Rigetti Computing Q2 2024 Earnings Call Transcript

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August 8, 2024

There are 8 speakers on the call.

Operator

Thank you for standing by. I am Augusto, and I will be your conference operator today. At this time, I would like to welcome everyone to the Rigatti Computing Second Quarter 20 24 Financial Results. All lines have been placed on mute to prevent any background noise. After the speaker remarks, there will be a question and answer Thank you.

Operator

I would now like to turn the call over to Sue Togarani, CEO and President of Rigatti. Please go ahead.

Speaker 1

Good afternoon, and thank you for participating in Rigatti's earnings conference call covering the Q2 ended June 30, 2024. Joining me today is Jeff Bertelsen, our CFO, who will review our results in some detail following my overview. We will be pleased to answer your questions at the conclusion of our remarks. We would like to point out that this call and Rigetti's Q2 ended June 30, 2024, press release contain forward looking statements regarding 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 described and are discussed in more detail in our Form 10 ks for the year ended December 31, 2023, our Form 10 Q for the 3 6 months ended June 30, 2024 and other documents filed by the company from time to time with the Securities and Exchange Commission.

Speaker 1

These filings identify and address important risks and uncertainties that could cause actual events and results to differ materially from those contained in the forward looking statements. We urge you to review these discussions of risk factors. Today, I'm pleased to provide an update and report on our progress at Rigetti Computing. First, on our technology road map and QPU performance. Rigetti remains on track to develop and deploy its anticipated 84 qubit AMCAR3 system with the goal of achieving a 99 plus percent median 2qubit gate fidelity by the end of 2024.

Speaker 1

We have seen very promising results both with fidelity and speed on our current systems, which leverage the underpinning technology of our upcoming ONCA-three system. Our 24 qubit system is performing in the 99% range for 2 qubit fidelity. Our gate speeds are 60 to 80 nanoseconds, making our systems twice as fast as some other superconducting quantum computing players and 3 to 4 orders of magnitude faster than trapped ion and pure atom quantum computing systems. We are confident that we can translate this level of performance to our 84 qubit chip. In addition, we continue to demonstrate leadership in developing high performing scalable quantum processors.

Speaker 1

In May 2024, Rigetti's research introducing multi chip tinnable couplers, floating tenevel couplers that can be used to entangle qubits on separate chips, was published in the peer reviewed scientific journal, Physical Review Applied. We introduced the world's 1st modular chip architecture in 2021, unlocking the ability to connect multiple identical chips into a large scale quantum processor. This modular approach exponentially reduces manufacturing complexity and allows for accelerated predictable scaling. This architecture will allow for future ANCA systems to be tied together to create larger qubit count processors without sacrificing gate performance. Furthering our work to improve the industry's understanding of the requirements needed for fault tolerant quantum computers, in June 2024, we released preliminary research on the resource estimation framework previously developed in Phase 1 of the DARPA benchmarking program.

Speaker 1

Our manuscript represents the resource estimation framework and a software tool that estimates the physical resources required to execute specific quantum algorithms compiled into their graph shape form and laid out onto a modular superconducting hardware architecture. We will continue to work to optimize quantum algorithms for a variety of applications and improve the utility estimates to understand the value proposition of future quantum computers. The limited number of QMS available on current quantum computers is a challenge that must be overcome to deliver utility in quantum or combinatorial optimization. In July, we introduced a method to solve large combinatorial problems using a small number of cubits using Rigetti's ANCA 9Q III system. This method introduces a qubit efficient combinatorial solver, which stores classical variables in an entangled wave function of fewer cubits.

Speaker 1

In summary, I'm pleased with our progress on the technology front. We remain on track to develop and deploy our 84 qubit AMCA-three system with the goal of achieving a 99 plus percent median 2 qubit gate fidelity by the end of 2024. Thank you. Jeff will now make a few remarks regarding our recent financial performance.

