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Rigetti Computing, Inc. (RGTI)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 revenue was $2.27M, down vs Q3 ($2.38M) and vs Q4 2023 ($3.38M); gross margin compressed to 44% as mix skewed to lower-margin NQCC contract revenue .
  • GAAP net loss spiked to $(153.0)M (or $(0.68) per share) driven by $(135.1)M non-cash fair-value marks on earn-out and warrant liabilities; operating loss was $(18.5)M, broadly in line with recent quarters .
  • Liquidity strengthened markedly: cash, cash equivalents, and marketable securities rose to $217.2M after equity raises; debt fully repaid (Trinity Capital) .
  • Technology/catalysts: launched 84‑qubit Ankaa‑3 with 99.0% median iSWAP and 99.5% fSim two‑qubit gate fidelities; announced strategic collaboration with Quanta (>$100M each over five years + $35M equity) to accelerate commercialization and scale the stack .
  • Management expects cash runway “at least the next 3 years”; share count in Q1 guided to ~290M, a modeling input for EPS .

What Went Well and What Went Wrong

What Went Well

  • Achieved record fidelity milestones and launched Ankaa‑3 (84 qubits) with 99.0% median iSWAP and 99.5% median fSim fidelity; “confident in plans to scale to 100+ qubits by the end of the year with a targeted 2x reduction in error rates” .
  • Strategic collaboration with Quanta: both parties to invest >$100M over five years; Quanta to purchase $35M of RGTI stock (pending regulatory approval). CEO: “complementary strengths… will support us in our goal to be at the forefront of the quantum computing industry” .
  • Commercial traction: two Novera QPU sales rev‑rec’d in Q4 (MSU and U.K. government); on‑prem 24‑qubit system fully operational at U.K.’s NQCC .

What Went Wrong

  • Revenue declined sequentially and year-over-year; gross margin fell to 44% from 75% YoY due to lower-margin NQCC contract mix .
  • GAAP net loss materially affected by non-cash fair-value changes on derivatives and earn‑out liabilities (negative $(135.1)M impact in Q4), obscuring operating progress .
  • Results still reflect R&D-stage commercialization: management reiterated that meaningful commercial sales are 4–5 years away, highlighting dependence on government contracts and milestones near-term .

Financial Results

Quarterly comparison (oldest → newest)

MetricQ2 2024Q3 2024Q4 2024
Revenue ($USD Millions)$3.086 $2.378 $2.274
Net Loss per Share (EPS) ($USD)$(0.07) $(0.08) $(0.68)
Gross Margin %64% 75% 44%
Operating Expenses ($USD Millions)$18.075 $18.550 $19.497
Operating Loss ($USD Millions)$(16.085) $(17.346) $(18.494)

Year-over-year comparison

MetricQ4 2023Q4 2024
Revenue ($USD Millions)$3.376 $2.274
Net Loss per Share (EPS) ($USD)$(0.09) $(0.68)
Gross Margin %75% 44%
Net Loss ($USD Millions)$(12.572) $(152.961)

KPIs and balance sheet indicators

KPIQ2 2024Q3 2024Q4 2024
Cash, Cash Equivalents & AFS Securities ($USD Millions)$100.5 $92.6 $217.2
Weighted Avg Shares (Millions)171.903 188.389 226.364
Novera QPU Units Sold (count)1 (Horizon shipped April) —2 (MSU, U.K. govt)

Notes:

  • Q4 non-cash fair-value changes drove the majority of GAAP net loss: derivative warrants $(90.885)M and earn‑out $(44.256)M .
  • Debt fully repaid; derivative and earn‑out liabilities increased on balance sheet, reflecting market valuations of these instruments .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Technology: 36‑qubit tiled systemMid‑202536‑qubit (4×9) targeted ~99.5% median 2‑qubit fidelity 36‑qubit (4×9) with targeted 2× error-rate reduction from end‑2024 levels Refined fidelity target framing; timeline maintained
Technology: >100 qubitsEnd‑2025>100 qubits targeted ~99.5% median 2‑qubit fidelity >100 qubits with targeted 2× error-rate reduction from end‑2024 levels Refined fidelity target framing; timeline maintained
2025 error-rate targetFY 202599.5% median target 2× reduction in error rates from 2024 levels Clarified ambition; emphasizes relative error reduction
Cash runwayMulti‑yearSufficient until mid‑Q1 2026 (10‑Q context) Sufficient “for at least the next 3 years” Improved (raised) runway
Share count outlookQ1 2025N/A~290M shares (weighted avg) New modeling input

No quantitative revenue, margin, or opex guidance was provided.

