The Zhitong Finance App learned that after the US stock market on November 10, quantum computing company Rigetti Computing (RGTI.US) announced financial results for the third quarter of fiscal year 2026, and then held a results conference call. What received the most attention at this conference was that while the company achieved technical milestones as scheduled, its revenue fell far short of market expectations. In response to this contrast, CEO Subodh Kulkarni emphasized that the Cepheus-1-108Q system has reached the 99.5% median double qubit gate fidelity target, further verifying the ability of the core particle architecture to expand; speaking of sales, he said that “everything is still in the R&D stage” and that the sales volume is “relatively small in the overall overall situation”. The company reiterated its annual revenue target of approximately $20 million, but on the premise that India's C-DAC customers complete acceptance in the fourth quarter.
According to financial reports, revenue for the third quarter was US$1.411 million, down 27.5% year on year and 72.5% month-on-month, which is about 60% lower than the agreed market forecast of about US$3.52 million (BenzingA/FactSet caliber). According to US GAAP (GAAP), the net loss per diluted share was 0.08 US dollars, with a net loss of $3.37 million, including fair value income of $25.291 million; according to the adjusted (non-GAAP) scale, the net loss per diluted share was 0.06 US dollars, which was slightly lower than the agreed expectation of about $0.05. The adjusted net loss was US$204.68 million, an increase over the previous year. The company reaffirmed revenue of approximately $20 million for the full year of 2026, which is more conservative than FactSet's agreed estimate of about $22.6 million. After the financial report was released, the stock fell more than 9% after the market; when the regular trading session closed at $12.12, it closed down 6.63%.
I. Focus and Response
The core contradiction of this conference call is that technological milestones have been achieved as scheduled, but commercial revenue is far from keeping up, and the target for the whole year is highly dependent on single order acceptance. Management was repeatedly questioned during the Q&A session about the certainty of sales channels and annual goals. When asked if sales could increase in the next few quarters, Kulkarni said that the company continues to communicate with national laboratories, universities, and a small number of commercial customers engaged in quantum research. Based on the overall popularity of quantum computing, sales are expected to grow, “but they are relatively small in the overall picture because everything is still in the R&D stage.”
Chief Financial Officer Jeff Bertelsen added that the interest of commercial customers such as government laboratories and TangleLab is growing, but the market is “still research-driven” and will not expand significantly until quantum advantages are realized. Regarding the annual target of about 20 million US dollars, which is highly dependent on the acceptance of a single C-DAC order of 8.4 million US dollars, management did not shy away, and reiterated that the relevant revenue will be confirmed on the premise that installation and performance inspections are completed in the fourth quarter.
Technology milestones and roadmap
At the beginning, Kulkarni summarized the progress of this quarter as three points: first, the Cepheus-1-108Q achieved 99.5% medium double qubit gate fidelity, continued to improve performance at the level of 100 qubits and above, and further verified the core architecture; second, it signed a final agreement of 100 million US dollars with the US Department of Commerce; and third, advancing the next-generation technology roadmap. The gate speed of the company's superconducting system is maintained at 50-70 nanoseconds, which is about 10,000 times that of ion trap systems and 100 times that of neutral atomic systems. The next major system goal is to show systems with 300 qubits or more, median double qubit gate fidelity of about 99.7%, and gate speeds of less than 60 ns by mid-2028.
Quantum error correction and commercialization pace
In response to analysts' questions about which metrics should be tracked in the next 18 months, Kulkarni said that it will continue to improve the three core indicators of fidelity, qubit count, and gate speed, and cooperate with Riverlane to promote error correction and correction, and disclose it to the outside world when the milestone is reached. He stressed that error correction and correction are only meaningful until at least 100 physical qubits, about 99.7% or even 99.8% fidelity, and it is too early to talk about “logical qubits” until then.
