Introduction

Rigetti Computing, Inc. (RGTI) is a visionary leader in the burgeoning field of quantum computing, leveraging its proprietary technology and full-stack approach to push the boundaries of what's possible in the classical computing landscape. With a rich history spanning over a decade, Rigetti has emerged as a trailblazer, fusing the power of quantum mechanics with the ubiquity of classical computing to unlock transformative computational capabilities.

Company History

Rigetti's journey began in 2013 when the company was founded by Chad Rigetti, a quantum computing pioneer with a PhD from Yale University. Recognizing the immense potential of quantum computing to revolutionize various industries, from finance and cryptography to materials science and drug discovery, Rigetti set out to develop a comprehensive, end-to-end quantum computing platform.

Headquartered in Berkeley, California, Rigetti has expanded its operations to include facilities in Fremont, California, London, United Kingdom, Adelaide, Australia, and British Columbia, Canada. The company's early years were marked by intense research and development efforts, as it worked to overcome significant challenges in inventing and developing new technology for its breakthrough multi-chip quantum processor. During this period, Rigetti faced difficulties in meeting publicly announced milestones, reflecting the complexities involved in bringing its innovative approach to quantum computing to fruition.

Financial History

A significant milestone was reached in 2018 when Rigetti began generating revenue, primarily through partnerships with government agencies and commercial organizations. However, the company continued to incur substantial operating losses as it maintained its commitment to heavy investment in ongoing research and development efforts. By the end of 2023, these investments had resulted in an accumulated deficit of over $350 million, underscoring the capital-intensive nature of quantum computing innovation.

Rigetti's financial landscape underwent a transformative change in March 2022 when the company completed a merger with Supernova Partners Acquisition Company II, Ltd., becoming a publicly traded entity on the Nasdaq Capital Market under the ticker symbol RGTI. This business combination provided Rigetti with a substantial cash infusion of $225.6 million in net proceeds, bolstering its ability to fund operations and accelerate technology development. Prior to this merger, Rigetti had relied on various capital-raising strategies, including the issuance of preferred stock, warrants, convertible notes, and venture-backed debt.

Overcoming Challenges

Throughout its history, Rigetti has demonstrated resilience in facing the inherent challenges of developing cutting-edge quantum computing technology and achieving profitability. The company has consistently worked to overcome these obstacles through sustained investment in research and development, the forging of strategic partnerships, and now, as a publicly traded company, by leveraging its access to additional capital markets.

Technology and Innovation

Over the years, Rigetti has meticulously built a diverse portfolio of intellectual property, encompassing cutting-edge quantum processor designs, software tools, and cloud-based service offerings. The company's flagship product, the Novera Quantum Processing Unit (QPU), has consistently demonstrated industry-leading performance, with its latest iteration, the Ankaa-2 system, achieving a remarkable 98% median 2-qubit gate fidelity - a testament to Rigetti's engineering prowess.

Financial Performance

Rigetti's financial performance has been marked by consistent revenue growth, despite the challenges posed by the COVID-19 pandemic and broader macroeconomic headwinds. In the latest reported quarter, Q3 2024, the company generated $2.38 million in revenue, a 23% decrease from the $3.1 million reported in the same period of the previous year. The company's net loss for Q3 2024 was $14.83 million, with operating cash flow at -$15.43 million and free cash flow at -$17.71 million.

For the fiscal year 2023, Rigetti reported total revenue of $12.01 million, with a net loss of $75.11 million. The company's operating cash flow for FY 2023 was -$50.58 million, while free cash flow stood at -$59.64 million.

The decreases in revenue, gross margin, and cash flow were due to changes in the composition of Rigetti's revenue and variability in the pricing and terms of its development contracts. During the nine months ended September 30, 2024, the company entered into a new contract to deliver a 24-qubit quantum computing system having higher costs and a lower gross margin profile than most of its other contracts.

Funding and Investment

One of the key drivers of Rigetti's growth has been its ability to secure significant funding and investment. In March 2022, the company completed a merger with Supernova Partners Acquisition Company II, Ltd., a special purpose acquisition company (SPAC), which provided Rigetti with a cash infusion of $225.6 million. This capital injection has enabled Rigetti to accelerate its research and development efforts, expand its sales and marketing initiatives, and invest in the scaling of its quantum computing technology.

As of September 30, 2024, Rigetti had $92.6 million in cash, cash equivalents, and available-for-sale securities. The company's debt-to-equity ratio stood at 0.166, with a current ratio and quick ratio of 4.84, indicating a strong liquidity position.

Innovation and Technological Advancements

In addition to its financial strength, Rigetti has also demonstrated a strong commitment to innovation and technological advancement. The company's research and development efforts have yielded significant breakthroughs, including the development of its proprietary "Alternating Bias-Assisted Annealing" (ABAA) technique, which allows for the precise control and tuning of quantum processor frequencies, a critical factor in achieving high-fidelity quantum computations.

Strategic Partnerships

Furthermore, Rigetti has forged strategic partnerships with industry leaders and government agencies, further solidifying its position as a trusted provider of quantum computing solutions. Notable collaborations include a long-standing relationship with the U.S. Department of Energy's Fermi National Accelerator Laboratory, as well as partnerships with the UK's National Quantum Computing Centre and the Israeli Quantum Computing Center.

Future Outlook

Looking ahead, Rigetti's technology roadmap is equally impressive, with the company planning to introduce a new modular system architecture in 2025. By mid-year 2025, Rigetti expects to release a 36-qubit system based on four 9-qubit chips, with a targeted 99.5% median 2-qubit gate fidelity. This milestone, along with the anticipated release of a system with over 100 qubits by the end of 2025, underscores Rigetti's relentless pursuit of quantum supremacy. The company also plans to develop the 336-qubit LiRAR system thereafter.

Rigetti remains on track to develop and deploy its anticipated 84-qubit Ankaa 3 system with the goal of achieving a 99% plus median 2-qubit gate fidelity by the end of 2024.

Revenue Streams and Business Model

Rigetti's revenue is primarily generated from two main sources: 1) Collaborative research, professional services and materials, and sales of quantum computers, and 2) Access to quantum computing systems. The first revenue stream represents the majority of Rigetti's total revenue, including revenue from development contracts with partners and sales of quantum computing hardware and systems. The second stream comes from providing customers access to Rigetti's quantum computing systems through its Quantum Computing as a Service (QCaaS) platform.

In the first nine months of 2024, Rigetti reported total revenue of $8.52 million, with $8.22 million coming from collaborative research, professional services, materials and quantum computer sales, and $292,000 from quantum computing system access.

Quantum Hardware and Systems

Rigetti designs and manufactures its own superconducting quantum processors and quantum computers. The company's key quantum hardware offerings include the Novera QPU, its first commercially available 9-qubit quantum processing unit, and the Ankaa-2 System, an 84-qubit quantum computing system launched in 2023, which achieved a 98% median 2-qubit gate fidelity.

Conclusion

Despite the inherent challenges and uncertainties that come with the development of transformative technologies, Rigetti has demonstrated its ability to navigate the competitive landscape and deliver tangible results. The company's unwavering commitment to innovation, strategic partnerships, and financial discipline has positioned it as a formidable player in the quantum computing arena.

As Rigetti continues to push the boundaries of what's possible in the realm of quantum computing, investors and industry observers will undoubtedly keep a close eye on the company's progress, eagerly anticipating the day when its quantum systems unlock new frontiers of scientific discovery and commercial innovation.