10-Q: Rigetti Reports Q2 Loss Amid Revenue Drop, Secures $380M

Rigetti Computing reported a net loss for Q2 2025 despite a significant capital raise and key technical milestone, as revenue declined and operating expenses rose.

Summary

• Rigetti Computing reported a net loss of $39.654 million for the three months ended June 30, 2025, compared to a net loss of $12.421 million for the same period in 2024.
• For the six months ended June 30, 2025, the company reported a net income of $2.965 million, a significant improvement from a $33.194 million net loss in the prior year, primarily driven by non-cash gains from changes in fair value of derivative warrant and earn-out liabilities.
• Revenue decreased by 42% to $1.801 million for the three months and by 47% to $3.273 million for the six months ended June 30, 2025, compared to the respective prior year periods, mainly due to reductions in collaborative research and professional services contracts.
• Gross profit declined by 72% to $0.566 million for the three months and by 71% to $1.008 million for the six months ended June 30, 2025.
• Operating loss increased by 24% to $19.882 million for the three months and by 27% to $41.514 million for the six months ended June 30, 2025.
• Research and development expenses increased by 14% to $13.522 million for the three months and by 24% to $28.977 million for the six months ended June 30, 2025.
• Selling, general and administrative expenses increased by 12% to $6.926 million for the three months and by 6% to $13.545 million for the six months ended June 30, 2025.
• The company successfully completed an At-the-Market (ATM) offering, raising $346.7 million in net proceeds from the sale of 30,309,780 shares of common stock at a weighted average price of $11.55 per share.
• A private placement transaction with Quanta Computer Inc. closed on April 29, 2025, generating approximately $35.0 million from the sale of 3,020,412 shares of common stock.
• Cash and cash equivalents stood at $57.183 million as of June 30, 2025, with total current assets of $433.579 million and total assets of $636.690 million.
• Net cash used in operating activities for the six months ended June 30, 2025, was $29.820 million.
• The company achieved a mid-year performance milestone of 99.5% median two-qubit gate fidelity on a modular 36-qubit system (Cepheus-1-36Q), which is now generally available on its Cloud Services Platform (QCS) and Microsoft Azure.
• Rigetti entered into a Collaboration Agreement with Quanta Computer Inc., with both parties committing to invest at least $250.0 million each over five years in quantum computing development.
• The company will lose its Emerging Growth Company (EGC) and Smaller Reporting Company (SRC) status as of December 31, 2025, becoming a large accelerated filer.
• As of June 30, 2025, the accumulated deficit was $551.8 million.

Sentiment

Score: 5

Explanation: The sentiment is mixed. While the company achieved a significant technical milestone and substantially improved its liquidity through successful capital raises, its core operational performance (revenue and gross profit decline, increased operating loss) deteriorated. The reported net income for the six-month period is primarily due to non-cash fair value adjustments, not operational profitability. The upcoming increase in compliance costs due to loss of EGC/SRC status also presents a challenge.

Positives

• Achieved a significant technical milestone of 99.5% median two-qubit gate fidelity on a modular 36-qubit system (Cepheus-1-36Q), representing a 2x reduction in median two-qubit gate error rate.
• The Cepheus-1-36Q system has been released for general availability on the company's Cloud Services Platform (QCS) and will be available on Microsoft Azure.
• Successfully raised substantial capital through an At-the-Market (ATM) offering, generating $346.7 million in net proceeds.
• Secured a strategic private placement of $35.0 million with Quanta Computer Inc., strengthening financial position and fostering collaboration.
• Entered into a Collaboration Agreement with Quanta Computer Inc., involving mutual investment commitments of at least $250.0 million each over five years for quantum computing development.
• Prepaid all outstanding debt with Trinity Capital Inc. in December 2024, eliminating associated interest expense.
• Reported a net income of $2.965 million for the six months ended June 30, 2025, a significant improvement from a net loss in the prior year, largely due to non-cash fair value adjustments.

