Q4 2023 Rigetti Computing Inc Earnings Call

Operator: Good day, and thank you for standing by. Welcome to Rigetti Computing's fourth quarter and full year 2023 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'll need to press star 11 on your telephone. You will then hear an automated message advising that your hand is raised.

Good day, and thank you for standing by welcome to Righetti computing fourth quarter and full year 2023 financial results Conference call. At this time all participants are in a listen only mode. After the speaker's presentation there'll be a question and answer session to ask a question. During the session you will need to press star one on your telephone.

You will then hear an automated message advising your hands raised.

Operator: 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, Chief Executive Officer. Please go ahead, sir.

Your question. Please press Star one 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, So <unk> Kulkarni Chief Executive Officer. Please go ahead Sir.

Subodh K. Kulkarni: Good afternoon, and thank you for participating in Rigetti's earnings conference call covering the fourth quarter and year ended December 31, 2023. Joining me today is Jeff Bertelsen, our CFO, who will review our results in some detail following my overview. Our CTO, David Rivas, is also here to participate in the Q&A session.

Good afternoon, and thank you for participating Securities earnings Conference call covering the fourth quarter and year ended December 31st 2023.

Joining me today is Jeff Bertelsen, our CFO, who will review our results in some detail following my overview.

Our CTO David J boss is also here to participate in the Q&A session.

Subodh K. Kulkarni: We'll be pleased to answer your questions at the conclusion of our remarks. However, we would like to point out that this call and Rigetti's Q4 and year-ended December 31st, 2023 press release contain forward-looking statements regarding current expectations, objectives, and underlying assumptions regarding our outlook and future operating results. This forward-looking statement is subject to a number of risks and uncertainties that could cause actual results to differ materially from those described and are described in more detail in our annual report on Form 10-K for the year ended December 31st, 2023, and other documents filed by the company from time to time with the Securities and Exchange Commission. These findings identify and address important risks and uncertainties that could cause actual events and results to differ materially from those contained in the forward-looking statement We urge you to review these discussions of risk factors.

We'll be pleased to answer your questions at the conclusion of our remarks.

We would like to point out that this call indicated Q4 and year ended December 31st two integrated E press release contain forward looking statements regarding our current expectations objectives and underlying assumptions regarding our outlook and future operating results.

These forward looking statements are subject to a number of risks and uncertainties that could cause actual results to differ materially from those described and I described in more detail in our annual report on Form 10-K for the year ended December 31, 2023, and other documents filed by the company from time to time with the securities.

<unk> Exchange Commission.

These filings identify and address important risks and uncertainties.

That could cause actual events and results to differ materially from those contained in the forward looking statements.

We urge you to review these discussions of risk factors.

Subodh K. Kulkarni: Turning now to recent events, I'm pleased to report on a number of new developments. In February 2024, we were awarded a Small Business Research Initiative grant from Innovate UK and funded by the National Quantum Computing Center to develop and deploy a 24 qubit quantum computer based on our ANKA class architecture. The proposed system is planned to be deployed at NQCC's Harwell campus, which is expected to open later this year and will serve as NQCC's landmark facility to support quantum computing research in the UK. Since deploying our first UK-based quantum computer in 2022, we have had the privilege of collaborating with the UK's talented quantum computing research community. We believe building a system at the NQCC could enable even more innovative discoveries to deepen our understanding of how to improve superconducting quantum computers with the goal of solving practical problems currently intractable by classical resources alone. In December 2023, we launched the Novera quantum processing unit, our first commercially available QPU. Novera has nine cubits and is based on our Anka-class chip architecture.

Turning now to recent events I am pleased to report a number of new developments.

In February 2020 fold, we were awarded a small business research initiative grant from innovate UK and funded by the National Quantum computing center to develop and deploy a twentyfold qubit quantum computer based on our anchor glass.

Architecture.

The proposed system is planned to be deployed at MTO Ccs hardware campus, which is expected to open later this year.

Third as MQ <unk> landmark facility to support quantum computing research in the U K.

She was deploying our first UK based quantum computer in 2022.

Had the privilege of collaborating with the UK talented quantum computing research community.

We believe building a system at <unk> could enable even more innovative discoveries to deepen our understanding of how to improve superconducting quantum computers with a goal of solving tactical problems currently intractable by classical resources alone.

In December 'twenty, two 'twenty, three we launched a nowhere a quantum processing unit, our first commercially available <unk>.

Nevada has nine terabytes and is based on our anchor glass chip architecture.

Subodh K. Kulkarni: We have completed two NOVERA QPU sales, both to leading national laboratories. The first sale was to the Superconducting Quantum Materials and Systems Center led by Fermilab in the second quarter of 2023. In the third quarter of 2023, we delivered our second NOVERA QPU to the Air Force Research Lab Information Directorate as part of our indefinite delivery, indefinite quantity contract. The IDIQ contract enables AFRL to harness Rigetti's fabrication capabilities for quantum networking hardware research and development. We are continuing our efforts to develop quantum computing solutions for financial institutions. We were recently awarded an Innovate UK grant with the aim of developing quantum machine learning techniques to enable financial institutions to more effectively process, interpret, and make decisions on complex data streams. Joining Rigetti in this project are Amazon Web Services, Imperial College London, and Standard Chartered.

We have completed two new layout GPU sales both to leading national labs.

The first sale was two superconducting quantum materials and system Center led back what do we lap in the second quarter of 2023.

In the third quarter of 2000 <unk>.

We delivered our second elevate our GPU to the Air Force Research Lab information director it as part of our indefinite delivery indefinite quantity contract.

The IDI to contract enables AFR has two hardware related fabrication capabilities for Walter networking hardware research and development.

We are continuing our efforts to develop quantum computing solutions for financial institutions.

We were recently awarded innovate UK grant with the aim to get the water machine learning techniques to any.

<unk> financial institutions do it more effectively process interpret and make decisions with complex Ddos strips.

Yes, I didn't regret in this project is Amazon Web services Imperial College, London and standard chartered.

