10-K: Rigetti Computing's 2023 10-K Filing: Focus on Scalability and Performance

Rigetti Computing's 2023 10-K filing highlights their focus on developing scalable, high-performance quantum computing systems and achieving narrow quantum advantage.

Summary

• Rigetti Computing's 10-K filing for 2023 outlines the company's mission to build powerful quantum computers to solve pressing global problems.
• The company is focused on developing scalable multi-chip quantum processors and a full-stack product development approach.
• Rigetti has been deploying quantum computers via the cloud since 2017 and began selling quantum computers in 2023.
• The company launched the Novera QPU in December 2023, its first commercially available QPU, and made its 84-qubit Ankaa-2 system publicly available via its Quantum Cloud Services (QCS) platform in Q4 2023.
• The Ankaa-2 system achieved a 98% median 2-qubit fidelity, a 2.5x improvement over previous QPUs, and a 2-qubit gate time of 68 nanoseconds.
• Rigetti estimates the global market for High Performance Computing (HPC) to be approximately $55 billion by 2028.
• The company believes its existing cash, cash equivalents, and marketable securities should be sufficient to meet anticipated operating cash needs into early in the third quarter of 2025.
• Rigetti expects to need additional capital by early in the third quarter of 2025 to fund research and development efforts and business objectives.
• Net losses for 2023 were $75.1 million, compared to $71.5 million in 2022.
• As of March 1, 2024, the company employed 134 people globally.

Sentiment

Score: 5

Explanation: The document presents a mixed sentiment. While there are positive developments in technology and partnerships, the company is still operating at a loss and needs to raise additional capital. The presence of material weaknesses in internal controls also weighs negatively on the sentiment.

Positives

• Launch of commercially available Novera QPU and Ankaa-2 system.
• Significant improvement in 2-qubit fidelity with the Ankaa-2 system.
• Focus on improving QPU performance and scaling to higher qubit counts.
• Strong customer relationships and collaborative partnerships with commercial enterprises and government organizations.
• Vertically integrated company with its own fabrication facility (Fab-1).
• The company believes its existing cash, cash equivalents, and marketable securities should be sufficient to meet anticipated operating cash needs into early in the third quarter of 2025.

Negatives

• The company has a history of operating losses and expects to incur significant expenses and continuing losses for the foreseeable future.
• The company expects to need additional capital by early in the third quarter of 2025 to fund research and development efforts and business objectives.
• The company has identified material weaknesses in its internal control over financial reporting.
• The company depends on a limited number of customers for a significant percentage of its revenue.
• The company is subject to stringent and evolving U.S. state, federal and foreign laws, regulations and rules, contractual obligations, industry standards, policies and other obligations related to privacy, data use and security.

Risks

• The company may be unable to raise additional funding when needed.
• The company may fail to achieve technological milestones or quantum advantage.
• The quantum computing industry is highly competitive.
• The company depends on a limited number of customers for a significant percentage of its revenue.
• The company's business is currently dependent upon its relationship with cloud providers.
• The company may face unknown supply chain issues.
• The company may be unable to attract and retain key employees.
• The company may be subject to product liability claims.
• The market price of the company's Common Stock and Public Warrants has been and may continue to be volatile.

Future Outlook

Rigetti plans to continue improving QPU performance, targeting at least 99% 2-qubit gate fidelity on an anticipated Ankaa-3 84 qubit system by the end of 2024. If the 99% target is achieved, Rigetti plans to shift focus to scaling to develop Lyra, an anticipated 336-qubit system. The company also plans to pursue sales of Novera, its first commercially available QPU.

Management Comments

• The Company is enabled by a deep technical team that includes global experts in quantum chip design and manufacturing, quantum computing systems architecture, quantum software, and quantum algorithms and applications.
• We believe that vertical integration, from chip manufacturing through sales of QPUs and cloud delivery, unlocks the fastest and lowest risk path to broad commercialization and the largest, long-term market opportunity.

Industry Context

The quantum computing market is evolving and highly competitive, with major companies and development-stage companies investing in quantum computing initiatives. The company believes its primary direct competition will come from other companies building or seeking to build universal, gate-model quantum computing systems that can meet the requirements for solving commercial problems.

Comparison to Industry Standards

• The document mentions competitors like IBM, Google, Microsoft, IonQ, D-Wave, Quantinuum, PsiQuantum, Xanadu and ColdQuanta.
• The document references a May 2023 Boston Consulting Group report predicting that fully fault tolerant quantum computers could ultimately produce between $450 billion and $850 billion in annual value creation on an operating income basis for end users after 2035.
• The document references an August 2023, International Data Corporation (IDC ) published a forecast for the worldwide quantum computing market, projecting customer spend for quantum computing to grow from $1.1 billion in 2022 to $7.6 billion in 2027, representing a five-year compound annual growth rate (CAGR) of 48.1%.

Management Changes

Stakeholder Impact

• Shareholders face risks related to potential dilution, market volatility, and the company's ability to achieve profitability.
• Employees may be affected by potential future workforce reductions or changes in compensation structures.
• Customers may benefit from improved quantum computing capabilities but also face risks related to the company's financial stability and ability to deliver on its promises.
• Suppliers may be affected by the company's ability to pay its bills and maintain its supply chain.
• Creditors face risks related to the company's ability to repay its debts.

Next Steps

• Continue working to improve the performance of QPUs with the goal of reaching at least 99% 2-qubit gate fidelity on an anticipated Ankaa-3 84 qubit system by the end of 2024.
• If the above target is achieved, shift focus to scaling to develop Lyra, an anticipated 336-qubit system.
• Pursue sales of Novera, its first commercially available QPU.

Key Dates

Keywords

quantum computing, qubits, QPU, QCaaS, Ankaa-2, Novera, fidelity, superconducting, Fab-1, cloud services, quantum advantage, HPC