Rigetti Computing Q2 2026 Earnings Report

Rigetti Computing EPS Results

• Actual EPS: -$0.05
• Consensus EPS: -$0.05
• Beat/Miss: Missed by -$0.00
• One Year Ago EPS: N/A

Rigetti Computing Revenue Results

• Actual Revenue: $5.14 million
• Expected Revenue: $5.09 million
• Beat/Miss: Beat by +$51.00 thousand
• YoY Revenue Growth: N/A

Rigetti Computing Announcement Details

• Quarter: Q2 2026
• Date: 8/6/2026
• Time: After Market Closes
• Conference Call Date: Thursday, August 6, 2026
• Conference Call Time: 5:00PM ET

Rigetti Computing (NASDAQ:RGTI) is a pioneering quantum computing company that designs and manufactures superconducting quantum processors alongside a complementary software stack. Founded in 2013 by CEO Chad Rigetti, the company has developed end-to-end quantum systems—from cryogenic hardware to control electronics—to advance the performance and scalability of quantum machines.

At the core of Rigetti’s offering is its Quantum Cloud Services (QCS) platform, which enables developers and enterprises to access quantum processing units (QPUs) and hybrid quantum-classical workflows via the cloud. Rigetti’s Forest software development kit supports programming in familiar languages such as Python, allowing users to develop, simulate and run quantum algorithms against both simulators and live QPUs.

Headquartered in Berkeley, California, Rigetti serves a global customer base that includes academic researchers, government agencies and commercial firms in sectors such as pharmaceuticals, materials science and financial services. The company collaborates with strategic partners and cloud providers to broaden access to quantum resources and accelerate use-case development in areas like optimization, machine learning and quantum chemistry.

Under Chad Rigetti’s leadership, the company completed a public listing in 2022, further fueling its efforts to scale quantum hardware capacity and software capabilities. Rigetti’s executive team combines expertise in quantum physics, engineering and enterprise IT to drive ongoing innovation in what is widely regarded as the next frontier in high-performance computing.

Rigetti Computing Q2 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Revenue rose to $5.1 million from $1.8 million year over year, driven by Novera QPU sales, while gross margin improved to approximately 43% from 31%.
• Positive Sentiment: Rigetti remains on track to recognize the $8.4 million C-DAC 108-qubit system order in the fourth quarter and plans to deliver a full 9-qubit Novera system to the HPE/Pittsburgh Supercomputing Center hybrid-computing testbed in 2027.
• Positive Sentiment: A Department of Commerce letter of intent could provide up to $100 million over three years to accelerate chiplet-based superconducting quantum computing development, although the funding is not yet definitive and would involve equity issuance.
• Neutral Sentiment: Rigetti reported median two-qubit fidelity of roughly 99.1% on its 108-qubit Cepheus system and expects further improvement before year-end; however, management acknowledged that customers are still primarily conducting research rather than commercially valuable quantum-advantage workloads.
• Negative Sentiment: Operating expenses increased to $30.3 million and the non-GAAP net loss widened to approximately $16 million, while cash and investments declined to $541.3 million from $589.8 million at year-end as the company invests heavily in R&D, fabrication, and refrigeration infrastructure.

Presentation

[Operator]

Good day, and thank you for standing by. Welcome to the Rigetti Computing second quarter 2026 financial results conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Subodh Kulkarni, CEO of Rigetti. Please go ahead.

[Subodh Kulkarni, CEO at Rigetti Computing]

Good afternoon, and thank you for joining us for Rigetti's second quarter 2026 earnings conference call. I'm pleased to be joined today by our Chief Financial Officer, Jeff Bertelsen, who will walk you through our financial results in more detail following my overview. We appreciate your continued interest in Rigetti and look forward to answering your questions at the conclusion of our prepared remarks. Before we begin, I would like to remind everyone that today's call, along with our second quarter 2026 press release, contains forward-looking statements. These statements reflect our current expectations, objectives, and underlying assumptions regarding our outlook and future operating results and are subject to risks and uncertainties that could cause actual results to differ materially from those anticipated.

[Subodh Kulkarni, CEO at Rigetti Computing]

These risks and uncertainties are described in more detail in our filings with the Securities and Exchange Commission, including our Form 10-K for the year ended December 31, 2025, our Form 10-Q filing for the quarter ended June 30, 2026, and other periodic reports filed from time to time with the SEC. Rigetti undertakes no obligation to update any forward-looking statements made during this call except as required by law. During today's call, we will refer to certain non-GAAP financial measures. For details on these measures and reconciliations to comparable GAAP measures, please refer to today's earnings release on our investor relations website at www.rigetti.com and to the 8-K furnished with the SEC. Before I dive into the quarter, I want to frame our discussion around three key takeaways.

[Subodh Kulkarni, CEO at Rigetti Computing]

First, we continue to demonstrate technical leadership with our Cepheus-class systems, including ongoing progress to improve the performance of our 108Q, Cepheus-1-108Q platform. Second, the letter of intent we signed with the U.S. Department of Commerce for up to $100 million in funding over three years further validates our superconducting chiplet-based approach and strengthens our ability to invest against our roadmap to quantum advantage. Third, we recently announced an expanded collaboration with HPE and the Pittsburgh Supercomputing Center to develop a hybrid quantum classical supercomputer, reflecting growing demand for our approach and positioning Rigetti to deliver differentiated quantum-enhanced HPC solutions. Q2 was another important proof point in our strategy to combine technical progress with real-world access and long-term strategic partnerships.

