Rigetti(RGTI) - 2025 Q1 - Quarterly Report

PART I — FINANCIAL INFORMATION Financial Statements (Unaudited) The company shifted to a $42.6 million net income in Q1 2025, driven by non-cash gains, while total assets declined and operating cash use remained stable Condensed Consolidated Balance Sheets Condensed Consolidated Balance Sheets | Account | March 31, 2025 ($ thousands) | December 31, 2024 ($ thousands) | Change | | :--- | :--- | :--- | :--- | | Assets | | | | | Cash and cash equivalents | 37,162 | 67,674 | ▼ $30,512 | | Available-for-sale investments | 171,966 | 149,488 | ▲ $22,478 | | Total current assets | 214,361 | 206,758 | ▲ $7,603 | | Total assets | 269,138 | 284,787 | ▼ $15,649 | | Liabilities & Equity | | | | | Total current liabilities | 11,392 | 11,867 | ▼ $475 | | Derivative warrant liabilities | 39,576 | 93,095 | ▼ $53,519 | | Earn-out liabilities | 4,114 | 45,897 | ▼ $41,783 | | Total liabilities | 62,010 | 158,198 | ▼ $96,188 | | Total stockholders' equity | 207,128 | 126,589 | ▲ $80,539 | - The significant decrease in total liabilities was primarily driven by a reduction in the fair value of derivative warrant liabilities (down $53.5 million) and earn-out liabilities (down $41.8 million)[19] Condensed Consolidated Statements of Operations Condensed Consolidated Statements of Operations | Metric | Q1 2025 ($ thousands) | Q1 2024 ($ thousands) | Change | | :--- | :--- | :--- | :--- | | Revenue | 1,472 | 3,052 | ▼ 51.8% | | Gross Profit | 442 | 1,500 | ▼ 70.5% | | Research and development | 15,455 | 11,471 | ▲ 34.7% | | Loss from operations | (21,632) | (16,585) | ▲ 30.4% | | Change in fair value of derivative warrant liabilities | 53,262 | (2,583) | Favorable | | Change in fair value of earn-out liabilities | 8,837 | (1,621) | Favorable | | Net income (loss) | 42,619 | (20,773) | Favorable | | EPS - basic | $0.15 | ($0.14) | Favorable | | EPS - diluted | $0.13 | ($0.14) | Favorable | - A shift to net income was driven by a $62.1 million non-cash gain from fair value changes, masking a wider operating loss from lower revenue and higher R&D expenses[21] Condensed Consolidated Statements of Cash Flows Condensed Consolidated Statements of Cash Flows | Cash Flow Activity | Q1 2025 ($ thousands) | Q1 2024 ($ thousands) | | :--- | :--- | :--- | | Net cash used in operating activities | (13,651) | (13,139) | | Net cash (used in) provided by investing activities | (23,609) | 6,220 | | Net cash provided by financing activities | 6,935 | 20,710 | | Net (decrease) increase in cash | (30,512) | 13,706 | - Cash and cash equivalents decreased by $30.5 million in Q1 2025, contrasting with a $13.7 million increase in Q1 2024, due to cash used in operations and investing[26] Notes to Condensed Consolidated Financial Statements Key notes detail accounting policies, a new collaboration with Quanta, and significant revenue concentration from government entities - The company believes existing cash, cash equivalents, and available-for-sale investments are sufficient to meet anticipated operating cash needs for at least the next 12 months[40] - In February 2025, the company entered into a five-year Collaboration Agreement with Quanta Computer Inc, involving mutual investment commitments of at least $250.0 million each[134][135][137] - During Q1 2025, the vesting of Sponsor Vesting Shares led to a $32.9 million earn-out liability being reclassified to additional paid-in capital[60][90] Customer Revenue Concentration | Customer Concentration (Revenue) | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Customer B | 14% | 11% | | Customer C | 69% | 29% | | Sales to government entities | 89.5% | 97.4% | Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses a 52% revenue decline and wider operating loss, while highlighting technology milestones and sufficient liquidity for the next 12 months Overview and Recent Developments - The long-term business model focuses on QPU sales and QCaaS, though development contracts currently constitute the majority of revenues[144] - A significant collaboration with Quanta Computer Inc involves mutual investment commitments of at least $250 million each over five years to advance Rigetti's product roadmap[152] - The 2025 technology roadmap includes releasing a 36-qubit system and a >100-qubit system, targeting a 2x reduction in error rates from late 2024 levels[150] Results of Operations - Revenue decreased by $1.6 million (52%) in Q1 2025, mainly from a reduction in collaborative research contracts pending reauthorization of the National Quantum Initiative Act[164] - Research and development expenses increased by $4.0 million (35%) year-over-year, driven by higher salaries and stock-based compensation[170][171] - Net income of $42.6 million was driven by non-cash gains of $53.3 million and $8.8 million from changes in fair value of warrant and earn-out liabilities, respectively[163][178][181] Liquidity and Capital Resources - As of March 31, 2025, the company had an accumulated deficit of $512.1 million and expects to incur additional losses for the foreseeable future[146][183] - Management believes existing cash and investments are sufficient to meet operating cash needs for at least the next 12 months[184] - Net cash used in operating activities was $13.7 million for Q1 2025, slightly higher than the $13.1 million used in Q1 2024[193][194] - Long-term cash requirements include a commitment to invest at least $250.0 million over five years as part of the Collaboration Agreement with Quanta[187] Quantitative and Qualitative Disclosures About Market Risks The company is exempt from market risk disclosures as a smaller reporting company - As a smaller reporting company, Rigetti is exempt from providing quantitative and qualitative disclosures about market risk[212] Controls and Procedures Management concluded that disclosure controls and procedures were effective as of March 31, 2025, with no material changes in internal controls - The principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were effective as of March 31, 2025[214] - No material changes occurred in the company's internal control over financial reporting during the three months ended March 31, 2025[215] PART II — OTHER INFORMATION Legal Proceedings The company is not currently a party to any material legal proceedings - As of the filing date, Rigetti is not involved in any material legal proceedings[217] Risk Factors This section refers to the company's latest Annual Report on Form 10-K for a detailed discussion of risk factors - For a detailed discussion of risk factors, the company directs readers to its most recent Annual Report on Form 10-K[218] Other Information Three board members adopted Rule 10b5-1 trading plans for selling company securities during the quarter - In March 2025, three directors adopted Rule 10b5-1 trading plans for the future sale of company common stock and, in one case, warrants[222][223][224]