Subodh K. Kulkarni: We were recently awarded phase two of the DARPA program, which aims to develop a resource estimation framework to provide insight into the requirements of a superconducting quantum computing system necessary for solving large-scale complex problems. The goal of phase two is to refine and optimize the estimates for selected utility scale problems, delivering new upper bounds on this requirement. The University of Technology, Sydney, Aalto University, and the University of Southern California will continue to be project partners in phase two. We are partnering with RiverLane and Oak Ridge National Laboratory to work to improve high-performance computing and quantum integration. To develop the integration of quantum computers into high-performance computing environments, the project partners plan to build the first ever benchmarking suite for measuring the performance of a joint HPC plus quantum system to be run on ORNL's Summit supercomputers.

We were recently awarded phase two of the DARPA program, which aims to develop a resource estimation framework to provide insight into the requirements of a superconducting quantum computing system necessary for solving large scale complex problems.

The goal of phase II is to refine and optimize the estimates for selected utility scale problems delivering new upper bounds of these requirements.

The University of Technology, Sydney Alto University, and the University of Southern California will continue to be project partners and faster.

We are partnering with <unk> and Oak Ridge National Laboratory.

Work to improve high performance computing and quantum integration.

To develop the integration of quantum computers into high performance computing environments. The project partners plan to build the first ever benchmarking suite for measuring the performance of.

<unk> joined HBC plus quantum system.

Subodh K. Kulkarni: For the quantum components, researchers plan to use simulated hardware based on key elements of Riverland's quantum error correction stack and real remote hardware located at our headquarters in California. Now, a few comments regarding our technology roadmap. Following the internal development of the 84-qubit ANKA-1 system in March 2023, our 84-qubit ANKA-2 system was made publicly available in December 2023. The 84-qubit AMCA2 system is our highest-qubit count QPU available to the public. In addition to a new chip architecture that features a square lattice and tunable couplers, Ankar 2 includes a new chip fabrication process, new printed circuit board technology, and electronics improvements.

We don't know audits summit supercomputer.

For the quantum components researchers' plan to use to mitigate hardware based on key elements of Riva laser quantum error correction stack NGL remote hardware located at our headquarters in California.

And now a few comments regarding our technology roadmap.

Following the internal development of 84 Kilobit Encore one system in March 2020.

84, Covid I've got two system was made publicly available in December 2023.

The 84 cubic <unk> system is our highest COVID-19 currently available to the public.

In addition to our new chip architecture that features a square lettuce and juniper couplers.

Two includes a new chip fabrication process, new printed circuit board technology and electronics improvements.

Subodh K. Kulkarni: Combined, these improvements contributed to AMCA2, achieving a 98% median two-qubit gate fidelity, a 2.5x increase in error performance compared to our prior QPUs. We plan to develop and deploy our anticipated 84-qubit ANCA3 system with the goal of achieving 99% median 2-qubit gate fidelity by the end of 2024. Thereafter, it is our plan to develop the 336-qubit LiDAR system. We are confident in our ability to build better performing QPUs, as evidenced by our impressive ANCA2 performance. We believe we have laid the groundwork for building scalable, high-performance QPUs with our proven modular chip architecture and the innovative ANCA chip design that resulted in a 98% median two-qubit gate fidelity.

Combined these improvements contributed to guide to achieving a 98% median two qubit gate facility.

Two five X increase in air performance compared to outright Gpus.

We plan to develop and deploy our anticipated 84 cubic I've got three system with the goal of achieving 19, 90% median two qubit gate facility by the end of 2024.

Thereafter, it's our plan to develop the 336 cubic lidar system.

We are confident in our ability to better performing could be used as evidenced by our impressive <unk>.

Performance.

We believe we have laid the groundwork for building scalable high performing Gpus with our Brewer Merida chip architecture, and the innovative <unk> chip design that is in a 98% median two cubic capability.

Subodh K. Kulkarni: We are excited about the anticipated development and deployment of our ANCA3 system, which we believe will demonstrate the excellence and ingenuity of our R&D teams. We believe our leadership and expertise in full-stack quantum systems, paired with our strong collaborations with researchers around the world, across academia, industry, and government, puts us in a unique position to tackle the challenges of building a quantum computer capable of addressing real-world problems. With Rigetti QPUs now in two research laboratories internationally, we are even more optimistic that practical quantum computing is in reach. Jeff will now make a few remarks regarding our recent financial performance. Thanks, Subodh.

We are excited for the anticipated development and deployment of our <unk> system, which we believe will demonstrate the excellence in engineering of our R&D teams.

We believe our leadership and expertise in full stack quantum systems paired with our strong collaboration with researchers around the world across academia industry and government.

This is in a unique position to tackle the challenges of building a quantum computer capable of addressing real world problems.

With regard to <unk> now into research labs internationally.

We are even more optimistic that practical quantum computing is in reach.

Jeff will now make a few remarks regarding our recent financial performance.

Jeffrey A. Bertelsen: Revenues in the fourth quarter of 2023 were $3.4 million. Unknown Executive, Nathaniel Bolton, Kinney Chin, David Rivas, Rigetti Gross margins in the fourth quarter of 2023 came in at 75%, compared to 87% for the fourth quarter of 2022. Revenue and gross margin variability is to be expected at this stage of the company's evolution, given the variable nature of contract deliverables and timing with major government agencies. On the expense side, total OPEX in the fourth quarter of 2023 was $19.7 million, compared to $32 million in the same period in the prior year. The year over year decrease was primarily due to the $5.4 million goodwill impairment charge booked in the fourth quarter of 2022 and a $3.5 million reduction in stock compensation.

Thanks Sue boat.

Revenues in the fourth quarter of 2023 were $3 4 million compared to $6 1 million in the same period of 2022, when a large amount of revenue from <unk> was recognized.

Gross margins in the fourth quarter of 2023 came in at 75%.

Compared to 87% for the fourth quarter of 2022.

Revenue and gross margin variability is to be expected at this stage of the company's evolution, given the variable nature of contract deliverables and timing with major government agencies.

On the expense side total opex in the fourth quarter of 2023 was $19 7 million compared to $32 million in the same period in the prior year.