Negatives

• Revenue decreased significantly by 47% for the six months ended June 30, 2025, to $3.273 million, primarily due to a reduction in collaborative research and professional services contracts.
• Gross profit declined sharply by 71% for the six months ended June 30, 2025, to $1.008 million.
• Operating loss increased by 27% for the six months ended June 30, 2025, reaching $41.514 million, indicating worsening core operational performance.
• Research and development expenses increased by 24% and selling, general and administrative expenses increased by 6% for the six months ended June 30, 2025, contributing to higher operating losses.
• Negative cash flow from operating activities increased to $29.820 million for the six months ended June 30, 2025.
• Revenue was negatively impacted by the expiration of the National Quantum Initiative Act in September 2023 and its pending reauthorization.
• The company expects to continue incurring losses for income tax purposes for the foreseeable future and maintains a full valuation allowance for its deferred tax assets.
• The company will lose its Emerging Growth Company (EGC) and Smaller Reporting Company (SRC) status as of December 31, 2025, leading to increased compliance costs and disclosure requirements.

Risks

• Inability to achieve technological advancements and milestones, including the goal of releasing a 100+ qubit chiplet-based system with 99.5% median two-qubit gate fidelity before the end of 2025.
• Unfavorable conditions in the industry, global economy, or global supply chain, including impacts from military conflicts, sanctions, trade protections, tariffs, inflation, and interest rates.
• Significant portion of revenue depends on contracts with the public sector, leading to customer concentration risk (90.7% of total revenue from government entities for the six months ended June 30, 2025).
• Potential need for additional capital sooner than planned, or inability to raise additional funds on attractive terms, which could force delays or reductions in research and development programs.
• Increased legal, accounting, and financial compliance costs, and diversion of management attention, due to the pending loss of Emerging Growth Company (EGC) and Smaller Reporting Company (SRC) status.
• Risk of not maintaining effective internal controls over financial reporting, especially after becoming a large accelerated filer.
• Risks associated with changes in information technology and protection of proprietary technology.
• Potential for patent litigation.
• Dependence on key individuals for business operations and technological development.
• Macroeconomic conditions, including inflation and interest rates, could increase the cost of materials, components, and operating costs.
• Future capital requirements and the adequacy of available funds are subject to many factors and estimates may prove incorrect.
• Raising additional capital through equity or convertible debt securities could dilute the ownership interest of existing stockholders.
• Debt and equity financing agreements may include covenants limiting specific actions, such as incurring additional debt or declaring dividends.
• Uncertainty regarding the outcome of any legal proceedings.

Future Outlook

The company's goal for 2025 is to introduce the next generation of its modular system architecture and continue increasing fidelities, with an expectation to release a 100+ qubit chiplet-based system with a 99.5% median two-qubit gate fidelity before the end of 2025. Interest income is anticipated to increase due to higher invested cash balances from recent equity offerings. Research and development expenditures are expected to grow as the company focuses on its technology roadmap and the long-term goal of achieving broad quantum advantage. Selling, general and administrative expenses are also expected to increase with business growth, particularly after potentially achieving quantum advantage. The company believes its existing cash, cash equivalents, and available-for-sale investments are sufficient to meet anticipated operating cash needs for at least the next 12 months. However, it may seek additional funds sooner than planned. The company will be deemed a large accelerated filer as of December 31, 2025, leading to increased compliance requirements and costs, and will no longer qualify as an Emerging Growth Company or Smaller Reporting Company. The 'One Big Beautiful Bill Act' is not expected to have a material financial impact.

Management Comments

• We believe quantum computing represents one of the most transformative emerging capabilities in the world today.
• Our long-term business model centers on revenue generated from sales of quantum processing units (QPUs) and quantum computing systems made accessible via the cloud in the form of Quantum Computing as a Service (QCaaS) products.
• The substantial majority of our revenues are currently derived from development contracts, and we anticipate this market opportunity will continue to represent an important source of revenue for at least the next several years as we work to ramp up sales of QPUs and our QCaaS business.
• We expect to continue to incur additional losses for the foreseeable future as we invest in research, development, and infrastructure consistent with our long-term business strategy.
• Our goal for 2025 is to introduce the next generation of our modular system architecture, while continuing to increase fidelities.
• We expect to release a 100+ qubit chiplet-based system with a 99.5% median two-qubit gate fidelity before the end of 2025.
• We believe that our existing cash, cash equivalents and available for sale investments should be sufficient to meet our anticipated operating cash needs for at least the next 12 months based on our current business plan, and expectations and assumptions considering current macroeconomic conditions.

