Good day, and thank you for standing by. Welcome to the Rigetti Computing Second Quarter 2025 Financial Results Conference Call. 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.

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&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 10-K for the year ended December 31, 2024, our Form 10-Q for the 3 and 6 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 maintained 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, Cepheus-1-36Q, the industry's largest multichip 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 Ankaa-3, we have once again halved our error rates. With a median 2-qubit gate fidelity of 99.5%, Cepheus-1-36Q has achieved a 2x reduction in 2-qubit gate error rate from our previous Ankaa-3 system. Cepheus-1-36Q is the first multichip quantum computer in the industry to achieve this level of performance. With four chips, Cepheus-1-36Q 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 Cepheus-1 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 2-qubit gates enable faster gate times while reducing coherent errors, which improves fidelity and is important for executing quantum error correction techniques. These improvements enable a 2x reduction in error rates. Advances in multilayer chip and tunable coupler design also enable 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 that quadrupling our 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 2-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 a 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 the commercial scale-up of our superconducting gate-based quantum computers. Thank you. Jeff will now make a few remarks regarding our recent financial performance.

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 the 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 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 pricing in terms of our development contracts, including our contracts with the U.K.'s NQCC for Quantum Systems, 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 noncash 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 favorable impact on our net loss for the second quarter of 2024. As of June 30, 2025, we had approximately $571.6 million of cash, cash equivalents, and available-for-sale investments and no debt. Thank you. We would now be happy to answer your questions.

Our first question comes from Troy Jensen with Cantor Fitzgerald.

First off, congrats on all the great traction here.

Thanks, Troy.

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 operating losses?

Our focus, Troy continues to be on R&D development. We will obviously look at every opportunity to accelerate our timeline. Right now, we believe we are funding R&D adequately to hit the milestones that we have laid out. As you saw, we demonstrated a 4x9 qubit multichip system. We are deploying it as we speak. Our plan for the end of the year is to deliver a multichip 100-plus qubit system with 99.5% 2-qubit gate fidelity. And from there on to continue to increase the fidelity as well as qubit count using the 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 3 to 4 years away from getting to the 1,000-plus qubit, 99.9% fidelity with error correction and gate speeds of less than 50 nanoseconds, which is when we achieve quantum advantage. If we can accelerate that timeline using our strengthened 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 4 years to get to that quantum advantage point. I hope that answers your question.

Yes, it does very much so. But just with respect to OpEx, it would assume just kind of sequential growth going forward, but no big stepping, no big leaps in spending.

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

Perfect. And maybe just one follow-up. Could you provide an update on Quanta, what they're doing, and how we can see their commitment regarding your further investment in Rigetti?

Sure. As we have shared before, Quanta plays a crucial role for us in the hardware sector outside of the QPU area. We remain focused on the QPU side, while Quanta is currently investing in the non-QPU part of the hardware stack, which includes control systems and other hardware components. Their current priority is to improve their capabilities in control systems. Our aim is to have them operational with control systems compatible with our QPUs in the coming quarters. Once they are proficient in both quantum computing and control systems, they will expedite development, allowing us to concentrate more on the QPU side. They continue to be a valuable strategic partner for us, and the collaboration is progressing well. We are enthusiastic about co-developing our quantum systems with them. I hope that answers your question.

Our next question comes from David Williams with The Benchmark Company.

Congrats on meeting the targets on the Cepheus chip. That's impressive. But I guess maybe, Subodh, last time we spoke, you had confidence that you could get to this 99.5%. But you 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?

Thank you for the question. Achieving four chiplets with nine qubits to reach the 36 qubit level was a major milestone this past quarter, and we're very pleased with that progress. In response to your inquiry about the 100-plus qubit goal, we are confident that we will reach 99.5% 2-qubit gate fidelity before the year ends. The advantage of the chiplet design is that once the fundamental architecture and performance are established, scaling up becomes much more straightforward. This approach allows us to utilize the same nine-qubit chip multiple times, leading to improved uniformity on our wafers and better yields. This method enables us to create a perfect nine-qubit chip and replicate it, which is why the semiconductor industry currently employs chiplets as a CMOS technology for advanced applications. The factors that benefit the semiconductor CMOS industry with chiplets are the same reasons for our choice of this approach. With the high fidelity we've demonstrated, we're quite optimistic about reaching 100-plus qubits and even beyond. Our goal is to achieve 1,000 qubits and multi-thousand qubits soon to attain quantum advantage and progress toward fault-tolerant quantum computing. Our confidence is strong, but as expected in technology development, challenges will arise. We are not taking anything for granted and will continue to work diligently to achieve our goals. I hope this answers your question.