The year over year decrease was primarily due to the $5 4 million goodwill impairment charge booked in the fourth quarter of 2022, and a $3 5 million reduction in stock compensation expense.

Jeffrey A. Bertelsen: In the fourth quarter of 2023, stock compensation expense totaled $3.7 million, compared to $7.2 million in the fourth quarter of 2022. Other decreases in the fourth quarter of 2023 included lower employee wages and benefit costs resulting from our February 2023 reduction in workforce. Operating loss for the fourth quarter of 2023 was $17.2 million, compared to an operating loss of $26.7 million for the same period of 2022.

In the fourth quarter of 2023 stock compensation expense totaled $3 7 million compared to $7 2 million in the fourth quarter of 2022.

Other decreases in the fourth in the fourth quarter of 2023 included lower employee wages and benefit costs, resulting from our February 2023 reduction in workforce.

Operating loss for the fourth quarter of 2023 was $17 2 million compared to an operating loss of $26 7 million for the same period of 2022.

Jeffrey A. Bertelsen: The net loss for the fourth quarter of 2023 was $12.6 million, or $0.09 per share, compared to a net loss of $22.9 million, or $0.19 per share, for the same period of 2022. Cash, Cash Equivalents, and Available for Sale Investments totaled $99.9 million as of December 31, 2023, compared with $110.2 million as of September 30, 2023, and $142.8 million at December 31, 2022. During the fourth quarter of 2023, we raised $5.5 million from the sale of 5.2 million shares of Common Stock under our Common Stock Purchase Agreement with B. Reilly. Subsequent to year end, during the first quarter of 2024, we raised a further $12.8 million from the sale of 10.1 million shares of common stock under the B. Reilly Agreement. There are no more shares available for sale under this agreement.

Net loss for the fourth quarter of 2023 was $12 6 million or <unk> <unk> per share compared to a net loss of $22 9 million or <unk> 19 per share for the same period of 2022.

Cash cash equivalents and available for sale investments totaled $99 9 million as of December 31, 2023, compared with $110 2 million outflow at September 32023, and $142 8 million at December 31 2022.

During the fourth quarter of 2023, we raised $5 5 million from the sale of $5 2 million shares of common stock under our common stock purchase agreement with B Riley.

Subsequent to year end during the first quarter of 2024.

We've raised a further $12 8 million from the sale of $10 1 million shares of common stock under the B Riley agreement.

There are no more shares available for sale under this agreement.

Jeffrey A. Bertelsen: In December 2023, we filed a $250 million shelf registration statement with the Securities and Exchange Commission. We are continually evaluating our financing. Thank you. We would now be happy to answer your question, www.globalonenessproject.org. Our first question comes from the line of Quinn Bolton with Needham & Company. Your line is now open. Hey guys, can you hear me?

In December 2023, we filed a $250 million shelf registration statement with the Securities and Exchange Commission.

We are continually evaluating our financing options. Thank you we would now be happy to answer your questions.

Okay.

Okay.

Okay.

Our first question comes from the line of Quinn Bolton with Needham <unk> Company. Your line is now open.

Subodh K. Kulkarni: Yeah, we can. Perfect, perfect. Congratulations on the nice finish. I guess, you know, since this is the fiscal year-end, Subodh, are there any milestones you can give us for 2024, sort of your highest priorities? You mentioned a couple, the ONCA 3 at 99, you know, median two-qubit gate fidelities and, you know, but wondering if there's anything else you can share, kind of in terms of big milestones. And then maybe for Jeff, anything. I think last year you sort of provided a year-end cash balance target. I don't know if you're prepared to do anything like that for 2024, but anything you Thank you. Sure, thanks, Gwyn.

Hey, guys can you hear me.

Yeah, we can.

Perfect perfect.

Congratulations on a nice finish I guess.

Since this is the fiscal year and so both are there any milestones you can give us for 2024 sort of your highest priorities you mentioned a couple of the oil and get three at 99.

Two.

Median to keep it keep fidelities and.

But I'm wondering if there's anything else you can share kind of in terms of big milestones and then maybe for Jeff anything I think last year, you had sort of provided a year end cash balance target I don't know if you're prepared to do anything like that for 2004, but anything you can sort of do to help shape revenue.

Cash flow or year end cash expectations would be would be helpful. Thank you.

Subodh K. Kulkarni: So certainly, the most important milestone we plan to deliver in 2024 is improvement in fidelity. That is the most important metric for quantum computing right now. So our plan, as we stated, is to get us from 98% median two-qubit gate fidelity, which is where we are today with our 84-qubit system, to 99 plus percent median two-qubit gate fidelity. And that's a big milestone, not only because it's a 2x reduction in errors, but also, at 99% fidelity, you can start doing realistic error correction, error mitigation, those kinds of things that are well-known and well-proven in conventional computation.

Sure. Thanks, Ken So certainly the most important milestone.

Plan to deliver in 2024 is implement infinity that is the most important metric.

For quantum computing right now so our plan as we stated is to get us from 98% medium to cubic capability, which is going to be at really without 84 cubic system.

1990, plus percent medium to cubic exited there too and that's a big milestone.

Only because it's a two X reduction in errors, but also had 99% facility.

Can start doing realistic correction added mitigation those kinds of things that are well known and well two one in conventional computation systems. So that's a big milestone from a technology standpoint, as we mentioned in our press release once we hit 99%. This also start working towards.

Subodh K. Kulkarni: So that's a big milestone from a technology standpoint. As we mentioned in our press release, once we hit 99%, we'll also start working towards our 336-qubit Lyra system, and while we do that, we will obviously continue to improve fidelity.

336 cubic lidar system and why do we do that we will obviously continue to improve utility our goal is to get into the mid 90 Nines next year, along with the several hundred cubic. So those are the technology milestones.

Subodh K. Kulkarni: Our goal is to get into the mid-99s next year, along with several hundred qubits. So those are the technological milestones. Along with it, and as you can see, both the quantum computing lab and, now that we can see AFRL, the premier DoD quantum computing lab, have essentially chosen Rigetti as the founder of their computer choice. And it's in competition with all the other big companies.

