Unlike most stocks, Rigetti Computing (RGTI) dropped yesterday despite the news of a temporary trade truce between the U.S. and China.
While the Nasdaq jumped 4.4% on the day, Rigetti’s stock dropped 11% in after-hours trading following a disappointing earnings report. The company’s stock is now down 24.3% for the year.
Rigetti reported $1.5 million in revenue for the first quarter, down more than 50% from the $3.1 million it made in the same period last year. That result also missed analyst expectations, which had forecast about $2.6 million, according to FactSet.
Its operating loss widened as well from $16.6 million a year ago to $21.6 million this quarter.
While revenue was down, Rigetti has recently picked up several promising government contracts.
In April, the company won a $5.48 million award from the U.S. Air Force to help lead a project developing next-generation chip technology.
It was also selected by the UK government as one of the winners of a quantum computing pilot program, leading a £3.5 million consortium focused on improving quantum error correction — a key challenge for the field.
And in April, Rigetti was shortlisted for a major U.S. defense initiative: the DARPA Quantum Benchmarking program.
But CEO Dr. Subodh Kulkarni downplayed the role of these wins in the short term.
“Our focus as a company is on R&D and technology milestones,” he said during the company’s earnings call.
“Some of these government contracts do come with sizable awards,” he added, but they’re not the kind of revenue numbers investors should focus on yet.
Kulkarni said most of the company’s current interest is coming from national labs and academic institutions. But until Congress passes the National Quantum Initiative Reauthorization Act, which would unlock $2.7 billion in federal funding over the next five years, budgets remain tight.
No fast payoff yet
Quantum computing stocks like Rigetti are prone to wild swings. The technology is promising, but it’s still unclear how soon it will be actually commercialized.
While Rigetti’s stock is still up nearly 900% over the past 12 months, this quarter’s disappointing earnings is a stark reminder that real-world sales are still a long way off.
Kulkarni told investors not to expect steady growth any time soon.
“We’re looking at three years from now, maybe four or five years from now,” he said, before commercial sales become a meaningful metric. “Until then, it’s going to be primarily R&D, primarily driven by government contracts [and] academic researchers.”
“By definition those sales are going to be lumpy in nature.”
Rigetti also announced a new investment from Quanta Computer in late April. The tech manufacturer purchased about $35 million worth of Rigetti stock at $11.59 per share. Rigetti closed Monday’s trading at $11.55.
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