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 3 to 4 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 3 to 4 years out?

We will definitely work to speed up our timeline to achieve Quantum Advantage from the projected 4 years. The introduction of chiplets is a significant factor in reaching that goal. However, there are also other critical benchmarks we need to meet. For instance, reaching 1,000 qubits for quantum advantage or more, achieving a 99.9% or higher fidelity in 2 qubit gates, having effective error correction in place, and improving gate speeds to below 50 nanoseconds. Additionally, we face challenges related to the dilution refrigerator, particularly with the high cable density as we scale up to 1,000 qubits or more. Currently, we mainly utilize coax cables, but as we increase qubit numbers, we will need to explore technologies like flex cables. It’s important to understand that although we have demonstrated chiplets, this does not mean the path forward is straightforward or that we will accelerate our timeline beyond what we've communicated. We're considering various opportunities, but we recognize it involves addressing multiple factors, which is why we estimate about 4 years to achieve quantum advantage. We believe this period is the most optimistic timeline possible in the quantum computing field. To reach quantum advantage, we have defined the need for at least 1,000 qubits, a minimum of 99.9% fidelity for 2 qubit gates, gate speeds faster than 50 nanoseconds, and proper error correction. Currently, no one in gate-based quantum computing has achieved these requirements, which is the basis for our 4-year estimate. While some companies may claim they are close to quantum advantage, we think that these four factors will take time to address. Particularly for modalities like trapped ions and pure atoms, they face significant scientific hurdles to improve their gate speeds to the required tens of nanoseconds, whereas they are currently at hundreds of microseconds. They require fundamental advancements to reach the necessary gate speeds for practical quantum advantage. We remain hopeful about finding ways to accelerate progress, but a realistic timeline for Quantum Advantage remains approximately 4 years, following the four criteria mentioned earlier. I hope that clarifies your question.

Yes. And you've certainly done a good job hitting your milestones so far. So we'll certainly be looking for that acceleration. I appreciate it.

Our next question comes from Krish Sankar with TD.

This is Steven calling on behalf of Krish. Subodh, if I could start first, I wanted to explore the M&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 M&A 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.

Thanks, Steven. We will continue to look at opportunities where M&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 4 years to Quantum Advantage is primarily within our control right now. If we find opportunities in M&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 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, and those tech giants are out of our league to consider M&A. Besides those kinds of opportunities, we really don't see anyone out there who is anywhere close to where we are. 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&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.

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

Good question, Steven. To achieve quantum advantage, we believe there are four key metrics: a minimum qubit count of 1,000, 2-qubit gate fidelity of at least 99.9%, error correction, and gate speeds faster than 50 nanoseconds. Of these, we are most confident about reaching faster gate speeds relatively soon. Currently, with Ankaa-3, we are around 70 nanoseconds, and we are deploying Cepheus-1, which is slightly faster than Ankaa-3; we expect it to be in the 50 to 60 nanoseconds range. We feel confident that we can accelerate this even further, so achieving 50 nanoseconds or quicker is not particularly challenging. Gate speed is crucial because it affects the performance of quantum computers. They will operate within existing data centers alongside CPUs and GPUs as part of a hybrid system, requiring interfaces with current networks. As a result, the quantum computer must align its clock speeds and other metrics with those of CPUs and GPUs, necessitating speeds faster than 50 nanoseconds. Some might argue that even this is relatively slow compared to traditional processors. However, compared to other technologies like trapped ion or pure atoms, which operate in the hundreds of microseconds, superconducting quantum computers can operate 1,000 to 10,000 times faster, making them more viable in current data centers. Thus, for a hybrid system relying on existing infrastructure, it is essential to aim for gate speeds in the tens of nanoseconds. I hope that clarifies your question.

Subodh, just a quick follow-up or a housekeeping item for Jeff. Jeff, like post the equity raise, what share count should we be modeling for Q3?

Sure. So we I would say roughly $327 million-ish roughly.

Our next question comes from Quinn Bolton with Needham & Company.

Congratulations on the impressive results and the technical milestone for the midyear. I wanted to begin by discussing the roadmap regarding the size of the chiplet compared to the number of chiplets in your tiled approach. It appears that you will continue using a 9-qubit QPU for the near future. However, reaching 1,000 qubits with a 9-qubit solution would necessitate over 100 chiplets. I am curious about when you might start to find a balance between the number of chiplets and the number of qubits on each chiplet. Where do you see that ideal point ultimately landing?

