Q4 2024 Rigetti Computing Inc Earnings Call
Okay.
Operator: Thank you for standing by and welcome to Rigetti's fourth quarter and full year 2024 earnings conference call. At this time, all participants are in a listen only mode. After the speaker presentation, there will be a question and answer session.
Speaker Change: Thank you for standing by and welcome to forget is fourth quarter and full year 'twenty 'twenty four earnings conference call.
Speaker Change: At this time all participants are in a listen only mode. After the speaker presentation, there will be a question and answer session.
Operator: To ask a question during the session, you will need to press star 11 on your telephone. To remove yourself from the queue, you may press star 11 again.
Speaker Change: To ask a question during the session you will need to press star one one on your telephone.
Speaker Change: To remove yourself from the queue you May press Star one one again.
Operator: I would now like to hand the call over to Subodh Kulkarni, President and CEO. Please go ahead.
Speaker Change: I would now like to hand, the call over to Sue boat Kulkarni, President and CEO. Please go ahead.
Subodh Kulkarni: Good morning and thank you for participating in Rigetti's earnings conference call covering the fourth quarter and year ended December 31st, 2024.
Speaker Change: Good morning, and thank you for participating in <unk> earnings conference call covering the fourth quarter and year ended December 31st 2024.
Subodh Kulkarni: Joining me today is Jeff Bertelsen, our CFO, who will review our results in some detail following my overview.
Speaker Change: Joining me today is Jeff Bertelsen, our CFO, who will review our results in some detail following my overview.
Subodh Kulkarni: We will be pleased to answer your questions at the conclusion of our remarks. We would like to point out that this call and Rigetti's fourth quarter and year-ended December 31st, 2024 press release contain forward-looking statements regarding 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 are discussed in more detail in our Form 10-K. For the year ended December 31st, 2023, our Form 10-Q for the three and nine months ended September 30th, 2024.
Speaker Change: We will be pleased to answer your questions at the conclusion of our remarks.
Speaker Change: We would like to point out that this call integrated fourth quarter and year ended December 31st 2024 press release contain forward looking statements regarding current expectations objectives.
Speaker Change: Underlying assumptions regarding our outlook and future operating results.
Speaker Change: These forward looking statements are subject to a number of risks and uncertainties.
Speaker Change: It could cause actual results to differ materially from those described and are discussed in more detail in our form.
Speaker Change: 10-K for the year ended December 31 2023.
Speaker Change: <unk> 10-Q for the three and nine months ended September 30 of 2024.
Subodh Kulkarni: 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.
Speaker Change: And other documents filed by the company from time to time.
Speaker Change: With the Securities and Exchange Commission.
Speaker Change: 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.
Subodh Kulkarni: We urge you to review these discussions of risk factors.
Speaker Change: Urge you to review these discussions of risk factors.
Subodh Kulkarni: Today, I'm pleased to provide an update and report on our progress at Rigetti Computing.
Speaker Change: Today I'm pleased to provide an update report on our progress accelerated computing.
Subodh Kulkarni: Rigetti recently entered into a strategic collaboration agreement with Quanta Computer Inc., a Taiwan-based global Fortune 500 company, and a global leader of computer server manufacturing, with the goal of accelerating the development and commercialization of superconducting quantum computing. Rigetti and Quanta have committed to investing more than $100 million each over the next five years pursuant to the collaboration agreement, with both sides focusing on their complementary strengths to develop superconducting quantum computing technologies. In addition, Quanta will also invest $35 million to purchase shares of Rigetti common stock, subject to regulatory clearance.
Speaker Change: <unk> recently entered into a strategic collaboration agreement with Quanta Computer Inc.
Speaker Change: Taiwan based global Fortune 500 company.
Speaker Change: And a global leader of computer server manufacturing with a goal of accelerating the development and commercialization of superconducting quantum computing.
Speaker Change: You could even quanta have committed to investing more than $100 million each over the next five years pursuant to the collaboration agreement.
Speaker Change: At both sites focusing on their complementary strengths to develop superconducting quantum computing technologies.
Speaker Change: In addition, quanta will always also invest $35 million to purchase shares. So if you get a common stock subject to regulatory clearance.
Subodh Kulkarni: Qantas collaboration with Rigetti is designed to strengthen our position in this flourishing market. Our company's complementary strengths, Rigetti as a pioneer in superconducting quantum technology with open modular architecture, enabling integration of innovative solutions across the stack. And Quanta, as the world's leading notebook server manufacturer with $43 billion sales, will support us in our goal to be at the forefront of the quantum computing industry.
Speaker Change: Contacts collaboration with <unk> is designed to strengthen our position in the exploration market.
Speaker Change: Our company's complementary strengths righetti as a pioneer in superconducting quantum technology with open what are your architecture, enabling integration of innovative solutions across the stack.
Speaker Change: And wonder is the world's leading notebooks that were manufactured with $43 billion sales.
Speaker Change: Support us in our goal to be at the forefront of the quantum computing industry.
Subodh Kulkarni: On the sales front, I'm pleased to report that we sold a Novera QPU to Montana State University in December 2024, which was our first QPU sale to an academic institution. The NOERA will be located at MSU's Q-Core to educate and train scientists and engineers on quantum computing technologies. in addition to being used to create a testbed for quantum computing R&D.
Speaker Change: On the sales front I'm pleased to report that we sold in the way it ought to be U two Montana State University in December 2024.
Speaker Change: Which was our first GPU sale to an academic institution.
Speaker Change: The Nevada will be located at Emmis years, Q code to educate and train scientists and engineers on quantum computing technologies.
Speaker Change: In addition to being used to create a testbed for quantum computing R&D.
Subodh Kulkarni: MSU's Q-Core is a new center of excellence for quantum enabling technologies established to accelerate workforce development and the regional quantum innovation ecosystem.
Speaker Change: Msu's Q cord is a new center of excellence for quantum enabling technologies established accelerate workforce development.
Speaker Change: The regional quantum innovation ecosystem.
Subodh Kulkarni: I should also note that in addition to the MSU sale, there was an additional Novera sale in the fourth quarter to the UK government.
Speaker Change: I should also note that in addition to the MSU sale. There was an additional warehouse sale in the fourth quarter to the UK government.
Subodh Kulkarni: On the technology front, we launched our 84-qubit ANCA3 system in December 2024. ANCA 3 features an extensive hardware redesign that enables superior performance. We achieved major two-qubit gate fidelity milestones with ANCA3. successfully having the error rates in 2024 to achieve a 99.0% median I-swap gate fidelity and demonstrating 99.5% median fidelity with F-SIM gate. Our newest flagship quantum computer continues to feature Rigetti's scalable, industry-leading chip architecture with 3D signal delivery while incorporating major enhancements to key technologies. ANCA3 is available to Rigetti's partners via Rigetti's Quantum Cloud Services platform and to the general public via Microsoft Azure and Amazon Bracket.
On the technology front, we launched our 84 deteriorate and got three system in December 2024.
Speaker Change: I've got three features an extensive hardware redesign that enables superior performance.
Speaker Change: We achieved major two qubit gate facility milestones hit on country.
Speaker Change: Successfully hiring the error rates in 2024.
Speaker Change: To achieve a 99.0% media I stopped gate facility and demonstrating 99, 5% median fidelity with extreme case.
Speaker Change: Our newest flagship quantum computer continues to feature aggregated scalable industry, leading chip architecture with TD signal delivery, while incorporating major enhancements to key technologies.
Speaker Change: And he is available to engage these partners by aggregating quantum cloud services platform and to the general public via Microsoft Azure and Amazon bracket.
Subodh Kulkarni: In other developments, AI power tools from quantum elements and cruise remotely automated the calibration of a Rigetti QPU integrated with quantum machines control system. This work was part of the AI for Quantum Calibration Challenge hosted at the Israeli Quantum Computing Center. The two companies participating in the challenge, Quantum Elements and Cruise, automated the calibration of a nine-qubit Rigetti Novera QPU, integrated with Quantum Machines' advanced OPX1000 control system and NVIDIA DGX Quantum, a unified system for quantum classical computing that NVIDIA built with Quantum Machines.
Speaker Change: In other developments.
Speaker Change: High power tools from quantum Eddie mentioned crews remotely automaker to calibration of irrigated GPU integrated with quanta machines control system.
Speaker Change: This lower cost part of the AI for quantum calibration challenge.
Speaker Change: The Israeli quantum computing centers.
Speaker Change: The two countries participating in the challenge Wonder Randy mentioned crews automated the calibration of the nine cubic irrigated nowhere, our GPU integrated with quantum machines advanced Op X 1000 controlled system and.
Speaker Change: And Nvidia <unk> quantum a unified system for quantum classical computing that nvidia basis quarter machines.
Subodh Kulkarni: This achievement showcases the potential of AI in quantum computer calibration and also highlights the growing collaboration within the quantum computing ecosystem. Quantum Elements, Cruz, and Quantum Machines are members of Rigetti's Nowera QPU partner program, an ecosystem of quantum computing hardware, software, and service providers who build and offer integral components of a functional quantum computing system.
Speaker Change: This actually makes it gives us the potential of AI and quantum computer calibration and also highlights the growing collaboration within the quantum computing ecosystem.
Speaker Change: One time events crews and quantum machines are members of rig it is nowhere <unk> partner program.
Speaker Change: An ecosystem of quantum computing hardware software and service providers, who build and offer integral components of a functional quantum computing system.
Subodh Kulkarni: We believe that another advantage we leverage is our modular approach to developing our technology. By enabling our partners to integrate their technology with ours, we can explore and advance creative and flexible ways to improve quantum computing capabilities.
Speaker Change: We believe that another advantage of leverage is our multi year approach to developing our technology.
Speaker Change: By enabling our partners to integrate the technology that we can explore advanced creative and flexible ways to improve quantum computing capabilities.
Subodh Kulkarni: In summary, we believe that superconducting qubits are the winning modality for quantum computers, given their fast speeds and scalability. We have developed critical IP to scale our systems and remain confident in our plans to scale to 100 plus qubits by the end of the year with a targeted 2X reduction in error rates from the error rates we achieved at the end of 2024. We believe our leadership in superconducting quantum computing continues to be reinforced as we push the boundaries of our system performance, as evidenced by the success of AMCA3.
Speaker Change: In summary, we believe that superconducting cubic's are the winning modality for quantum computers, given then fast speeds and scalability.
Speaker Change: We have developed critical IP to scale, our systems and remain confident in our plans to scale to 100, plus <unk> by the end of the year with a targeted two X reduction in error rates from the originally achieved at the end of 2024.
Speaker Change: We believe our leadership in superconducting quantum computing continues to be reinforced as they push the boundaries of our system performance as evidenced by the success of our country.
Subodh Kulkarni: Thank you.
Jeffrey Bertelsen: Jeff will now make a few remarks regarding our recent financial performance. Thanks, Subodh. Revenues in the fourth quarter of 2024 were $2.3 million. compared to $3.4 million in the fourth quarter of 2023. Revenue is an important part of our strategy to fund our ongoing research initiative.
Speaker Change: Thank you Jeff will now make a few remarks regarding our recent financial performance.
Jeff Bertelsen: Thanks, Sue about Reg.
Jeff Bertelsen: Revenues in the fourth quarter of 2024 were $2 3 million.
Jeff Bertelsen: Compared to $3 4 million in the fourth quarter of 2023.
