管理層發言
Thank you for standing by, and welcome to Rigetti's Fourth Quarter and Full Year 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. I would now like to hand the call over to Subodh Kulkarni, President and CEO. Please go ahead.
Good morning, and thank you for participating in Rigetti's earnings conference call covering the fourth quarter and year ended December 31, 2024. Joining me today is Jeff Bertelsen, our CFO, who will review our results in some detail following my overview. We will be pleased to answer your questions at the conclusion of our remarks. We would like to point out that this call and Rigetti's fourth quarter and year ended December 31, 2024 press release contain forward-looking statements regarding current expectations, objectives, and underlying assumptions regarding our outlook and future operating results. These forward-looking statements are subject to a number of risks and uncertainties, that could cause actual results to differ materially from those described and are discussed in more detail in our Form 10-K for the year ended December 31, 2023, our Form 10-Q for the three months and nine months ended September 30, 2024, and other documents filed by the company from time to time with the Securities and Exchange Commission.
These filings identify and address important risks and uncertainties, that could cause actual events and results to differ materially from those contained in the forward-looking statements. We urge you to review these discussions of risk factors. Today, I'm pleased to provide an update and report on our progress at Rigetti Computing. Rigetti recently entered into a strategic collaboration agreement with Quanta Computer, Inc., a Taiwan-based Global Fortune 500 company and a global leader in computer server manufacturing, with the goal of accelerating the development and commercialization of superconducting quantum computing. Rigetti and Quanta have committed to investing more than $100 million each over the next five years pursuant to the collaboration agreement with both sides focusing on their complementary strengths to develop superconducting quantum computing technologies. In addition, Quanta will also invest $35 million to purchase shares of Rigetti common stock subject to regulatory clearance.
Quanta's collaboration with Rigetti is designed to strengthen our position in this flourishing market. Our company's complementary strengths, Rigetti as a pioneer in superconducting quantum technology with open modular architecture, enabling integration of innovative solutions across the stack, and Quanta as the world's leading notebook server manufacturer with $43 billion in sales, will support us in our goal to be at the forefront of the quantum computing industry. On the sales front, I'm pleased to report that we sold a Novera QPU to Montana State University in December 2024, which was our first QPU sale to an academic institution. The Novera will be located at MSU's QCORE to educate and train scientists and engineers on quantum computing technologies, in addition to being used to create a testbed for quantum computing R&D. MSU's QCORE is a new center of excellence for quantum-enabling technologies, established to accelerate workforce development and the regional quantum innovation ecosystem.
I should also note that in addition to the MSU sale, there was an additional Novera sale in the fourth quarter to the UK government. On the technology front, we launched our 84-qubit Ankaa-3 system in December 2024. Ankaa-3 features an extensive hardware redesign that enables superior performance. We achieved major two-qubit gate fidelity milestones with Ankaa-3, successfully halving the error rates in 2024 to achieve a 99.0% median iSWAP gate fidelity and demonstrating 99.5% median fidelity with fSim gates. Our newest flagship quantum computer continues to feature Rigetti's scalable, industry-leading chip architecture with 3D signal delivery while incorporating major enhancements to key technologies. Ankaa-3 is available to Rigetti's partners via Rigetti Quantum Cloud Services platform and to the general public via Microsoft Azure and Amazon Braket. In other developments, AI-powered tools from Quantum Elements and Qruise remotely automated the calibration of Rigetti QPU integrated with Quantum Machines control system.
This work was part of the AI for Quantum Calibration Challenge hosted at the Israeli Quantum Computing Center. The two companies participating in the challenge, Quantum Elements and Qruise, automated the calibration of a nine-qubit Rigetti Novera QPU integrated with Quantum Machines' advanced OPX1000 control system and NVIDIA DGX Quantum, a unified system for quantum-classical computing that NVIDIA built with Quantum Machines. This achievement showcases the potential of AI in quantum computer calibration and also highlights the growing collaboration within the quantum computing ecosystem. Quantum Elements, Qruise, and Quantum Machines are members of Rigetti's Novera QPU partner program, an ecosystem of quantum computing hardware, software, and service providers who build and offer integral components of a functional quantum computing system. We believe that another advantage we leverage is our modular approach to developing our technology.
