Rigetti Computing, Inc.

Good day and thank you for standing by. Welcome to the Regetti Computing Fourth Quarter and Full Year 2025 Financial Results Conference Call. At this time, all participants are in a listen-only mode. Please be advised that today's conference is being recorded. After the speaker's presentation, there will be a question and answer session. To ask a question, please press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again. I would now like to hand the conference over to your speaker today, CEO, Dr. Subodh Kulkarni.

Good afternoon, everyone, and thank you for joining us for Rigetti's fourth quarter and full year 2025 earnings conference call. I'm pleased to be joined today by our Chief Financial Officer, Jeff Pertelson, who will walk you through our financial results in more detail, following my overview. Also with us is our Chief Technology Officer, David Rivas, who will be available to participate in the Q&A session following our prepared remarks. We appreciate your continued interest in Regati, and we look forward to answering your questions at the conclusion of our remarks. Before we begin, I would like to remind everyone that today's call, along with our fourth quarter and full year 2025 press release, contains forward-looking statements. These statements reflect our 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 anticipated. Such risks and uncertainties are described and discussed in greater detail in our findings with the Securities and Exchange Commission, including our Form 10-K for the year ended December 31st, 2025, and other periodic reports filed by the company from time to time with the SEC. We encourage you to review these findings for a comprehensive discussion of these risks and uncertainties that could cause actual events and results to differ materially from those contained in the forward-looking statements. Brigadier 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 gap measures and for further information regarding the factors that may affect Rigetti's future operating results, please refer to today's earnings release on Rigetti's website at investors.rigetti.com. All to the 8K furnished with the SEC today after the close. Now turning to the business. 2025 was a year of technical validation and disciplined execution for Rigetti. We advanced materially across fidelity, scale, and architecture, while remaining realistic about timelines and commercialization. Our focus remains reaching true commercially meaningful quantum advantage, not headline milestones. I want to begin by grounding today's discussion in how we think about quantum computing at Rigetti, because that perspective is central to how we operate, how we invest, and how we measure progress. Quantum computing is not about replacing classical computing. It is about enhancing it. CPUs will continue to handle sequential workloads, and GPUs will continue to handle parallel workloads. Where quantum computing becomes powerful is in simultaneous computation. Problems where thousands of variables interact at once and classical systems struggle to converge. That is a problem space we are building for. Our strategy has consistently focused on superconducting gate-based quantum computing because it offers two fundamental advantages that matter at scale, speed and scalability. We are working with electrons, not atoms or ions, which gives us gate speeds measured in tens of nanoseconds. And because this technology is grounded in semiconductor fabrication, we believe it offers the most realistic path to building large-scale systems over time. Over the past year, we've made great progress toward what we define as true quantum advantage. I'm excited to share that Rigetti recently achieved a two-qubit gate fidelity as high as 99.9% at 28 nanosecond gate speed on a ProDrive platform using our new proprietary adiabatic CZ scheme. We are still maintaining 99.9% one-qubit gate fidelity, and we have also reported median two-qubit gate fidelities of 99.7% on our nine-qubit system, 99.6% on our 36-qubit system, and 99% on our 108-qubit system, what we call CFIUS-108Q. Together, these milestones are a testament to our ongoing progress in materials, fabrication, and system-level design. They're helping us further narrow the fidelity gap between superconducting systems and other quantum modalities by delivering speeds that are about 1,000 times faster than some approaches like trapped ion or pure atoms. We successfully deployed multiple systems to the cloud, including an 84-qubit monolithic chip system and a 36-qubit chiplet-based system. More importantly, we demonstrated that chiplet tiling works in practice. That matters because scaling to thousands of qubits on a single die is not realistic. Chiplets are how we believe quantum systems will scale in the real world. As we pushed beyond 100 qubits, we gained important insights. On our 108 qubit system, we identified tunable coupler interactions that emerge at higher scale. we made a deliberate decision to delay general availability and address the issue. We executed architectural refinements that successfully improved system stability and control. That decision reflects our discipline and increases our confidence in our 108-qubit chiplet-based system as we move toward customer readiness. That experience underscores why we have our own foundry. Ligeti operates FAB1, the industry's first dedicated and integrated quantum device manufacturing facility, which allows us to tightly couple design, fabrication, and testing under one roof. This enables faster innovation cycles as we scale beyond 100 qubits and drives proprietary advancements rather than incremental workarounds. We see FAB1, as a durable competitive advantage that accelerates our roadmap and creates a meaningful barrier to entry as quantum systems grow in scale and complexity. That combination of scale, control, and execution is also what our customers and partners are responding to. We are also seeing increased demand for on-premises quantum systems, particularly from national governments and research institutions seeking