Speaker 2

Thanks, Subodh. Revenues in the Q2 of 2024 were $3,100,000 compared to $3,300,000 in the Q2 of 2023. Revenues in the Q2 of 2024 include the sale of the Novaera QPU shipped to Horizon Quantum Computing in April. Gross margins in the Q2 of 2024 came in at 64% compared to 82% in the Q2 of 2023. Revenue and gross margin variability is to be expected at this stage of the company's evolution given the variable nature of contract deliverables and timing with major government agencies.

Speaker 2

In addition, our recent contract to deliver a 24 Cubit Quantum system has a lower gross margin profile than most of our other revenue. On the expense side, total OpEx in the Q2 of 2024 was $18,100,000 compared to $19,000,000 in the same period of the prior year. The year over year decrease in total OpEx was primarily driven by an increase in the amount of engineering time used to deliver revenue, resulting in a higher cost allocation to cost of revenue. IT costs also decreased in the Q2 of 2024 when compared to the same period of 2023, mainly due to savings from R and D related IT systems rationalization. Stock compensation expense for the Q2 of 2024 was $3,300,000 compared to $3,400,000 for Q2 of 2023.

Speaker 2

Net loss for the Q2 of 2024 was $12,400,000 or $0.07 per share compared to a net loss of $17,000,000 or $0.13 per share for the Q2 of 2023. The non cash change in the fair value of derivative warrant and earn out liabilities favorably impacted our net loss for the Q2 of 2024 by $3,400,000 compared to a negative impact of 355 $1,000 in the comparable prior year period. Cash, cash equivalents and available for sale investments totaled $100,500,000 as of June 30, 2024. On March 15, 2024, we entered into an ATM sales agreement for shares of our common stock having an exit offering price of up to $100,000,000 For the period from April 1 to July 12, 2024, we raised $27,800,000 from the sale of 24,100,000 common shares under our current ATM program, including $15,800,000 raised in the 3 months ended June 30, 2024. As disclosed in today's 10 Q filing, we believe that our existing balances of cash, cash equivalents and marketable securities should be sufficient to meet our anticipated operating cash needs until midway through the Q1 of 2026 based on our current business plan and expectations and assumptions considering current macroeconomic conditions.

Speaker 2

Thank you. We would now be happy to answer your questions.

Operator

For our first question, Craig Ellis with B. Riley Securities. Please go ahead.

Speaker 3

Yes. Thanks for taking the question. And Antu, but I wanted to start with you. So it's nice to see that the company continues to make nice progress with Gate Fidelity and that you look for progress on 84 cubit systems to persist. As you make both Fidelity progress and as you see that happening at such high speeds, what's happening with the center of conversation with some of your partners, whether they be some of the engagements you've had with U.

Speaker 3

S. Entities or some of your international partners or new partners?

Speaker 1

Yes. Good question, Craig. Thanks for the question. So indeed, as we improve fidelity with superconducting quantum processors, quantum processors, that has always been a challenge for superconducting quantum processors. Rest of the metrics of scalability and particularly gate speed.

Speaker 1

As we said, we are in the 60 to 80 nanosecond range. And that's very good for practical uses of quantum computing and our partners, whether it's the DOE, DoD or the UK government, National Lab or other national labs around the world. They're very pleased with the progress that they see both in terms of fidelity as well gate speed, in particular the gate speed because as you all know, CPUs and GPUs go very fast. So in a real practical sense, to keep up the CPU, GPU clock speeds, you need to be in the nanoseconds range. And some other modalities, although they better fidelities to start because they are dealing with purer atoms or ions, they are 3 to 4 orders of magnitude.

Speaker 1

We are talking 1000 to 10000 times lower. So they are dealing with 100 of microseconds. And even though for some applications that may not be an issue, for most practical applications, obviously a speed of a computer matters. I mean nobody is going to say speed doesn't matter in computation. So it's critical that we continue to improve our speed from the 60 to 80 nanoseconds we have right now.

Speaker 1

And their model, it is certainly have a tall task ahead of them to improve the gate speeds to where we are right now. But overall, the combination of Fidelity, gate speed and other metrics makes many of our current customers, the National Labs, believe that we are indeed approaching what we call the narrow quantum advantage or the broad quantum advantage era in the next couple of years. Hopefully that answers your question.

