Rigetti Computing, Inc. Price & Performance (RGTI)

These filings identify and address important risks and uncertainties that could cause actual events and results to differ materially from those contained in the forward looking statements. We urge you to review these discussions of risk factors. Today, I'm pleased to provide an update and report on our progress at Rigetti Computing. Rigetti recently entered into a strategic collaboration agreement with [indiscernible] A Taiwan based global Fortune 500 company, and a global leader of computer server manufacturing, with the goal of accelerating the development and commercialization of superconducting quantum computing, DIGETE and Quanta have committed to investing more than $100,000,000 each over the next five years pursuant to the collaboration agreement, with both sides focusing on their complementary strengths to develop superconducting quantum computing technologies. In addition, Quanta will also invest $35,000,000 to purchase shares of Rigetti common stock subject to regulatory clearance.

Konta's collaboration with Rigetti is designed to strengthen our position in this flourishing market. Our company's complementary strengths Rigetti as a pioneer in superconducting quantum technology, with open modular architecture enabling integration of innovative solutions across the stack, And Quanta has the world's leading notebook server manufacturer with $43,000,000,000 sales will support us in our goal to be at the forefront of the quantum computing industry.

On the sales front, I'm pleased to report that we sold a Novera QPU to Montana State University in December 2024. Which was our first QPU sale to an academic institution. The Novera will be located at MSU's Cucor to educate and train scientists and engineers on quantum computing technologies in addition to being used to create a test bed for quantum computing R and D. MSU's Q Core a new center of excellence for quantum enabling technologies established to accelerate workforce development and the regional quantum innovation ecosystem. I should also note that in addition to the MSU sale, there was an additional Novera sale in the fourth quarter to the UK government. On the technology front, we launched our 84 qubit AMGARD three system in December 2024. Onka three features an extensive hardware redesign that enables superior performance.

We achieved major two qubit gate [indiscernible] successfully having the error rates in 2024 to achieve a 99% median ISFOP gate fidelity and demonstrating 99.5% median [indiscernible] Our newest flagship quantum computer continues to feature Riget's scalable industry leading chip architecture with three d signal delivery while incorporating major enhancements to key technologies. Anka three is available to Righetti's partners via our Rigetti Quantum Cloud Services Platform and to the general public via Microsoft Azure and Amazon Bracket. In other developments, AI power tools from Quantum Elements and Cruise remotely automated the calibration of irrigated QPU integrated with Quantum Machines system. This work was part of the AI for Quantum calibration challenge hosted at the Israeli Quantum Computing Center. The two companies participating in the challenge Quantum Elements and Cruise, automated the calibration of a nine cubic rigidity Noveira QPU Integrated with Quantum Machine's advanced OPX1000 control system, and NVIDIA DGX Quantum a unified system for quantum classical computing that NVIDIA built with quantum machines. This achievement showcases the potential of AI in quantum and also highlights the growing collaboration within the quantum computing ecosystem. [indiscernible] and Quantum Machines are members of Rigetti's [indiscernible] an ecosystem of quantum computing hardware software and service providers who build and offer integral components of a functional quantum computing system.

We believe that another advantage we leverage our modular approach to developing our technology. By enabling our partners to integrate their technology with us, we can explore and advance creative and flexible ways to improve quantum computing capabilities. In summary, we believe that superconducting qubits are the winning modality for quantum computers given their fast speeds and scalability. We have developed critical IP to scale our systems and remain confident in our plans to scale to 100 plus qubits by the end of the year with a targeted 2x reduction in error rates from the error rates we achieved at the end of twenty twenty four. We believe our leadership in superconducting quantum computing continues to be reinforced as we push the boundaries of our system performance as evidenced by the success of Amkkar three, Thank you. Jeff will now make a few remarks regarding our recent financial performance. Thanks, Zubaud.

Revenues in the fourth quarter of twenty twenty four were 2,300,000.0 compared to $3,400,000 in the fourth quarter of twenty twenty three revenue is an important part of our strategy to fund our ongoing research initiatives. Renewal of the U. S. National Quantum Initiative, sales to U. S. And foreign governments, and Nuvera are all important to future sales. Gross margins in the fourth quarter of twenty twenty four came in at 44% compared to 75% in the fourth quarter of twenty twenty three. The lower gross margins on a year over year basis were due to ongoing revenues from our contract with The U. K.'s NQCC to deliver a 24 cubic quantum system which has a lower gross margin profile than most of our other revenue. On the expense side, total OpEx in the fourth quarter of twenty twenty four was $19,500,000 compared to $19,700,000 in the same period of the prior year.

