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01/10 23:48
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call summary reveals concerning financial performance with declining revenue, gross margins, and increased operating losses. While there are strategic developments, such as the Quanta investment and Ankaa-3 launch, competitive pressures, supply chain challenges, and operational risks remain significant. The Q&A section highlights uncertainties around funding and project timelines. Despite some positive aspects, the overall sentiment is negative due to financial struggles and external risks, suggesting a potential stock price decline of -2% to -8%.
Revenue $1,500,000 (down 52% from $3,100,000 in Q1 2024); decrease attributed to lower sales from the US National Quantum Initiative and government contracts.
Gross Margin 30% (down from 49% in Q1 2024); decrease due to ongoing revenues from a contract with the UK’s NQCC for a 24 qubit quantum system, which has a lower gross margin profile.
Total Operating Expenses (OpEx) $22,100,000 (up from $18,100,000 in Q1 2024); increase due to annual salary increases, new hires, higher FICA taxes related to RSUs, and higher stock compensation expenses.
Stock Compensation Expense $4,200,000 (up from $3,000,000 in Q1 2024); increase attributed to higher employee spot bonuses.
Operating Loss $21,600,000 (up from $16,600,000 in Q1 2024); increase due to higher operating expenses.
Net Income $42,600,000 (compared to a net loss of $20,800,000 in Q1 2024); increase driven by non-cash changes in the fair value of derivative warrant and earn out liabilities, which had a favorable impact of $62,100,000.
Cash, Cash Equivalents and Available for Sale Investments $237,700,000 as of 04/30/2025; following the closing of the investment by Quanta Computer.
Quantum Preconditioning Algorithm: Leveraged to address a power energy grid problem, achieving high solution accuracy.
36 Qubit Quantum Processing Unit: Upgrading existing quantum computer at NQCC to include a larger 36 qubit QPU.
Chip Fabrication Technology: Developing alternating bias assisted annealing (ABAA) to improve qubit quality.
DARPA Quantum Benchmarking Initiative: Selected to participate, focusing on utility scale quantum computing.
Innovate UK Quantum Mission Pilot Awards: Awarded three projects to advance superconducting quantum computing.
Quanta Computer Investment: Closed a $35 million investment to strengthen strategic collaboration.
Operational Efficiency: Increased operational expenses due to new hires and stock compensation.
Gross Margins: Reported lower gross margins due to contract with UK’s NQCC.
Strategic Shift: Focus on chiplet approach for scaling qubit counts.
Partnership with Riverlane: Collaboration to refine quantum error correction technology.
Regulatory Risks: The company is awaiting the passage of the NQI Reauthorization Act, which has bipartisan support but has not yet been approved. Delays in funding could impact future sales and operations.
Competitive Pressures: Rigetti faces competition from other companies in the superconducting quantum computing space, particularly in achieving higher qubit counts and fidelity levels. The DARPA project involves a vetting process where only a few companies will advance, increasing competitive pressure.
Supply Chain Challenges: The company relies on government funding for many of its projects, and delays in the NQI reauthorization could hinder the flow of funds to academic institutions and national labs, affecting demand for Rigetti's products.
Economic Factors: The overall economic environment and government funding levels for quantum computing research and development are critical for Rigetti's growth, as many contracts depend on government appropriations.
Operational Risks: The company reported an increase in operating expenses due to higher salaries, new hires, and stock compensation, which could impact profitability if revenues do not increase accordingly.
Technological Challenges: Rigetti is working on scaling up qubit counts and improving gate speeds, which are technically challenging and critical for achieving utility-scale quantum computing.
DARPA Quantum Benchmarking Initiative: Rigetti has been selected to participate in DARPA’s quantum benchmarking initiative, focusing on utility scale quantum computing.
Chiplet Approach: Rigetti aims to demonstrate a chiplet approach with four nine qubit chiplets, targeting over 100 qubits by the end of 2025.
AFOSR Award: Rigetti leads a $5,480,000 consortium to develop chip fabrication technology, focusing on superconducting qubits.
Innovate UK Quantum Mission Pilot Awards: Rigetti has been awarded three pilot awards to advance superconducting quantum computing and quantum error correction capabilities.
Quanta Computer Investment: Quanta purchased approximately $35,000,000 worth of Rigetti common stock, strengthening their strategic collaboration.
Revenue Expectations: Q1 2025 revenues were $1,500,000, down from $3,100,000 in Q1 2024, with future sales dependent on government contracts and initiatives.
Gross Margins: Q1 2025 gross margins were 30%, down from 49% in Q1 2024, primarily due to lower margins from the NQCC contract.
Operating Expenses: Q1 2025 operating expenses were $22,100,000, up from $18,100,000 in Q1 2024, influenced by salary increases and stock compensation.
Future Financial Projections: The company anticipates that the NQI reauthorization will positively impact funding and sales in the coming months.
R&D Focus: Rigetti emphasizes R&D and technology milestones, with expectations of achieving quantum advantage in 4-5 years.
Share Purchase by Quanta Computer Inc.: Quanta purchased approximately $35,000,000 worth of Rigetti common stock at roughly $11.59 per share.
The earnings call highlights a strong financial position with $571.6 million in cash, optimistic guidance on achieving high fidelity in quantum computing, and potential revenue from Novera system sales. The Q&A section reveals confidence in reaching technical milestones and integrating with NVIDIA's NVQLink, despite some uncertainties about DARPA selection and external foundry capabilities. The positive sentiment from analysts and management's forward-looking strategies suggest a likely positive impact on stock price.
The earnings call reveals several concerning financial metrics: a significant revenue drop, decreased gross margins, and increased operating losses. Despite optimistic future guidance and strategic partnerships, the immediate financial health is weak. The Q&A section highlights uncertainties in achieving technological milestones and government funding. The lack of clear timelines for critical advancements adds to the uncertainty. Although there are positive strategic developments, the negative financial performance and uncertainties are likely to weigh on investor sentiment, leading to a negative stock price reaction over the next two weeks.
The earnings call summary reveals concerning financial performance with declining revenue, gross margins, and increased operating losses. While there are strategic developments, such as the Quanta investment and Ankaa-3 launch, competitive pressures, supply chain challenges, and operational risks remain significant. The Q&A section highlights uncertainties around funding and project timelines. Despite some positive aspects, the overall sentiment is negative due to financial struggles and external risks, suggesting a potential stock price decline of -2% to -8%.
The earnings call reveals several negative financial aspects: declining revenues, reduced gross margins, and a widening operating loss. Despite some promising developments, such as strategic collaborations and new projects, the financial performance is concerning. The Q&A section also highlights uncertainties in funding timelines and lack of clarity in management responses. These factors, combined with the negative financial metrics, suggest a negative market sentiment and potential stock price decline in the short term.
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