Speaker 3

Yes, that's really helpful, Subhad. Thank you. And then Jeff, I'll just flip one over to you. So as you mentioned, the nature of gross margin at this stage of the company's evolution can be a bit bumpy. Can you call out any notable items that existed in 2Q?

Speaker 3

And then any color as you look at 3Q, whether it be on the top line with any gives or takes with development engagements as they're progressing or others and or on gross margin would be helpful. Thank you very much, Jeff. Sure.

Speaker 2

In Q1 and Q2, we did sell and are progressing nicely with the 24 QPU system, and that does have a lower gross margin, recognize a little bit more revenue from that in Q1 than Q2, which is why our gross margin ticked up a bit. Small size of our revenue and the different types of projects that we're working on, we'll continue to see some lumpiness in our revenue, some lumpiness in our gross margin. I do think going forward as we start to get more Novara sales, those tend to have pretty good margins, generally have a good margin profile. So they should help margins moving forward.

Speaker 3

That's helpful. Thanks guys. Appreciate it.

Speaker 1

Thanks, Greg.

Operator

Our next question comes from Quinn Bolton with Needham and Company. Please go ahead.

Speaker 4

Hi, Suboden and Jeff. Congratulations on the continued technical progress. I guess I wanted to start there. Your 24 Cubit to 2 Cubit Gate Fidelity is already at 99%. You're trying to get there for the 84 Cubit QPU by year end.

Speaker 4

Just knowing that these are semiconductor based designs, I'm wondering if you can talk to us about are you already in the process of beginning to fab the 84 QPUs that will get you to that 99% gate fidelity by year end or the cycle times not that long, so you've got some more time to work. But just what gives you the confidence that you can get there on the full 84 qubit QPU by year end?

Speaker 1

Thanks, Quinn. The chip that we use for 24 cubit and 84 cubit is basically the same chip. We just take 24 qubits out of the 84 qubit and bring them up first and characterize them and do the 24 qubit measurements first. So it's the same fundamental chip that we use both for 24 qubit and 84 qubit. So that answers your question that have we fabricated the chip already?

Speaker 1

We have multiple 84 qubit chips already in our hand. We are characterizing them, bringing them up. That's what's taking the time and effort right now. There's a lot of optimizations that we have to do when we bring up a chip, including everything from the way we pulse them, the shape of the pulses, the timing of the pulses and so on. So a lot of work goes into bringing up the chip and tuning and retuning as opposed to just fabricating.

Speaker 1

Typically, because we have our own fab, we turn the crank from idea to a new chip in couple of months' time period. So we take plenty of turns in a year, at least 5 or 6 of new ideas. So we'll continue to generate new ideas and we are and we will be fabricating new chips and if something looks better, obviously we'll take that. But based on all the current data with the 24 qubit chip, which is basically the same as the 84 qubit chip, we feel pretty good that we should be in the 99 plus percent range with 84 qubit by the end of this year. Hope that answers your question.

Speaker 4

Yes, it certainly does on the manufacturing side. I guess just in terms of characterizing the cubits, obviously it sounds like on the 24 cubit systems you take a subset of the cubits. My guess is you sort of measure them and you take the best 24. What sort of the fall off you've seen between the 24 cubits that you use and then the rest of the 84 or the remaining cubits? Are you within 0.5 percentage point kind of across the entire ship right now?

Speaker 4

Or is there a bigger delta between, say, the 24 that are 99 and the remainders? I mean, how much work do you have to do to kind of get the rest of the chip up there to 99?

Speaker 1

Good question. We actually don't choose for say the best 24 cubits or anything like that. Frankly because our individual cubits, they are fine. I mean, 1Q fidelity is like 99.9% most of the times. So we cannot really tell which qubits are the best.

Speaker 1

So all the challenges that we run into when we talk about 2 qubit gate fidelity is when we start doing the entanglement and bringing them up. And a priori, we don't know where the entanglement issues are going to happen with which qubit. So it's not like we choose the best 24 and bring them up and that's what we report the number and then we worry about. They are essentially random 24 qubits that are adjacent to each other that we bring up and then we will do the same with 84 qubits. Regarding I mean you had a good question about the spread that we see and there is a spread.