Earnings Call Themes & Trends

TopicQ2 2024 (prior)Q3 2024 (prior)Q4 2024 (current)Trend
Scaling strategy (tiling/chiplets)Introduced modular chip architecture; fidelity focus on Ankaa‑3 Roadmap to 36‑qubit (4×9) then >100 qubits Confirmed tiling: 4×9 mid‑year, ~12×9 by YE to cross 100 qubits Execution moving from lab to staged deployments
Error correction (QEC) & ecosystemDARPA benchmarking progress; Riverlane QEC integration Real‑time low‑latency QEC demonstrated with Riverlane Discussed Amazon error correction work; openness to integrate third‑party solutions Growing third‑party integration in open modular stack
Government funding & contractsDOE/DOD as key revenue drivers; R&D stage emphasized NQCC facility opened with 24‑qubit system Positive outlook on U.S. bipartisan $2.5B initiatives; DARPA QBI selection expected soon Tailwinds building; timing still dependent on appropriations
Gross margin variabilityLower on 24‑qubit system mix Lumpiness expected; margins benefit from Novera sales Q4 margin 44% vs 75% YoY; explained by NQCC mix Mix-sensitive until revenue base scales
Commercialization timelineEmphasis on R&D, limited near-term commercial sales —4–5 years to meaningful commercial sales; focus on R&D milestones Consistent view; sets expectations for investors

Management Commentary

  • CEO on modality leadership: “We believe that superconducting qubits are the winning modality for quantum computers given their fast gate speeds and scalability… confident in our plans to scale to 100+ qubits by the end of the year with a targeted 2x reduction in error rates” .
  • CEO on Quanta partnership: “Our companies’ complementary strengths… will support us in our goal to be at the forefront of the quantum computing industry” .
  • CFO on margins and mix: “Gross margins in the fourth quarter… 44% compared to 75%… due to ongoing revenues from our contract with the U.K.’s NQCC… lower gross margin profile” .
  • CFO on non-cash impacts: “Derivative warrant and earn‑out liabilities… negatively impacted net loss… by $135.1M… noncash in nature, and Rigetti will never be required to pay cash to settle these obligations” .
  • CEO on commercialization timeline: “We are still roughly about 4 to 5 years away before commercial sales matter… focus squarely on R&D” .

Q&A Highlights

  • Quanta collaboration details: >$100M investments each over five years; $35M RGTI equity at $11.59 (pending clearance); Quanta to contract manufacture non‑QPU stack (controls, dilution refrigerators, cabling) to scale efficiently .
  • Government funding outlook: bipartisan $2.5B U.S. initiative (DOE labs) and DARPA QBI (> $300M) selections expected; optimism for 2025 appropriations .
  • Scaling approach: confirmed tiling path from 4×9 (36 qubits) to ~12×9 (>100 qubits); monolithic remains optional but chiplets preferred to overcome uniformity/yield limits .
  • Error-rate targets clarified: 99.0% gate to 99.5%, and 99.5% gate to 99.75% under the “2× reduction” framing across gate types .
  • Revenue recognition: two Novera sales fully recognized in Q4; NQCC revenue largely complete in Q1 with minor spill into Q2 .
  • Share count modeling: CFO guided Q1 weighted average shares to ~290M .

Estimates Context

  • Wall Street consensus estimates (S&P Global) for Q4 2024 and forward periods were unavailable at request time due to data limits. As a result, beat/miss analysis vs consensus cannot be determined. Values retrieved from S&P Global were unavailable at the time of request.
  • Implications for future estimates:
    • Gross margin likely modeled lower near term given NQCC revenue mix; margin trajectory could improve with more Novera QPU sales .
    • GAAP EPS will remain volatile due to non-cash fair-value items (derivatives, earn‑out); investors may focus on operating loss and cash runway .
    • Share count (~290M guided for Q1) will dilute per‑share metrics; analysts should update models accordingly .

Key Takeaways for Investors

  • Operating performance steady but revenue/margin mix remains lumpy at small scale; watch mix shift toward higher-margin Novera QPU sales to support GM recovery .
  • GAAP net loss is heavily influenced by non-cash fair-value marks; focus on operating loss, cash use, and milestone execution for true progress signals .
  • Liquidity and runway materially improved (no debt; $217.2M cash & securities), reducing financing risk near term .
  • Technology momentum is the primary equity narrative: Ankaa‑3 fidelity, tiling roadmap to 36 and >100 qubits, and potential QEC integrations are strategic differentiators .
  • Government funding cycles (DOE/DOD/DARPA; U.K./EU initiatives) are key near-term revenue catalysts; monitor appropriations and award decisions in 2025 .
  • Quanta partnership can accelerate scaling and commercialization of the stack beyond QPU, potentially reducing capex intensity and improving execution bandwidth .
  • Modeling: incorporate ~290M weighted average shares for Q1; expect continued gross margin variability and constrained near-term commercial demand (R&D-stage) .