Q1 2025 Rigetti Computing Inc Earnings Call

Operator: Our long-time partner and leader in QEC code technology, River Lane, will collaborate with us on this project to help refine our proposed utility-scale quantum computer concept and validate the underlying technology.

Our longtime partner and leader in QE CECO technology differently.

Collaborate with US on this project to help refine our proposed utility scale quantum computer contract and validate the underlying technology.

Subodh Kulkarni: I'm also very excited about our recent AFOSR Award to further develop our Breakthrough Chip Fabrication Technology Alternating Bias Assisted Annealing or ABAAA.

I'm also very excited about our recent F OSI Award.

Develop a breakthrough chip fabrication technology.

Bias.

Clearly our a b E.

Subodh Kulkarni: We will lead a $5.48 million consortium consisting of Iowa State University, the Royal Melbourne Institute of Technology, the University of Connecticut, and Lawrence Livermore National Laboratory to develop a detailed understanding of how ABAA impacts a chip on a microscopic level, which aims to shed light on defects in superconducting qubits and open new avenues for understanding and mitigating them.

We received a $5 $48 million consortium.

Of Iowa State University that Royal Melbourne Institute of Technology, The University of Connecticut.

Lawrence Livermore National Laboratory to develop a detailed understanding of how <unk> impacts a chip on a microscopic level, which aims to shed light our defection superconducting cubic's.

New avenues for understanding and mitigating that.

Operator: For more information, visit www.fema.gov We have also been awarded three Innovate UK Quantum Mission Pilot Awards to advance superconducting quantum computing.

We have also been awarded key innovate UK Quant ambition pilot awards to advanced superconducting quantum computing.

Subodh Kulkarni: We will collaborate with RiverLane and the National Quantum Computing Center, or MQCC, superconducting circuits team to advance quantum error correction capabilities on superconducting quantum computers.

We will collaborate with rigor and the national quantum computing centers are and Youll see superconducting circuits team at launch and a correction.

Correction capabilities on superconducting quantum computers.

Subodh Kulkarni: The consortium will conduct ambitious QEC tests that advance state-of-the-art metrics and demonstrate real-time QEC capabilities.

Our consortium will conduct ambitious QBC test edmar.

Advanced state of the art metrics and demonstrates <unk> capabilities.

Subodh Kulkarni: a requirement for universal fault-tolerant quantum computing.

Requirements for Universal quantum.

Quantum computing.

Subodh Kulkarni: As part of the project, we will also upgrade our existing quantum computer currently deployed at the NQCC.

As part of the project.

Also upgrade our existing quantum computers currently deployed and UCC.

Subodh Kulkarni: The upgrades will include deploying a larger 36-qubit quantum processing unit and integrating Rigetti's latest generational control system, enabling improved qubit control and a fully programmable low-latency interface with RiverLens QEC stack.

The branch will include deploying a larger 36 qubit quantum processing unit and integrating mitigating this latest generation control system.

Important to weed control and a fully programmable low latency interface with river Lynch to issue stock.

Subodh Kulkarni: We were also awarded two additional quantum missions by the competition project.

We were also awarded two additional quantum missions pilot artificial projects.

Subodh Kulkarni: We will collaborate with CQC to integrate its digital chip-based technology with our 9-qubit Nowera QPU hosted at the NQCC with the goal of identifying and understanding the key components needed for scalable QEC.

We will collaborate with CPUC to integrated digitally chip based technology with our 92 Big Nevada Bu will start at the FCC.

The goal of identifying and understanding the key components needed for scalable QVC.

Subodh Kulkarni: We will also collaborate with TREC, Q-ROOS, Q-Control, and Oxford Ionics to create an open architecture quantum computing testbed and deliver an open specification for quantum workflows, creating a common interface between quantum software and hardware.

We will also collaborate with Greg Toulouse to control and Oxford IONICS to create an open architecture quantum computing Testbed and deliver an open specification for important workflows, creating a common interface between quantum software and hardware.

Subodh Kulkarni: On the technical update front, our joint paper with Harvard University, Massachusetts Institute of Technology, and University of Chicago, Coherent Control of a Superconducting Fluid Using Light, has been published in Nature Physics.

On the technical update trend, our giant Paypal with already near City, Massachusetts Institute of Technology, and University of Chicago O'hare in control of a superconducting qubit using light has been published in nature.

Subodh Kulkarni: Point-tolerant quantum computing will likely require 10,000 to a million physical qubits.

One on the computing will likely required 10000 million physical chew bags.

Subodh Kulkarni: Scaling these systems is challenging because they require bulky microwave components with high thermal loads that can quickly overwhelm the cooling power of a dilution refrigerator.

Scaling the systems is challenging because they required bulky microwave components with high thermal loads that can quickly overwhelmed the pulling power of a dilution refrigerator.

Subodh Kulkarni: Optical signals have a considerably smaller footprint and negligible thermal conductivity.

Optical signals have a considerably smaller footprint and negligible total conductivity.

Subodh Kulkarni: The team successfully demonstrated the integration of a hybrid microwave optical quantum transducer with a Rigetti-fabricated superconducting tube.

The team successfully demonstrated the integration of a hybrid microwave optical part of transducers delegating fabricated superconducting chew bags.

Subodh Kulkarni: This hybrid setup enables optical control of the qubit, removing the need for coax lines, and provides a promising approach to scaling to higher qubit counts.

This hybrid setup enables optical control of the two big removing the need for <unk> and provides a promising approach to scaling to higher cubic college systems.

Subodh Kulkarni: We also recently leveraged our new quantum optimization algorithm, quantum preconditioning, to address a power energy grid problem.

We also recently leveraged our new quantum optimization algorithm onto pre conditioning address our energy grid.

Subodh Kulkarni: Using a public data set representing South Carolina's energy grid, the problem was to compute the maximum power extension section, a metric that informs on the health and power delivery capability of the energy network.

Using public data sets, representing South Carolina's energy grid.

Government wants to continue the maximum power exchange.

It may take that in parts of the health and power delivery capability of the energy network.

Subodh Kulkarni: Using Rigetti's 84-qubit AMCA3 system, quantum preconditioning was used to boost best-in-class classical optimizers.

Is it going to get is 84 cubic on car T system.

Reconditioning was used to boost best in class classical optimize those.

Subodh Kulkarni: A relative advantage against the classical baseline was achieved along with a high solution accuracy, highlighting the potential for quantum preconditioning to achieve quantum utility for solving practical optimization problems. Finally, I'm pleased to report that Rigetti has closed its previously announced investment by Quanta Computer Inc.

And I think <unk> against the classical baseline was achieved along with a high solution accuracy, highlighting the potential for quantum pre conditioning regimen.

For solving tactical optimization problems.

Finally, I am pleased to report that <unk> has closed its previously announced investment by Quanta Computer Inc.

Subodh Kulkarni: related to our strategic collaboration agreement.

Our strategic collaboration agreement.

Subodh Kulkarni: In connection with the closing in late April, Ponta purchased approximately $35 million worth of Rigetti common stock at roughly $11.59 per share.

In connection with the closing in late April.

Just approximately $35 million worth of <unk> common stock at roughly $11 59 per shares.

Jeffrey Bertelsen: Jeff will now make a few remarks regarding our recent financial performance. Thanks, Subodh.

Thank you.

I'll make a few remarks regarding our recent financial performance.

Jeffrey Bertelsen: Revenues in the first quarter of 2025 were $1.5 million.

Thanks, Sue about revenues in the first quarter of 2025, or $1 5 million compared to $3 1 million in the first quarter of 2020 for renewal of the U S. National quantum initiative sales to U S and foreign governments and Nomura are all important to future sales.

Jeffrey Bertelsen: 2 million. Three point three point 3.1 million in the first quarter of 2024.

Jeffrey Bertelsen: Renewal of the U S National Quantum Initiative, sale Grassland cognitive, sales to U.S.

Jeffrey Bertelsen: and foreign governments and now there are are all important to future sales.

Jeffrey Bertelsen: Gross margins in the first quarter of 2025 came in at 30% compared to 49% in the first quarter of 2024.

Gross margins in the first quarter of 2025 came in at 30%.

Compared to 49% in the first quarter of 2024.

Jeffrey Bertelsen: 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.

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 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 first quarter of 2025 was $22.1 million, compared to $18.1 million in the same period of the prior year.

On the expense side total opex in the first quarter of 2025 was $22 1 million compared to $18 1 million in the same period of the prior year.