Speaker 1

Typically, it all depends on where the errors are coming from with that particular result and sometimes it depends on the position of the vapor and so on. Sometimes it has to do with the dilution refrigeration system and the thermalization of it those kinds of things. So depending on where letters are coming from, we do notice a variability. Typically, we monitor the 2 qubit fidelity across the entire grid. And if you look at Aramchkar 2 that is deployed right now on Azure and AWS, are you are our median 2 qubit gate fidelity for anchor 2 was 98%, but there was a spread.

Speaker 1

I mean, there were some 2 qubit gates which were closer to 97 and some that were closer to 99. So there was a spread across the chip about a couple percent. Along with the median, obviously, our goal is to tighten that spread. So as we like on our 9 qubit, 99.3 percent 2 qubit gate fidelity, I believe the lowest one is in the range of 99, maybe 99.1 and the highest ones are actually closer to 99.7 or 99.8. So we can see that we can make superconducting 2 qubit gate fidelities well in the 99.8 percent type numbers.

Speaker 1

Hope that answers your question.

Speaker 4

No, that was great. Thank you. And I guess sorry for my misunderstanding of how you sort of select the cubits in the 24 versus the 84 the 84, configuration. Wanted to move maybe to more the sort of the revenue or the business side for a minute. The company has been generating revenue of about $3,000,000 to $3,500,000 for the last five quarters.

Speaker 4

Can you just maybe spend a minute talking about the pipeline for either Novera or additional 24 QPU sales that you might see this year and into next year as the pipeline building? Would you expect sort of an upward trend in revenue as we get into the second half of this year? Or would you encourage investors to think that revenue sort of stays in this 3 ish plus or minus range until you get the technical milestone with ANCA-three at 99 percent 2Q that gave fidelity and once you hit that, that may be more where you may see the knee in the curve. Just any sort of thoughts on how we should be thinking about just kind of modeling the revenue ramp over the next several quarters?

Speaker 1

Sure. Overall, we think in the next year or 2, definitely we expect revenues to ramp up. And that's primarily because most of the governments and national labs, if you look at press releases coming out, they are increasing their budgets starting with the U. S. I mean U.

Speaker 1

S. Is increasing its quantum budget significantly. The bills are going through our House and Senate as we speak, but on both sides seem to this bipartisan support to increase the budget quite a bit, same with UK, European countries, many Asian countries. So overall government funding for quantum computing is increasing significantly. So that's obviously a great backdrop to have and those are our customers.

Speaker 1

Regarding the one of the challenges we have is, I mean the systems when we sell on premise QPU systems, typically we are pricing them in the neighborhood of 200 dollars to $250,000 per cubit. So a 24 cubit system roughly is in the $5,000,000 neighborhood. And timing of that is always difficult to predict. So and we are dealing with governments and national labs obviously and their budgets and you know how those things can be very lumpy the way the budgets get passed with bills and stuff like that. So exactly when we get an order from a national lab and we can deliver and we can recognize the revenue, it becomes a very difficult job to do.

Speaker 1

So it is going to be lumpy for the foreseeable future. We are in that 3, 3.5 range today for sales per quarter, primarily because most of the revenues are coming from DOE, DoD and the UK government contracts. And those are more predictable in nature. But when it comes to on premise QPU orders and deliveries, it's going to be lumpy until the business becomes large enough where we get some kind of a smoothing effect. So I would say overall, the trend should be up in the next couple of years because of the increased interest in on premise QPUs from governments and national labs.

Speaker 1

But it's going to be lumpy until we get bigger and smoothing effect starts coming in. I know you wanted a more specific answer, but I think that's the best I can give right now. Jeff, you want to add anything?

Speaker 2

No, I think that's a good response, Subodh. That's the way I would see it too. Okay.

Speaker 4

And then maybe just one quick one for you, Jeff. Just, OpEx, should we looks like it's been sort of hovering about $15,000,000 on a non GAAP basis backing out stock based compensation. Is that sort of a decent level to be thinking about on the go forward basis? Or do you have plans to ramp headcount?