direct access to hardware for hybrid computing and systems-level R&D. In January of this year, we announced an $8.4 million order from India's Center for Development of Advanced Computing, or CDAC, for a 108-qubit on-premises quantum computer scheduled for deployment in the second half of 2026. This system will be integrated into CEDAC's supercomputing environment and is based on our chiplet architecture, which is central to our scaling strategy. That order builds on a memorandum of understanding we signed with CEDAC to explore the co-development of hybrid classical quantum systems. Taken together, these efforts reflect how customers are engaging with us, not just as a hardware vendor, but as a long-term technology partner in hybrid computing environments. At the smaller end of the spectrum, late last year, we also announced purchase orders totaling approximately $5.7 million for two 9-qubit Novera on-premises systems. hardware research, error correction, and internal capability development. Importantly, they are upgradable, which allows customers to grow with the platform as their needs evolve. Our Novera QPU also continues to be an ideal solution for customers who want to integrate our technology with their existing cryogenics and controls. We are pleased to announce that we have secured a purchase order for a Novera QPU from a Japanese research organization, which is scheduled to be delivered in April 2026. This will be Rigetti's first QPU to be located in Japan, and we are excited to be expanding into this new geographic region. A core differentiator for Rigetti is our open modular architecture. We do not believe the future of quantum computing will be built by any single company attempting to own the entire stack. Instead, we have designed our platform to integrate best-in-class partners where they can move faster or deeper than we can alone. We are partnering with Riverlane to advance real-time quantum error correction capabilities as it is foundational to achieving fault-tolerant quantum computing. Riverlane has demonstrated capabilities that we believe will meaningfully advance that goal. We are also working closely with NVIDIA to support NVQ-Link, an open platform designed to integrate quantum systems with AI supercomputing. This collaboration reflects our shared view that quantum computers will coexist with CPUs and GPUs in data centers as part of future hybrid computing environments. Another example is our collaboration with QFOX and the UK's National Quantum Computing Center on optical readout of superconducting qubits. This work addresses a fundamental scaling bottleneck by reducing cryogenic heat load and wiring complexity. While this remains early stage research, it illustrates how our architecture allows us to incorporate novel technologies that could materially improve scalability over time. This ecosystem approach gives us flexibility, accelerates innovation, and reduces execution risk as the industry evolves. The quantum computing market today remains research-driven. Most systems are deployed to government labs, national research centers, universities, and early commercial researchers. That is not a limitation. It is a reflection of where the technology is in its lifecycle. I want to be very clear about how we define quantum advantage because this frames our roadmap and our timelines. For Rigetti, quantum advantage means outperforming classical systems on practical workloads in real computing environments for commercial applicability. We believe achieving quantum advantage requires several things to come together, scale, fidelity, speed, and error mitigation. systems on the order of 1,000 qubits, two qubit gate fidelity approaching 99.9%, gate speeds below 50 nanoseconds, and integrated error mitigation. Based on what we know today, we believe we are roughly three years from reaching that point. That may sound conservative, but in a technology as complex as quantum computing, precision and credibility matter more than bold claims. Looking ahead, 2026 is about execution and scaling. Our near-term priority is completing deployment of the 108-qubit system at 99.5% median two-qubit gate fidelity, which we expect around the end of March. Beyond that, our focus is to deploy a system with more than 150 qubits with an anticipated 99.7% median two-qubit gate fidelity around the end of December 2026. As far as we know, no one has demonstrated systems at that scale and fidelity using chiplet-based architecture. In parallel, we'll continue advancing our chiplet architecture as the foundation for scaling toward a system of more than 1,000 qubits with an anticipated 99.8% median two-qubit gate fidelity by or around the end of 2027. Chipplets are central to our strategy and represent the most practical path to large-scale systems. We also will continue working to integrate error correction into the stack. Our work with River Lane demonstrates ongoing progress in this area. From a market perspective, we expect 2026 to remain focused on delivering on-premises systems across government, national labs, and academic institutions, with select commercial customers engaged in quantum research. Finally, we strengthened our balance sheet. We exited the year with approximately $590 million in cash, providing us with the flexibility and runway to execute our roadmap through the quantum advantage timeframe. Our investment focus remains organic. We will consider M&A only if it meaningfully accelerates our roadmap, but we do not need acquisitions to execute our core strategy. To close, quantum computing is a long cycle opportunity. It requires patience, technical rigor, and capital discipline. We are not building for next quarter or next year. We are building for meaningful, durable impact over the next five to 10 years. Rigetti's strategy is deliberate. We focus on speed, scalability, and fidelity. We leverage a strong ecosystem. We define success rigorously. And we invest with a long-term view. Thank you for your continued support. I'll now turn the call over to our CFO, Jeff Bertelsen, for a review of our financial results. Jeff?

