Rigetti Computing, Inc. (NASDAQ:RGTI) reported its second-quarter financial results after the closing bell on Tuesday.

Below are the transcripts from the second quarter earnings call.

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OPERATOR

Good day and thank you for standing by. Welcome to The Rigetti Computing Second Quarter 2025 Financial Results Conference call. At this time all participants are in a listen only mode. After the speaker’s presentation there will be a question and answer session. To ask a question during the session you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised to withdraw your question. Please press star 11 again. Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your speaker today, Dr. Subodh Kulkarni, Chief Executive Officer. Please go ahead.

Subodh Kulkarni (CEO)

Good afternoon and thank you for participating in Rigetti’s earnings conference call covering the second quarter ended June 30, 2025. Joining me today is Jeff Bertelsen, our CFO who will review our results in some detail following my overview. Our CTO David Rivas is also here to participate in the Q and A session. We will be pleased to answer your questions at the conclusion of our remarks. We would like to point out that this call and Rigetti’s second quarter ended June 30, 2025 press release contain forward looking statements regarding current expectations, objectives and underlying assumptions regarding our outlook and future operating results. These forward looking statements are subject to a number of risks and uncertainties that could cause actual results to differ materially from those described and are discussed in more detail in our Form 10K for the year ended December 31, 2024, our Form 10Q for the three and six months ended June 30, 2025 and other documents filed by the company from time to time with the securities and Exchange Commission. 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 report that we continue to achieve our ambitious roadmap goals and maintain our momentum on the technology front, most recently by demonstrating the industry’s largest multi chip quantum computer with impressive performance. Our Multi chip Quantum Computer CPS 136Q, the industry’s largest multi chip quantum computer, is released for general availability and deployed on the Rigetti quantum cloud services platform QCS and will be available on Microsoft Azure thereafter. Just six months after our record performance with Aspen M-3, we have once again halved our error rates with a median 2.99.5% CPS 136Q has achieved a 2x reduction in 2 qubit gate error rate from our previous Anka3 system. CPS 136Q is the first multi chip quantum computer in the industry to achieve this level of performance with 4 chips. CPS 136Q contains the largest number of chiplets in a quantum computer and further validates our approach to scaling Rigetti’s quantum computers. It’s our view that superconducting qubits are the leading modality for quantum computers due to their ability to scale and their ability to achieve gate speeds more than 1,000 times faster than other modalities like ion traps and pure atoms. Our superconducting qubits leverage technologies like chiplets that have been maturing in the semiconductor industry for decades. Use of these well established methods enables Rigetti to scale its quantum computers to higher levels of performance and qubit counts. This legacy of technological advancement continues with the CPS one architecture and includes the following features that contribute to improved performance. Transitioning from a monolithic chip to chiplets enables greater control over chip uniformity which in turn improves performance. Leveraging chiplets also reduces manufacturing complexity and improves fabrication yield. Optimized two qubit gates enable faster gate times while reducing coherent errors which improves fidelity and is important for executing quantum error correction techniques. These improvements enabled a 2x reduction in error rates. Advances in multi layer chip and tunable coupler design also enables higher performance. Our industry leading proprietary chiplet approach to scaling makes us confident that we will hit our end of year technology goals. We believe quadrupling or chiplet count and significantly decreasing error rates is a clear path towards quantum advantage and fault tolerance. We intend to continue our momentum and expect to release a 100 plus Qubit chiplet based system at 99.5% median two Qubit gate fidelity before the end of 2025. While we are pleased with our sequential growth in quarterly revenues, we believe achievement of our technology milestones remains the key metric to achieving our long term success. On the financing front, I’m pleased to report that Rigetti has significantly strengthened its balance sheet. During the second quarter of 2025 Rigetti completed the sales of 350 million gross proceeds of its common stock pursuant to our previously disclosed at the Market Equity Offering program. We are well positioned to support commercial scale up of our superconducting gate based quantum computers. Thank you Jeff. Will now make a few remarks regarding our recent financial performance.