Good question, Quinn. Honestly, we don't know the answer right now regarding the right time to transition from a 9-qubit chiplet to something higher. Clearly, we will do it before we reach 1,000 qubits, as you noted. Otherwise, we'd need more than 100 chiplets, which would create unnecessary pressure on the packaging side, and there's no reason to push it that hard right now. There is certainly more flexibility in the size of the chiplet itself, so we will stick with the 9-qubit chiplet at least until we achieve the 100-plus qubit milestone by the end of this year. For next year's milestone, which will have a higher qubit count and better fidelity than this year's, we will explore options for either staying with 9 qubits or attempting something larger, like 16 qubits, or other square numbers such as 16, 25, or 36 qubits for the next chiplet size. We are currently working to determine the next optimal chiplet size. However, once we surpass a few hundred qubits, we will use a higher qubit count chiplet to reach over 1,000 qubits.

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?

There will always be some need for new or upgraded capital for our fab in Fremont, California. We continue to make the necessary investments there. We don't anticipate any issues. Our Ankaa-3 chip is 84 qubit at approximately 1.5 centimeters. The 9-qubit chiplet we are currently working with measures 6 millimeters by 6 millimeters. Therefore, we certainly have the capability to handle a chip of up to 1.5 centimeters. We don't believe we require drastically different equipment for the fab to accommodate larger chiplet sizes. Packaging is definitely an area we are examining as we plan to produce more than 10 or 20 chiplets. We are assessing whether we need better quality packaging equipment or something different. We are currently undertaking that work, but we do not believe that significantly new equipment with extremely high costs is necessary at this time to achieve a higher qubit count.

That's great. I wanted to move on to your mention of one of the four requirements for Quantum Advantage being quantum error correction. I understand this year's goals involve the tiled approach and achieving 100 qubits with 99.5% fidelity by the end of the year. As you approach that 100-plus qubit solution, when do you anticipate beginning to implement the low-density parity check error codes that you had submitted as part of your QBI DARPA program?

Correct. Quantum error correction is a critical area for the long term and will become increasingly relevant as we approach 2026 and beyond. This year, we are focusing more on fidelity and increasing our qubit count to over 100. We are actively working on quantum error correction, both independently and in partnership with Riverlane in Cambridge, U.K. Together, we have achieved significant results in demonstrating real-time error correction to some extent, particularly with low-latency error correction. We plan to advance this work toward real-time error correction soon, but there is still much to accomplish in that area. We believe we need several hundred qubits operating at approximately 99.7% or 99.8% fidelity to effectively showcase the benefits of error correction in real time. Currently, we are not equipped on the hardware side to test the advanced error correction codes like the QLDPC code you mentioned. We expect to be a year or two away from undertaking that type of work. I hope that answers your question.

Yes, 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 in Congress to try to advance that bill toward signage?

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 down to a single version yet. We hope that happens in the next few weeks or months and it becomes the NQI Authorization Act. Obviously, we are looking forward to getting that done and signed, but it 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. It looks like it's going to happen. It's just a question of when, not if.

Our next question comes from Richard Shannon with Craig-Hallum Capital Group.

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?

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 4/9 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 interconnects and other things. So those projects are ongoing. We will continue to disclose that appropriately as we hit some technology milestones or publish some papers. With DARPA, we clearly are in Phase 1 right now. They will be narrowing the group down for Phase 2 before the end of this year. We certainly are optimistic given our results and where we are that we will make it to Phase 2, but it's ultimately DARPA's decision. Our key differentiation from everyone else is our open modular approach as well as the chiplet design. We clearly believe this is a leadership system that we have introduced with 4 chiplets. So I'm sure that will play a huge role in DARPA's 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. 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 to the chiplet approach?

We have gained a lot of insights from moving from a monolithic chip to chiplets. Much of this knowledge is part of our expertise and reflects in the numerous patents we have filed in this area. Our patent portfolio is available for review, and many of these patents are now being granted. They include critical intellectual property that establishes us as leaders in chiplet technology and our unique approach to scaling. We have learned that qubit design must be adapted for chiplets instead of a single chip, which requires adjustments to geometries and wiring layouts. This is similar to the lessons learned in the CMOS industry a decade ago when chiplets were first integrated. However, we are also discovering new information, particularly concerning the coupling of qubits across chiplets through an interposer, which is where we are developing significant know-how and intellectual property.

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?