Government orders and sales channels
Kulkarni said that almost all developed countries have introduced quantum strategies. The company is closely connected with the US, the British government and India (C-DAC), has deployed systems at the US Department of Energy's Fermi Laboratory, the Ministry of Defense's Air Force Research Laboratory, and the National Laboratory near Oxford in the UK, and is building new systems at India's C-DAC. He said that sales are still dominated by research-oriented customers, and the market will not expand significantly until quantum advantages are realized.
US Department of Commerce Agreements and Capital
Bertelsen explained that the 100 million US dollars of Commerce capital will be gradually withdrawn as monthly costs are incurred, and all included in additional paid-in capital (additional paid-in capital), corresponding to about 7.7 million shares already issued; related costs are normally covered according to R&D expenses or capital expenses, which is essentially equivalent to a $100 million equity financing with restrictions on the use of capital. As of the end of September, the company had not withdrawn any funds. The total amount of cash, cash equivalents and marketable investments at the end of the period was US$497.1 million, and the company had no debt.
Mergers and acquisitions and year-round guidance
In response to a question about whether to increase mergers and acquisitions under a cash reserve of about 500 million US dollars, Kulkarni said that it will only consider targets that can accelerate the road map or have key strategic value. Currently, there is no action. It is still focusing on self-research, and reaffirms confidence in the superconducting gate-based technology route. The company reiterated that its revenue for the full year of 2026 was approximately US$20 million, based on C-DAC's fourth quarter acceptance, and the management did not raise the guidelines.
Results conference call notes (artificial intelligence tool assisted translation):
II. Executive Speeches
Subod Kulkarni, President and CEO
Thank you all for attending Rigetti's third quarter results conference call. Chief Financial Officer Jeff Bertelson will be detailing the financial results after my speech. ... Before I look back at this quarter, I'd like to frame this discussion with three main points:
First, we achieved 99.5% median double qubit gate fidelity on the Cepheus-1-108Q. This is an important milestone, proving that continuous performance improvements have been achieved at the system level above 100 qubits, not just on small research devices, and further validated our method of superconducting quantum computation based on core extensions.
Second, we have strengthened our cooperation with the US Government. A final agreement of $100 million was signed with the US Department of Commerce this quarter to accelerate three research and development areas critical to the expansion of superconducting quantum computing.
Third, we are moving forward with the next phase of the technology roadmap. The Rigetti superconducting system continues to achieve gate speeds of 50 to 70 nanoseconds, which is about 10,000 times that of ion trap systems and 100 times that of neutral atomic systems. The next major system goal is to show a system with 300 qubits or more, a median double qubit gate fidelity of about 99.7%, and a gate speed of less than 60 ns by mid-2028; within about three years, the goal is to deploy a system with about 1000 qubits, 99.9% median double qubit gate fidelity, a gate speed of less than 50 ns, and integrated error correction and correction.
III. Q&A session
TD Cowen Analyst Krish Sankar: The Interconnection Costs of Sales Pipeline and Core Expansion
Q: How will the sales pipeline or order reserve evolve over the next few quarters?
A (Subod Kulkarni): Thank you, Krish. We usually spend more time on technical indicators and continue to communicate with national laboratories, universities, and a small number of commercial customers engaged in quantum research on the sales side. Based on the overall focus on quantum computing, we do expect sales to continue to grow. But again, they're relatively small in the overall picture, because everything is still under development. Jeff, would you like to add more information about pipelines or order reserves?
A (Jeff Bertelson): I agree with Subodh. Quantum computing is still in its early stages, but what is certain is that we are seeing growing interest from governments, government laboratories, and some commercial customers, such as the TangleLab opportunity you mentioned today. So in terms of direction, interest is indeed growing. As we get closer to quantum advantage and system capabilities become stronger, we expect to see a continuous increase in customer interest and growth opportunities in the next few years.
Q: Subodh, you mentioned that the core strategy has no limit on maximum size. I'm wondering if there are any costs in terms of interconnect performance, fidelity, or speed as the scale increases?
