Rigetti Computing, Inc. (RGTI) Q2 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call reveals several concerning financial metrics: a significant revenue drop, decreased gross margins, and increased operating losses. Despite optimistic future guidance and strategic partnerships, the immediate financial health is weak. The Q&A section highlights uncertainties in achieving technological milestones and government funding. The lack of clear timelines for critical advancements adds to the uncertainty. Although there are positive strategic developments, the negative financial performance and uncertainties are likely to weigh on investor sentiment, leading to a negative stock price reaction over the next two weeks.
Key Financial Performance
Revenue $1.8 million in Q2 2025 compared to $3.1 million in Q2 2024, a decrease due to the expiration of the National Quantum initiative and its pending reauthorization in the U.S. Congress.
Gross Margins 31% in Q2 2025 compared to 64% in Q2 2024, a decrease due to revenue mix and variability in pricing terms of development contracts, including lower-margin contracts with the U.K.'s NQCC for Quantum Systems.
Operating Expenses (OpEx) $20.4 million in Q2 2025 compared to $18.1 million in Q2 2024, an increase due to annual salary increases, new hires, higher consulting costs in R&D, and higher costs for the annual shareholder meeting.
Stock Compensation Expense $3.6 million in Q2 2025 compared to $3.3 million in Q2 2024, an increase.
Operating Loss $19.9 million in Q2 2025 compared to $16.1 million in Q2 2024, an increase.
Net Loss $39.7 million in Q2 2025 compared to $12.4 million in Q2 2024, an increase due to noncash charges for the change in the fair value of derivative warrant and earn-out liabilities, which had a $22.8 million unfavorable impact in Q2 2025 compared to a $3.4 million favorable impact in Q2 2024.
Cash, Cash Equivalents, and Investments $571.6 million as of June 30, 2025, with no debt.
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Operating Highlights
Release of Cepheus-1-36Q: Rigetti released Cepheus-1-36Q, the industry's largest multi-chip quantum computer, for general availability on the Rigetti Quantum Cloud Services platform and Microsoft Azure. It achieved a 2x reduction in 2-qubit gate error rate compared to the previous Ankaa-3 system.
Technological advancements: Transitioned from monolithic chip to chiplets, improving chip uniformity, manufacturing complexity, and fabrication yield. Optimized 2-qubit gates and advances in multilayer chip and tunable coupler design contributed to higher performance.
Revenue performance: Quarterly revenue decreased to $1.8 million in Q2 2025 from $3.1 million in Q2 2024, impacted by the expiration of the National Quantum Initiative and its pending reauthorization.
Financing: Raised $350 million through an at-the-market equity offering program, strengthening the balance sheet to support commercial scale-up.
Operational expenses: Total operating expenses increased to $20.4 million in Q2 2025 from $18.1 million in Q2 2024, driven by salary increases, new hires, and higher consulting costs in R&D.
Gross margins: Gross margins declined to 31% in Q2 2025 from 64% in Q2 2024 due to revenue mix and lower-margin contracts.
Scaling quantum computers: Rigetti plans to release a 100-plus qubit chiplet-based system with 99.5% median 2-qubit gate fidelity by the end of 2025, aiming for quantum advantage and fault tolerance.
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Risk or Challenges
Revenue Decline: Revenues in Q2 2025 were $1.8 million, a significant drop from $3.1 million in Q2 2024, primarily due to the expiration of the National Quantum Initiative and its pending reauthorization in the U.S. Congress.
Gross Margin Reduction: Gross margins fell to 31% in Q2 2025 from 64% in Q2 2024, impacted by revenue mix and lower-margin development contracts, including those with the U.K.'s NQCC.
Increased Operating Expenses: Total operating expenses rose to $20.4 million in Q2 2025 from $18.1 million in Q2 2024, driven by salary increases, new hires, higher consulting costs in R&D, and increased costs for the annual shareholder meeting.
Widening Net Loss: Net loss for Q2 2025 was $39.7 million, significantly higher than the $12.4 million net loss in Q2 2024, exacerbated by noncash charges related to derivative warrant and earn-out liabilities.
Dependence on Government Initiatives: Future sales are heavily reliant on the renewal of the U.S. National Quantum Initiative and contracts with U.S. and foreign governments, creating uncertainty.
Lower Revenue from Key Contracts: Contracts with the U.K.'s NQCC for Quantum Systems have lower gross margins, impacting overall profitability.
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Guidance & Outlook
Technology Goals: Rigetti plans to release a 100-plus qubit chiplet-based system with 99.5% median 2-qubit gate fidelity before the end of 2025. This is part of their roadmap to achieve quantum advantage and fault tolerance by quadrupling chiplet count and decreasing error rates.
Revenue and Sales Outlook: Future sales are expected to be influenced by the renewal of the U.S. National Quantum Initiative, sales to U.S. and foreign governments, and partnerships like Novera.
Financial Position: Rigetti has strengthened its balance sheet with $571.6 million in cash, cash equivalents, and available-for-sale investments as of June 30, 2025, positioning the company for commercial scale-up of its quantum computers.
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Shareholder Return Plan
The selected topic was not discussed during the call.
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Key Q&A
Q:What is the company's plan for the use of proceeds from their strengthened balance sheet?
A:The company plans to focus on R&D development, aiming to accelerate their timeline for achieving milestones. They are currently funding R&D adequately to hit their milestones, such as delivering a multichip 100-plus qubit system with 99.5% 2-qubit gate fidelity by the end of the year. They estimate being 3-4 years away from achieving quantum advantage with 1,000-plus qubits, 99.9% fidelity, and gate speeds of less than 50 nanoseconds.
Q:What is the update on Quanta's involvement and their commitment to Rigetti?