[Subodh Kulkarni, CEO at Rigetti Computing]

Quantum computing remains a long cycle opportunity, we are increasingly seeing the ecosystem coalesce around platforms that can scale in a practical way and that are available to users where they already run their workloads. We believe Rigetti is well-positioned in the current environment for three reasons. We are focused on superconducting gate-based quantum computing, which offers a combination of scalability and speed that is difficult to replicate with other modalities. We are pursuing an open modular architecture that allows us to integrate innovative solutions from partners to advance our technology faster, such as QEC technology from Riverlane and transduction technology from QphoX. We pioneered and continue to lead in chiplet-based architectures, which we believe provide a more practical path to scaling to 1,000 qubits and beyond than monolithic approaches. Let me start with our technology and product progress.

[Subodh Kulkarni, CEO at Rigetti Computing]

Cepheus 1108Q remains one of the highest qubit count generally available gate-based quantum computers in the world and the largest modular quantum computing system on the market today. The system is built from 12 interconnected 9-qubit chiplets and is accessible to customers via Rigetti Quantum Cloud Services and through Amazon Braket, Microsoft Azure Quantum, and qBraid. We are just one of three companies, including IBM and Google, who have delivered gate-based systems with over 100 qubits, and we believe that our modular approach gives us a strong advantage on the path towards higher qubit count systems. Today, Cepheus 1108Q continues to operate at a median single qubit gate fidelity of approximately 99.9% and a median two qubit gate fidelity of roughly 99.1% with gate speeds around 60 nanoseconds.

[Subodh Kulkarni, CEO at Rigetti Computing]

These performance levels at the 100-plus qubit scale are meaningful, our teams remain focused on improving fidelity throughout 2026 as we refine chip design, materials, and fabrication processes and incorporate learnings from our R&D platforms. From a systems engineering perspective, our work this quarter extended beyond adding qubits. We continue to mitigate coupling interactions between tunable couplers that become more pronounced beyond the 100-qubit scale and to address coherence time limitations that are now the primary constraint on fidelity. As we discussed with investors in May, our current coherence times are in the 25-30 microsecond range, and we are executing on a set of chip design and material initiatives intended to roughly double or triple those times over the next several years.

[Subodh Kulkarni, CEO at Rigetti Computing]

This includes joint IP with Fermilab, where capping niobium superconducting contacts with tantalum has demonstrated meaningful coherence time improvements in fundamental experiments, we are now incorporating those learnings into production chip designs. We are also refining deposition, oxidation, and etch processes to smooth interfaces in the Josephson junction area, which we believe will further improve coherence and ultimately gate fidelities. Beyond Cepheus 1108Q, we remain on track with the chiplet-based roadmap we laid out earlier this year and have begun investing in dilution refrigeration and infrastructure that can support 1,000-qubit systems. Our objective remains to reach approximately 1,000 qubits, two-qubit gate fidelities of 99.9%, and gate speeds below 40 nanoseconds in roughly three years. I would now like to spend a few minutes on the U.S. Department of Commerce letter of intent we announced on May 21.

[Subodh Kulkarni, CEO at Rigetti Computing]

Under this LOI, the department has selected Rigetti for a potential award of up to $100 million in funding over three years to accelerate superconducting quantum computing R&D that addresses key technical challenges in scaling and advancing our systems. The contemplated transaction structure includes the department receiving an equity stake in Rigetti consistent with the total amount of funding, and the funding itself would be allocated under the CHIPS Research and Development Office broad agency announcement pursuant to the CHIPS Act. We believe that this prospective partnership reflects the view that quantum computing will have far-reaching impacts on national security, economic interests, and overall prosperity, and that superconducting qubit platforms are central to U.S. leadership in this field. It also reflects the administration's broader CHIPS R&D investments in quantum computing and related technologies designed to build domestic industry, create high-paying jobs, and strengthen technological resilience.

[Subodh Kulkarni, CEO at Rigetti Computing]

For Rigetti, this LOI is strategically significant in several ways. It will allow us to tackle key scaling bottlenecks more rapidly associated with multi-chip architectures. It will enable us to accelerate multiple generations of superconducting quantum processors and associated control electronics at Fab-1, our dedicated quantum device manufacturing facility. It will deepen our collaboration with the U.S. government at a time when global investment in quantum computing is increasing and geopolitical competition in this domain is intensifying. It is important to emphasize that the LOI is not yet a definitive agreement. Any final structure will also include issuance of securities to the department and will be subject to customary approvals and conditions. We view this prospective partnership as aligned with our long-term strategy and our commitment to disciplined capital deployment. Jeff will provide additional context on how we are thinking about this funding opportunity within our broader capital framework.

[Subodh Kulkarni, CEO at Rigetti Computing]

Turning to customer momentum and market traction. Our strategy is to meet customers where they are across public cloud, hybrid infrastructure, and dedicated quantum systems. On the cloud, Rigetti Quantum Cloud Services, Amazon Braket, Microsoft Azure Quantum, and qBraid provide global access to our systems, including Cepheus 1108Q. We continue to see engagement from researchers and enterprises seeking to experiment on one of the most capable, generally available gate-based platforms, where they benefit from ease of use and consistent uptime. In parallel, we are building a growing base of on-premises system deployments. Earlier this year, we outlined three systems targeted for delivery in 2026. Two nine-qubit Novera systems and a 108-qubit system for C-DAC in India. We remain on track and are seeing additional demand for Novera QPUs from national labs and universities, with recent wins including the University of Saskatchewan and a research arm of a large Japanese conglomerate.

[Subodh Kulkarni, CEO at Rigetti Computing]

These deployments deepen technical engagement, create multi-year usage pathways, and generate high-value feedback that informs our roadmap. At this stage of the market, we are prioritizing customers committed to active experimentation and collaboration, and we are deliberate in how we build those relationships. As part of this customer momentum, we recently expanded our collaboration with HPE and the Pittsburgh Supercomputing Center. Rigetti will deliver a nine-qubit Novera quantum computing system into PSC's new TangleLab testbed, which is being funded by a National Science Foundation grant. Working with HPE, this deployment is designed to integrate the Novera system with an HPE-powered supercomputing environment so that researchers and industry users can develop and test hybrid quantum classical workloads on real hardware. We view this as an important step in moving our HPE relationship from early experimentation toward commercially relevant quantum-enabled HPC solutions.