Stock compensation expense for the fourth quarter of twenty twenty four was $3,400,000 compared to $3,700,000 for the fourth quarter of twenty twenty three. Net loss for the fourth quarter of twenty twenty four was $153,000,000 or $0.68 per share compared to a net loss of $12,600,000 or $0.09 per share for the fourth quarter of twenty twenty three. The non cash change in the fair value of derivative negatively impacted our net loss for the fourth quarter of twenty twenty four by $135,100,000 dollars compared to a favorable impact of $4,600,000 the comparable prior year period.

The derivative warrant and earn out liabilities are non cash in nature and Rigetti will never be required to pay cash to settle these obligations. Cash, cash equivalents and available for sale investments totaled $217,200,000 as of 12/31/2024, During the fourth quarter of twenty twenty four, we received net proceeds of $153,300,000 from the sale of 88,100,000.0 common shares through a registered direct off and completion of our at the market equity offering. We also prepaid in full all of the remaining amounts owed under our loan agreement with Trinity Capital Inc. We believe that our existing balances of cash, cash equivalents and marketable securities should be sufficient to meet our anticipating operating [indiscernible] for at least the next three years, based on our current business plan, and expectations and assumptions considering current macroeconomic conditions. Thank you. We would now be happy to answer your questions.

Our first question comes from the line of Craig Ellis of B. Riley. Please go ahead, Craig. Yes. Thanks for taking the question and congratulations on the partner progress and the Nuvera QPU sales. So Subut, I wanted to start off by following up on the Quanta announcement. And the question is this, can you help us understand the deals Genesis were you reaching out to them, they to you, And over what time period has this deal been gestating? And is there anything exclusive about any of the technology that you or they would develop underneath the agreement?

Thanks, Craig. So yes, it's an exciting partnership announcement we did with Quantum Computer. As our announcement said, Quanta is a large company based in Taiwan with almost $43,000,000,000 in [indiscernible] They are well known for both their laptop as well as server manufacturing I believe they have the number one market share in GPU servers right now. So we are a close partner of companies such as NVIDIA, Apple and many other companies. They on their own have been looking around for how is the best way for Quanta Computer to get into quantum computing because they clearly view quantum computing as the next big thing after GPUs. And they've always done that. They have always been on the leading edge of the new technology curves. So they were searching for the right partner. They did their own homework. Looked at all the different modalities, decided that superconducting gate based quantum computing is the most likely modality to win. Within that, we are clearly a leader competing right at the top along with IBM and Google. So we don't know all the companies that they talk to, but they certainly started talking to us close to a year ago or so.

So we have been discussing with them for a while now. On our side, we know that we cannot be building the commodity type items of the hardware stack in Berkeley or Fremont, California.

Doesn't make any sense. Given the cost structure in those places. So we were looking for appropriate contract manufacturers in the long term as volumes pick up who's the right contract manufacturer for us.

So it was a mutual decision where we thought they are the right potential partner given the critical role they play in CPU, GPU servers today. They believe that we are the right partners a technology standpoint. Clearly, one of our needs was to have money and that's what they offer is, as you can see, they are buying $35,000,000 of our shares at $11.59 pending regulatory clearance. But more importantly, they have committed to more than $250,000,000 over the next five years to be invested in the non QPU portion of the hardware stack. So essentially going forward, we will continue to focus as we always have on the quantum chip fabrication part and will be responsible for the whole stack but we will start relying on them as our contract manufacturer for things such as the control system, the dilution refrigerator, cables and all other accessories. That are extremely important, but just not that high value add. So we believe it's a right partnership. In the long term, we certainly are counting on them to help us out on that part. And certainly, the between the cash we already have plus the $35,000,000 they will give us for shares plus $250,000,000 commitment we effectively have close to $500,000,000 right now to be invested in the next five years.

So we feel really good about that position and how we can deploy that investment to accelerate the pace of our quantum computing development. Hopefully that answers your question.

Yes, that's very helpful. And I think it is significant that as a leader in first X86 servers and now GPU based servers, they've chosen to partner up with you and and certainly with significant financial commitments The second question I wanted to ask was related to your take on where we stand with government funding recently. There was bipartisan bill introduced by Senators Danes and Durbin regarding $2,500,000,000 of potential funding for the U. S. Government Can you just give us an update on where things stand federally in The U. S. And and your views on what that might be able to do Sure. So as you correctly said, there is a buy partisan bill that has been introduced for about $2,500,000,000 for over five years.

Most of that is slated to go to the DOE labs such as Fermilab, Oak Ridge National Lab and other DOE labs that we depend on for our funding. That seems to have bipoditional support. There's no indication it won't go through, but as of today, it hasn't been signed yet. We are optimistic that it will get signed here soon and then the money gets appropriated to the right DOE labs. We are hoping that somewhere in the second quarter of this year, the money will start getting appropriated, so we can start getting contracts from those DOE labs.

