On November 10 after the U.S. market close, quantum computing company Rigetti Computing (RGTI.US) released its financial results for the third quarter of fiscal 2026 and subsequently held an earnings call. The most closely watched aspect of the call was the sharp contrast between the company's on-schedule delivery of technology milestones and revenue that fell far short of market expectations.
In response to this divergence, CEO Subodh Kulkarni emphasized that the Cepheus-1-108Q system had achieved its 99.5% median two-qubit gate fidelity target, further validating the scalability of the chiplet architecture. On sales, he said that "everything is still in the R&D phase" and that sales volume is "relatively small in the grand scheme of things." The company reiterated its full-year revenue target of approximately $20 million, contingent on the India C-DAC customer completing acceptance in the fourth quarter.
The financial statements showed third-quarter revenue of $1.411 million, down 27.5% year-over-year and down 72.5% quarter-over-quarter, missing the market consensus of approximately $3.52 million (per Benzinga/FactSet) by roughly 60%. On a GAAP basis, diluted net loss per share was $0.08, with a net loss of $3.137 million, including a $25.291 million gain from the change in fair value of warrants. On a non-GAAP basis, diluted net loss per share was $0.06, slightly worse than the consensus estimate of approximately $0.05, with an adjusted net loss of $20.468 million, widening year-over-year. The company reiterated full-year 2026 revenue of approximately $20 million, more conservative than the FactSet consensus of approximately $22.6 million. Following the earnings release, the stock fell more than 9% in after-hours trading; it closed the regular session at $12.12, down 6.63%.
Key Focus and Management Response
The core tension of this earnings call was that technology milestones were delivered on schedule, but commercial revenue lagged far behind, with the full-year target highly dependent on the acceptance of a single order. During the Q&A session, management was repeatedly pressed on the certainty of the sales pipeline and the full-year target.
When asked whether sales could ramp up in the coming quarters, Kulkarni said the company continues to engage with national laboratories, universities and a small number of commercial customers engaged in quantum research. Given the overall heat around quantum computing, sales are expected to grow, "but they are relatively small in the grand scheme of things, because everything is still in the R&D phase." Chief Financial Officer Jeff Bertelsen added that interest from government laboratories and commercial customers such as TangleLab is growing, but the market "remains research-driven" and will not ramp significantly until quantum advantage is achieved.
Regarding the full-year target of approximately $20 million, which relies heavily on the acceptance of a single $8.4 million order from C-DAC, management did not shy away, reiterating that revenue recognition is contingent on completing installation and performance acceptance in the fourth quarter.
Technology Milestones and Roadmap
In his opening remarks, Kulkarni summarized the quarter's progress in three points: first, Cepheus-1-108Q achieved 99.5% median two-qubit gate fidelity, continuously improving performance at the 100-plus qubit level and further validating the chiplet architecture; second, the company signed a final $100 million agreement with the U.S. Department of Commerce; third, the company advanced its next-generation technology roadmap. The company's superconducting system gate speeds remain at 50 to 70 nanoseconds, roughly 10,000 times faster than ion trap systems and 100 times faster than neutral atom systems. The next major system target is to demonstrate a system with more than 300 qubits, approximately 99.7% median two-qubit gate fidelity and gate speeds below 60 nanoseconds by mid-2028.
Quantum Error Correction and Commercialization Pace
In response to an analyst's question about which metrics to track over the next 18 months, Kulkarni said the company will continue to improve three core metrics: fidelity, qubit count and gate speed, and will work with Riverlane on error correction and error mitigation, disclosing progress upon reaching milestones. He emphasized that error correction and mitigation only become meaningful at a minimum of 100 physical qubits and fidelity of around 99.7% or even 99.8%, and that it is premature to talk about "logical qubits" before then.