[Subodh Kulkarni, CEO at Rigetti Computing]

More broadly, global investment in quantum computing continues to expand, led by governments and national labs, and increasingly complemented by commercial interests. Outside the U.S., we are seeing structured programs such as the U.K. government's six-year ProQure initiative, where we intend to invest up to $100 million over time in systems, talent, and infrastructure. In India, our 108-qubit C-DAC award reflects national-level interest in superconducting platforms. Across Europe and Asia, we are seeing growing number of coordinated quantum initiatives. Commercial revenue remains early, but engagement is increasing across industries such as materials, logistics, and financial services as they explore hybrid and quantum-inspired workloads. As system performance improves and the industry moves closer to quantum advantage, we expect commercial adoption to build on the government and research foundation in place today. Let me briefly connect these developments back to our long-term roadmap.

[Subodh Kulkarni, CEO at Rigetti Computing]

We remain focused on a clear sequence of milestones designed to position Rigetti to reach quantum advantage in roughly three years. Near term, that means driving Cepheus-1-108Q toward a median two-qubit gate fidelity of approximately 99.5% later this year, while maintaining our gate speed advantages. Beyond that, we are working toward deploying higher qubit systems that leverage our chiplet-based architecture as the foundation for scaling beyond 1,000 qubits with fidelities and speed, error mitigated, and eventually fault-tolerant computation. In support of this roadmap, we continue to invest in Fab-1 and associated refrigeration infrastructure, as well as partnerships with organizations such as Riverlane, Quanta, and QphoX to integrate innovative solutions into the stack. The prospective CHIPS Act funding would further reinforce our ability to execute on multiple generations of processors while maintaining prudent capital discipline.

[Subodh Kulkarni, CEO at Rigetti Computing]

We intend to update our published technology roadmap later this year once we have additional operational data from Cepheus-1-108Q and clearer visibility into subsequent system deployments. Our objective is to provide investors with a transparent view of the milestones that matter most for quantum advantage, including specific targets for qubit count, fidelity, coherence time, and gate speed. With that overview, I will now turn the call over to our CFO, Jeff Bertelsen, to discuss our financial results and capital deployment in more detail.

[Jeff Bertelsen, CFO at Rigetti Computing]

Thank you, Subodh, and good afternoon, everyone. I will spend a few minutes walking through our second quarter 2026 financial results, our balance sheet and liquidity, and how we are thinking about capital deployment as we continue to execute on the roadmap Subodh described, including the potential implications of the Department of Commerce LOI. For the second quarter of 2026, revenue was approximately $5.1 million, compared to $1.8 million in the second quarter of 2025. The year-over-year increase was driven by on-premises Novera QPU sales, reflecting recognition of previously announced Novera purchase orders. Gross margin for the quarter was approximately 43%, compared to 31% in the second quarter of 2025, with variability driven by contract mix and pricing and the relative contribution from Novera QPU sales.

[Jeff Bertelsen, CFO at Rigetti Computing]

Total operating expenses for the second quarter were $30.3 million, compared to $20.4 million in the same period last year, with spending concentrated in research and development, including engineering headcount, fabrication, chip design, and control electronics development, as well as investments in refrigeration and infrastructure to support higher qubit count systems. Stock-based compensation for the quarter was approximately $7 million, compared to $3.6 million in the second quarter of 2025. Operating loss was $28.1 million, compared to $19.9 million in the prior year period. On a GAAP basis, net loss for the quarter was $52.6 million, compared to a net loss of $39.7 million in the prior year period, with results again impacted by non-cash fair value adjustments to derivative warrant and earn-out liabilities.

[Jeff Bertelsen, CFO at Rigetti Computing]

As we have said previously, these fair value adjustments can introduce significant quarter-to-quarter volatility into our GAAP results and do not affect how we operate the business or allocate capital. On a non-GAAP basis, which excludes stock-based compensation and fair value adjustments to warrant and earn-out liabilities, net loss for the quarter was approximately $16 million, or $0.05 per diluted share, compared to a non-GAAP net loss of $13.3 million or $0.04 per diluted share in the second quarter of 2025. Let me provide a bit more color on revenue drivers and how we are thinking about the remainder of the year. As we discussed on our prior call, we expected strong year-over-year revenue growth in the first half of 2026, driven by the previously announced Novera purchase orders we received late last year and earlier in 2026.

[Jeff Bertelsen, CFO at Rigetti Computing]

In Q2, we continued to progress on the $8.4 million C-DAC order for an on-premises 108-qubit system in India, which we still expect to recognize in the fourth quarter of this year following installation and performance acceptance testing. More broadly, our revenue profile continues to be influenced by the timing of system deliveries and government-funded projects. We view this variability as inherent to the current stage of the quantum computing market and not as a driver of our long-term capital allocation or technology strategy. Turning to the balance sheet, we ended the second quarter of 2026 with approximately $541.3 million in cash equivalents, and available-for-sale investments, compared with $569 million as of March 31, 2026, and $589.8 million as of December 31, 2025.

[Jeff Bertelsen, CFO at Rigetti Computing]

We continue to operate with no debt, and given our current operating profile, we believe our capital position provides sufficient runway to execute against our technology and system deployment milestones, including continued progress on scale, fidelity, system integration, and our planned investment in the U.K. Capital expenditures in the quarter were primarily driven by investments in Fab-1 and additional dilution refrigeration capacity to support higher qubit count systems. As we noted previously, we expect 2026 CapEx to be elevated relative to prior years, largely due to investments in dilution refrigeration and fab equipment. Our approach to capital deployment remains disciplined and consistent with what we have discussed on prior calls. The majority of our spending is directed toward core R&D activities that directly advance our technology platform, including our chiplet-based architecture, control systems, and cloud integration. We are not managing the business around short-term revenue optimization.

