Rigetti Computing Third Quarter 2026 Financial Results - RIGETTI COMPUTING INC

Financial Performance:

• Q3 2026 revenue was $1.4 million (down from $1.9 million in Q3 2025), while YTD revenue for the first nine months reached $10.9 million, representing 110% growth YoY and exceeding full-year 2025 revenue of $7.1 million.
• Full-year 2026 revenue guidance is approximately $20 million, driven by expected fourth-quarter CDAC system delivery and revenue recognition.
• Gross margin improved to ~61% in Q3 2026 compared to 21% in the prior year period; margins remain volatile due to contract mix and hardware recognition timing.
• Operating expenses totaled $34 million in Q3 2026 (vs. $21 million prior year), with R&D at $25.5 million and SG&A at $8.5 million, reflecting increased hiring and development costs.
• Net loss for the quarter was $3.1 million ($0.08 per share) on a GAAP basis and $20.5 million ($0.06 per share) on a non-GAAP basis (excluding stock-based compensation and fair value adjustments).
• The balance sheet ended Q3 2026 with $497.1 million in cash, cash equivalents, and investments; the company maintains a debt-free status.
• Capital expenditures were elevated at $42.6 billion (transcript likely typo for $42.6 million) for the first nine months, primarily directed toward dilution refrigeration capacity, Fab 1 equipment, and infrastructure to support scaling.

Guidance and Future Outlook:

• Mid-2028 target: Deploy a 300+ qubit system with ~99.7% median two-qubit gate fidelity and gate speeds under 60 nanoseconds.
• Long-term goal (approx. 3 years): Deploy a 1,000+ qubit system featuring 99.9% median two-qubit gate fidelity, sub-50 nanosecond gate speeds, and integrated error correction.
• Strategic roadmap prioritizes increasing qubit density within a single dilution refrigerator rather than networking multiple fridges to enhance performance and reduce costs.
• Management projects a transition to commercial viability and ROI demonstration approximately three years out, once systems approach quantum advantage.
• Continued focus on real-time error correction and mitigation in partnership with Riverlane as fidelity metrics improve.

Business Segments and Product Lines:

• CPEUS-1 (108-qubit system): Achieved 99.5% median two-qubit gate fidelity; sub-lattices of 50 and 80 qubits achieved 99.7% and 99.6% fidelity respectively.
• Chiplet Architecture: The system utilizes 12 interconnected 9-qubit chiplets; future roadmap includes 36-qubit chiplets (6x6) to enable the 1,000-qubit target.
• Commercial Access: Systems available via on-premises deployments (e.g., DOE labs, UK National Lab) and public cloud platforms (AWS Braket, Microsoft Azure, QBraid).
• New Product Integration: A 9-qubit NovaD system will be integrated into the HPE/Pittsburgh Supercomputing Center Tangle Lab in 2027.
• Government Contracts: Signed a definitive $100 million agreement with the U.S. Department of Commerce (CHIPS R&D Office) for R&D in compressing readout electronics, expanding cryogenic capacity, and high-connectivity chip fabrication.

Market and Competitive Landscape:

• Rigetti positions itself as a leader in superconducting quantum computing, citing the CPEUS-1 as one of only a few publicly available systems exceeding 100 qubits (competing with IBM's 120-qubit and Google's 105-qubit systems).
• Market remains in the R&D phase; customers include national labs, universities, and select commercial entities, with revenue driven by research grants and system sales rather than commercial ROI.
• Superconducting modality offers gate speeds 10,000x faster than trapped ion and 100x faster than neutral atom systems, a key differentiator for quantum advantage.
• Increasing global interest in quantum strategies from US, UK, and Indian governments, creating a favorable environment for strategic government partnerships.

Risks and Challenges:

• Technical Hurdles: Primary challenges include improving coherence times (currently ~25-30 microseconds), achieving target fidelity levels (99.7% - 99.9%), and scaling qubit density without compromising yield.
• Physical Constraints: Managing cable density (coaxial to flex cable to fiber optics) and wiring limits when scaling to 1,000+ qubits in a single refrigerator.
• Financial Volatility: Revenue recognition is lumpy and tied to discrete system deliveries; gross margins fluctuate based on contract mix.
• Execution Risk: Delivering the 300-qubit milestone by mid-2028 requires flawless execution of chiplet scaling and cryogenic architecture improvements.

Management Commentary and Tone:

• Management expressed confidence in the chiplet-based scaling strategy, emphasizing that qubit count alone is insufficient without simultaneous gains in fidelity and speed.
• Tone was cautious yet optimistic regarding commercialization, with a clear stance that revenue growth will accelerate only after demonstrating quantum advantage (approx. 3 years out).
• CEO Subodh Kulkarni and CFO Jeff Bertelsen emphasized discipline in capital allocation, linking spending directly to measurable technical milestones.
• Management rejected the use of "logical qubits" in marketing until error rates are sufficiently low (<10^-10), preferring to focus on physical qubit metrics.

Analyst Questions and Answers:

• Fidelity Variance: Sublattice fidelity (99.7%) exceeds the full system median (99.5%) due to statistical distribution; sublattice performance allows users to test algorithms on higher-quality subsets.
• Chiplet Scaling: No theoretical limit on chiplet size; moving to 36-qubit chiplets is expected soon, with no immediate interconnect penalties observed on the 12-chiplet grid.
• Capital Expenditure: 2026 CapEx is elevated due to infrastructure build-out; 2027 is expected to maintain similar high spending levels to support the 2028 roadmap.
• Department of Commerce Funding: The $100M is structured as an equity transaction; funds will be drawn monthly against incurred costs, credited to Additional Paid-In Capital, not recorded as receivables.
• Acquisition Strategy: No active pursuit of M&A unless a specific strategic value exists to accelerate the roadmap; focus remains on organic technology development.
• Wiring Solutions: Transitioning from coaxial cables to superconducting flex cables for 300-1,000 qubit systems, and eventually fiber optics for larger scales.

Other Key Points:

• The U.S. Department of Commerce deal included a minority, non-controlling equity stake for the government, aligning with national security goals.
• Rigetti maintains a "no debt" policy and retains significant financial flexibility ($497.1M cash) to fund its roadmap.
• Collaboration with Riverlane is critical for real-time error correction, with the company planning to deploy error mitigation tools as fidelity thresholds are met.
• Revenue recognition is heavily influenced by the timing of customer acceptance milestones for on-premises systems.