Jeff Bertelsen (Chief Financial Officer)

Thanks Subodh revenues in the second quarter of 2025 were 1.8 million compared to 3.1 million in the second quarter of 2024. On a year over year basis Our revenue for the quarter was impacted by expiration of the National Quantum Initiative and its pending reauthorization in the U.S. congress. Renewal of the U.S. national Quantum Initiative sales to U.S. and foreign governments and Novera’s sales are all important to future sales. Gross margins in the second quarter of 2025 came in at 31% compared to 64% in the second quarter of 2024. The lower gross margins on a year over year basis were impacted by revenue mix and variability in the pricing in terms of our development contracts, including our contracts with the UK’s NQCC for Quantum Systems, which have a lower which have lower gross margins than most of our other revenue. On the expense side, total OPEX in the second quarter of 2025 was 20.4 million compared to 18.1 million in the same period of the prior year. The increase in total OPEX was due to annual salary increases, new hires and higher consulting costs, mainly in research and development. Higher costs for our annual shareholder meeting due to the increase in the number of beneficial owners of our stock also contributed to the increase. Stock compensation expense for the second quarter of 2025 was 3.6 million compared to 3.3 million for the second quarter of 2024. Our operating loss for the second quarter of 2025 came in at 19.9 million compared to 16.1 million in the prior year period. We recorded a 39.7 million net loss for the second quarter of 2025 compared to a net loss of 12.4 million for the second quarter of 2024. Our net loss for the second quarter of 2025 includes non cash charges for the change in the fair value of our derivative warrant and earn out liabilities which had a 22.8 million unfavorable impact on our net loss for the quarter. Derivative warrant and earn out liabilities had a 3.4 million unfavorable impact on our net loss for 2Q20. As of June 30, 2025, we had approximately $571.6 million of cash. Cash equivalents and available for sale investments and no debt.

Subodh Kulkarni (CEO)

Thank you. We would now be happy to answer your questions.

OPERATOR

As a reminder to ask a question, please press star 11 on your telephone and wait for a name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q and A roster. Our first question comes from Troy Jensen with Cantor Fitzgerald. Your line is open.

Cantor Fitzgerald Equity Analyst

Hey gentlemen, first off, congrats on all the great traction here.

Subodh Kulkarni (CE)

Thanks Troy.

Cantor Fitzgerald Equity Analyst

Hey, so Subodh for you maybe to. Start off with just use of proceeds, you’ve got a ton of money on the balance sheet now, I mean, is the intention to accelerate R&D, do a little M&A or just kind of a cushion on the balance sheet to fund, you know, operating losses?

Subodh Kulkarni (CEO)

Our focus, Troy, continues to be on R and D development. We will obviously look at every opportunity to accelerate our timeline. Right now we believe we are funding R and D adequately to hit the milestones that we have laid out. As you saw, we demonstrated a 4 by 9 qubit multi chip system. We are going to be deploying it as we speak. Our plan for the end of the year is to deliver a multi chip 100/qubit system with 99.5% 2qubit gate fidelity and from there on to continue to increase the fidelity as well as qubit count using chiplet approach. Every opportunity we get to accelerate that timeline, we continue to look at it and we will do so. At this point we believe we are still about three to four years away from getting to the thousand plus qubit 99.9% fidelity with error correction and gate speeds of less than 50Ns, which is when we achieve quantum advantage. If we can accelerate that timeline using our strength and balance sheet, as you correctly pointed out, we will obviously look at that. But I believe right now we are still looking at roughly about four years to get to that quantum advantage point. Hope that answers your question.

Cantor Fitzgerald Equity Analyst

Yeah, it does, very much so. Just with respect to OPEX would assume just kind of sequential growth going forward, but no big, no big, you know, stepping, no big leaps in spinning.

Jeff Bertelsen (Chief Financial Officer)

Yeah, Troy, I think that’s a good summary for right now anyway. So, you know, as Subodh said, we’re adequately funded in R and D, but we’ll look for opportunities. But right now I don’t think we anticipate any significant uplift.

Cantor Fitzgerald Equity Analyst

Okay, perfect. And maybe just one follow up. Could you just give us an update on Quanta Computer? You know, what they’re doing, what we can’t see to kind of satisfy their commitment here with your investment. Other investment in Rigetti.

Subodh Kulkarni (CEO)

Sure. So as we have disclosed in the past, Quanta is a very strategic partner for us on the hardware side outside the QPU area. So we continue to stay focused on the QPU side. Quanta will invest is investing right now on the non QPU portion of the hardware stack. That primarily means control system and the rest of the hardware stack. Right now their focus is to essentially come up to speed in control systems and our goal is to get them up and running with control systems that work with RQPUs fairly soon here in the next few quarters. Once they’re up to speed in quantum computing and control systems, they will obviously accelerate development of that, allowing us more focus on the QPU side. So they continue to be a very good and very strategic partner for us. The partnership is going really well. We are excited to co develop the quantum systems, our quantum systems with them. Hopefully that answers your question.

