Core Viewpoint - Rigetti Computing (NASDAQ: RGTI) specializes in quantum computer chips known as superconducting qubit processors and offers cloud access to these technologies [1] Company Summary - The company has been rated as "Hold" due to its stock price reflecting current valuations [1] - Rigetti focuses on producing objective, data-driven research primarily on small- to mid-cap companies, which are often overlooked by investors [1] Industry Context - The analysis occasionally includes large-cap companies to provide a broader perspective on equity markets [1]

Financial Data and Key Metrics Changes - Revenues in Q3 2025 were $1.9 million, down from $2.4 million in Q3 2024, impacted by the expiration of the National Quantum Initiative [12] - Gross margins in Q3 2025 were 21%, compared to 51% in Q3 2024, due to revenue composition and pricing variability [12][13] - Operating loss for Q3 2025 was $20.5 million, compared to $17.3 million in the prior year [14] - GAAP net loss for Q3 2025 was higher than in Q3 2024, with a non-GAAP net loss of $10.7 million, or $0.03 per share, compared to $13.4 million, or $0.07 per share, in Q3 2024 [15] - As of September 30, 2025, the company had approximately $558.9 million in cash and equivalents, with no debt [15] Business Line Data and Key Metrics Changes - The company announced purchase orders totaling approximately $5.7 million for two 9-qubit Novera quantum computing systems, which are upgradable [6][7] - A three-year, $5.8 million contract from the Air Force Research Laboratory (AFRL) was announced to advance superconducting quantum networking [8] Market Data and Key Metrics Changes - The expiration of the National Quantum Initiative and its pending reauthorization in the U.S. Congress impacted revenue [12] - The company is engaged with various academic and government sectors to enhance quantum computing capabilities [9][10] Company Strategy and Development Direction - The company plans to deliver a 150-plus qubit system by the end of 2026 and a 1,000-plus qubit system by the end of 2027, with anticipated gate fidelity improvements [5][6] - The company is focusing on public-private partnerships to advance quantum technologies [9] - The company intends to open an Italian subsidiary to pursue business opportunities in the region [11] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about future sales driven by recent contracts and collaborations, despite current revenue challenges [12][15] - The company is optimistic about being selected for phase B of the DARPA Quantum Benchmarking Initiative project in the coming months [10][18] Other Important Information - The company is exploring options for a new chip fab facility to enhance capabilities beyond the current 150 mm fab [63][66] - The potential investment for a new quantum fab is expected to be in the hundreds of millions of dollars, significantly less than a CMOS fab [66] Q&A Session Summary Question: Can you discuss the DARPA phase B and the feedback received? - Management noted that while not selected for phase B, constructive feedback was received, focusing on error correction and long-range coupling [17][18] Question: What is the comfort level for achieving 99% fidelity by 2027? - Management is confident in achieving 99.7% fidelity at 150-plus qubits by 2026 and 99.8% at 1,000 qubits by 2027 [21][22] Question: Will the 1,000-qubit system use chiplet-based architecture? - The plan is to use 36-qubit chiplets for the 1,000-qubit system, with confidence in achieving the fidelity targets [27][28] Question: How will revenue recognition work for the Novera system sales? - Revenue for the two Novera systems will be recognized upon shipment, expected in Q1 and Q2 of 2026 [31] Question: What is the expected impact of the National Quantum Initiative funding? - The recent reinstatement of funding to $625 million over five years is seen as a positive step, though discussions for higher funding amounts are ongoing [88][89] Question: What is the company's strategy regarding potential M&A? - The company is open to exploring M&A opportunities to accelerate its roadmap but believes it can execute its plans organically [50][51]