[Jeff Bertelsen, CFO at Rigetti Computing]

We are managing it around credible long-term progress toward quantum advantage and commercially relevant systems. Should we move from the current LOI to definitive agreements with the Department of Commerce, we would expect the CHIPS Act funding to be deployed in a way that is tightly aligned with this philosophy. That means focusing the capital on specific technical programs that address scaling bottlenecks and packaging and enhancements while being mindful of potential dilution associated with any equity issuance. To close, our financial strategy is unchanged from what we outlined last quarter. We are focused on maintaining flexibility, funding innovation responsibly, and aligning capital deployment with the long-term value creation of our technology roadmap, including the CHIPS Act funding. Quarterly results will continue to reflect the early-stage nature of the quantum computing market and the timing of large system contracts.

[Jeff Bertelsen, CFO at Rigetti Computing]

We believe our balance sheet and capital discipline position us to execute with patience and control. With that, I will turn it back to Subodh for closing remarks before we open the call for questions.

[Subodh Kulkarni, CEO at Rigetti Computing]

Thank you, Jeff. We are encouraged by the progress we are making on our technology roadmap, the strengthening engagement we are seeing from customers across cloud and on-premises channels, and the strategic support we are beginning to see from governments such as the United States and the United Kingdom. We remain focused on delivering against the milestones we have laid out, including fidelity improvements on Cepheus-1-108Q, higher qubit systems, and disciplined execution of our capital plan. On behalf of the entire Rigetti team, thank you for your continued interest and support. Operator, we are now ready to open the call for questions.

[Operator]

Thank you. As a reminder, to ask a question, please press *11 on your telephone and wait for your name to be announced. To withdraw your question, please press *11 again. Please stand by while we compile the Q&A roster. Our first question comes from Brian Kinstlinger of Alliance Global Partners. Your line is open.

[Brian Kinstlinger, Analyst at Alliance Global Partners]

Hey, guys. Thanks for taking my question. On the last conference call, you highlighted coherence time as the primary limitation on your new architecture to fidelity and that you believed you could address that challenge. You gave some details around that today. When is a reasonable timeframe where we can expect to see that impact fidelity?

[Subodh Kulkarni, CEO at Rigetti Computing]

Thanks, Brian, for the call. Indeed, as we discussed in the call, coherence time is the limiting factor for two qubit gate fidelity at this time, and that's why we are so focused on improving coherence time. Right now, it's in the 25 to 30 microseconds range. We want to obviously bump it up as much as possible, but we think a factor of two or three improvement is practical in the near term, and that's what we are working on. The kind of stuff we are working on we disclosed during the call, things like smoother interfaces at the Josephson junction level or capping off the niobium with tantalum, which seems to improve the coherence time, and we have published some papers along those lines. Those are the kinds of things we are doing.

[Subodh Kulkarni, CEO at Rigetti Computing]

We definitely expect fidelity to increase at the 108 qubit level before the end of this year, and we'll update everyone when we are ready to deploy a new system. I just want to put the developments in a little perspective here. Keep in mind that there are only three very capable more than 100 qubit systems in the gate-based world in quantum computing right now. Besides us is IBM at 120 qubits, we are at 108, and Google is at 105 qubits. Everyone else, even though they may be talking a lot and about roadmaps and future, are well below that, and many companies are well below 50 qubits when it comes to actual systems. We get incredible feedback from end users who are using our systems every day that our system is one of the easiest to use and has consistent uptime.

[Subodh Kulkarni, CEO at Rigetti Computing]

We want to be careful that before we are upgrade our system, if you will, with higher coherence time and higher fidelity. We have checked off all the other metrics, and we don't inadvertently go backwards in the technical progress. We are careful with how we are doing the experiments and how we will deploy it in the actual system that is deployed for the whole world. Hopefully, that answers your question.

[Brian Kinstlinger, Analyst at Alliance Global Partners]

It does. If I can just ask one follow-up. A few months back, there was a change in the leadership in DARPA's QBI. Has this had any impact on Rigetti's chances of getting to Stage B? Do you think this is still achievable by year-end? Thanks for taking my questions.

[Subodh Kulkarni, CEO at Rigetti Computing]

Certainly, there was a change in leadership at DARPA. Our plan stays the same. DARPA gave us a bunch of areas where they wanted to see improvements to get into Phase B. We continue to work with them. We have periodic calls with them and meetings with them, we will continue to demonstrate improvements in the areas that they pointed out. We still feel optimistic that we will get into DARPA Phase B relatively soon. It's impossible to predict the exact timelines on all these kinds of things, we continue to make very good progress, we continue to believe we will get into Phase B soon. Along with DARPA, there are other initiatives, as I mentioned in my call. There is a U.K. government's ProQure initiative, which is kind of like the DARPA QBI initiative and some other initiatives across the world.

[Subodh Kulkarni, CEO at Rigetti Computing]

We are engaged in multiple initiatives like that, it's not just DARPA alone. As you saw, the Department of Commerce in the U.S. created a separate initiative focused on accelerating roadmaps, we are definitely part of that. DARPA is and will continue to be an important player in the quantum computing ecosystem, it's not the only one. There are multiple areas that we are participating in right now.

[Brian Kinstlinger, Analyst at Alliance Global Partners]

Great. Thanks, Subodh.

[Subodh Kulkarni, CEO at Rigetti Computing]

Thank you, Brian.

[Operator]

Thank you. Our next question comes from Krish Sankar of TD Cowen. Your line is open.

[Krish Sankar, Analyst at TD Cowen]

Hi, thanks for taking my question. Subodh, just a first question on the current Fab-1 facility in Fremont. What's the annual QPU production capacity, and what kind of CapEx requirement should we expect for that?

