RGTI

Business Context and Reporting Period

Rigetti Computing, Inc. (RGTI) is a vertically integrated quantum computing company that designs, manufactures, and operates superconducting quantum processors. The company operates its own wafer fabrication facility (Fab-1) and offers Quantum Computing as a Service (QCaaS) via its QCS platform and direct sales of Quantum Processing Units (QPUs). This summary covers the fiscal year ended December 31, 2024.

Key operational milestones in 2024 included the public launch of the Ankaa-3 system (84 qubits) and the achievement of 99.0% median two-qubit iSWAP gate fidelity. The company remains in the "Emerging Quantum Advantage" phase, relying heavily on government development contracts for revenue.

Key Financial Metrics

Liquidity and Debt: The company raised approximately $206 million in equity financing during 2024 (via ATM offerings and a registered direct offering). It fully repaid its outstanding debt to Trinity Capital Inc. in December 2024. Management believes existing cash and investments are sufficient to fund operations for at least the next three years.

Material Changes vs. Prior Period

• Revenue Decline: Revenue decreased by 10% ($1.2 million) primarily due to a $2.0 million reduction in QCaaS revenue, partially offset by higher development contract and QPU sales revenue.
• Significant Net Loss Increase: Net loss more than doubled to $201.0 million. This was driven by non-cash charges related to the change in fair value of derivative warrant liabilities ($90.2 million loss) and earn-out liabilities ($43.7 million loss), largely due to stock price volatility.
• Cost of Revenue: Increased by 82% ($2.3 million) due to a change in revenue mix, specifically a new contract for a 24-qubit system with a lower gross margin profile.
• Operating Expenses: Total operating expenses decreased by 9% ($7.3 million). R&D expenses fell by 6% due to workforce restructuring impacts and IT cost rationalization. SG&A expenses fell by 12% due to the absence of a $2.2 million expense related to a forward agreement with Ampere Computing recognized in 2023.

Guidance, Outlook, and Risks

Outlook and Roadmap:

• 2025 Targets: Rigetti plans to release a 36-qubit system by mid-2025 and a system with over 100 qubits by year-end 2025, targeting a 2x reduction in error rates compared to 2024 levels.
• Quanta Collaboration: In February 2025, the company entered a Collaboration Agreement with Quanta Computer Inc. Both parties agreed to invest at least $250 million over five years. Rigetti also agreed to sell Quanta approximately $35 million of common stock in a private placement, subject to regulatory clearance.

Key Risks and Contingencies:

• Capital Requirements: The company has a history of operating losses and expects to incur significant expenses for the foreseeable future. It may need to raise additional capital sooner than planned.
• Customer Concentration: Revenue is highly concentrated. Sales to government entities comprised 89.4% of total revenue in 2024. Five customers accounted for the majority of revenue, with one customer representing 27%.
• Derivative Liabilities: The company has significant derivative liabilities (warrants and earn-outs) that are remeasured at fair value each period, causing volatility in net income.
• Technology Execution: The business depends on achieving "quantum advantage." Failure to meet technological milestones or achieve commercial viability could harm the business.

Investor Verification Checklist

• Cash Runway: Verify the sufficiency of the $67.7 million cash balance against the $250 million investment commitment to Quanta and ongoing R&D burn rates.
• Quanta Deal Status: Monitor the regulatory clearance status of the $35 million private placement with Quanta, which is a condition for closing.
• Government Contract Renewals: Assess the risk of revenue volatility given that nearly 90% of revenue comes from government contracts, which are subject to funding cycles and termination rights.
• Warrant Liability Volatility: Understand that net loss figures are heavily distorted by non-cash fair value adjustments on warrants; focus on operating cash flow and gross margin trends.
• Technology Milestones: Track the delivery of the 36-qubit and 100+ qubit systems in 2025 and the associated error rate reductions.