Financial Data and Key Metrics Changes - Revenues in Q3 2025 were $1.9 million, down from $2.4 million in Q3 2024, impacted by the expiration of the National Quantum Initiative [12] - Gross margins in Q3 2025 were 21%, compared to 51% in Q3 2024, due to revenue composition and pricing variability [12][13] - Operating loss for Q3 2025 was $20.5 million, compared to $17.3 million in the prior year [14] - GAAP net loss for Q3 2025 was higher than in Q3 2024, primarily due to non-cash changes in fair value of derivative liabilities [15] - As of September 30, 2025, the company had approximately $558.9 million in cash and equivalents, with no debt [15] Business Line Data and Key Metrics Changes - The company announced purchase orders totaling approximately $5.7 million for two 9-qubit Novera quantum computing systems, which are upgradable [6][7] - A three-year, $5.8 million contract from the Air Force Research Laboratory (AFRL) was announced to advance superconducting quantum networking [8] Market Data and Key Metrics Changes - The expiration of the National Quantum Initiative and its pending reauthorization in the U.S. Congress impacted revenue [12] - The company is engaged with various academic and government institutions to advance quantum computing capabilities [9][10] Company Strategy and Development Direction - The company plans to deliver a 100+ qubit chiplet-based quantum system by the end of 2025, with a roadmap to deploy a 150+ qubit system by the end of 2026 and a 1,000+ qubit system by the end of 2027 [5][6] - The company is focusing on public-private partnerships to advance quantum technologies [9] - The company intends to open an Italian subsidiary to pursue business opportunities in the region [11] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about future sales driven by recent contracts and collaborations, despite current revenue challenges [12][15] - The company is focused on achieving quantum advantage within the next three to five years, targeting 1,000 qubits with 99.9% fidelity [18][22] - Management is optimistic about potential funding increases for quantum initiatives from the U.S. government [88][89] Other Important Information - The company is exploring options for a new chip fab facility to enhance capabilities beyond the current 150 mm fab [63][66] - The potential investment for a new quantum fab could be in the hundreds of millions of dollars, significantly less than a traditional CMOS fab [66] Q&A Session Summary Question: Can you talk about DARPA phase B and the feedback received? - Management noted that while not selected for phase B, constructive feedback was received, focusing on error correction and long-range coupling [17][18] Question: What is the comfort level for achieving 99% fidelity by 2027? - Management expressed confidence in achieving 99.7% fidelity at 150+ qubits by 2026 and 99.8% at 1,000 qubits by 2027 [22][23] Question: Will the 1,000-qubit system be chiplet-based? - The plan is to use 36-qubit chiplets for the 1,000-qubit system, with no significant challenges anticipated for long-range coupling [28][30] Question: How will revenue recognition work for the Novera sales? - Revenue for the two Novera systems will be recognized upon shipment, expected in Q1 and Q2 of 2026 [32] Question: What is the expected gross margin profile moving forward? - Management indicated that margins may improve with upcoming sales, particularly from Novera systems [71] Question: What types of applications will the 1,000-qubit system run? - The system is expected to handle complex applications like drug discovery and financial forecasting, which current CPUs and GPUs struggle with [76][77] Question: How does the recent funding from the Energy Department affect the business? - The reinstatement of the National Quantum Initiative funding is seen as a positive step, although discussions for higher funding amounts are ongoing [88][89]