Speaker 2

No, I think that's I think that's reasonable. I mean, there'll be a few headcount adds here and there, but we aren't planning to significantly increase the headcount. So I think our recent results should really reflect our spending in the upcoming quarters.

Speaker 4

Perfect. Thank you very much.

Speaker 1

Thanks, Quinn.

Operator

David Williams from Benchmark. Please go ahead.

Speaker 5

Hey, good job. Thanks for taking the question here. I just had a quick question on the 24 cubit system. How quickly can you bring those up? And is this the same process that you go through internally as you're bringing the chip up for use internal?

Speaker 1

Thanks, David. So typically when we have a new chip, the majority of the time was in cooling the dilution refrigeration system. We are talking a day or 2 days to bring the dilution refrigeration to the 10 millikelvin kind of temperatures. After that, it does depend on how long you want to optimize the performance of the chip. I mean, if it starts functioning well from the get go and most of the 9 qubit chips we are making these things are in that range, we can bring them up within a few hours right away once the Doctor is covered.

Speaker 1

So you're talking a couple of days to bring up the system, if you will. And then it stays stable at that condition forever practically until something goes wrong with the Doctor or something somewhere else in the system. 24 qubit, we are learning as we go along because we don't have that much experience as we have with 9 qubit systems. But the timelines are similar, a couple of days to get the Doctor code, a day or 2 to do the initial optimization. And if everything looks good, you are up and running.

Speaker 1

If you have to do more tuning and optimization depends on how extensive it is, but we are talking days here. So essentially, once the chip is ready, within a few days, we can be up and turning as a system.

Speaker 5

Okay, great. And then maybe, if you could talk a little bit more and you mentioned in the Quinn's question about the government funding, but know a couple of quarters ago, you were quite encouraged by some activity you've seen, clearly that still exists or is still the case. You talk about maybe any specifics or areas where you're maybe more enthusiastic about opportunities within government funding? And how big of a piece of the business do you think that that would be near term? I'm assuming with research and development that that could be a larger chunk.

Speaker 5

But just how do you think about that relative to maybe some of the interest that you're receiving outside of government entities for processors? Thank you.

Speaker 1

Thanks for the question. I mean, overall, the government funding situation is improving nicely. There are many studies that have been done, but most of the business that is expected in the next 3 to 4 years is expected to come from the government side. So IDC ran a report a couple of months ago and they quantified the total quantum computing business to be roughly $7,500,000,000 in 2027 and most of that was government spending. Longer term, once we reach the the what we call the quality tolerant quantum computing or quantum advantage, then the commercial business is expected to grow significantly.

Speaker 1

So when you look at 2,035 and 2,040, the commercial business starts dominating the numbers when you are talking about tens of 1,000,000,000, if not like $100,000,000,000 kind of number, that's when the commercial business is the larger entity. But for the first $5,000,000,000 to $10,000,000,000 business, which is the next 5 years, it's mostly going to be government. That number is definitely in a healthy situation right now. All the governments, including U. S, are planning to increase funding significantly for quantum computing.

Speaker 1

So we feel pretty good about that opportunity for the foreseeable future.

Speaker 5

Great. Thanks so much. And that's all I had. Thank you.

Speaker 1

Thanks, David.

Operator

Rich Stankey with TD Cowen. Please go ahead.

Speaker 6

Hello. Can you hear me?

Speaker 1

Yes, we can.

Speaker 6

Yes. Hi. Sorry, yes, this is Steven calling on behalf of Krish. Yes, thanks for taking my questions. First one, Thibaut, if I could.

Speaker 6

In terms of the competitive environment, I think there's 1 or 2 major other modalities that are currently generating some reasonable amounts of commercial revenues. And I guess just from your perspective, any thoughts on what are some of the puts and takes for you guys in generating or at least gaining some mind share in the commercial revenue space, whether it's 1 or 2 years out, once you guys reach the 9%, 9% plus penalty rates for your systems? And what I guess, what kind of technical merits would allow you guys to gain the mind share with commercial customers?

