10-Q: Rigetti Computing Reports Q2 2024 Results, Cites Progress on Quantum Computing Development

Rigetti Computing's Q2 2024 results show a slight decrease in revenue and a reduced net loss compared to the same period last year, while the company continues to focus on its quantum computing technology roadmap.

Summary

• Rigetti Computing reported a net loss of $12.4 million for the three months ended June 30, 2024, compared to a net loss of $17.0 million for the same period in 2023.
• The company's revenue for the quarter was $3.1 million, a slight decrease from $3.3 million in the prior year's quarter.
• For the six months ended June 30, 2024, Rigetti's net loss was $33.2 million, an improvement from the $40.3 million loss in the first half of 2023.
• Six-month revenue increased to $6.1 million from $5.5 million in the prior year.
• The company believes its current cash, cash equivalents, and marketable securities will fund operations until midway through the first quarter of 2026, but additional capital will be needed.
• Rigetti is focused on improving its quantum processors, aiming for 99% 2-qubit gate fidelity on its Ankaa-3 system by the end of 2024, and scaling to a 336-qubit system called Lyra.

Sentiment

Score: 6

Explanation: The document presents a mixed picture. While there are positive signs of reduced losses and progress in technology development, the company's need for additional capital and the identified material weakness in internal controls are concerning. The sentiment is cautiously optimistic, reflecting the potential of the technology but also the risks involved.

Positives

• The company's net loss decreased in both the three and six-month periods compared to the previous year.
• Revenue increased for the six-month period compared to the previous year.
• Rigetti has made progress in improving its quantum processor technology, targeting 99% 2-qubit gate fidelity.
• The company has a clear roadmap for scaling its quantum computing systems, including the development of the Lyra system.
• The company has secured funding through an At-The-Market (ATM) offering and a Common Stock Purchase Agreement.

Negatives

• Revenue decreased slightly in the three-month period compared to the previous year.
• The company continues to incur significant operating losses.
• Rigetti anticipates needing additional capital to fund its operations and research.
• The company has identified a material weakness in its internal control over financial reporting.
• The company's gross profit decreased in both the three and six-month periods compared to the previous year.

Risks

• The company's ability to raise additional capital is uncertain, and failure to do so could impact development efforts.
• Rigetti has a limited operating history, making it difficult to forecast future results.
• The company faces competition in the quantum computing industry.
• A significant portion of revenue depends on contracts with the public sector, which could be affected by changes in government policies.
• The company relies on third-party suppliers and cloud providers, and disruptions could impact operations.
• The quantum computing industry is in its early stages and volatile, and may not develop as expected.
• The company has identified a material weakness in its internal control over financial reporting, which could affect its ability to accurately report financial results.
• Unstable market and economic conditions could negatively impact the company's business and share price.

Future Outlook

Rigetti believes its current cash will fund operations until midway through the first quarter of 2026, but additional capital will be needed. The company plans to improve its quantum processors, targeting 99% 2-qubit gate fidelity on its Ankaa-3 system by the end of 2024, and scale to a 336-qubit system called Lyra.

Management Comments

• Management believes that existing cash, cash equivalents and marketable securities should be sufficient to meet anticipated operating cash needs until midway through the first quarter of 2026.
• Management expects to need to obtain additional capital to fund research and development efforts and business objectives as currently planned.
• Management is focused on improving the performance of QPUs with the goal of reaching at least 99% 2-qubit gate fidelity on an anticipated Ankaa-3 84-qubit system by the end of 2024.
• Management plans to shift focus to scaling to develop Lyra, an anticipated 336-qubit system, if the 99% fidelity target is achieved.

Industry Context

Rigetti's focus on improving qubit fidelity and scaling its quantum processors aligns with the broader industry trend of moving towards more practical and commercially viable quantum computing systems. The company's emphasis on a full-stack approach, from chip design to cloud delivery, is also a common strategy among quantum computing companies.

Comparison to Industry Standards

• Rigetti's 2-qubit fidelity of 98% on its Ankaa-2 system is a significant improvement over its previous QPUs, but it is still below the 99.9% or higher fidelity that some competitors are targeting.
• The company's plan to scale to a 336-qubit system is comparable to other companies' efforts to increase qubit counts, but the actual performance and stability of these systems will be critical.
• Rigetti's focus on a vertically integrated approach is similar to that of some competitors, while others rely more on partnerships and collaborations.
• The company's revenue model, which currently relies heavily on development contracts, is common among early-stage quantum computing companies, but the long-term goal is to generate revenue from sales of QPUs and QCaaS.

Stakeholder Impact

• Shareholders may be impacted by potential dilution from future capital raises.
• Employees may be impacted by the company's restructuring efforts and focus on strategic priorities.
• Customers may benefit from the company's progress in quantum computing technology.
• Suppliers and creditors may be impacted by the company's financial performance and ability to raise capital.

Next Steps

• Continue working to improve the performance of QPUs with the goal of reaching at least 99% 2-qubit gate fidelity on an anticipated Ankaa-3 84-qubit system by the end of 2024.
• Shift focus to scaling to develop Lyra, an anticipated 336-qubit system, if the 99% fidelity target is achieved.
• Continue to pursue sales of Novera, the company's first commercially available QPU.
• Continue to implement the remediation plan for the material weakness in internal control over financial reporting.

Key Dates

Keywords

quantum computing, quantum processors, QCaaS, superconducting, qubits, Ankaa, Lyra, fidelity, research and development, financial results