Rigetti Computing Inc

NASDAQ:RGTI

Earnings Call Analysis

Earnings Call Transcript 2024-Q2

[Operator]

Thank you for standing by. I am Agusta, and I will be your conference operator today. At this time, I would like to welcome everyone to the Rigetti Computing Second Quarter 2024 Financial Results. [Operator Instructions] I would now like to turn the call over to Subodh Kulkarni, CEO and President of Rigetti. Please go ahead.

[Subodh Kulkarni, executive]

Good afternoon, and thank you for participating in Rigetti's earnings conference call covering the second quarter ended June 30, 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 second quarter ended June 30, 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 3 and 6 months ended June 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.

First, on our technology road map and QPU performance. Rigetti remains on track to develop and deploy its anticipated 84-qubit Ankaa-3 system with the goal of achieving a 99-plus percent median 2-qubit gate fidelity by the end of 2024. We have seen very promising results both with fidelity and speed on our current systems, which leverage the underpinning technology of our upcoming Ankaa-3 system.

Our 24-qubit system is performing in the 99% range for 24-qubit fidelity. Our gate speeds are 60 to 80 nanoseconds, making our systems twice as fast as some other superconducting quantum computing players and 3 to 4 orders of magnitude faster than trapped ion and pure atom quantum computing systems.

We are confident that we can translate this level of performance to our 84-qubit chip. In addition, we continue to demonstrate leadership in developing high-performing scalable quantum processors. In May 2024, Rigetti’s research introducing multichip tunable couplers, floating tunable couplers that can be used to entangle qubits on separate chips, was published in the peer-reviewed scientific journal, Physical Review Applied.

We introduced the world's first modular chip architecture in 2021, unlocking the ability to connect multiple identical chips into a large-scale quantum processor. This modular approach exponentially reduces manufacturing complexity and allows for accelerated, predictable scaling. This architecture will allow for future Ankaa systems to be tied together to create larger qubit count processors without sacrificing gate performance.

Furthering our work to improve the industry's understanding of the requirements needed for fault-tolerant quantum computers, in June 2024, we released preliminary research on the resource estimation framework related developed in Phase 1 of the DARPA Benchmarking Program.

Our manuscript represents the resource estimation framework and a software tool that estimates the physical resources required to execute specific quantum algorithms, compiled into their graph-state form and laid out onto a modular superconducting hardware architecture.

We will continue to work to optimize quantum algorithms for a variety of applications and improved the utility estimates to understand the value proposition of future quantum computers. The limited number of qubits available on current quantum computers is a challenge that must be overcome to deliver utility in quantum combinatorial optimization.

In July, we introduced a method to solve large combinatorial problems using a small number of qubits using Rigetti's Ankaa-9Q-3 system. This method introduces a qubit-efficient combinatorial solver, which stores classical variables in an entangled wave function of fewer qubits. In summary, I'm pleased with our progress on the technology front.

We remain on track to develop and deploy our 84-qubit Ankaa-3 system with the goal of achieving a 99-plus percent median 2-qubit gate fidelity by the end of 2024. Thank you. Jeff will now make a few remarks regarding our recent financial performance.

[Jeffrey Bertelsen, executive]

Thanks, Subodh. Revenues in the second quarter of 2024 were $3.1 million compared to $3.3 million in the second quarter of 2023. Revenues in the second quarter of 2024 include the sale of the Novera QPU ship to Horizon Quantum Computing in April. Gross margins in the second quarter of 2024 came in at 64% compared to 82% in the second quarter of 2023. Revenue and gross margin variability is to be expected at this stage of the company's evolution, given the variable nature of contract deliverables and timing with major government agencies.

In addition, our recent contract to deliver a 24-qubit quantum system has a lower gross margin profile than most of our other revenue. On the expense side, total OpEx in the second quarter of 2024 was $18.1 million compared to $19 million in the same period of the prior year.

The year-over-year decrease in total OpEx was primarily driven by an increase in the amount of engineering time used to deliver revenue, resulting in a higher cost allocation to cost of revenue. IT costs also decreased in the second quarter of 2024 when compared to the same period of 2023, mainly due to savings from R&D-related IT systems rationalization.

Stock compensation expense for the second quarter of 2024 was $3.3 million compared to $3.4 million for the second quarter of 2023. Net loss for the second quarter of 2024 was $12.4 million or $0.07 per share compared to a net loss of $17 million or $0.13 per share for the second quarter of 2023.

The noncash change in the fair value of derivative warrant and earn-out liabilities favorably impacted our net loss for the second quarter of 2024 by $3.4 million compared to a negative impact of $355,000 in the comparable prior year period. Cash, cash equivalents and available-for-sale investments totaled $100.5 million up to June 30, 2024.