In addition to DOE, DOD has several initiatives going on right now to fund quantum computing The biggest one being the DoD, DARPA, Quantum Benchmark Initiative, QBI, We expect them to make some very important announcements in the month or so to which is the group of companies that they have chosen going forward to build they call utility scale quantum computing. Basically, that's like the world's best biggest quantum computer that has to be built by 02/1933 time period. And they have $700,000,000 more than $300,000,000 budget for that. In addition to that, there are several other line items in the DoD bill that will be able to fund quantum computing. So overall between DOE and DOD, we are expecting sizable increase in U. S. Government investment in quantum computing. We are just waiting for the bills to get signed and the money to get appropriate But we are pretty optimistic as this as 2025 rolls along a sizable amount of investments will be available from DOE and DoD And then finally for me before I hop back in the queue, Regarding cash, congratulations on getting it to such a significant level. The first question related to that is, does it change at all how you look at near term intensity for either R and D or sales and marketing?

And then the longer term question since Jeff did indicate potential sufficiency for the next three years or so How do you feel about its ability to get you to a level where the company is self funding?

So as I mentioned earlier, we have $217,000,000 as Jeff mentioned, dollars 1,000,000 at the end of last year. Plus we have this commitment from Quanta for $35,000,000 plus the $250,000,000 So [indiscernible] Of the numbers, we have roughly $500,000,000 available to us for the next five years, which is a sizable amount of money given our burn rate. As Jeff said, at least for three years, we don't need to worry about cash and probably longer. Certainly, we hope that this government initiatives get funded by the U. S. Government, the U. K. Government where we have very good relationships well as some others friendly governments around the world that we have been talking to Assuming those initiatives materialize, we certainly hope we don't need to raise cash. We'll certainly look at opportunities, but it's not that we need to raise cash. Those initiatives materialize and we manage to get the contracts.

But clearly, we are in an R and D stage right now. We don't believe commercial sales to increase anytime immediately know there's a lot of discussion going around as to where exactly quantum computing is in terms of sales [indiscernible] Our general view is we are still in R and D. We are still roughly about four to five years away before commercial sales matter which is why we keep highlighting that it's R and D milestones that are far more important right now than this one off government type contracts. We certainly welcome those and we want those and as government increases the budget substantially, we will certainly depend on those to help us get [indiscernible] positive cash flow in the next three, four years. But our focus right now continues to be squarely on R and D and making sure we are in the lead superconducting quantum computing. Hopefully that answers your question.

Yes, that's very helpful, Subhad. Thank you. Thank you.

Thank you. Our next question comes from Quinn Bolton of Needham and Company. Hey, guys. This is Shadi on for Quinn. My first question is on the QPU sale to Montana State University. You guys discuss if the sale to MSU was a competitive process? And if so, what was some of the feedback from the university that led to them choosing Rigetti Thanks, Jon. I mean, as you know, we have been building nine cubic QPU and making it available to customers, particularly academic researchers and government national life tech customers, not quite classic data center type customers. The real objective of enabling that is to build a quantum ecosystem and it's all for research applications. It's clearly the Montana State University is a research case where they are to understand the fundamentals of quantum computing So they are doing basic experiments with those like pulse shape, pulse sizes, really understanding how to design algorithms and those kinds of things. So gets to the fundamental understanding of quantum computing. You're really not going to use a nine qubit QPU to try to compete with our CPU or GPU. So it's really not meant for the practical application or demonstrating quantum advantage or anything.

It's all for research purposes. It's a nice convenient product to have in your lab, where you can get hands on experience, It fits into many of the research we're customers in this area already have purchased a dilution refrigerator for various reasons. And the nine cubic QPU is a relatively simple product that fits into your existing dilutions refrigerator it's a really simple thing to ship, get it integrated into your system and you can start working with it fairly quickly. So it's a fairly user friendly way to get into fundamentals of quantum computing ecosystem. Hopefully that answers your question.

Yes, it does. Thanks for that. And then I want to follow-up on Craig question and sorry if I missed this, but is that DOE Quantum Leadership Act the same bill as the National Quantum Initiative Act, but reintroduced as a different name? Or are these two different bills going through Congress?

No, there's only one bill. Right now, it is the same one that Craig mentioned introduced by Senator Deane Sanderham it's a $2,500,000,000 initiative over five years.

Got it. And then one quick modeling question. What can we expect the share count to be in Q1? Yes. I think in terms of share count, we we ended the year at 200 and call it 84,000,000 shares So I would think let's say $2.90 would be my estimate.

Awesome. Thanks for taking my questions and congrats on the progress.

Thank you. Thank you. Our next question comes from Chris Sankar of TD Cohen.

Hi. Thanks for taking my questions.

This is Steven calling on behalf of Krish.

As you both, I guess first one for you regarding technical milestones for the year.

Specifically on the scaling front for the nine qubit modular tile architecture.

