Rigetti (RGTI) Q4 2025 Earnings Call Transcript

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DATE

Wednesday, March 4, 2026, at 5 p.m. ET

CALL PARTICIPANTS

• Chief Executive Officer — Subodh Kulkarni
• Chief Financial Officer — Jeff Bertelsen
• Chief Technology Officer — David Rivas

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TAKEAWAYS

• Reported Revenue -- $1.9 million, down from $2.3 million, attributed by management to the timing of system deliveries and government contract activity.
• Gross Margin -- 35% for the quarter, a decrease from 44%, with contract mix and lower-margin government work cited as the main factors.
• Operating Expenses -- $23.2 million for the quarter, up from $19.5 million, with spending concentrated in research and development, engineering headcount, and system integration.
• Stock-Based Compensation -- $5.6 million in the quarter, an increase from $3.4 million in the prior year period.
• Operating Loss -- $22.6 million, worsened from $18.5 million; management states GAAP net loss for the full year improved due to non-cash changes in warrant and earn-out liabilities.
• Non-GAAP Net Loss -- $11.3 million or $0.03 per share, compared to $14 million or $0.06 per share.
• Cash and Equivalents -- $590 million at year-end, significantly increased from $270 million, described as sufficient runway with no debt outstanding.
• Upcoming Revenue Recognition -- $5.7 million of Novera sales expected, with management stating a little less than half recognized in Q1, remainder in 2026; $8.4 million CDAC order to be recognized "all at once" upon system validation in 2026.
• Technical Milestone -- Two-qubit gate fidelity of 99.9% at 28-nanosecond gate speed achieved on ProDrive platform using proprietary adiabatic CZ scheme; median fidelities reported as 99.7% (nine-qubit), 99.6% (36-qubit), and 99% (108-qubit, CPS 108Q).
• Product Pipeline -- Deployment of a 108-qubit chiplet-based system at 99.5% median two-qubit gate fidelity targeted for March, with a greater-than-150-qubit system at approximately 99.7% fidelity anticipated for December 2026.
• Commercial Orders -- $8.4 million order from India’s CDAC for a 108-qubit system for 2026 delivery, and $5.7 million in purchase orders for nine-qubit Novera systems; a Japanese research entity also ordered a Novera QPU for Q2 2026 delivery.
• Foundry Utilization -- Fab-1 used as a foundry for select government partners, cited as a durable competitive advantage and key driver for innovation and integration.
• Partnerships -- Collaborations with Riverlane (error correction), Nvidia (NVQ Link for hybrid quantum-AI systems), and QFOX with the UK's NQCC (optical readout) detailed as elements supporting system scale and ecosystem approach.
• Strategic Focus -- Management asserts chiplet architecture as the central scaling strategy for systems targeting 1,000-plus qubits, emphasizing organic capital deployment and disciplined execution rather than dependency on M&A.

SUMMARY

Rigetti Computing (NASDAQ:RGTI) management disclosed a near-term goal to deliver a 108-qubit chiplet-based system at 99.5% median two-qubit gate fidelity and a longer-range plan for a greater-than-150-qubit system at roughly 99.7% fidelity by year-end, underscoring the roadmap toward commercial quantum advantage. Cash balance rose to $590 million, with no debt, supporting continued investment in core R&D without needing external financing. Technical validation was highlighted by the achievement of sub-30-nanosecond gate speeds and two-qubit gate fidelities at the 99.9% level, positioning the company for scaling efforts. Pipeline visibility is derived from government and research institution demand, including orders from India, Japan, and additional Novera systems, with future revenue recognition contingent on delivery and specification testing. Strategic partnerships are being actively leveraged for error correction, system integration, and hybrid classical-quantum computing, reflecting a modular and non-proprietary platform approach.

• CEO Subodh Kulkarni said, "Our near-term priority is completing deployment of the 108-qubit system at 99.5% median two-qubit gate fidelity, which we expect around March."
• CFO Jeff Bertelsen confirmed "significant first quarter year-over-year revenue growth driven by a portion of the $5,700,000 Novera on-premises system purchase orders expected to ship in Q1."
• Management identified Fab-1 as "the industry's first dedicated and integrated quantum device manufacturing facility," asserting that it "creates a meaningful barrier to entry" as systems scale.
• Jeff Bertelsen plans to recognize all revenue from the $8.4 million CDAC order "all at once" upon passing acceptance testing, with no ongoing support revenue included in the current contract.
• The company does not anticipate needing a new fabrication facility to reach 1,000 qubits and quantum advantage in the next three years, per management statements.

INDUSTRY GLOSSARY

• QPU: Quantum Processing Unit; the fundamental computational device in a quantum computer, analogous to a CPU in classical systems.
• Two-qubit gate fidelity: A performance measure representing the accuracy of operations involving two qubits; critical for entanglement and error correction.
• Chiplet: A modular sub-component containing qubits, used by Rigetti Computing, Inc. to scale quantum systems beyond single-die limitations.
• Adiabatic CZ scheme: A proprietary implementation of the controlled-Z (CZ) quantum gate, achieving high-speed, high-fidelity entangling operations.
• Dilution refrigerator: A specialized refrigeration system enabling superconducting quantum hardware to operate at millikelvin temperatures.
• Quantum advantage: The point at which a quantum computer meaningfully outperforms the best classical computer on a practical task.

Full Conference Call Transcript

Subodh Kulkarni: Good afternoon, everyone, and thank you for joining for Rigetti Computing, Inc.'s fourth quarter and full year 2025 earnings conference call. I am pleased to be joined today by our Chief Financial Officer, Jeff Bertelsen, who will walk you through our financial results in more detail following my overview. Also with us is our Chief Technology Officer, David Rivas, who will be available to participate in the Q&A session following our prepared remarks. We appreciate your continued interest in Rigetti Computing, Inc., and we look forward to answering your questions at the conclusion of our remarks.