On March 15, 2024, we entered into an ATM sales agreement for shares of our common stock having an exit offering price of up to $100 million. For the period from April 1 to July 12, 2024, we raised $27.8 million from the sale of 24.1 million common shares under our current ATM program, including $15.8 million raised in the 3 months ended June 30, 2024.

As disclosed in today's 10-Q filing, we believe that our existing balances of cash, cash equivalents and marketable securities should be sufficient to meet our anticipated operating cash needs until midway through the first quarter of 2026, 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.

[Operator]

[Operator Instructions] For our first question, Craig Ellis with B. Riley Securities.

[Craig Ellis, analyst]

And Subodh, I wanted to start with you. So it's nice to see that the company continues to make nice progress with gate fidelity and that you look for progress on 4-qubit systems to persist. As you make both fidelity progress and as you see that happening at such high speeds, what's happening with the center of conversation with some of your partners, whether they be some of the engagements you've had with U.S. entities or some of your international partners or new partners?

[Subodh Kulkarni, executive]

Yes. Good question, Craig. Thanks for the question. So as we improve fidelity with superconducting quantum processors that LR has always been a challenge for superconducting quantum processors or rest of the metrics of scalability and particularly gate speed. As we said, we are in the 60 to 80 nanosecond range. And that's very good for practical uses of quantum computing and our partners, whether it's the DOE, DOD or the U.K. government, National Lab or other national labs around the world.

They're very pleased with the progress that they see both in terms of fidelity as well as the gate speed, particularly gate speed because, as you all know, CPUs and GPUs go very fast. So in a real tactical sense to keep up the CPU/GPU clock speeds, you need to be in the nanosecond range and some other modalities, although they have better fidelities to start because they are doing with pure atoms or ions. There are 3 to 4 orders of magnitude.

We are talking about 1,000 to 10,000 times slower. So they're dealing with hundreds of microseconds. And even though the -- for some applications that may not be an issue, for most practical applications, obviously, a speed of a computer matters. I mean nobody is very good to say speed doesn't matter in computation.

So it's critical that we continue to improve our speed from the 60 to 80 nanoseconds we have right now and other modalities certainly have a tall task ahead of them to improve the gate speeds to where we are right now. But overall, the combination of fidelity, gate speed and other metrics makes many of our current customers, the national labs believe we are indeed approaching what we call the narrow quantum advantage or the broad quantum advantage era in the next couple of years. Hopefully, that answers your question.

[Craig Ellis, analyst]

Yes, that's really helpful, Subodh. And then, Jeff, I'll just flip one over to you. So as you mentioned, the nature of gross margin at this stage of the company's evolution can be a bit bumpy. Can you call out any notable items that existed in 2Q? And then any color as you look at 3Q, whether it be on the top line with any gives or takes with development engagements as they're progressing or others or on gross margin would be helpful.

[Jeffrey Bertelsen, executive]

Sure. In Q1 and Q2, we did sell and are progressing nicely with the 24 QPU system, and that does have a lower gross margin, recognize a little bit more revenue from that in Q1 than Q2, which is why our gross margin ticked up a bit. I do think going forward, just given the relatively small size of our revenue and the different types of projects that we're working on, we'll continue to see some lumpiness in our revenue, some lumpiness in our gross margin.

I do think going forward, as we start to get more Novera sales, those tend to have pretty good margins and generally have a good margin profile. So they should help margins moving forward.

[Operator]

Our next question comes from Quinn Bolton with Needham & Company.

[Quinn Bolton, analyst]

Subodh and Jeff, congratulations on the continued technical progress. I guess I wanted to start there. Your 24-qubit, 2-qubit gate fidelities are already at 99%. You're trying to get there for the 84-qubit QPU by year-end. Just knowing that these are semiconductor-based designs, I'm wondering if you can talk to us about, are you already in the process of beginning to fab the 84-qubit QPUs that will get you to that 99% gate fidelity by year-end or the cycle time is not that long so you've got some more time to work. But just what gives you the confidence that you can get there on the full 84-qubit QPU by year-end?

[Subodh Kulkarni, executive]

Thanks, Quinn. The chip that we use for 24-qubit and 84-qubit is basically the same chip. We just take 24-qubits out of the 84-qubit and bring them up first and characterize them and do the 24-qubit measurements first. So it's the same fundamental chip that we use both for 24-qubit and 84-qubit. So that answers your question that have we fabricated the chip already, and we have multiple 84-qubit chips already in our hand.

We are characterizing them, bringing them up, that's what's taking the time and effort right now. There's a lot of optimizations that we have to do when we bring up a chip, including everything from the way we pulse and the shape of the pulses, the timing of the pulses and so on. So a lot of work goes into bringing up the chip and tuning and retuning as opposed to just fabricating.

Typically, because we have our own fab, we turn the crank from idea to a new chip in a couple of months' time period. So we take plenty of turns in a year, at least 5 or 6 of new ideas. So we'll continue to generate new ideas and we are and we will be fabricating new chips. And if something looks better, obviously, we'll take that.