Government Orders and Sales Pipeline
Kulkarni said nearly all developed countries have introduced quantum strategies. The company is closely aligned with the U.S. and U.K. governments and with India (C-DAC), has deployed systems at the U.S. Department of Energy's Fermilab, the Department of Defense's Air Force Research Laboratory and a national laboratory near Oxford in the U.K., and is building a new system at C-DAC in India. He said sales remain primarily to research-oriented customers, and the market will not ramp significantly until quantum advantage is achieved.
U.S. Department of Commerce Agreement and Capital
Bertelsen explained that the $100 million in Department of Commerce funding will be drawn down gradually as monthly costs are incurred, all credited to equity (additional paid-in capital), corresponding to approximately 7.7 million shares already issued. Related costs will be expensed normally as R&D expenses or capital expenditures, essentially amounting to a $100 million equity financing with restrictions on the use of funds. As of the end of September, the company had not drawn down any funds. Cash, cash equivalents and available-for-sale investments totaled $497.1 million at period end, with no debt.
M&A and Full-Year Guidance
Asked whether the company would step up M&A with approximately $500 million in cash reserves, Kulkarni said it would only consider targets that could accelerate the roadmap or hold critical strategic value, that no action has been taken yet, and that the company remains focused on in-house development while reiterating confidence in its superconducting gate-based technology path. The company reiterated full-year 2026 revenue of approximately $20 million, contingent on C-DAC acceptance in the fourth quarter, and management did not raise guidance.
Earnings Call Transcript (Translated with the Assistance of AI Tools)
Executive Remarks
Subodh Kulkarni, President and Chief Executive Officer: Thank you for joining Rigetti's third-quarter earnings call. Chief Financial Officer Jeff Bertelsen will provide details on the financial results after my remarks. Before reviewing the quarter, I want to frame this discussion with three key points: First, we achieved 99.5% median two-qubit gate fidelity on Cepheus-1-108Q, a significant milestone that demonstrates sustained performance improvement at the system level of more than 100 qubits, rather than only on small research devices, and further validates our chiplet-based approach to scaling superconducting quantum computing. Second, we strengthened our partnership with the U.S. government. During the quarter, we signed a final agreement with the U.S. Department of Commerce for $100 million in funding to accelerate three R&D areas critical to scaling superconducting quantum computing. Third, we are advancing our next-stage technology roadmap. Rigetti superconducting systems continue to achieve gate speeds of 50 to 70 nanoseconds, roughly 10,000 times faster than ion trap systems and 100 times faster than neutral atom systems. The next major system target is to demonstrate a system with more than 300 qubits, approximately 99.7% median two-qubit gate fidelity and gate speeds below 60 nanoseconds by mid-2028; in about three years, the goal is to deploy a system with approximately 1,000 qubits, 99.9% median two-qubit gate fidelity, gate speeds below 50 nanoseconds and integrated error correction and mitigation.
Q&A Session
TD Cowen analyst Krish Sankar: Sales pipeline and the interconnect cost of chiplet scaling. Question: How will the sales pipeline or backlog evolve over the coming quarters? Answer (Subodh Kulkarni): Thank you, Krish. We typically spend more time on technical metrics. On sales, we continue to engage with national laboratories, universities and a small number of commercial customers engaged in quantum research. Given the overall attention on quantum computing, we do expect sales to continue growing. But again, they are relatively small in the grand scheme of things, because everything is still in the R&D phase. Jeff, do you want to add anything on the pipeline or backlog? Answer (Jeff Bertelsen): I agree with what Subodh said. Quantum computing is still at an early stage, but to be sure, we are seeing growing interest from governments, government laboratories and some commercial customers, such as the TangleLab opportunity you mentioned today. So directionally, interest is indeed growing, and as we get closer to quantum advantage and our systems become more capable, we expect to see continued growth in customer interest and opportunities over the coming years. Question: Subodh, you mentioned that the chiplet strategy has no limit at the largest scale. I wanted to ask whether, as scale increases, there will be trade-offs to address in interconnect performance, fidelity or speed? Answer (Subodh Kulkarni): Good question, Krish. So far we have not seen any limits in connecting chiplets, because we use an interposer to connect two chiplets through the interposer, and we have not seen performance degradation. That does not mean a larger grid will not bring negative effects at some point, but with the current 12 nine-qubit chiplets, we have not seen any issues. So when we talk about 1,000 qubits, we are roughly at about 30 36-qubit-type chiplets, and we do not expect problems. That said, this is indeed a key area we continue to monitor to see whether fundamental limits emerge as we scale. But for now, we are not seeing any limits.
