‘Revenue is not our main driver:’ Xanadu CEO defends long-term vision after stock plunge

Christian Weedbrook, CEO of Xanadu Quantum Technologies, joins BNN Bloomberg to discuss the company's Q1 earnings.

Xanadu Quantum Technologies Ltd. says it is focused on its long-term growth while its stock experiences extreme volatility in the short term.

Its stock fell over nine per cent on Friday, following an over 60 per cent drop two weeks ago.

The Toronto-based company, which builds universal photonic quantum computers, reported its inaugural first-quarter earnings on Thursday. It posted a revenue of US$2.8 million but reported a net loss of US$20.6 million, or US$0.28 per share.

Regardless, things are going exactly as they should, says Christian Weedbrook, founder and CEO of Xanadu.

“We’ve always taken a long-term view here at Xanadu… we try very hard not to look at the stock price, really thinking years ahead,” he says.

“Revenue is not our main driver here.”

He says the stock’s sharp drop is a technical side effect of having very few tradable shares and the typical volatility of de-SPAC companies, rather than a sign that major investors are quitting.

“The more float we have, the more stable the stock will be,” says Weedbrook.

Xanadu Quantum Technologies went public nearly two months ago in a dual listing, where it began trading simultaneously on both the Nasdaq in New York and the Toronto Stock Exchange under the ticker symbol XNDU. It was the first pure-play photonic quantum computing company to be listed on both exchanges.

Since then, the stock has experienced extreme volatility.

It skyrocketed from approximately US$11 to US$44 by mid-April. The surge was largely triggered by Nvidia’s release of the “Ising” quantum AI models. This ignited speculative interest across the entire quantum sector, as Xanadu’s error-correction technology is highly compatible with Nvidia’s new tools.

“I think we’ll see more and more of these things over the coming years, these blips that drive the stock price up. And that’s a function of people trying to really understand quantum computing,” says Weedbrook.

“I think our investors and investors in the quantum space really know that this is a long-term play.”

He states the company is on track to build its quantum data centre by 2029 or 2030, a relatively near-term target. While there is some degree of uncertainty about meeting the deadline precisely, he emphasizes that “quantum computing is one of those few technologies that will change the world.”

“It’s deep, deep tech. We really are storing, manipulating, and measuring information at the quantum level, which is very hard to do,” says Weedbrook.

He says the company is focused on meeting its hardware milestones and roadmaps.

“Also, it’s more about partnerships than revenue. So having long-term partners that will stay with us over the next couple of years. That will ultimately be our first true customers,” Weedbrook adds.

Developing open-source software, PennyLane

He says the company is advancing its quantum computing roadmap by developing the open-source software platform PennyLane and negotiating up to $390 million with the Canadian and Ontario governments for Project OPTIMISM.

“Think of any hardware we have, whether it’s our computers or phones. You need software to interact with them, and the same is true for quantum computers. So that’s what PennyLane is,” says Weedbrook.

Through Project OPTIMISM, the company is building a large-scale quantum computer to drive advancements in industries like drug discovery, finance, and AI. Weedbrook says PennyLane is already in use in over 150 universities in more than 30 countries around the world.

“I can say at a high level, though, that quantum is going to be very significant and change the world in many industries,” says Weedbrook.