Before we begin, I would like to remind everyone that today's call, along with our fourth quarter and full year 2025 press release, contains forward-looking statements. These statements reflect our 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 anticipated. Such risks and uncertainties are described and discussed in greater detail in our filings with the Securities and Exchange Commission, including our Form 10-K for the year ended 12/31/2025 and other periodic reports filed by the company from time to time with the SEC.

We encourage you to review these filings for a comprehensive discussion of these risks and uncertainties that could cause actual events and results to differ materially from those contained in the forward-looking statements. Rigetti Computing, Inc. undertakes no obligation to update any forward-looking statements made during this call except as required by law. During today's call, we will refer to certain non-GAAP financial measures. For details on these measures and reconciliations to comparable GAAP measures, and for further information regarding the factors that may affect Rigetti Computing, Inc.'s future operating results, please refer to today's earnings release on Rigetti Computing, Inc.'s website at investors.rigetti.com or the 8-K furnished with the SEC today after the close. Now turning to the business.

2025 was a year of technical validation and disciplined execution for Rigetti Computing, Inc. We advanced materially across fidelity, scale, and architecture while remaining realistic about timelines and commercialization. Our focus remains reaching true, commercially meaningful quantum advantage, not headline milestones. I want to begin by grounding today's discussion in how we think about quantum computing at Rigetti Computing, Inc., because that perspective is central to how we operate, how we invest, and how we measure progress. Quantum computing is not about replacing classical computing. It is about enhancing it. CPUs will continue to handle sequential workloads and GPUs will continue to handle parallel workloads.

Where quantum computing becomes powerful is in simultaneous computation—problems where thousands of variables interact at once and classical systems struggle to converge. That is the problem space we are building for. Our strategy has consistently focused on superconducting gate-based quantum computing because it offers two fundamental advantages that matter at scale: speed and scalability. We are working with electrons, not atoms or ions, which gives us gate speeds measured in tens of nanoseconds. And because this technology is grounded in semiconductor fabrication, we believe it offers the most realistic path to building large-scale systems over time. Over the past year, we made great progress toward what we define as true quantum advantage.

I am excited to share that Rigetti Computing, Inc. recently achieved a two-qubit gate fidelity as high as 99.9% at 28-nanosecond gate speed on a ProDrive platform using our new proprietary adiabatic CZ scheme. We are still maintaining 99.9% one-qubit gate fidelity, and we have also reported median two-qubit gate fidelities of 99.7% on our nine-qubit system, 99.6% on our 36-qubit system, and 99% on our 108-qubit system, what we call CPS 108Q. Together, these milestones are a testament to our ongoing progress in materials, fabrication, and system-level design.

They are helping us further narrow the fidelity gap between superconducting systems and other quantum modalities by delivering speeds that are about 1,000 times faster than some approaches like trapped ion or pure atoms. We successfully deployed multiple systems to the cloud, including an 84-qubit monolithic chip system and a 36-qubit chiplet-based system. More importantly, we demonstrated that chiplet tiling works in practice. That matters because scaling to thousands of qubits on a single die is not realistic. Chiplets are how we believe quantum systems will scale in the real world. As we push beyond 100 qubits, we gained important insights. On our 108-qubit system, we identified tunable coupler interactions that emerge at higher scale.

We made a deliberate decision to delay general availability and address the issue. We executed architectural refinements that successfully improved system stability and control. That decision reflects our discipline and increases our confidence in our 108-qubit chiplet-based system as we move toward customer readiness. That experience underscores why we have our own foundry. Rigetti Computing, Inc. operates Fab-1, the industry's first dedicated and integrated quantum device manufacturing facility, which allows us to tightly couple design, fabrication, and testing under one roof. This enables faster innovation cycles as we scale beyond 100 qubits and drives proprietary advancements rather than incremental workarounds.

We see Fab-1 as a durable competitive advantage that accelerates our road map and creates a meaningful barrier to entry as quantum systems grow in scale and complexity. That combination of scale, control, and execution is also what our customers and partners are responding to. We are also seeing increased demand for on-premises quantum systems, particularly from national governments and research institutions seeking direct access to hardware for hybrid computing and systems-level R&D. In January, we announced an $8,400,000 order from India's Center for Development of Advanced Computing, or CDAC, for a 108-qubit on-premises quantum computer scheduled for deployment in 2026.

This system will be integrated into CDAC's supercomputing environment and is based on our chiplet architecture, which is central to our scaling strategy. That order builds on a memorandum of understanding we signed with CDAC to explore the co-development of hybrid classical-quantum systems. Taken together, these efforts reflect how customers are engaging with us not just as a hardware vendor, but as a long-term technology partner in hybrid computing environments. At the smaller end of the spectrum, late last year, we also announced purchase orders totaling approximately $5,700,000 for two nine-qubit Novera on-premises systems. These systems are being used as test beds for quantum hardware research, error correction, and internal capability development.

Importantly, they are upgradable, which allows customers to grow with the platform as their needs evolve. Our Novera QPU also continues to be an ideal solution for customers who want to integrate our technology with their existing cryogenics and controls. We are pleased to announce that we have secured a purchase order for a Novera QPU from a Japanese research organization, which is scheduled to be delivered in April 2026. This will be Rigetti Computing, Inc.'s first QPU to be located in Japan, and we are excited to be expanding into this new geographic region. A core differentiator for Rigetti Computing, Inc. is our open modular architecture.

We do not believe the future of quantum computing will be built by any single company attempting to own the entire stack. Instead, we have designed our platform to integrate best-in-class partners where they can move faster or deeper than we can alone. We are partnering with Riverlane to advance real-time quantum error correction capabilities, as it is foundational to achieving fault tolerant quantum computing. Riverlane has demonstrated capabilities that we believe will meaningfully advance that goal. We are also working closely with NVIDIA to support NVQ Link, an open platform designed to integrate quantum systems with AI supercomputing.

