The world of quantum computing is abuzz with excitement and anticipation. Companies are vying for dominance, pushing the boundaries of this revolutionary technology with promises of unparalleled computational power. Amidst this frenzy, Rigetti Computing, a leading player in the superconducting quantum computing arena, seems to be making a quiet, yet significant, strategic shift. While analysts focus on qubit count and fidelity improvements, a closer look at Rigetti's recent earnings transcripts reveals a compelling narrative: the rise of on-premise quantum computers as a potential path to profitability.

Rigetti has always offered cloud-based access to its quantum processors. However, the recent launch of its commercially available 9-qubit Novera QPU, specifically designed for on-premise deployment, marks a departure from this model. This move has been met with substantial success, with two leading US national labs – the Superconducting Quantum Materials and Systems Center (SQMS) and the Air Force Research Lab (AFRL) – already purchasing Novera systems. Further solidifying this trend is the recent sale of a Novera QPU to Horizon Quantum Computing in Singapore, signifying the burgeoning global demand for on-premise quantum computing.

The financial implications of this shift are intriguing. While on-premise QPU sales currently contribute a small portion of Rigetti's revenue, their potential impact on profitability is undeniable. A single Novera QPU, priced at approximately $900,000, represents a significant revenue stream. Furthermore, the standardized, off-the-shelf nature of Novera, coupled with its quick delivery time, allows for rapid revenue recognition, boosting Rigetti's financial performance.

Rigetti's management has acknowledged the positive influence of Novera sales on their cash runway, indicating a potential focus on this avenue for revenue generation. While the company refrains from providing formal guidance, the language used in their earnings calls suggests an optimistic outlook for on-premise QPU sales.

The question then arises: why are national labs, typically at the forefront of technological advancements, opting for on-premise quantum computers instead of utilizing cloud-based access? The answer lies in the nuanced understanding of where quantum computing stands today.

While the industry marches towards "quantum advantage," the point at which quantum computers demonstrably outperform classical computers for specific tasks, we haven't reached that milestone yet. The current generation of quantum computers is primarily geared towards research and experimentation, allowing scientists to explore the intricacies of this new computational paradigm.

National labs are actively investigating various aspects of quantum computing, from optimizing pulse sequences to developing error correction techniques. For these research-oriented tasks, having a quantum computer physically present offers significant advantages. It allows for hands-on experimentation and a deeper understanding of the system's behavior.

Furthermore, national labs often handle sensitive data and require stringent security protocols. On-premise deployment provides them with greater control over their data and eliminates the potential risks associated with cloud-based access.

Rigetti's decision to cater to this demand with Novera seems to be a calculated move. It allows the company to capitalize on the immediate revenue opportunities presented by research-oriented on-premise quantum computers while simultaneously laying the groundwork for a future dominated by commercial quantum computing applications.

Could On-Premise Sales Be the Path to Profitability?

Here's a hypothesis: could Rigetti's on-premise strategy be a shrewd maneuver to achieve profitability sooner than its cloud-focused competitors? Consider this: Rigetti's current cash runway extends into Q3 2025 (Rigetti Q4 2023 Earnings Transcript). With a conservative estimate of 10 Novera QPU sales per year, each generating approximately $900,000 in revenue, Rigetti could potentially add $9 million in annual revenue. This significant boost, combined with ongoing cost optimization measures, could dramatically accelerate their path to profitability.

Rigetti's Qubit Fidelity Progress

Rigetti has made significant strides in improving the fidelity of its quantum processors. The chart below shows the progress of their Ankaa-class QPUs in achieving higher 2-qubit gate fidelity.

This silent shift towards on-premise quantum computers might be the key differentiator for Rigetti in the coming years. While the race to achieve quantum advantage continues, Rigetti is strategically positioning itself to reap the financial benefits of the current research-driven landscape, setting the stage for a future where quantum computing becomes an indispensable tool across various industries.

"Fun Fact: Rigetti's Fab-1, their dedicated quantum chip fabrication facility, is a testament to their commitment to vertical integration. It's one of the few facilities globally dedicated solely to producing superconducting quantum processors, giving Rigetti greater control over their production process and allowing them to rapidly iterate on their technology."