Along with it and as you can see.

Got it.

Both the deal.

Quantum computing lab and now that we can see as far as the Premier D. O D. Quantum computing lab have essentially chosen mitigating.

Okay.

Great choice.

And transportation that although there are other big companies.

Subodh K. Kulkarni: So we're still thinking about securing the DoE and DoD on their piece, if you will. Along with it, the UK government, the national lab of the UK government, had set up a competition, and we came out at the top. So the UK government has chosen to deploy our 24-qubit quantum computing system. We are continuing to work with other national governments, including DOE, DOD, and the UK government.

Okay.

Securing the deal.

On the base if you will.

Along with it.

The UK government on national level, you could augment setup of competition and B came out at the top so the UK government has chosen to deploy our 24 cubic quantum computing system.

We are continuing to work with other national Board mens, including Doa duty in the U K and we hope to announce some more women's as the year goes on whether it's higher cubic count systems to the existing customers like D. R. <unk> D. R. U K, our two new national absolutely certainly hope we can announce some of those so that's at a high level. What we are doing both from a technology.

Subodh K. Kulkarni: And we hope to announce some more MINs as the year goes on, whether it's higher qubit count systems for existing customers like DOE, DOD, or UK, or to new national labs. And we certainly hope we can announce some of those. So that's at a high level what we are doing, both from a technology as well as a business standpoint. Jeff, do you want to answer the question about cash?

As well as business standpoint, Jeff you want to answer the question about cash sure.

Jeffrey A. Bertelsen: Sure. Yeah, Quinn, we are not providing any forward-looking guidance right now, although I would comment that given our current cash and available for sale securities on hand, we have sufficient funding to take us into the early part of Q3 2025. So just want to provide that cash runway.

Yes, Quinn, we are not providing any forward looking guidance right now although I would.

Comment that given our current cash and available for sale securities on hand.

Have sufficient funding to take us into the early part of Q3 2025.

So just want to.

Provide that cash runway.

Outlook.

Jeffrey A. Bertelsen: Okay. Understanding that you don't want to give any kind of formal guidance for 24, maybe you could walk through this with Jeff. Obviously, you've got contracts, you also have the QPU sales, and especially as you get to a 24 qubit QPU, I think the ASPs go up. Is it reasonable for analysts to sort of think you should see revenue trending sort of flat to higher through the year from kind of the December run rate?

Okay.

Understanding that you don't want to sort of give.

Sort of any kind of formal guidance for 'twenty four maybe can you walk through Jeff.

You've got contracts you also have the QP you sales.

And especially as you get to a 2004 cubit keeps.

<unk> I think the Asps go up.

It is it reasonable for analysts to sort of think you should see revenue trend dean sort of flat to higher through the year from kind of the December run rate I mean, again I won't try to get you to.

Jeffrey A. Bertelsen: I mean, again, I won't try to get you to, I won't pinpoint you, but it certainly feels like, you know, between the contracts that you've announced and QPU sales that revenue is likely to grow 24 over 23. Sure, you know, again, no, no forward-looking guidance. But obviously, it's our goal, you know, to continue to drive revenues and reduce our losses.

I won't pinpoint year, but it certainly feels like.

Yes between contracts that you've announced in <unk> sales that.

Revenue is likely to grow 24 over 23.

Again, no no forward looking guidance, but obviously, it's our goal.

To continue to drive revenues and reduce our loss I mean, we do have the.

Jeffrey A. Bertelsen: I mean, we do have the, you know, the nine QPU Novera product now that we can sell, and we did just, you know, get the nice 24 Q and QCC contract, which certainly helps. So, you know, we're definitely focused on those things, which will, you know, extend our cash runway and help in that regard. So, you know, we're definitely focused on all the levels.

The nine <unk> Nomura.

Product now that we can sell and we did just get the nice <unk>.

<unk> thousand four <unk> and Q cc contract, which certainly helps so we're definitely focused on those things which would.

Extend our cash runway and help in that regard so.

Subodh K. Kulkarni: I mean, again, I agree that just given the Basic contracts we already have, plus the 24-qubit sale to NQCC, we certainly expect sales growth. But the main story over here continues to be the technology and fidelity improvement and getting close to quantum advantage. So I don't want sales to be the metric of how we are succeeding with the technology. Okay. Maybe just one last quick one.

We are definitely focused on all the levers.

Okay.

Okay.

Just given the.

Basic contracts, we already have plus 24 cubic oscillator NCC, we certainly expect sales growth breakdown in studio. We're here continues to be their technology and together to implement and getting closer to mic ultra southern Orange seems to be the metric of how we are succeeding with the technology.

Got it maybe just just one last quick one then so but just.

Subodh K. Kulkarni: And Subodh just said, knowing that gate fidelity is the most important goal, obviously, you announced that ANCA 2 is at 98%. But as you, you know, continue to run wafers in Fab 1, do you feel like, you know, perhaps the nine qubit fidelities are already well on their way to sort of the 99% or 99 plus percent qubit fidelity? And do you have any sort of proof points that give you confidence in your ability to get to that 99% for ANCA 3 by the end of the year? Thanks. That's a good question.

Knowing that the Cape Fidelity as the most important goal, obviously, you announced that Orca two is at 98%, but as you continue to run wafers in fab one.

Do you feel like perhaps the nine qubit fidelity's are already well on their way to sort of the 99% or 99 plus percent qubit fidelity and do you have sort of the proof points that give you confidence in your ability to get to that 99% for on Q3 by the end of the year.

Thanks.

Subodh K. Kulkarni: And actually, we do have data. I mean, we always have a lot of data on nine qubits before we put it all together for the 24 qubit and 84 qubit systems. So all the initial indications with nine qubits and ANCA3 are that we feel very confident of hitting our 99% goal at the 84 qubit level, which means we certainly will be much higher than that at the nine qubit level. So all our initial data is very promising for ANCA3. And we feel pretty good about getting to 99% at the 84 qubit level before the end of this. Perfect. Thank you. Thank you, Chris.

It's a good question and actually we do have data I mean, we always have.