Jeff Bertelsen: Revenue is an important part of our strategy to fund our ongoing research initiatives.
Jeffrey Bertelsen: Renewal of the U.S. National Quantum Initiative, sales to U.S. and foreign governments, and Novera are all important to future sales. Gross margins in the fourth quarter of 2024 came in at 44%. compared to 75% in the fourth quarter of 2023. The lower gross margins on a year-over-year basis were due to ongoing revenues from our contract with the UK's NQCC to deliver a 24-cubic quantum system, which has a lower gross margin profile than most of our other revenues.
Jeff Bertelsen: Renewal of the U S National quantum initiative sales to U S and foreign governments and nowhere are all important to future sales.
Jeff Bertelsen: Gross margins in the fourth quarter of 2024 came in at 44%.
Jeff Bertelsen: Compared to 75% in the fourth quarter of 2023.
Jeff Bertelsen: The lower gross margins on a year over year basis were due to ongoing revenues from our contract with the U K's and QC C.
Jeff Bertelsen: To deliver a 2004 qubit quantum system, which has a lower gross margin profile than most of our other revenue.
Jeffrey Bertelsen: On the expense side, total OPEX in the fourth quarter of 2024 was $19.5 million, compared to $19.7 million in the same period of the prior year. Stock compensation expense for the fourth quarter of 2024 was $3.4 million, compared to $3.7 million for the fourth quarter of 2023. Net loss for the fourth quarter of 2024 was $153 million, or $0.68 per share, compared to a net loss of $12.6 million, or $0.09 per share, for the fourth quarter of 2023. The non-cash change in the fair value of derivative warrant and earn out liabilities negatively impacted our net loss for the fourth quarter of 2024 by $135.1 million.
Jeff Bertelsen: On the expense side total opex in the fourth quarter of 2024 was $19 5 million.
Jeff Bertelsen: Compared to $19 7 million in the same period of the prior year.
Jeff Bertelsen: Stock compensation expense for the fourth quarter of 2024 was $3 4 million.
Jeff Bertelsen: <unk> to $3 7 million for the fourth quarter of 2023.
Jeff Bertelsen: Net loss for the fourth quarter of 2024 was $153 million or <unk> 68 per share compared to a net loss of $12 6 million or <unk> <unk> per share for the fourth quarter of 2023.
Jeff Bertelsen: The noncash change in the fair value of derivative warrant and earn out liabilities negatively impacted our net loss for the fourth quarter of 2024 by $135 1 million <unk>.
Jeffrey Bertelsen: compared to a favorable impact of 4.6 million in the comparable prior year period. The derivative warrant and earn out liabilities are non-cash in nature and Rigetti will never be required to pay cash to settle these obligations.
Jeff Bertelsen: Compared to a favorable impact of $4 $6 million in the comparable prior year period.
Jeff Bertelsen: The derivative warrant an earn out liabilities are noncash in nature, and we're getting we'll never be required to pay cash to settle these obligations.
Jeffrey Bertelsen: Cash, Cash Equivalents, and Available for Sale Investments totaled $217.2 million as of December 31, 2024. During the fourth quarter of 2024, we received net proceeds of $153.3 million from the sale of 88.1 million common shares through a registered direct offering and completion of our at-the-market equity offer. We also prepaid in full all of the remaining amounts owed under our loan agreement with Trinity Capital, Inc. We believe that our existing balances of cash, cash equivalents, and marketable security should be sufficient to meet our anticipating operating cash needs for at least the next three years, based on our current business plan and expectations and assumptions, considering current macroeconomic conditions.
Jeff Bertelsen: Cash cash equivalents and available for sale investments totaled $217 2 million as of December 31, 2024.
Jeff Bertelsen: During the fourth quarter of 2024, we received net proceeds of $153 3 million from the sale of $88 1 million common shares through a registered direct offering and completion of our aftermarket equity offering.
Jeff Bertelsen: We also prepaid in full all of the remaining amounts owed under our loan agreement with Trinity Capital Inc.
Jeff Bertelsen: We believe that our existing balances of cash cash equivalents and marketable securities should be sufficient to meet our anticipating operating cash needs for at least the next three years based on our current business plan and expectations and assumptions considering current macroeconomic conditions.
Jeffrey Bertelsen: Thank you.
Operator: We would now be happy to answer your question. Thank you.
Jeff Bertelsen: We would now be happy to answer your questions.
Operator: As a reminder, to ask a question, you will need to press star 11 on your telephone. To remove yourself from the question queue, you may press star 11 again. Please stand by while we compile the Q&A roster.
Jeff Bertelsen: Thank you as a reminder to ask a question you will need to press star one one on your telephone to remove yourself from the question queue. You May Press Star one one again, please standby, while we compile the Q&A roster.
Craig Ellis: Our first question comes from the line of Craig Ellis of B Reilly. Please go ahead, Craig. Yeah, thanks for taking the question and congratulations on the partner progress and the Novera QPU sales.
Speaker Change: Our first question comes from the line of Craig Ellis of B Riley. Please go ahead Craig.
Craig Ellis: Yes, Thanks for taking my question and congratulations on the partner progress and <unk> sales. So Super I wanted to start off by following up on the Quanta announcement and the question is can you help us understand the deals Genesis were you reaching out to them.
Subodh Kulkarni: So Subodh, I wanted to start off by following up on the Quanta announcement. And the question is this, can you help us understand the deal's genesis? Were you reaching out to them, they to you? And over what time period has this deal been gestating? And is there anything exclusive about any of the technology that you or they would develop underneath the agreement? Thanks, Craig.
Speaker Change: Ada Yu and over what time period has the steel band just stating and is there anything exclusive about.
Speaker Change: Any of the technology that you are they would develop underneath the underneath the agreement.
Subodh Kulkarni: So yeah, it's an exciting partnership announcement we did with Quanta Computers. As our announcement said, Quanta is a large company based in Taiwan with almost $43 billion in annual sales. They're well known for both their laptop as well as server manufacturing. I believe they have the number one market share in GPU servers right now. So they're a close partner of companies such as Nvidia, Apple and many other companies. They, on their own, have been looking around for how is the best way for a quantum computer to get into quantum computing, because they clearly view quantum computing as the next big thing after GPUs.
Speaker Change: Thanks, Greg.
Speaker Change: Citing our partnership announcement, we did with quanta computers.
Speaker Change: As our arms with quanta as a large company based in Taiwan, It's almost $42 billion.
Speaker Change: Annual sales.
Speaker Change: They are well known for both their laptop SNF cellular manufacturing I believe to have the number one market share in GPU servers right. Now so we are a close partner company.
Speaker Change: Companies, such as Nvidia Apple and many other companies.
Speaker Change: They on their own have been looking around for how is the best way for quanta computer to get into quantum computing, because they clearly view quantum computing is the next big thing.
Subodh Kulkarni: And they've always done that. They have always been on the leading edge of the new technology curves. So they were searching for the right partner. They did their own homework, looked at all the different modalities, decided that superconducting gate-based quantum computing is the most likely modality to win. Within that, we are clearly a leader, competing right at the top, along with IBM and Google. So we don't know all the companies that they talk to, but they certainly started talking to us close to a year ago or so. So we have been discussing with them for a while now.
Speaker Change: Gpus.
Speaker Change: And they've always done bag. They have always been on the leading edge of new technology costs, but they were searching for the right partner they did their own homework looked at all the different modalities decided.
Speaker Change: That superconducting gate based water computing is the most likely modality to win.
Speaker Change: Within that we are clearly a leader competing rated the top along with IBM and Google.
Speaker Change: So we don't know all the companies are deductible, but they certainly started talking to us close to a year or so so we have been discussing with them for a while now.
Subodh Kulkarni: On our side, we know that we cannot be building the commodity type items of the hardware stack in Berkeley or Fremont, California, doesn't make any sense given the cost structure in those places. So we were looking for appropriate contract manufacturers in the long term as volumes pick up, who's the right contract manufacturer for us. So it was a mutual decision where we thought they are the right potential partner given the critical role they play in CPU, GPU servers today. They believe that we are the right partners from a technology standpoint. Clearly, one of our needs was to have money, and that's what they offered is, as you can see, they are buying $35 million of our shares at $11.59, pending regulatory clearance.
Speaker Change: On our side, we know that.
Speaker Change: We cannot be bidding.
Speaker Change: Commodity type items of the hardware stack.
Speaker Change: Politically our Fremont, California doesn't make any sense given the cost structure in those spaces. So we were looking for appropriate contract manufacturers in the long term as volumes pick up.
Speaker Change: Is there a contract manufacturer for us.
Speaker Change: So it doesn't mutual decision, where we talk.
Speaker Change: They are a great potential partner given the critical role they play in CPU GPU servers today. They believe that we've got the right partners from a technology standpoint.
Speaker Change: Clearly, we're not hard needs wants to wants to have money and thats. What they offered is as you can see.
Speaker Change: They are buying $35 million of our shares at $11 59.
Speaker Change: Pending regulatory clearance.
Subodh Kulkarni: But more importantly, they have committed to more than $250 million over the next five years to be invested in the non-QPU portion of the hardware stack. So essentially, going forward, we will continue to focus, as we always have, on the quantum chip fabrication part, and we'll be responsible for the whole stack, but we will start relying on them as our contract manufacturer for things such as the control system, the dilution refrigerator, cables, and all other accessories that are extremely important, but just not that high-value add. So we believe it's the right partnership in the long term.
Speaker Change: But more importantly, they have committed to more than $250 million over the next five years.
To be to be administered in the non GPU portion of the hardware stack. So essentially going forward. We will continue to focus as we always have on the quantum chip application part and when we restart will be responsible for the whole stack, but we will start relying on them as a contract manufacturer for things such as the control system the dilution of that figure.
Speaker Change: Our cables and all other activities.
Speaker Change: We are extremely important but just knocked back by high value add.
Speaker Change: So we believe it's the right partnership in the long term.
Craig Ellis: We certainly are counting on them to help us out on that part, and certainly between the cash we already have, plus the $35 million they will give us for shares, plus the $250 million commitment, we effectively have close to $500 million right now to be invested in the next five years. So we feel really good about that position and how we can deploy that investment to accelerate the pace of our quantum computing development. Hopefully that answers your question. Yeah, that's very helpful.
Speaker Change: Certainly.
Speaker Change: Hunting on them to help us out on backlog and certainly though between the cash we already have close to $35 million that would give us.
Speaker Change: Four shares plus the $250 million come.
Speaker Change: Commitment.
Speaker Change: We effectively have close to $500 million right now are to be invested in the next five years. So we feel really good about that.
Speaker Change: Acquisition.
Speaker Change: All we can deploy that investment to accelerate the pace of our quantum computing development.
Speaker Change: Hopefully that answers your question.
Speaker Change: Yeah, that's very helpful and I think it is significant.
Craig Ellis: And I think it is significant that as a leader in first x86 servers, and now GPU based servers, they've chosen to partner up with you and, and certainly with significant financial commitment.
Speaker Change: As a leader in <unk>, six servers, and and our GPU based servers, they've chosen to partner up with you and certainly with significant financial commitments.
Craig Ellis: The second question I wanted to ask was related to your take on where we stand with government funding. Recently, there was a bipartisan bill introduced by Senators Daines and Durbin, regarding 2.5 billion in potential funding for the US government. Can you just give us an update on on where things stand federally in the US and, and your views on on what that might be able to do?
