Rigetti bets on government funding and hybrid computing as it battles coherence times
Q2 report highlights Commerce LOI, HPE collaboration, and persistent technical constraints
RGTI · Earnings Call · 2026-08-06
A quarter of strategic validation
Rigetti’s second-quarter 2026 report was punctuated by three strategic catalysts: a letter of intent with the U.S. Department of Commerce for up to $100 million in CHIPS Act funding, an expanded collaboration with HPE and the Pittsburgh Supercomputing Center, and continued progress on its 108-qubit Cepheus system. Subodh Kulkarni, CEO, framed the quarter as a proof point for the company’s chiplet-based approach: “The letter of intent we signed with the U.S. Department of Commerce for up to $100 million in funding over 3 years further validates our superconducting chiplet-based approach and strengthens our ability to invest against our road map to Quantum advantage.” — Subodh Kulkarni, Chief Executive Officer · 2026-08-06 This funding, if converted to a definitive agreement, would support multigenerational processor development at Fab-1 and deepen Rigetti’s engagement with the U.S. government. The HPE collaboration, which involves delivering a 9-qubit Novera system into the Pittsburgh Supercomputing Center’s TangleLab, is a tangible step toward hybrid quantum-classical computing. Kulkarni highlighted the speed advantage of superconducting systems: “our gate speeds are in the 50 nanosecond, 60 nanosecond range, which are roughly 1,000x to 10,000x faster than trapped Ion or atoms or other modalities.” — Subodh Kulkarni, Chief Executive Officer · 2026-08-06 The company expects delivery in 2027, and while early, it signals a pivot from cloud-only access to on-premises hybrid infrastructure. The C-DAC order in India and the U.K. ProQure initiative reinforce the global demand for on-premises quantum systems, with U.K. government funding and Department of Commerce backing extending Rigetti’s reach beyond the academic sphere.The coherence wall and the push to fidelity
Despite the strategic wins, the core technical challenge remains coherence time. At the 108-qubit scale, coherence times of 25–30 microseconds are the primary limit on 2-qubit gate fidelity. Management is targeting 99.5% median fidelity for Cepheus-1-108Q later this year, up from the current ~99.1%. Kulkarni was candid about the difficulty: “our current coherence times are in the 25 to 30 microsecond range, and we are executing on a set of chip design and material initiatives intended to roughly double or triple those times over the next several years.” — Subodh Kulkarni, Chief Executive Officer · 2026-08-06 This includes joint IP with Fermilab using tantalum caps and refinements in Josephson junction processing. The company has also made progress on the 36-qubit front, improving median 2-qubit gate fidelity to 99.6%, and management noted that design optimizations are now being incorporated into production chips. The scaling path was articulated in the prior quarter: “We need to get that to 36 qubit next and 108 qubit, so we'll push on that as fast as we can.” — Subodh Kulkarni, Chief Executive Officer · 2026-05-11 The company also reiterated its confidence in achieving DARPA Phase B, a theme that has been a recurring focus. In the prior quarter, Kulkarni noted: “we feel pretty good that we should be in Phase B by the end of this year” — Subodh Kulkarni, Chief Executive Officer · 2026-03-05 — a sentiment echoed in the current call, though timelines remain uncertain. Looking further out, the path to 1,000 qubits will require not only better coherence but also advances in cryogenics, control electronics, and error correction.Financial reality: revenue inflection but valuation still rich
Revenue in Q2 grew 199% year-over-year to $4 million, driven by on-premises Novera QPU sales, and gross margin expanded to 31.3%. However, the company’s operating loss widened to $33 million, and it continues to burn cash. Management’s cash position is strong—approximately $541 million at quarter end—and they have no debt, but the potential equity issuance implied by the Commerce LOI will be dilutive. The market valuation remains extreme: Price to revenue has fallen to 465.8x, still a multiple that implies massive future revenue, and far above any sustainable level for a company generating $4 million per quarter. The stock sits 68% below its October 2025 peak, reflecting the violent regime shift in high-multiple growth names. Yet for believers in the path to quantum advantage, the funding and partnership momentum provide a credible runway.That philosophy is now being tested by the market’s valuation skepticism and the technical hurdles ahead. Rigetti’s strategy of leveraging Pittsburgh Supercomputing Center collaborations and coherence time research is a clear competitive differentiator, but execution will determine whether the company can pivot from research curiosity to commercial reality.We are not managing the business around short-term revenue optimization. We are managing it around credible long-term progress toward Quantum Advantage and commercially relevant systems.