Rigetti Computing Q2 FY2025 Earnings Call Transcript
Rigetti Computing, Inc. (NASDAQ:RGTI) reported its second-quarter financial results after the closing bell on Tuesday.
Below are the transcripts from the second quarter earnings call.
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OPERATOR
Good day and thank you for standing by. Welcome to The Rigetti Computing Second Quarter 2025 Financial Results Conference call. At this time all participants are in a listen only mode. After the speaker’s presentation there will be a question and answer session. To ask a question during the session you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised to withdraw your question. Please press star 11 again. Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your speaker today, Dr. Subodh Kulkarni, Chief Executive Officer. Please go ahead.
Subodh Kulkarni (CEO)
Good afternoon and thank you for participating in Rigetti’s earnings conference call covering the second quarter ended June 30, 2025. Joining me today is Jeff Bertelsen, our CFO who will review our results in some detail following my overview. Our CTO David Rivas is also here to participate in the Q and A session. We will be pleased to answer your questions at the conclusion of our remarks. We would like to point out that this call and Rigetti’s second quarter ended June 30, 2025 press release contain forward looking statements regarding current expectations, objectives and underlying assumptions regarding our outlook and future operating results. These forward looking statements are subject to a number of risks and uncertainties that could cause actual results to differ materially from those described and are discussed in more detail in our Form 10K for the year ended December 31, 2024, our Form 10Q for the three and six months ended June 30, 2025 and other documents filed by the company from time to time with the securities and Exchange Commission. These filings identify and address important risks and uncertainties that could cause actual events and results to differ materially from those contained in the forward looking statements. We urge you to review these discussions of risk factors today. I’m pleased to report that we continue to achieve our ambitious roadmap goals and maintain our momentum on the technology front, most recently by demonstrating the industry’s largest multi chip quantum computer with impressive performance. Our Multi chip Quantum Computer CPS 136Q, the industry’s largest multi chip quantum computer, is released for general availability and deployed on the Rigetti quantum cloud services platform QCS and will be available on Microsoft Azure thereafter. Just six months after our record performance with Aspen M-3, we have once again halved our error rates with a median 2.99.5% CPS 136Q has achieved a 2x reduction in 2 qubit gate error rate from our previous Anka3 system. CPS 136Q is the first multi chip quantum computer in the industry to achieve this level of performance with 4 chips. CPS 136Q contains the largest number of chiplets in a quantum computer and further validates our approach to scaling Rigetti’s quantum computers. It’s our view that superconducting qubits are the leading modality for quantum computers due to their ability to scale and their ability to achieve gate speeds more than 1,000 times faster than other modalities like ion traps and pure atoms. Our superconducting qubits leverage technologies like chiplets that have been maturing in the semiconductor industry for decades. Use of these well established methods enables Rigetti to scale its quantum computers to higher levels of performance and qubit counts. This legacy of technological advancement continues with the CPS one architecture and includes the following features that contribute to improved performance. Transitioning from a monolithic chip to chiplets enables greater control over chip uniformity which in turn improves performance. Leveraging chiplets also reduces manufacturing complexity and improves fabrication yield. Optimized two qubit gates enable faster gate times while reducing coherent errors which improves fidelity and is important for executing quantum error correction techniques. These improvements enabled a 2x reduction in error rates. Advances in multi layer chip and tunable coupler design also enables higher performance. Our industry leading proprietary chiplet approach to scaling makes us confident that we will hit our end of year technology goals. We believe quadrupling or chiplet count and significantly decreasing error rates is a clear path towards quantum advantage and fault tolerance. We intend to continue our momentum and expect to release a 100 plus Qubit chiplet based system at 99.5% median two Qubit gate fidelity before the end of 2025. While we are pleased with our sequential growth in quarterly revenues, we believe achievement of our technology milestones remains the key metric to achieving our long term success. On the financing front, I’m pleased to report that Rigetti has significantly strengthened its balance sheet. During the second quarter of 2025 Rigetti completed the sales of 350 million gross proceeds of its common stock pursuant to our previously disclosed at the Market Equity Offering program. We are well positioned to support commercial scale up of our superconducting gate based quantum computers. Thank you Jeff. Will now make a few remarks regarding our recent financial performance.
Jeff Bertelsen (Chief Financial Officer)
Thanks Subodh revenues in the second quarter of 2025 were 1.8 million compared to 3.1 million in the second quarter of 2024. On a year over year basis Our revenue for the quarter was impacted by expiration of the National Quantum Initiative and its pending reauthorization in the U.S. congress. Renewal of the U.S. national Quantum Initiative sales to U.S. and foreign governments and Novera’s sales are all important to future sales. Gross margins in the second quarter of 2025 came in at 31% compared to 64% in the second quarter of 2024. The lower gross margins on a year over year basis were impacted by revenue mix and variability in the pricing in terms of our development contracts, including our contracts with the UK’s NQCC for Quantum Systems, which have a lower which have lower gross margins than most of our other revenue. On the expense side, total OPEX in the second quarter of 2025 was 20.4 million compared to 18.1 million in the same period of the prior year. The increase in total OPEX was due to annual salary increases, new hires and higher consulting costs, mainly in research and development. Higher costs for our annual shareholder meeting due to the increase in the number of beneficial owners of our stock also contributed to the increase. Stock compensation expense for the second quarter of 2025 was 3.6 million compared to 3.3 million for the second quarter of 2024. Our operating loss for the second quarter of 2025 came in at 19.9 million compared to 16.1 million in the prior year period. We recorded a 39.7 million net loss for the second quarter of 2025 compared to a net loss of 12.4 million for the second quarter of 2024. Our net loss for the second quarter of 2025 includes non cash charges for the change in the fair value of our derivative warrant and earn out liabilities which had a 22.8 million unfavorable impact on our net loss for the quarter. Derivative warrant and earn out liabilities had a 3.4 million unfavorable impact on our net loss for 2Q20. As of June 30, 2025, we had approximately $571.6 million of cash. Cash equivalents and available for sale investments and no debt.