Jeffrey Bertelsen: The increase in total OPEX was due to annual salary increases, new hires, higher FICA taxes related to the vesting of RSUs and the increase in our stock price, and a reduction in the amount of engineering time used to deliver revenue.

The increase in total Opex was due to annual salary increases new hires higher FICA taxes related to the vesting of <unk> and the increase in our stock price and a reduction in the amount of engineering time used to deliver revenue.

Jeffrey Bertelsen: Higher stock compensation expenses for employee spot bonuses also contributed to the increase.

Higher stock compensation expenses for employee spot bonuses also contributed to the increase.

Jeffrey Bertelsen: Stock compensation expense for the first quarter of 2025 was $4.2 million, compared to $3 million for the first quarter of 2024.

Stock compensation expense for the first quarter of 2025 was $4 2 million compared to $3 million for the first quarter of 2024 are.

Jeffrey Bertelsen: Our operating loss for the first quarter of 2025 came in at $21.6 million compared to $16.6 million in the prior year period.

Our operating loss for the first quarter of 2025 came in at $21 6 million compared to $16 6 million in the prior year period.

Jeffrey Bertelsen: We recorded $42.6 million of net income for the first quarter of 2025, compared to a net loss of $20.8 million in the prior year period.

We recorded $42 6 million of net income for the first quarter of 2025 compared to a net loss of $20 8 million in the prior year period.

Jeffrey Bertelsen: Our net income for the first quarter of 2025 was driven by the non-cash changes in the fair value of our derivative warrant and earn out liabilities, which had a $62.1 million favorable impact on net income for the quarter.

Our net income for the first quarter of 2025 was driven by the noncash changes in the fair value of our derivative warrants and earn out liabilities, which had a $62 1 million favorable impact on net income for the quarter.

Jeffrey Bertelsen: Derivative warrant and earn out liabilities had a $4.2 million unfavorable impact on our net loss for the first quarter of 2024.

Derivative warrant an earn out liabilities had a $4 2 million unfavorable impact on our net loss for the first quarter of 2024.

Jeffrey Bertelsen: As of April 30, 2025, following the closing of the previously announced share purchase by Quanta Computer, cash, cash equivalents and available for sale investments totaled $237.7 million.

As of April 32025, following the closing of the previously announced share purchase by Quanta computer cash cash equivalents and available for sale investments totaled $237 $7 million. Thank you. We would now be happy to answer your questions.

Operator: We would now be happy to answer your questions.

Certainly.

Operator: And our first question for today comes from the line of Brian Kinstlinger from Alliance Global Partners.

Brian Singer: And our first question for today comes from the line of Brian singer from Alliance Global Partners. Your question. Please.

Brian Singer: Great. Thanks, so much for taking my question.

Brian Kinstlinger: In the past, you highlighted that chip tiling is expected to get Rigetti to 36 qubits at mid-year and over 100 by the end of 25 at fidelity rates of 99.75%.

Brian Singer: Past you highlighted that chip tiling is expected to get Righetti 236, cubits at mid year and over 100 by the end of 'twenty five at fidelity rates of $99 seven 5% I'm curious, we're just a month and a half away from mid year can you speak to the progress you are making on tiling and you.

Subodh Kulkarni: I'm curious, we're just a month and a half away from mid-year, can you speak to the progress you're making on tiling, and do you think that these timeframes are still reasonable? Sure. Thanks, Brian, for your question. Indeed, deploying chiplets is a very critical part of our strategy because we believe that's the a real good way to scale up a number of qubits as we go forward using monolithic die that we have used in the past along with many of our peers works obviously and we have systems that are deployed that are doing well but we see a significant challenge in squeezing more qubits on a single monolithic die which is why we deployed the chiplet approach.

Brian Singer: Think that these timeframes are still reasonable.

Brian Singer: Sure. Thanks for that answer your question indeed.

Deploying chip lives is a very critical part of our strategy because we believe that store.

Brian Singer: If you are a good way to scale up.

Brian Singer: Number of cubic as we go forward using monolithic die.

Brian Singer: We have used in the past along with many of our peers.

Brian Singer: Our works, obviously and we have systems that are deployed that are doing well, but we see a significant challenge and squeezing more tidbits on a single monolithic diabetes widely deployed.

Subodh Kulkarni: In the past we have deployed two chiplets in a system and then last year we announced that we have done that with two nine-qubit chiplets at a much higher fidelity level. We feel pretty confident that the chiplet approach with the four 9-qubit chiplets sometime middle of this year and taking it over 100 qubits by the end of this year is going to work. All the data looks promising. We feel optimistic that we should be able to disclose our results as time goes on.

Brian Singer: Triplet approach in the past we have deployed.

Brian Singer: Sure.

Brian Singer: Two chip leg in our system.

Brian Singer: And then last year, we announced that we have done that with two nine cubic chip leg setup much higher security level.

Brian Singer: We feel pretty confident that triplet approach.

Brian Singer: The 490, <unk> sometime middle of this year.

Brian Singer: At over 100 Kilobits by the end of this year is going to work.

Brian Singer: All the data looks promising.

Speaker Change: M B shares.

Speaker Change: Optimistic that we should be able to disclose our results as time goes on.

Subodh Kulkarni: I don't have anything specific to report. I mean, as we have said in the past, Two attempts with two chiplets have worked, all the fundamental data suggests that our attempts with four and eventually with multiple chiplets is going to work.

Speaker Change: Don't have anything specific to report I mean, as we have said in the past autograph.

Speaker Change: We will demonstrate to chip Lax airport.

Speaker Change: All the fundamental data suggests that our attempts at four and eventually add multiple chipsets is going to work.

Subodh Kulkarni: This is not just important for Rigetti, but it's frankly important for the whole industry, because this is the only way we see how you scale up the qubit counts.

Speaker Change: This is not just important for recruiting extremely important for the whole industry. Because this is the of the BBC, how you scale up the pubic comps some of their companies.

Subodh Kulkarni: Some other companies in superconducting have tried to do larger monolithic chips, and they haven't worked quite well.

Superconducting have tried to do larger monolithic chips and they haven't worked quite well.

Subodh Kulkarni: And frankly, the other modalities are significantly behind the superconducting modality in terms of qubit count.

Speaker Change: Frankly that doesn't modalities are significantly behind the superconducting mortality.

Speaker Change: In terms of cubic aren't so we really don't see them coming to one hundreds and thousands of tof. So we really believe that <unk> is the right way to scale up superconducting Clearbridge and show a path towards the total quantum computing systems.

Subodh Kulkarni: So we really don't see them coming to the hundreds and thousands of qubits.

Subodh Kulkarni: So we really believe that chiplets is the right way to scale up superconducting qubits and show a path towards the fault or in quantum computing.

Subodh Kulkarni: I hope that answers your question, Brian. For sure, absolutely.

Speaker Change: So to your question Ryan for sure absolutely I have one follow up and then I'll get back in the queue.

Brian Kinstlinger: I have one follow-up and then I'll get back in the queue.

Brian Kinstlinger: I know there were some hearings recently regarding the NQI reauthorization act.

Speaker Change: I know there was some hearings recently regarding the <unk> Reauthorization Act Im curious what youre hearing in regards to the new funding Bill.

Subodh Kulkarni: I'm curious what you're hearing in regards to the new funding bill and, you know, how you think about when it might get approved or, you know, what you're hearing. Yes, certainly the NQRE Authorization Act seems to have bipartisan support in our government, and there are multiple versions of the bills that have been floated both in the House and Senate.

Speaker Change: How you think about when it might get approved or what what you are hearing.

Speaker Change: Yes, So let me the Intuit Reauthorization Act seems to have bipartisan support in our government and there are multiple versions of the bills that have been floated bolt in the house and Senate as of today it hasn't passed yet.

Subodh Kulkarni: As of today, it hasn't passed yet.

Subodh Kulkarni: And even after it passes, there is always a time for the money to be appropriated.

Speaker Change: Even after your classes there is a time for the money to be appropriate. It. So we are talking at least a couple of months from now before we actually start seeing money flow out of the LTI reauthorization Bill.

Subodh Kulkarni: So we are talking at least a couple months from now before we actually start seeing money flow out of the NQRE Authorization Bill.

Subodh Kulkarni: Many of us, we for sure, but quantum computing companies are eagerly awaiting for the NQRE Authorization to pass.

Speaker Change: Many of us for sure, but many quantum computing companies are eagerly awaiting for the energy transition to pass.

Subodh Kulkarni: We are pretty optimistic. Great.

Speaker Change: Are you optimistic.

