Rigetti Computing, Inc. — Q1 2022 Form 10-Q
Period: Three months ended March 31, 2022; unaudited. Financial amounts below are in U.S. dollars. Rigetti builds superconducting quantum processors and provides cloud access and development services. On March 2, 2022, it completed its SPAC business combination, accounted for as a reverse recapitalization.
Financial performance and position
| Metric | Q1 2022 | Q1 2021 |
|---|---|---|
| Revenue | $2.104 million | $2.360 million |
| Gross profit / margin | $1.690 million / 80.3% | $2.087 million / 88.4% |
| Operating expenses | $25.484 million | $9.767 million |
| Loss from operations | $(23.794) million | $(7.680) million |
| Net loss | $(10.470) million | $(7.787) million |
| Net loss per share | $(0.20) | $(0.36) |
| Cash used in operations | $(15.721) million | $(5.795) million |
| Capital expenditures | $2.836 million | $1.488 million |
- At March 31, cash was $206.6 million ($206.9 million including restricted cash); total assets were $245.9 million and stockholders’ equity was $165.4 million.
- Debt principal outstanding was $32.0 million; balance-sheet debt was $30.0 million, net of discounts. Debt is secured by substantially all assets and bears interest at the greater of a prime-based rate or 11%, with an effective rate reported at 16.49%–17.31% for the tranches.
- Financing activities provided $213.4 million in cash, principally reflecting $225.6 million of net business-combination and PIPE proceeds, offset by transaction costs and other financing items.
Changes versus the prior period
- Revenue fell 11%, mainly because a large government project’s first phase had been completed in Q1 2021; expanded U.S. and U.K. government projects partly offset the decline. Development contracts and other professional services generated $1.515 million; quantum-system access generated $0.589 million.
- Operating expenses rose 161%. Research and development increased 80%; sales and marketing increased 373%; general and administrative expenses increased 359%.
- Reported net loss increased by $2.683 million, despite $15.456 million of gains from changes in the fair value of warrant and earn-out liabilities. These noncash gains partly offset the larger operating loss.
- The business combination significantly changed the capital structure: common shares outstanding rose from 18.2 million at year-end to 113.8 million at March 31. The company reported $11.5 million of stock-based compensation, including a cumulative recognition of previously deferred RSU compensation when the merger satisfied the liquidity condition.
Outlook, commentary and risks
- Management said cash on hand and expected customer receipts should fund working-capital and capital needs for at least 12 months from issuance of the statements, based on current plans and assumptions. It expects continued operating losses and negative operating cash flow and may seek additional capital.
- Management expects development contracts to remain the majority of revenue for at least several years while QCaaS grows; contract milestone timing makes revenue variable. Remaining performance obligations were approximately $10.6 million, with about $5.3 million expected in the remainder of 2022 and $5.3 million in 2023–2024.
- The filing says lower-than-anticipated business-combination proceeds, together with rising development costs, are expected to extend timelines for the 1,000- and 4,000-qubit systems. The risk discussion cites planned introductions of a 1,000+ qubit system in late 2025 and a 4,000+ qubit system in or after 2027. No formal revenue or earnings guidance is provided.
- Customer and government exposure is concentrated: the three largest customers represented 83% of Q1 revenue, and government entities represented 76%. One customer accounted for 47% of revenue.
- Key risks include technical and commercialization uncertainty, competition, dependence on cloud providers and limited suppliers, public-sector contract timing and funding, inflation and supply-chain disruption, and the need for additional capital. Management reported that the previously identified material weakness in internal control over financial reporting was remediated as of March 31, 2022; it reported disclosure controls effective and no additional material weaknesses identified.
- Legal proceedings: the company reported no material pending or threatened proceeding it believed could have a material adverse effect.
Important facts for investors to verify
- Whether revenue growth and customer diversification reduce reliance on a few customers and government contracts.
- Cash burn, investment needs and the assumptions supporting management’s stated 12-month liquidity outlook.
- Progress against the revised quantum-system roadmap and the effect of delays or technical setbacks on commercialization.
- How much of reported results reflects recurring operations versus noncash fair-value gains and merger-related stock compensation and costs.
- Debt terms, secured collateral, potential dilution from outstanding warrants and equity awards, and future capital-raising needs.