Cantor Fitzgerald Equity Analyst

Yeah, no, that’s great guys. Keep up the great work.

Subodh Kulkarni (CEO)

Thank you.

OPERATOR

Thank you. Our next question comes from David Williams with the Benchmark Company. Your line is open.

Benchmark Equity Analyst

Hey, good afternoon gentlemen and congrats on meeting the targets on the Cepheus chip. That’s impressive. I guess maybe Subodh. Last time we spoke you had, you were, you had confidence that you could get to this 99.5, but said that. You had a little bit of work. To do and you clearly hit that here, I guess. How confident are you in being able to parlay that on the 100 qubit chip? And are there any major, I guess, steps or challenges ahead of you in order to get that 100 qubit at the same fidelity?

Subodh Kulkarni (CEO)

Thanks David, for the question. Certainly getting to 4 chiplets with 9 qubits to the 36 qubit level was a significant accomplishment this last quarter and we are really happy to get that. Regarding our question about 100 + Qubit, we are confident we’ll get there with 99.5% 2 Qubit gate fidelity before the end of this year. The beauty of the chiplet approach is once the fundamental architecture is defined and the performance is there, scaling up becomes a lot easier by definition. And that’s the whole reason for the chiplet approach. You intrinsically are using the same 9 qubit chip multiple times and that gets you, you get better uniformity on your wafers, you get better years. And it really allows us to get a perfect 9 qubit chip and then replicate it multiple times. Which is why the semiconductor industry uses chiplets with the CMOS technology right now for all your advanced applications. So all the reasons that help semiconductor CMOS industry with chiplets are the same reasons why we chose the chiplet approach. Now that we have proven that it works at this high fidelity, our confidence is fairly high that we will get to 100 plus qubit and beyond. Frankly, we really need to get to 1000 qubit and multi thousand qubits here soon to get to that quantum advantage point and then fault tolerant quantum computing beyond that. So our confidence is fairly high. But obviously this is still Technology development and challenges will always be there. So we are not taking it for granted by any means and we’ll continue to work hard to get it there. Hopefully that answers your question.

Benchmark Equity Analyst

No, it absolutely does. And I guess the follow up to that would be do you think that your roadmap can be accelerated beyond. I know you’ve talked about three to four years, but it seems like you’re making just such great progress on the scalability side that you might be able to accelerate that, even though maybe the error correction is lacking. Do you think you’ll hit one of your targets maybe on the qubit side before you get to the others that you talked about this three to four years out?

Subodh Kulkarni (CEO)

Thanks. We will certainly try to accelerate our timeline from that four year to quantum advantage. Having said that, there are chiplets certainly helps us quite a bit to achieving that milestone. At the same time, there are other important metrics as well. I mean, we talked about getting to 1000 qubit for that quantum advantage or more, getting to 99.9% or better. 2 qubit gate fidelity error correction, as you correctly pointed out, has to be there too. And also improving the gate speeds to better than 50 nanoseconds faster than that. There are other challenges. In the Dilution refrigerator, there’s a lot of cables that we use right now. Right now we are still using primarily coax cables. And when you get to 1000 qubit or higher, your density of cables and other components in the Dilution refrigerator become quite intense. So you have to start looking at things like flex cable technology and other things that, that we will encounter. So there are. I don’t want to make it sound simply that just because chiplets have been demonstrated, it’s a relatively easy path and will be able to accelerate the timeline. From what we have already told you, we’ll certainly look at opportunities. But there are multiple, there are multiple dimensions we need to tackle. And that’s where the number roughly four years comes from. And our view is that four years is probably the fastest any of us in the quantum computing space can get to quantum advantage. We have already quantified what our view is. To get to quantum advantage, you need a minimum of thousand qubits, you need a minimum of 99.9%2 qubit gate fidelity. You need to be faster than 50 nanosecond gate speed and you need error correction. None of us doing gate based quantum computing are there yet by any means. And that’s where the four years comes from. So even though you may have heard about some companies Talking about quantum advantage now and very soon. Our view is that it’s going to take time to hit those four things and certainly for some modalities like trapped ion and pure atoms where they have fundamental science challenges to improve their gate speeds to get to these tens of nanoseconds. I mean right now they are dealing with hundreds of microseconds and have some serious scientific fundamental inventions needed situation on hand to get to the gate speeds that you need to get to to get demonstrate practical quantum advantage. So you continue to look at opportunities to accelerate and we hope we find them. But the realistic timeline is what we are using for quantum advantage in about roughly four years with those four things that I mentioned earlier. Hopefully that answers your question. Yes. Fantastic.