By enabling our partners to integrate their technology with ours, we can explore and advance creative and flexible ways to improve quantum computing capabilities. In summary, we believe that superconducting qubits are the winning modality for quantum computers given their fast speeds and scalability. We have developed critical IP to scale our systems and remain confident in our plans to scale to over 100 qubits by the end of the year with a targeted 2 times reduction in error rates from the error rates we achieved at the end of 2024. We believe our leadership in superconducting quantum computing continues to be reinforced as we push the boundaries of our system performance, as evidenced by the success of Ankaa-3. Thank you. Jeff will now make a few remarks regarding our recent financial performance.
Thanks, Subodh. Revenues in the fourth quarter of 2024 were $2.3 million, compared to $3.4 million in the fourth quarter of 2023. Revenue is an important part of our strategy to fund our ongoing research initiatives. Renewal of the US National Quantum Initiative, sales to US and foreign governments, and Novera are all important to future sales. Gross margins in the fourth quarter of 2024 came in at 44%, compared to 75% in the fourth quarter of 2023. The lower gross margins on a year-over-year basis were due to ongoing revenues from our contract with the UK's NQCC to deliver a 24-qubit quantum system, which has a lower gross margin profile than most of our other revenue. On the expense side, total OpEx in the fourth quarter of 2024 was $19.5 million, compared to $19.7 million in the same period of the prior year. Stock compensation expense for the fourth quarter of 2024 was $3.4 million compared to $3.7 million for the fourth quarter of 2023.
Net loss for the fourth quarter of 2024 was $153 million or $0.68 per share compared to a net loss of $12.6 million or $0.09 per share for the fourth quarter of 2023. The non-cash change in the fair value of derivative warrant and earn-out liabilities negatively impacted our net loss for the fourth quarter of 2024 by $135.1 million compared to a favorable impact of $4.6 million in the comparable prior year period. The derivative warrant and earn-out liabilities are non-cash in nature, and Rigetti will never be required to pay cash to settle these obligations. Cash, cash equivalents, and available-for-sale investments totaled $217.2 million as of December 31, 2024. During the fourth quarter of 2024, we received net proceeds of $153.3 million from the sale of $88.1 million common shares through a registered direct offering and completion of our at-the-market equity offering. We also prepaid in full all of the remaining amounts owed under our loan agreement with Trinity Capital, Inc. We believe that our existing balances of cash, cash equivalents, and marketable securities should be sufficient to meet our anticipated operating cash needs for at least the next three years based on our current business plan and expectations and assumptions considering current macroeconomic conditions. Thank you. We would now be happy to answer your questions.
分析師問答
Thank you. Our first question comes from the line of Craig Ellis of B. Riley. Please go ahead, Craig.
Yes. Thanks for taking the question and congratulations on the partner progress and the Novera QPU sales. So Subodh, I wanted to start off by following up on the Quanta announcement. And the question is this, can you help us understand the deals genesis? Were you reaching out to them, they to you? And over what time period has this deal been gestating? And is there anything exclusive about any of the technology that you or they would develop underneath the agreement?
Thanks, Craig. So yes, it's an exciting partnership announcement we did with Quanta Computers. As our announcement said, Quanta is a large company based in Taiwan with almost $43 billion in annual sales. They are well known for both their laptop as well as server manufacturing. I believe they have the number one market share in GPU servers right now. So they are a close partner of companies such as NVIDIA, Apple, and many other companies. They on their own have been looking around for how is the best way for Quanta Computer to get into quantum computing because they clearly view quantum computing as the next big thing after GPUs, and they've always been on the leading edge of the new technology curves. So they were searching for the right partner. They did their own homework, looked at all the different modalities, and decided that superconducting gate-based quantum computing is the most likely modality to win.
Within that, we are clearly a leader competing right at the top along with IBM and Google. So we don't know all the companies that they talked to, but they certainly started talking to us close to a year ago or so. So we have been discussing with them for a while now. On our side, we know that we cannot be building the commodity type items of the hardware stack in Berkeley or Fremont, California; it doesn't make any sense given the cost structure in those places. So we were looking for appropriate contract manufacturers in the long term as volumes pick up, who is the right contract manufacturer for us. So it was a mutual decision where we thought they are the right potential partner given the critical role they play in CPU, GPU servers today. They believe that we are the right partners from a technology standpoint. Clearly, one of our needs was to have money, and that's what they offered.
