Rigetti Computing, Inc.

Good day, ladies and gentlemen, and thank you for standing by. Welcome to the Rigetti Computing's first 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 1-1 on your telephone keypad. As a reminder, this conference call is being recorded. At this time, I would like to turn the conference over to Mr. Subodh Kulkarni, CEO of Rigetti. Sir, please begin.

Good afternoon, and thank you for joining us for Rigetti's first 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. 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 Rigeti, 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 first 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. 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 filings with the Securities and Exchange Commission, including our Form 10-K for the year ended December 31st, 2025, are Form 10Q for the three months ended March 31st, 2026, and other periodic reports filed by the company from time to time with the SEC. We encourage you to review these filings 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. Brigetti 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, 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, or to the 8k furnished with the SEC today after the close. Before I begin, I want to frame today's discussion around three key takeaways. First, with the general availability of our 108-qubit CFIUS-1 108Q system on Rigetti Quantum Cloud Services, Amazon Bracket, Microsoft Azure Quantum, and Q-Braid, we believe we have delivered one of the most powerful, generally available quantum computers in the world and the largest modular quantum computing system on the market today. Second, we are seeing growing adoption of Regati systems across government, academic, and commercial customers, including new on-premises nowhere QPU sales that support meaningful year-over-year revenue growth. Third, we remain focused on disciplined execution against our roadmap to quantum advantage, continuing to improve fidelity on CPS108Q and advancing toward higher qubit, higher fidelity chiplet-based systems underpinned by a strong balance sheet and prudent capital deployment. Now I'll step back and put the quarter in context. Q1 was an important proof point in our strategy to combine technical progress with real-world access and usage. Quantum computing remains a long-cycle opportunity, but 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. Our progress this quarter reflects that reality. Let me start with our technology and product milestones. Last month, we announced the general availability of our 108-qubit CPS1-108Q quantum computing system Accessible to customers via Rigetti Quantum Cloud Services and through Amazon Bracket, the Quantum Computing Service by AWS, as well as Microsoft's Azure Quantum Service and Qbraille. CPS1-108Q is our highest qubit count system to date and the industry's largest modular quantum computing system, built from 12 interconnected 9-qubit chiplets. This system triples the number of qubits and chiplets from our previous 36-qubit CFIUS1-36Q system, and more importantly, validates our proprietary chiplet-based scaling architecture in a production setting. Today, CFIUS1-108Q has achieved a median two-qubit gate fidelity of approximately 99.1%, with gate speeds of roughly 60 nanoseconds and a median single qubit gate fidelity of 99.9%. These are meaningful performance levels at this scale, and we expect to continue improving fidelity throughout 2026 as we refine the performance of our individual chiplets, innovate across materials and fabrication, and incorporate learnings from our prototype and R&D platforms. We achieved a median with 40-nanosecond gate speeds on our nine-qubit system by using a proprietary adiabatic CZ gate scheme. Leveraging the same gate scheme, we also demonstrated two-qubit gate fidelities as high as 99.9% at 28-nanosecond gate speeds on a prototype system, and those advancements are informing how we operate CFIUS 1108Q and design future systems. From a systems engineering perspective, this launch is about more than just adding qubits. During development, we identified and mitigated coupling interactions between three-level couplers that become more pronounced beyond the 100-qubit scale. By refining our chip architecture to address those interactions, we effectively shifted the primary performance limitation from coupler behavior to coherence time, which we are confident we can address as we continue to optimize our entire stack. I also want to highlight what this means for users. With CFIUS 1-108-Q now available on Rigate EQCS, Amazon Bracket, Microsoft Azure Quantum, and Q-Braid, researchers and enterprises can access our highest qubit count system on platforms they already use for classical and quantum R&D. CFIUS 1-108-Q is the first gate-based device on Amazon Bracket with more than 100 qubits offering improved fidelities that enable wider and deeper circuits for applications such as material science, optimization, and quantum simulation. AWS is a leader in cloud infrastructure, so extending our relationship with Amazon Bracket and now Azure Quantum and CubeRaid is an important validation for technology and our go-to-market strategy. Stepping back, we continue to believe that superconducting gate-based quantum computing with chiplet-based scaling offers a compelling combination of speed and scalability. Our current systems achieve gate speeds on the order of 50 to 70 nanoseconds, which is roughly 1,000 times faster than some other alternative modalities such as strapped ion or neutral atom systems. As we scale, we intend to maintain those speed advantages while driving fidelity higher and integrating error correction-ready gate operations into the stack. Let me now turn to customer momentum and market traction. Our strategy is to meet customers where they are, whether that is on the public cloud, on hybrid infrastructure, or in dedicated quantum centers. On the cloud side, The combination of the QCS, Amazon Bracket, Microsoft Azure Quantum, and Q-Braid provides global access to our systems, including CPS 1108Q. And we are seeing strong interest from researchers who want to experiment on one of the most capable, generally available