Benchmark Equity Analyst

Thanks so much for the color and you’ve certainly done a good job hitting. Your milestone so far. So we’ll certainly be looking for that acceleration. I appreciate it. Thank you.

Subodh Kulkarni (CEO)

Thanks David.

Operator

Thank you. Our next question comes from Krish Sankar with TD Cowen. Your line is open.

TD Cowen Analyst

Hi, this is Stephen calling on behalf of Krish. Thanks so much for taking my questions. Subodh if I could start first I want to explore the M and A related question again I guess just with the stronger balance sheet that you guys have now. And I guess I want to get your view on kind of current valuations on quantum assets currently and is MA an important part of your growth story. Over the next year or two and. Specifically just asking related to like more adjacent technologies whether it’s semi manufacturing, advanced packaging or software related capabilities.

Subodh Kulkarni (CEO)

Thanks Stephen. We will continue to look at opportunities where M and A could help us with our timeline. Our view is that we are very much in technology development right now. The timeline that we have laid out the four years to quantum advantage is primarily within our control right now. If we find opportunities in M and A where we can accelerate our timeline, we will certainly look at that. As of today we don’t see anything out there that can help us. We are in the in the leadership camp right now when it comes to overall quantum computing performance. There’s probably a couple of tech giants that have one or two critical metrics that are ahead of us. But besides that, I mean frankly those tech giants are out of our league to consider M and A. Besides those kinds of opportunities. We really don’t see anyone out there who is anywhere close to VR. So we are quite a bit ahead of everyone when it comes to technology right now except for a couple of tech giants in a couple of key metrics. So really we don’t see any tactical opportunity to use M and A to help us with our timeline acceleration. But we’ll continue to look at that and if there are opportunities out there, we’ll certainly not be shy to exercise those opportunities.

TD Cowen Analyst

Got it. That’s helpful. My second question is related to gate speeds. You kind of mentioned it at first that getting below 50Ns is important for ultimately reaching quantum advantage for the industry. I think previously you mentioned you guys were around 70Ns currently and just kind of curious. If you can provide some thoughts on the roadmap for getting to sub 50Ns and also what are the implications in terms of overall quantum system performance? Is it a benefit or a boost to coherence times fidelity rates in terms of the overall productivity and performance of the system? If you could help provide some color, that’d be helpful.

Subodh Kulkarni (CEO)

Good question, Stephen. I mean the four things that we have mentioned to get to quantum advantage are the qubit count, which we believe has to be minimum 1002 qubit gate fidelity, which we believe has to be minimum 99.9% error correction, and then gate speeds faster than 50 nanoseconds. Of the four things, we feel most confident that we will be able to get to gate speeds faster, gate speeds relatively quickly. That’s not the redetermining factor, if you will, to get to quantum advantage. We are, as you correctly said with Anka 3, we are at about 70Ns. We are deploying CPS One right now, which is a little faster than Anka 3, as my remarks pointed out. We are still quantifying it, but it will be in the 50-60Ns type range. We certainly think we will be able to accelerate that faster. So getting to 50Ns or faster is not that difficult. Honestly, we believe gate speed is extremely important. Ultimately you are building a quantum computer. Speed absolutely matters. So once you combine all the metrics, gate speeds are going to be critical when it comes to time for performing any operation and completion kind of tasks. Our view, as we have pointed out multiple times before, is that a quantum computer is not going to exist in a silo in some kind of a quantum network. It is going to sit in existing Data Centers with CPUs and GPUs in form of a hybrid system. It will have to interface with existing networks. So I think our view is that you need to design a quantum computer that fits into the overall data centers, which means that your clock speeds and other metrics have to be commensurate with CPU GPU clock speeds. And for that you do need the quantum computer to be faster than 50Ns. One would argue even that is on the slower side compared to CPUs and GPUs. But at least there is a chance to be able to use that gate speed to stay up with CPU and GPU clock speeds. But once you start talking the hundreds of microseconds that some other modalities like trapped ion or pure atoms use, you’re really like thousand times, if not 10,000 times slower than superconducting quantum computers and certainly CPUs and GPUs. And that makes it really hard to think about a quantum computer existing in current data center using current networks. So our view of a hybrid system using existing networks really forces you to talk about tens of nanoseconds of gate speeds. Hopefully that answers your question.

