Rigetti posts $2.1M in Q2 revenue, discusses potential government contract delay

Rigetti Computing posted second quarter 2022 revenue of $2.1 million, almost $600.000 short of expectations, and also indicated that it could miss its full-year revenue and EBITDA guidance if the negotiation process now underway for a government contract fails to finish in time to see revenue from it this year.

The company also announced a committed equity facility agreement with B. Riley Principal Capital II, LLC, under which Rigetti “has the right, without obligation, to sell and issue up to $75 million of shares of its common stock to B. Riley, subject to certain limitations and satisfaction of certain conditions, over a 24-month period.”

Chad Rigetti, CEO and founder of the company, called the agreement a “prudent” move amid the “current uncertain macro environment.”

The Q2 revenue posting was 39% than the $1.5 million reported during the same period last year.

Regarding the government contract situation, Rigetti stated:

“In our Q1 earnings release in May, we estimated that revenues for fiscal year 2022 would be in the range of $12 to $13 million. This estimate included approximately $4.0 million tied to contracts that are being negotiated with a government entity that is also an existing customer. The contracting process has taken longer than anticipated, and revenue recognition for some or all of the estimated $4.0 million, a portion of which relates to work that has already been performed and costs that have already been incurred, could be deferred to a fiscal period after fiscal year 2022 if negotiations are not completed and contracts are not executed until after 2022. In such case, the Adjusted EBITDA loss for fiscal year 2022 could be greater than the $50 to $53 million range we estimated in May. Moreover, if negotiations result in contract terms that are less favorable than we anticipated, the total expected value of these contracts could decrease.”

During the company’s earnings call, Rigetti CFO Brian Sereda also commented on the contract situation, in response to an analyst’s question. He said, according to the Seeking Alpha earnings transcript, that Rigetti believes “we have a very good potential of closing this [contract] in time to meet our revenue guidance.” He added that the issue causing potential delay is “not so much pricing, but the structure of the contract… around costs incurred,” and that the negotiation process was typical of government contracts, and not out of the ordinary.

Sereda further stated, “It’s an existing customer, very strong working relationship with this customer for a lengthy period already. And we expect this agreement will expand the relationship, and provide opportunities for several years going forward. So, it’s an important contract to the company and this is an important stage you might say an inflection point in the relationship.”

Chad Rigetti also clarified during the earnings call that the company is not changing it full-year guidance at this time, so revenue guidance remains in the range of $12 million to $13 million for 2022.

Other data from the earnings report:

• The Q2 revenue posting was 39% than the $1.5 million reported during the same period last year.
• Total gross profit for the second quarter was $1.3 million up slightly from $1.2 million in Q2 2021.
• Total GAAP operating expenses for the second quarter of 2022 were $26.9 million, compared with $10.9 million in the prior year period.
• Non-GAAP operating expenses were $16.4 million, compared with $9.3 million during Q2 2021.
• Net GAAP loss for the second quarter of 2022 was $10.0 million, or $0.09 per share.
• Adjusted EBITDA was a loss of $15.1 million, versus a loss of $8.1 million in the prior year period.
• Rigetti reported it had cash and cash equivalents of $184.0 million as of June 30, 2022.

Meanwhile, the company said it is still on track to introduce its planned single-chip 84-qubit quantum computer in 2023, its planned 336-qubit multi-chip processor later the same year, its planned 1,000+ qubit system in late 2025, and its planned 4,000+ qubit system in or after 2027.

Dan O’Shea has covered telecommunications and related topics including semiconductors, sensors, retail systems, digital payments and quantum computing/technology for over 25 years.