So I know you guys have a target of reaching 36 qubit chip in by middle of this year and then over 100 qubits by the end of the year. I was just kind of wondering this level of scaling should we assume that that rate of scaling can continue in future years as well? Or are there certain physical limitations to the packaging or processing process in terms of like reticles or [indiscernible] And also related to it from an error rate standpoint, You mentioned having or [indiscernible] 2x reduction in error rates by the end of this year. Just wondering if all of the I guess the aggregate of different software algorithms and other improvements that you guys are working on with internally and with partners, can that error rate be outperformed or You currently are estimating?

Sure. All very good questions, Steven. So I'll try to answer them. So regarding let's take an assessment of where we are First, as a modality, I mean, you can clearly see what's going on in the quantum computing world with superconducting, gate based quantum computing. I mean, between our announced plus Google, below chip announcement plus the recent announcements from companies like Amazon, Microsoft, even the Chinese Academy of Sciences, which is the government of China sponsored organization, To us, it's becoming absolutely evident that superconducting gate based quantum computing is the most likely winning modality here. I mean the amount of investment going on from all the large companies and organizations But look at the data, I mean, collectively, we are in the roughly 100 qubit range right now Collectively, we are in the 99 to 99.5% median two qubit gate fidelity We are in the 10s of nanoseconds gate speed, which I'll point out is 10,000 times faster than some other modalities like trapped ion or pure atoms. And we are already deploying real time error correction with low latency. We did that, Google did that with the below chip announcement. So when we look at collectively where superconducting modality based quantum computing modalities stands to us, it becomes very clear that this is the modality that's most likely going to bend within that, we have our share of challenges.

None of us are demonstrating quantum advantage yet. And I'll say that across the board for all modalities. I mean, you'll hear all kinds of hype going around and there's a lot of hype going around in quantum computing. None of us have demonstrated quantum advantage We are all getting to that point. And at least on the superconducting gate based quantum computing side, We believe we need to get to several hundred qubits, maybe 1,000 qubits we need to get to like 99.7% median two qubit gate relative maybe 99.8 less than thirty nanosecond gate speed and real time error correction to demonstrate quantum advantage. And that's where our roadmap and believe IBM Google's roadmap is comparable to ours. We are all looking at roughly about four or five years, maybe five years to demonstrate quantum advantage and and commercial business to take off. Now having said that, how do we get from the current about 300 qubits we are all at to 1,000 qubit.

And that's where I think different approaches start coming in. Our view is that chiplet is a key tool that we are planning on using to scale up. And we did some early work with 40 qubit chips in the low like about two, three years ago, then more recently last year we did more with nine cubic chips. Demonstrated a couple of different times that you can tile chips and still maintain all your quantum effects and see no deterioration in performance, which is a huge important milestone to demonstrate. Having done that twice now, now this is the year we have decided to start deploying it in a more of a volume manner, So our first important milestone is demonstrating four times nine quatt so that would be 36 qubit by the middle of this year and demonstrate 99.5% or better median two qubit gate fidelity And assuming we are successful and we are fairly optimistic, we will be successful with that milestone, then bump it up to more than 100 qubit by the end of this year. It certainly is a big milestone for Rigetti, but believe it's a huge milestone for the whole industry because it's it's the first time anyone of us is going to show a real path to get to thousand qubit Right now, all of us, even though we are at 100 qubit, we know that getting to several hundred qubits from where we are right now with a single monolithic chip is a challenge.

See that in our data We believe IBM tried to go to four thirty qubits a year ago and they had some challenges, which is why you don't find it deployed right now.

And certainly, when we look at other modalities, I don't even think they are anywhere close to what we are talking about one hundred and hundreds of qubits and stuff like that. So our view is that triplets is a critical technology. It We have shown that it works in quantum computing. Obviously, the CMOS world has shown that chiplets are critical. I mean, if you look at any high end applications with CMOS today, most of them do use chiplet and there's a good reason for that. Because it's a lot easier to control uniformity and performance over a smaller dimension chip, physical dimension chip than a larger dimension chip. So it's no reason for us to reinvent the wheel so we are using all the learnings from the semiconductor industry and CMOS industry in specific and deploying chiplets, we feel pretty good that we will demonstrate four nineteen by the middle of this year and then we'll bump it up to over 100 qubit And assuming we are successful with that, that we believe is a really good way to scale it up to several hundred and several thousands of qubits. Just to give you a feel, our nine cubic chip right now is six millimeter by six millimeter and we certainly think we can shrink it down by a factor of two.