This collaboration reflects our shared view that quantum computers will coexist with CPUs and GPUs in data centers as part of future hybrid computing environments. Another example is our collaboration with QFOX and the UK's National Quantum Computing Center on optical readout of superconducting qubits. This work addresses a fundamental scaling bottleneck by reducing cryogenic heat load and wiring complexity. While this remains early-stage research, it illustrates how our architecture allows us to incorporate novel technologies that could materially improve scalability over time. This ecosystem approach gives us flexibility, accelerates innovation, and reduces execution risk as the industry evolves. The quantum computing market today remains research-driven.

Most systems are deployed to government labs, national research centers, universities, and early commercial researchers. That is not a limitation; it is a reflection of where the technology is in its life cycle. I want to be very clear about how we define quantum advantage because this frames our road map and our timelines. For Rigetti Computing, Inc., quantum advantage means outperforming classical systems on practical workloads in real computing environments for commercial applicability. We believe achieving quantum advantage requires several things to come together: scale, fidelity, speed, and error mitigation—specifically, systems on the order of 1,000 qubits, two-qubit gate fidelity approaching 99.9%, gate speeds below 50 nanoseconds, and integrated error mitigation.

Based on what we know today, we believe we are roughly three years from reaching that point. That may sound conservative, but in a technology as complex as quantum computing, precision and credibility matter more than bold claims. Looking ahead, 2026 is about execution and scaling. Our near-term priority is completing deployment of the 108-qubit system at 99.5% median two-qubit gate fidelity, which we expect around March. Beyond that, our focus is to deploy a system with more than 150 qubits with an anticipated 99.7% median two-qubit gate fidelity around December 2026. As far as we know, no one has demonstrated systems at that scale and fidelity using a chiplet-based architecture.

In parallel, we will continue advancing our chiplet architecture as the foundation for scaling toward a system of more than 1,000 qubits with an anticipated 99.8% median two-qubit gate fidelity by or around 2027. Chiplets are central to our strategy and represent the most practical path to large-scale systems. We also will continue working to integrate error correction into the stack. Our work with Riverlane demonstrates ongoing progress in this area. From a market perspective, we expect 2026 to remain focused on delivering on-premises systems across government, national labs, and academic institutions, with select commercial customers engaged in quantum research. Finally, we strengthened our balance sheet.

We exited the year with approximately $590,000,000 in cash, providing us with the flexibility and runway to execute our road map through the quantum advantage time frame. Our investment focus remains organic. We will consider M&A only if it meaningfully accelerates our road map, but we do not need acquisitions to execute our core strategy. To close, quantum computing is a lifelong cycle opportunity. It requires patience, technical rigor, and capital discipline. We are not building for next quarter or next year. We are building for meaningful, durable impact over the next five to ten years. Rigetti Computing, Inc.'s strategy is deliberate. We focus on speed, scalability, and fidelity. We leverage a strong ecosystem. We define success rigorously.

And we invest with a long-term view. Thank you for your continued support. I will now turn the call over to our CFO, Jeff Bertelsen, for a review of our financial results. Jeff?

Jeff Bertelsen: Thank you, Subodh, and good afternoon, everyone. I will spend a few minutes walking through our fourth quarter financial results, our balance sheet, and how we are thinking about capital deployment as we continue to execute the road map you have just heard about. For 2025, revenue was $1,900,000 compared to $2,300,000 in 2024. As investors have seen over time, our quarterly revenue profile continues to be influenced by the timing of system deliveries and government contract activity. That dynamic remained true in the fourth quarter. While we saw contributions from our contracts with NQCC and AFSOR, revenue variability at this stage of the market is expected and does not change how we manage the business or allocate capital.

Gross margins for the fourth quarter were 35%, compared to 44% in Q4 of last year. Margin performance continues to be driven primarily by contract mix. Certain strategic contracts, particularly with government and national lab customers, carry lower margin profiles but play an important role in advancing system validation, ecosystem integration, and long-term positioning. Total operating expenses for the fourth quarter were $23,200,000 compared to $19,500,000 in the same period last year. Spending remains concentrated in research and development, including engineering headcount, fabrication, and system integration. Stock-based compensation was $5,600,000 for the quarter, compared to $3,400,000 a year ago. Operating loss for the fourth quarter was $22,600,000 compared to $18,500,000 in Q4 2024.

Our GAAP net loss for 2025 was lower than the GAAP loss for 2024, primarily due to the non-cash change in the fair value of our derivative warrant and earn-out liabilities. On a non-GAAP basis, net loss was $11,300,000 or $0.03 per share, compared to a net loss of $14,000,000 or $0.06 per share in the prior year quarter. I want to briefly address the timeline for revenue with respect to the $5,700,000 of Novera sales we announced late last year and the $8,400,000 CDAC order we announced in January. Regarding the two Novera sales for $5,700,000, we expect a little less than half of that revenue to be recognized in the first quarter, with the balance recognized in 2026.

Both Novera sales included lower-margin dilution refrigeration systems. Therefore, we anticipate significant first quarter year-over-year revenue growth driven by a portion of the $5,700,000 Novera on-premises system purchase orders expected to ship in Q1. Importantly, while an individual quarter can move around, these contracts support a growing base of recurring and multi-period activity. Regarding the CDAC order, we expect to recognize revenue from that sale in 2026 following testing to validate that the system meets its specifications. The CDAC order announced in January 2025 did not include ongoing maintenance or support; we expect to receive an additional PO for those services later in the year.

Turning to the balance sheet, we ended the year with approximately $590,000,000 in cash, cash equivalents, and available-for-sale investments, compared with approximately $270,000,000 at the end of 2024. We continue to operate with no debt. At our current operating profile, we believe our capital position provides sufficient runway to execute against the milestones Subodh outlined, including continued progress on scale, fidelity, and system integration. Our approach to capital allocation remains disciplined and deliberate. The majority of our spending is directed toward core R&D activities that directly advance our technology platform. We are not managing the business around short-term revenue; we are managing it around credible, long-term progress toward quantum advantage.

