Earnings Call Insights: Rigetti Computing (RGTI) Q3 2025
Management View
- CEO Subodh Kulkarni reported strong momentum in demand for on-premises quantum computers and highlighted expanding collaborations to advance research and the quantum ecosystem. He stated, “On the technology front, we remain on track to deliver our 100-plus qubit chiplet-based quantum system with an anticipated 99.5% median 2-qubit gate fidelity by the end of 2025.” Kulkarni also announced a road map update: “We expect to deploy a 150-plus qubit system by or around the end of 2026, with an anticipated 99.7% median 2-qubit gate fidelity. And by or around the end of 2027, we expect to deploy a 1,000-plus qubit system with an anticipated 99.8% median 2-qubit gate fidelity.”
- The company disclosed purchase orders totaling approximately $5.7 million for two 9-qubit Novera quantum computing systems and a new $5.8 million, three-year contract from the Air Force Research Laboratory (AFRL) to advance superconducting quantum networking.
- Rigetti is supporting NVIDIA’s NVQLink, aiming for integration between quantum hardware and AI supercomputing, and plans to open an Italian subsidiary to accelerate business opportunities and talent acquisition in Italy.
- CFO Jeffrey Bertelsen stated, “Revenues in the third quarter of 2025 were $1.9 million, compared to $2.4 million in the third quarter of 2024… The recent sales Subodh noted in his remarks, the 2 9-qubit Novera system sales and the AFRL contract will benefit revenue in the fourth quarter and as we move into 2026.”
Outlook
- The company maintains its focus on delivering a 100-plus qubit system with 99.5% median 2-qubit gate fidelity by year-end 2025 and targets a 150-plus qubit system at 99.7% fidelity for 2026 and a 1,000-plus qubit system at 99.8% by end of 2027. Kulkarni emphasized, “We still think we need a 99.9% 2-qubit gate fidelity, as well as some form of error correction” to achieve quantum advantage, projecting that milestone between 2027 and 2029.
- Management expects the AFRL contract and Novera system sales to drive revenue growth into 2026, with revenue recognition upon shipment for the Novera systems.
Financial Results
- Revenues for the third quarter of 2025 were $1.9 million, compared to $2.4 million in the third quarter of 2024, reflecting the expiration of the National Quantum Initiative and its pending reauthorization.
- Gross margins for Q3 2025 were 21%, lower than the 51% recorded in Q3 2024, attributed to revenue composition and contract pricing variability.
- Total operating expenses were $21 million, up from $18.6 million year-over-year, driven by salary increases, new hires, and higher R&D costs.
- Non-GAAP net loss for Q3 2025 was $10.7 million or ($0.03) per share, compared to $13.4 million or ($0.07) per share in Q3 2024.
- As of September 30, 2025, cash, cash equivalents, and available-for-sale investments totaled $558.9 million, rising to approximately $600 million as of November 6, 2025, due to warrant exercises.
Q&A
- David Williams, The Benchmark Company: Asked about the DARPA Phase B selection and the timeline for advancement. Kulkarni responded that Rigetti received constructive feedback focused on error correction and long-range coupling, stating, “We are incorporating that input. We will continue to talk to DARPA. We are still very much part of Phase A and we’ll continue to work with DARPA closely.”
- Quinn Bolton, Needham & Company: Queried about chiplet approach evolution and long-range coupling. Kulkarni explained, “For the 1,000 qubit, our thinking right now is to go up to 36-qubit chiplets… The challenges are pretty much the same whether it’s a single monolithic chip or chiplet-based system.”
- Craig Ellis, B. Riley Securities: Asked about M&A potential with the large cash balance and integration with NVIDIA’s NVQLink. Kulkarni said, “If we find someone who could help us accelerate our road map further, we obviously will take a look at it. But right now, we believe we are in a leadership position, and we’ll continue to execute well.”
Sentiment Analysis
- Analyst tone was inquisitive but measured, focusing on the feasibility and timing of the ambitious technical milestones, as well as the financial implications of new contracts and the large cash balance.
- Management maintained a confident and optimistic tone, particularly in prepared remarks: “We feel really good about executing that road map right now.” In the Q&A, they acknowledged challenges and feedback but emphasized ongoing progress and adaptability.
- Compared to the previous quarter, both management and analysts showed slightly more focus on execution risks and the impact of government funding, but management’s confidence remained high.
Quarter-over-Quarter Comparison
- The outlook for delivering a 100-plus qubit system by year-end remains unchanged, but the new road map now includes a 150-plus qubit system for 2026 and a 1,000-plus qubit system for 2027, reflecting an accelerated timeline on scalability.
- Gross margins and revenues were lower compared to the previous quarter, linked to contract mix and the expiration of government funding, while the cash position strengthened due to warrant exercises.
- Analysts’ questions shifted toward the specifics of revenue recognition, margin outlook, and the practical steps for achieving error correction and higher fidelity.
- Management’s confidence in the chiplet strategy and road map execution increased, with more detailed discussion of future manufacturing needs and potential foundry or fab investments.
Risks and Concerns
- Management cited the pending reauthorization of the National Quantum Initiative as a key factor impacting government-related revenues.
- Lower gross margins were attributed to the current contract mix and variability in pricing terms.
- The company acknowledged the need for significant capital expenditures for future fab upgrades or foundry partnerships if national initiatives do not materialize, with potential costs in the hundreds of millions of dollars.
- DARPA feedback highlighted the need to enhance error correction and long-range coupling, which could impact long-term milestones.
Final Takeaway
Rigetti is accelerating its quantum computing development road map, targeting a 1,000-plus qubit system with near 99.8% median 2-qubit gate fidelity by 2027, supported by new system sales, government contracts, and expanding global collaborations. Management remains confident in its leadership position and ability to execute on these ambitious targets, while acknowledging ongoing challenges related to margins, government funding, and technical milestones required for quantum advantage.