That's fairly standard with using conventional semiconductor technologies. We could even get more aggressive and reduce it further. Even with the current dimension, if you take one meter by one meter panel, you can fit in more than 500,000 qubits and suddenly we believe the division refrigeration technology will advance enough for us to maintain cool temperatures across a meter by meter square panel in about five years And so we feel pretty good that we should be able to get several hundred thousand qubits maybe even more than half a million cubic in about five years or so by using the chiplet approach. You correctly pointed out that the challenge does become packaging to some extent. So we will have to improve the way we are packaging to chips when you're doing it only for four or ten or even one hundred you can do manual or semi manual methods Certainly, when you are dealing with thousands and ten thousand you will need to automate that. But you look at the current state of advanced packaging from the semiconductor industry side, There are several advanced processes that have been developed and we will be able to leverage them and take advantage of them So putting together several hundred thousand tiles, if you will, and certainly several 10,000 tiles is not that challenging given the state of art and semiconductor industry.

So pretty exciting roadmap. We feel pretty good about it. That's our path to get to several hundred thousand qubit and like the utility scale quantum computer that DARPA is challenging all of us with.

So hopefully, I answered most of your questions. Did I miss any?

It was very helpful and very instructive. Explanation to ask you about Thank you so much for that. And just one quick follow-up more for Jeff on the P and L and cash flow side of things. In terms of the Quanta computer collaboration and I guess $100,000,000 that you guys are committed to guess, investing from your side. Is there how should we think about like the the expenditures of that $100,000,000 over five years Is that really like a cash investment in terms of equipment of some sort or is that just the course of existing R and D and will it flow through OpEx or CapEx? Any details there would be helpful.

Yes, I mean, it really is continuation of our ongoing R and D efforts. So it really will flow through OpEx in the context of our R and D team and with our capital plans and so on. So I don't think from our side you really see anything too different other than than the benefits that we're going to get from partnering with Quanta and taking advantage of their expertise in areas outside of QPU.

Thanks Jeff. And just as a follow-up, I guess incremental $100,000,000 spending, is that would that represent a step up to sort of annual spending or are there offsets to account for that? No, I mean, in our side, it really is a continuation of our ongoing R and D effort. So there really isn't any specifics step up per se at all on our side. On their side, they've committed to investing $250,000,000 in furthering our roadmap and so on.

Perfect. Thank you so much. Thanks, Steve.

Thank you.

Our next question comes from Richard Shannon of Craig Hallum. Your line is open, Richard.

Great. Thanks, Subodh and Jeff for letting me ask a couple. Questions. Guess my first one, Subodh, is following up on the prior discussion here on the roadmap for this year. I specifically wanted to ask about the approach to getting to the 100 plus qubits this year. Is this using kind of the tiling approach kind of extending on the 4x9 one you said you're trying to hit midyear or is this kind of pacing more monolithic one, the Anka three. Can you kind of help us understand what the scaling approach here is?

Certainly, our roadmap is relying on styling to hit the 4x9 demonstration force by the middle of this year. Assuming we succeed with that, we will go let's say, 12 by nine to get more than £100 like £108 or something like that. But we certainly have the option of using the monolithic approach, which is what others like IBM and Google are doing right now, and we have done all these years too. So we certainly have the option of bumping up the 84 qubit chip to a higher qubit count. But we believe targeting is the right way to go in long term. So we are going to definitely try to get first the 4x9 and assuming that succeeds 12x9 or something like that.

Okay. So we're just kind of a one track here in terms of using tiling going forward here. NOCA has been more of kind of demonstration or will be entirely focused on tiling going forward. Is that fair to think?

Yes, it's fair to think. And the main reason for that is because we can see in our data that going the monolithic chip approach is going to be extremely difficult once you are in the several hundred qubits going to several thousand qubits.

As I've mentioned in my previous answer, IBM tried a four thirty qubit chip and there's a reason why they haven't deployed it, we believe, because they also ran into the same challenges that we are seeing [indiscernible] I mean the whole CMOS industry has learned it for a decade now, right? It's very hard to build a large single monolithic chip. So we are finding the same issues. The root causes are exactly the same. Uniformity and yields and those kinds of things. So given all the information we already have, we decided that timing is the right way to leverage the approach that the CMOS industry has done. So it's a great job and rely on that. Once we have proven that, the quantum effects can be sustained across an interposer with triplets, then the path becomes very clear for us. But it's important to keep demonstrating one at a time. So we will demonstrate four by nine first already did the work with 2x9 last year and 2x40 a couple of years ago.

Although at that time, the fiddities were not as good as what we are dealing with right now. Now we are dealing with 99.5% type nine cubic chips. So we want to make sure that when we tile them, we don't see any deterioration in the Fidelity performance. It's important to demonstrate the four ninety nine at 99.5 we love this year, assuming we succeed, certainly our roadmap will be very tiling oriented. [indiscernible] Perfect. Thanks for that, Sabote. My second question is following up on one of the topics mentioned in the press release as well as I think in the press release on this topic I think in December or January regarding joint research with QBox and Q Blocks.

Here. Maybe if you can just kind of talk us through how this accelerates your scaling and Fidelity roadmap, that'd be great to hear about as well.