gate-based platforms in the market today. In parallel, we continue to expand our base of on-premises Novera QPUs. The Novera QPU is designed to integrate into a customer's existing cryogenic and control systems, providing a high performance on-premises platform for quantum R&D. Recent Novera events include an order from the University of Saskatchewan, where our QPU will support quantum research and education. And we have also announced Novera QPU and Novera system sales to additional research organizations globally. This on-premises systems deepen technical engagement, create multi-year usage pathways, and showcase the flexibility of our product portfolio from nine to more than 100 cubits. As discussed in our prior call, Nowhere and other system deliveries contribute to significant year-over-year growth, albeit with some variability quarter-to-quarter based on shipment timing and contract mix. For example, we expect a meaningful portion of previously announced Novera purchase orders to be recognized in the first half of 2026, and we are executing on additional system-level contracts, such as the CDAC order we announced earlier this year. While the timing of revenue recognition can move between quarters, these contracts underscore growing demand for regated QPUs and systems among national labs, universities, and quantum computing centers. We are also encouraged by continued engagement from commercial customers who are exploring quantum-inspired and hybrid use cases. While commercial revenue remains early, we are seeing increased interest from industries such as materials, logistics, and financial services as they look to understand where quantum computing can augment classical high-performance computing over time. We are starting to see tangible examples of how even relatively small-scale quantum systems can impact real-world workloads. For example, a team in China recently demonstrated that a 90-bit quantum system could outperform classical reservoir networks with thousands of nodes on a realistic weather forecasting task, highlighting how modest-sized quantum devices can begin to disrupt AI and modeling applications. We view results like this as early validation of the commercial opportunities that systems like our Novera QPUs and CPS-class devices are positioned to address as they mature. Let me briefly connect this back to our long-term roadmap. We remain focused on a clear sequence of milestones that we believe positions Rigetti to reach quantum advantage in roughly three years. Near-term, that means driving CPS 1108Q to a medium two-qubit gate fidelity of approximately 99.5% later this year while maintaining our gate speed advantages. Beyond that, we are working toward deploying systems that leverage our chiplet-based architecture as the foundation for eventually scaling more than 1,000 qubits with fidelities and gate speeds that support error-mitigated and ultimately fault-tolerant computation. In support of this roadmap, we recently announced our intention to invest up to $100 million in the United Kingdom over the next several years to accelerate quantum computing development. This will be our first major investment outside the United States and builds on our existing 36 qubit system deployment at the UK's National Quantum Computing Center, as well as UK government's multi-billion dollar commitment to quantum technologies. In parallel, we continue to collaborate with partners such as Riverlane and others to integrate error correction ready capabilities into the stack. This includes support for high fidelity native gates, improved circuit compilation, and control electronics enhancements that are designed to be compatible with future error corrected architectures. Our intention is to update our published technology roadmap later this year once we have incorporated operational data from CPS 1108Q and can provide more detail on the specific steps we expect to take toward quantum advantage. Turning to the financial framework, our approach remains straightforward and disciplined. We exited last year with a strong cash position and no debt, giving us the flexibility to continue investing behind our technology roadmap and customer opportunities. Our spending remains concentrated in core R&D, including fabrication, chip design, and control electronics development, along with the capex required to support higher qubit count systems and associated cryogenics infrastructure. While this results in elevated capex in the near term, we believe these investments are directly tied to the capabilities that will differentiate Rigetti in the market. We are not managing the business around short-term revenue optimization. We are managing it around credible progress toward large-scale, high-fidelity quantum systems that can deliver commercially meaningful value. To that end, our capital allocation remains focused on organic execution, and we will consider M&A only where we can clearly accelerate our roadmap without compromising our financial discipline. To close my remarks before turning it over to Jeff, I want to reiterate the three key messages we hope you take away from today's call. First, CPS1-108Q is now generally available through ReGate EQCS, Amazon Bracket, Microsoft Azure Quantum, and QBraid. And we believe it represents one of the most powerfully generally available gate-based quantum computers in the world and the largest modular system on the market today. Customer adoption continues to build across cloud and on-premises channels with Novera cells and other contracts, supporting strong year-over-year revenue growth and deepening our engagement with leading research institutions and emerging commercial users. Third, we remain committed to disciplined execution on the roadmap that targets quantum advantage in about three years, anchored in our chiplet-based architecture, high-speed superconducting qubits, improving fidelity, a strong balance sheet, and strategic initiatives such as our planned $100 million UK investment that enables us to invest with patience and control. Thank you for your continued support and interest in DGATI. I will now turn the call over to our CFO, Jeff Bertelsen, who will walk you through our financial results in more detail.

