By coinnews 
00:00 Brian Sozzi
Rigetti computing seeing a decrease in revenue for the first quarter compared to the fourth quarter. How the company estimating it is about five years away from demonstrating quantum advantage. Rigetti CEO and president Subodh Kulkarni joins us now to discuss. Subodh, it is good to see you. Let’s start with this earnings report, Subodh because it’s the first time we’ve gotten a chance to talk to you about it. It does look like the Q1 revenue misses expectations, misses consensus there. It looks also like gross margins declined from the year earlier. Walk us through the, the print though Subodh. I’m curious what you are seeing in the business.
01:09 Subodh Kulkarni
Yeah, indeed the numbers, um, sales did decline from last year and the gross margins were lighter than last year. However, we fundamentally in quantum computing are, uh, a technology development company. Uh, the technology milestones and how we are accomplishing them and the timeline for that is far more critical than sales at this point of the journey. Uh, sales are primarily coming from, uh, what we give to academic researchers or government national labs. So these are one-off contracts. They’re lumpy in nature. Some quarters you will see spikes, some quarters like this one, uh, when the, when those don’t happen, you do see a decline. When the numbers are small, you do get, tend to get this spiky behavior, lumpy behavior. So we try not to focus too much on sales at this point in the journey of the company. Uh, as you correctly pointed out, we are four to five years from real commercial value of quantum computing. That’s where the market is really supposed to grow and be large enough where things like sales and EPS start becoming much more critical at that point. At this point, it’s all about technology development and how we are getting the milestones done so that we enable this large $100 plus billion market in the future.
03:00 Brian Sozzi
Subodh, taking a step back for the uninitiated, help us explain in layman’s terms, to the extent possible, what is the difference, Subodh, between quantum computers and supercomputers and what your competitive advantage about is in this market.
03:26 Subodh Kulkarni
Fundamentally, quantum computing is a way of doing much higher, computing than the supercomputer and consuming a lot less energy. So we can be a million or even a billion times faster than a supercomputer, uh, and consume a lot less energy. And the reason behind that is we use what is called cubits. We entangle those cubits that allows us exponentially better computing power than a classical supercomputer. So imagine the world’s number one supercomputer is sitting in Oak Ridge National Lab right now. It’s the size of a, a big building. Basically, it cost the US government hundreds of millions of dollars. The same work that the supercomputer is doing right now, we could do, we can do potentially with a single chip, uh, and consume a lot less energy at the same time. Now when we have powerful chips, we should be able to do, as I said, thousands and maybe millions of times more computing power than a supercomputer. So fundamentally, it’s a different way of doing computing. In classical computers, you have just two states, zero and one. In quantum, we have multiple states and on top of that, we tend to couple the cubits, which gives us the exponential power of computing. So think of it as a super, supercomputer at a lot less energy consumption in a much more smaller form factor. So exciting potential, huge market opportunity, but we are still very much in the R&D stages. We need to continue to perfect the technology to enable this future.
05:35 Brian Sozzi
And, and Subodh, I mean obviously listen, the street’s excited about this technology, and investors are excited about this technology, but in terms of when it’s actually, you know, really commercially viable, you say still years away. Why years, Subodh?
06:00 Subodh Kulkarni
It gets into the nitty-gritty of where we are in quantum computing. There are things we, um, measure routinely, things like the quality of the cubits in terms of the error rates, the number of cubits, the gate speeds and gets into a lot of technical metrics. Uh, and right now they work, I mean, quantum computers work. They can do your standard computing. It’s just not faster or cheaper than your regular computer. So there’s really no point in using a quantum computer for practical workload today. The reason for excitement is we can extrapolate and we can see that once we are above a thousand cubits and above a fidelity level of what we call 99.9% two cubit gate fidelity and gates are fast enough and we do error corrections, we can project and see that indeed a quantum computer will be a million or a billion times faster than your fastest computer today and consume lot less energy. So it’s the projections that give us the confidence that, uh, we will be able to get there. But as of today, none of us have a quantum computer that we can show a data center and say, use it, you will get this practical benefit today compared to your, uh, HPC cluster or supercomputer.
07:58 Brian Sozzi
Subodh, you know, there’s some broader issues, concerns out there for investors, you know them well. Worries about the economy, worries about the Trump tariffs. I’m just curious, Subodh, have those impacted, affected at all, how you’re leading this company right now, in terms of just decisions you want to make about, about investing, about spending, about hiring?
08:28 Subodh Kulkarni
Well, not really at this stage. Uh, since we are primarily focused on R&D, things like tariffs don’t matter to us as much because most of our expenses are in the US. Most of them are salary type expenses. So, uh, tariffs fundamentally don’t hit us and we are not selling many things to any foreign governments where reciprocal tariffs becomes an issue. So as of right now, tariffs is not an issue. Long term, obviously, we watch what’s going to happen. If there’s significant tariffs for parts that we are buying from outside the US, it will impact us to some extent. And same if there are reciprocal tariffs when we are selling quantum computers or quantum computing as a service to foreign countries, that would impact us too. So long term it does absolutely will make a difference. But as of today, while we are doing R&D, tariffs is not as big an issue. Even the economy, the macro factors, like the, the GDP or inflation, those kinds of factors that are typically very important for a traditional company with a mature business are not as important when you are doing early stage R&D work as we are doing right now in quantum computing.
09:57 Brian Sozzi
Subodh, you know, we talk on tariffs so we have to talk China. I am very curious to get your take on this, which is kind of the broader geopolitical competition with China Subodh, when it comes to quantum computing. Uh, China is intent on becoming a true global tech powerhouse Subodh. I mean, how does the US right now stack up? Subodh. How does it compare and contrast with China when it comes to this field, quantum computing?
10:31 Subodh Kulkarni
Quantum computing is a very high stakes area right now. It is being viewed as a critical technology by just about all the developed economies of the world. Certainly US, China included, but many Western European and Asian countries as well. And the stakes are indeed high because the company or country that owns quantum computing has a huge advantage over everyone else. Uh, one of the main reasons for that is encryption, decryption. Almost all of our information right now is encrypted with some form of RSA or AES encryption and it works because a standard computer, even a supercomputer cannot break it. With quantum computers, we have shown with models that you can relatively easily break AES or RSA encryption. So the stakes are very high. I mean, if a rogue company or a rogue country got quantum computers before we do, they could not only hack into our information, they could take our information and encrypt it with the quantum computer. So we don’t even have any access to our prior information. So stakes are indeed very high. That’s why governments are very much aware of it. Uh, regarding your specific question, um, we all are, very keenly looking at what countries like China are doing and, uh, China is investing extremely aggressively in quantum computing, um, and we really don’t know exactly where they are. Uh, as of right now, based on publications and patent literature, we have a good sense that they are making rapid progress. Uh, we, but we don’t know exactly where they are. So, US quantum computing as a field generally started in the US and Europe came along at the same time. Right now, we believe companies like us, along with IBM and Google are in the lead globally. But we have to be careful. China may be catching up, maybe very close and maybe even ahead, and we just don’t know. This is an area where they are not going to openly divulge if you’re ahead. If this is a critical asset, if you are indeed ahead of other countries, you are definitely not going to tell other countries that you are ahead. So it’s an area of extreme concern for everyone. And that’s why our government, along with other Western European governments, are taking this area very, very seriously.