So, sure. So it was an exciting announcement we did with Q Fox and Q Blocks and it gets into signal in, signal out. Right now, we are using coax cables to send the signals to our chip and get the signals back from our chip. Most of the industry we believe does that right now.

We are all looking at, but there's a reason why we want to move away from coax cables and the main reason is cost and the physical dimensions of a coax cable.

I mean right now we are all in the 100 cubic range, even 150 or 200 cubic range is not a big deal.

We can live with coax cables. But once you go to 1,000 qubits and 10,000 qubits, cost with co head cables will be prohibitively high And the bigger issue is physically you don't have enough space in your dilution refrigerator unless you start bidding monster division refrigerator, which will be very expensive So we need to find a more practical way to get the signal in, signal out So we are looking at flex cables. We have a lot of IP in that area and we'll certainly start deploying but are not your standard off the shelf flex cables because we are dealing with superconducting temperatures. There's a lot of materials and process innovation that's going on in flex cables and we are working on that.

Some other companies are also working in that area like IBM and Google, I believe. So we'll first go from coax to flex. But beyond that, we need to think about even at like 100,000 cubic or above, even flex cables will have their share of challenges in fitting into a Doctor. And that's where optical signaling comes in. So a lot of work has been going on with converting our microwave signal, if you will, or our RS signals into optical signals, The key part about our joint work that we published in Nature in December was using fiber optics So instead of open air optics, now we are dealing with fiber optic signal in, signal out, That makes it a lot more practical to build a system instead of just open air optics. So it's a key technology demonstration that you can use fiber optic to get the signal into a superconducting chip and get the signal out Now that that is available, we will certainly start investigating fiber optics and at what point should that come into our roadmap? As of today, we haven't decided when to go from coax to flex to fiber optic, but certainly by the time we reach several hundred thousand cubic we believe we will need to be with fiber optic So hopefully that answers your question.

That is helpful. Thanks for all that, Sabod. My last quick question here is just on the DAPRA benchmark. Project or opportunity here. I think you said you expect some decision here in the not too distant future. You can help us understand the process for this award here or is not even the end step here? And then what opportunity do you see from a revenue perspective over time if you're successful in winning part of that?

Yes. So DoD's DARPA agency effectively is has invited proposals from anyone and we certainly have submitted The goal and you can go to the website and see a lot of the publicly disseminated information. The goal is to build a utility scale quantum computer by 02/1933. And really what it means is you can do anything that your classical computing can do, but much, much faster and much, much cheaper. Than what your classical computing can do. It's really effectively a moonshot type effort. So this is like the U. S. Government's official, let's build a world's best biggest quantum computer type project, man on the moon kind of a project. We certainly have applied. I'm sure others have to. They have said that they will make a decision here soon, hopefully, yet this month. Typically, the way DARPA projects of these kinds of complexity work is they choose a handful number of to and then they ask those companies to demonstrate the next set of milestones and then they'll pick a couple of companies, maybe one company, [indiscernible] Overall scope of the project is somewhere in the $300 plus million range. I already told you the timeline is before 02/1933.

We certainly our goal is to be the last company out there and build a the computer. So this will be the world's biggest, best quantum computer be delivered to DARPA by 02/1933. But there are various hurdles to go through We certainly believe our technology is in a very good shape to make a compelling case, particularly with these superconducting gate based modality, as I said, In our view and based on all the announcements you are hearing from other companies to it becomes pretty evident to everyone, I believe, that most likely modality to win is superconducting gate based modality. Within that, with our open modular approach, the chiplet IP that we have, we believe we are fairly well positioned to try to win the DARPA project. We certainly are excited to be participating in it. We look forward to their selections and we'll continue to work on our technology program. Expect that, we will continue to work on our technology milestones. I mean DARPA is a huge opportunity and lot lots of money associated with it. But there's a bigger market out there. I mean, we have already said that the market is we believe like a couple billion dollars five years from now for all these national labs and universities.

We believe the market is going to be like 100 plus billion dollars in about fifteen years from now.

So certainly an exciting opportunity. So as important as the DARPA project is and we certainly want to be winning that one because that clearly demonstrates technology leadership. The The bigger potential of course is the commercial world and $100 plus billion opportunity. That we'll continue to look at.

Again, I hope I have answered your question there.

That was very helpful, Subodh. That's all for me. Thank you. Thank you.

Thank you. Our next question comes from Brian Kingslinger of Alliance Global Partners. Your line is open, Brian.

Great. Thanks so much. First, you mentioned your plan to scale through tiling right now. Given the challenges that all of the superconducting OEMs have, Is their approach scaling also through tiling? Are they trying to figure it out? Where are they with tiling compared to you?