We continue to evaluate longer-term fab and R&D capital needs, including the need for dilution refrigeration as qubit counts scale. Any future investment decisions will be driven by capability requirements and evaluated carefully against alternatives, including partnerships or shared infrastructure. Our currently disclosed road map does not depend on near-term changes to our fab footprint. Our execution path remains primarily organic. We believe we have the available technical depth and internal capabilities required to deliver on our road map. At the same time, we maintain flexibility to evaluate selective opportunities that could accelerate progress in targeted areas. Discipline and alignment with our strategy remain the filter. To close, our financial strategy is straightforward.

We are focused on maintaining flexibility, funding innovation responsibly, and aligning capital deployment with long-term value creation. While quarterly results will continue to reflect the early-stage nature of the market, our balance sheet positions us to execute with patience and control. With that, I will turn it back to the operator, who will open the call for your questions.

Operator: Thank you. We will now open for questions. As a reminder, to ask a question, please press 11 on your telephone and wait for your name to be announced. To withdraw your question, please press 11 again. Our first question comes from Kevin Garrigan with Jefferies. You may proceed.

Kevin Garrigan: Yes. Hey, team. Thanks for letting me ask a few questions. So I guess just first on the 108-qubit system, you made significant progress on the QPU, but what are the key remaining gating items to deliver that as a customer-ready system?

Subodh Kulkarni: Yeah. Thanks for your question, Kevin. So as we said in our press release, we are on track to deploy the 108-qubit system around March with about 99.5% two-qubit gate fidelity and 99.9% one-qubit gate fidelity. As we mentioned in our prior press release, we intentionally delayed because of some interactions between tunable couplers that happen at that scale, and that is what we are addressing. We have done that. We feel pretty good about deploying the system here soon. Hopefully, this answers your question.

Kevin Garrigan: Yes, it does. Thank you for that. And then as a follow-up, you know, as the quantum supply chain—just as the quantum industry—scales, manufacturing capacity could become a pretty big constraint. And given Fab-1 is a key differentiator for you guys, do you ever consider offering foundry or manufacturing capacity to others in the quantum computing industry?

Subodh Kulkarni: Well, actually, we do offer Fab-1 as a foundry to select customers, specifically the DOE, DOD, and the UK national government. So these are our customers. They have used our—they use our systems. They have deployed our systems over there. And as part of the overall technology partnership package, we do allow them to run experiments where we become the foundry. So we already do that, and we will continue to do those kinds of arrangements for select customers that have interest in developing their own chip architecture, chip designs, and so on.

Kevin Garrigan: Okay. Perfect. I appreciate the color. Thank you.

Subodh Kulkarni: Thank you, Kevin.

Operator: Thank you. Our next question comes from Troy Jensen with Cantor Fitzgerald. You may proceed.

Troy Jensen: Hey, gentlemen. Congrats on all the progress and milestones achieved last year. But maybe I just—it is a Subodh for you. I just want to make sure I get this correct. There have been a few different numbers kind of quoted in your press release about the single and dual gate fidelity. So when you launch this chip at March, can you just clarify exactly what you think the fidelity levels will be for single and dual mode—or dual gate?

Subodh Kulkarni: Yeah. Thanks, Troy. So when we deploy this 108-qubit system towards March, our one-qubit gate fidelity will continue to be at 99.9%. And our two-qubit gate fidelity, the median number, is expected to be about 99.5%. The reason we started clarifying one-qubit gate fidelity is, frankly, because there are many other quantum computing companies that are confusing everyone by reporting one-qubit gate fidelity instead of two-qubit gate fidelity. Historically, as you know, we have always focused on two-qubit gate fidelity because that is really the most important metric when it comes to entanglement and so on.

But some of the other quantum computing companies are routinely reporting one-qubit gate fidelity and then comparing their one-qubit gate fidelity with our two-qubit gate fidelity numbers. So to avoid that confusion, we have started reporting both numbers right now. Again, I will reiterate: our one-qubit gate fidelity has consistently been at 99.9% or better for a few years now. It is the two-qubit gate fidelity that we monitor closely, and that is what will be about 99.5% median when we deploy the 108-qubit system by the end of March.

Troy Jensen: Awesome. And if I could toss in two more quick ones: 28-nanosecond gate speed—where were you guys at previously? And then also just an update on DARPA—where you guys stand with that?

Subodh Kulkarni: So sure. So probably one of the most exciting parts about the press release this afternoon is the achievement of 99.9% two-qubit gate fidelity along with 99.9% one-qubit gate fidelity and 28-nanosecond gate speed with our proprietary, what you call, adiabatic CZ gate. CZ is a standard gate that many of us use in quantum computing for general purpose quantum computing. And this proprietary version of the CZ gate allows us to get this incredible performance. We really believe this is a great milestone for us to follow because now we know it is possible to get 99.9% two-qubit gate fidelity with our current design and architecture. So very important milestone.

That takes us with confidence that we will be able to deliver a 1,000-plus qubit system in a couple of years with 99.8% or that kind of two-qubit gate fidelity. We are really proud of that accomplishment. Regarding DARPA, specifically, we continue to work with them. We are confident that we will get into Phase B, especially—as we have in the past—it is an open-ended DARPA program. Once we reach certain milestones, they will get us into Phase B. They have given us a list of things that we have to address, mostly related to error corrections and a few other things. And we are working on them as we speak.

So we feel pretty good that we should be in this group by the end of this year or thereabouts.

Troy Jensen: Alright, guys. Well, good luck this year.

Subodh Kulkarni: Thank you.

Operator: Thank you. Our next question comes from Quinn Bolton with Needham & Company. You may proceed.