Thank you, Subodh, and good afternoon, everyone. I'll spend a few minutes walking through our fourth quarter financial results, our balance sheet, and how we are thinking about capital deployment as we continue to execute the roadmap you've just heard about. For the fourth quarter of 2025, revenue was $1.9 million compared to $2.3 million in the fourth quarter of 2024. As investors have seen over time, our quarterly revenue profile continues to be influenced by the timing of system deliveries and government contract activity. That dynamic remained true in the fourth quarter. While we saw contributions from our contracts with NQCC and AFSOR, revenue variability at this stage of the market is expected and does not change how we manage the business or allocate capital. Gross margins for the fourth quarter were 35% compared to 44% in Q4 of last year. Margin performance continues to be driven primarily by contract mix. Certain strategic contracts, particularly with government and national lab customers, carry lower margin profiles but play an important role in advancing system validation, ecosystem integration, and long-term positioning. Total operating expenses for the fourth quarter were $23.2 million compared to $19.5 million in the same period last year. Spending remains concentrated in research and development, including engineering, headcount, fabrication, and system integration. Stock-based compensation was $5.6 million for the quarter compared to $3.4 million a year ago. Operating loss for the fourth quarter was $22.6 million, compared to $18.5 million in Q4 2024. Our GAAP net loss for the fourth quarter of 2025 was lower than the GAAP loss for the fourth quarter of 2024, primarily due to the non-cash change in the fair value of our derivative warrant and earn-out liabilities. On a non-GAAP basis, net loss was $11.3 million, or three cents per share, compared to a net loss of 14 million or six cents per share in the prior year quarter. I want to briefly address the timeline for revenue recognition with respect to the 5.7 million of NOVERA sales we announced late last year and the 8.4 million CDAC order we announced in January. Regarding the two NOVERA sales for 5.7 million, we expect a little less than half of that revenue to be recognized in the first quarter with the balance recognized in the second quarter of 2026. Both NOVERA sales included lower margin dilution refrigeration systems. Therefore, we anticipate significant first quarter year-over-year revenue growth driven by a portion of the 5.7 million NOVERA on-premises system purchase orders expected to ship in Q1. Importantly, while individual quarters can move around, these contracts support a growing base of recurring and multi-period activity. Regarding the CDAC order, we expect to recognize the revenue from that sale in the second half of 2026, following testing to validate that the system meets its specifications. The CDAC order announced in January 2026 did not include ongoing maintenance or support. We expect to receive an additional PO for those services later in the year. Turning to the balance sheet, we ended the year with approximately $590 million in cash, cash equivalents, and available for sale investments, compared with approximately $217 million at the end of 2024. We continue to operate with no debt. At our current operating profile, we believe our capital position provides sufficient runway to execute against the milestones Subodh outlined, including continued progress on scale, fidelity, and system integration. Our approach to capital allocation remains disciplined and deliberate. The majority of our spending is directed towards core R&D activities that directly advance our technology platforms. We are not managing the business around short-term revenue optimization. We are managing it around credible long-term progress toward quantum advantage. We continue to evaluate longer-term FAB and R&D capital needs, including the need for dilution refrigeration as cube accounts scale. Any future investment decisions will be driven by capability requirements and evaluated carefully against alternatives. including partnerships or shared infrastructure. Our currently disclosed roadmap does not depend on near-term changes to our FAB footprint. Our execution path remains primarily organic. We believe we have the available technical depth and internal capabilities required to deliver on our roadmap. At the same time, we maintain flexibility to evaluate selective opportunities that could accelerate progress in targeted areas. Discipline and alignment with our strategy remain the filter. To close, our financial strategy is straightforward. We are focused on maintaining flexibility, funding innovation responsibly, and aligning capital deployment with long-term value creation. While quarterly results will continue to reflect the early stage nature of the market, our balance sheet position us to execute with patience and control. With that, I'll turn it back to the operator who will open the call for your questions.