Speaker Change: The second question I wanted to ask was relate.
Speaker Change: Related to <unk>.
Speaker Change: Your take on.
Speaker Change: Where we stand with government funding recently there was a.
Speaker Change: Bipartisan Bill introduced by Senators gains in Durban regarding $2 5 billion of potential funding for the U S government can.
Speaker Change: Can you just give us an update on on where things stand federally in the U S and in.
Speaker Change: And your views on what that might be able to do.
Subodh Kulkarni: Sure. So, as you correctly said, there is a bipartisan bill that has been introduced for about $2.5 billion for over five years. Most of that is slated to go to the DOE labs, such as Fermilab, Oak Ridge National Lab, and other DOE labs that we depend on for our funding. That bill seems to have bipartisan support. There's no indication it won't go through, but as of today, it hasn't been signed yet. We are optimistic that it will get signed here soon, and then the money gets appropriated to the right DOE labs. We are hoping that somewhere in the second quarter of this year, the money will start getting appropriated so we can start getting contracts from those DOE labs.
Speaker Change: Sure. So as you correctly said there is a bipartisan bill that has been introduced for about $2 5 billion.
Speaker Change: For over five years or more.
Speaker Change: That is slated to go to their labs, such as Fermilab Oak Ridge National Lab and other audio is abstract we depend on for our funding.
Speaker Change: <unk>.
Speaker Change: That seems to have bipartisan support there is no indication that won't go through but as of to date hasn't been signed yet we are optimistic that it can get signed here soon and then the money gets appropriated to the right.
Speaker Change: We are hoping that somewhere in the second quarter of this year. The money, we'll start getting appropriate. So we can start getting contracts on those apps.
Subodh Kulkarni: In addition to DOE, DOD has several initiatives going on right now to fund quantum computing. The biggest one being the DoD, DARPA, Quantum Benchmark Initiative, QBI, we expect them to make some very important announcements in the next month or so, as to which is the group of companies that they have chosen going forward to build what they call utility-scale quantum computing. Basically, that's like the world's best, biggest quantum computer that has to be built by 2033 type time period. And they have several hundred million dollars, more than $300 million in budget for that. In addition to that, there are several other line items in the DoD bill that will be able to fund quantum computing.
Speaker Change: Yes.
Speaker Change: In addition to D. R E D O D has several initiatives going on right now to fund quantum computing.
Speaker Change: The biggest one being the deal the dark bar quantum benchmark initiative <unk>.
Speaker Change: We expect them to make some very important announcements in the next month or so as to which is a group of companies that they have.
Speaker Change: <unk> chosen going forward debate, what they called utility scale quantum computing basically that's like the world's biggest quantum computer.
That has to be beta by 2032 at a time periods are going to have $700 million more than $300 million in budget for that in addition to that there are several other line items in <unk>.
Speaker Change: We'll be able to fund quantum computing.
Subodh Kulkarni: So overall, between DoE and DoD, we are expecting sizable increase in US government investment in quantum computing. We are just waiting for the bills to get signed and the money to get appropriated, but we are pretty optimistic as 2025 rolls along, a sizable amount of investments will be available from DoE and DoD.
Speaker Change: So overall between urea and <unk>, we are expecting sizable increase in U S government investment in quantum computing.
Speaker Change: We are just waiting for the builds to get signed and the money to get appropriate, but we're pretty optimistic.
Speaker Change: As $2025 alone.
Speaker Change: Sizable amount of investments will be available from <unk> and duty.
Subodh Kulkarni: Thank you.
Subodh Kulkarni: And then finally, for me, before I hop back in the queue, regarding cash, congratulations on getting it to such a significant level. The first question related to that is, does it change at all how you look at near-term intensity for either R&D or sales and marketing? And then the longer term question, since Jeff did indicate potential sufficiency for the next three years or so, how do you feel about its ability to get you to a level where the company is self-funding?
Speaker Change: Thank you and then finally for me before I hop back in the queue regarding cash congratulations on getting it to such a significant level.
Speaker Change: First question related to that is.
Speaker Change: Does it change at all how you look at near term it tends to be for either R&D or sales and marketing and then the longer term question sense, Jeff did indicate potential sufficiency for the next three years or so how do you feel about its ability to get you to a level where the company itself.
Subodh Kulkarni: Thank you. So as I mentioned earlier, we have 217, as Jeff mentioned, million dollars at the end of last year. Plus, we have this commitment from Quanta for $35 million, plus the $250 million. So rounding off the numbers, we have roughly $500 million available to us for the next five years, which is a sizable amount of money, given our burden rate. And as Jeff said, at least for three years, we don't need to worry about cash, and probably longer. Certainly, we hope that these government initiatives get funded by the US government, the UK government, where we have very good relationships, as well as some other friendly governments around the world that we have been talking to.
Speaker Change: Funding. Thank you.
Speaker Change: So as I mentioned earlier.
Speaker Change: We have 217 as Jeff mentioned million dollars at the end of last year plus.
Speaker Change: Plus we have this commitment from $435 million plus the $250 million so around being off the numbers, we have roughly $500 million.
Speaker Change: <unk> to us for the next five years, which is a sizable amount of money given our burn rate and then just kind of at least 40 years, we don't need to worry about cash and probably longer.
Speaker Change: We hope that does go to make initiatives get funded by the U S government U K go in Mexico, we have very good relationships as well as some others friendly governments around the world that we have been talking to you as.
Subodh Kulkarni: Assuming those initiatives materialize, we certainly hope we don't need to raise cash. We'll certainly look at opportunities, but it's not that we need to raise cash if those initiatives materialize and we manage to get a contract. But clearly we are in an R&D stage right now. We don't believe commercial sales to increase anytime immediately. I know there's a lot of discussion going around as to where exactly quantum computing is in terms of sales expectations. Our general view is we are still in R&D. We are still roughly about four to five years away before commercial sales matter, which is why we keep highlighting that it's R&D milestones that are far more important right now than this one-off government-type contracts.
Speaker Change: Assuming those initiatives materialize, we certainly hope that we don't need to raise cash will certainly look at opportunities, but it's not that we need to raise cash if those initiatives materialize and we managed to get the contracts.
Speaker Change: But clearly we are in the R&D stage right now.
Speaker Change: Don't believe commercial sales.
Speaker Change: <unk>.
Speaker Change: To increase anytime immediately I know, there's a lot of discussion going around.
Speaker Change: As to where exactly quantum computing is in terms of sales expectations. Our general view is we are still in R&D. We are still just me about four to five years of age before commercial serious matter, which is why we keep highlighting that it's the R&D milestones that are far more important right now than this one off government contracts.
Subodh Kulkarni: We certainly welcome those and we want those. And as government increases the budget substantially, we will certainly depend on those to help us get to positive cashflow in the next three, four years. But our focus right now continues to be squarely on R&D and making sure we are in the lead with superconducting quantum computing. Hopefully that answers your question.
Speaker Change: Certainly welcome those and be one dose.
Speaker Change: Delivering increases the budget substantially we will certainly depend on those to help us get to positive cash flow in the next three four years, but our focus right now continues to be squarely on the R&D and making sure.
Speaker Change: We are in the lead it's superconducting quantum computing.
Speaker Change: Hopefully that answers your question.
Craig Ellis: Yeah, that's very helpful Subodh.
Speaker Change: Yes, that's very helpful. Thank you.
Operator: Thank you.
Speaker Change: Thank you.
Thank you.
Quinn Bolton: Our next question comes from Quinn Bolton of Niedermann Company. Please go ahead, Quinn.
Speaker Change: Our next question comes from Quinn Bolton Needham <unk> Company. Please go ahead Quinn.
Subodh Kulkarni: Hey guys, this is Shadian for Quinn. My first question is on the QPU sale to Montana State University. Can you guys discuss if the sale to MSU was a competitive process? And if so, what was some of the feedback from the university that led to them choosing Rigetti's technology? Thanks, y'all. I mean... As you know, we have been building 9-qubit QPU and making it available to commercial customers, particularly academic researchers and government national lab type customers, not quite the classic data center type customers. The real objective of enabling that is to build a quantum ecosystem.
Speaker Change: Hey, guys. This is Charlie on for Glenn.
Speaker Change: My first question is on the <unk> sale to Montana State University can you guys discussed at the sale to MSU was a competitive process and if so what were some of the feedback from the university that led to them choosing we get to this technology.
Speaker Change: Thanks, Sean.
Speaker Change: As you as you know we have been building.
Speaker Change: Building nine cubic GPU and making it available to commercial customers, particularly academic researchers and Goldman national lipid customers not quite the classic data center customers.
Speaker Change: <unk>.
Speaker Change: The real objective of enabling that is to build a quantum ecosystem and it's all for research applications is clearly the Montana State University research case that they are trying to understand the fundamentals of quantum computing.
Subodh Kulkarni: And it's all for research applications. It's clearly the Montana State University is a research case where they are trying to understand the fundamentals of quantum computing. So they're doing basic experiments with those, like pulse shape, pulse sizes, really understanding how to design algorithms and those kinds of things. So get to the fundamental understanding of quantum computing, you're really not going to use a nine qubit QPU to try to compete with a CPU or GPU. So it's really not meant for any practical application or demonstrating quantum advantage or anything. It's all for research purposes. But it's a nice convenient product to have in your lab, where you can get hands on experience.
Speaker Change: So they are doing basic expert he mentioned a dose like pulse shapes and sizes.
Speaker Change: Begin your understanding Holdco design algorithms and those kinds of things. So gets you the fundamental understanding of quantum computing youre really not going to use a 90 with GPU to try to compete with <unk>.
Speaker Change: CPU or GPU, succeeding not meant for the practical application are demonstrating quantum advantage or anything it's all for research purposes.
Speaker Change: Less convenient.
Speaker Change: Our product to have in your lap debate you can get hands on experience.
Subodh Kulkarni: It fits into many of the research customers in this area already have purchased a dilution refrigerator for various reasons. And a nine qubit QPU is a relatively simple product that fits into your existing dilution refrigerator. So it's a relatively simple thing to ship, get it integrated into your system, and you can start working with it fairly quickly. So it's a fairly user friendly way to get into fundamentals of quantum computing ecosystem. Hopefully that answers your question. Yeah, it does. Thanks for that.
Speaker Change: It fits into many of the research customers in this area already have purchased a dilution refrigerator for various reasons.
Speaker Change: 90, with Gpus are relatively simple product that fits into your existing dilutions refrigerators, such a relatively simple thing to ship it.
Speaker Change: Integrated into your system and you can start working with <unk> sadly quickly.
Speaker Change: Fairly user friendly way to get into fundamentally soft quantum computing ecosystem hopefully that answers your question.
Speaker Change: Yes. It does thanks for that and then I want to follow up on Craig's question and sorry, if I missed this but is that the OE quantum leadership Act. The same bill as the National Quantum Initiative Act, but reintroduce has a different name or are these two different bills going through Congress.
Quinn Bolton: And then I want to follow up on Craig's question.
Subodh Kulkarni: And sorry if I missed this, but is that DOE Quantum Leadership Act the same bill as the National Quantum Initiative Act, but reintroduced as a different name? Or are these two different bills going through Congress? No, there's only one bill. Right now, it is the same one that Craig mentioned, introduced by Senator Daines and Durham. It's a $2.5 billion initiative over five years. Got it.