Quinn Bolton: Hey, Subodh and Jeff. I guess just wanted to come back on the 108-qubit system. Obviously, March is just a few weeks away. Are you guys already at the 99.5% median two-qubit gate fidelity in the lab, and you are just sort of going through the process of getting the system online, or is there still work to do on, you know, chips and tuning the process to get to that 99.5% two-qubit gate fidelity?

Subodh Kulkarni: Hey, Quinn. This is a little more complicated than that to give a simple answer like that, partly because when we bring up a new system with that lot of qubits—obviously, 108 qubits is a lot of qubits—and we bring different parts of the grid up, look at different edges and internal parts of the grid. So, yeah, there are multiple areas where we already are at 99.5% or better, but obviously, the grid is not at 99.5% median; otherwise, we would have deployed it right away. So we did a chip redesign to address the coupling issues. We are collecting data, verifying that all the data is consistent.

So when we deploy, we will be confident that this is the right system to deploy. Just a little context: a 108-qubit system at that level of fidelity and that gate speed—about 50 to 60 nanoseconds—is a really good system. I mean, when you look at the overall industry right now, as far as we can tell, the only one who has anything in that league or better would be IBM at 120 qubits with their tunable coupler. They used to have a 156-qubit fixed coupler, but they moved to tunable coupler and they had 120. Everyone else is much lower than that.

And, certainly, when you see announcements from companies like trapped ion or pure atom companies, as far as we know, nobody is even approaching 100 qubits yet. There is a lot of press releases that go out, but when we go and see actual deployments from any of these companies, no one is in that range. So we will be only the second company, as far as I can tell, to reach 108 qubits deployed in a cloud. Just wanted to put that perspective in place.

Quinn Bolton: No, I appreciate that. And the second question is for Jeff. Jeff, you gave us, you know, some sense that the gross margin on the two Novera sales in the $5,700,000 purchase orders were going to carry lower gross margins because of dilution refrigerators. Can you give us any sense of what level of gross margin you would expect on the $5,700,000? And then I guess a similar question on the CDAC 108-qubit system: what type of gross margin would you expect on that system? Is that also low because of a dilution refrigerator, or is that expected to be a higher gross margin sale?

Jeff Bertelsen: Yeah. I guess the way I would answer that one is, you know, I do not know that we want to get into quoting exactly what the gross margins are for competitive reasons and whatnot. You know, our typical Novera systems without the dilution refrigeration have very high margins—definitely higher. You know, with the dilution refrigeration, it is a resold item; you really cannot mark that up. So, you know, they are going to be lower than maybe what we would see with some of our other Novera sales. And, you know, regarding the CDAC system, again, I think for competitive reasons, we will not, you know, comment on the gross margin profile specifically.

I mean, it is a very important strategic account for us and, you know, we are happy to have it. And, you know, it will definitely contribute to our sales growth next year, but do not want to get into the margin specifics.

Quinn Bolton: Got it. And then just a final clarification on the CDAC order. It sounds like the entire $8,400,000 rev recs once validation testing has been completed, or is there a possibility that the $8,400,000 could be rev rec over a couple of quarters in the back half of the year?

Jeff Bertelsen: No. It will not, you know, be spread over time. It will be rev rec all at once, you know, at a point in time once it has been installed and, you know, we are able to demonstrate that it is meeting its specs. So it will be more like a traditional system hardware sale as opposed to, you know, rev rec over time.

Quinn Bolton: Got it. Thank you.

Operator: Thank you.

Operator: Next question comes from David Williams with Stonex. You may proceed.

David Williams: Hey, good afternoon, Subodh, Jeff. Thanks for letting me ask a couple of questions here. I guess maybe first, if you think about what you have done with NVIDIA on the link there, can you talk maybe a little about the progress and anything that has maybe developed over the last quarter in that regard?

Subodh Kulkarni: Sure. Thanks for the question, David. So our view is that quantum computing is not going to exist in a silo. It will be part of a hybrid ecosystem. So as we have said multiple times and even in this press release, we believe that CPUs will continue to be in data centers doing sequential computing—addition, subtraction, that kind of stuff. GPUs will continue to be in data centers doing parallel computing. Quantum computing will take over the simultaneous computing part that is currently handled by GPUs. So effectively quantum computing becomes an accelerator to a GPU for select applications where you have simultaneous computing. That view is consistent with NVIDIA and some other companies.

That is where we are partnered with NVIDIA on the NVQ Link. A critical part where we think it gives us a huge advantage to be doing hybrid computing—superconducting gate-based quantum computing, which is what we do—is it gets to the speed area. We are dealing with tens of nanoseconds in gate speeds. As you can see, our standard product is in the 50 to 60 nanosecond range, and with this new gate that we announced, we are talking about sub-30-nanosecond gate speed. That is commensurate with CPU and GPU gate speeds. And that really allows a practical hybrid quantum ecosystem to evolve.

You compare that with some other modalities like trapped ion or pure atom—they are talking about hundreds of microseconds. In fact, if I recall this correctly, the most recent number from IONQ is 600 microseconds. So that is 30,000 times slower than where we are. Just to repeat, we are talking tens of thousands of times slower speed with trapped ion–type modalities. And that creates a significant challenge for them to talk about a hybrid quantum ecosystem. So that is a huge advantage superconducting gate-based quantum systems have as we have tremendous gate speeds comparable to the CPU and GPU. It allows us to do that kind of stuff. That is why we partnered with NVIDIA.

We demonstrated at GTC in October how a concept would look, and we will continue to do that with them. They are not the only company from the HPC environment that shares this view; other HPC builders are also sharing similar views. You are going to see more and more companies talk about a hybrid quantum computing environment with HPC and quantum computers, particularly superconducting gate-based quantum computers, coexisting together. Hopefully, that answers your question.

David Williams: Yeah. It certainly does. Thanks so much for the color. And then maybe secondly, just kind of looking at the landscape for M&A or acquisitions, it seems like there is a fairly ripe environment of different enabling-type technologies that are out there. So maybe just discuss the landscape, how you see it, if there are areas of the stack where you could benefit—maybe that could help accelerate your road map. Thanks.