Financial Data and Key Metrics Changes - Revenues in Q3 2025 were $1.9 million, down from $2.4 million in Q3 2024, impacted by the expiration of the National Quantum Initiative [10] - Gross margins decreased to 21% in Q3 2025 from 51% in Q3 2024, attributed to the composition of revenue and pricing variability [10] - Total operating expenses increased to $21 million in Q3 2025 from $18.6 million in the same period of the prior year, due to salary increases, new hires, and higher stock-based compensation [11] - GAAP net loss for Q3 2025 was higher than in Q3 2024, primarily due to a non-cash change in the fair value of derivative warrant and earn-out liabilities [12] - As of September 30, 2025, the company had approximately $558.9 million in cash and equivalents, with no debt, and this increased to approximately $600 million by November 6, 2025 [12] Business Line Data and Key Metrics Changes - The company announced purchase orders totaling approximately $5.7 million for two 9-qubit Novera quantum computing systems, which are upgradable [5] - A three-year, $5.8 million contract from the Air Force Research Laboratory (AFRL) was secured to advance superconducting quantum networking [6] Market Data and Key Metrics Changes - The expiration of the National Quantum Initiative and its pending reauthorization in the U.S. Congress impacted revenue, with future sales dependent on its renewal [10] - The company is engaged with various academic and government sectors to enhance quantum computing capabilities, including collaborations with Montana State University and the Center for Development of Advanced Computing [7][8] Company Strategy and Development Direction - The company aims to deliver a 150-plus qubit system by the end of 2026 and a 1,000-plus qubit system by the end of 2027, with anticipated gate fidelity improvements [4][5] - The strategy includes deepening support for quantum computing capabilities in academic and government sectors and integrating with NVIDIA's NVLink for AI supercomputer quantum integration [8] - The company plans to open an Italian subsidiary to accelerate business opportunities in the region [9] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about future sales from recent contracts and collaborations, which are expected to benefit revenue in Q4 2025 and into 2026 [10] - The management acknowledged challenges in achieving long-range coupling and error correction, which are critical for future milestones [17] - The company is optimistic about being selected for phase B of the DARPA Quantum Benchmarking Initiative project in the coming months [18] Other Important Information - The company is exploring options for potential M&A to accelerate its roadmap, although it believes it can execute its current plans organically [47][48] - The company is considering significant capital expenditures for upgrading its chip fabrication facility in the future [56][60] Q&A Session Summary Question: Can you talk about DARPA phase B and the feedback received? - Management noted that while they were not selected for phase B, constructive feedback was received regarding error correction and long-range coupling, which are important for future milestones [16][17] Question: What is the comfort level for achieving 99% fidelity by 2027? - Management expressed confidence in achieving 99.8% fidelity with 1,000 qubits by the end of 2027, emphasizing the importance of error correction [20][22] Question: Will the 150-qubit and 1,000-qubit systems use chiplet-based approaches? - The company plans to use 9-qubit chiplets for the 150-qubit system and 36-qubit chiplets for the 1,000-qubit system [27] Question: How will revenue recognition work for the Novera system sales? - Revenue for the two Novera systems will be recognized upon shipment, expected in Q1 and Q2 of 2026 [31] Question: What is the expected gross margin profile moving forward? - Management indicated that while gross margins were lower in Q3, future sales, particularly from Novera, are expected to have better margins [64] Question: How does the recent funding for the National Quantum Initiative affect the business? - Management noted that the reinstatement of funding to $625 million over five years is a positive step, although discussions for higher funding amounts are ongoing [81][82]

Core Viewpoint - Traders are shifting their focus from artificial intelligence (AI) stocks to quantum computing stocks in search of significant price movements [1] Group 1 - The interest in quantum computing stocks is growing as traders seek alternatives to AI stocks for potential high returns [1]

Core Insights - Rigetti Computing, Inc. reported a quarterly loss of $0.03 per share, better than the Zacks Consensus Estimate of a loss of $0.05, marking a 40.00% earnings surprise [1] - The company generated revenues of $1.95 million for the quarter ended September 2025, missing the Zacks Consensus Estimate by 18.54%, and down from $2.38 million year-over-year [2] - Rigetti Computing shares have increased approximately 121.3% year-to-date, significantly outperforming the S&P 500's gain of 14.4% [3] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is -$0.04 on revenues of $3 million, and for the current fiscal year, it is -$0.09 on revenues of $8.67 million [7] - The estimate revisions trend for Rigetti Computing was mixed ahead of the earnings release, resulting in a Zacks Rank 3 (Hold) for the stock, indicating expected performance in line with the market [6] Industry Context - The Internet - Software industry, to which Rigetti Computing belongs, is currently ranked in the top 28% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]

Earnings Summary for Rigetti Computing - Rigetti Computing reported a third quarter operating loss of $20.5 million, exceeding the estimated loss of $20.1 million, with revenue of $1.9 million, which was below the expected $2.17 million [1][2] - The company also reported a loss per share of $0.62, significantly worse than the estimated loss of $0.05 [2][12] - The revenue figures are considered small, primarily derived from government contracts and consulting work [4][5] Market Reaction and Future Outlook - Despite the significant misses in earnings and revenue, the stock did not experience violent trading movements, with a downside of about 1.5% [2][3] - Investors view Rigetti as a potential long-term player in the quantum computing space, akin to Nvidia, but acknowledge the near-term challenges [5][6] - Any material breakthroughs or new contracts, especially from the U.S. government, could serve as catalysts for stock price recovery [6][9] Industry Context and Competitive Landscape - The quantum computing sector is still in its early stages, with significant capital flowing into speculative trades based on anticipated revolutionary technology [8][9] - Rigetti is competing with major players like Intel, IBM, and Google, which may impact its market positioning [12][13] - The company is focusing on building relationships with the Department of Defense, which could provide a strategic advantage [13][14] Earnings Summary for Core - Core reported a third quarter loss per share of $0.22, better than estimates ranging from $0.39 to $0.57 [14] - The net loss was $110.1 million, significantly better than the estimated loss of $299.6 million [14] - Revenue for the quarter was $1.36 billion, exceeding the expected $1.29 billion [15] Operational Insights and Market Dynamics - Core's backlog of orders as of September 30 was $55.6 billion, missing the street's expectation of $60 billion [17] - The company is investing heavily in building data centers and leasing Nvidia chips, which raises concerns about potential overcapacity in the future [18][19] - Analysts express concerns about the sustainability of business models for companies like Core that rely on overcapacity from hyperscalers [25][26]