Speaker Change: Now there is only one bill right now it is the same one that Craig mentioned introduced by Senator Dean Center hub.
Speaker Change: $2 5 billion initial.
Speaker Change: Initiative over five years.
Subodh Kulkarni: And I have one quick modeling question, but what can we expect the share count to be in Q1? Yeah, I think in you know, in terms of share count, we we ended the year at 200 and call it 84 million shares. So I would think, you know, let's, let's say, you know, 290 would be my estimate. Awesome.
Speaker Change: Got it and I have one quick modeling question, but what can we expect the share count to be in Q1.
Speaker Change: Yeah.
Speaker Change: Yes, I think in terms of share count we ended the.
Speaker Change: For the year at.
Speaker Change: 200 and call it 84 million share so I would think.
Speaker Change: Let's say.
Speaker Change: To 90 would be my estimate.
Quinn Bolton: Thanks for taking my questions and congrats on the progress.
Speaker Change: Awesome, Thanks for taking my questions and congrats on the progress.
Speaker Change: Thank you.
Speaker Change: Thank you.
Krish Sankar: Our next question comes from Krish Sankar of TD Cohen. Please go ahead, Krish. Hi, thanks for taking my questions.
Speaker Change: Our next question comes from Chris Sand car of TD Cowen. Please go ahead Chris.
Steven: Hi, Thanks for taking my questions. This is Steven calling on behalf of Krish.
Stephen: This is Stephen calling on behalf of CRISH. Subodh, I guess first one for you regarding technical milestones for the year, specifically on the scaling front for the nine-qubit modular tile architecture. So, I know you guys have a target of reaching 36-qubit chip by the middle of this year and then over 100 qubits by the end of the year. I was just kind of wondering, this level of scaling, can, should we assume that that rate of scaling can continue in future years as well? Or are there certain physical limitations to the packaging or processing process in terms of like reticles or signal integrity, so on and so forth?
Steven: I guess first one for you regarding technical milestones for the year.
Steven: Specifically on the scaling front for the nine qubit modular tile architecture.
Steven: I know you guys have a target of reaching <unk> 16 bid.
Steven: Chip in the middle of this year.
Steven: Over 100 Gigabits by the end of the year is just kind of wondering this level of scaling and Kevin should we assume that that rate of scale and can continue in future years, as well or are there certain physical limitations to the.
Steven: Packaging.
Steven: Our process in terms of like radicals or chemo integrity, and so forth and also related to it.
Stephen: And also related to it from an error rate standpoint? You mentioned having a 2x reduction in error rates by the end of this year, just wondering if all of the, I guess the aggregate of different software algorithms and other improvements that you guys are working on both internally and with partners, can that error rate be outperformed or better than you currently are estimating?
Steven: Every rate standpoint.
Steven: You mentioned, having or <unk>.
Steven: <unk> <unk> reduction in error rates by the end of this year.
Steven: Just wondering if all of the I guess the aggregate of different software algorithms and other improvements that you guys are working on both internally and with partners cannot elevate the outperformance.
Speaker Change: Better than you currently are estimating.
Subodh Kulkarni: So all very good questions, Stephen, so I'll try to answer them. So regarding, let's take an assessment of where we are. First, as a modality, I mean, you can clearly see what's going on in the quantum computing world with superconducting gate-based quantum computing. I mean, between our announcement, those Google below-chip announcement, plus the recent announcements from companies like Amazon, Microsoft, even the Chinese Academy of Sciences, which is the government of China's sponsored organization. To us, it's becoming amply evident that superconducting gate-based quantum computing is the most likely winning modality here. I mean, the amount of investment going on from all the large companies and organizations.
Steven: So all very good question, Steven So I'll try to answer them.
Speaker Change:
Speaker Change: So regarding let's let's take.
Speaker Change: An assessment of where we are.
Speaker Change: Firstly the mortality I mean, you can clearly see what's going on in the quantum computing world with superconducting gave this quantum computing I mean between our announcement does Google Blue Chip announcement, plus the recent announcements from companies like Amazon, Microsoft even the Chinese Academy of Sciences, which is the government of China sponsored organization.
Speaker Change: To us, it's becoming empty evident that superconducting gateways quantum computing is the most likely leading modality.
Speaker Change: I mean, the amount of investment going on from large companies and organizations, but look at the data I mean collectively we are in the roughly 100 cubic range right now.
Subodh Kulkarni: But look at the data. I mean, collectively, we are in the roughly 100-qubit range right now. Collectively, we are in the 99 to 99.5% median two-qubit gate fidelity. We are in the tens of nanoseconds gate speed, which I'll point out is 10,000 times faster than some other modalities like trapped ion or pure atoms. And we are already deploying real-time error correction with low latency. We did that. Google did that with their below-chip announcement. So when we look at collectively where superconducting modality-based quantum computing modality stands, to us, it becomes very clear that this is the modality that's most likely going to win.
Speaker Change: Collectively we are in the 99% to 99, 5% median two qubit gateway to Ricky.
Speaker Change: We are in the tens of nanoseconds gait speed, which I'll point out is 10000 times faster than some other modalities like trapped ion a pure items.
Speaker Change: And we are already deploying real time error correction with low latency digit tag related that with the blue chip announcements. So when I look when you look at collectively where superconducting modality based quantum computing modality stance to us it becomes very clear that this is the mortality that is most likely going to vet.
Subodh Kulkarni: Now, within that, we have our share of challenges. None of us, none of us are demonstrating quantum advantage yet. And I'll say that across all across the board for all modalities. I mean, you hear all kinds of hype going around and there's a lot of hype going around in quantum computing. But none of us have demonstrated quantum advantage. We are all getting to that point. And at least on the superconducting gate based quantum computing side. We believe we need to get to several hundred qubits, maybe a thousand qubits. We need to get to like 99.7% median two-qubit gate fidelity, maybe 99.8%, less than 30 nanosecond gate speed, and real-time error correction to demonstrate quantum advantage.
Speaker Change: Now within that we have our share of challenges none of us none of us.
Speaker Change: Demonstrating quantified want ACX and I would say that across all across the board for all modalities I mean, Europe came so high going around going to survive going around in quantum computing, but none of us have demonstrated <unk> H R.
Speaker Change: Getting to that point and at least on the superconducting date based upon the computing side.
Speaker Change: I believe we need to get to 700, <unk>, maybe <unk> going to get like 99, 7% media into Cubic's Certificate, maybe 99 eight.
Speaker Change: Less than 30, nanosecond gait speed and time error correction to demonstrate <unk> agent, that's where our road map and I believe IBM, Google roadmap as a competitor to US we are all looking at roughly about four maybe five years or demonstrate quantify gallant HN and commercial business to take off now.
Subodh Kulkarni: And that's where our roadmap and I believe IBM Google's roadmap is comparable to ours. We are all looking at roughly about four, three, or maybe five years to demonstrate quantum advantage and commercial business to take off. Now, having said that, how do we get from the current about roughly 100 qubits we are all at to a thousand qubit? And that's where I think different approaches start coming in. Our view is that chiplets is a key tool that we are planning on using to scale up. And we did some early work with 40 qubit chips in the, like about two, three years ago.
Speaker Change: Now, having said that how do we get from the current debacle 300, Cubic's, we add all of that to a thousand Geo bag and Thats, where I think different approaches start coming in our view is that <unk> is a key.
Speaker Change: To that we are planning on using to scale up.
Speaker Change: And we did some early work with 40 cubic chips and the like.
Speaker Change: About two years ago and more recently last year, we did more with 90 pubic chips, we demonstrate a couple of different things that you can dial chimps and still maintain all year quantum effects and see no deterioration in performance, which is a huge important milestone to demonstrate having done that twice now and now. This is the year, we have decided to start deploying it in.
Subodh Kulkarni: Then more recently last year, we did more with nine qubit chips. We demonstrated a couple of different times that you can tile chips and still maintain all your quantum effects and see no deterioration in performance, which is a huge, important milestone to demonstrate. Having done that twice now, now this is the year we have decided to start deploying it in a more of a volume manner. So our first important milestone is demonstrating four times nine qubit, so that would be 36 qubit, by the middle of this year, and demonstrate 99.5 percent or better median two qubit gate fidelity.
Speaker Change: More of a volume manner. So the first important milestone is demonstrating four times 90 of it so that it would be 36 gigabit by the middle of this year and demonstrate 99, 5% or better medium to cubic exited niches.
Subodh Kulkarni: And assuming we are successful and we are fairly optimistic, we will be successful with that milestone, then bump it up to more than 100 qubit by the end of this year. It certainly is a big milestone for Rigetti, but we believe it's a huge milestone for the whole industry. Because it's the first time any one of us is going to show a real path to get to 1,000 qubit. Right now, all of us, even though we are at 100 qubit, we know that getting to several hundred qubits from where we are right now with a single monolithic chip is a challenge.
Speaker Change: And assuming we are successful and we are fairly optimistic we will be successful with that milestone then.
Speaker Change: Bump it up to more than 100 cubic by the end of this year.
Speaker Change: Certainly is a big milestone for <unk>, but we believe it is a huge milestone for the whole industry. Because it is a first time anyone of US is going to show a real path to get to housing, Quebec right now all of those even though we had a 100 cubic with no debt.
Speaker Change: To several hundred cubic's from where we are right now with a single monolithic chip.
Subodh Kulkarni: We see that in our data. We believe IBM tried to go to 430 qubits a year ago and they had some challenges, which is why you don't find it deployed right now. And certainly, when we look at the other modalities, I don't even think they are anywhere close to what we are talking about, hundreds and hundreds of qubits. So our view is that chiplets is a critical technology. We have shown that it works in quantum computing. Obviously, the CMOS world has shown that chiplets are critical. I mean, if you look at any high-end applications with CMOS today, most of them do use chiplets.
Is a challenge we see that in our data we believe IBM try to go to 430, Cubic's a year ago and they had some challenges which is why you don't find it deployed right now.
Speaker Change: Certainly when we look at the other modalities I don't do anything get anywhere close to what we are talking about 101, hundreds of cubic's and stuff like that so our view is that <unk> is a critical technology.
Speaker Change: We have shown that it works in quantum computing, obviously, the Cmos Lloyd has shown that triplex are critical I mean, if you look at any high end applications with Cmos today, most of them do use chip Lex and there's good reason for that because it's lot easier to control uniformity and performance over a smaller dimension chip physically you mentioned chip and the larger dimension chip.
Subodh Kulkarni: And there's a good reason for that, because it's a lot easier to control uniformity and performance over a smaller dimension chip, physical dimension chip, than a larger dimension chip. So there's no reason for us to reinvent the wheel. So we are using all the learnings from the semiconductor industry and CMOS industry in specific, and deploying chiplets. We feel pretty good that we will demonstrate four by nine by the middle of this year, and then we'll bump it up to 100 qubit. And assuming we are successful with that, that, we believe, is a really good way to scale it up to several hundred and several thousands of qubits.
Speaker Change: So there's no reason for us to reinvent the views of using all the learnings from the semiconductor industry and Cmos industry and specific and deploying triplex, we feel pretty good that we will demonstrate all by nine by the middle of this year and then will bump it up to 100 cubic and assuming we're successful with that.