Subodh Kulkarni: Yeah. As we mentioned, we would certainly be open to M&A if it helps accelerate our road map. Our road map—again, to repeat—we are talking about a more than a thousand-qubit system at sub-50-nanosecond gate speed and 99.8% median two-qubit gate fidelity in a couple years. As far as we can tell, that is a very impressive system that we may be one of the only ones, if not the only one, to be able to get a system to that level of performance.

So to get a system there and to try to find accelerating points where we can acquire someone to help us accelerate that road map—at least we have not seen what exactly is out there that could help us accelerate that road map right now. Clearly, our chiplet strategy is a critical component of us getting to a thousand qubits. And there we are the pioneers. We have the IP. We have the know-how. As far as we can tell, we are the only ones who are practicing chiplets in real life. Really, no one else can help us to accelerate that one.

When it comes to the other components of the stack, on the control system, as we have already disclosed, we are partnered closely with Quantum Computer in Taiwan, and they are a top player in CPU/GPU servers in the cloud, and they fully understand that control system part of the stack. So we feel pretty good about who we are partnered with. I have already mentioned NVIDIA for NVQ Link and the distribution layer software like CUDA Quantum. Other areas—we have Riverlane for error correction, QFOX for optical signaling—those kinds of partnerships. So we will continue to monitor the situation. And if we believe that someone can help accelerate our road map faster, we are certainly open.

But at this point, our road map clearly is dependent on just us executing our plan. So that is why we have said that most of our plan is organic right now, not contingent on M&A.

David Williams: Great. Thanks so much for the help.

Subodh Kulkarni: Thank you, David.

Operator: Thank you. Our next question comes from Krish Sankar with TD Cowen. You may proceed.

Krish Sankar: Yeah. Hi. Thanks for taking my question. I have two of them, Subodh. First one, if I remember right, I think by end of next quarter or so is your timeline for making the decision of maybe building another fab or, you know, outsourcing it. So I am kind of curious where we are in that, and have the recent acquisition by your competitors kind of changed that decision-making thought process?

Subodh Kulkarni: Well, we already have our own fab that is existing in Fremont. That is what is producing our vehicles every day right now. Regarding the need for a new fab, we have mentioned that there may be a potential possibility that we may have to invest in a new fab. We have been very clear, Krish, that we do not believe we need a new fab to get to quantum advantage. So we are certain for the next three years, we think our existing fab is capable of getting us to quantum advantage, which is thousand qubits, 99.9%-type fidelity.

The fact that we just disclosed 99.9% two-qubit gate fidelity performance with our existing fab is a proof point that our existing fab is clearly capable of taking us there. Regarding our competitors buying a CMOS foundry for quantum fab, we are not quite sure why they did that when they had already—I believe you are referring to IONQ buying SkyWater. We are not quite sure why they did that because, as far as we knew, IONQ had already invested in a separate fab in Washington State three years ago. And then purchasing SkyWater—we are not quite sure. And so SkyWater's primary business—most of their business—is CMOS foundry, obviously. We are not quite sure what exactly the rationale was.

You need to talk to them, but we certainly do not believe that we need to be using any other fab except our fab for the near term. Longer term, obviously, we have said there is potentially a need for a Fab-2. There are multiple initiatives being looked at right now, including there are foundry options out there. We will certainly take a look at foundry options, other initiatives that are being looked at, and decide what is the next step. But, again, to repeat, we feel pretty good about our existing fab and feel confident that it will take us to quantum advantage—which is about three years from now.

Krish Sankar: Got it. Very helpful. And, Subodh, just as a quick follow-up, kind of curious on the government funding thing. Last year, had DOE announced new funding. Have you seen any activity from them? There are also any latest thoughts on the US NQIRA and any of the sovereign initiatives that you are seeing that could benefit Rigetti Computing, Inc.?

Subodh Kulkarni: Well, certainly, there are a lot of initiatives being discussed at the US government level to support quantum computing. But as we can all see, there is no bill that has been signed and appropriated yet. There seems to be bipartisan support for this NQI reauthorization act in both the House and Senate. There seems to be support, but it has not led yet to a bill that is signed and approved, which we are all eagerly awaiting. It looks imminent. Everything suggests that such a bill should be signed here soon, and that will significantly help companies like us, but along with us, other companies that play in this ecosystem too.

So we certainly are supportive of those kinds of initiatives and hopefully they happen. DOD funding continues. As you can see, we clearly are already getting funded from places like Air Force Research Lab, part of DOD, and we will continue to look at other opportunities with DOD and other areas of the government. We certainly are a critical part of the UK government's initiative in quantum computing. There are multiple new initiatives being discussed by the UK government right now. We certainly will take a look at those kinds of opportunities. And, of course, we announced that we are the first company that the Indian government has really chosen to get their quantum computer installed.

We are really proud of that accomplishment. So when the first quantum computer is procured by the government of India, we believe it will be ours before the end of this year. So we feel pretty good about being closely affiliated with US, UK, and now the Indian government. We will continue to monitor different initiatives and funding activities going on.

Krish Sankar: Very helpful. Thank you, Subodh.

Subodh Kulkarni: Thank you, Krish.

Operator: Thank you. Our next question comes from Craig Ellis with B. Riley Securities. You may proceed.

Craig Ellis: Yeah. Thanks for taking the question, guys. Subodh, in your prepared comments, and in the press release, there was note of a Novera QPU sale to a Japanese research entity. I am wondering if you could just tell us a little bit more about that. And then use that to elaborate on what the pipeline is looking like as you engage more broadly with other international entities?