Brett: Hi, Brett.

Speaker Change: Thank you.

Speaker Change: Or.

Speaker Change: Perfect.

Speaker Change: Just a question.

Speaker Change: Alright.

Speaker Change: Okay.

Speaker Change: Stability.

Speaker Change: Extra capacity fairly soon.

Subodh Kulkarni: Thanks, Dr. Thank you.

Speaker Change: Great. Thank you.

Speaker Change: Thanks, Brian.

David Williams: And our next question comes from the line of David Williams from the Benchmark Company.

Speaker Change: And our next question comes from the line of David Williams from the Benchmark Company. Your question. Please.

David Williams: Hey, good afternoon, gentlemen.

David Williams: Hey, good afternoon, gentlemen, thanks for letting me ask a question here I guess, maybe first.

David Williams: Thanks for letting first on the DARPA contract.

David Williams: On the dark contract that you won can you give us a little more information about that I know the phase one, but how do you expect that.

Subodh Kulkarni: But how do you expect? So thanks for the question, David. I mean, DARPA, Quantum Benchmarking Initiative project is an extremely critical project for the country. Its goal is to build utility-scale quantum computing in the next seven years. Really, I mean, we have used words like fault-tolerant quantum computing in the past. And essentially, it means the same thing. Something that really shows value over the cost is the way DARPA defines it. Our view is to deliver a system like that you need. tens of thousands, if not hundreds of thousands, of physical qubits. You need better than 99.9% medium two-qubit gate fidelity.

David Williams: Proceed.

David Williams: What should we be looking for in terms of milestones.

David Williams: Sure.

For the question, David I mean, DARPA quantum benchmarking initiative project is an extremely critical project.

Speaker Change: Florida, though currently.

Speaker Change: Its goal is to build utility scale quantum computing.

Speaker Change: In the next seven years.

Speaker Change: Clearly I mean, we have used words like for it other than quantum computing in the past and essentially it means the same thing something that really shows.

Speaker Change: Value over the cost is to wait out a pretty defined set.

Speaker Change: Our view is to deliver a system like that you need.

Speaker Change: Tens of thousands if not hundreds of thousands of physical IP rates.

Speaker Change: <unk>.

Speaker Change: Better than 99, 9% medium two qubit gate for density.

Subodh Kulkarni: You need faster than 10 nanoseconds gate speed, and you need real-time error correction code. So once again, more than 10,000 qubits, more than 99.9% median two-qubit gate fidelity, faster than 10 nanosecond gate speed. And real-time error correction. Once you get those kinds of numbers, we believe one will achieve DARPA's milestone of utility-scale quantum computing or what we have commonly referred to in the past as fault-tolerant quantum computing. Extremely important project for the country.

Speaker Change: As you need faster than.

Speaker Change: And then second gait speed and you need.

Speaker Change: All time error correction. So once again more than 10000 cabinets more than 99, 9% media to cubic get Trinity faster than 10, nanosecond gait speed and.

Speaker Change: David just a correction.

Speaker Change: Once you get those kinds of numbers, we believe we'll achieve DARPA might storm.

Speaker Change: Scale quantum computing artwork.

Speaker Change: Commonly referred to in the past as far as total quantum computing extremely important project for the country. We are proud to be selected as the group for a selected for phase <unk>.

Subodh Kulkarni: We are proud to be selected as the group for selected for phase A. In a way, it's a vetting process. Our understanding is more than 100 companies applied for that. DARPA has chosen 15 companies within the superconducting camp. Along with us, it's basically IBM and HP, I believe. And there are some other modalities DARPA has also chosen. This is called phase A. Over the next six months, DARPA is going to announce the winners of the next phase, phase B. We expect the number to go down significantly from 15. The actual number will depend on the progress that various companies accomplish.

It's a vetting process our understanding is more than 100 companies applied for that DARPA has chosen 15 companies.

Speaker Change: Within the superconducting gab.

Speaker Change: A lot of later stage basically IBM and HP I believe.

Speaker Change: And then there are some other modality is ARPA has also chosen.

Godfrey: This is godfrey.

Speaker Change: The next six months.

Speaker Change: Dark bar is going to announce the notice of the mixed phase B do you expect the number to go down significantly from 2015.

Speaker Change: The actual number will depend on the progress that various companies accomplish.

Subodh Kulkarni: We don't know exactly what other companies are doing. From our standpoint, we know exactly what our plan is, and it comes back to what we have publicly stated. We want to demonstrate chiplets. We want to demonstrate higher fidelity than what we have done already. Our current system, as you are probably aware, is at 84 qubit. 99% or 99.5% median two-qubit gate fidelity, depending on what kind of gates you use. We want to bump that number over 100 qubit, but using chiplets and bump the fidelity up to 99.5% to 99.7% again, depending on what kind of gates you use.

Speaker Change: We don't know exactly what other companies are doing from our standpoint, we know exactly what our plan is and it comes back to what we have publicly stated we want to demonstrate chip ledge avianca demonstrate higher fidelity than what we have done already.

Speaker Change: Our current system as you are probably aware is at 84 to <unk>.

Speaker Change: 90, 999, 5% median two gigabit gateway related depending on what kind of gets you use move onto bumped that number over 100 cubic, but using chip lifts and the facility up to $99 598, 7% again, depending on for <unk>. So we know what we have to do to get from phase two.

Subodh Kulkarni: So we know what we have to do to get from phase A to phase B. I assume other companies will be doing their part as well. DARPA has said they will narrow the list down in phase B and ultimately in phase C. Eventually, in a year, year and a half, maybe two years from now, we expect one or maybe two companies are left in that process. Our goal clearly is to be in that final group. That's where the real substantial award will be awarded to build a final quantum computer. So in a way, our view is DARPA vetting process is a nice validation of our technology.

Speaker Change: Phase B.

Speaker Change: I assume other companies will be doing their part as well our DARPA has said they will narrow the list down in phase III and ultimately in facie eventually in a year or year and half maybe two years from now the expected one or maybe two companies left in that process. Our goal clearly is to be in that final group that's.

Speaker Change: The real substantial award will be awarded to Bury the final quantum computer.

Speaker Change: Our view is DARPA vetting process is a nice validation of our technology. We are proud to be part of the group that has been selected for <unk>, We certainly want to be part of the next group under what beyond that.

Subodh Kulkarni: We are proud to be part of the group that has been selected for 15. We certainly want to be part of the next group and the one beyond. Hope that answers your question.

Speaker Change: That answers your question.

David Williams: It does.

Speaker Change: It does thanks, so much.

David Williams: It's exciting to be a part of it.

Speaker Change: It's exciting to be a part of that initial group are there revenues that are associated with each one of those phases that youre, making contributions towards.

David Williams: Are there revenues that are at... Yeah, there are some revenues, and we have disclosed that the Phase A is a $1 million award.

Speaker Change: Those specs.

Speaker Change: Yes, there are some revenues and we have disclosed that.

Speaker Change: <unk> is a $1 billion award.

Subodh Kulkarni: We view it in a very strategic sense. I mean, as we have discussed before, our focus as a company is on R&D and technology milestones. Some of these government projects do come with sizable awards. In this case, Phase A is relatively small. Phase B, the number will increase significantly, and Phase C, certainly the number will increase quite a bit.

Speaker Change: It is a very strategic sense I mean.

Speaker Change: We have discussed before our focus is are companies on R&D and technology milestones.

Speaker Change: This government projects do come with sizable awards in this case <unk> is relatively small phase b. The number will increase significantly said certainly the number will increase quite a bit.

Subodh Kulkarni: So our view right now is we view this as a very strategic kind of a project, not really from a monetary standpoint.

Speaker Change: So our view right now is this is Lee.

Speaker Change: We view this as a very strategic kind of a project not a at least from a marketing standpoint.

Speaker Change: Sure.

Speaker Change: Yes.

Speaker Change: Okay very good.

David Williams: And then just maybe from an interest standpoint, from maybe customers that are looking to acquire.

Speaker Change: And then just maybe.

Speaker Change: From an interest standpoint from maybe customers that are looking to acquire.

Speaker Change: Processor itself I know in the past it seems like that pipeline or that that interest level has picked up quite a bit any thoughts or colors on just maybe how you're seeing customers now and would you would you say that that is the interest is increasing or have you seen a leveling off anything in terms of just kind of trying to size that interest level that youre seeing on the <unk>.

David Williams: Thoughts or colors on just maybe how you're seeing customers now, and would you say that that is...

David Williams: or have you seen a leveling off?