Speaker Change: We believe is a really good way to scale it up to several hundred several thousands of <unk> just to give you a feel on nine cubic chip right. Now is six millimeter by six millimeter and we certainly think we can shrink it down by a factor of two and Thats fairly standard using cognition semiconductor technologies, we could even get more aggressive in their usage.
Subodh Kulkarni: Just to give you a feel, our nine-qubit chip right now is six millimeter by six millimeter. And we certainly think we can shrink it down by a factor of two. That's fairly standard using conventional semiconductor technologies. We could even get more aggressive and reduce it further. But even with the current dimension, if you take a one meter by one meter panel, you can fit in more than half a million qubits. And certainly we believe dilution refrigeration technology will advance enough for us to maintain cold temperatures across. a meter by meter square panel in about five years.
Speaker Change: Further, but even with the current dimension if you take a one metre by one meter panels, you can sit in more than half a million dollars chew bags and suddenly we believe dilution refrigeration technology of the avalanche enough for us to maintain or temperatures across.
Speaker Change: A meter by meter square panel in about five years, and so we feel pretty good that we should be able to get several hundred thousand cubits, maybe even more than half a million <unk>.
Subodh Kulkarni: And so we feel pretty good that we should be able to get several hundred thousand cubits, maybe even more than half a million cubits in about five years or so by using the chiplet approach. You correctly pointed out that the challenge does become packaging to some extent. So we will have to improve the way we are packaging to chips. When you're doing it only for four or 10 or even 100, you can do manual or semi-manual methods. Certainly, when you're dealing with thousands and 10,000, you will need to automate that. But you look at the current state of advanced packaging from the semiconductor industry side, there are several advanced processes that have been developed.
Speaker Change: Five years or so.
Speaker Change: By using the triplet approach.
Speaker Change: Correctly pointed out that the challenge does become packaging to some extent.
Speaker Change: So we will have to improve the way we are packaging to chips and you're doing it only for four or 10 or even 100.
Speaker Change: You can do manual or semi manual metrics, certainly when youre dealing with thousands and 10000, you will need to automate that but do you look at the current state of advanced packaging from the semiconductor industry side. There are several advanced processes that have been developed and we will be able to deliver HSM ill take that one.
Subodh Kulkarni: And we will be able to leverage them and take advantage of them. So putting together several hundred. thousand tiles, if you will, and certainly several 10,000 tiles is not that challenging given the given the state of the art in semiconducting.
Speaker Change: Each of them, so putting together several hundred.
Speaker Change: Housing.
Speaker Change: <unk> will answer to decelerate in Posen tires is not that challenging given the given the state of art in semiconductor industry. So a pretty exciting road map, we feel pretty good about it that's our path to get to several hundred thousand to your bid and like the utility scale quantum computer that DARPA is challenging other phosphate.
Subodh Kulkarni: So pretty exciting roadmap. We feel pretty good about it. That's our path to get to several hundred thousand qubit and like the utility scale quantum computer that DARPA is challenging all of us. So hopefully I answered most of your questions. Did I miss any?
Speaker Change: So hopefully I answered most of your questions did I Miss any.
Stephen: You know, it was very helpful, a very instructive explanation, Subodh. Thank you so much for that.
Speaker Change: It's very helpful very constructive.
Speaker Change: <unk>. Thank you so much for that and just one quick follow up more for Jeff on the.
Jeffrey Bertelsen: And just one quick follow-up, more for Jeff, on the P&L and cash flow side of things. In terms of the quanta computer collaboration and, I guess, the $100 million that you guys are committed to, I guess, investing from your side, how should we think about the expenditures of that $100 million over five years? Is that really like a cash investment in terms of equipping us in some sort, or is that just in the course of existing R&D? Will it flow through OpEx or CapEx? Any details would be helpful.
Speaker Change: GNL.
Speaker Change: Net cash.
Speaker Change: Cash flow side of things in terms of the quanta computer collaboration and I guess, the $100 million debt. Thank.
Speaker Change: Thank you guys.
Speaker Change: <unk> okay.
Speaker Change: Investing from your side is there how should we think about like the expenditures.
Speaker Change: $100 million over five years is that really like a cash.
Speaker Change: In terms of equipment of some sort or is that just.
Speaker Change: Of course, the existing R&D and <unk>.
Speaker Change: So what will flow through opex or capex, but any details there would be helpful. Thanks.
Jeffrey Bertelsen: Thanks. Yeah, I mean, it really is a continuation of our ongoing R&D efforts. So, it really will flow through OpEx, you know, in the context of our R&D team and with our capital plans and so on. So, I don't think, you know, from our side, you'll really see anything too different, other than, you know, the benefits that we're going to get from partnering with Quanta and taking advantage of their expertise in areas outside of QPU.
Speaker Change: Yes, I mean, it really is.
Speaker Change: Continuation of our ongoing R&D efforts, so it really will throw flow through opex.
And in the context of our R&D team and with our capital plans and so on so I don't think from our side Youll really see anything.
Speaker Change: Two two different other than the benefits that we're going to get from partnering with.
Speaker Change: Quanta and taking advantage of their expertise.
Speaker Change: In areas outside of acute Bu.
Jeffrey Bertelsen: Thanks, Jeff. And just as a follow-up, I guess the incremental $100 million spending, does that represent a step up to sort of annual spending, or are there offsets to account for that? No. I mean, in our side, it really is a continuation of our ongoing R&D efforts. So there really isn't any specific step up, per se, at all on our side. On their side, they've committed to investing $250 million in furthering our roadmap and so on.
Speaker Change: Okay, Thanks, and just as a follow up I.
Speaker Change: I guess T J.
Speaker Change: The incremental 100 million spending is that.
Speaker Change: And does that represent a step up to sort of annual <unk>.
Speaker Change: Pending orders are there offsets to account for that.
Speaker Change: And our side it really is a continuation of our ongoing R&D efforts. So there really isn't any specifics desktop per say at all on our site on their side, they've committed to investing $250 million in <unk>.
Speaker Change: Further.
Speaker Change: Our road map and so on.
Jeffrey Bertelsen: Perfect.
Jeffrey Bertelsen: Thank you so much.
Speaker Change: Perfect. Thank you so much thanks.
Operator: Thanks to Thank you.
Steve: Thanks, Steve.
Steve: Thank you.
Richard Shannon: Our next question comes from Richard Shannon of Craig Hollow. Your line is open, Richard. Great. Thanks, Subodh, Jeff, for letting me ask you a couple of questions. I guess my first one, Subodh, is following up on the prior discussion here on the roadmap for this year. I specifically wanted to ask about the approach to getting to the 100 plus qubits this year. Is this using kind of the tiling approach, kind of extending on the 4x9 one that you said you're trying to hit mid-year? Or is this kind of based on more of the monolithic one, the ANCA-3?
Steve: Our next question.
Steve: Comes from Richard Shannon of Craig Hallum.
Speaker Change: Your line is open Richard.
Speaker Change: Great. Thanks.
Speaker Change: Some boat Jeff for letting me ask a couple of questions.
Speaker Change: Yes. My first one is some boat is following up on the prior discussion here on the roadmap for this year, specifically wanted to ask about the approach to getting to the 100 plus kubitz. This year just using.
Speaker Change: The tiling approach kind of extending on the floor by 91 that you said youre trying to hit mid year or is this kind of based on more of the monolithic one I've got three can you kind of help us understand what the scaling approach here is.
Subodh Kulkarni: Can you kind of help us understand what the scaling approach here is? Certainly, our roadmap is relying on tithing to hit the 4x9 demonstration force by the middle of this year. Assuming we succeed with that, we will go, let's say, 12x9 to get more than 100 qubits, like 108 qubits or something like that. But we certainly have the option of... are using the monolithic approach, which is what others like IBM and Google are doing right now. And we have done all these years, too. So we certainly have the option of bumping up the 84-qubit chip to a higher qubit count.
Speaker Change: Certainly.
Our roadmap is relying on styling to hit the four by nine demonstration for us by the middle of this year, assuming we succeed with that we will go.
Speaker Change: Let's say 12 by 90 to get more than 100 cubic 808, cubic's or something like that.
Speaker Change: But we certainly have the option of.
Speaker Change: Using the monolithic operation, which is more.
Speaker Change: Like IBM and Google are doing right now R&D have done all this year.
Speaker Change: So we certainly have the option of bumping up 84 cubic chip.
Speaker Change: Two 100 cubic count, but we believe diving is the right way to go long term. So we are going to definitely try to get first afforded by $90 something thats exceeds 12 by nine or something like that.
Subodh Kulkarni: But we believe tithing is the right way to go in the long term. So we are going to definitely try to get first a 4x9 and assuming that succeeds 12x9 or something. Okay, so we're just kind of a one-track approach here in terms of using tiling going forward here, not because it's been more of kind of a demonstration or we'll be entirely focused on tiling going forward. Is that fair to think? Yeah, it's fair to think. And the main reason for that is because we can see in our data that going the monolithic chip approach is going to be extremely difficult once you are in the several hundred qubits going to several thousand qubits.
Speaker Change: Okay. So so we're just kind of a one track approach here in terms of using tiling going forward here not because it's been more kind of a demonstration or will be.
Speaker Change: Entirely focused on Thailand going forward is that fair to think yes.
Speaker Change: Yes, it's fair to staying in the main reason for that is because.
Speaker Change: You can see in our data that go into monolithic chip approach is going to be extremely difficult. Once you are in the several hundred cubic's going to several thousand capex.
Subodh Kulkarni: As I mentioned in my previous answer, IBM tried a 430-qubit chip and there's a reason why they haven't deployed it, we believe, because they also ran into the same challenges that we are seeing. And I mean, the whole CMOS industry has learned it for a decade now, right? It's very hard to build a large single monolithic chip. So we are finding the same issues. The root causes are exactly the same. Uniformity and gears and those kinds of things. So given all the information we already have, we decided that tiling is the right way to leverage the chiplet approach that the CMOS industry has done such a great job and rely on that.
Speaker Change: As I've mentioned in my previous answer IBM target of 430 cubic chip and there is a reason why they haven't deployed actively because he also ran into the same challenges that we are seeing.
Speaker Change: I mean, the whole Cmos industry has granted for a decade now it's very hard to build a large single monolithic chip. So yes, I think the same issues. The root causes are exactly the same uniformity and use and those kinds of things.
Speaker Change: So given all the information we already have we decided that tightening is the right way to leverage that should pick up routes at the Cmos industry Hesitance, So a great job and rely on back once we have proven that.
Subodh Kulkarni: Once we have proven that the quantum effects can be sustained across an interposer with chiplets, then the path becomes very clear for us. But it's important to keep demonstrating one at a time. So we will demonstrate 4x9 first. We already did the work with 2x9 last year and 2x40 a couple years ago. Although at that time, the fidelities were not as good as what we are dealing with right now. Now we are dealing with 99.5% 9-qubit chips. So we want to make sure that when we tile them, we don't see any deterioration in the fidelity performance.
Speaker Change: Quantum effects can be sustained at cross savings into Rosa with triplets than the past becomes very clear for us, but it is important to keep demonstrating one at a time so.
Speaker Change: We'll demonstrate four by night influenced the ability to vertically to buy nine last year and to buy 40, a couple of years ago. Although at that time. The affinity has been not as good as what we are dealing with right. Now now we are dealing with 99, 5% nine cubic chips.
Speaker Change: So if you want to make sure that and retire them, we don't see any deterioration in the facility performed so it's important to demonstrate the full $109 98, five by the middle of this year, assuming the succeed certainly our roadmap will be very tightening oriented.