As you can see, they are buying $35 million of our shares at $11.59 pending regulatory clearance. But more importantly, they have committed to more than $250 million over the next five years to be invested in the non-QPU portion of the hardware stack. So essentially going forward, we will continue to focus as we always have on the quantum chip fabrication part and will be responsible for the whole stack, but we will start relying on them as our contract manufacturer for things such as the control system, the dilution refrigerator, cables, and all the other accessories that are extremely important, but just not that high value add. So we believe it's a right partnership in the long term. We certainly are counting on them to help us out on that part, and certainly, between the cash we already have plus the $35 million, they will give us for shares plus the $250 million commitment, we effectively have close to $500 million right now to be invested in the next five years. So we feel really good about that position and how we can deploy that investment to accelerate the pace of our quantum computing development. Hopefully, that answers your question.
Yes, that's very helpful. And I think it is significant that as a leader in first x86 servers and now GPU-based servers, they've chosen to partner up with you and certainly with significant financial commitment. The second question I wanted to ask was related to your take on where we stand with government funding. Recently, there was a bipartisan bill introduced by Senators Daines and Durbin regarding $2.5 billion in potential funding for the US government. Can you just give us an update on where things stand federally in the US and your views on what that might be able to do?
Sure. So as you correctly said, there is a bipartisan bill that has been introduced for about $2.5 billion for over five years. Most of that is slated to go to the DOE labs such as Fermilab, Oak Ridge National Lab, and other DOE labs that we depend on for our funding. That bill seems to have bipartisan support. There's no indication it won't go through. But as of today, it hasn't been signed yet. We are optimistic that it will get signed here soon and then the money gets appropriated to the right DOE labs. We are hoping that somewhere in the second quarter of this year, the money will start getting appropriated, so we can start getting contracts from those DOE labs. In addition to DOE, the DoD has several initiatives going on right now to fund quantum computing. The biggest one being the DoD DARPA quantum benchmark initiative, QBI. We expect them to make some very important announcements in the next month or so, as to which is the group of companies that they have chosen going forward to build what they call utility scale quantum computing.
Basically, that's like the world's best, biggest quantum computer, and that has to be built by 2033. They have several hundred million dollars, more than $300 million in budget for that. In addition to that, there are several other line items in the DoD bill that will be able to fund quantum computing. So overall, between DOE and DoD, we are expecting sizable increases in US government investment in quantum computing. We are just waiting for the bills to get signed and the money to get appropriated. But we are pretty optimistic that as 2025 rolls along, a sizable amount of investments will be available from DOE and DoD.
Thank you. And then finally for me, before I hop back in the queue, regarding cash, congratulations on getting it to such a significant level. The first question related to that is, does it change at all how you look at near-term intensity for either R&D or sales and marketing? And then the longer-term question, since Jeff did indicate potential sufficiency for the next three years or so, how do you feel about its ability to get you to a level where the company is self-funding? Thank you.
So as I mentioned earlier, we have $217 million as Jeff mentioned at the end of last year, plus we have this commitment from Quanta for $35 million plus the $250 million. So rounding off the numbers, we have roughly $500 million available to us for the next five years, which is a sizable amount of money given our burn rate. And as Jeff said, at least for three years, we don't need to worry about cash, and probably longer. Certainly, we hope that these government initiatives get funded by the US government, the UK government where we have very good relationships, as well as some other friendly governments around the world that we have been talking to. Assuming those initiatives materialize, we certainly hope we don't need to raise cash. We will certainly look at opportunities, but it's not that we need to raise cash. If those initiatives materialize and we manage to get the contract, but clearly, we are in an R&D stage right now.
We don't believe commercial sales will increase anytime immediately. I know there's a lot of discussion going around as to where exactly quantum computing is in terms of sales expectations. Our general view is we are still in R&D. We are still roughly about four to five years away before commercial sales matter, which is why we keep highlighting that it's R&D milestones that are far more important right now than this one-off government type contracts. We certainly welcome those and we want those, and as government increases the budget substantially, we will certainly depend on those to help us get to positive cash flow in the next three or four years. But our focus right now continues to be squarely on R&D and making sure we are in the lead with superconducting quantum computing. Hopefully, that answers your question.
Yes, that's very helpful, Subodh. Thank you.
Thank you.
Thank you. Our next question comes from Quinn Bolton of Needham & Company. Please go ahead, Quinn.
Hey guys, this is Shadi on for Quinn. My first question is on the QPU sale to Montana State University. Can you guys discuss if the sale to MSU was a competitive process? And if so, what was some of the feedback from the university that led to them choosing Rigetti's technology?