[Subodh Kulkarni, CEO at Rigetti Computing]

Krish, right now the Fab-1 we have in Fremont is 150-millimeter Fab-1. Frankly, capacity is not a concern at all. We have plenty of capacity in that Fab-1 with 150 millimeters because each quantum chip is capable of significant computation, as you're aware. We make a number of 9-qubit chips right now, and with our chiplet architecture, we are using 9-qubit chiplets to get a 36-qubit system or 108-qubit system. In future, we believe we will make things like 36-qubit chiplets that will take us to 1,000 qubits and beyond, and we will continue to increase the size of the chiplets in the future. Right now, to give you a reference, the 9-qubit chiplet is roughly 6 millimeter by 6 millimeter. As you can imagine, we can build plenty of 9-qubit chiplets in a single 150-millimeter wafer, and we can run number of wafers a day.

[Subodh Kulkarni, CEO at Rigetti Computing]

The capacity is not an issue at all. Challenge, of course, is getting the capability out there, and there are some limitations with 150-millimeter equipment, and it is not an automated line, and we believe there are some limitations that come with non-automated line and 150-millimeter size. We continue to look at alternative options for upgrading the fab, but it is mostly for capability, not for capacity.

[Krish Sankar, Analyst at TD Cowen]

Got you. Very helpful, Subodh. Then a follow-up on the HPE Pittsburgh, which is 9-qubit Novera QPU system. Will you be providing this QPU chips only, or would it be QPU plus dilution fridge, controls and other infrastructure? What is the timing for delivery on that?

[Subodh Kulkarni, CEO at Rigetti Computing]

Yeah, it is a good question, and we are really excited to partner with HPE and Pittsburgh Supercomputing Center. It is really a great initiative to demonstrate how hybrid computing works. If you go out there right now, a lot of people talk about hybrid computing, but honestly, there are very, very few places, in fact, hardly any, where you can go and actually do demonstrate hybrid computing and how it is supposed to work. We believe we will be one of the first ones to do that along with HPE. Our contribution to that NSF-sponsored project is a full 9-qubit system. Not just the QPU, but the QPU plus static refrigeration plus control system and everything.

[Subodh Kulkarni, CEO at Rigetti Computing]

Obviously, HPE is a top player in the HPC world, HPE's contribution is HPC, and the interfaces is what we will be working on, and that is really the role of Pittsburgh Supercomputing Center. It is going to be an exciting project to bring in the best of HPCs, the best of quantum computing, and allow access to anyone in the world so that they can easily play around with hybrid computing and see how hybrid computing works. In particular, I will bring forward that because we are using superconducting gate technology, we have a huge benefit in terms of speed. Our gate speeds are in the 50, 60 nanosecond range, which are roughly 1,000 to 10,000 times faster than trapped ion or atoms or other modalities. That really will shine and will come forward when we show the data coming out of hybrid computing.

[Subodh Kulkarni, CEO at Rigetti Computing]

Clearly, a trapped ion or an atom-based quantum computer with its very, very slow speed will have a tough time keeping up with CPU and GPU. You can see that in some of the results being discussed when they talk about hybrid computing. Whereas with superconducting computing, you will really see the benefit of speed and how speed helps in the overall computation and coming to the correct answer much, much faster than with other modalities. We are pretty excited about this partnership opportunity and demonstrating how hybrid computing will work, particularly with superconducting.

[Krish Sankar, Analyst at TD Cowen]

Maybe just to follow up from that with Jeff, sorry, last question. Timing of delivery and how to think about rev rec for this?

[Subodh Kulkarni, CEO at Rigetti Computing]

We believe the delivery will be sometime in 2027. We don't know the exact quarter yet. The program just got kicked off recently. As we find out, we will be transparent about the timelines, but at this point, it definitely will be a 2027 delivery. We'll let you know once we know exactly when it will happen.

[Krish Sankar, Analyst at TD Cowen]

Thanks a lot, Subodh. Appreciate it.

[Subodh Kulkarni, CEO at Rigetti Computing]

Thank you, Krish.

[Operator]

Thank you. Our next question comes from Troy Jensen of Cantor Fitzgerald. Your line is open.

[Troy Jensen, Analyst at Cantor Fitzgerald]

Hey, John. Congrats on the continued progress here. Maybe a quick question, start with Subodh here. Just any thoughts on the executive order, has there been any change in kind of government activity post signing of that order? I'm wondering if it's mainly security more or just system level, just love to hear your thoughts on if anything's changed since then.

[Subodh Kulkarni, CEO at Rigetti Computing]

Sure. Thanks, Troy. Indeed, with the executive order passed by the president, there has been increased emphasis on quantum computing. A number of initiatives have started because of those executive orders. I would say they are still generally in the early stages, but you are already seeing some of them. The Department of Commerce initiative using the CHIPS Act certainly is one of those. We definitely expect more funding coming into the overall quantum computing ecosystem from the U.S. government because of those executive orders. There are various bills that are being debated as we speak, whether it's the NQI authorization bill that funds the Department of Energy labs, or the NDAA, which funds the Department of Defense, there are many line items included in that for quantum computing.

[Subodh Kulkarni, CEO at Rigetti Computing]

Overall, I would say definitely the executive orders highlighted the importance of quantum computing for national security and strategic reasons. It is definitely helping free up funding in quantum computing. You are already seeing that a little bit with the Department of Commerce, but definitely expect more of those kinds of things from both Department of Energy as well as Department of Defense.

[Troy Jensen, Analyst at Cantor Fitzgerald]

All right. Makes sense. Just another one for you, maybe. Congrats on the HPE announcement. I think that's huge. Obviously, you're close to them in Quanta. I guess I would assume there's tons of good data center partnerships that you guys could have. Is HPE as much on the networking side or is that on the server side? Just any more kind of details on that would be wonderful.