TD Cowen Analyst

Yes, super helpful. And just a quick follow up housekeeping item for Jeff. Jeff, like post the equity raise. What share count should we be modeling for? Q3?

Jeff Bertelsen (Chief Financial Officer)

Sure. So we, you know, I would say, you know, roughly, you know, 300, say 27 million ish. Roughly.

TD Cowen Analyst

Perfect. Thank you so much.

OPERATOR

Thank you. Our next question comes from Quinn Bolton with Needham and Company. Your line is open.

Needham Equity Analyst

Hey guys, congratulations on the nice results and the technical milestone for the mid year. Wanted to start just with that sort of the roadmap on the size of the chiplet versus the number of chiplets. In your tiled approach it sounds like you’re going to stick with the 9qubit QPU for the near term. But getting to 1000qubits if you stuck with a 9qubit solution would require over 100chiplets. I’m kind of wondering when do you start to see a trade off between the number of chiplets versus the number of qubits on a given chiplet. Where is that sweet spot do you think? Where do you think that sweet spot ultimately ends up?

Subodh Kulkarni (CEO)

A good question, Quinn. Honestly we don’t know the answer right now as to what. When exactly would be the right time to transition from a 9 qubit chiplet to something higher. Clearly we will do it before we get to thousand qubits as you correctly said. Otherwise we are talking about more than 100 chiplets and that will start putting unnecessary pressure on the packaging side and no reason to push push it that hard at this time. Certainly there’s more flexibility on the size of the chiplet itself. So we’ll stay with 9qubit at least until we get to the 100/qubit milestone before the end of this year and then for next year’s milestone, which will be higher qubit count and better fidelity than this year, we will look at options of staying with 9 qubit or trying to attempt something bigger like 16 qubit, some square number. So 16, 25, 36 kind of qubits for the next chiplet size. We are doing the work right now to decide which is the next optimal chiplet size. But certainly once we go over a few hundred qubits, we will be using a higher qubit count chiplet to get to 1000 +qubit.

TD Cowen Analyst

As you go to larger square qubit tiles, would that require any significant capex on the equipment in Fab 1 or do you think the existing equipment set should allow you to go to sort of any reasonable square number of qubits. On a single tile?

Subodh Kulkarni (CEO)

There will be some. There’s always going to be some need for new capital or upgraded capital for our FAB in Fremont, California. We continue to do the necessary investments there. We don’t see anything. Our Anka 3 chip, if you will, was 84 qubit at roughly 1 by 1.5 centimeter. And the 9 qubit chip that we are dealing with chiplet right now we are dealing with is 6 millimeter by 6 millimeter. So suddenly we have capability to handle a chip if you will, up to 1.5 centimeters. So we don’t think we need something drastically different for FAB to get a higher chiplet size. Packaging is certainly an area we are looking at right now as we start building more than 10 or 20 chiplets. Do we need better quality packaging equipment or do we need something different? We are doing that work right now, but we don’t think some significantly new equipment with very very high price tab is needed at this time to get to the higher qubit count. Got it.

TD Cowen Analyst

Okay, that’s great. I wanted to move on just to. You mentioned one of the four requirements for quantum advantage would be the quantum error correction. And I know this year’s milestones are really around the tiled approach and hitting 100 qubits with 99.5% fidelity by year end. You know, as you get to that hundred plus qubit solution by year end, when do you think you start trying to implement the low density parity check error codes that I think you guys had submitted as part of your QBI DARPA program.

Subodh Kulkarni (CEO)

Correct. And quantum error correction is obviously a very important area long term and it will become more and more of a discussion as we get into 20, 26 and beyond this year, we are, you are correct, we are focusing much more on the fidelity side and increasing the qubit count to more than 100 qubit. We continue to work on quantum error correction on our own along with our partner River Lane in Cambridge, uk we have done jointly, we have done some excellent work demonstrating real time error correction to some level, low latency error correction. And then we will take that work to get to real time error correction soon. But there’s a lot of work to be done on that front. We believe we need several hundred qubits at 99.7 or 99.8% or something along those lines to truly demonstrate the value of error correction in a real time sense. So we are not quite at that point on the hardware side to try the sophisticated error correction codes like the QLDPC code that you referred. We are a year or two away from starting to do that kind of work. Hopefully that answered your question.

