Rigetti Computing, Inc.

Good day and thank you for standing by. Welcome to the Regetti 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 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 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.

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 RIGATI and look forward to answering your questions and 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 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. Thank you. Thank you. furnished with the SEC. Before I dive into the quarter, I want to frame our discussion around three key takeaways. First, we continue to demonstrate technical leadership with our CFIUS class systems, including ongoing progress to improve the performance of our 108Q, CFIUS 1-108Q platform. Second, the letter of intent we signed with the US 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 and HPC Solutions. Q2 was another important proof point in our strategy to combine technical progress with real-world access and long-term strategic partnerships. 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. We believe Rigetti's well-positioned 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 QVC technology from Riverlane and transduction technology from QFox. 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. CPS-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 Brigetti Quantum Cloud Services and through Amazon Bracket, Microsoft Azure Quantum, and CubeBraid. 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, CFIUS-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. These performance levels at the 100 plus qubit scale are meaningful, and 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 to 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. This includes joint IP with Fermilab, where capping niobium superconducting contacts with tantalum has demonstrated meaningful coherence time improvements in fundamental experiments and we are now incorporating those learnings into production chip designs. We are also refining deposition, oxidation and edge processes to smooth interfaces in the Josephson junction area, which we believe will further improve coherence and ultimately gate fidelities. Beyond CFIUS-1-108Q, 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 US Department of Commerce letter of intent we announced on May 21. 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 a department receiving an equity stake in IGATI 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 US 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. For Rigetti, this LOI is strategically significant in several ways. It would allow us to tackle key scaling bottlenecks more rapidly associated with multi-chip architectures. It would enable us to accelerate multiple generations of superconducting quantum processors and associated control electronics at FAB1, our dedicated quantum device manufacturing facility. It would deepen our collaboration with the US 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. 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 Bracket, Microsoft Azure Quantum, and Q-Braid provide global access to our systems, including CFIUS-1108-Q. 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 9-qubit Novera systems and a 108-qubit system for CDAC in India. We remain on track and are seeing additional demand for Nowhere RQPUs from national labs and universities with recent wins including the University of Saskatchewan and a research arm of a large Japanese conglomerate. 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 Novara quantum computing system into PSC's new Tangle Lab testbed, which is being funded by a National Science Foundation grant. Working with HPE, this deployment is designed to integrate the Novara 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 only experimentation toward commercially relevant quantum enabled HPC solutions. More broadly, global investment in quantum computing continues to expand led by governments and national labs and increasingly complemented by commercial interest. Outside the United States, we are seeing structured programs such as the UK government's six-year PROCURE initiative, where we intend to invest up to $100 million over time in systems, talent, and infrastructure. In India, our 108-qubit CDAC award reflects national-level interest in superconducting platforms. And across Europe and Asia, We are seeing a 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. We remain focused on a clear sequence of models designed to position Rigetti to reach quantum advantage in roughly three years. Near-term, that means driving CFIUS 1100Q 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 mitigated and eventually fault-tolerant computation. In support of this roadmap, we continue to invest in FAB1 and associated refrigeration infrastructure, as well as partnerships with organizations such as Riverlane, Quanta, and QFOX 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. We intend to update our published technology roadmap later this year once we have additional operational data from CPS108Q 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 gauge 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.

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're 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-in pricing and the relative contribution from Novera QPU sales. 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 cubic 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. 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're 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. In Q2, we continued to progress on the $8.4 million CDAC 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, 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. 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 United Kingdom. Capital expenditures in the quarter were primarily driven by investments in FAB I and additional dilution refrigeration capacity to support higher tube account 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. 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's 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. but 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.