Subodh Kulkarni: Yeah. Sure. Thanks, Craig. So as we disclosed, we did get an order for a nine-qubit Novera from a Japanese research organization. We always ask their permission if we can disclose their name. In this case, they did not want to for confidentiality reasons on their side. But it is a premium Japanese organization. And once they give us permission to discuss, we will be happy to disclose. Overall, we feel pretty good about interest increasing to get on-premises quantum computing. As we have already disclosed, we have two upgradable nine-qubit systems that we are going to deliver and the 108-qubit system to the government of India in the second half of this year.

We have disclosed this Novera order and there are a few more Novera potential orders here in the pipeline. We will disclose them when we get them. And if they give us permission to disclose that, we will obviously do that. We are certainly talking to different government entities within the US, UK, India, and some other countries. And we believe the demand for on-premises systems will continue to grow. As you can see, just by adding the numbers that we have disclosed, we are going to see significant year-over-year increase in sales this year just delivering the systems that we have already received orders for. And we will continue to see that in the future.

We believe that as we get closer to quantum advantage—which is about three years from now—you are going to see a significant spike in interest as we get closer to that milestone. That makes sense because that is really when people start seeing practical benefits with quantum computing. And you will definitely see more and more commercial organizations starting to show interest in on-premises quantum computing. Hopefully, that answers your question today.

Craig Ellis: Yeah. That is very helpful. Thank you, Subodh, and it is nice to see the revenue momentum. On the Japanese research sales, Jeff, are you expecting those to rev rec this year? And if so, can you give us a sense for whether that would be in the first half of the year or the second half of the year?

Jeff Bertelsen: Yeah. The Novera to the Japanese organization—you know, we expect that to ship in April and to rev rec in Q2.

Craig Ellis: Got it. Thank you.

Subodh Kulkarni: Thanks, Craig.

Operator: Thank you. Our next question comes from Richard Shannon with Craig-Hallum Capital Group. You may proceed.

Tyler Perry Anderson: Hi, guys. This is Tyler on for Richard. Thank you for taking my question. To the Japanese organization that purchased your system, do they already have multiple dilution fridges installed, or are they just testing different components in the stack or different combinations of components in the stack? And I have one more follow-up.

Subodh Kulkarni: Well, we certainly know they have one dilution refrigerator because they have ordered our Novera QPU and not a whole nine-qubit upgradable system. We are not sure of what other modalities they have tested, and within superconducting if they have looked at any competitive solutions. As you probably know, Tyler, IBM really does not offer something like a nine-qubit system. Google does not offer an on-premises quantum computing system. There are organizations in Europe like IQM and Quantware where they can offer smaller qubit count systems. But, frankly, our performance is significantly better than those kinds of competitors. So we believe the Japanese organization did their homework and decided superconducting quantum computing is an area they want to invest in.

Within superconducting, to get started, Novera supports a fixed solution to get your researchers familiar with quantum computing and starting to learn about the quantum computing ecosystem and work on algorithms and applications and stuff like that.

Tyler Perry Anderson: Got it. Thank you. And then you had mentioned you are doing work with Riverlane on the scalability of error correction. Could you just elaborate on what that means?

Subodh Kulkarni: Sure. What we have disclosed is that we are partnered with Riverlane based in Cambridge, UK. It is a company of roughly our size—about 150 employees. Excellent quality work they do in error correction software. And we have published some papers that anyone can take a look at. We showed some concepts of how real-time error correction will work. We have shown a path to how their error correction hardware will closely integrate with our hardware, so they will be a core part of our stack, if you will. And how that will scale up as we go up to 100 and then 1,000 qubits and beyond 10,000 qubits. So our road maps are well aligned.

We work very closely with their team. So effectively, we view their error correction as a key part of our stack going forward. Hopefully, that answers your question.

Tyler Perry Anderson: Yeah. Is there just any update on, like, number of qubits per one of their systems? Is there any change in that?

Subodh Kulkarni: Not in that sense. I mean, number of qubits and the raw fidelity—obviously, all those things come from us. Where they start coming in is error mitigation and error correction area. Obviously, that is the layer that is critical when you start talking about quantum advantage. So really the benefit that our customers are going to see with Riverlane error correction is when we start approaching quantum advantage. Right now, they can test it. Riverlane will offer them their services. They have physical products to ship, if you will. And we can demonstrate that our systems are closely working well together.

But clearly, we are not at a point of thousand-qubit size at 99.9%-type fidelity where error correction can clearly be demonstrated to show practical benefits. So we need to get closer to quantum advantage before end users will start seeing the real value of error mitigation and error correction.

Tyler Perry Anderson: Got it. Thank you. Appreciate you taking the time for my questions.

Subodh Kulkarni: Thanks, Tyler.

Operator: Thank you. Next question comes from John McPhee with Rosenblatt Securities. You may proceed.

John McPhee: Thanks, guys, and congrats on getting to the error rate that you need to get to by the end of the quarter. Question on the 150-plus qubit system that you guys had originally planned for by the end of this year at 99.7% two-qubit gate fidelity. Is that still on the cards?

Subodh Kulkarni: Yeah. Absolutely. That is our road map. We will deploy this 108-qubit system soon, and then the plan is to get to 150-plus qubits around the end of this year. We want to be careful. I mean, anytime you say by the end of this year, it always creates a challenge on December 31 and so on. I mean, these are extremely complex systems. These are extremely complicated technologies that we are developing. So what we have said is more than 150 qubits, about 99.7% median two-qubit gate fidelity around the end of this year. That is the next one.

The bigger one that we are really excited about, and we are focusing very much on that, is more than a thousand qubits, closer to 99.8% median two-qubit gate fidelity, less than 50-nanosecond gate speed in about a couple of years. So that is where a lot of our work already has started. So we will certainly get 150-plus delivered around the end of this year, but most of the effort right now has already started on the thousand-plus qubit in a couple of years. As I mentioned earlier, I mean, even 150—right now, there is no one with a 150-plus qubit system with the exception of IBM's old technology where they had 156 qubits.