TD Cowen Analyst

Yeah, it did. And then lastly, just any updated chatter on when the DOE National Quantum act or the reauthorization of NQI might make it through Congress. Does it feel like there’s any momentum there? Is it going in front of committees? Are there hearings being held, you know, in Congress to try to advance that bill towards signage?

Subodh Kulkarni (CEO)

Yes, absolutely. It looks like there’s bipartisan support. There has been bipartisan support for a while and it continues to be the case. There are several versions of the NQI reauthorization bill that are in different committees and a lot of hearings have happened in the last few months along those lines. The House has multiple versions, the Senate has multiple versions. Nothing has been consolidated, consolidated down to a single version yet. We hope that happens in the next few weeks or months and it becomes NQRE Authorization Act. Obviously we are looking forward to getting that done and signed, but hasn’t happened yet. But certainly support seems to be there and all the hearings that we have participated in ourselves as well as following looks like it’s going to happen. It’s just a question of when, not if.

TD Cowen Analyst

Got it. Okay, thank you.

Subodh Kulkarni (CEO)

Thanks Glenn.

OPERATOR

Thank you. Our next question comes from Richard Shannon with Craig-Hallum Capital Group. Your line is open.

Craig-Hallum Equity Analyst

Hi Sabha, this is Tyler Anderson on for Richard and congrats on all the work this quarter. I was wondering do you have any feedback or updates from QBI or NQCC to give?

Subodh Kulkarni (CEO)

I mean we certainly talk to both of the organizations, the DARPA organization as well as NQCC organization on an ongoing basis. They are very much aware of our progress with NQCC as we have disclosed in the past, there are several active projects that are going on right now. One of them being upgrading their existing 24 qubit system to what we have right now In California, the 4 by 9 qubit chiplet type system. So we are going to be working with them to upgrade their system along with demonstrating some other fundamental technology blocks like optical interconnected connects and other things. So those projects are ongoing. We will continue to disclose appropriately as we hit some technology milestones or publish some papers with darpa. We clearly are in phase one right now. They will be narrowing the group down for phase two before the end of this year. We certainly are optimistic given our results and where we are, that we will make it to phase two. But it’s ultimately DARPA’s decision. Key differentiation from everyone else’s, our open modular approach as well as the chiplet design. We clearly believe this is a leadership system that we have introduced with four chiplets. So I’m sure that will play a huge role in dark box decision making. So we continue to stay optimistic on that front. But we will find out when they decide before the end of this year. That’s great.

Craig-Hallum Equity Analyst

And then do you have any timeline on when you plan to reach a 16 tile chiplet and are there any learnings that you’ve had from transitioning back.

Subodh Kulkarni CEO)

To the chiplet approach? Well, there’s plenty of learnings that we have derived from going, going to, from monolithic chip to chiplets. A lot of it is part of our know how as well as many of the patents we have filed in this area. Certainly you can take a look at our patent portfolio. Many, many of those patents have started issuing now and you can take a look at what exactly we cover in those patterns. It’s obviously very important, critical piece of IP for us to be the first and foremost in demonstrating chiplet and having a proprietary approach to scaling up. There’s a lot of learning. I mean you clearly have to design the qubits appropriately because you are using chiplets, not a single chip. So you need to adjust the geometries and the wiring layouts and so on. Not very different than what we have learned in the CMOS industry when we use chiplets. If you look at all the work that happened a decade or so ago in the CMOS industry to incorporate chiplets in advanced devices. Some of the things are similar that we are learning, but some are because by definition we are coupling qubits across the chiplets through an interposer. There are some new things that we are uncovering as we go along. And that’s where a lot of know how is getting developed and IP is getting developed.

Craig-Hallum Equity Analyst

Okay, and then are you planning on staying with a square layout for your tiles and piggybacking off of Quinn’s question, do you have any range that you could give for the logical qubit overhead for QLDPC codes?