Have a lot of data on nine cubic before we put it altogether.

2004 cubic on 84 cubic system. So all initial indications with nine 2 billion bankruptcy out of that we feel very confident of hitting our 99% goal at day 84 cubic level, which means we certainly will be much higher than that of the nine cubic level. So the all of our initial data is very promising for our country and we feel pretty good about getting to 99, 4%.

At 84 cubic level before the end of this year.

Perfect. Thank you.

Subodh K. Kulkarni: Our next question comes from the line of Brian Kingslander with Alliance Global Partners. Your line is now open. Hi guys, thanks for taking my question. My first question is about the NQCC award for the 24-qubit system. How long was the evaluation process? Who was the competition specifically for the QPU piece of the procurement? And what was the feedback on why Rigetti?

Thank you Quint. Thank you as a reminder to ask a question Thats Star one one on your telephone please wait for your name to be announced.

Our next question comes from the line of Bruce.

Ryan <unk> with Alliance Global Partners. Your line is now open.

Hi, guys. Thanks for taking my thanks for taking my questions.

My first is could you discuss the <unk> award for the 24 qubit system. How long was the evaluation process, who is the competition, specifically, where the <unk> piece of the procurement and what was the feedback on why righetti.

Subodh K. Kulkarni: Thanks, Brian. Good questions. So the NQCC competition was set by basically the UK government; they wanted a foundational quantum computer in their facility on which they would build the UK's quantum infrastructure. So there's a very key piece of equipment that they were procuring. The competition was set for roughly a six month period.

Thanks, Brian good questions. So the intensity of competition was set by the basically the U K government. They wanted.

<unk> quantum computer in their facility on which debate U K quantum infrastructure. So it is a very key piece of equipment that are procuring.

Competition was set Florida, roughly a six months period.

Subodh K. Kulkarni: They didn't break down all the competitors that they evaluated, but we are pretty sure most of the companies that are at the cutting edge of technology and quantum computing were part of that competition. That's why we feel really good that they chose us as the technology of choice to build the UK's quantum infrastructure. So clearly, it demonstrates their faith in superconducting quantum computing technology and within superconducting quantum computing technology, Rigetti as the leading technology of choice. So, this is a very important competition, and we feel really good about the fact that an external third party has validated and confirmed our beliefs that we are making the best quantum computers right now. And did you, for your QPOP, only compete with gating technology, or was it against, you think, all the different types of technology? They didn't, they didn't clarify that.

They didn't divulge all the competitors that devaluated, but we are pretty sure.

Most of the companies that are at the cutting edge of technology, and quantum computing, where part of that competition and that's why we feel really good that they chose us as the technology of choice to big UK quantum infrastructure. So clearly demonstrates their feet in superconducting quantum computing technology and within superconducting quantum computer.

<unk> technology into <unk> as the leading technology of choice. So very important competition, we feel really good about the fact that an external third party validate energen conformed R. B.

Believes that we are making the best quantum computers right now.

Okay.

Did you or your <unk> only compete with the gating technology or was it against you think all the different types of technology.

Regarding the award I didn't clarify that but based on the fact that they were looking for general purpose computing.

Subodh K. Kulkarni: But based on the fact that they were looking for general purpose computing, it, they probably looked more at gate based computing approaches, as you probably know, when you look at things like annealing, they're very restricted to the number of applications they can pursue, like optimization, and a few other applications like that. As soon as you say general purpose computing for the broader market, really, you have to go with a gate based approach. So the fact that they were looking for general computing tells me that they were primarily looking at gate based approaches. Great.

They probably looked more at gate based computing approaches as you probably know.

When you look at things like annealing.

They are really restricted to the number of applications. They can post sale like optimization and a few other applications like that as soon as you say general purpose computing for the broader market really you have to go with a gateway separately.

The fact that they were looking for general computing. It tells me that do it primarily looking at gate based approaches.

Subodh K. Kulkarni: And then does this award put you in a leadership position so that, is the NQCC involved in other procurements or other national labs see that you are seeing increased interest? I guess I'm just kind of curious; can this lead to additional QQ sales, whether it's 9Q, but 24 or even more? Certainly, I mean, the fact that the DOE's premier quantum computing facility, Fermilab, chose us in the middle of 2023, that certainly was a factor, I'm sure, in NQCC's decision to choose us. And now that both the US government, DOE, DOD labs, and now NQCC, the UK lab, have chosen us, I'm pretty sure the next few national labs who are looking at similar testbeds and quantum computing facilities will look at us much more carefully.

And then there's this award.

Leadership position so that is.

As the <unk> has other procurements or other national AD C. That are you seeing increased interest I guess I'm just kind of curious can this lead to additional.

Q2 sales, whether it's nine cubic 24 or even more.

Certainly I mean, the fact that we.

D O S premier to quantum computing facility Fermilab chose us.

Of 2023.

That certainly was a factor I am sure <unk> decision of choosing us and now that both the U S government Dod EOD labs, and now anticipate a UK lab have chosen us.

I'm pretty sure in the next few National Labs, we're looking at similar.

<unk> quantum computing facilities, we look at is much more carefully.

Subodh K. Kulkarni: Because if the US government and the UK government deem that we are making the best quantum computers, chances are we are making the best quantum computers. And are there any other national labs that are running procurements right now? Or is it all incoming early base calls to kind of fill out the gaps? There are several countries around the world where they have quantum initiatives going on. If you go around the world, you can certainly see that governments have sponsored and sometimes even gotten bills through their respective governments.

If the U S government and you get government deals that we are making that the best quantum computers chances are we are making the best quantum computers.

And are there any other national labs that are running procurement right now or is it all.

In coming early based call as tick kinda fill out the industry.

There are several countries around the world, where they have quantum initiatives going on if you go around the world.

Certainly see.

Governments have sponsored and sometimes even gotten a boost to their respective governments I'm in Japan in specific Australia, India.