Subodh Kulkarni: So it's important to demonstrate the 4x9 and 99.5 by the middle of this year. Assuming we succeed, certainly our roadmap will be very tiling-oriented. Perfect.
Subodh Kulkarni: Thanks for that, Subodh.
Speaker Change: Okay perfect. Thanks for that it's about <unk>.
Subodh Kulkarni: My second question is following up on one of the topics mentioned in the press release, as well as, again, the press release on this topic, I think, in December, January, regarding joint research with QFOX and Qblox here. Maybe you can just kind of talk us through how this accelerates your scaling and fidelity roadmap. That'd be great to hear about as well. So, sure. So it was an exciting announcement we did with Q-Fox and Q-Blox and it gets into signal in, signal out. Right now, we are using coax cables to send the signals to our chip and get the signals back from our chip.
Speaker Change: Question is following up on all the topics mentioned in the press release as well.
Speaker Change: The press release on this topic as I can.
Speaker Change: <unk> January.
Speaker Change: <unk> joint research with coupons and cube blocks here, maybe if you can just kind of talk us through how this accelerates your scaling and fidelity roadmap that would be great to hear about as well.
Speaker Change: So it wasn't exciting announcement, we did with Q4 <unk>.
Speaker Change: And it gets into our <unk>.
Speaker Change: <unk> signaled out right now we are using coax cables.
Speaker Change: To send the signals to our chip and get the signals back somewhat chip and most of the industry. We believe does that right now.
Subodh Kulkarni: And most of the industry, we believe, does that right now. We are all looking at, but there is a reason why we want to move away from coax cables. And the main reason is cost and the physical dimensions of a coax cable. When we, right now, we are all in the 100-qubit range, 150 or 200-qubit range is not a big deal. We can live with coax cables. But once you go to a thousand qubits and ten thousand qubits, the cost with coax cables will be prohibitively high. And the bigger issue is physically you don't have enough space in your dilution refrigerator unless you start building monster dilution refrigerators, which will itself be very expensive.
Speaker Change: We're all looking at but there is a reason might be wanting to move away from core Exco will kind of main reason is cost center physically mentioned offer coax cable.
Speaker Change: Right now we are all under 100 cubic range 150, or 200 cubic range is sort of a big deal. We can liberate coax cables, but once you go to a thousand cubic's end 10000 cubits.
Speaker Change: Cost with coax cables would be prohibitively high and the bigger issue is just because you don't have enough space in your dilution that if we get it unless you start bidding monster additional refrigerators.
Speaker Change: Very expensive so we need to find a more practical way to get the signaling signal out. So we are looking at flex cable is to be able to sort of IP in that area and we'll certainly start deploying flex cables.
Subodh Kulkarni: So we need to find a more practical way to get the signal in, signal out. So we are looking at flex cables. We have a lot of IP in that area and will certainly start deploying flex cables. But these are not your standard off-the-shelf flex cables because we are dealing with superconducting temperatures. So there's a lot of materials and process innovation that's going on in flex cables. And we are working on that. Some other companies are also working in that area, like IBM and Google, I believe. So we will first go from coax to flex.
Speaker Change: These are not your standard off the shelf X gave us because we are dealing with superconducting temperatures. So theres a lot of materials and process innovation thats going on in flex cables and we are working on that also other companies are also looking in that area like IBM and Google I believe.
First of all from coaxial flex, but beyond that we need to think about even at like 100000, puberty cerebral even flex cables and have their share of challenges and fitting into a Dr and thats, where optical signal incomes in so a lot of what has been going on that converting our microwave signal. If you will on our RF signals into optical signals.
Subodh Kulkarni: But beyond that, we need to think about even at like 100,000 qubits or above, even flex cables will have their share of challenges in fitting into a DR. And that's where optical signaling comes in. So a lot of work has been going on with converting our microwave signal, if you will, or RF signals into optical signals. The key part about our joint work that we published in Nature in December was using fiber optics. So instead of open air optics, now we are dealing with fiber optics, signal in, signal out. That makes it a lot more practical to build a system instead of just open air optics.
Speaker Change: The key.
Speaker Change: Part about our joint work that we published in nature.
Speaker Change: December was using fiber optics.
Speaker Change: So instead of opening of Opex now we are dealing with fiber optics signal signal out that makes it a lot more practical to build a system.
Speaker Change: And sort of just open their optics.
Subodh Kulkarni: So it's a key technology demonstration that you can use fiber optics to get the signal into a superconducting chip and get the signal out. Now that that is available, we will certainly start investigating fiber optics and at what point should that come into our roadmap. As of today, we haven't decided when to go from coax to flex to fiber optic, but certainly by the time we reach several 100,000 qubit, we believe we will need to be with fiber optic cabling. So hopefully that answers your question. Yeah, that is helpful. Thanks for all that, Subodh.
Speaker Change: Key technology demonstration that you can use fiber optics to get the signal into a superconducting chip and get the signal out now that that is available. We will certainly start investigating fiber optics and at what point should that come into our roadmap as of today, we haven't decided when too.
<unk> extra fiber uptake, but certainly by the time, we reach several hundred thousand cubic.
Speaker Change: We believe we will need to be with fiber optic cabling. So hopefully that answers your question.
Speaker Change: Okay that is helpful. Thanks for all that supported my last quick question here is just on the DARPA benchmarking.
Subodh Kulkarni: My last quick question here is just on the DARPA benchmarking project or opportunity here. I think you said you expect some decision here in the not-too-distant future. Maybe you can help us understand the process for this award here, or is this not even the end step here? And then what opportunity do you see from a revenue perspective over time if you're a successful winning partner?
Speaker Change: <unk> our opportunity here I think you said you expect some decision here in the not too distant future. Maybe you can help us understand the process for for this award here or is this not even the end and step here and then what opportunity do you see from a revenue perspective over time, if youre successful winning part of that.
Subodh Kulkarni: So DOD's DARPA agency effectively has invited The goal, and you can go to their website and see a lot of the publicly disseminated information, the goal is to build a utility-scale quantum computer by 2033. And really what it means is you can practically do anything that your classical computing can do, but much, much faster and much, much cheaper than what your classical computing can do. It's really effectively a moonshot type effort. This is like the US government's official, let's build the world's best, biggest quantum computer type project, man on the moon kind of a project.
Speaker Change: Yes.
Speaker Change: Dod's dark bars.
Speaker Change: Agency effectively is has invited.
Speaker Change: Proposals from anyone.
Speaker Change: We certainly have submitted the.
Speaker Change: The Golar and you can go to their website and see a lot of the publicly disseminated information. The goal is to build a utility scale quantum computer.
Speaker Change: By 2033.
Speaker Change: And really what it means is you can practically to entertain that classical computing can do but much much faster and much much cheaper.
Speaker Change: And then what your classical computing can do.
Speaker Change: It's really effectively a moonshot type effort. So this is like the U S government official let's build the world's best biggest quantum computer type project <unk> move in kind of a project.
Subodh Kulkarni: We certainly have applied. I'm sure others have too. They have said that they will make a decision here soon, hopefully this, yet this month. Typically the way DARPA projects of this kinds of complexity work is they choose a handful number of companies to, and then they ask those companies to demonstrate the next set of milestones. And then they'll pick. couple companies, maybe one company, or our scope of the project is somewhere in the 300 plus million dollar range. I already told you the timeline is before 2033. We certainly, our goal is to be the last company out there and build the computer.
Speaker Change: We certainly have applied I am sure others have too.
Speaker Change: Have said that they will make a decision here soon hopefully.
Speaker Change: Yet this month.
Speaker Change: Typically the way DARPA projects of discounts of complexity work as they choose a handful number of companies.
Speaker Change: And then the ask those companies to demonstrate the next set of milestones and then they will take.
Speaker Change: A couple of companies, maybe one company or scope of the project is somewhere in the 300 plus million dollars range I already told you. The timeline you said it before 2000 <unk>, we certainly are going to distribute the last company out there and build their computer. So this will be the world's biggest best quantum computer do we deliver to <unk> by 2030.
Subodh Kulkarni: So this will be the world's biggest, best quantum computer to be delivered to Darpa by 2033. But there are various hurdles to go through. We certainly believe our technology is in a very good shape to make a compelling case, particularly with the superconducting gate-based modality, as I said. In our view, and based on all the announcements you are hearing from other companies too, it becomes pretty amply evident to everyone, I believe, that the most likely modality to win is superconducting gate-based modality. Within that, with our open modular approach, the chiplet IP that we have, we believe we are fairly well positioned to try to win the Darpa project.
Speaker Change: Various hurdles to go through we certainly believe our technology.
Speaker Change: As in a very good shape to make a compelling case, particularly with the superconducting gate based modality as I said in our view.
Speaker Change: Based on all the announcements you are hearing from other companies to it because.
I am pleased to review and I believe that the most likely mortality within his superconducting gate based modality.
Speaker Change: And that with our open modular approach the chip IP that we have we believe we are fairly well positioned.
Speaker Change: To try to win the dark bar project. So we certainly are excited to be participating in <unk> and look forward to their selections and we'll continue to work on our technology program, having said that we will continue to work on our technology milestones I mean, it's a huge opportunity and lots and lots of money.
Subodh Kulkarni: So we certainly are excited to be participating in it. We look forward to their selections and we'll continue to work on our technology program. Having said that, we will continue to work on our technology milestones.
Subodh Kulkarni: Darpa is a huge opportunity and lots of money associated with it. But there's a bigger market out there. I mean, we have already said that the market is, we believe, like a couple billion dollars five years from now for all these national labs and universities. And we believe the market is going to be like 100 plus billion dollars in about 15 years from now. So certainly an exciting opportunity.
Speaker Change: <unk> associated with it.
Speaker Change: But there is a bigger market or that I mean, <unk> already said that the market is we believe that a couple of billion five years from now for August National Labs, and universities and we believe the market is going to be like 100 plus billion dollars.
In about 15 years from now so certainly an exciting opportunity so as important as the DARPA project is and we certainly want to be winning that one because that clearly demonstrates technology leadership.
Subodh Kulkarni: So as important as the Darpa project is, and we certainly want to be winning that one because that clearly demonstrates technology leadership, the bigger potential, of course, is the commercial world and 100 plus billion dollar opportunity. That we'll continue to look at. So again, I hope I have answered your question. And that was very helpful, Subodh. That's all from me. Thank you.
Speaker Change: The bigger potential of course is the commercial related and 100 plus billion dollar opportunity that we'll continue to look at.
Speaker Change: So again I hope I have answered your question there.
Speaker Change: That was very helpful. So about that's all for me. Thank you.
Speaker Change: Thank you.
Speaker Change: Thank you.
Brian Kinstlinger: Our next question comes from Brian Kinstlinger of Alliance Global Partners. Your line is open, Brian. Great, thanks so much. First, you mentioned your plan to scale through tiling right now. Given the challenges that all of the superconducting OEMs have, is their approach scaling also through tiling? Are they trying to figure it out? Where are they with tiling compared to you? So, certainly we are relying on tiling. I believe IBM has made some statements suggesting that they are also considering tiling, that exact dimensions will be different, but I believe they have discussed tiling openly. We are not quite sure of Google and what exactly their plan is at this point.
Our next question comes from Brian Kingston Here of Alliance Global Partners. Your line is open Brian.