Subodh Kulkarni CEO)

So for the timing, we’ll continue to stay with the square chiplets. So right now it’s nine. As I mentioned to Quinn, we’ll probably look at a higher number before we go to 1000 copyrights. We are pretty sure we’ll look at a higher number before we go to a thousand qubits. Up to 100 will stay with nine for sure. But beyond that we’ll look at higher number than nine. Regarding the whole discussion of logical qubit, as you probably are well aware, I mean there’s no clear definition of logical qubits. A lot of it depends on the error correction and how you lay it out. So we’ll continue to stay with physical qubit and fidelity, which basically gives you effectively logical qubit. So once you are in that 99.9% thousand plus qubit range, we believe we will get to an overhead of 10 to 1 or better. But it’s all projections right now. I mean, no one has demonstrated anywhere close to 100 logical qubits yet. So our predictions say that once we are at that thousand plus qubits at 99.9% 2 qubit gate fidelity or better, we will be in that range. But we need to get there. But really a lot depends on the definition of logical qubits and error correction and so on. So you continue to use physical qubits and two qubit gate fidelity and metrics like that, which are clear and not controversial. Otherwise you get into, once you say logical qubit, you have to define what a logical qubit is, how you did your error correction, and then numbers are all over the place at that one, making it very difficult to compare. Hopefully that answers your question. That does. And I got one more.

Craig-Hallum Equity Analyst

Speaking of controversial, so does having this chiplet, Is that garnering any more attention towards people getting any more on premise systems, whether it’s from people who you’ve already sold to or someone new?

Subodh Kulkarni CEO)

I mean we certainly right now we deal with the US government, the UK Government as our two primary customers, if you will, and we continue to talk to some other governments on a selective basis. All of them are very interested in the chiplet approach. Our belief, and many of those customers believe as well, is this is truly the only scalable way to get to more than a thousand qubits. None of us see how you can take a single monolithic chip and take it to more than 1000 qubits and certainly to tens of thousands and hundreds of thousands of qubits, which you eventually have to to get to a fault tolerant quantum computer. So everyone sees chiplet as a necessary component to get to fault tolerant quantum computing. So when we talk to the DOE’s DODs, the UK National NQCC, they all understand the strategic value of chiplets and demonstrating that to get to fault or on quantum computing. Hopefully that answered your question.

Craig-Hallum Equity Analyst

It does, and I agree with the statement on the need for triplets. Thank you. I appreciate your time.

Subodh Kulkarni CEO)

Thank you, Tyler.

OPERATOR

Thank you. Our next question comes from Brian Kinstlinger with Alliance Global Partners. Your line is open.

Alliance Global Partners Equity Analyst

Thanks for taking my question. While we both can agree that the Most important metrics today are based on progress in your roadmap, and you clearly stated that you still have four years left on that roadmap to achieve quantum advantage, is there some combination of your four metrics that begin to drive revenue or larger scale orders in your opinion?

Certainly. We agree that right now it’s all about technology development and technology metrics. That’s the most important thing. Obviously sales, we monitor, we report, we are dealing with primarily government labs and academic institutes right now. Sales, as you call them, they are more like research contracts. They are one off. So we will continue to participate with DOE, DoD, UK government and other governments as appropriate as we really don’t believe that those numbers, one off numbers, they can fluctuate very widely, are really representative of what’s happening. But at the same time, yeah, the government, national labs, universities are interested in getting on premise quantum computers for research applications, not for production workflows, not in their data centers or anything like that, but for research applications. And as we continue to get closer and closer to quantum advantage, you are going to see see more and more of those orders. If you look at the national quantum missions, if you will, of various countries starting the U.S. we are talking substantial numbers. I mean the NQI reauthorization, the number we talked about is $2.5 billion over five years. So that’s roughly $500 million a year. The DOD DARPA initiative is already, they have disclosed it to be more than half a billion dollars for the current QBI initiative. And there will be more projects, projects like that from the DoD side. Then you go to the UK, you’re talking of hundreds of Millions of dollars. And many other countries in the western world, along with some other select countries in Asia, friendlier countries in Asia, they’re all talking about hundreds of millions of dollars a year and some of that will be used for on premise quantum computers. And we will continue to look at those opportunities to participate on a selective basis. So even though it’s not our focus, we’ll continue to use look at those opportunities and we are pretty confident we will get those opportunities. But by no means do we want that to become the focus of the company while we are continuing to work on getting to quantum advantage as fast as we can. Hopefully that answers your question. Yeah, great, thanks.