Thanks, Shadi. I mean, as you know, we have been building nine-qubit QPUs and making them available to commercial customers, particularly academic researchers and government, national labs type customers, not quite the classic data center type customers. The real objective of enabling that is to build a quantum ecosystem and it's all for research applications. Clearly, Montana State University is a research case where they are trying to understand the fundamentals of quantum computing. So they are doing basic experiments with those like pulse shape, pulse sizes, really understanding how to design algorithms and those kinds of things. So it gets to the fundamental understanding of quantum computing. You're really not going to use a nine-qubit QPU to try to compete with a CPU or GPU. So it's really not meant for any practical application or demonstrating quantum advantage or anything. It's all for research purposes, but it's a nice convenient product to have in your lab where you can get hands-on experience.
It fits into many of the research customers in this area who already have purchased a dilution refrigerator for various reasons, and nine-qubit QPUs are relatively simple products that fit into your existing dilution refrigerator. So it's a relatively simple thing to ship, get it integrated into your system, and you can start working with it fairly quickly. So it's a fairly user-friendly way to get into the fundamentals of the quantum computing ecosystem. Hopefully, that answers your question.
Yes, it does. Thanks for that. And then I want to follow up on Craig's question, and sorry if I missed this, but is that DOE Quantum Leadership Act the same bill as the National Quantum Initiative Act, but reintroduced as a different name? Or are these two different bills going through Congress?
No, there's only one bill. Right now, it is the same one that Craig mentioned introduced by Senators Daines and Durbin. It's a $2.5 billion initiative over five years.
Got it. And I have one quick modeling question. But what can we expect the share count to be in Q1?
Yes, I think in terms of share count, we ended the year at 200 million, call it 84 million shares. So I would think, let's say, 290 million would be my estimate.
Awesome. Thanks for taking my questions and congrats on the progress.
Thank you.
Thank you. Our next question comes from Krish Sankar of TD Cowen. Please go ahead, Krish.
Hi, thanks for taking my questions. This is Steven calling on behalf of Krish. Subodh, my first question for you is about the technical milestones for the year, particularly regarding the scaling of the nine-qubit modular tile architecture. I understand you aim to have a 36-qubit chip by the middle of this year and over 100 qubits by the end of the year. Can we expect this level of scaling to continue in the future, or are there physical limitations related to packaging or processing, such as reticles or signal integrity? Also, you mentioned a potential twofold reduction in error rates by the end of this year. I'm curious if the combination of various software algorithms and improvements you are working on, both internally and with partners, could lead to an error rate that outperforms your current estimates.
Sure. Those are all great questions, Steven. Let me address them. First, let's assess the current state of quantum computing, particularly in superconducting gate-based quantum computing. The recent announcements from us, Google with the Willow Chip, and others like Amazon, Microsoft, and the Chinese Academy of Sciences indicate that superconducting gate-based quantum computing is likely to be the leading approach. The investment from major companies and organizations reinforces this view. We are collectively operating in the range of around 100 qubits, achieving between 99% and 99.5% median two-qubit gate fidelity, with gate speeds in the tens of nanoseconds—about 10,000 times faster than alternatives like trapped ions or pure atoms. We are already implementing real-time error correction with low latency, an achievement shared with Google through their Willow Chip announcement. As we evaluate the superconducting modality, it is clear that while we're on the right path, no one has yet achieved quantum advantage across all modalities.
There is a lot of hype in the quantum computing field, but we are all nearing that critical juncture. From the superconducting gate-based quantum computing perspective, we aim to reach several hundred qubits, ideally close to 1,000 qubits. To demonstrate quantum advantage, we need to improve to about 99.7% to 99.8% median two-qubit gate fidelity, achieve gate speeds of less than 30 nanoseconds, and have effective real-time error correction. Our projections align with those of IBM and Google, all targeting about four to five years to reach quantum advantage and commercial viability. To bridge the gap from around 100 qubits to 1,000 qubits, we see chiplets as a vital tool. We've previously explored chiplets with 40-qubit and 9-qubit chips, demonstrating that we can tile chips without losing quantum effects or performance. This year marks our commitment to scaling this approach—our key milestone is to demonstrate four times nine qubits, totaling 36 qubits, with 99.5% or better median two-qubit gate fidelity by mid-year.