A (Subod Kulkarni): Great question, Krish. Currently, we have not seen any limitations in connecting the core grains, because we use an intermediary layer to connect the two core grains through the intermediate layer, and we have not seen any deterioration in performance. This doesn't mean that a larger grid won't have a negative impact at some point, but we haven't seen any problems with the current 12 9-qubit cores. So when it comes to 1000 qubits, we're roughly about 30 36 qubit type cores, and we don't expect any problems. But this is indeed a critical area for us to continuously monitor to see if there are any fundamental limitations as we expand. But as of now, we don't see any restrictions.
Needham & Company Analyst Quinn Bolton: Government Project Progress and Commerce Department Funding Method
Q: First, congratulations on the progress of Cepheus-1-108Q. Subodh, I'd like to first understand the interest you've seen from government laboratories or government agencies. Can you update on the latest developments in the DARPA QBI project and the UK ProQure project?
A (Subod Kulkarni): Of course, Quinn. Overall, as can be seen from the news cycle, almost all developed countries in the world now have some kind of quantum mission or quantum strategy, because everyone understands the importance of quantum computing to national security and its potential for decades to come. We are particularly closely aligned with the US and UK governments, and are increasingly close to the Indian government due to the C-DAC system. We continue to communicate with other governments interested in quantum computing, but be careful about how many governments we interact with, as each requires dedicated resources and personnel support. Obviously, we have installed quantum computers at the Department of Energy Laboratory (Chicago's Fermi Lab) and the Department of Defense Laboratory (Air Force Research Laboratory in upstate New York), have a system at the British National Laboratory near Oxford, and are now building a C-DAC system at India's National Laboratory. We will continue to promote this kind of strategic collaboration that both promotes technology and brings sales. We are deeply involved in the US government's Department of Commerce initiative, the CRDO program, or the $100 million we mentioned, which is extremely valuable to us, helping us develop technology and advance our timeline. We are also continuing to communicate with DARPA on QBI and the UK on ProQuRE, and any disclosing developments will be announced separately.
Q (To Bertelson): You mentioned that costs under the Department of Commerce's milestone will be charged or capitalized as they are incurred, so how does this $100 million fund flow between the balance sheet, cash flow statement, and income statement? There doesn't seem to be any $100 million in accounts receivable right now.
A (Jeff Bertelson): All of this money will be transferred through equity. The entire $100 million capital of the Ministry of Commerce will be allocated to approximately 7.7 million shares issued by us and included in equity. We gradually withdraw funds on a monthly basis as costs are accrued, and these funds are added to additional paid-in capital (share capital premium) each month. Therefore, when withdrawing funds every quarter, you will see the inflow of funds in the cash flow statement, and the costs incurred under the project are normally covered according to R&D expenses or capital expenses. You can think of it as $100 million equity financing with restrictions on the use of capital.
Q: But that 100 million dollars in cash isn't currently on the balance sheet, right? Will it be gradually withdrawn along with the cost?
A (Jeff Bertelson): Exactly. As of September, we haven't withdrawn any $100 million of funding because the project has just started and no related costs have been incurred. Simply put, withdrawing $100 from the Ministry of Commerce means debiting cash and crediting benefits.
Q: So the income statement remains the same. The cost of 100 million US dollars is still included in R&D, and there will be an inflow of 100 million US dollars on the cash flow statement to offset these costs, right?
A (Jeff Bertelson): Exactly.
Alliance Global Partners Analyst Brian King Stringer: Tracking Metrics and Error Correction Times for the Next 18 Months
Q: The next significant data point on the roadmap is mid-2028. Over the next 18 months or so, should we see a gradual increase in QPU size, fidelity, or speed for Cepheus? What KPIs should we track during this time?