So certainly we are designing on tiling. I believe IBM has made some statements suggesting that they are also considering tiling like exact dimensions will be different But I believe we have discussed timing openly We are not quite sure of Google and what exactly their plan is at this point. They did indicate in their paper when they published the results that they have some share of challenges to go up from where they are. They are using what we call perimeter wiring right now.

So all of their circuit is basically designed in two d.

And to increase the cubic county, how to keep increasing the perimeter, if you will, of the chip, which you can do up to a certain point, but not beyond that.

We believe Google will first move to three d which is what we and IBM are doing right now.

And beyond that, they will probably consider it adding to, but we are not quite sure because they haven't disclosed all their details. But certainly, we are on tiling. IBM is considering tiling. And frankly, we view the three of us as the leaders in this space. We are not quite sure of what the Chinese Academy of Sciences is considering. It's very hard to get information from there. Regarding the rest of the superconducting, I mean, even though they are large tech companies like Amazon and Microsoft and many other smaller companies I mean Amazon's most recent announcement, they were still talking eight qubits and same with Microsoft. So even though they are much larger companies and they are in terms of quantum computing, I believe they have some serious work ahead of themselves to get to the 100 qubit type level that we, IBM and Google are at right now.

We certainly view ourselves along with IBM and Google in the leadership position. And how we go about solving this scaling a problem, I'm sure the other companies will be looking at us. Great. My follow-up that kind of leads into the next one.

With your open source architecture, what does Amazon's announcement about faster and more cost efficient error correction mean for Rigetti versus the rest of the superconducting quantum OEMs And then my second question is, as organizations like DARPA, DoD and others evaluate you do they communicate being more excited about an open source flexible architecture Or does that not yet come up in the discussion?

It absolutely comes up in discussions when we talk to National Labs, not just our DOE and other government national labs too. The fact that our architecture is open and modular in nature is a significant plus in our favor because fundamentally it allows creative innovative solutions from other third parties to be incorporated relatively I mean IBM and Google obviously are doing a great job of building a quantum computer right now along with hers. But this is a more mainstream like approach right now. And again, we don't know what the Chinese Academy of Sciences is doing, but I suspect it's a mainstream like approach to. And that's great because you control all aspects of the full stack. But if there it's very hard to integrate a innovative creative solution in that kind of an approach. If that kind of an approach. Whereas with our open modular we can relatively easily do that. So specifically, I mean, River Lane in U. K. Cambridge U. K. Is a company that developed some really good error correction software and we started integrating that in our systems last year. And that's how we showed real time low latency error correction, which was a very important milestone in the industry.

And this new announcement by Amazon to even though the chip is being built by Amazon itself, the eight cubic chip, I mean the real value in that paper is the error correction software. And certainly, we will be open to looking at integrating that error correction decouple it from their chip, And I suspect they may be incentivized to look at other 100 cubic type high performing chips certainly opens up the avenue where we can integrate creative innovative solutions from third parties quickly into our stack. My last question is, it's a really quick one. Just want to make sure I have the numbers right. If you get to 100 qubits at 2x better error rates, Is because we have started using two numbers now in our Fidelity. I saw it. Confusing. Yes, exactly. So we use 990% with what's called as an iSwap or a CZ kind of gate gets really geeky at this level. Different kind of gates. And then there's a unique gate that we call SM gate where we get 99.5% today. That's what we have today. So when you have multiple gates, you are monitoring fidelities now. That's why we decided to start using the phrase 2x reduction in error rates across both of them.

So the 99 will go to 99.5 and the 99.5 will go to 99.75. You said?

That's what I said. Okay. Makes sense. Thank you so much.

Thank you, Brian. Thank you. Our next question comes from David Williams of The Benchmark Company. Please go ahead, David. Hey, good afternoon. Thanks for taking my question. I'm jumping on late here, so excuse me if this has already been asked. But Savo, you talked about in the past your architectural and your IP differentiation and you talked about maybe Google and some of the others where you really can differentiate yourself from an IP perspective. Can you talk a little bit about what that means relative to maybe some of your competitors what Sure.

So within the superconducting gate based quantum computing companies, certainly we monitor IBM, Google, very closely. We cannot really monitor the Chinese Academy of Sciences that closely. As I mentioned in an earlier question, even though Amazon, Microsoft play in this general space, they are at fairly low Qbit count right now, like eight units. And the rest of the startups or smaller companies in superconducting gate based are quite distant behind us right now. The two companies we basically look at very closely from what exactly they're doing are IBM and Google. And I'm sure they're monitoring us too. And IP becomes a very critical part. We have to two thirty patents right now. That is a core value of the company. So how do we differentiate from IBM and Google? The main thing is our architecture. We just were talking about it. We have an open model or stack approach. Versus they have more like a mainframe approach. The other area where we are. And we believe the open modular approach is better in long term because it allows us to integrate creative innovative third party solutions much more easily. That's why we continue to invest in that approach.