Subodh K. Kulkarni: I mean, Japan in particular, Australia, India, Italy, Germany, Denmark, and a few other European countries. There are clearly initiatives going on in various countries to get themselves up to speed in quantum computing. So we are really optimistic about our position with the US and UK right now and leveraging that and extending that to these different countries that are getting into quantum computing. Last question I have, what's the biggest obstacle you have to achieving the 99% fidelity of the 84 qubit system in 2024? And I guess the same question for 2025 on the larger system for 99. Certainly, I mean, the basic discipline that most of us in the semiconductor industry use to improve error rates is what we call Pareto analysis. So we look at errors just about every day; we'll do a thorough diagnosis of where the errors are coming from and plot them. And then that's called Pareto analysis.

Italy, Germany.

Denmark and a few other European countries.

There are clearly initiatives going on in videos countries too.

Get them since up to speed in quantum computing. So we are really optimistic about our position that U S and U K right now and leveraging that in extending back to this different countries that are getting into quantum computing.

Great last question I had whats the biggest obstacle or you have to achieving the 99 percentile modality on the 80 core qubit system in 2024.

And I guess the same question for 2025 on the larger system for $99 five.

Certainly I mean the basic.

Basic discipline most of us in the semiconductor industry use to improve our rate is what we call Burrito analysis.

<unk> looked at it as just about every day with dual auto diagnosis of their leaders have come in trauma and plot them and then.

Subodh K. Kulkarni: And then we look at the biggest contributor of errors, and then we go chase them. And then once we resolve them, then the next tier, and so on. So first, to get from 98 to 95% to 98%.

That's called pre dialysis and then we look at the biggest contributor translators and illegal chase them and then once he resolved and then the next tier Exelon. So first to get from 90, 895% to 98% last year.

Subodh K. Kulkarni: Last year, we did all kinds of things in what we call the Josephson junction itself, which is a proper device in the chip. We also did some changes in the electronics like PCBs that we use, as well as the refrigeration. This year, to go from 98 to 99, our focus is primarily on the proper design of the qubit itself, what we call the Hamiltonian. Also, more work into the refrigeration systems and the losses that we are getting from the refrigeration systems. So, a scientific way of going after errors and addressing them.

Things in the particular Josephson junction itself, which is a proper device in the chip. They also did some changes in the electronics like Pcbs actually use.

So I figured I Shannon systems.

This year to go from $19 99, our focus is primarily on the proper design of the accumulated sales what we call the Hamiltonian.

Also more.

More.

Looking to the refrigeration systems and the losses that we are getting from the refrigeration systems. So.

Scientific can be of going after it enters and addressing them we feel pretty.

Subodh K. Kulkarni: We feel pretty good about getting to 99% this year using that methodology. Great Thanks, you both. Thank you. Thank you. Please take a moment for our next question. Our next question comes from the line of Krish Sankar with TDKelvin. Your line is now open. Hi, thanks so much for taking my questions. This is Stephen calling on behalf of Chris.

Good about getting to 99% using that methodology.

Great. Thank you Bob.

Thank you one moment for our next question. Please.

Our next question comes from the line of Krish Shankar with TD Cowen. Your line is now open.

Hi, Thanks, so much for taking my questions. As this is Steven calling on behalf of Krish.

Subodh K. Kulkarni: Subodh, maybe the first one for you, just kind of going back to NCQQWIN and deployment timing. I know you mentioned that that facility will be up and running later this year and could start the deployment of the system around that time, but just curious in terms of when, Chairman, and installation of your, whether it's the QPU or a number of subcomponents Unknown Executive, Nathaniel Bolton, Kinney Chin, David Rivas, Rigetti, that might still be early, is the NCQQ's timeline in terms of Installing.

I guess first one for you just kind of going back to the <unk> win and.

That said the deployment timing I know you mentioned that the <unk>.

That facility will be up and running later this year and.

The deployment of the system around that time.

Just curious.

In terms of when.

The procurement and installation of your at your.

Whether it's the keeping keeping you where.

A number of sub components effort that goes into their system can you talk about when that approximate timing might need the latest year was it potentially into early next year.

So just more broadly.

You referenced other initiatives in other countries.

That might help you early.

NTT queues.

Subodh K. Kulkarni: Is that a good template for the future, you know, installments, or build-outs by others? Yeah, thanks, Krish. So, certainly, the NGCC timeline that they have provided us is more gated by their facility rather than our ability to supply the QPU. We have already started ordering several subcomponents, and we already have the chip, and the core parts are already ready, basically. So we are working with them right now on the facility side to make sure that the facilities are ready once it comes up. Having said all that, the target right now is the middle of this year; sometime in the June to August time period is when the facility will be ready. It will take us a few weeks, maybe a month or so to get it delivered and installed properly and then probably another month of debugging or so.

In terms of building out and potentially installing is that good template for.

Sure.

Installments or build outs by other countries.

Yeah, Thanks, Chris So.

Certainly.

The anticipated timeline that they have provided us.

<unk> is more gated by the end facility rather than our ability to supply the QQ.

We have started ordering several.

<unk> components and we are already have the chip and at the core parks are already 30, basically so we are now working with them right now on the facility side to make sure that the facility has been set once it comes out having said all that the target right now is middle of this year.

In the June to August time period has been the facility to be ready.

It will take us a few weeks, maybe a month or so to get it delivered and installed properly and then probably another month of debugging also so before well before the end of this year the system should be up and running.

Subodh K. Kulkarni: So before, well before the end of this year, the system should be up and running. That's the overall timeline. As we discussed with other national labs in other countries, this model that NQCC is doing seems to be a replicable model, if you will, and other countries are looking along the same lines, where they want a 20-odd qubit system to start. Nine qubits is a good starting point, but it's really for basic research applications.

So that's the overall timeline.

As we discussed it.

Other national labs in other countries.

This model that <unk> is doing is seems to be.

A replicable model, if you will and other countries are looking along the same lines there the warranty.

<unk> qubit system to start 90% is a good starting point.

But it's really for basic research applications.

Subodh K. Kulkarni: 20 plus qubits gives you enough horsepower to do some real computation work. So many national labs that we are talking to right now are talking about 20 plus systems. There are a couple that are talking about 80 plus qubit systems; those are the more aggressive ones. Obviously, the price points will be higher.