Brian Kingston: Thanks, so much.
Brian Kingston: First you mentioned your plan to scale through Thailand, right now.
Brian Kingston: Given the challenges that all of the superconducting Oems have.
Brian Kingston: Is their approach scaling also through tiling.
Brian Kingston: China figure it out where are they with Thailand compared to you.
Brian Kingston: So certainly we are relying on timing I believe IBM has made some statements suggesting that they are also considering tiling.
Brian Kingston: <unk>.
You mentioned will be different.
Brian Kingston: But I believe we have disclosed styling openly we are not quite sure of Google.
Brian Kingston: And what exactly their plan is at this point they did indicated data paper when they published a resource that they have some share of challenges to go up from where they are they are using what we call perimeter Whiting right now so that all of their circuit is basically designed into the <unk>.
Subodh Kulkarni: They did indicate in their paper when they published a video resource that they have some share of challenges to go up from where they are. They are using what we call perimeter wiring right now. So all of their circuit is basically designed in 2D and to increase the qubit count, you have to keep increasing the perimeter, if you will, of the chip, which you can do up to a certain point, but not beyond that. So we believe Google will first move to 3D, which is what we and IBM are doing right now. And beyond that, they will probably consider tiling too, but we are not quite sure because they haven't disclosed all their details.
Brian Kingston: To increase the cubic currently how to keep increasing the perimeter. If you will of the chip, which which you can do up to a certain point, but not beyond that.
Brian Kingston: So we believe we'll go we'll first move to TD.
Brian Kingston: This is Ravi and IBM are doing right now and beyond that they will probably consider dialing too, but we're not quite sure because we haven't disclosed our litigators.
Subodh Kulkarni: But certainly we are on tiling, IBM is considering tiling. And frankly, we view the three of us as the leaders in this space. We are not quite sure of what the Chinese Academy of Sciences is considering. It's very hard to get information from there. And regarding the rest of the superconducting, I mean, even though there are large tech companies like Amazon and Microsoft and many other smaller companies. I mean, Amazon's most recent announcement, they were still talking eight qubits and same with Microsoft. So even though they are much larger companies than we are in terms of quantum computing, I believe they have some serious work ahead of themselves to get to the hundred qubit type level that we IBM and Google are at right now.
Brian Kingston: Currently we are on tightening IBM is considering tightening.
Brian Kingston: And frankly, we view the three of US as the leaders in this space. We are not quite sure of what the Chinese Academy of Sciences, considering it's very hard to get information from there.
Brian Kingston: And regarding the rest of the superconducting I mean, even though they're large tech companies like Amazon and Microsoft.
Brian Kingston: Many of those smaller companies.
Brian Kingston: Amazon's of most recent announcement they were stocking <unk> with Microsoft So even though they are much larger companies than they are in terms of quantum computing I believe they have some serious work ahead of themselves to get to the 100 cubic type level that the IBM and Google that Act right now so we certainly view our sales along with IBM and Google in the leader.
Subodh Kulkarni: So we certainly view ourselves along with IBM and Google in the leadership position and how we go about solving this. Skilling a problem, I'm sure the other companies will be looking at us.
Brian Kingston: Ship position and.
Brian Kingston: <unk> global solving this.
Brian Kingston: Scaling a problem I'm sure other companies will be looking at us.
Subodh Kulkarni: My follow-up kind of leads into the next one. With your open-source architecture, what does Amazon's announcement about faster and more cost-efficient error correction mean for Rigetti versus the rest of the superconducting quantum OEMs? And then my second question is, as... Organizations like DARPA, DOD, and others evaluate you. Do they communicate being more excited about an open source, flexible architecture, or does that not yet come up in the discussion? It absolutely comes up in discussions when we talk to national labs, not just DARPA, but DOE and other government national labs too. The fact that our architecture is open and modular in nature is a significant plus in our favor because fundamentally it allows creative, innovative solutions from other third parties to be incorporated relatively easily.
Speaker Change: My follow up the kind of leads into the next one with your open source architecture, what guys Amazon's announcement about faster and more cost efficient error correction mean for Getty versus the rest of the superconducting quantum Oems and then my second question is.
As.
Speaker Change: Organizations like DARPA.
Speaker Change: And others evaluate you.
Speaker Change: Do they communicate being more excited about an open source flexible architecture or does that not yet come up in the discussion.
Speaker Change: No that certainly comes up in discussions when we talk the National labs, not just now.
Speaker Change: And other government National Labs to the fact that our architecture is open and modular in nature is a significant loss in our favor because fundamentally it allows.
Speaker Change: Clearly we in order to have solutions from other third parties to be incorporated relatively easily.
Subodh Kulkarni: I mean, IBM and Google obviously are doing a great job of building a quantum computer right now, along with us, but theirs is a more mainframe-like approach right now. And again, we don't know what the Chinese Academy of Sciences is doing, but I suspect it's a mainframe-like approach. And that's great because you control all aspects of the full stack, but it's very hard to integrate a innovative, creative solution in that kind of an approach, with that kind of an approach. Whereas with our open modular, we can relatively easily do that. So specifically, I mean, River Lane in UK, in Cambridge, UK, is a company that developed some really good error correction software.
Speaker Change: IBM and Google obviously are doing a great job of building a quantum computer right now along with US, but this is a more of a mainframe like approach right now.
Speaker Change: And again, we don't know what the Chinese Academy of Sciences is doing but I suspect it to maintain that capital.
Speaker Change: And that's great because you control all aspects of the stack, but it's very hard to integrate a innovative creative solution in that kind of an apples did that kind of approach, but as with our open more dealer. We can relate it easily do that so specifically I mean, the duvernay and in UK in Cambridge, UK is a company that.
Speaker Change: Develop some really good error correction software and you started integrating that in our systems last year.
Subodh Kulkarni: And we started integrating that in our systems last year. And that's how we showed real time, low latency error correction, which was a very important milestone in the industry. And this new announcement by Amazon, even though the chip is being built by Amazon itself, the eight-qubit chip, I mean, the real value in their paper is the error correction software. And certainly we will be open to looking at integrating that error correction software if they choose to decouple it from their chip. And I suspect they may be incentivized to look at other hundred-qubit type high-performing chips.
Speaker Change: How we should.
Speaker Change: Real time, those agency error correction, which is a very important milestone in the industry.
Speaker Change: And this new announcement by Amazon.
Speaker Change: Even though the chip is being built by Amazon. It says the eight cubic chip I mean, the real value in that paper is the error correction software and certainly we will be open to looking at integrating data collection software if they choose to decouple it from their chip.
Speaker Change: And I suspect there may be.
Speaker Change: The ways to look at another 100 cubic type high performing chips. So certainly opens up the Avenue, where we can integrate creative innovative solutions from 240 is quickly into our stack.
Subodh Kulkarni: So certainly opens up the avenue where we can integrate creative, innovative solutions from third parties quickly into our stack.
Brian Kinstlinger: My last question, it's a really quick one. I just want to make sure I have the numbers right. If you get to 100 qubits at 2x better error rate. Help me do the math. What is 2x better? Is that 99.75? What is that actual fidelity rate that is 2x better? So the reason we said 2x and not the exact number is because we have started using two numbers now in our Fidelity, right? I saw, confusing. Yeah, exactly. So we use 99.0% with what's called as an ISWAP or a CZ kind of gate. Gets really geeky at this level, different kind of gates.
Speaker Change: My last question, it's a really quick one I just wanted to make sure I have the numbers right. If you get to a 100 cubits two X better error rates.
Speaker Change: Just help me do the math on what is to act better is that 90 975, what is that actual fidelity rate that is two X better.
Speaker Change: So the reason we set two extra not exact numbers because we have started using two numbers now and not fidelity confusing.
Speaker Change: Confusing.
Speaker Change: Yes exactly.
Speaker Change: 99.0% with what's called as an ice swap on <unk> kind of it gets really gtx this level different kind of gates, and then theres a unique gate that because SM gate.
Brian Kinstlinger: And then there's a unique gate that we call FSim gate where we get 99.5% today. That's what we have today. So when you have multiple gates, you are monitoring Fidelity now. That's why we decided to start using the phrase 2x reduction in error rates across both of them. So the 99 will go to 99.5 and the 99.5 will go to 99.75. That's what I said. Okay, makes sense. Thank you so much. Thank you, Brian. Thank you.
Speaker Change: We get 99, 5% today, that's what we have today. So when you have multiple gates you are monitoring facility now that's why we decided to start using phase two extra reduction in error rates across both of them. So the 99 will go to 99, 5% to $99 five will go to $98 75, that's correct. Okay makes sense. Thank you so much.
Speaker Change: Thank you Brent.
David Williams: Our next question comes from David Williams of The Benchmark Company. Please go ahead, David. Hey, good afternoon. Thanks for taking my question. And I'm definitely late here. So excuse me if this has already been asked.
Thank you.
Speaker Change: Next question comes from David Williams of the Benchmark Company. Please go ahead David.
Speaker Change: Hey, good afternoon. Thanks for taking my question and I'm jumping on late here. So excuse me. If this has already been asked but.
Subodh Kulkarni: But Subodh, you talked about in the past, your architectural and your IP differentiation, and you talked about maybe Google and some of the others, where you really can differentiate yourself from an IP perspective. Can you talk a little bit about what that means, relative to maybe some of your competitors, what Sure, sure. So within the superconducting gate-based quantum computing companies, certainly we monitor IBM, Google very closely. And we cannot really monitor the Chinese Academy of Sciences that closely. And as I mentioned in an earlier question, Even though Amazon, Microsoft play in this general space, they are at fairly low qubit count right now, like 8 qubits.
Speaker Change: You talked about in the past your architectural and your IP differentiation and you've talked about maybe Google or some of the others, where you really can differentiate yourself from from an IP perspective can you talk a little bit about what that means relative to maybe some of your competitors.
Speaker Change: Okay sure.
Speaker Change: Yes.
Speaker Change: So within the superconducting gate based quantum computing companies.
Speaker Change: Certainly we monitor IBM, Google very closely.
Speaker Change: And we cannot really monitor the Chinese Academy of Sciences that closely and as I mentioned in an earlier question.
Speaker Change: Even though Amazon Microsoft play in this general space.
Speaker Change: Clearly low qubit contract issues there.
Subodh Kulkarni: And the rest of the startups or smaller companies in superconducting gate based are quite a distance behind us right now. So the two companies we basically look at very closely from what exactly they're doing are IBM and Google. And I'm sure they're monitoring us too. And IP becomes a very critical part. We have close to 230 patents right now. That is a core value of the company.
Speaker Change: And the rest of the startups are smaller companies and superconducting gateway stock quite.
Speaker Change: Quite quite a distance behind us right now so the two countries. We basically look at very closely from what exactly they are doing are IBM and Google and I should have monitoring us tool and IP becomes a very critical part of we have close to 230 patterns right now that is a core value of the company.
Subodh Kulkarni: So how do we differentiate from IBM and Google? The main thing is our architecture. We just were talking about it. We have an open modular stack approach versus they have more like a mainframe approach. The other area where we are, and we believe the open modular approach is better in the long-term because it allows us to integrate creative, innovative third-party solutions much more easily. That's why we continue to invest in that approach. The other area where we have a clear differentiation from them right now is the whole chiplet area. Our plan, we have already demonstrated.