Subodh Kulkarni: Anything in terms of just kind of trying to decide. So sure, thanks for the question. I mean, overall quantum computing continues to be in an R&D mode. Our view is that we are still very much in the stage of developing quantum computers.

Speaker Change: Thank you.

Speaker Change: Sure. Thanks for the question I mean overall quantum computing continues to be another R&D mode.

Speaker Change: Our view is that we are still very much in the stage of developing quantum computers, we are still.

Subodh Kulkarni: We are still four to five years away from what we call quantum advantage, which is when you need at least a thousand qubits, at least 99.8% fidelity median to qubit gate fidelity and some real-time error correction. Until then, it's going to be primarily R&D, primarily driven by government contracts, academic researchers. So by definition, those kinds of sales are one-off sales. They are lumpy in nature. So I wouldn't really interpret sales from any quantum computing company, honestly, right now in a serious way. This is all R&D going on right now.

Speaker Change: For two five years away from what he called quantum advantage, which is when you'll need at least a <unk> 98, 8% for the immediate to keep it gets rid of Aegean and some of your Diamond ring collection.

Speaker Change: Until then it is going to be primarily R&D, primarily driven by government contracts academic researchers so by definition those guidance youll see sort of what our sales are lumpy in nature. So I wouldn't really interpret sales from any quantum computing company honestly right now too.

Speaker Change: <unk>. This is all R&D going on right now, particularly the bullet should be to get a quantum computer to quarter megawatt Asia that <unk> had in commercial sales and sales.

Subodh Kulkarni: Really, the goal should be to get a quantum computer to quantum advantage, and that's really when commercial sales and sales in general start making sense. And we are talking at least three years from now, maybe four to five years from now. So until then, this is primarily an R&D kind of a situation. Having said that, I mean, there are government national labs and academic researchers who are interested in using quantum computers, whether they are on the cloud through AWS or Azure. or actually getting on-premise quantum computers as we have done with Novera for academic researchers.

Speaker Change: In general make start making sense of at least three years from now maybe four to five years from now. So until then this is primarily an R&D kind of situation, having said that I mean, there are government national labs, and academic researchers who are interested in using quantum computers, whether they are on the cloud to AWS or azure.

Speaker Change: Are actually getting optimized quantum computers as we have done that Nevada for academic researchers interest is definitely there a lot of this organization.

Subodh Kulkarni: Interest is definitely there. A lot of this organization depend on DOE funding, which is primarily the NQI reauthorization. So there is a lack of funding in general for academic institutions right now until the NQI passes and is appropriated. DOD funding situation is a little and that's where we have seen some of the contracts like the AFOSR contract or the DARPA contract. But a lot of academic institutions and DOE labs certainly depend on the NQI reauthorization. So overall, even though the interest is there for Novera and on-premise QPUs, I would say a lack of funding from the U.S.

Speaker Change: <unk> funding, which is primarily the NII reauthorization. So there is a lack of funding in general for academic institutions right now until the MTI passes.

Speaker Change: Is appropriate.

Speaker Change: Do you have different situations, a little better and Thats, where we have seen some of the contracts like the AI for the SAR contract of the DARPA contract, but a lot of academic institutions and absolutely depend on the MQ idea authorization. So overall, even though the interest is therefore nowhere and optimize gpus.

Speaker Change: I would say lack of funding from the U S government is certainly hurting.

Subodh Kulkarni: government is certainly holding that interest converting to orders. But again, I'll highlight that our view is we are still very much in R&D. We focus on this one-off sales from government contracts as exciting as they could be. That's not a real metric that we think should be watched at this point.

Speaker Change: That interest converting to orders, but again I would highlight that our view is we are still very much in R&D for current technology milestones. This one off sales from government contracts as exciting as they could be that's not a real metric that we think should be watched at this point.

Subodh Kulkarni: Hope that answers your question.

Speaker Change: So to your question.

Speaker Change: Yes. It does thank you so much for the help certainly appreciate it.

Quinn Bolton: And our next question comes from the line of Quinn Bolton from Needham & Company.

Speaker Change: Thank you and our next question comes from the line of Quinn Bolton from Needham <unk> Company. Your question. Please.

Speaker Change: Thank you, Brad and Jeff maybe just a quick clarification on your answer to that.

Quinn Bolton: Maybe, Subodh, just a quick clarification on your answer to the NQI reauthorization.

<unk> re authorization could you do you have a sense that that could be signed within the next couple of months I think you said it would probably take a couple of months. After the deal was signed before the funds would start to flow, but I wasn't sure. If you had given thoughts on when that may past.

Quinn Bolton: Do you have a sense that that could be signed within the next couple of months?

Subodh Kulkarni: I think you said it would probably take a couple of months after the bill is signed before the funds would start to flow, but I wasn't sure if you had given thoughts on when that may pass. Well, thanks for the question, Kuhn. I mean, it was supposed to pass almost a year ago, but it still hasn't happened yet, obviously. This is despite having bipartisan support.

Speaker Change: Well thanks for the question good I mean, it was supposed to pass almost a year ago.

Speaker Change: Yesterday.

Speaker Change: And.

Speaker Change: This is despite having bipartisan support because I know it is frustrating to see the slow progress of the NGL realizations there.

Subodh Kulkarni: So in a way, it is frustrating to see the slow progress of the inquiry authorization bill through the House and Senate right now. As I said, there have been multiple versions of the bills that have been floated between the House and Senate. There seems to be bipartisan support, as recently as four days ago, I believe there was a hearing on the House floor. Again, we saw bipartisan support for the bill. President Trump has indicated that he supports quantum computing. So no reason to believe it won't pass, but as of today, it hasn't passed. Normally for a bill like this, appropriations process does take a few weeks, four to six weeks is a normal number that gets used.

Speaker Change: To the house and Senate right now.

Speaker Change: As I said there have been multiple versions of those that have been floated between the house and Senate there seems to be bipartisan support as recently as four days ago Avenue there was a hearing.

Speaker Change: On the house floor again, we saw bipartisan support for the Bill.

Speaker Change: And Trump has indicated that he supports quantum computing. So no reason to believe it won't pass but as of today 800 pass.

Speaker Change: Normally for a bill like this appropriations process does take a few weeks four to six weeks is a normal number that gets used.

Subodh Kulkarni: So once the bill is passed, it still takes a month to two months for money to start flowing to the DOE labs and academic institutions. And that's where really we get funded from. So it will still be a while before we see the benefits of inquiry authorization materially translated into our financial.

Speaker Change: So once the Bill has passed it still takes a month to two months for money to start flowing through the <unk> labs, and academic institutions, and Thats, where really we get funded.

Speaker Change: So it will still be a while before we see the benefits of impurity authorization materially translate into our financials.

Quinn Bolton: My first question was regarding the new award, the UK Innovate Award, I think it was with the NCCC, where you're going to upgrade to the 36-qubit QPU with enhanced control.

Speaker Change: Understood.

Speaker Change: Sir first question was regarding the.

Speaker Change: The New award U K Innovate award.

Whereas with the ATC, where you're going to upgrade to the 36 cubic <unk> with enhanced control.

Quinn Bolton: Do you have a time frame on sort of how long that project runs?

Speaker Change: Do you have a timeframe on.

Speaker Change: Sure how long that that.

Quinn Bolton: Is that something that you could deliver that 36-qubit QPU this year?

Speaker Change: Project runs is that something that you could deliver that 36 QP you.

Subodh Kulkarni: And I guess related question, you mentioned the gross margin for the NCCC 24-qubit QPU has been below average.

Speaker Change: This year and I guess related question you had mentioned the gross margin.

Speaker Change: For the <unk> 'twenty for <unk> has been below average would you expect the 36, David <unk> to also carry.

Subodh Kulkarni: Would you expect the 36-qubit QPU to also carry lower gross margins, or could that be revenue that comes in at better margins than the initial 24-qubit QPU sale? In general, I'll take the second part first, in general NQCC margins are lower than the average because it's primarily a cost-sharing model that the UK government has. We do that despite the low margin as reported because it's strategically very important. Right now, the UK government has clearly chosen us as the technology provider for this conducting site. When you visit NQCC center in Harwell, which is close to Oxford, UK, you will see that the only working supercomputer, superconducting quantum computer is Rigetti's right now.

Speaker Change: Lower gross margins or could that be revenue that comes in at better margins than the initial.

Speaker Change: 24 cubic GPU sale.

Speaker Change: In General I think the second part first in general and <unk> margins are lower than the outage because it's primarily a cost sharing model that the UK government has.