If we are successful, we plan to exceed 100 qubits by year’s end. This achievement is significant not only for Rigetti but for the entire industry as it presents a clear pathway to 1,000 qubits. Currently, transitioning to several hundred qubits with a single large chip poses challenges, as evidenced by IBM’s past attempt to scale to 430 qubits. Our strategy hinges on the chiplet technology that has proven effective in quantum computing, drawing on insights from the semiconductor industry. Notably, high-end CMOS applications increasingly integrate chiplets for better control of uniformity and performance. Thus, we are leveraging these advancements for our quantum systems. We are optimistic about demonstrating our 4x9 milestone this year and scaling to over 100 qubits. With our nine-qubit chip measuring six millimeters by six millimeters, we believe we can effectively reduce its size and, with a one-meter square panel, potentially fit over half a million qubits.
We are confident that advancements in dilution refrigeration will support maintaining low temperatures across such a panel within five years, allowing us to reach several hundred thousand qubits. You accurately pointed out that packaging presents challenges, particularly as we scale towards thousands of tiles. While manual methods suffice for smaller quantities, automation will be essential for larger scales. Thankfully, the semiconductor industry has developed advanced packaging techniques that we can utilize, making the assembly of several hundred thousand chips feasible. We are excited about this roadmap and feel good about progressing toward a utility-scale quantum computer, as outlined in DARPA's challenge to us. I hope I’ve addressed your questions adequately. Did I overlook anything?
It was very helpful and a constructive explanation, Subodh. Thank you for that. I have a quick follow-up for Jeff regarding the P&L and cash flow. Regarding the Quanta Computer collaboration and the $100 million you are committed to investing, how should we view the spending of that amount over five years? Is this primarily a cash investment in equipment, or does it relate to existing R&D and will it be reflected in OpEx or CapEx? Any details on this would be appreciated. Thank you.
Yes. I mean, it really is a continuation of our ongoing R&D efforts. So it really will flow through OpEx in the context of our R&D team and with our capital plans and so on. So I don't think from our side you really see anything too different other than the benefits that we are going to get from partnering with the Quanta and taking advantage of their expertise in areas outside of QPU.
Thanks, Jeff. And just as a follow-up, I guess the incremental $100 million spending, does that represent a step-up to sort of annual spending or are there offsets to account for that?
No. I mean in our side, it really is a continuation of our ongoing R&D efforts. So there really isn't any specific step-up per se at all on our side. On their side, they've committed to investing $250 million in furthering our roadmap and so on.
Perfect. Thank you so much.
Thanks, Steven.
Thank you. Our next question comes from Richard Shannon of Craig-Hallum. Your line is open, Richard.
Great. Thanks, Subodh, Jeff for letting me ask a couple of questions. I guess my first one, Subodh, is following up on the prior discussion here on the roadmap for this year. I specifically wanted to ask about the approach to getting to the 100-plus qubits this year. Is this using kind of the tiling approach kind of extending on the 4-by-9 one that you said you're trying to hit midyear? Or is this kind of based on more of the monolithic one Ankaa-3? Can you kind of help us understand what the scaling approach here is?
Certainly, our roadmap is relying on tiling to hit the 4-by-9 demonstration first by the middle of this year. Assuming we succeed with that, we will go, let's say, 12-by-9 to get to more than 100 qubits like 108 qubits or something like that. But we certainly have the option of using the monolithic approach, which is what others like IBM and Google are doing right now and we have done all these years too. So we certainly have the option of bumping up the 84-qubit chip to a higher qubit count. But we believe tiling is the right way to go in the long term. So we are going to definitely try to get first the 4-by-9, and assuming that succeeds, 12-by-9 or something like that.
Okay. So we're just kind of a one track approach here in terms of using tiling going forward here, not because there have been more kind of a demonstration or will be entirely focused on tailwind going forward. Is that fair to think?
Yes, it's fair to think. And the main reason for that is because we can see in our data that going the monolithic chip approach is going to be extremely difficult once you are in the several hundred qubits going to several thousand qubits. As I mentioned in my previous answer, IBM tried a 430-qubit chip and there is a reason why they haven't deployed it. We believe, because they also ran into the same challenges that we are seeing. And I mean, the whole CMOS industry has learned it for a decade now, right. It's very hard to build a large single monolithic chip. So we are finding the same issues. The root causes are exactly the same: uniformity and yields and those kinds of things. So given all the information we already have, we decided that timing is the right way to leverage the chiplet approach that the CMOS industry has done such a great job and rely on that. Once we have proven that the quantum effects can be sustained across an interposer with chiplets, then the path becomes very clear for us.