[Subodh Kulkarni, CEO at Rigetti Computing]

Certainly, we are excited to partner with HPE. They are, as I mentioned, the top player in the world of HPCs. The partnership will certainly evolve as we get into demonstration and what else can we do. It's not an exclusive partnership. We are certainly going to be talking to other HPC players. Certainly HPE will be talking with other modalities and other quantum computing companies, too. I think the exciting part for both of us is truly bring a state-of-the-art HPC with a state-of-the-art quantum computer and see how exactly we do the trifurcation of data, if you will, where CPUs do sequential, GPUs do parallel, and quantum does simultaneous computing, and its superconducting speeds are commensurate with CPU and GPU. That's really where it will help to truly show the benefit of quantum computing.

[Subodh Kulkarni, CEO at Rigetti Computing]

Certainly a lot of applications we will be able to take on with that kind of a setup and show really how quantum computing helps reduce the overall time to results or the accuracy of results or even some applications that are near impossible to solve with the current HPC setup. Certainly we are looking forward to putting the system together between now and 2027 and making it available to general public at that time. We'll continue to talk to HPE and other HPC players on how to leverage quantum computing in different workload applications.

[Troy Jensen, Analyst at Cantor Fitzgerald]

Awesome. Thanks, guys. Keep up the good work.

[Subodh Kulkarni, CEO at Rigetti Computing]

Thank you.

[Operator]

Thank you. Our next question comes from John McPeake of Rosenblatt Securities. Your line is open.

[John McPeake, Analyst at Rosenblatt Securities]

Great. Can you hear me, guys?

[Subodh Kulkarni, CEO at Rigetti Computing]

Yes, we can, John.

[John McPeake, Analyst at Rosenblatt Securities]

Excellent. Subodh and Jeff, congrats on the execution here. Steady progress. Actually, I have a couple for Jeff. You talked about CapEx. I got that. That was one of my questions. Deferred revenues ticked up more than in any quarter I've seen in the history. You actually had your largest billings quarter, if you just look at the change in deferred and revenues. Could you talk a little bit about what that's about, if anything?

[Jeff Bertelsen, CFO at Rigetti Computing]

Sure. That mainly relates to C-DAC. With that order, there were some prepayments and so forth that added to deferred revenue. That was the main driver there.

[John McPeake, Analyst at Rosenblatt Securities]

Okay. That makes sense. Then one for Subodh. I've heard compliments about your QPUs from some optical interconnect companies. I'm curious if you've had any discussions with respect to, with your open architecture, potentially at least doing some exploratory work on optical interconnect of your Novera QPUs.

[Subodh Kulkarni, CEO at Rigetti Computing]

Thanks, John, for telling us that you hear good things about us from optical interconnect companies. Indeed, we are very proud of the fact that our QPUs are some of the best QPUs, if not the best QPUs out there, and we consistently hear that from end users who use our QPUs. They keep telling us that they are extremely reliable, consistent, very easy to use. It's not a surprise, but it's always good to hear from third parties. We talk to multiple optical players, the publicly disclosed partnerships. Among the publicly disclosed partnerships, we have mentioned QphoX, where we are working with them on transduction. That's basically converting microwave signals to optical signals and vice versa. The reason that area is important is because right now, our 9-qubit or even our 108-qubit system does not use any optical signaling.

[Subodh Kulkarni, CEO at Rigetti Computing]

We are basically relying on coax signaling, that will continue for a while. We plan to use flex cable technology to get to 1,000 qubits, but beyond 1,000, certainly when we start talking 10,000 and 100,000 qubits, we cannot rely on flex cables and certainly not coax cables. That's really where optical signaling comes in. The early research work is what we are doing right now with companies like QphoX, understanding how to convert microwave signal to optical and reverse that without losing fidelity or any other issues. It all shows promising results right now, but I would caution it's still early research. Before all of that can be converted into roadmap and definitive timelines, we still have some work to do.

[Subodh Kulkarni, CEO at Rigetti Computing]

It is encouraging to see that optical signal is going to work out, that allows us to get to the tens of thousands and hundreds of thousands of qubits.

[Operator]

Thank you. Our next question comes from Quinn Bolton of Needham & Company. Your line is open.

[Shadi Mitwalli, Analyst at Needham]

Hey, this is Shadi Mitwalli on for Quinn. Thanks for taking our questions. Now that you have your 108-qubit system up and running in the cloud, can you just talk about what you guys are seeing in regard to user engagement? I have a follow-up.

[Subodh Kulkarni, CEO at Rigetti Computing]

Hey, Shadi. Thanks for that question. As I mentioned in my comments earlier, we are getting excellent feedback from end users who are using our 108-qubit system. We are consistently hearing it is one of the best systems out there. Again, to remind everyone, there are only three more than 100-qubit systems out there in the world, IBM at 120 qubit, we at 108, Google at 105. Everyone else is well below that, most of the players that talk are well below 50 qubits. Really, we are in the top. We are in the second place right now as far as quantum computing capability is concerned. We get excellent feedback. Customers who have used it and thousands of customers are using it through AWS and Azure as well as other cloud platforms, we consistently hear our system is one of the easiest to use.

[Subodh Kulkarni, CEO at Rigetti Computing]

It is always up and running. The results are consistent, reliable. We are really happy to hear that kind of feedback. Most of the work that they are still doing is very much research kind of work. We acknowledge openly that we are not quite close to quantum advantage. We need to get to, as we have mentioned in the past, closer to 1,000 physical qubits, closer to 99.9% two-qubit gate fidelity, along with some error mitigation or correction before we can start talking tactical workload applications and demonstrating value with that. We fully understand that we are building systems right now for research applications. That is exactly what we see customers are doing. They are trying to understand how to design algorithms, how to fundamentally look at quantum computing, how it fits in their ecosystem.

[Subodh Kulkarni, CEO at Rigetti Computing]

Overall, I would say we are very pleased with the feedback we are getting from end users who have been using our 108-qubit system for a while now.