Speaker Change: We do that despite the low margin as reported because it's strategically very important right now the UK Goldman has clearly chosen us as the technology provider.

Speaker Change: Conducting site when you visit an <unk> centre in hardware, which is close to Oxford U K U.

Speaker Change: You will see that the only working supercomputer.

Speaker Change: Superconducting quantum computer is it are getting right now and then Youll get Goldman is putting a lot of faith in us.

Subodh Kulkarni: And the UK government is putting a lot of faith in us in allowing them to develop the ecosystem using our technology. So we absolutely want to continue supporting that, even if it's a cost-sharing model, which leads to a lower gross margin percent on our financials, because it's strategically very important to us to be a key player in the UK quantum ecosystem.

Speaker Change: Allowing them to develop the ecosystem using our technology. So absolutely we want to continue supporting that even if it's a cost sharing model, which leads to a lower gross margin percent on our financials because its strategy strategically very important to us to be a key player in the UK quantum ecosystem.

Subodh Kulkarni: Regarding the first part of your question, we have disclosed in the past that even though we brought up the 24-qubit system at the NQCC, the actual chip we use is an 84-qubit chip in that system. So it's only really a question of cables and wires that we have to upgrade if you really wanted to just upgrade the 24-qubit to 36-qubit. So that's one easier path, if you will, to get the UK upgraded to 36-qubit. But what they really would like to do, and we also would like to do, is once we demonstrate the chiplet approach with 4x9-qubit at a higher fidelity than 99.5% for a generic gate and 99.7% for a F-SIM type gate, we would like to bring that latest and best technology to the UK.

Speaker Change: The first part of your question.

Speaker Change: We have disclosed in the past that.

Speaker Change: Even though we brought up the 2000 qubit system and then do you see.

The actual chip we use is at 84 cubic chip in that system. So it's only it's really a question of.

Speaker Change: Cables and wires that vehicle created if you should get you wanted to just upgrade 24 cubic to 36 cubic so thats one easier part if you will.

Speaker Change: The UK upgraded to 36 gigabyte.

Speaker Change: But what they really would like to do and we also would like to do is once we demonstrate the triplet approach with four by 90, albeit at a higher fertility 98, 5% for the generated gauge at $99 seven for the SMT gate.

Speaker Change: I'd like to bring the latest and best technology to the U K. So ideally we want to demonstrate that list in California in our facilities and once we have demonstrated that we would like to bring it to the U K, which would mean.

Subodh Kulkarni: So ideally, we want to demonstrate that first in California in our facilities. And once we have demonstrated there, then we would like to bring it to the UK, which would mean roughly second half of this year is when we would upgrade them to the chiplet approach and 36-qubit. But we could certainly upgrade them to 36-qubit sooner if they really want it right now using the existing AMCA3 chip, which is an 84-qubit chip.

Speaker Change: Roughly second half of this year is when they will upgrade them to the chip led approach and 36 stupid.

Speaker Change: But we could certainly upgrade them to 36 cubic sooner if they really want it right now using the existing <unk> three chip, which is 84 gigabit chip.

Quinn Bolton: So, hope that answers your question.

Speaker Change: So hope that answers your question.

Quinn Bolton: Yeah, so it sounds like you have two paths.

Speaker Change: Got it so it sounds like you have to ask you could you could either upgrade the existing GPU.

Quinn Bolton: You could either upgrade the existing QPU since it's 84 qubits, or you could bring a tile 36 qubit once you've demonstrated that in the second half of the year.

Speaker Change: Since its 80 <unk> or you can bring a tile 36 skew that once you've demonstrated that.

Speaker Change: In the second half of the year I think that's pretty clear and the other question I had and maybe this is just a longer term technical <unk>.

Quinn Bolton: I think that's pretty clear.

Quinn Bolton: The other question I had, and maybe this is just a longer-term technical question, you know, to get to utility scale computing, you gave us sort of four key criteria.

Speaker Change: Question to get to utility scale computing, you gave us sort of four key criteria one of them was increasing.

Quinn Bolton: One of them was increasing the gate speed.

Quinn Bolton: And I think today your gate speeds are in the tens of nanoseconds range, and you want to get that down to 10 nanoseconds.

Speaker Change: The gait speed I think today Youre gate feature in the tens of nanoseconds range and you want to get that down to 10 nanoseconds.

Quinn Bolton: How do you do that?

Quinn Bolton: Is that kind of smaller qubits, smaller circuitry?

Speaker Change: How do you do that is that is that kind of smaller kubitz smaller circuitry is it just optimizing the control signals.

Quinn Bolton: Is it just optimizing the control signals?

Quinn Bolton: How do you improve the gate speed on the QPUs?

Speaker Change: Yes.

Speaker Change: How do you how do you improve the gait speed on on the <unk>. Thank you.

Subodh Kulkarni: Thank you. Great, great question. Well, I mean, let's talk a little bit about gate speeds first. So yes, you're right. Our AMCA3 system that is deployed on AWS and Azure right now, which is 84 qubit system, has a gate speed of about 70 nanoseconds right now. In general, if you look at all the superconducting gate based modality, quantum computing companies, our gate speeds are in the 50 to 100 nanosecond range. The numbers vary a little bit depending on the exact technology, but they are in that range. There are many knobs that can improve gate speeds.

Speaker Change: Great.

Speaker Change: Little bit about gates speaks first so yes, you are right.

Speaker Change: Got three system that is deployed on AWS and Azure right now, which is 84 cubic system.

Speaker Change: Gait speed of about 17 nanoseconds right now in general if you look at all the superconducting gate based modality.

Speaker Change: Computing companies <unk> are in the 50 to 100 nanosecond range the numbers vary a little bit depending on the exact technology, but.

Speaker Change: Yes in that range.

Speaker Change: <unk>.

Speaker Change: There are many knobs that can improve gait speeds.

Subodh Kulkarni: And before I move or get into what we are going to do next, let's just talk a little bit about the importance of gate speed, I mean, because that often gets forgotten. I mean, when we compare superconducting modality to trapped ion or pure atom modalities, the gate speeds for those modalities are in the hundreds of microseconds. So they are like 1,000 to 10,000 times slower than the superconducting gate-based modality. I'll repeat that again. They're 10,000 to 10,000 times slower than superconducting gate-based modality. And in real life, that matters. I mean, I've never seen any customer who has said they want their computer to be 10,000 times slower.

Speaker Change: Before I get into what we are going to do next let's just talk.

Speaker Change: Talk a little bit about the importance of data speed I mean, because that often gets forgotten.

Speaker Change: Compare superconducting modality to trapped ion our pure item where entities.

Speaker Change: Thanks for those entities are in the one hundreds of micro seconds. So they're like housing to 10.

Speaker Change: Sometimes slower than the superconducting gate based modality repeat that again.

Speaker Change: 10000 times slower than superconducting gateways morality, I didn't realize that matters.

Speaker Change: We have seen any customer who has said they want their computer to be 10000 times slower. So it absolutely critical that dropdown in pure Adam modalities increase their <unk>, so to be competitive with superconducting unless the ico tremendous amount of scientific challenges ahead of them.

Subodh Kulkarni: So it absolutely is critical that trapped ion and pure atom modalities increase their gate speed so to be competitive with superconducting.

Subodh Kulkarni: And honestly, I see a tremendous amount of scientific challenges ahead of them. Now, coming back to superconducting side, The number one thing to improve our gate speed, which was over 100 nanosecond, was to move from fixed coupler technology to tunable coupler technology. We did that with AMCA2, and then we improved that further with AMCA3. That's what got us in the 50 to 100 nanosecond range, and we noticed that some of our peer companies in superconducting gate-based modality have done similar work.

Speaker Change: Now coming back to superconducting side.

Speaker Change: Number one take to improve <unk> over 100, nanosecond Lawrence to move from fixed coupler technology to tunable coupler technology, we did that with <unk> and the new.

Speaker Change: I include that further with a country that regardless in the 50 to 100 nanosecond range, we noticed that some of our peer companies in superconducting.

Speaker Change: <unk> based modality have done similar work.

Subodh Kulkarni: After that, what we are looking at is the type of gate that we use has a big impact on gate speed. Whether it's the control Z, whether it's the I-swap, whether it's the F-SIM, whether it's something else, the type of gates matter because that's what really determines how fast you can do it. But there are other important variables to how good the coupling is between the qubits, and that gets into the geometry and other design parts of the chip. So there are many other knobs out there that help us with gate speed. Our goal, certainly, is to continue to improve it because that's such a critical metric.