Needham & Company analyst Quinn Bolton: Progress on government programs and how Department of Commerce funding flows. Question: First, congratulations on the progress with Cepheus-1-108Q. Subodh, I wanted to first understand the interest you are seeing from government laboratories or government agencies. Can you update us on the DARPA QBI program and the U.K. ProQure program? Answer (Subodh Kulkarni): Certainly, Quinn. Overall, as you can see from the news cycle, nearly every developed country in the world now has some kind of quantum mission or quantum strategy, because everyone understands the importance of quantum computing to national security and its potential over the coming decades. We are particularly closely aligned with the U.S. government and the U.K. government, and increasingly with the Indian government because of the C-DAC system. We continue to engage with other governments interested in quantum computing, but we have to be careful about how many governments we interact with, because each requires dedicated resources and personnel support. Clearly, we have installed quantum computers at a Department of Energy laboratory (Fermilab in Chicago), a Department of Defense laboratory (the Air Force Research Laboratory in upstate New York), a U.K. national laboratory near Oxford, and we are now building a system at India's national laboratory C-DAC. We will continue to pursue these strategically meaningful partnerships that both advance technology and generate sales. We are deeply involved in the U.S. government's Department of Commerce initiative, the CRDO program, which is the $100 million we mentioned, and which is extremely valuable to us in helping us develop technology and advance our timeline. We are also in ongoing discussions with DARPA on QBI and with the U.K. on ProQure, and we will announce separately when there is progress we can disclose. Question (to Bertelsen): You mentioned that costs under the Department of Commerce milestones will be expensed or capitalized as incurred. How does the $100 million flow among the balance sheet, cash flow statement and income statement? It seems there is no $100 million accounts receivable yet. Answer (Jeff Bertelsen): The funding will flow entirely through equity. The full $100 million from the Department of Commerce will be allocated to approximately 7.7 million shares we issued, credited to equity. We draw down the funds monthly as costs are incurred, and each month we credit these funds to additional paid-in capital. So each quarter, when we draw down funds, you will see cash inflows in the cash flow statement, while costs incurred under the program are expensed normally as R&D expenses or capital expenditures. You can think of it as a $100 million equity financing with restrictions on the use of funds. Question: But that $100 million in cash is not currently on the balance sheet, right? It will be drawn down as costs are incurred? Answer (Jeff Bertelsen): Correct. As of September, we had not drawn down any of the $100 million, because the program had just started and related costs had not yet been incurred. Simply put, drawing $100 from the Department of Commerce means debiting cash and crediting equity. Question: So the income statement is unchanged, the $100 million in costs will still be included in R&D, and there will be a $100 million inflow on the cash flow statement to offset those costs, right? Answer (Jeff Bertelsen): Correct.