[Shadi Mitwalli, Analyst at Needham]

Got it. That's great to hear. On the $100 million LOI, it sounds like this will likely be milestone or technical based. Can you just talk about what Rigetti would need to prove to unlock all the funding?

[Subodh Kulkarni, CEO at Rigetti Computing]

Yeah, good question. The agreement is not definitive yet, we are still discussing with Department of Commerce on what exactly is expected when to get the $100 million. Broad-based, we know the areas we are working on. We are working on things like cryogenics. We are working on things like miniaturization of electronics in the readout chain, those kinds of things. We know at a high level. Basically, it's accelerating our roadmap. The overall goal of this $100 million is to accelerate our roadmap, that's exactly what we are working on. We are defining exactly what our roadmap is and which milestones can be accelerated. It's still a work in progress. Hopefully, it becomes a definitive agreement soon, then we can disclose in more detail what and when we plan to do.

[Operator]

Thank you. Our next question comes from Tyler Anderson of Craig-Hallum. Your line is open.

[Tyler Anderson, Analyst at Craig-Hallum]

Hi, gentlemen. Thank you for taking my questions. This is Tyler Anderson on for Richard Shannon. Just to start, for a very quick question. For the HPE and PSC deployment, is this still fridge and control unit yours, or is this going to be a third party's?

[Subodh Kulkarni, CEO at Rigetti Computing]

It's ours, Tyler. Basically, it's a full system that we build. We obviously are outsourcing parts of the system, we are buying dilution refrigerators from vendors. Obviously, we are partnered with Quanta for control system, and so on. We will use third-party components, but the overall system is designed and built by us.

[Tyler Anderson, Analyst at Craig-Hallum]

Okay. That's very interesting with the Quanta. Getting into what's getting your coherence time up or what you are doing to do that. The niobium caps you had previously done before, and I'm just wondering, was integrating all of these technologies required to get you to the fidelities that you were aiming for originally? Or is this something that you've held in your back pocket and you've been deploying these benefits as you need them to increase the coherence time? I have a quick follow-up.

[Subodh Kulkarni, CEO at Rigetti Computing]

Yeah, as you can imagine, Tyler, when you are doing advanced R&D on these kinds of complicated systems, you never hold anything in your back pocket. You pretty much do the best you can and try to put it together and see how the systems are working. We have been working with Fermilab on the capping of niobium, specifically with tantalum, and those results show very good promise. There are various reasons why we have not quite deployed it in the system that is available for everyone today. We definitely plan to include that, but as I mentioned earlier, we have to be careful we don't just throw everything and then turn it on and deploy it right away.

[Subodh Kulkarni, CEO at Rigetti Computing]

Right now the system is working very well right now, before we upgrade the system that is on the cloud right now, we want to test it exhaustively, make sure everything is good. We have not sacrificed something inadvertently in the process. That's the kind of testing we are doing. We are just being deliberate with every testing so we don't change something and inadvertently find out that we have deteriorated something else in the process. Hope that answers your question.

[Tyler Anderson, Analyst at Craig-Hallum]

That does, that totally makes sense, doing things one at a time and seeing what the impact is. With that, if we implement all of these things, we start to see a really good impact to the coherence time. These adiabatic gates seem to be doing you pretty well with the fidelity increases with the 36-qubit QPU. Is this something that could potentially accelerate the roadmap if everything else goes well, plus adiabatic gates?

[Subodh Kulkarni, CEO at Rigetti Computing]

Yeah, certainly adiabatic gates, we published a white paper on it last year. We definitely see a lot of promise with that. That definitely is a technology we plan to deploy. We are using a version of that right now in our 108 qubit system, but not the full thing that we disclosed in our white paper. There are, again, reasons for doing that. Definitely work is going on in that area, and we definitely plan to include adiabatic CZ gates as part of our roadmap for future systems.

[Tyler Anderson, Analyst at Craig-Hallum]

Thank you for the time. I appreciate it.

[Subodh Kulkarni, CEO at Rigetti Computing]

Thank you, Tyler.

[Operator]

Thank you. Our next question comes from Gary Mobley of StoneX Group. Your line is open.

[Gary Mobley, Analyst at StoneX Group]

Hey, gentlemen. Thanks for taking my question. I know in the past you've done some work for the U.K.'s NQCC, and I believe that was at one point a substantial portion of your revenue. What's the prospect for renewal of the funding for that work, and potentially, some sort of re-engagement there looking forward?

[Subodh Kulkarni, CEO at Rigetti Computing]

Well, thanks for that question, Gary. That's a really good segue into the U.K.'s overall deployment of quantum ecosystem. If you notice, the U.K. government has announced a multi-year initiative that they call ProQure. It's kind of like DARPA QBI, but a little different in the way the U.K. government is defining the milestones. The end goal is roughly similar. Both of these, DARPA QBI as well as the U.K. ProQure, are targeting fault-tolerant quantum computing system in roughly six to seven years. The path to get there is a little different for the two programs. Both have merits about why they are doing what they're doing. We are definitely involved with the U.K. government with those kinds of discussions. We are continuing. Our system is at NQCC right now. Again, it's a 36 qubit system over there right now.

[Subodh Kulkarni, CEO at Rigetti Computing]

One of the best systems that they have ever seen, we get very good input from them, again, about how easy our system is to use, consistent the results are, and how reliable it is. They like working with our system. We are definitely working with them on the ProQure initiative. Hopefully, we'll be able to announce things as the U.K. government announces their decisions. Definitely, our plan is to be in the U.K. ecosystem and continue to be investing in the U.K.

[Gary Mobley, Analyst at StoneX Group]

Thank you for that color. When you examine your pipeline of potential deals, how does it compare today versus a year ago or any other recent point in time, and where does that money trail lead back to? What I mean by that is it disproportionately skewed to commercial experimentation, government-backed funding, university research, grant funding, or PQC?