Speaker Change: After that what we are looking at is that type of scale.

Speaker Change: <unk> has a big impact on gauge speed.

Speaker Change: <unk> controls Eva that it's the ISR.

Speaker Change: And whether it's something else.

Speaker Change: The type of gauge matter because that store.

Speaker Change: Determines how fast you can do it but there are other important variables to how good the coupling between the two bids and that gets into the geometry.

Speaker Change: The design parts of the of the chip. So there are many others not so did that help us.

Speaker Change: Yeah.

Speaker Change: So gabe speed.

Speaker Change: Certainly is to continue to improve it.

Speaker Change: That's such a critical metric.

Subodh Kulkarni: that we have to monitor.

Subodh Kulkarni: Hope that answers your question.

Speaker Change: We have to monitor hope that answers your question.

Quinn Bolton: Yeah, that was great.

Yes that was great. Thank you Scott.

Chris: Thanks, Chris.

Richard Shannon: And our next question comes to the line of Chris Thanker from TD Cowan.

Speaker Change: Thank you and our next question comes from the line of Chris Sanger from TD Cowen Your question. Please.

Richard Shannon: Hi, this is Stephen calling on behalf of CRISH.

Steven: Hi, Ed This is Steven calling on behalf of Krish. Thanks, So much for taking my questions.

Richard Shannon: The first one for Subodh, I had a couple of questions on the ABA Development Consortium.

Speaker Change: The first one for <unk>.

Steven: Couple of questions on the Eva.

Steven: Developing consortium, so that first of all of that $5 8 million.

Subodh Kulkarni: So that, first of all, that $5.48 million, I guess, grant or award for yourself and your partners, can you talk about how that award amount is to be divided amongst the partners in that consortium, first of all, and then how to follow up on that? So yeah, we don't want to get into the details of exactly how the world gets divided at that level, Chris. We will get majority of that award. out of the various partners. But I mean, in the big scheme of things, it's honestly not that important exactly what the number is.

Steven: Yes grant.

Steven: Good for you.

Speaker Change: Yourself and your partners can you talk about how that.

Speaker Change: Award amount is to be divided amongst the partners in a consortium first of all and then had a follow up on that.

Speaker Change: So we don't want to get into the details of exactly how our Delaware to get divided attached level Chris.

Speaker Change: We will get the majority of that award.

Speaker Change: Out of the various partners.

Speaker Change: But I mean in.

Speaker Change: In the big scheme of things, it's honestly not that important exactly what the number is at such a critical strategic project for us and the industry.

Subodh Kulkarni: It's such a critical strategic project for us and the industry. So we don't want to minimize the importance of it by getting into nickels and dimes, to be honest.

Speaker Change: So if you don't want to minimize the importance of it by getting into nickels and dimes to be honest.

Subodh Kulkarni: ABA is a very critical technology to scale up superconducting gate-based quantum computing. The initial results that we showed last year were very promising. The DOD, specifically the Air Force of AFOSR organization wants us to accelerate commercialization of that technology because it's so important. Some very prestigious labs, as you can see, Lawrence Livermore National Lab, Ames Lab from Iowa, and a couple of other universities are part of that because they have some key faculty members who are doing excellent research in related areas. So we think it's a very important strategic award for the whole industry and so on.

Speaker Change: <unk> is a very critical technology to scale up.

Superconducting gave this quantum computing the initial results that we showed last year they are very promising.

Speaker Change: The Dod specifically the Air Force.

Speaker Change: <unk> alright.

Speaker Change: Organization wants us to.

Speaker Change: <unk> commercialization of that technology, because it's so important.

Speaker Change: Steve just labs as you can see Lawrence Livermore National Lab aims Lat-lon, Iowa.

Speaker Change: A couple of other universities are part of that because we have some key faculty members, who are doing excellent surgeon related aes. So we think it's a very important strategic award for the whole industry and certainly for us.

Subodh Kulkarni: Certainly for us.

Subodh Kulkarni: So I don't want to get into the breakdown if that's OK with you.

Speaker Change: So I don't want to get into the breakdown if that's okay with you.

Subodh Kulkarni: Yeah, that's fair.

Speaker Change: Yes, that's fair and that's not a problem.

Subodh Kulkarni: And the other question I had related to ABA is, you know, I guess from a from a technology perspective, you know, again, I understand that it helps to that technology progress helps to improve the quality of the qubits.

Speaker Change: The other question I had related to EMEA.

Speaker Change: I guess from a.

Speaker Change: From a technology perspective.

Speaker Change: Again, I understand that it helps too.

Speaker Change: That technology progress helps too.

Subodh Kulkarni: But just to dig down a bit further into the details, is ABA helped to, I guess, increase the consistency of the behavior across different gates?

Speaker Change: Prudency the quality is a key bits, but just to dig further into the details.

Speaker Change: As a help too.

Speaker Change: This increase the consistency of the behavioral across different gates.

Subodh Kulkarni: Or is this helping a different vector of the performance of the superconducting gate? In general, ABA is we are using it right now for what we say frequency targeting when we have when we build you There's a range of frequencies they respond to. And we obviously want to have precise control over which frequency they respond to. Because once we can target them at a certain frequency, it helps us define coupling and other interactions.

Speaker Change: Or is this helping different.

Speaker Change: Different vector of the performance of superconducting gates.

Speaker Change: In general we are using it right in our Florida was it say frequency targeted when we have when you do the same.

Speaker Change: Range of frequencies, they respond to and we obviously want to have precise control or which frequent stay responsible because once we can target certain sequencing.

Speaker Change: Coupling and other interactions so EBITDA hits essentially.

Subodh Kulkarni: So ABA helps, essentially, our process control of the qubit manufacturing process. It gives us a precise control on the frequency. And we have papers out there that you can look at where we show that the distribution is spread. And without ABA, and with ABA, and with ABA, we really get the spread improved by almost 10x or more. So it's a really important way to control the frequency targeting of the qubit and get better process control of the qubit.

Speaker Change: So of the pubic manufacturing process gives us a precise control of frequency.

Speaker Change: Papers out there that you can look at where we show that.

Speaker Change: Spread in the without <unk> and DBA.

Speaker Change: The yearly.

Speaker Change: Good display introduced by improved by almost <unk>.

Speaker Change: So it's a really important way to control the frequency targeting of the pivot and get better process control deteriorate.

Speaker Change: Got it understood.

Jeffrey Bertelsen: And just also for my final question, I had one for Jeff on OPEX.

Speaker Change: And that just ask for my final question I had one for Jeff.

Jeffrey Bertelsen: Jeff, just wondering, you know, after Q1's $22 million in OPEX, and I understand there's a number of, I guess, seasonal increases and bonuses baked in there, just wondering for the June quarter and onwards, is like a high teens, million OPEX run rates goal the right one to be thinking about, or is this low 20s level the more appropriate number we should be mulling for?

Speaker Change: Opex as I was just wondering after Q1s $22 million and Opex I understand there is a number of.

Speaker Change: Seasonal increases and bonuses.

Speaker Change: They can they're just wondering for for the June quarter and onwards is like a high high teens million Opex run rate still the right number to be thinking about or is this low twenties.

Speaker Change: Level, the more appropriate number we should be modeling for thank you.

Jeffrey Bertelsen: Thank you.

Jeffrey Bertelsen: Yeah, I mean, I think certainly this quarter, as I had mentioned, there were, you know, a couple of factors that caused OPEX to be a little bit high in Q1. FICA tax was one, there were some spot bonuses that impacted stock compensation expense. So going forward, you know, hopefully, we'll see a, you know, a little bit of a reduction.

Speaker Change: Yes, I mean, I think certainly this quarter as I had mentioned there were a couple of factors that caused opex to be a little bit high in Q1.

Speaker Change: FICA tax was one there were some spot bonuses that impacted stock compensation expense.

Speaker Change: Going forward, hopefully, we will see a little bit of a reduction.

Speaker Change: Okay. Thank you.

Richard Shannon: And our next question comes from the line of Richard Shannon from Craig Hallam.

Speaker Change: Thank you and our next question comes from the line of Richard Shannon from Craig Hallum. Your question. Please.

Richard Shannon: Well, hi, Subodh and Jeff.

Speaker Change: Oh, hi vote and Jeff Thanks for taking my questions.