Core Insights - Rigetti Computing Inc. reported a mixed third-quarter earnings report, leading to a decline in its stock price [1] Financial Performance - The company reported quarterly losses of three cents per share, which was better than the analyst estimate of four cents [2] - Quarterly revenue was $1.94 million, missing the Street estimate of $2.17 million and down from $2.37 million in the same period last year [2] Technology Roadmap - Rigetti's CEO, Dr. Subodh Kulkarni, noted strong momentum in demand for on-premises quantum computers and collaborations to advance R&D and the quantum ecosystem [3] - The company is on track to deliver a 100+ qubit chiplet-based quantum system with an anticipated 99.5% median two-qubit gate fidelity by the end of 2025 [4] - Rigetti expects to deploy a 150+ qubit system by the end of 2026 with an anticipated 99.7% median two-qubit gate fidelity, and a 1,000+ qubit system by the end of 2027 with an anticipated 99.8% median two-qubit gate fidelity [5]

Financial Performance - The company reported net losses of $201.0 million and $75.1 million for the years ended December 31, 2024, and December 31, 2023, respectively, with an accumulated deficit of $752.8 million as of September 30, 2025[142]. - Revenue decreased by $431,000 (18%) for the three months and $3.3 million (39%) for the nine months ended September 30, 2025, compared to the same periods in 2024, primarily due to reductions in collaborative research and related contracts[166]. - The net loss for the nine months ended September 30, 2025, was $198.0 million, compared to a net loss of $48.0 million for the same period in 2024[201][202]. - Non-cash expenses impacting the net loss increased by $145.5 million to $158.7 million during the nine months ended September 30, 2025, compared to the same period in 2024[203]. - The change in fair value of warrant liabilities resulted in a loss of $182 million for the three months and $149.3 million for the nine months ended September 30, 2025, compared to gains in the prior year[182]. Cash Flow and Investments - Net cash used in operating activities for the nine months ended September 30, 2025, was $43.6 million, an increase of $1.5 million compared to $42.1 million for the same period in 2024[203]. - Cash used in investing activities increased significantly to $389.7 million for the nine months ended September 30, 2025, compared to $0.8 million for the same period in 2024[206]. - Cash provided by financing activities totaled $391.9 million for the nine months ended September 30, 2025, a substantial increase from $41.8 million in the same period in 2024[209]. - The company received net proceeds of $346.7 million from the sale of 30,309,780 shares of common stock under its ATM program during the nine months ended September 30, 2025[207]. Research and Development - The company launched the 84-qubit Ankaa-3 system in Q4 2024, achieving a 99.0% median two-qubit iSWAP gate fidelity and a 99.5% median two-qubit fidelity with fSim gates[144][145]. - The company announced a mid-year performance milestone of 99.5% median two-qubit gate fidelity on a modular 36-qubit system, a 2x reduction in median two-qubit gate error rate from previous results[147]. - The company expects to release a 100+ qubit chiplet-based system with a 99.5% median two-qubit gate fidelity before the end of 2025[147]. - The company expects research and development expenses to increase as it continues to invest in quantum computing technologies[161]. - Research and development expenses rose by $2.3 million (18%) for the three months and $7.9 million (22%) for the nine months ended September 30, 2025, driven by higher salaries and employee-related costs[172]. Contracts and Collaborations - The company entered into a three-year $5.8 million contract with the Air Force Research Laboratory to advance superconducting quantum networking[152]. - The company signed a Memorandum of Understanding with C-DAC to explore co-development of hybrid quantum computing systems[152]. - The company expects to generate much of its future revenue from development contracts and anticipated sales of on-premises quantum processing units (QPUs)[168]. - The company plans to invest at least $250.0 million in quantum computing over a five-year period starting February 27, 2025, as part of its Collaboration Agreement with Quanta[194]. Operational Costs - Cost of revenue increased by $369,000 (31%) for the three months ended September 30, 2025, while the nine-month change was not significant, impacted by a less favorable revenue mix[169]. - Selling, general and administrative expenses increased by $135,000 (2%) for the three months and $861,000 (5%) for the nine months ended September 30, 2025, mainly due to higher stock-based compensation and proxy solicitation costs[175]. - The company has not recorded a provision for income taxes for the three and nine months ended September 30, 2025, due to a full valuation allowance for deferred tax assets[186]. Future Outlook - The company anticipates significant future capital expenditures to upgrade its chip fabrication facility and possibly invest in a new facility[193]. - The company plans to potentially increase capital expenditures significantly to upgrade its chip fabrication facility and possibly invest in a new facility[174]. - Macroeconomic conditions, including inflation and interest rates, may adversely affect product demand and corporate capital expenditures[198]. - The company may face dilution of stockholder ownership if additional capital is raised through equity or convertible debt securities[195]. - The company anticipates that existing cash and investments will be sufficient to meet operating cash needs for at least the next 12 months[143].