[Subodh Kulkarni, CEO at Rigetti Computing]

Well, we definitely see a lot more interest today in quantum computing than a year ago or certainly two years ago. The interest is coming from all the different areas. Certainly, governments are getting a lot more interested, as you can see from the U.S. government side, things like the Commerce initiative and continued discussion on the NQI or NDAA, the recent NSF award we got with HPE to do the hybrid computing. You are already seeing the U.S. government being a lot more active today than what it was a year or two years ago in quantum computing. I just mentioned the U.K. government and the big initiative they have with ProQure. You saw from our announcement what's happening in the country of India and their government and how they are going about it.

[Subodh Kulkarni, CEO at Rigetti Computing]

You see across Europe and many other countries in Asia, just about every major economy has a quantum mission or something like a quantum mission. Many governments have freed up funding, and certainly they want to be part of, at least a leader or the leader in the quantum ecosystem. A lot of activity is happening at the government level, and certainly that leads to universities. A lot of advanced universities are getting more and more active in quantum computing. The historical places like Yale University or MIT, or Princeton of the world were already there. Now you see broader swath of universities getting involved. You saw us announcing with Montana State University and University of Saskatchewan and those kinds of places, and you'll see more and more universities in this.

[Subodh Kulkarni, CEO at Rigetti Computing]

What is exciting is actually the commercial companies getting more and more interested in quantum computing right now. If you notice, our first two 9-qubit systems that we delivered this year were both to commercial organizations. Now they're not buying quantum computers on-premise to do for their data centers to do any practical workloads. They fully understand it's our research systems. There's enough interest in understanding the basics of quantum computing that we are seeing increased commercial traction now in addition to the government and university area. That's where you are seeing sales growth coming for our first half of sales growth is primarily driven by commercial organizations buying on-premise quantum computing systems. We definitely see that increasing. That wasn't there at all a year or certainly two years ago. That's an exciting development to watch.

[Subodh Kulkarni, CEO at Rigetti Computing]

Overall, we see huge interest in quantum computing across the entire spectrum, government, universities, and commercial. The commercial one is a new one. Pretty exciting to see.

[Gary Mobley, Analyst at StoneX Group]

Thank you.

[Subodh Kulkarni, CEO at Rigetti Computing]

Thank you, Gary.

[Operator]

Thank you. As a reminder, if you do have a question, please press star 11. One moment for our next question. Our next question comes from Nehal Chokshi of Northland Capital Markets. Your line is open.

[Nehal Chokshi, Analyst at Northland Capital Markets]

Yes. Hi, thank you. It looks like the 36-qubit median qubit gate fidelity did improve from 99.5% in the first quarter to 99.6% in the second quarter. I may have missed this, but could you just say what was the driver of that improvement?

[Subodh Kulkarni, CEO at Rigetti Computing]

Yeah, thanks for the question, Nehal. We continue to work on fidelity just about every day, as you can imagine. There are multiple things we have done in the background to improve our 9-qubit and 36-qubit, along with the 108-qubit fidelity. A lot of it goes into, in the broad sense, we do change the design of the qubit. We change fab processes along with it, and sometimes even the materials that are used in the fab, like the tantalum discussion we had earlier. Most of that improvement, at the 9-qubit level, we are at 99.8% 2-qubit gate fidelity. At 36-qubit, you are right, we have improved it to 99.6% median 2-qubit gate fidelity. Most of that improvement came from design optimization. It's how the lines are designed and the coupling of the lines with the qubit.

[Subodh Kulkarni, CEO at Rigetti Computing]

That's where we are seeing some of the improvements right now. Certainly, we are incorporating those learnings, and we'll continue to do more work to get all that learning incorporated into the 108-qubit systems and in future larger systems.

[Nehal Chokshi, Analyst at Northland Capital Markets]

Yeah. To be clear, the improvements that were implemented to drive that improvement in the 36-qubit system has not been applied to the 108-qubit system yet, or it's in flight at this point in time to see if those changes also result in an improvement to 108-qubit system?

[Subodh Kulkarni, CEO at Rigetti Computing]

In general, you're right. We are, as I mentioned earlier, being deliberate that we don't turn too many knobs at the same time and inadvertently hurt the performance. Right now, there are many users who are using our 108-qubit system every day. Obviously, we don't want to tinker around while they're using the system and cause some inadvertent problems. We are working on other 108-qubit systems, independent of the one that is deployed in the cloud, and that's where we are beginning to incorporate the learnings from 9-qubit and 36-qubit systems.

[Nehal Chokshi, Analyst at Northland Capital Markets]

Thank you.

[Subodh Kulkarni, CEO at Rigetti Computing]

Thank you, Nehal.

[Operator]

Thank you. I show no further questions at this time. I'd like to turn it back to Subodh Kulkarni for closing remarks.

[Subodh Kulkarni, CEO at Rigetti Computing]

Thank you, operator. In closing, we are encouraged by our progress in the second quarter and remain focused on executing against our strategic priorities as we advance Rigetti's position in the quantum computing ecosystem. In the coming months, we will be out meeting with investors at a number of conferences and related events, and we hope to see you there. Thank you for your continued interest in Rigetti.

[Operator]

This concludes today's conference call. Thank you for participating, and you may now disconnect.

Participants

Executives

• Subodh Kulkarni, CEO
• Jeff Bertelsen, CFO

Analysts

• Brian Kinstlinger, Analyst at Alliance Global Partners
• Krish Sankar, Analyst at TD Cowen
• Troy Jensen, Analyst at Cantor Fitzgerald
• John McPeake, Analyst at Rosenblatt Securities
• Shadi Mitwalli, Analyst at Needham
• Tyler Anderson, Analyst at Craig-Hallum
• Gary Mobley, Analyst at StoneX Group
• Nehal Chokshi, Analyst at Northland Capital Markets