The other area where we have a clear differentiation from them right now is the whole chiplet area. Our plan, as we have already demonstrated, chiplets in quantum computing once with 40 qubits, last year with nine qubits, our plan is to scale up multiple chiplets, different to your tiles to get the 36 qubits first and then more than 100 qubits by the end of this year and then take that approach to continue to scaling up from there.

We believe IBM will do something similar based on some of the statements they have made. Google hasn't made their plans very clear as to how they plan to scale up to 1,000 and several thousand cubits. So we we will look at that. And then there are some other more details gets into more details of how we design the chip and fabricate the chip and the rest of the stack. And the differentiation that comes in. We have talked in the past about a proprietary annealing process called ABAA where we are doing DC pulses effectively through the entire area of the cubit We believe our competition is doing laser annealing type approach as we believe the ADA annealing is a lot faster, easier to scale up compared to and it's actually more uniform and controls the frequency targeting a lot more precisely than the annealing approaches And then there are some we touched earlier on flex cables and that kind of stuff. So probably 10 other things that how we differentiate ourselves from them really gets into the details and the patents and how we file the patents and the scopes that they cover and so on.

But hopefully that gave you a feel for how we are differentiating. Our main differentiators are our open modular architecture, [indiscernible] chiplet approach and a few other things like annealing, Great. That's very helpful. Thank you for that. And then maybe this is a follow-up. Do you think that your IP is compelling enough that over time others will need to develop around your IP Or how do you think about maybe consolidation just given your rich patent portfolio and what that would mean for some of the others?

I mean, that's the whole goal of patents, right? I mean, when you come up with creative innovative ideas, you you file patents and you try to get as broad coverage as possible So when others try to essentially copy that idea, they are forced to either find a completely different route making it inefficient or have to seek a license from you. I think it's still too early, David, to know all the answers. I mean, clearly IBM and Google are gigantic companies and they have their own patent portfolios. Usually in cases like this, most of us in the tech in the R and D field who have dealt with these kinds of complex patent portfolios We find ways to collaborate and cross license in critical areas. Sometimes it can be licensing terms and we just we want to make sure ecosystem is healthy and stays healthy and everyone gets fairly compensated for the work they have done. At this point where we are clearly in our end to the goal is to get the technical milestones patent portfolio established, Over time, we'll see how the licensing and cross licensing scenarios evolve.

Perfect. Thank you. Then just one last, if I may. Just on the customer demand, for QPUs, could you talk a little bit about how that demand is? And if you're you think that maybe trends through this year?

Yes. Certainly, we see excitement growing about quantum computing. People are beginning to it's no longer a question of if, it's a question of when. Everyone seems to understand that when we talk to them. But clearly, it's still in R and D stages. Unlike some other companies we believe we are still four to five years on commercial applications of quantum computing. In a meaningful way. I know there are some companies who claim they have quantum advantage or near advantage now, but those are for very select niche kind of applications. There's a lot of overhyping, underhyping going on in quantum computing right now. So our view is that we are still very much in R and D. We need to get to like post several hundred qubits or 1,000 qubits, 9099.7% or 99.8%. Less than thirty nanosecond gate speed and real time error correction, before we can start showing quantum computers to data center managers and demonstrating ROI And we think that's at least four or five years from now. And that's more or less consistent from IBM and Google too. So I don't think we are that different than IBM or Google right now in that sense from a timing standpoint.

So our view is all the customer demand, if you will, as you called it, is mostly from academicians and research people mostly to understand the fundamentals of quantum computing. That's why the numbers are going to be relatively small Yes, sales matter and we want to continue to grow, but our focus is clearly on R and D milestones right now and making sure that technology is perfected before we worry too much about customer demand and uptick in sales.

Great. Thanks so much.

Thank you, David. Thank you. Our next question comes from Craig Ellis of B. Riley.

Please go ahead, Craig.

Yes.

Thanks for taking the follow-up question. It's really just to clarify part of fourth quarter's announcements And I suspect it's mostly for Jeff. Regarding the two QPUs that were sold, one to the U. S. Academic and institution, the other to The UK. Did those both fully rev rec in the quarter? And then Jeff, I think you said there was still part of a UK system sale that existed in fourth quarter sales. Where are we in fully rev recing that system? Does it trail into 2025? And if so, to what extent? Thank you.

Sure. The two noveras did fully rev rec in Q4. And then regarding the kind of the larger ongoing sale to MQCC, that revenue has been taken over time and it will be largely complete in the first quarter, maybe a little bit moving into the second quarter.

But don't really expect anything from that in the latter part of the year.

Got it. Thanks, Jeff.

Thank you. I would now like to turn the conference back to Sabote for closing remarks.

Sir?

Thank you for your interest and questions. We look forward to updating you with our progress at the end of Q1. Thanks again.

This concludes today's conference call.