A:Quanta is a strategic partner focusing on the non-QPU portion of the hardware stack, such as control systems. They are working to come up to speed in control systems to work with Rigetti's QPUs. The partnership is progressing well, and Quanta is expected to accelerate development once they are up to speed.
Q:How confident is the company in achieving 99.5% fidelity on a 100-qubit chip?
A:The company is confident in achieving 99.5% fidelity on a 100-qubit chip by the end of the year. They attribute this confidence to their chiplet approach, which simplifies scaling by using the same 9-qubit chip multiple times, improving uniformity and yields.
Q:Can the company's roadmap to quantum advantage be accelerated?
A:The company is exploring opportunities to accelerate their timeline but acknowledges challenges such as error correction, gate speeds, and dilution refrigerator components. They estimate that achieving quantum advantage will realistically take about 4 years.
Q:What is the company's view on M&A as part of their growth strategy?
A:The company is open to M&A opportunities that could accelerate their timeline but currently does not see any tactical opportunities. They believe they are ahead of most competitors in quantum computing technology, except for a few tech giants.
Q:What is the roadmap for achieving sub-50 nanoseconds gate speeds?
A:The company is confident in achieving sub-50 nanoseconds gate speeds relatively quickly. They are currently at about 70 nanoseconds with Ankaa-3 and expect Cepheus-1 to be in the 50-60 nanoseconds range. Faster gate speeds are critical for integrating quantum computers into existing data centers.
Q:What is the company's plan for scaling chiplet sizes?
A:The company plans to stay with 9-qubit chiplets until they reach 100 qubits. For higher qubit counts, they will consider larger chiplets, such as 16, 25, or 36 qubits. They are evaluating the optimal chiplet size for future milestones.
Q:What is the company's progress on quantum error correction?
A:The company is working on quantum error correction with their partner, Riverlane. They have demonstrated low-latency error correction and aim to achieve real-time error correction. They believe several hundred qubits at high fidelity are needed for effective error correction and are a year or two away from implementing sophisticated codes like QLDPC.
Q:What is the status of the NQI reauthorization bill?
A:The NQI reauthorization bill has bipartisan support and is progressing through committees in the House and Senate. However, it has not yet been consolidated into a single version or signed into law.
Q:What feedback has the company received from QBI and NQCC?
A:The company has ongoing projects with NQCC, including upgrading their 24-qubit system to a 4/9 qubit chiplet system. They are optimistic about advancing to Phase 2 of the DARPA QBI initiative, citing their open modular approach and chiplet design as key differentiators.
Q:What is the company's approach to logical qubits and error correction?
A:The company focuses on physical qubits and fidelity rather than logical qubits due to the lack of a clear definition for logical qubits. They project achieving a 10:1 overhead for logical qubits once they reach 1,000-plus qubits at 99.9% fidelity.
Q:How is the partnership with Quanta progressing?
A:The partnership with Quanta is progressing well. Quanta is focusing on control systems and is expected to contribute to the rest of the hardware stack by 2026. The collaboration aims to leverage Quanta's expertise in high-volume, low-cost manufacturing for future scalability.
Q:What is the company's strategy for government funding opportunities?
A:The company actively engages with DOE, DoD, and other government entities. They participate in initiatives like the DARPA QBI program and are optimistic about securing funding from the NQI reauthorization and other government projects.
Q:Review of Unclear Management Responses
A:Management avoided providing specific details on the optimal chiplet size for scaling beyond 100 qubits, stating that they are still evaluating options. They also did not provide a clear timeline for implementing sophisticated quantum error correction codes like QLDPC, only indicating that it is a year or two away. Additionally, they did not specify when the NQI reauthorization bill might be signed into law, only expressing optimism about its eventual passage.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Advances chip
Anderson Craig
Ankaa
Azure month
Benchmark LLC
Bertelsen Chief
Brian Kinstlinger
CEO President
CTO QA
Cantor Fitzgerald
Capital Group
Cepheus architecture
Cepheus industry
Cepheus multichip
Cepheus number
Cepheus reduction
Chin TD
Co Research
Conference Instructions
Cowen Research
Craig Ellis
Craig Hallum
Director Brian
Division Anderson
Division Conference
Financial
LLC Research
Officer
Research Division
Rigetti quantum
ability
error rate
momentum
multichip quantum
RGTI Transcript
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The earnings call shows promising developments, including strategic partnerships with NVIDIA and Riverlane, and government funding. The 108-qubit system deployment by March with high fidelity is a positive catalyst. Although management was vague on some financial details, the overall sentiment from new partnerships and product milestones suggests a positive outlook for the stock.
Rigetti Computing, Inc. (RGTI) Q3 2025 Earnings Call Transcript
Positive11-11
The earnings call highlights a strong financial position with $571.6 million in cash, optimistic guidance on achieving high fidelity in quantum computing, and potential revenue from Novera system sales. The Q&A section reveals confidence in reaching technical milestones and integrating with NVIDIA's NVQLink, despite some uncertainties about DARPA selection and external foundry capabilities. The positive sentiment from analysts and management's forward-looking strategies suggest a likely positive impact on stock price.
Rigetti Computing, Inc. (RGTI) Q2 2025 Earnings Call Transcript
Unknown8-12
The earnings call reveals several concerning financial metrics: a significant revenue drop, decreased gross margins, and increased operating losses. Despite optimistic future guidance and strategic partnerships, the immediate financial health is weak. The Q&A section highlights uncertainties in achieving technological milestones and government funding. The lack of clear timelines for critical advancements adds to the uncertainty. Although there are positive strategic developments, the negative financial performance and uncertainties are likely to weigh on investor sentiment, leading to a negative stock price reaction over the next two weeks.
RGTI Report
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