Alliance Global Partners analyst Brian Kinstlinger: Metrics to track over the next 18 months and the timing of error correction. Question: The next major data point on the roadmap is mid-2028. Over the next 18 months or so, should we expect to see gradual improvements in QPU scale, fidelity or speed for Cepheus? Which KPIs should we track during this period? Answer (Subodh Kulkarni): Good question, Brian. We will certainly continue to improve fidelity, qubit count and speed, and as we make progress we will discuss error mitigation and error correction in conjunction with our work with Riverlane, disclosing them when key milestones are reached. We currently achieve 99.5% median two-qubit gate fidelity on 108 qubits, higher on sub-lattices, with gate speeds of about 60 nanoseconds. Whenever these numbers improve, we will disclose them and deploy as appropriate — it does not make sense to deploy to the public cloud each time just one number improves; we will carefully judge whether it is worth end users switching to a new platform. You should continue to focus on our three key metrics: two-qubit gate fidelity (along with other fidelities such as parallel fidelity and readout fidelity), physical qubit count, and, critically, gate speed. We avoid using the imprecise term "logical qubits" — we note that some companies in the industry have started to do so, but logical qubits should be nearly perfect, meaning error rates of at least better than 10 to the minus 10. Talking about logical qubits at error rates of 10 to the minus 3 or minus 4 would confuse everyone. Question: When does error correction become a priority in your QPU development? Can you explain in terms of QPU scale and fidelity? Answer (Subodh Kulkarni): Certainly. Our view is that for error correction, and even error mitigation, to begin to be effective, you need at least 100 physical qubits and about 99.7%, or even 99.8%, two-qubit gate fidelity. Before that, talking about error correction and mitigation is meaningless, which is why we have talked about it less previously. We work closely with Riverlane, and we also conduct error correction development ourselves and have published multiple papers. As we approach 99.7% and 99.8%, and our sub-lattices have already reached 99.7%, we can begin to talk about error correction and mitigation at that level. Below 99.7% fidelity, whether using FPGAs, CPUs or GPUs, the errors generated far exceed what can be corrected and will be overwhelmed by errors.
Craig-Hallum Capital analyst Tyler Anderson: Collaborative R&D model for cryostat architecture. Question: Regarding the cryostat architecture, does this require collaboration with existing dilution refrigerator manufacturers? Is this a dilution refrigerator with a different overall size, or adjustments to internal shape or configuration? I want to clarify which R&D you are taking on yourselves. Answer (Subodh Kulkarni): Good question, Tyler. Fundamentally, under this Department of Commerce initiative, we are responsible for delivering these milestones. The two you mentioned — miniaturization of readout electronics and a new cryostat architecture — we clearly will not do entirely on our own. This is an extremely complex field with many potential partners who excel in specific areas, and we adopt a collaborative model where appropriate. On readout electronics miniaturization, we are working with several partner companies to select appropriate mature technologies to deliver the Department of Commerce milestones, while understanding their interaction with QPU technology. On cryostat architecture, we are not a cryostat company ourselves. We currently purchase off-the-shelf dilution refrigerators from three companies depending on the application, and we are working with one of them to jointly define this new architecture and how it will help us move toward 10,000 qubits and beyond. So on these specific milestones, you will see us adopt a collaborative model.
Cantor Fitzgerald analyst Kieran McCabe: M&A opportunities and capital expenditure decisions. Question: With about $500 million in cash and a market pullback, are you seeing inorganic (M&A) opportunities becoming more attractive? Or is the trade-off between in-house development and M&A roughly the same as earlier this year? I also have a follow-up. Answer (Subodh Kulkarni): Good question. We certainly continue to watch the market and look for potential opportunities, but we will only consider them if they can help us accelerate the roadmap or have truly critical strategic value. Clearly we have not yet seen any targets, which is why we have not acted. Fundamentally, we remain convinced that our superconducting gate-based technology path is the most likely to dominate the market, because we have advantages in speed and scale. Looking at the current landscape, our Cepheus-1-108Q, as I said earlier, is second only to IBM's 120 qubits in terms of qubit count on the public cloud — we are right behind it, followed by Google's 105 qubits, with the rest below 100 and most companies far below 50. So M&A for the sake of M&A, or M&A to boost sales, is not, in our view, the right strategy at this stage. We remain focused on developing key technical metrics; but if an opportunity with major strategic value that could accelerate the timeline emerges, we will consider it. Question: My follow-up is related. The Department of Commerce agreement — I am thinking more broadly, not just the $100 million to you and funding for other quantum computing companies, but also investment in fabrication — once it is in place and finalized, has it changed your future capital expenditure decisions in any way?
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