And certainly a thousand is going to be a big milestone for the whole industry. Certainly for us, but for the whole industry. We just do not see how other modalities, even though they claim they will be there—you look around trapped ion or pure atoms or any other modalities—none of them, as far as I can see, have reached even 100 qubits. Even anywhere close to that. So when they have the road maps talking about getting to tens of thousands, it is a road map. In our case, because we are using chiplet technology and because we have semiconductor fabrication, we know how to stack up the chips.

We feel pretty good about our executability of our road map. So, yeah, to answer your question, absolutely, 150-plus around the end of this year and more than a thousand around the end of next year. That is the plan.

John McPhee: Great. So the issues you are resolving around the 108—are those critical to reaching these road map milestones? Is that the way I should think about it, like, once you resolve this tunable coupler?

Subodh Kulkarni: Yeah. Absolutely. I mean, the issue that we are resolving as we speak with the tunable coupler—and that is why we did the chip reiteration—it is critical to not only 108, but 150 and everything beyond that. So every time we advance to a certain level, we take advantage of all that learning with the next systems. That is why, I mean, when we hear some companies talk about how they are going to get to a million qubits without demonstrating even 10 qubits, we are very skeptical of those kinds of claims.

And, frankly, I mean, even if you look at some companies—trapped ion companies like IONQ who acquired Oxford Ionics technology at a couple of qubits—and that is where they are right now, at a couple of qubits, and to suddenly say we will be at a million qubits next year, we remain skeptical of those kinds of claims. I mean, unless you can demonstrate 10 and then 100, we just do not see how you can go from two or five qubits to suddenly a couple million qubits in a year or two years.

John McPhee: Then just last one if I could. The thousand-qubit machine by 2027—can you give us some kind of sense as to how many logicals you might be able to squeeze out of that? I do not know if you are thinking about the, you know, the Riverlane error correction solution or some other error correction, or how should I think about that? Because it is a great physical number—certainly 99.8 on that one.

Subodh Kulkarni: Yeah. So, really, to start talking logical qubits, you need to get to closer to 99.9%, which is that quantum advantage point that I have talked about. In general, in the superconducting gate-based quantum computing technology space we are in, typically the number that we use is roughly 10 to 50 physical-to-logical qubit, depending on the exact fidelity and stuff like that—maybe 10 to 100 in the worst case. But that is the ratio. So you have to divide that number by 10 to 100 to get the number of logical qubits once you have reached 99.9% level.

Now I know that this is going around right now in the industry because, again, some trapped ion and pure atom companies have started reporting physical-to-logical qubit ratios of two-to-one and, in some aggressive cases, one-to-one. I just want to caution you that they are using a very weird definition of logical qubit in that case. They are not talking about the logical qubit as a perfect qubit. They are talking about a logical qubit having a fidelity, and in some cases, their logical qubit fidelity is actually lower than their physical qubit gate fidelity. So it does not make any sense that they are using that language, but they are.

And that is unfortunately confusing a lot of people as to logical qubit and what does it mean and stuff like that. Hopefully, that answers your question or maybe I confused you some more.

John McPhee: No. No. No. I get it. Thanks. I will jump off. Thanks a lot, guys. Take it, John.

Operator: Thank you.

Operator: Our next question comes from Brian Kinstlinger with Alliance Global Partners. You may proceed.

Brian Kinstlinger: My question was kind of answered, but I guess I am curious, Subodh, if you can touch on or elaborate on—either in Japan or India—your customers, what the evaluation process was like. I think you said in Japan, maybe you were not sure of the other modalities. But what was the competitive landscape in time?

Subodh Kulkarni: Certainly, almost every national lab, university, or any potential—even commercial—customers, they are fully aware of different modalities, the pros and cons. And once they decide to choose superconducting gate-based modality—and usually the reason is for obvious things that we have been saying, which are scalability and gate speed—those are the huge benefits with superconducting modality. Everyone understands that fidelity is our main challenge in superconducting modality. So usually, that part most customers that we talk to have done on their own. Usually, when we talk to them, they have already gone through that process, but then they are starting to look at different competitors within superconducting gate modality. Obviously, IBM is always there in the fray.

Sometimes we deal with companies like IQM from Finland or Quantware from Holland or some other companies around the world. The main thing that differentiates Rigetti Computing, Inc. is our open modular architecture. We have this innovative way of incorporating third-party solutions that allows us to come up with innovative solutions faster—examples being Quantum Computer for control system or NVIDIA for NVQ Link or distribution layer software like CUDA Quantum, or Riverlane for error correction. Most customers like that kind of an open approach because usually they have some ideas on what other things they would like to try with quantum computing—they are also doing research at this point.

And the other part where we really outshine our competitors is chiplets. Everyone sees that chiplets is a very, very possible way to scale up long term. We allow our customers to upgrade. As you can clearly see, our current two orders that we are fulfilling are upgradable nine-qubit systems. So once they get nine qubits up and running, we fully expect them to ask us to upgrade them to up to 108 qubits sometime next year, because the same dilution refrigerator, with some changes in cables and connectivity, will be able to handle 108 qubits or even more in the future.

So the main differentiators—the reasons they choose us—are our open modular approach and our chiplet approach and a few other things. But those are the customers that end up choosing Rigetti Computing, Inc. Hopefully, that answers your question.

Brian Kinstlinger: Yeah. Great. Thank you.

Operator: Thank you.

Operator: I would now like to turn the call back over to Dr. Subodh Kulkarni for any closing remarks.

Subodh Kulkarni: Thank you for the thoughtful discussion today. We are excited about the momentum we are building across our technology road map, our partnerships, and growing engagement from customers around the world. Our team is focused on executing with discipline and delivering systems that enable meaningful progress in quantum and hybrid computing. We appreciate your continued interest and look forward to sharing our progress in the quarters ahead. Thank you.

Operator: Thank you. This concludes the conference. Thank you for your participation. You may now disconnect.

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