<unk> gives you enough horsepower to do some deals computations work. So many national labs that we are talking to right now are talking about 'twenty assistance. There are a couple that are talking about 80, plus cubic systems to do that.

Or the more aggressive ones, obviously, the price points will be higher.

Subodh K. Kulkarni: So our hope is that besides NQCC, we will get at least one more, maybe a couple more national laboratories this year from different countries using the 20 plus qubit system, and then hopefully, some early work starts with some 80 plus qubit systems that may get installed early next year or the middle of next year. But again, the focus is mostly on fidelity. As fidelity improves, all these opportunities will continue to. Got it. Yeah, that's very helpful.

So our hope is that besides in UCC, we will get at least one more maybe a couple more national labs this year.

Different countries using the 20 plus cubic system and then.

Definitely.

Early work starts at some 80 plus cubic systems that may get installed early next year or middle of next year.

It's really the focus is all mostly on fidelity as fertility improves all these opportunities will continue to happen.

Subodh K. Kulkarni: And also, in terms of the Novera QPU, you know, it's very exciting to see the formalized program and marketing for that. So from some of the details that you've published so far, it seems like the pricing for that is just under a million dollars. I'm just kind of curious, like, are you only selling standard versions? Or is there, you know, opportunities for more bespoke configurations? And what that gets you.

Got it that's very helpful and also in terms of the Nomura GPU.

Very exciting to see a formalized program in marketing for that.

From some of the detail that you published so far and it seems like the pricing for that is just under $1 million.

Just kind of curious like are you only selling standard versions or is there opportunities for from a bespoke configuration.

Subodh K. Kulkarni: Rough ASP or revenue that could be associated with more bespoke design. Lastly, in terms of the product lead time or backlog, is it still sort of, you know, inter-quarter type orders that get fulfilled pretty quickly, or is there a longer backlog or lead time?

And what that would you be able to talk about.

Right.

Neither rough ASP or revenue that could be associated with more bespoke designs.

Lastly, and in terms of the.

The product lead time backlog is it still sort of intra quarter type orders that get fulfilled pretty quickly, whereas in Europe, along with backlog or lead time associated with <unk>.

Subodh K. Kulkarni: For more information, visit www.fema.gov. For more information, visit www.fema.gov.

Subodh K. Kulkarni: Regarding Nowera, I mean, the product is fairly simple. I mean, our product is essentially for 900k. We will ship you a basic QPU that can essentially become a plug and play module into your dilution refrigeration systems. Our baseline assumption is that the customer already has a DR in their facility, and is familiar with quantum computing in general, so they can just take our QPU and plug it into their DR. That's the whole concept of Nowera. We have all the parts ready, and we literally keep one or two of them in stock right now. So if an order comes tomorrow, we can ship it within a day, practically.

Albert.

Regarding the <unk>.

Got it is fairly simple I mean, the product is essentially four 900 key.

We will ship your basic GPU that can essentially become a plug and play model into your dilution that figure to him systems. Our baseline assumption is that the customer already has a D are in that facility are familiar with quantum computing in general so they can just take our GPU and plug it into the LDR, that's the whole concept of Nevada and again.

We have all the capacity at ENB literally keep one or two loans in stock right now so if an article.

Tomorrow, we can ship it within a day or practically and it's fairly straightforward to get it integrated and up and running for a customer who is familiar with quantum computing and dilution of the originations. So it's a fairly straightforward product sand if you will.

Subodh K. Kulkarni: And it's fairly straightforward to get it integrated and up and running for a customer who's familiar with quantum computing and dilution refrigeration. So it's a fairly straightforward product sale, if you will, get the order, ship the standardized QPU that goes directly into the system. There are three dilution refrigeration companies that are generally available in the world right now. BlueForce, a Finnish company, Oxford Instruments from the UK, FormFactor from California, and then a couple other smaller companies are getting into the business. Each one has a slightly different configuration of their DR, so depending on the exact model and what the customer has, it may need some customization, but our plan is to try to keep it as an off-the-shelf standard product that we can ship quickly that will plug into your existing DR. But there are some DRs that may not be suitable to do a plug-and-play, in which case we may have to do some adjustments, or they may have to do some adjustments on the customer side.

Get the order shipped to standardized GPU that goes directly into their system.

Yes.

Dilution refrigeration companies that are generally available in the world right now.

Blue Force, a Finnish company, Oxford instruments from U K.

Form factors from California, and then a couple of other smaller companies are getting into the business. Each one has a slightly different configuration of the ADR.

So depending on the exact model in which the customer has it may lead some customization, but our plan is to try to keep it as an off the shelf standard product that we can ship quickly that will plug into your existing Dr. But there are some deals that may not be suitable to do a plug and play in which case, we may have to do some adjustments our day.

Jeffrey A. Bertelsen: But the idea is a straightforward, simple shipment. Thank you so much for that, and just one last one for Jeff. Jeff, on the share count side, just wondering if... I'll help quantify a bit what the share count might be for this quarter and when the full dilution from all the receipts... equity raise, what that might be for Uh, sure. Yeah, I mean, the full share count impact from the activity that I mentioned in Q1 of 2024 that will really kick in for the second quarter of 2024. We did sell 10.1 million shares in the first quarter.

Heck or do I, just know that the customer side, but it is a straightforward simple.

Shipment.

Okay great.

Thank you so much for that and just a last one for Jeff Jeff I on the share count side. Just wondering wondering if you could help quantify a bit what.

You know what the share count might be for this quarter end and when the full dilution from the.

Recent.

Equity raise what that might be for for next quarter. Thank you.

Sure, Yes, I mean the.

Full.

Share count impact from the activity.

That I mentioned in Q1 of 2024 that will really kick in.

For the second quarter of 2024.

We did.

So $10 1 million shares in the first quarter, so from a share count perspective, we will be.

