Rigetti ComputingRGTI

Rigetti is scheduled to report its second-quarter results after the market closes today. Analysts expect the company to report a loss of about 5 cents per share on roughly 10 million dollars in revenue. While the company has a history of beating these estimates, the numbers themselves are currently less important than the progress of its technology.

We are watching for two specific things: growth in revenue from cloud and on-site system sales, and updates on the 1,000-qubit system. For a company valued at several billion dollars on very little revenue, any sign that the technical roadmap is slowing down or that customers aren't signing up for the new Cepheus-1 system could be a problem.

See the full quarter, and how our tracked metrics did

Key highlights

• Quantum system scale up: Rigetti launched its largest system ever, the 108-qubit Cepheus-1-108Q, which uses twelve interconnected 9-qubit chips to prove its modular building block design works. This is a significant jump from the prior 36-qubit version and confirms the company can scale its hardware by tiling smaller chips together.
• Hardware revenue growth: Revenue tripled to $4.4 million compared to $1.47 million a year ago, driven by the sale of on-premises quantum processors to customers like the University of Saskatchewan. While total sales are still small, the 199% growth shows increasing demand from researchers who want to own their own quantum hardware rather than just renting it through the cloud.
• Fidelity improvements continue: The company reached a 99.8% performance rate, or fidelity, on its 9-qubit system and saw prototype results as high as 99.9%. High fidelity is a measure of how often the computer completes a calculation without an error, and hitting these marks is necessary for quantum computers to eventually outperform traditional supercomputers.
• Significant international investment: Rigetti plans to invest up to $100 million in the United Kingdom to build a quantum system with more than 1,000 qubits within the next three to four years. This long-term expansion is a major step toward the company's goal of building large-scale machines that can solve useful real-world problems.
• Strong cash position: The company holds $569.0 million in cash and investments, which provides a large safety net to fund expensive research and development. This capital is critical because the business still had an operating loss, which is the money lost running its core operations, of $26.0 million this quarter.

Our take: A productive quarter that shows Rigetti is successfully scaling its hardware. Tripling revenue and launching a 108-qubit system are major milestones that prove the technology is moving out of the lab and into customer hands. The long-term case is much stronger now that the modular chip design is working at this scale.