University of Kwazulu-Natal

Rigetti Computing Faces Mounting Pressure After Quarterly Setback

Bonisiwe Shabane
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rigetti computing faces mounting pressure after quarterly setback

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. 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. Electro Optic Systems Holdings is entering 2026 with significant momentum, following a remarkable share price surge of...

Daily stocks & crypto headlines, free to your inbox By continuing, I agree to the Market Data Terms of Service and Privacy Statement Investors in quantum computing firm Rigetti Computing faced a difficult week as the company reported disappointing quarterly results coupled with a significant loss of government funding. While the company managed to exceed profit expectations, a severe revenue decline and a failed bid for a key U.S. defense contract sent its stock price tumbling, raising questions about its recovery prospects. A substantial setback emerged from Washington, where Rigetti failed to secure selection for Phase B of the Defense Advanced Research Projects Agency’s (DARPA) Quantum Benchmarking Initiative.

This exclusion represents more than just the loss of a non-dilutive funding source; it also damages the company’s credibility within the competitive quantum computing sector. The government program, structured over seven years, is widely regarded as a quality seal for quantum computing enterprises. Although Rigetti maintains an optimistic outlook, pointing to what it describes as “constructive discussions,” the exclusion from this prestigious initiative remains a significant negative development. The company’s third-quarter 2025 results, released Monday evening, revealed fundamental weaknesses in its business model. Revenue plummeted to just $1.95 million, substantially missing analyst estimates of $2.17 million. The year-over-year comparison appeared even more concerning, with revenues collapsing by 18.1%.

Should investors sell immediately? Or is it worth buying Rigetti?

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