Analyst(s): Dr. Bob Sutor
Publication Date: August 13, 2024
The News: Rigetti Computing reported its Q2 2024 financial results with a revenue of $3.1 million and a net loss of $12.4 million. The company highlighted continued progress on its 84-qubit Ankaa™-3 system and raised $27.8 million through its ATM program during the quarter.
By the Numbers:
- Revenue: $3.1 million for Q2 2024, down from $3.3 million in Q2 2023.
- Total Operating Expenses: $18.1 million for Q2 2024, down from $19.0 million in Q2 2023.
- Net Loss: $12.4 million for Q2 2024, compared to $16.9 million in Q2 2023.
- Cash and Cash Equivalents: $100.5 million as of June 30, 2024.
- Shares Issued: 24.1 million common shares sold during the quarter, raising $27.8 million.
Rigetti Computing Reports Second Quarter 2024 Financial Results
Analyst Take: Rigetti Computing’s Q2 2024 results reflect a company that continues to grapple with the challenges of operating within the nascent quantum computing industry, where we must balance the promise of future breakthroughs against current financial realities. This earnings report provides a clear snapshot of the company’s economic pressures and flat revenue. I continue to question the market need for a 9-qubit quantum computer component. Measured directly against industry juggernauts IBM and Google in the superconducting qubit modality, Rigetti lags in system scalability and overall performance.
As of August 11, the company’s stock sat at $0.790, down $0.134 year-to-date, with a 52-week high of $2.86 and a low of $0.75.
A Look into Rigetti’s Second Quarter Financials
The reported revenue of $3.1 million marks a slight decline from the same period last year. Despite ongoing losses, the company’s ability to raise $27.8 million via stock sales during the quarter suggests that investors remain confident in Rigetti’s long-term prospects.
Operating expenses for the quarter were notably high at $18.1 million, driven primarily by research and development (R&D) activities. R&D expenses totaled $11.9 million, accounting for a significant portion of overall costs. The continued high expenditure on R&D underscores Rigetti’s required focus on innovation and technology development as it seeks to gain a competitive edge in the quantum computing sector. In the world of small quantum computing hardware companies, the operating motto is “Innovate, scale, increase revenue or investments, or die.”
Net loss for the quarter was $12.4 million, which, while substantial, reflects a reduced loss compared to the $16.9 million loss recorded in the same quarter last year. This reduction in net loss may indicate improved cost management or other financial efficiencies. However, the ongoing losses for this public company highlight Rigetti’s challenge in transitioning from a development-focused company to one with a more balanced and sustainable economic model.
Technology and Roadmap
One of the key highlights of the earnings report is Rigetti’s progress on its 84-qubit Ankaa™-3 system. The company has set a goal of achieving a 99+% median 2-qubit gate fidelity by the end of 2024. Other quantum companies, including Quantinuum in April, have already reached this level of low error rates. So, while it is a worthwhile goal to state, it is a requirement and not a market-leading ambition.
The company also emphasized its ongoing work on modular chip architecture, which allows for connecting multiple identical chips into a large-scale quantum processor. This approach reduces manufacturing complexity and enables scalable quantum computing solutions. The continued development of this technology is critical for Rigetti’s long-term success, as it addresses one of the key barriers to the widespread adoption of quantum computing: scalability. This work is laudable, as I believe quantum computing companies should be spending half of their innovation time and budget on such modular approaches.
Rigetti’s research on quantum optimization algorithms is a noteworthy development. The company has introduced a qubit-efficient combinatorial solver designed to tackle significant combinatorial problems using a small number of qubits.
Market and Competitive Landscape
Rigetti operates in a highly competitive market with established technology giants and specialized quantum computing firms. The competitive landscape is intense, with other players such as IBM, Google, Microsoft, Quantinuum, and IonQ also making significant strides in quantum computing.
Rigetti’s ability to compete depends on its continued technological advancements and capacity to translate its innovations into commercial products and services for research, education, and experimentation. The company’s emphasis on modular architecture and qubit-efficient algorithms suggests a strategic focus on overcoming some of the critical challenges that have limited the scalability and practical applicability of quantum computing to date.
The company’s financial position, while bolstered by recent capital raises, remains a concern. The high burn rate associated with ongoing R&D and operational expenses means that Rigetti must continue securing additional funding or demonstrate a clear pathway to profitability shortly.
Looking Ahead
Rigetti Computing’s future hinges on achieving key technological milestones, particularly the anticipated deployment of the 84-qubit Ankaa™-3 system by the end of 2024. This development could validate the company’s technological approach and lay the groundwork for future growth. However, financial sustainability remains a pressing concern, as ongoing losses and high operating expenses highlight the need for a clear path to profitability for a public company.
Key Takeaways
Rigetti’s future success will depend on its ability to deliver on its technological goals, secure the necessary funding, and establish a sustainable financial model. Investors and stakeholders will closely monitor the company’s progress in the coming quarters as Rigetti works to navigate the complexities of the quantum computing market and support long-term growth.
You can read the full press release on Rigetti’s website here.
Disclosure: The Futurum Group is a research and advisory firm that engages or has engaged in research, analysis, and advisory services with many technology companies, including those mentioned in this article. The author does not hold an equity position in any company mentioned in this article.
Analysis and opinions expressed herein are specific to the analyst individually and data and other information that might have been provided for validation, not those of The Futurum Group as a whole.
Other Insights from The Futurum Group:
Quantum in Context: Rigetti Computing’s Q1 2024 Earnings and 9 Qubits
Quantum in Context: Rigetti Q4 2023 Earnings and Other Numbers
Quantum in Context: A Qubit Primer
Author Information
Dr. Bob Sutor is a Consulting Analyst for Futurum and an expert in quantum technologies with 40+ years of experience. He is an accomplished author of the quantum computing book Dancing with Qubits, Second Edition. Bob is dedicated to evolving quantum to help solve society's critical computational problems. For Futurum, he helps clients understand sophisticated technologies and how to make the best use of them for success in their organizations and industries.
He’s the author of a book about quantum computing called Dancing with Qubits, which was published in 2019, with the Second Edition released in March 2024. He is also the author of the 2021 book Dancing with Python, an introduction to Python coding for classical and quantum computing. Areas in which he’s worked: quantum computing, AI, blockchain, mathematics and mathematical software, Linux, open source, standards management, product management and marketing, computer algebra, and web standards.