Thank you, Sibodh, and good afternoon, everyone. I will spend a few minutes walking through our first quarter 2026 financial results, our balance sheet, and how we're thinking about capital deployment as we continue to execute on the roadmap Subo described. For the first quarter of 2026, revenue was $4.4 million compared to $1.5 million in the first quarter of 2025. The year-over-year increase was driven primarily by on-premises and OVARA QPU deliveries and related contracts, as well as certain government and research projects. Gross margin for the first quarter was 31% compared to approximately 30% in the first quarter of 2025. Our first quarter 2026 gross margin was impacted by contract mix, including a higher contribution from QPU and system deliveries that include lower margin third-party refrigeration. Total operating expenses for the first quarter were $27.3 million, compared to $22.1 million in the same period last year. Spending remains concentrated in research and development, including engineering headcount, fabrication, and system integration, consistent with the priorities we outlined on our fourth quarter call. Stock-based compensation for the quarter was $5.9 million compared to $4.2 million in the first quarter of 2025. Operating loss for the first quarter was $26 million compared to an operating loss of $21.6 million in Q1 2025. On a GAAP basis, net income for the first quarter of 2026 was $33.1 million compared to net income of $42.6 million in the prior year period. The first quarter of 2026 included $53.7 million of non-cash gains from the change in fair value of derivative warrant and earn-out liabilities compared to $62.1 million in the prior year period. As a reminder, these non-cash fair value adjustments can introduce significant volatility into our GAAP results quarter to quarter, 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 $14.7 million, or four cents per diluted share, compared to a non-GAAP net loss of approximately $15.3 million, or five cents per diluted share, in the first quarter of 2025. Let me provide a bit more color on revenue drivers and how we're thinking about the remainder of the year. As we outlined in our fourth quarter call, we expected strong year-over-year revenue growth in the first quarter of 2026, driven by shipment of a portion of the 5.7 million of on-premises Novera quantum computing system purchase orders announced late last year. The first quarter results are consistent with that view, and we continue to expect the remaining NOVERA revenue to be recognized primarily in the second quarter of 2026. We also continue to execute on the $8.4 million CDAC order for an on-premises 108-qubit system in India, which we expect to recognize in the fourth quarter of 2026 following installation and performance acceptance testing. As we said last quarter, the initial CDAC order did not include ongoing maintenance and support. We still expect to receive a separate purchase order for those services. More broadly, our revenue profile continues to be influenced by the timing of system deliveries and government-funded projects. We continue to view this variability as inherent to the current stage of the market and not as a driver of our long-term capital allocation or technology strategies. Turning to the balance sheet, we ended the first quarter of 2026 with approximately $569 million in cash, cash equivalents, and available for sale investments, compared with $209.1 million as of March 31, 2025, and approximately $589.8 million at the end of 2025. The year-over-year increase relative to Q1 2025 reflects the capital raised and strategic investment activity we have previously discussed, while the sequential decline from year-end reflects ongoing operating spend and capital expenditures. We continue to operate with no debt. At our current operating profile, we believe our capital position provides sufficient runway to execute against the technology and system deployment milestones we have laid out, including continued progress on scale, fidelity, and system integration, as well as our planned investment in the United Kingdom. Capital expenditures in the quarter were primarily driven by investments in FAB1 and additional dilution refrigeration capacity to support higher cube account systems over the next several years, consistent with the framework we outlined in the fourth quarter. We continue to expect 2026 CapEx to be elevated relative to prior years, largely due to refrigeration and infrastructure needs rather than major changes to our FAB footprint. Our approach to capital deployment remains disciplined and consistent with what we have discussed on the Q4 call. 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. We're managing it around credible long-term progress toward quantum advantage and commercially relevant systems. To close, our financial strategy is unchanged from what we outlined last quarter. We are focused on maintaining flexibility, funding innovation responsibly, in aligning capital deployment with the long-term value creation potential of our technology roadmap. While quarterly results will continue to reflect the early stage nature of the quantum computing market and the timing of large system contracts, we believe our balance sheet and capital discipline position us to execute with patience and control.