Speaker 1

So certainly, I mean, the first part of your question was to the competitive modalities. We feel pretty good about where we are with superconducting modality right now. We believe it's a leading modality. And I answered that in the first question and the primary reason is our cubit count fidelity. But importantly, the gate speed, I think many people forget that gate speed is important and we are 3 to 4 orders of magnitude faster than trapped ion and pure atom kind of modalities.

Speaker 1

And that puts us in a huge advantageous position when it comes to practical computing. Regarding commercial opportunities, our view is that we need to demonstrate what we call narrow quantum advantage, which means better performance in terms of either speed or accuracy or a better cost compared to classical computation before commercial customers can do an ROI and start showing real interest. We always get a few contracts. I mean, right now, we work with companies like Moody's and HSBC and Standard Chartered and a few other companies like that, who do give us some dollars for doing some specialized projects for them. And yes, we do count them as sales obviously, but that's really not the classical commercial sales where we are giving them a quantum computer and they can do an internal ROI and see the benefit they get with quantum quantum computers.

Speaker 1

They can't do that today with the performance we are. So in the current era, which is called the NISQ era, noisy intermediate scale quantum computing, we really don't think commercial customers are going to show much interest except for cursory research level interest. So most of the business that we see in the next 3 to 5 years at least is going to be dominated by government and national lifetime customers. I know some of our competitors are saying more about commercial customers and the interest that they are seeing. We as I said, we do talk to a few and there is some research level interest, but it's not like they are really interested in buying a 24 qubit or 84 qubit quantum computer for their data center and hook it up with their HPC.

Speaker 1

And if they are not talking to the superconducting people like us, I doubt if they are talking to other modalities like trapped ion and pure atom. I mean, right now, if you put a GPU next to a trapped ion or pure atom quantum computer, I mean, you're literally dealing with 4 to 5 orders of magnitude. I mean the GPU will be idle for most of the time that the quantum computer has to keep churning and it doesn't make any sense when you have 4 and 5 orders of magnitude clock speed difference between a GPU and a trapped ion or a pure atom computer. So I doubt if any commercial customer is really going to put any kind of quantum computer in their data center until we get over that NQA threshold and have clock speeds that are commensurate with their HPC servers. Hopefully that answers your question.

Speaker 6

It does. Thank you so much for that color. And

Speaker 7

a couple of

Speaker 6

quick follow ups for the current ANCA-three or the upcoming ANCA-three eighty four Qubit Chip Milestones, once you guys hit or reach and exceed that 99% Fidelity rate exiting this year, what are the thoughts on potential timing of generating GPU chip sales from Hunker 3? Would that be like 1, 2 or 3 quarters after you guys reach those technical milestones here?

Speaker 1

So our plan clearly is to get ANCA-three, the 84 qubit chip at 99% level Fidelity, 2, medium 2 qubit get Fidelity by the end of this year as we have stated. After that, as we have said, we want to increase the qubit count. At the same time, we want to keep increasing Fidelity and we frankly prioritize Fidelity over cubit count. So we will look at where to go next and some of the work that we have disclosed today and that we have disclosed in scientific journals is this whole concept of modular chiplets effectively. So we have demonstrated that you can do quantum computation with a chiplet like concept.

Speaker 1

And we definitely want to we have a lot of IP in that area. We have a lot of know how in that area. And we definitely want to leverage all that. So we are looking at once we get to Ankati, are we going to be tiling 84 cubit? If so, how many tiles?

Speaker 1

Or are we going to take a subset of 84, like a 9 qubit or 24 qubit and do tiling of that? And if so, how many? So we are going through those calculations and plans right now. But certainly, we will continue to improve Fidelity and Cubit count over 2025. That's where I believe we believe the narrow quantum advantage that we have talked in the past.

Speaker 1

It's going to need obviously very higher cubit count than where we are right now and certainly a little higher fidelity than where we are right now. Exact numbers, it's not clear, but we certainly think between the fidelity improvement and cubit count improvement we plan to achieve next year, we should be able to demonstrate narrow counter advantage before the end of next year. That's our current plan. Hopefully, I answered your question.