But it's important to keep demonstrating one at a time. So we will demonstrate 4-by-9 first. We already did the work with 2-by-9 last year and 2-by-40 a couple of years ago, although at that time the fidelities were not as good as what we are dealing with right now. Now we are dealing with 99.5% type nine-qubit chips. So we want to make sure that when we tile them, we don't see any deterioration in the fidelity performance. So it's important to demonstrate 4-by-9 at 99.5% by the middle of this year; assuming we succeed, certainly our roadmap will be very tiling-oriented.
Perfect. Thanks for that, Subodh. My second question is following up on one of the topics you mentioned in the press release as well as again the press release on this topic, I think in December and January regarding joint research with QphoX and Qblox here. Maybe if you can just kind of talk us through how this accelerates your scaling and fidelity roadmap, that would be great to hear about as well.
It was an exciting announcement regarding our collaboration with QphoX and Qblox, which touches on signal-in, signal-out technology. Currently, we utilize coax cables to transmit signals to and from our chip, a common practice in the industry. However, we want to move away from coax cables primarily due to their cost and physical size. While coax cables are manageable for systems with 100 to 200 qubits, they become economically unfeasible and physically cumbersome once we scale up to 1,000 qubits and beyond. The lack of space in dilution refrigerators further complicates matters unless we invest in much larger and more expensive setups. To address this, we are exploring flex cables, leveraging our intellectual property in this area. However, these won't be standard cables as we must consider superconducting temperatures, which require material and process innovations. Other companies, such as IBM and Google, are also pursuing similar developments.
Our initial transition will be from coax to flex cables, but as we approach 100,000 qubits, flex cables will also face challenges in our infrastructure. This brings us to optical signaling, where significant efforts are underway to convert our microwave or RF signals into optical signals. Our joint research published in December demonstrated the feasibility of using fiber optics for signal transmission, which is a more practical solution compared to traditional open-air optics. This technology confirms that we can effectively transfer signals to and from superconducting chips using fiber optics. Moving forward, we will explore how and when to integrate fiber optics into our roadmap. While we haven't established a timeline for transitioning from coax to flex and then to fiber optics, we anticipate that by the time we reach several hundred thousand qubits, fiber-optic cabling will be essential.
That is helpful. Thanks for all that, Subodh. My last quick question here is just on the DARPA benchmarking project or opportunity here. I think you said you expect some decision here in the not-too-distant future. Maybe you can help us understand the process for this award here or is this not even the end step here? And then what opportunity do you see from a revenue perspective over time if you're successful in winning part of that?
The DoD's DARPA agency has invited proposals from multiple parties, and we have submitted ours. The objective, which is outlined on their website, is to create a utility-scale quantum computer by 2033. Essentially, the goal is to achieve tasks that classical computers can perform, but at a much faster and more cost-effective rate. This initiative is akin to a moonshot endeavor, representing the U.S. government's official effort to develop the world's most impressive quantum computer, much like the man-on-the-moon mission. We have applied, as have others, and DARPA has indicated that they will make a decision soon, likely within this month. Typically, for projects of this complexity, DARPA selects a few companies to demonstrate future milestones and may ultimately choose one or two of them. The overall project budget is expected to be upwards of $300 million, and we aim to be the leading company that delivers this quantum computer by 2033, despite the various challenges we must overcome.
We believe our technology is well-positioned to present a convincing case, especially with our superconducting gate-based approach, which seems to be the most promising method based on current industry trends. With our modular chiplet intellectual property, we feel we have a strong chance of winning the DARPA project. We are excited about participating and look forward to their decision. While the DARPA project represents a significant opportunity with considerable funding, we recognize that there is an even larger market potential. We anticipate that in about five years, the market for national labs and universities could reach a couple of billion dollars, with a longer-term outlook projecting it to exceed $100 billion in about 15 years. Therefore, while the DARPA project is crucial for demonstrating technological leadership, the more substantial opportunity lies in the commercial market, which we will continue to pursue.
That was very helpful, Subodh. That's all from me. Thank you.
Thank you, Richard.
Thank you. Our next question comes from Brian Kinstlinger of Alliance Global Partners. Your line is open, Brian.