For now, we will stick with the square chiplets. Currently, we are using 9 qubits. As I mentioned to Quinn, we are likely to consider a higher number before reaching 1,000 qubits. We are confident that we will look at increased numbers before reaching that threshold. Up to 100 qubits, we will definitely remain with 9. However, beyond that, we will consider a number higher than 9. Regarding logical qubits, there isn't a definitive definition. Much depends on error correction and layout. Therefore, we will continue focusing on physical qubits and fidelity, which essentially gives a logical qubit representation. Once we achieve the 99.9% fidelity in the 1,000-plus qubit range, we believe we will see an overhead of 10:1 or better, although these are just projections at this stage. No one has yet demonstrated figures close to 100 logical qubits. Our projections suggest that once we hit 1,000-plus qubits with 99.9% 2-qubit gate fidelity or better, we will be in that range, but we need to reach that point first. The definition of logical qubits and error correction significantly influence this. We will continue using physical qubits along with 2-qubit gate fidelity and similar metrics, which are straightforward and universally accepted. Once you mention logical qubits, you must clarify their definition and the method of error correction. At that juncture, the numbers can vary widely, making comparisons challenging. I hope that addresses your question.

That does. And I got one more 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?

We currently work with the U.S. government and the U.K. government as our main customers and are also selectively engaging with other governments. They are all very interested in the chiplet approach. We believe, and many of our customers agree, that this is truly the only scalable way to achieve more than 1,000 qubits. None of us see how a single monolithic chip can exceed 1,000 qubits, especially not reach tens of thousands or hundreds of thousands of qubits, which is essential for developing a fault-tolerant quantum computer. Therefore, everyone recognizes the chiplet as a crucial element for advancing towards fault-tolerant quantum computing. When we discuss this with the Departments of Energy and Defense, as well as the U.K. national NQCC, they all appreciate the strategic importance of chiplets in demonstrating our path to fault-tolerant quantum computing.

It does. And I agree with the statement on the need for chiplets.

Our next question comes from Brian Kinstlinger with Alliance Global Partners.

While we both can agree that the most important metrics today are based on progress in your roadmap. And you've clearly stated that you still have 4 years left on that roadmap to achieve Quantum Advantage. Is there some combination of your 4 metrics that begin to drive revenue or larger scale orders in your opinion?

We agree that currently, the focus is on technology development and metrics, which are crucial. While we do monitor and report sales, we're primarily engaged with government labs and academic institutions. The sales we refer to resemble research contracts and are typically one-time events. We will maintain our participation with the Department of Energy, Department of Defense, the U.K. Government, and other relevant entities. We believe that these one-off sales figures can vary greatly and are not fully indicative of the overall situation. However, it is evident that government labs and universities show interest in acquiring on-premise quantum computers for research purposes, rather than for production use in their data centers. As we progress toward Quantum Advantage, we anticipate an increase in these orders. In terms of national quantum initiatives, starting with the U.S., we're mentioning significant funding, such as the $2.5 billion NQI reauthorization over five years, which averages $500 million annually. The DoD DARPA initiative has disclosed over $0.5 billion for the current QBI initiative, and more similar projects are expected from the DoD. In the U.K., we see discussions around hundreds of millions of dollars, as well as in various other countries in the West and some allied nations in Asia, all aligning on substantial annual investments. Part of this funding will be directed toward on-premise quantum computers, and we will actively seek selective participation in these opportunities. Nonetheless, it is not our primary focus, as we aim to achieve Quantum Advantage as quickly as possible. I hope this addresses your question.

Our next question comes from Craig Ellis with B. Riley Securities.

Congratulations on the progress technically and Subodh on the extended visibility that it gives you to get to a 100-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 the way things progress. So I would expect that at some point when you scale up to larger qubit sizes and 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 Quanta is progressing with the system development issues so that as you scale up to 100 multi-hundred qubits, 1,000 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?

Good question, Craig. I mean, certainly, any time 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 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 are the 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 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 4 years from now and that's when the volumes will start picking up in 2 to 3 years. I believe Quanta is very well positioned to help us with the acceleration ramp. I mean that's where we really bring the strengths of high-volume, low-cost manufacturing of these GPU servers. And that's really where we will start getting the benefit of Quanta's capabilities a couple of years from now when we start talking higher volumes. Hopefully, that answered your question.

It does. 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 yet I wouldn't think 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?

Yes, it's a good question. I mean we continue to engage very actively with both the DOE and DoD right now. So even though the NQI reauthorization has not been signed and appropriated yet, our relationships continue to be very strong. So if you physically visit Fermilab and the SQMS center in Fermilab, you will see several dilution refrigerator systems over there incorporating our chips. One of them is the 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 talk with other DOE labs as well. And you obviously are familiar with our involvement with QBI and the 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 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 with 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 the government to fund these initiatives at a higher level than what the current situation is. 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.

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.

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

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