A (Subod Kulkarni): Great question, Brian. We will definitely continue to improve fidelity, qubits, and speed, and will disclose when key milestones are reached as progress is combined with our collaboration with Riverlane to discuss correction and error correction. Currently, we have achieved 99.5% median double qubit gate fidelity at 108 qubits, higher on the sub-lattice, and the gate speed is about 60 ns. As these numbers improve, we'll disclose and deploy as appropriate — it's not reasonable to deploy to the public cloud by improving only one number at a time, and we'll carefully judge whether it's worth switching to a new platform for end users. We should continue to pay attention to our three key metrics: two-qubit gate fidelity (as well as other fidelity such as parallel fidelity and readout fidelity), number of physical qubits, and critical gate speed. We avoid using unstrict “logical qubits” expressions — we've noticed that some companies in the industry are starting to do this, but logic qubits should be nearly perfect, that is, the error rate should be at least 10 to the power of 10. Talking about logical qubits with an error of negative 3 or 4 squared of 10 would be confusing for everyone.
Q: When did error correction become a priority in your QPU development? Can the QPU scale be combined with the fidelity description?
A (Subod Kulkarni): Of course. Our view is that for error correction or even correction to take effect, at least 100 physical qubits and a two-qubit gate fidelity of about 99.7% or even 99.8% are required. There is no point in talking about error correction before that, which is why we have talked less about it before. We work closely with Riverlane, and have also developed our own error correction and published several papers. As we approach 99.7% and 99.8%, and our sub-lattice has reached 99.7%, we can start talking about error correction at this level. Below 99.7% fidelity, whether using an FPGA, CPU, or GPU, errors far exceed what can be corrected and are overwhelmed by errors.
Craig-Hallum Capital Analyst Taylor Anderson: Cooperative R&D Model for Cryogenic Thermostat Architectures
Q: Regarding the cryostat architecture, does this require cooperation with an existing dilution chiller manufacturer? Is this a dilution chiller with a different overall size or an adjustment of internal shape or configuration? I'd like to clarify what R&D you are responsible for.
A (Subod Kulkarni): Great question, Tyler. Fundamentally, under this Ministry of Commerce initiative, we are responsible for delivering these milestones. The two things you mentioned — read out the miniaturization of electronics and the new cryostat architecture — we're clearly not going to do it all ourselves. This is an extremely complex field with lots of potential partners who specialize in specific fields, and we use a cooperative model where appropriate. In terms of electronics miniaturization, we are working with several partner companies to select the right proven technology to deliver the Commerce Department's milestone while understanding its interaction with QPU technology. In terms of the cryostat architecture, we are not a cryostat company ourselves. Currently, we are purchasing off-the-shelf dilution chillers from three companies based on the application, and are jointly defining this new architecture with one of them, and how it will help us move to 10,000 qubits and beyond. So at these specific milestones, you'll see us adopt a cooperative model.
Cantor Fitzgerald Analyst Kieran McCabe: M&A Opportunities and Capital Expense Decisions
Q: With around $500 million in cash and a market correction, are you seeing inorganic (mergers and acquisitions) opportunities become more attractive? Or is the trade-off between internal research and mergers and acquisitions roughly the same as earlier this year? I have one more question.
A (Subod Kulkarni): Great question. We will of course continue to monitor the market and look for potential opportunities, but we will only consider them if they help us accelerate our roadmap or have real key strategic value. Obviously we haven't seen any targets yet, which is why we haven't taken action yet. Fundamentally, we remain convinced that the superconducting gate-based technology route we have adopted is most likely to dominate the market because of our advantages in speed and scale. Looking at the current pattern, our Cepheus-1-108Q, as I said before, only IBM's 120 qubits are higher than the number of qubits on the public cloud, followed by Google's 105 qubits. The rest are below 100, and most companies are well below 50. Therefore, we believe that mergers and acquisitions for the purpose of mergers and acquisitions, or mergers and acquisitions to increase sales, is not the right strategy at this stage. We remain focused on developing key technical indicators; however, we will consider opportunities that have significant strategic value and accelerate timelines.
Q: My question is related to this. Did the Department of Commerce agreement — more broadly, not just the $100 million in funding for your other quantum computing companies, but also investment in manufacturing (fabrication) — change your future capital expenditure decisions in any way after it has been implemented and finalized?