Great. Thanks so much. First, you mentioned your plan to scale through tiling right now; given the challenges that all of the superconducting OEMs have, is their approach to scaling also through tiling? Are they trying to figure it out? Where are they with tiling compared to you?
So certainly, we are relying on tiling. I believe IBM has made some statements suggesting that they are also considering tiling. That exact dimensions will be different, but I believe we have discussed tiling openly. We are not quite sure of Google and what exactly their plan is at this point. They did indicate in their paper, when they published revenue results that they have some share of challenges to go up from where they are. They are using what we call perimeter wiring right now. So all of their circuits are basically designed in 2D, and to increase the qubit count, they have to keep increasing the perimeter, if you will, of the chip, which you can do up to a certain point, but not beyond that. So we believe Google will first move to 3D, which is what we and IBM are doing right now and we have done all these years too. So we certainly have the option of bumping up the 84-qubit chip to a higher qubit count. But we believe tiling is the right way to go in the long term. So we are going to definitely try to get first the 4-by-9, and assuming that succeeds, 12-by-9 or something like that.
Great. My follow-up that kind of leads into the next one, with your open source architecture, what does Amazon's announcement about faster and more cost-efficient error correction mean for Rigetti versus the rest of the superconducting quantum OEMs? And then my second question is, as organizations like DARPA, DoD, and others evaluate you, do they communicate being more excited about an open source flexible architecture or does that not yet come up in the discussion?
It definitely comes up in discussions. When we engage with national labs, including DARPA, the DOE, and other government labs, the open and modular nature of our architecture is a significant advantage. It fundamentally enables the easy incorporation of innovative solutions from third parties. While IBM and Google are doing excellent work on quantum computers, their more centralized mainframe-like approach makes it challenging to integrate creative solutions. On the other hand, our open modular design allows for smoother integration. For instance, Riverlane in Cambridge, UK has developed impressive error correction software, which we began integrating into our systems last year. This integration has resulted in real-time low latency error correction, an important milestone for the industry. Regarding Amazon's recent announcement about their own eight-qubit chip, the main value lies in their error correction software. We would certainly consider integrating it if they decide to provide it separately from their chip, especially if they explore other high-performing quantum solutions. This situation opens up opportunities for us to integrate innovative solutions from third parties efficiently into our platform.
My last question is a really quick one. I just want to make sure, I have the numbers right. If you get to 100 qubits at 2 times better error rates, just help me do the math, what is 2 times better? Is that 99.75%? What is that actual fidelity rate that is 2 times better?
So the reason we said 2 times and not the exact number is because we have started using two numbers now in our fidelity. So we use 99.0% with what's called as an iSWAP or a CZ kind of gate; it gets really geeky at this level, different kind of gates. And then there's a unique gate that we call fSim gate where we get 99.5% today; that's what we have today. So when you have multiple gates, you're monitoring fidelity now, that's why we decided to start using the Phase 2x reduction in error rates across both of them. So the 99% will go to 99.5% and 99.5% will go to 99.75%.
That's correct. Okay. Makes sense. Thank you so much.
Thank you, Brian.
Thank you. Our next question comes from David Williams of The Benchmark Company. Please go ahead, David.
Hey, good afternoon. Thanks for taking my question. And I'm jumping on late here so excuse me if this has already been asked but Subodh, you talked about in the past your architectural and your IP differentiation, and you talked about maybe Google and some of the others where you really can differentiate yourself from an IP perspective. Can you talk a little bit about what that means relative to maybe some of your competitors? What technical difficulty they should have a real advantage?
We closely monitor IBM and Google within the superconducting gate-based quantum computing sector, while it's challenging to track the Chinese Academy of Sciences closely. As I mentioned earlier, although Amazon and Microsoft are involved in this space, they currently operate with a low qubit count, around eight qubits. The other startups and smaller companies in superconducting gate-based quantum computing are significantly behind us. Our primary focus is on IBM and Google, and I’m confident they are observing our progress as well. Intellectual property is essential to our value, and we currently hold nearly 230 patents. To distinguish ourselves from IBM and Google, our key differentiator is our architecture. We employ an open modular or stack approach, whereas they use a more traditional mainframe model. We believe that this open modular approach is advantageous in the long run, as it facilitates the integration of innovative third-party solutions more efficiently.