Speaker 6

Yes. Thank you so much. And just a last quick one for Jeff. Jeff, I just have a quick question on the at the market stock sale program. I know the market volatility has led to a lot of dispersion in valuation.

Speaker 6

But just kind of curious like in terms of when you guys might next utilize the program, would it be based on certain timing relative to your financial planning or is it just being opportunistic relative to any recovery in the stock valuation? Thanks.

Speaker 2

Yes, thanks. I mean, I certainly would definitely be more opportunistic, I think. Certainly, we were sensitive to the share price and the current pullback, given the overall pullback in the market. So I think going forward, we would tend to look at it opportunistically and go from there.

Speaker 6

Great. Thank you so much.

Operator

Brian Kinstlinger from Alliance Global Partners. Please go ahead.

Speaker 7

Great. Thanks. Good evening. I just wanted to follow-up. I have 2 questions.

Speaker 7

The first one is on the progress you're making on the roadmap and how it's impacting the pipeline. You've obviously talked about it at nauseam. You've moved from a 9 cubit to 24 at 99 Fidelity. Is there a way to quantify the pipeline of how many national labs maybe you're talking to or in active discussions with versus maybe a year ago? Is that having an impact on that pipeline?

Speaker 1

Good question, Brian. So yes, absolutely, the pipeline continues to increase. So there are many national labs we are talking to right now, certainly the DOE labs, DoD labs, but U. K. Obviously chose us over competition for delivering the 24 qubit system this year.

Speaker 1

But you go around Europe and Asia, pretty much many countries advanced economies, I would say, are viewing quantum computing as very strategic and they each have their plan on how they want to play in the quantum computing era. And many of them view superconducting quantum computing as the leading modality for many reasons that we have talked about in the past. And they are talking to us, I assume that they are talking to some of our other larger tech competitors as well. But they are definitely taking a close look. But overall, the pipeline is definitely much larger today than what it was a year ago when we were dealing with mid-90s for Fidelity as we have approached.

Speaker 1

And our 9 qubit is already well past 99. We are in the 99.3 percent median 2 qubit gate fidelity for 9 qubit, but we have approached 99 for or we are at 99 for 24 qubit now. And our customers see that certainly the value that they see when we get those kinds of fidelities at that kind of qubit count with that gate speed becomes very attractive for them to start thinking practical applications. They are still in research stage, but they are starting to see how this all fits there. So the pipeline definitely has increased.

Speaker 1

The national labs of most advanced countries are beginning to take an active interest in quantum computing. Each country is slightly different in the way they pass their budgets and how it goes to the various parliamentary bodies, if you will, and then which national labs take the lead and so on. So time lines can be different for different countries, but overall, the pipeline is a lot bigger today and not healthier today than what it was a year

Speaker 7

ago. Great. My second question, my follow-up is, you could speak to your ability to hire and retain top talent as employee turnover remained low, while the excitement at Righetti of improving and progressing on the roadmap continues?

Speaker 1

Great question. We look at our attrition rate very, very seriously. And we are in obviously, most of our employees are in the Bay Area, where in general the tech market is very good as you know. Our attrition rate has been extremely low, much, much lower than an average company in the Northern California region and certainly a lot lower than when I came in the company just about 18 months ago. And most of it is because people see where we are headed in light of the fact that we are hitting our milestones.

Speaker 1

We are executing our road map very well. And they see the bright future ahead for when we reach this 100 cubit type numbers at 99.5 plus percent level and we think we'll be there in a year or so, That makes quantum computing really practically feasible for many interesting applications. So our employees see the MQA around the corner. They see the potential. They see the interest.

Speaker 1

So excitement is high. Modal is very, very good. And that usually means much lower attrition rate and that's what we are seeing. So we really haven't lost any key employees in the last at least 6 months and maybe getting close to 9 months or so right now. So we feel really good about the employee situation right now.

Speaker 7

Great. Thanks so much.

Speaker 1

Thanks,

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