Subodh Kulkarni (CEO)
Thank you. We would now be happy to answer your questions.
OPERATOR
As a reminder to ask a question, please press star 11 on your telephone and wait for a name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q and A roster. Our first question comes from Troy Jensen with Cantor Fitzgerald. Your line is open.
Cantor Fitzgerald Equity Analyst
Hey gentlemen, first off, congrats on all the great traction here.
Subodh Kulkarni (CE)
Thanks Troy.
Cantor Fitzgerald Equity Analyst
Hey, so Subodh for you maybe to. Start off with just use of proceeds, you’ve got a ton of money on the balance sheet now, I mean, is the intention to accelerate R&D, do a little M&A or just kind of a cushion on the balance sheet to fund, you know, operating losses?
Subodh Kulkarni (CEO)
Our focus, Troy, continues to be on R and D development. We will obviously look at every opportunity to accelerate our timeline. Right now we believe we are funding R and D adequately to hit the milestones that we have laid out. As you saw, we demonstrated a 4 by 9 qubit multi chip system. We are going to be deploying it as we speak. Our plan for the end of the year is to deliver a multi chip 100/qubit system with 99.5% 2qubit gate fidelity and from there on to continue to increase the fidelity as well as qubit count using chiplet approach. Every opportunity we get to accelerate that timeline, we continue to look at it and we will do so. At this point we believe we are still about three to four years away from getting to the thousand plus qubit 99.9% fidelity with error correction and gate speeds of less than 50Ns, which is when we achieve quantum advantage. If we can accelerate that timeline using our strength and balance sheet, as you correctly pointed out, we will obviously look at that. But I believe right now we are still looking at roughly about four years to get to that quantum advantage point. Hope that answers your question.
Cantor Fitzgerald Equity Analyst
Yeah, it does, very much so. Just with respect to OPEX would assume just kind of sequential growth going forward, but no big, no big, you know, stepping, no big leaps in spinning.
Jeff Bertelsen (Chief Financial Officer)
Yeah, Troy, I think that’s a good summary for right now anyway. So, you know, as Subodh said, we’re adequately funded in R and D, but we’ll look for opportunities. But right now I don’t think we anticipate any significant uplift.
Cantor Fitzgerald Equity Analyst
Okay, perfect. And maybe just one follow up. Could you just give us an update on Quanta Computer? You know, what they’re doing, what we can’t see to kind of satisfy their commitment here with your investment. Other investment in Rigetti.
Subodh Kulkarni (CEO)
Sure. So as we have disclosed in the past, Quanta is a very strategic partner for us on the hardware side outside the QPU area. So we continue to stay focused on the QPU side. Quanta will invest is investing right now on the non QPU portion of the hardware stack. That primarily means control system and the rest of the hardware stack. Right now their focus is to essentially come up to speed in control systems and our goal is to get them up and running with control systems that work with RQPUs fairly soon here in the next few quarters. Once they’re up to speed in quantum computing and control systems, they will obviously accelerate development of that, allowing us more focus on the QPU side. So they continue to be a very good and very strategic partner for us. The partnership is going really well. We are excited to co develop the quantum systems, our quantum systems with them. Hopefully that answers your question.
Cantor Fitzgerald Equity Analyst
Yeah, no, that’s great guys. Keep up the great work.
Subodh Kulkarni (CEO)
Thank you.
OPERATOR
Thank you. Our next question comes from David Williams with the Benchmark Company. Your line is open.
Benchmark Equity Analyst
Hey, good afternoon gentlemen and congrats on meeting the targets on the Cepheus chip. That’s impressive. I guess maybe Subodh. Last time we spoke you had, you were, you had confidence that you could get to this 99.5, but said that. You had a little bit of work. To do and you clearly hit that here, I guess. How confident are you in being able to parlay that on the 100 qubit chip? And are there any major, I guess, steps or challenges ahead of you in order to get that 100 qubit at the same fidelity?
Subodh Kulkarni (CEO)
Thanks David, for the question. Certainly getting to 4 chiplets with 9 qubits to the 36 qubit level was a significant accomplishment this last quarter and we are really happy to get that. Regarding our question about 100 + Qubit, we are confident we’ll get there with 99.5% 2 Qubit gate fidelity before the end of this year. The beauty of the chiplet approach is once the fundamental architecture is defined and the performance is there, scaling up becomes a lot easier by definition. And that’s the whole reason for the chiplet approach. You intrinsically are using the same 9 qubit chip multiple times and that gets you, you get better uniformity on your wafers, you get better years. And it really allows us to get a perfect 9 qubit chip and then replicate it multiple times. Which is why the semiconductor industry uses chiplets with the CMOS technology right now for all your advanced applications. So all the reasons that help semiconductor CMOS industry with chiplets are the same reasons why we chose the chiplet approach. Now that we have proven that it works at this high fidelity, our confidence is fairly high that we will get to 100 plus qubit and beyond. Frankly, we really need to get to 1000 qubit and multi thousand qubits here soon to get to that quantum advantage point and then fault ...