Richard Shannon: Thanks for taking my questions. Subodh, maybe I'll ask you a question on one of the things you mentioned, as well as on the pressure that's here about optical signaling. I guess maybe if you could talk about the importance of that and then also, let me get a sense of when you think this enters the roadmap. Are we getting close to that time frame or is this still kind of early stage R&D? Nice question, Richard. Thank you.

Speaker Change: So maybe I'll ask a question on one of the.

Speaker Change: Things you mentioned as well as in the press release here about optical signaling.

Speaker Change: I guess, maybe if you could talk about the importance of that and then also wanted to get a sense of when do you think this enters the roadmap are we getting closer to that timeframe or is that still kind of early stage R&D.

Speaker Change: Nice question Richard Thank you.

Subodh Kulkarni: Indeed, optical signaling is a very important element of our roadmap, and for that matter, the whole industry's roadmap. And the main reason for that is right now we all use coax cables in the dilution refrigerator. That's what sends the signals in, that's what gets the signals out. And obviously it works at the 100 qubit level and we think it will even work up to several hundred qubits. But then beyond that, you literally start running out of space in a given dilution refrigerator system. We are experimenting with flex cables along with many other players in the industry, and we certainly think flex cables have a role to play.

Speaker Change: Indeed optical signaling is a very important element of our roadmap and for that matter the whole industry's roadmap.

Speaker Change: And the main reason for that is right now we always use coax cables in the dilution refrigerator, that's what center signals and that's what gets the Sigma Tau and obviously it works at 100 cubic level. Then we think it will even work up to several hundred kilobits.

Speaker Change: But then beyond that you literally start running out of space.

Speaker Change: Given dilution refrigerator.

Speaker Change: So step.

Speaker Change: We are experimenting with our flex cables along with many other players in the industry and we certainly think flex cables have a role to play so.

Subodh Kulkarni: So a few hundred qubits to maybe a thousand or a few thousand qubits, we think, we will switch from. coax cables to flex cables. Beyond that, though, and we still need something beyond because even flex cables are not good enough to take us to the tens of thousands of qubits that we need to deliver this fault-tolerant quantum computing system or the infinity-scale quantum computing system that DARPA is asking for. And that's really where we have started experimenting with optical cables. Converting microwave signal, which is what we use to control our qubits, to optical signals has been done in literature before.

Speaker Change: A few hundred get rich to maybe.

Speaker Change: <unk> thousand or a few thousand qubit rethink their usage.

Speaker Change: Coax cables to flex cables.

Speaker Change: Beyond that though and we still need something beyond because even six gigawatts are not good enough to take us to the tens of thousands of teammates that we needed to deliver despite over in quantum computing system, while they continue to scale on the computer system that <unk> is asking for.

Speaker Change: And Thats really where we start we have started experimenting with optical cables converting microwave signal, which is what we used to control <unk>.

Speaker Change: Our two optical signal has been done in the future before there have been many papers in the past there became in along with our partners like Q Fox.

Subodh Kulkarni: There have been many papers in the past where we came in along with our partners like QFox. and more recently, Harvard University at MIT is showing that you can do it with actually a fiber optic cable, not just open air optics, if you will. And that's extremely important because that makes it a lot more practicable in real life. So now we are envisioning literally a fiber optic cable going in a dilution refrigerator and the fiber optic cable coming out of the dilution refrigerator. And the physical size requirement for fiber optic is significantly smaller than even a flex cable.

Speaker Change: <unk>.

Speaker Change: And more recently hardware engineers again, there might be.

Speaker Change: <unk> that you can do it and actually a fiber optic game not just open air optics, if you will.

Speaker Change: And that's extremely important because that makes it a lot more practice in real life. So now youre envisioning literally a fiber optic cable going in.

Speaker Change: Dilution refrigerator in the fiber optic cable coming out of the dilution if we hit it and the physical size requirement for fiber optic is significantly smaller than even the flex cable and that is just tremendous advantages not only from a physical space standpoint, but also from the thermal load, which converts into the cooler downtime and so on so what are the low to switch over.

Subodh Kulkarni: And that is a tremendous advantage is not only from a physical space standpoint, but also from the thermal load, which converts into the cool down times and so on. So overall, we would love to switch over from coax cables to flex cables to fiber optics as soon as possible. From a practical standpoint, we think right now it's coax, for the next year, two years, maybe even three years, we will be in the flex cable regime. And somewhere in the three to four year before we start getting into the thousands and tens of thousands of physical qubits is when fiber optics will start entering our roadmap.

Speaker Change: <unk> from.

Speaker Change: <unk> cables to flex cable to fiber optics as soon as possible.

Speaker Change: Practical standpoint, we think.

Speaker Change: Further.

No it's coax.

Speaker Change: Next year two years, maybe even three years you will be in.

Speaker Change: We'll flex cable regime and somewhere in the three to four years.

Speaker Change: Before we start getting into the thousands and tens of thousands of physical cubic's than fiber optics will start entering our road map and for that matter the industry.

Subodh Kulkarni: And for that matter, the industry's roadmap. So we are definitely a pioneer in this space. We are leading a lot of the work. But once we prove it, I'm sure the rest of the industry will be looking at something like this as well.

Speaker Change: So we are definitely a pioneer in this space, we are leading a lot of the work.

Speaker Change: Once the Pruitt I'm sure the rest of the industry will be looking at something like this as well.

Subodh Kulkarni: Hope that answers your question.

Speaker Change: That answers your question.

Subodh Kulkarni: That answer completely, Subodh.

Speaker Change: Does that answer it completely so thanks for that.

Subodh Kulkarni: My other question is, I'm not sure if it's for Subodh or Jeff here, but when we look collectively at the NQCC revenue opportunity, as well as the Air Force, forget what the acronym is there, I think the $1 million there, what do we think about in terms of the timeframe over which that'll be recognized?

My other question is I'm not sure if it's for some motor Jeff here, but.

Speaker Change: When we look collectively at the.

Speaker Change: In Q C C revenue opportunity as well as the Air Force.

Speaker Change: Forget what the acronym is there I think.

Speaker Change: $1 million there what do we think about in terms of the timeframe over which that will be recognized and may be even if you could elaborate on how much we might see recognize this year.

Jeffrey Bertelsen: And maybe even if you could elaborate how much we might see recognized this year? Yeah, I guess I'll take it.

Speaker Change: Yes, I guess I'll take that.

Jeffrey Bertelsen: Okay, yeah, so The NQCC opportunity, let me take that one first. That runs really for a year, so I would expect that revenue. You know, essentially booked over time over the course of the next year in terms of the Air Force opportunity contract. I mean, I think, you know, when, when we look at that contract, we're looking at, you know, roughly on the magnitude of You know, over the course of the upcoming year, it's roughly going to probably be about a million dollars. It's a it's a three year contract in total. But in terms of the next year, it's probably about a million dollars.

Speaker Change: Okay, Yeah. So.

Speaker Change: The <unk> opportunity, let me take that one first that runs.

Speaker Change: Really for a year, so I would expect that revenue to be.

Speaker Change: Essentially booked over time over the course of the next year.

Speaker Change: In terms of.

Speaker Change: Air Force opportunity contract.

Speaker Change: I think.

Speaker Change: When we look at that contract we're looking at.

Speaker Change: Roughly.

Speaker Change: On the magnitude of.

Speaker Change: Over the course of the upcoming year, it's roughly going to probably be about $1 million.

Speaker Change: Three year contract in total.

Speaker Change: But in terms of the next year, it's probably about $1 million.

Speaker Change: Okay. Thanks for that color that's all for me.

Jeffrey Bertelsen: That's all.

Speaker Change: Thank you.

Craig Ellis: And our next question comes from the line of Craig Ellis from B.

Speaker Change: And our next question comes from the line of Craig Ellis from B Riley Securities. Your question. Please.

Craig Ellis: Yeah, thanks for taking the question and apologies if I already asked.

Speaker Change: Yes, thanks for taking the question and apologies if already asked I hopped on a little late but I wanted to start off just by going back to.

Craig Ellis: I hopped in a little late.

Craig Ellis: Subodh, I wanted to start off just by going back to the DARPA Stage A and congratulations on making it to that level. But the question is this, what specifically are they looking for in Stage A? What boxes does Rigetti need to check to move on to the next phase of that program after Stage A?

Speaker Change: The DARPA stage Jay and.

Speaker Change: Relations on making it to that level, but the question is this what specifically are they looking for in state Jay what boxes does where Kevin you need to check to move on to the next phase of that program after state Jay.