Industry Context

Rigetti Computing operates in the nascent but rapidly evolving quantum computing industry, aiming to leverage quantum mechanics for fundamentally new and powerful information processing. The company is vertically integrated, owning its Fab-1 facility for quantum processor production and employing a full-stack product development approach. While the long-term business model focuses on QPU sales and Quantum Computing as a Service (QCaaS), current revenue is predominantly from development contracts, particularly with the public sector. The industry faces challenges such as the need for significant R&D investment, competition, and macroeconomic conditions impacting supply chains and operating costs. The expiration and pending reauthorization of the National Quantum Initiative Act highlight the reliance on government funding in this emerging sector.

Comparison to Industry Standards

• NA

Corporate Governance

Legal Proceedings

• The company is from time to time party to litigation and other legal proceedings in the ordinary course of business.
• Currently, the company is not a party to any material legal proceedings that, if determined adversely, would individually or taken together have a material adverse effect on its business, financial position, results of operations, or cash flows.

Related Party Transactions

• The vesting condition for the Promote Sponsor Vesting Shares (2,479,000 shares held by Sponsor Holders) was satisfied on February 6, 2025, resulting in the reclassification of $32.9 million from earn-out liability to additional paid-in capital.
• The vesting condition for the Sponsor Redemption-Based Vesting shares (580,273 shares held by Sponsor Holders) remained unsatisfied as of June 30, 2025, but as of August 8, 2025, the volume weighted average price of the company's Common Stock equaled or exceeded $15.00 for 16 days out of the last 18 trading days, nearing the vesting threshold.

Stakeholder Impact

• Shareholders experienced dilution from the recent ATM offering and private placement, and face potential future dilution from additional capital raises.
• Employees benefit from stock-based compensation and annual salary increases, but the company's continued losses may impact long-term stability.
• Customers will benefit from the general availability of the new 36-qubit Cepheus-1-36Q system on QCS and Microsoft Azure, and ongoing collaborative research.
• Suppliers may face impacts from macroeconomic conditions, including supply chain constraints and increased material costs.
• Creditors saw the company prepay its outstanding debt, reducing its financial obligations and interest expense.

Next Steps

• Introduce the next generation of modular system architecture and continue to increase fidelities.
• Release a 100+ qubit chiplet-based system with a 99.5% median two-qubit gate fidelity before the end of 2025.
• Further develop revenue streams and forge important customer relationships through technology development contracts.
• Invest at least $250.0 million in the field of quantum computing over a five-year period, as per the Collaboration Agreement with Quanta.
• Comply with increased disclosure and compliance requirements as a large accelerated filer starting January 1, 2026.
• Reflect any financial impacts from the 'One Big Beautiful Bill Act' (OBBA) in the condensed consolidated financial statements during the three months ended September 30, 2025.

Key Dates

Recommendation

While Rigetti Computing achieved a significant technical milestone with its 36-qubit system and secured substantial funding through an ATM offering and a strategic partnership with Quanta, its core operational performance shows concerning trends. Revenue declined sharply by 47% and operating losses widened by 27% for the six months ended June 30, 2025. The reported net income is primarily due to non-cash fair value adjustments, not underlying profitability. The company's reliance on development contracts and government funding, coupled with the expiration of the National Quantum Initiative Act, presents revenue volatility. The upcoming loss of EGC/SRC status will also increase compliance costs. The long-term potential of quantum computing is high, and Rigetti's technological progress is notable, but the current financial performance and the inherent risks of an early-stage, capital-intensive industry suggest a 'hold' position. Investors should monitor the company's ability to monetize its technology, diversify revenue streams, and manage increasing operational costs as it scales.

Keywords

Quantum Computing, Superconducting Processors, QPU, QCaaS, Quantum Technology, SEC Filing, 10-Q, Financial Results, Capital Raise, Strategic Partnership, Research and Development, Semiconductor, High Performance Computing