Financial Performance - Total revenues for Q3 2025 were $1.9 million, with an operating loss of $20.5 million[9] - GAAP net loss for Q3 2025 was $201.0 million, resulting in a GAAP net loss per share of $(0.62)[9] - Non-GAAP net loss for Q3 2025 was $10.7 million, with a non-GAAP net loss per share of $(0.03)[9] - Total revenue for the three months ended September 30, 2025, was $1,947,000, a decrease of 18.1% compared to $2,378,000 for the same period in 2024[30] - Gross profit for the nine months ended September 30, 2025, was $1,412,000, down 70.0% from $4,694,000 in 2024[30] - Net loss for the three months ended September 30, 2025, was $200,968,000, compared to a net loss of $14,833,000 in 2024, representing a significant increase[30] - Non-GAAP net loss for the nine months ended September 30, 2025, was $39,244,000, compared to $39,553,000 in 2024[35] - The company reported a significant increase in stock-based compensation expense, totaling $12,027,000 for the nine months ended September 30, 2025, compared to $9,705,000 in 2024[35] - The weighted average shares used to compute net loss per share attributable to common stockholders increased to 325,024,000 for the three months ended September 30, 2025, from 188,389,000 in 2024[35] Cash and Assets - As of September 30, 2025, cash, cash equivalents, and available-for-sale investments totaled $558.9 million, increasing to approximately $600.0 million by November 6, 2025[9] - Cash and cash equivalents decreased to $26,133,000 as of September 30, 2025, from $67,674,000 at the beginning of the period[32] - Total assets increased to $630,274,000 as of September 30, 2025, compared to $284,787,000 at December 31, 2024[28] - Total liabilities rose to $258,448,000 as of September 30, 2025, up from $158,198,000 at December 31, 2024[28] Business Development and Collaborations - Rigetti secured purchase orders for two 9-qubit Novera™ quantum computing systems totaling approximately $5.7 million, with delivery expected in the first half of 2026[7] - The company plans to deploy a 150+ qubit system by the end of 2026 with an anticipated 99.7% median two-qubit gate fidelity, and a 1,000+ qubit system by the end of 2027 with an anticipated 99.8% median two-qubit gate fidelity[6] - Rigetti was awarded a $5.8 million contract from AFRL to advance superconducting quantum networking, collaborating with QphoX on the project[11] - Rigetti plans to open an Italian subsidiary to accelerate business opportunities and talent acquisition in Italy[10] - The company announced new collaborations with C-DAC in India and MSU to advance quantum computing research and workforce development[16][14] - Rigetti supports NVIDIA NVQLink, an open platform for AI supercomputer-quantum integration, to enhance hybrid computation development[13] Research and Development - Research and development expenses increased to $15,020,000 for the three months ended September 30, 2025, up 17.7% from $12,752,000 in 2024[30]