developer tools to advance quantum AI and machine learning innovation, and ended the quarter with a record $819 million in cash,” D-Wave CEO Alan Baratz said.

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Helena Cheng

Lululemon’s stretch getting tested: Stock plunges after after outlook is cut

Lululemon shares are down double digits in premarket trading after the company cut its full-year sales and profit outlook, overshadowing a Q1 beat and raising fresh concerns about the brand’s turnaround efforts.

The company now expects fiscal 2026 revenue to be flat to down 1%, compared with its prior forecast for 2% to 4% growth. Guidance for full-year diluted earnings per share was dragged down to a range of $10.95 to $11.15, below the company’s previous guidance of $12.10 to $12.30 and well below Wall Street’s estimate of $13.26.

Key numbers for Q1:

  • EPS of $1.69 vs. the $1.68 expected.

  • Revenue of $2.47 billion vs. the $2.43 billion expected.

The modest top-line beat masked a widening divergence between Lululemon’s geographic markets. While international revenue rose 22% overall with a 30% increase in Mainland China, the bigger problem remains North America, where revenue fell 5%.

Interim co-CEO and CFO Meghan Frank acknowledged during the earnings call that recent product rollouts underperformed. A highly anticipated yoga campaign failed to generate its expected “halo effect” across broader product lines.

Profitability metrics took a major hit, with gross margins contracting by 410 basis points to 54.2% due to mounting tariff costs and promotional markdowns. Operating income consequently fell 37% year over year to $276.9 million.

“We experienced spikes of negative commentary in the media and on social channels with regard to our brand, which had an impact on traffic and overall top-line performance,” Frank said during the earnings call. “And second, not all of our product launches have met our expectations. While we have had several successful launches so far this year, we have seen others as we start Q2 not generate the anticipated guest response.”

Lululemon’s valuation has already been steadily compressing for years. While it was once one of retail’s richly valued stocks, investors have been questioning whether the company can return to the double-digit growth era.

The results also arrive during a leadership transition. Lululemon announced back in April that former Nike executive Heidi O’Neill is set to take over as CEO in September, with investors looking to her to revive growth in North America and restore the brand’s growth.

As Lululemon faces both macroeconomic pressure and brand-specific challenges, its stock has dropped around 40% year to date.

markets
Paige Oamek

US job growth skyrocketed in May, blasting past expectations

The US economy added 172,000 jobs in the month of May, the Bureau of Labor Statistics reported Friday, sending 10-year Treasury yields higher.

The strong May job market surprised economists. Experts had predicted only 85,000 new jobs — just half the reported number. The unemployment rate held steady at 4.3%, as expected.

The job growth story is a hopeful spot for the economy as consumers continue to feel inflationary pressure from the Iran war.

Job gains were buoyed by the leisure and hospitality sector, which added 70,000 jobs, as well as local government, healthcare, and education.

Both the March and April jobs reports were revised upward, making them collectively 93,000 higher than previously reported.

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