Thus, we continue to invest in this strategy. Another area of clear differentiation is in the chiplet sector. We demonstrated chiplets in quantum computing last year with 40 qubits and nine qubits. Our goal is to scale up multiple chiplets, targeting 36 qubits initially and then exceeding 100 qubits by the end of this year, with plans to progress from there. While IBM may pursue a similar path based on their statements, Google has not clarified its strategy for scaling up to 1,000 or several thousand qubits, which we will continue to observe. Additionally, there are finer details regarding the design, fabrication of the chip, and how these elements differentiate us, including our proprietary annealing process called ABAA. This method utilizes DC pulses across the qubit's area, which we believe is faster, easier to scale, and delivers more uniform frequency targeting compared to the laser annealing techniques that our competitors are likely using.
There are many other aspects in which we differentiate ourselves, involving the intricacies of our patents, how we file them, and the coverage they provide. Overall, the main factors setting us apart are our open modular architecture, chiplet approach, and certain methodologies like the annealing process.
Great. Very helpful. Thank you for that. And then maybe just as a follow-up, do you think that your IP is compelling enough that over time others will need to develop around your IP or how do you think about maybe consolidation, just given your rich patent portfolio and what that would mean for some of the others?
The main aim of patents is to protect innovative ideas. When you have unique concepts, you apply for patents to secure broad protection. This forces others who might want to copy those ideas to either find an entirely new approach, which can be inefficient, or to obtain a license from us. It’s still early to draw conclusions. IBM and Google are both major players with extensive patent portfolios. Typically, in these situations, those of us in research and development who deal with complex patent portfolios often find ways to collaborate and cross-license in key areas. This sometimes involves negotiating licensing terms, but our priority is to ensure a healthy ecosystem where everyone is fairly compensated for their contributions. Right now, we're focused on reaching our technical milestones and building our patent portfolio. Over time, we'll observe how licensing and cross-licensing opportunities develop.
Perfect. Thank you. And then just one last, if I may. Just on the customer demand for QPUs, could you talk a little bit about how that demand is and if you're how you think that maybe trends through this year?
Yes. Certainly, we see excitement growing about quantum computing. People are beginning to – it's no longer a question of if; it's a question of when, everyone seems to understand that when we talk to them. But clearly, it's still in R&D stages. Unlike some other companies, we believe we are still four to five years from commercial applications of quantum computing in a meaningful way. I know there are some companies who claim they have quantum advantage or near quantum advantage now, but those are for very select niche kind of applications. There's a lot of overhyping, under-hyping going on in quantum computing right now. So our view is that we are still very much in R&D. We need to get to several hundred qubits at or thousand qubits, 99.7% or 99.8%, less than 30 nanosecond gate speed, and real-time error correction before we can start showing quantum computers to data center managers and demonstrating ROI.
And we think that's at least four or five years from now. And that's more or less consistent from a timing standpoint with what you hear from IBM and Google too. So I don't think we are that different than IBM or Google right now in that sense from a timing standpoint. So our view is all the customer demand, if you will, as you called it, is mostly from academicians and research people, mostly to understand the fundamentals of quantum computing. That's why the numbers are going to be relatively small. Yes, sales matter, and we want to continue to grow, but our focus is clearly on R&D milestones right now and making sure the technology is perfected before we worry too much about customer demand and uptick in sales.
Great. Thanks so much.
Thank you, David.
Thank you. Our next question comes from Craig Ellis of B. Riley. Please go ahead, Craig.
Yes, thanks for taking the follow-up question. It's really just a clarification on some of the things that were part of fourth quarter's announcements. And I suspect it's mostly for Jeff. Regarding the two QPUs that were sold, one to the US academic institution, the other to the UK, did those both fully RevRec in the quarter? And then, Jeff, I think you said there was still part of a UK system sale that existed in fourth-quarter sales. Where are we in fully RevRecing that system? Does it trail into 2025? And if so, to what extent? Thank you.
Sure. The two Noveras did fully RevRec in Q4. And then regarding the kind of the larger ongoing sale to NQCC, that revenue has been taken over time, and it will be largely complete in the first quarter, maybe a little bit moving into the second quarter, but we don't really expect anything from that in the latter part of the year.
Got it. Thanks, Jeff.
Thank you. I would now like to turn the conference back to Subodh for closing remarks. Sir.
Thank you for your interest and questions. We look forward to updating you with our progress at the end of Q1. Thanks again.
This concludes today's conference call. Thank you for participating. You may now disconnect.