RGTIW — Rigetti Computing, Inc.

Summary of Rigetti Computing Q3 2025 Earnings Call

1. Key Financial Results and Metrics

• Revenue: $1.9 million in Q3 2025, down from $2.4 million in Q3 2024, primarily due to the expiration of the National Quantum Initiative and its pending reauthorization.
• Gross Margin: 21%, significantly lower than 51% in Q3 2024, attributed to lower-margin contracts.
• Operating Expenses: Increased to $21 million from $18.6 million year-over-year, driven by salary increases, new hires, and higher stock-based compensation.
• Operating Loss: $20.5 million, compared to $17.3 million in the prior year.
• Net Loss: GAAP net loss increased, while non-GAAP net loss was $10.7 million ($0.03 per share), an improvement from $13.4 million ($0.07 per share) in Q3 2024.
• Cash Position: Approximately $558.9 million as of September 30, 2025, with an increase to about $600 million post-quarter due to warrant exercises.

2. Strategic Updates and Business Highlights

• Technology Development: On track to deliver a 100+ qubit chiplet-based quantum system with 99.5% median 2-qubit gate fidelity by end of 2025. Plans for a 150+ qubit system by end of 2026 and a 1,000+ qubit system by end of 2027, targeting 99.8% fidelity.
• Sales: Announced $5.7 million in purchase orders for two 9-qubit Novera quantum systems, with applications in quantum computing research.
• Contracts: Secured a 3-year, $5.8 million contract with the Air Force Research Laboratory (AFRL) to advance superconducting quantum networking.
• Collaborations: Engaging with various academic and research institutions, including a memorandum of understanding with India's C-DAC for hybrid quantum computing systems.
• NVIDIA Partnership: Supporting NVIDIA's NVQLink for AI supercomputer integration, enhancing hybrid computation development.

3. Forward Guidance and Outlook

• Revenue Expectations: Anticipated revenue growth from recent contracts and system sales expected to benefit Q4 2025 and 2026.
• Technology Roadmap: Confident in achieving fidelity milestones and qubit counts as planned, with ongoing improvements in chiplet technology.
• Funding Outlook: Positive developments regarding the reauthorization of the National Quantum Initiative, with expectations for increased funding from the Department of Energy.

4. Bad News, Challenges, or Points of Concern

• Revenue Decline: Year-over-year revenue decrease due to external factors like the National Quantum Initiative's expiration.
• Lower Gross Margins: Significant drop in gross margins due to the nature of recent contracts, raising concerns about profitability.
• DARPA Phase B Participation: Not selected for Phase B of the DARPA Quantum Benchmarking Initiative, though constructive feedback was received; future participation remains uncertain.
• CapEx Considerations: Potential need for significant capital expenditure for upgrading or building new fabrication facilities to meet future technology demands.

5. Notable Q&A Insights

• DARPA Feedback: Management expressed optimism about future participation in DARPA projects, focusing on error correction and long-range coupling.
• Chiplet Technology: Confidence in using chiplet architecture to meet future milestones, with plans to scale up to 36-qubit chiplets for the 1,000 qubit target.
• Foundry Exploration: Open to exploring partnerships with existing foundries to enhance production capabilities, though current options are limited.
• Customer Insights: Customers purchasing 9-qubit systems are focused on understanding quantum computing fundamentals before upgrading to larger systems.

Overall, while Rigetti Computing faces challenges such as declining revenues and lower gross margins, it maintains a strong cash position and a promising technology roadmap, with strategic initiatives aimed at enhancing its market position in the quantum computing space.