University of Kwazulu-Natal

Can Rigetti Computing S Margin Recover After Second Quarter Pressure

Bonisiwe Shabane
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can rigetti computing s margin recover after second quarter pressure

ARQQ Quick QuoteARQQ IONQ Quick QuoteIONQ RGTI Quick QuoteRGTI Rigetti Computing’s (RGTI Quick QuoteRGTI - Free Report) second-quarter 2025 results gave investors a closer look at the pressures weighing on margins as it balances financial discipline with technology progress. Revenues slipped to $1.8 million from $3.1 million a year earlier, largely due to the expiration of the U.S. National Quantum Initiative while awaiting reauthorization. More striking was the drop in gross margin, which fell to 31% from 64% a year ago. Management attributed the weakness to a heavier mix of lower-margin development contracts, including those tied to the United Kingdom’s National Quantum Computing Centre.

With operating expenses climbing to $20.4 million from $18.1 million last year, Rigetti’s operating loss widened to $19.9 million compared with $16.1 million in the prior-year period. While the balance sheet has been bolstered by $350 million in new equity proceeds, leaving the company with $571.6 million in cash and investments and no debt, the second-quarter results underscore that margins remain... On the technology front, Rigetti advanced with the launch of Cepheus-1-36Q, the industry’s largest multichip quantum computer, achieving 99.5% fidelity and halved error rates compared with Ankaa-3. Management reiterated plans for a 100+ qubit system by year-end, underscoring the promise of its chiplet approach. While these milestones build credibility, they have yet to translate into steady, high-margin revenues, leaving margins exposed to contract mix and funding cycles. IonQ (IONQ Quick QuoteIONQ - Free Report) continues to position itself differently, focusing on trapped-ion architectures and expanding partnerships with major cloud providers to broaden commercial access.

This strategy has helped IonQ secure a more diverse set of enterprise agreements, including with Fortune 500 companies, providing revenue sources beyond government contracts. While this model supports steadier revenue visibility, IonQ faces its own scalability hurdles, particularly in advancing gate speeds, which could limit long-term efficiency compared with superconducting approaches. Daily stocks & crypto headlines, free to your inbox By continuing, I agree to the Market Data Terms of Service and Privacy Statement Your email has been successfully added to our mailing list. Rigetti Computing’s RGTI second-quarter 2025 results gave investors a closer look at the pressures weighing on margins as it balances financial discipline with technology progress.

Revenues slipped to $1.8 million from $3.1 million a year earlier, largely due to the expiration of the U.S. National Quantum Initiative while awaiting reauthorization. More striking was the drop in gross margin, which fell to 31% from 64% a year ago. Management attributed the weakness to a heavier mix of lower-margin development contracts, including those tied to the United Kingdom’s National Quantum Computing Centre. With operating expenses climbing to $20.4 million from $18.1 million last year, Rigetti’s operating loss widened to $19.9 million compared with $16.1 million in the prior-year period. While the balance sheet has been bolstered by $350 million in new equity proceeds, leaving the company with $571.6 million in cash and investments and no debt, the second-quarter results underscore that margins remain...

On the technology front, Rigetti advanced with the launch of Cepheus-1-36Q, the industry’s largest multichip quantum computer, achieving 99.5% fidelity and halved error rates compared with Ankaa-3. Management reiterated plans for a 100+ qubit system by year-end, underscoring the promise of its chiplet approach. While these milestones build credibility, they have yet to translate into steady, high-margin revenues, leaving margins exposed to contract mix and funding cycles. IonQ IONQ continues to position itself differently, focusing on trapped-ion architectures and expanding partnerships with major cloud providers to broaden commercial access. This strategy has helped IonQ secure a more diverse set of enterprise agreements, including with Fortune 500 companies, providing revenue sources beyond government contracts. While this model supports steadier revenue visibility, IonQ faces its own scalability hurdles, particularly in advancing gate speeds, which could limit long-term efficiency compared with superconducting approaches.

Arqit Quantum ARQQ follows yet another route, concentrating on software and encryption rather than hardware. Its QuantumCloud platform seeks to deliver large-scale symmetric key agreement for cybersecurity, offering a more near-term use case as enterprises prepare for post-quantum security risks. While this approach shields Arqit from hardware margin pressures, its financial outlook hinges on broader adoption of quantum-safe encryption, which remains at an early stage and is dependent on customer conversion. Investor confidence in Rigetti Computing has been shaken by a challenging third quarter and a significant competitive loss. The quantum computing firm now confronts heightened skepticism from Wall Street as it must demonstrate tangible operational progress to justify its premium valuation, despite having recently bolstered its cash reserves. Financially, Rigetti maintains a solid position.

As of early November, the company held approximately $600 million in cash and liquid investments, a substantial cushion strengthened in part by the exercise of warrants. However, this financial stability contrasts sharply with its market valuation. Rigetti trades at a price-to-book ratio of nearly 25, a figure that vastly exceeds the industry average of 6. This premium leaves little room for operational missteps, especially given the intense competition from rivals like D-Wave Quantum and IonQ. The recent quarterly results did little to support this high multiple. Revenue declined 18% year-over-year to $1.9 million, primarily due to the conclusion of grants from the National Quantum Initiative and delays in government contract awards.

Should investors sell immediately? Or is it worth buying Rigetti? A deeper concern emerged in the company’s profitability metrics. The gross margin collapsed to 21%, a stark drop from 51% in the prior-year period, while operating expenses rose to $21 million. Strategically, the failure to secure the “Phase B” contract from DARPA represents a substantial setback. This loss raises serious questions about Rigetti’s competitiveness in securing lucrative government contracts and undermines confidence in its near-term execution capabilities.

Written by Zacks Equity Research for Zacks-> Rigetti Computing RGTI reported second-quarter 2025 adjusted loss per share of 5 cents, narrower than the loss per share of 7 cents in the prior-year quarter. The metric also surpassed the Zacks Consensus Estimate of earnings by 16.7%. GAAP loss per share in the reported quarter was 13 cents compared with the loss per share of 7 cents in the prior-year quarter. Shares of this company lost nearly 2.6% in today’s pre-market hours. The company’s shares have gained 3% in the year-to-date period compared with the industry’s growth of 20.5%.

The broader S&P 500 Index has increased 8.2% in the same time frame. The company reported total revenues of $1.8 million, down 41.6% year over year. The top line missed the Zacks Consensus Estimate by 5.7%.

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