Jeffrey A. Bertelsen: So from a share count perspective, we will be north of 150 million shares here by the time we get to the end. Great, thank you so much. Thank you. As a reminder, that's star 11 to ask your questions. Our next question comes from the line of David Williams with the Benchmark Company. Your line is now open. Hey, good afternoon, gentlemen. I hope you can hear me. Yes, we can hear you, David. Unknown Speaker...

<unk> north of 150 million shares here.

At the time, we get to the end of Q1.

Okay, great. Thank you so much.

Thank you.

As a reminder, that star one wanted to ask a question.

Our next question comes from the line of David Williams with Benchmark Company. Your line is now open.

Hey, good afternoon gentlemen.

Okay, Yes.

Yes, we can hear you David.

David Neil Williams: Some pretty significant progress across, and many others. Thank you. Thank you, firm and the company, just bringing that roadmap, I think, from Dana Bulletfield and myself. Unknown Speaker 1-1-1, I'm wondering, as you look out, what do you think the next big steps are for Rigetti? Yeah, your line was cutting off, but I think I got the gist of the question. So I'll answer it from what I understood

Great.

Thank you.

Pretty significant progress across.

The aspects of the of the Perm in the company and just bringing that roadmap I think from what.

Okay.

Payable.

Pat.

As you set forward.

Kind of wondering as you look out what do you think the next big step up.

Where we get.

Do you feel about your relative.

Relative to your peers.

Yes, you are the latest cutting on but I think I got the gist of the question. So I'll answer it from what I understood. So regarding our roadmap and critical points as I mentioned security is the top critical points for all of us in quantum computing.

Subodh K. Kulkarni: So regarding our roadmap and critical points, as I mentioned, fidelity is the top critical point for all of us in quantum computing. We are at 98% median two qubit gate fidelity at the 84 qubit level, although obviously, the number is much higher for smaller qubit counts.

We are at 98% median <unk> at day 84 cubic level. Obviously, the number is much higher for a smaller cubic counts are.

Subodh K. Kulkarni: Our goal is to get to 99 this year and in the mid-99s next year at 84 qubits, at which point, hopefully, we'll start dialing up the qubit count to several hundred qubits. We talk a lot about fidelity and qubit count, and that gets a lot of attention. But another important metric is gate speed. Generally, our gate speeds are in the 50 to 100 nanosecond range right now. Most of us in the supercomputing space are in that 50 to 200 nanosecond gate speed range.

Our goal is to get to 99 this year and in the mid 90 Nines next year at $18 four to date at which point hopefully will start dialing up the pubic count.

700 cubic we.

We talk a lot about fidelity on cubic count and that gets a lot of attention, but another important metric is gait speed.

Generally our deep speech or in the.

<unk> 50 to 100 nanosecond range right now most of us in the supercomputing space are in that.

50 to 200 nanosecond gait speed range.

Subodh K. Kulkarni: When we look at other modalities, particularly things like trapped ions or pure atoms, they are dealing with three orders of magnitude slower gate speeds than what we in the superconducting camp are looking at. So, as we have always said, the challenge for superconducting quantum computing is fidelity. The benefits we have are scalability and gate speed. The challenges for the other modalities like trapped ions and pure atoms, their fidelity is intrinsically better because they are dealing with pure ions or pure atoms.

When we look at other mortality soft, particularly things like trapped ion are pure atoms.

They are getting the three orders of magnitude slower gait speeds and what we in the superconducting camera looking at so as we've always said the challenge for superconducting quantum computing.

Is fidelity and the.

Benefits, we have our scalability.

And gait speed and the challenges for the other modalities like trapped ion and appeared items Theyre security intrinsically is better because they are getting that pure <unk> pure items, but the big challenge for them is scalability and and gait speed.

Subodh K. Kulkarni: But the big challenge for them is scalability and gate speed. I mean, it's really hard to overcome three orders of magnitude gate speed for those types of technologies, in addition to the scalability challenge. So overall, within the quantum computing space, we continue to be firm believers in superconducting quantum computing. We think that is the right way to go about tackling real-life problems.

Really hard to overcome three orders of magnitude gait speed.

David.

In addition to the scalability challenge so all within the quantum computing space. We can we continue to be.

Fordham believers in superconducting quantum computing, beating that is the right way to go about tackling real life problems and Thats why you look at collectively between us and other companies in the superconducting space like IBM, Google and a few others. We are really making rapid progress all of us. So within the next two to three years I'm sure more than one off.

Subodh K. Kulkarni: And that's why, collectively, between us and other companies in the superconducting space like IBM, Google, and a few others, we are really making rapid progress, all of us. So within the next two to three years, I'm sure more than one of us in the superconducting camp will be at 1,000 plus qubits at 99 and a half or better percent fidelity with sub 100 nanosecond gate speed. And that's really when real-life quantum advantage type applications start becoming meaningful. So I think that's where the superconducting camp is going. We feel pretty good that we are in the leadership position in that camp, as evidenced by the government of the US and the government of the UK choosing us over others.

In the superconducting Cam will be at a thousand per SKU bid at 99, and a half or better percent facility with sub 100, nanosecond gait speed and that's really when real life quantum advantage type applications start becoming meaningful so I think thats, where the superconducting campus growing we feel pretty good that we are in the leadership position in that gap is.

Evidenced by the government of U S and the government of UK choosing us over others. So we feel pretty good about superconducting quantum computing in general and within that acquisition hopefully that answers. Your question if I heard it correctly.

Subodh K. Kulkarni: So we feel pretty good about superconducting quantum computing in general and within that, our position. Hopefully, that answers your question if I heard it correctly. Thank you. I'm currently showing no further questions at this time. I'd like to hand the conference back over to Mr. Subodh Kulkarni for closing remarks. Thank you all for your questions and interest. We look forward to updating you as the year progresses. Thanks again. This concludes today's conference call. Thank you for your participation. You may now disconnect. Everyone have a wonderful day. Thanks for watching!

Thank you.

I'm currently showing no further questions at this time I would like to hand, the conference back over to Mr. So loops to Connie.

For closing remarks.

Thank you all for your questions and interest we look forward to updating you as the year progresses tanks against.

This concludes today's conference call. Thank you for your participation you may now disconnect everyone have a wonderful day.

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