OPERATOR

Thank you. Our next question comes from Craig Ellis with B. Riley Securities. Your line is open.

B. Riley Equity Analyst

Yeah, thanks for taking the question and congratulations on the progress technically and subodh on the extended visibility that it gives you to get to a hundred qubit system and beyond that. I had a question related to how the technology advances and the way you collaborate with your partner Quanta on on the way things progress. So I would expect that at some point when you scale up to larger qubit sizes that I’m not sure what the thresholds might be, but at some point there would be systems implications and a system for a certain qubit count would have to evolve for one of a higher qubit count. The question is how do you ensure that Quant is progressing with the system development issues so that as you scale up to 100 multi hundred qubits, 1000 qubits that on the system side they’re delivering on time and that the entire system is going to be one that works really well. Thank you.

Subodh Kulkarni (CEO)

Good question, Craig. I mean certainly anytime you do a strategic partnership with anyone, you have to worry about those exact questions that your partner is capable up to speed. They are not the one ones who are going to slow you down and so on. And we will continue to work closely with Quanta. I mean they are a very, very capable company. As you know. They, they are leaders in CPU GPU servers on the cloud. Right now they have the number one market share for GPU servers. They have a significantly capable and large technical team and they are putting some of their best people on the quantum computing program right now. So we have seen no indications that they are going to to drop the ball on their side. They’re very actively involved and right now we continue to make our own control systems but we continue to basically get them up to speed. They are very capable on the CPU GPU side. So when it comes to the hybrid system side, they are going to be teaching us effectively on the CPU GPU side. So I believe the collaboration is working out great. Right now. It’s still very early days. They are coming up to speed in 2026 at least certainly before the end of 2026 I believe we will start using control systems from Quanta and then they’ll start getting into the rest of the hardware stack. So given the overall timeline for quantum advantage of about four years from now, and that’s when the volumes will start picking up in two to three years, I believe Quanta is very well positioned to help us with the acceleration ramp. I mean that’s where they really bring this trends of high volume, low cost manufacturing of these GPU servers and that’s really where we will start getting the benefit of Quantas capabilities a couple years from now when we start talking higher volumes. Hopefully that answered your question.

B. Riley Equity Analyst

It does. Thanks shubod. And then the follow up question relates to the flip side of the current state of the government funding resolution issue. No, it’s not yet signed and, and yet I wouldn’t think that that would preclude you from interacting with national labs or the DOE and talking about roadmap issues, technology progress. Can you just talk about the things that you’re able to do with some of those entities to position the business best for when we do get those funding resolutions and the team can better realize the related revenue opportunities from them.

Subodh Kulkarni (CEO)

Thank you. Yeah, it’s a good question. I mean we continue to engage very actively with both DOE and DOD right now. So even though the NQR reauthorization has not been signed and appropriated yet, our relationships continue to be very strong. So if you physically visit Fermilab and SQMS center in Fermilab, you will see several dilution refrigerator systems over there incorporating our chips. One of them is a full fledged 9 qubit system that we deployed last year. But there are many other systems that are using our chips and various experiments are being done. So along with it we talked with other DOE labs as well and you obviously are familiar with our involvement with QBI under DARPA initiative. So nothing has changed from an interaction standpoint. Everyone continues to be very interested in superconducting technology and our open modular approach, particularly the chiplet approach in superconducting computing technology technologies. So all that is progressing. Obviously they are stranded without getting additional dollars from the NQI reauthorization, so they need more money to continue their experiments. So overall the technology is progressing well. We continue to do our roadmap they are continuing to do their work. It’s just that all of us would like government to fund this initiative is at a higher level than what the current situation. But as far as I can see, our internal roadmap has not been impacted that drastically because of the lack of NQI funding so far. But we certainly want our government to step up and start funding these initiatives.

B. Riley Equity Analyst

Got it. Thank you.

Subodh Kulkarni (CEO)

Thank you, Greg.

OPERATOR

Thank you. This concludes the question and answer session. I would now like to turn it back to Dr. Subodh Kulkarni, Chief Executive officer, for closing remarks.

Subodh Kulkarni (CEO)

Thank you for your interest and excellent questions. We look forward to updating you with our progress in future quarters. Thanks again.

OPERATOR

This concludes today’s conference call. Thank you for participating. You may now disconnect.

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