Speaker Change: Sure.
Speaker Change: How do we differentiate from IBM and Google. The main thing is our architecture. We just were talking about it we have an open multi zone stack approach.
Speaker Change: As they have more like a mainstream approach.
Speaker Change: The other area of it and we believe the open modular approach is better in the long term because it can it allows us to integrate creative innovative third party solutions much more easily.
Speaker Change: Why we continue to invest in that approach.
Speaker Change: The other area, where we have a clear differentiation from them right now is the whole chip Lake area.
Speaker Change: Our plan already demonstrated.
Subodh Kulkarni: Chiplets in quantum computing, once with 40 qubits, last year with 9 qubits. Our plan is to scale up multiple chiplets, effectively our tiles, to get to 36 qubits first, and then to more than 100 qubits by the end of this year. And then take that approach to continue to speeding up from there. We believe IBM will do something similar based on some of the statements they have made. Google hasn't made their plans very clear as to how they plan to scale up to 1,000 and several thousand qubits. So we will look at that. And then there are some other more details, gets into more details of how we design the chip and fabricate the chip and the rest of the stack and the differentiation that comes in.
Speaker Change: Chip let me.
Speaker Change: And once it fully covers lost service 90 rates. Our plan is to scale multiple chip, let's differentiate your titles to get the 36 Cubic's first and then drove more than 100 gigabit by the end of this year and then take that approach and continue to speeding up front that we believe IBM will do something similar based on some of the statements are made we will have been made there.
Speaker Change: The answer is clear as to how they plan to scale up to thousands of dollars several thousand cap ex.
Speaker Change: We will look at that and then there are some other more detailed gets into more details of how we design the chip and fabricate the chip and the rest of the stack and the differentiation that comes in.
Subodh Kulkarni: We have talked in the past about a proprietary annealing process called ABAA, where we are doing DC pulses effectively through the entire area of the qubit. We believe our competition is doing laser annealing type approaches. We believe the ABAA annealing is a lot faster, easier to scale up compared to. And it's actually more uniform and controls the frequency targeting a lot more precisely than the annealing approaches. And then there are some we touched on earlier on flex cables and that kind of stuff.
Speaker Change: We have talked in the past are already.
Speaker Change: Proprietary annealing process called <unk> and we are doing.
Speaker Change: C pulses effectively through the entire area of the cubic.
Speaker Change: Our competition is doing laser annealing data, which is we believe the AE, a leading is a lot faster and easier to scale up compared to and its actually more uniform and controls. The frequent started getting a lot more precisely than annealing approaches.
Speaker Change: And then there are some.
Speaker Change: We touched on earlier on flex cables and backend of stocks that are probably 10 other things that how we differentiate ourselves from them and you have to get into the detail and the patterns and how we finance the backend center scopes that they cover and so on but hopefully that gives you a feel for how we are differentiating our main differentiator is our open modular architecture chip led approach.
Subodh Kulkarni: So probably 10 other things that how we differentiate ourselves from them really gets into the details and the patterns and how we find the patterns and the scopes that they cover and so on. But hopefully that gave you a feel for how we are differentiating the main differentiators are our open modular architecture, chiplet approach and a few other things like annealing. Oh, very helpful. Thank you for that.
Speaker Change: And a few other things like annealing.
Speaker Change: Great. That's very helpful. Thank you for that and then maybe just.
Subodh Kulkarni: And then maybe this is a follow up. Do you think that your IP is compelling enough that over time, others will need to develop around your IP? Or how do you think about maybe consolidation, just given your rich patent portfolio and what that would mean for some of the other I mean, that's the whole goal of patents, right? I mean, when you come up with creative, innovative ideas, you file patents and you try to get as broad coverage as possible. So when others try to essentially copy that idea, they are forced to either find a completely different route, making it inefficient or have to seek a license from you.
Speaker Change: Follow up do you think that your IP is compelling enough that over time, others will need to develop around your IP or how do you think about maybe consolidation just given your rich patent portfolio and what that would mean for for some of the others.
Speaker Change: I mean, that's so golar patents right I mean, when you come up with creative and innovative ideas.
Speaker Change: File patents and you try to get as broad coverage as possible, so and others try to essentially copy that idea.
Speaker Change: Fourth street or find a completely different route making it inefficient.
Speaker Change: CECO licensed from here I think it's still too early David nor the answers I mean, clearly IBM and Google are gigantic companies and they have their own patent portfolios.
Subodh Kulkarni: I think it's still too early, David, to know all the answers. I mean, clearly, IBM and Google are gigantic companies and they have their own patent portfolios, usually in cases like this. Most of us in the R&D field who have dealt with these kinds of complex patent portfolios, we find ways to collaborate and cross license in critical areas. Sometimes it can be licensing terms. And we want to make sure the ecosystem is healthy and stays healthy and everyone gets fairly compensated for the work they have done. So at this point where we are clearly in R&D, the goal is to get the technical milestones demonstrated, get patent portfolio established.
Speaker Change: In cases like this.
Speaker Change: Most of us in the R&D field, where beta discounts of complex backend portfolios, we find ways to collaborate and cross license in critical area, sometimes it can be licensing terms and we just we wanted to make sure. The ecosystem is healthy and stays healthy and everyone gets fairly compensated for the.
Speaker Change: What they have done so at this point that we are clearly in R&D. The board is to get the technical milestones demonstrating it get backend portfolio established.
Subodh Kulkarni: Over time, we'll see how the licensing and cross licensing scenarios evolve. Thank you.
Speaker Change: Overtime, we will see how the licensing and cross licensing scenarios elong.
Speaker Change: Perfect. Thank you and then just one one last one if I may just on the customer demand for <unk> could you talk a little bit about how that demand is and how you think that maybe trends through this year.
Subodh Kulkarni: And then just one last, if I may, just on the customer demand for QPUs, could you talk a little bit about how that demand is and if you're, how you think it may be trends through this year? Yeah, certainly we see excitement growing about quantum computing, people are beginning to, it's no longer a question of if, it's a question of when. Everyone seems to understand that when we talk to them. But clearly, it's still in R&D stages. Unlike some other companies, we believe we are still four to five years from commercial applications of quantum computing in a meaningful way.
Speaker Change: Yes.
Speaker Change: Suddenly, we see excitement growing about quantum computing people are beginning to.
Speaker Change: Another question on <unk>.
Speaker Change: If it's a question of when everyone seems to understand that when they talk to them.
Speaker Change: But clearly it's given R&D stages.
Speaker Change: Unlike some other companies.
Speaker Change: We believe.
Speaker Change: We are still four to five year strong commercial applications of quantum computing in a meaningful way I know there are some companies who claim to have quantum advantage on near to quantum advantage now, but does that have a very select niche kind of applications.
Subodh Kulkarni: I know there are some companies who claim they have quantum advantage or near quantum advantage now. But those are for very select niche kind of applications. There's a lot of over hyping, under hyping going on in quantum computing right now. So our view is that we are still very much in R&D, we need to get to like close to several hundred qubits or 1000 qubits, 99.7 or 99.8%, less than 30 nanosecond gate speed and real time error correction, before we can start showing quantum computers to data center managers and demonstrating ROI. And we think that's at least four or five years from now.
Speaker Change: There's a lot of overlapping underwriting where you won important computing right now so our view is that we assume that you mentioned R&D, we need to get to that.
Speaker Change: 700, cubits at <unk> 1990, $9 798, 8% less than 30, nanosecond gait speed NGL diameter correction before we can start showing quantum computers to data center managers and demonstrating Ottawa and we think that's at least four or five years from now and thats more or less consistent from a timing standpoint get what you hear.
Subodh Kulkarni: And that's more or less consistent from a timing standpoint with what you hear from IBM and Google too. So I don't think we are that different than IBM or Google right now in that sense from a timing standpoint. So our view is all the customer demand, if you will, as you called it, is mostly from academicians and research people, mostly to understand the fundamentals of quantum computing. And that's why the numbers are going to be relatively small. Yes, sales matter and we want to continue to grow, but our focus is clearly on R&D milestones right now and making sure the technology is perfected before we worry too much about customer demand and uptick in sales.
Speaker Change: From IBM and Google too so I don't think we are.
That different and IBM, Google right now in that sense from a timing standpoint.
Speaker Change: So our view is for other customer demand. If you will as you called it is mostly from academicians and research people are mostly to understand the fundamentals of quantum computing and thats, where the numbers are going to be relatively small.
Speaker Change: Yes sales matter and we want to continue to grow but our focus is clearly on R&D milestones right now and making sure. The technology is perfected before we worry too much about.
Customer demand and uptick in sales.
Subodh Kulkarni: Great. Thanks so much. Thank you, David. Thank you.
Speaker Change: Great. Thanks, so much.
David: Thank you David.
Operator: Our next question.
Speaker Change: Thank you.
Speaker Change: Next question.
Craig Ellis: comes from Craig Ellis of B Reilly.
Speaker Change: Comes from Craig Ellis of B Riley. Please go ahead Craig.
Jeffrey Bertelsen: Please go ahead, Craig. Yeah, thanks for taking the follow-up question. It's really just a clarification on some of the things that were part of fourth quarter's announcements, and I suspect it's mostly for Jeff. Regarding the two QPUs that were sold, one to the U.S. academic institution, the other to the U.K., did those both fully reproduct in the quarter? And then, Jeff, I think you said there was still part of a U.K. system sale that existed in fourth quarter sales. Where are we in fully reproducting that system? Does it trail into 2025, and if so, to what extent?
Craig Ellis: Yes, thanks for taking the follow up question, it's really just a clarification on some of the things that were part of fourth quarter's announcements.
Speaker Change: I suspect that most of the catch up.
Speaker Change: Regarding the two <unk> that were sold one to the U S. Academic institution you either to the U K did those both fully <unk> in the quarter and then Jeff I think you said there was still part of the UK system sale.
Speaker Change: Just again fourth quarter sales where are we in POI.
Speaker Change: Breaking that system does that trail into 2025, and if so to what extent. Thank you.
Jeffrey Bertelsen: Thank you. Sure, the two Noveras did fully revrec. for. And then regarding the kind of the larger ongoing sale to NQCC, that revenue has been taken over time. You know, it will be largely complete in the first quarter, maybe a little bit, you know, moving into the second quarter, but don't really expect anything from that in the latter part of the year. Got it. Thanks, Jeff.
Speaker Change: Sure. The two nowhere did fully Rev Rec in Q4.
Speaker Change: And then regarding the.
Speaker Change: Kind of the larger ongoing sale too and QC that revenue has been taken over time.
Speaker Change: It will be largely <unk>.
Speaker Change: <unk> in the first quarter, maybe a little bit may have moving into the second quarter.
Speaker Change: But don't really expect anything from that in the latter part of the year.
Jeff Bertelsen: Got it thanks, Jeff.
Operator: Thank you.
Subodh Kulkarni: I would now like to turn the conference back to Subodh for closing remarks, sir. Thank you for your interest and questions. We look forward to updating you with our progress at the end of Q1. Thanks again.
Speaker Change: Thank you I would now like to turn the conference back to support for closing remarks, Sir.
Speaker Change: Thank you for your interesting questions. We look forward to updating you with our progress at the end of Q1. Thanks again.
Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.
Speaker Change: This concludes today's conference call. Thank you for participating you may now disconnect.
Speaker Change: Okay.
Speaker Change: Okay.
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