Subodh Kulkarni: So overall, Craig, the goal for the DARPA project is utility-scale quantum computing in the next six to seven years. They have three stages, stage A, stage B, stage C. We have been selected for stage A. We believe to get to stage B, we have to execute the roadmap that we have publicly disclosed. So that would mean demonstrating the chiplet approach, the first of four by nine qubit at a very high fidelity, like 99.5% for generic gates and 99.7% for F-SIM type gates. Assuming we do that by the middle of this year, as we have publicly disclosed is our plan, and assuming we are on track to demonstrate more than 100 qubits using the chiplet approach at similar fidelity levels, we believe that should be enough.

Speaker Change: So all are.

Speaker Change: Greg the goal for the DARPA project is utility scale quantum computing in the next six to seven years.

Speaker Change: They have three stages stage III stage V stage C. Instead of <unk> AG.

Speaker Change: <unk>.

Speaker Change: And we believe to get to stage B, we have secured the roadmap that we have publicly disclosed so that would mean.

Speaker Change: Demonstrating the chip led approach to first afforded by nine cubic.

Speaker Change: At a very high fidelity like 99, 5% for each other engaged and 99, 7%.

Speaker Change: Assuming we do that by the middle of this year as we have publicly disclosed is our plan and assuming we are on track to demonstrate more than 100 cubic's using the triplet approach similar to fertility levels.

Speaker Change: We believe that should be enough.

Subodh Kulkarni: to get us into phase B, because clearly that's a very leadership situation in the superconducting camp to be demonstrating chiplet at more than 100 qubit at 99.5% median 2-qubit gate fidelity. We really don't know what other companies' roadmaps exactly are and what they are committing to DARPA, so we cannot comment on that, but as far as we are concerned, we think as long as we execute the roadmap that we have publicly disclosed, that should enable us to participate in phase two.

Speaker Change: To get us into phase <unk>.

Speaker Change: Because clearly that's very dealership.

Speaker Change: Situation.

Speaker Change: In the superconducting cap to be demonstrating chip led at more than 100 gigabit at 99, 5%, let me get into cubic Xfinity.

Speaker Change: We really don't know what other companies Roadmaps exactly are and what they are committing to dotted box. So we cannot have we.

Speaker Change: We cannot comment on that but as far as we're concerned beating as long as we execute the roadmap that we have publicly disclosed that should enable us to participate in phase III.

Speaker Change: Excellent. Thank you and then the follow up question is related to the quanta relationship. So.

Craig Ellis: And then the follow-up question is related to the Quanta relationship.

Craig Ellis: So a quarter ago, we announced the relationship.

Speaker Change: A quarter ago, we announced the relationship was very significant this quarter, we announced that the investment of $35 million has closed. So that's further tightened and solidified the relationship. The question is this as investors and analysts look at.

Craig Ellis: It was very significant.

Craig Ellis: This quarter, we announced that the investment of $35 million has closed.

Craig Ellis: So that's further tightened and solidified the relationship.

Subodh Kulkarni: The question is this, as investors and analysts look at what the next steps are for that relationship, can you help us with some things that would be reasonable milestones from here through the end of this year, and then some things that would be on the 2026 roadmap to help us understand where that relationship can go for the company?

Speaker Change: What the next steps are for that relationship can you help us with some things that would be reasonable milestones from here through the end of this year and then some things that went beyond that 2026 roadmap to help us understand where that relationship can go up to the company. Thank you.

Subodh Kulkarni: Thank you. Thanks for the question. Quanta is indeed a very strategic partner for us going forward. So as we disclosed, we did get the $35 million for roughly 3 million shares that they got at $11.59. But more importantly, if you look at our announcement when we made it a couple of months ago, we said that they have committed to investing $250 million over the next five years in the non-QPU hardware portion of the stack. So non-QPU hardware portion of the stack includes things like control systems, the dilution refrigerator, the cables, the chassis, and many other components.

Speaker Change: Thanks for the question Quanta is indeed, a very strategic partner for photos going forward.

Speaker Change: So as we disclosed we did get the $35 million for roughly 2 million shares at $11 59.

Speaker Change: But more importantly.

Speaker Change: If you look at our announcement when we made it a couple of months ago.

Speaker Change: Said that they have committed to investing $250 million over the next five years in the non GPU hardware portion of the stack.

Speaker Change: So not giving you a hardware portion of the stack includes things like control systems.

Speaker Change: The dilution refrigerator cables.

Speaker Change: Cassie and many of the components.

Subodh Kulkarni: And that's really what Quanta is good at. I mean, if you look at what role do they play in the CPU, GPU server ecosystem, that's really what they do. And they are obviously a global leader in that space. So they're bringing their expertise and their high volume, low cost manufacturing expertise, obviously, in addition to that. and they are going to be essentially investing on. in the non-QPU hardware portion of the stack for our technology. Basically, what that means is we have to invest less in that part of the stack, which normally we would have to do on our own.

Speaker Change: And that's really what quanta is good at I mean, if you look at what what role do they play in the CPU GPU set of our ecosystem, that's really what they do and data obviously, a global leader in that space.

Speaker Change: They are they are bringing the expertise and high volume low cost manufacturing expertise. Obviously in addition to that.

Speaker Change: And they are going to be essentially investing on.

Speaker Change: In the non GPU hardware portion of the stack.

Speaker Change: For our technology basically that means what that means is we have to invest less in that part of the stack, which normally we would have to do on our own. So it certainly helps us.

Subodh Kulkarni: So it certainly helps us not invest R&D dollar in that. So that helps enable our focus in the QPU portion of the stack, which is basically the chip design, chip fabrication, and the immediate hardware that goes around it. So long-term, we can see how it's going to play. Right now, we are working very closely with them. We are essentially teaching them how to become our contract manufacturer or ODM partner, if you will, and how to build our control system that works with our stack. By this time next year, I'm pretty confident that they will be doing bulk of the control systems R&D.

Speaker Change: Not invest R&D dollars in that so that does help us enable that helps enable our focus in the <unk> portion of the stack, which is basically the chip design chip fabrication in the immediate hardware that goes around it.

Speaker Change: So.

Speaker Change: Long term, we can see how it's going to play right. Now we are working very closely with them. We are essentially teaching them how to become our contract manufactured at our ODM partner if you will.

Speaker Change: And how to build a control system that works with our stack.

Speaker Change: By this time next year I'm pretty confident that David will be doing bulk of the control systems R&D and we're going to start picking up other hardware portions of the stack along with.

Subodh Kulkarni: And they would have started picking up other hardware portions of the stack along with it, reducing the pressure on us to do R&D in those areas.

Speaker Change: Introducing the pressure on us to do R&D in those areas. So hope that answers. Your question of how we envisioned the partnership going forward.

Subodh Kulkarni: So I hope that answers your question of how we envision the partnership going forward. That's correct. I mean, it's primarily to help accelerate our timeline to market. Quanta obviously is a terrific partner, ODM company. They will certainly help us on the high volume manufacturing side as business really becomes commercial type business in the next three to four years. Thanks, Subodh. Thank you.

Speaker Change: It does and it would seem to me that either.

Speaker Change: <unk> R&D.

Speaker Change: Levels wed refocus to something much tighter and more.

Speaker Change: Core to scaling up.

Speaker Change: Cubic quality in cubic count or potentially R&D would go down but it gives you a lot of degrees of freedom with how you allocate R&D dollars given the narrow focus that you'll be able to have at that point.

Speaker Change: It's correct I mean, it's primarily to help accelerate our timeline to market.

Speaker Change: Obviously is a terrific partner ODM bus company. They will certainly help us on the high volume manufacturing site as business really becomes commercial type business in the next three to four years.

Hooper: Thanks Hooper.

Speaker Change: Thanks, Greg.

Operator: This does conclude the question and answer session of today's program.

Speaker Change: Thank you. This does conclude the question and answer session of today's program I'd like to hand, the program back to support for any further remarks.

Subodh Kulkarni: I'd like to hand the program back to Subodh for any further remarks.

Subodh Kulkarni: Thank you all for your interest and questions.

Speaker Change: Well. Thank you all for your interest and questions. We look forward to updating you with our progress at the end of next quarter. Thank you.

Subodh Kulkarni: We look forward to updating you with our progress at the end of next quarter.

Operator: Thank you, ladies and gentlemen, for your participation in today's conference.

Speaker Change: Thank you, ladies and gentlemen for your participation in today's conference. This does conclude the program you may now disconnect good day.

Operator: This does conclude the program.

Operator: You may now disconnect.

Operator: Good day. Satsang with Mooji

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Okay.