But based on all the current data with the 24-qubit chip, which is basically the same as 84-qubit chip, we feel pretty good that we should be in the 99-plus-percent range with 84-qubit by the end of this year. Hope that answers your question.

[Quinn Bolton, analyst]

Yes, it certainly does on the manufacturing side. I guess just in terms of characterizing the qubits, obviously, it sounds like on the 24-qubit systems, you take a subset of the qubits. My guess is you sort of measure them and you take the best 24. What's sort of the falloff you've seen between the 24-qubits that you use and then the rest of the 84 or the remaining qubits. Are you within 0.5 percentage point kind of across the entire chip right now? Or is there a bigger delta between, say, the 24 that are 99% and the remainder -- I mean how much work do you have to do to kind of get the rest of the chip up there to 99%?

[Subodh Kulkarni, executive]

Good question. We actually don't choose per se the best 24-qubits or anything like that. Frankly, because of -- our individual qubits, they're falling. I mean the 1q fidelity is like 99.9% most of the times. So we cannot really tell which qubits are the best.

So all the challenges that we run into when we talk about 2-qubits fidelity is when we start doing the entanglement and bringing them up. And our priority, we don't know where the entangle issue -- entanglement issues are going to happen with which qubit so it's not like we choose the best 24 and bring them up, and that's what we report the number and then we worry about.

They are essentially random of 24-qubits that are adjacent to each other that we bring up and then we will do the same with the 84-qubit. Regarding -- I mean, you had a good question about the spread that we see. And there is a spread. Typically, it all depends on where the errors are coming from with that particular lot.

And sometimes it depends on the position in the wafer and so on. Sometimes it has to do with the dilution refrigeration system and the thermalization of it and those kinds of things. So depending on where the errors are coming from, we do notice of variability.

Typically, we monitor the 2-qubit fidelity across the entire grid. And if you look at our Ankaa-2 that is deployed right now on Azure and AWS. Are you -- are our median 2-qubit gate fidelity for Ankaa-2 was 98%, but there was a spread. I mean there were some 2-qubit gates, which were closer to 97% and some that are closer to 99% so rather spread across the chip of about a couple percent.

Along with the median obviously, our goal is to tighten that spread. So as we -- like our 9-qubit 99.3%, 2-qubit fidelity, I believe the lowest one is in the range of 99% -- maybe 99.1% and the highest ones are actually closer to 99.7% or 99.8%. So we can see that we can make superconducting 2-qubit fidelities well in the 99.8% type numbers. I hope that answers your question.

[Quinn Bolton, analyst]

No, that was great. And I guess, sorry for my misunderstanding of how you sort of select the qubits in the 24 versus the 84 configurations. I wanted to move maybe to more the sort of the revenue or the business side for a minute. The company has been generating revenue of about $3 million to $3.5 million for the last 5 quarters.

Can you just maybe spend a minute talking about the pipeline for either Novera or additional 24-qubit QPU sales that you might see this year and into next year? Is the pipeline building? Would you expect sort of an upward trend in revenue as we get into the second half of this year?

Or would you encourage investors to think that revenue sort of stays in this 3-ish plus or minus range until you get the technical milestone with Ankaa-3 at 99% 2-qubit fate fidelity. And once you hit that, that may be more where you may see the knee in the curve. Just any sort of thoughts on how we should be thinking about just kind of modeling the revenue ramp over the next several quarters?

[Subodh Kulkarni, executive]

Sure. Overall, we think in the next year or 2, definitely, we expect revenues to ramp up. And that's primarily because most of the governments and national labs, if you look at the press releases coming out, they are increasing their budgets starting with the U.S. I mean, U.S. is increasing its quantum budget significantly.

The bills are going through our house and Senate as we speak. But both sides seem to this bipartisan support to increase the budget quite a bit, same with U.K., European countries, many Asian countries. So overall government funding for quantum computing is increasing significantly. So that's obviously a great backdrop to have, and those are our customers.

Regarding the -- one of the challenges we have is, I mean, the systems when we sell on-premise QPU systems, typically, we are pricing them in the neighborhood of $200,000 to $250,000 per qubit. So a 24-qubit system roughly is in the $5 million neighborhood, and timing of that is always difficult to predict. So -- and we are dealing with governments and national labs, obviously, and their budgets and you know how those things can be very lumpy the way the budgets get passed with bills and stuff like that.

So exactly when we get an order from a national lab, when we can deliver and when we can recognize the revenue, it becomes a very difficult job to do. So it is going to be lumpy for the foreseeable future. We are in that 3%, 3.5% range today for sales per quarter, primarily because most of the revenues are coming from DOE, DOD and the U.K. government contracts.

And those are more predictable in nature. But when it comes to on-premise QPU orders and deliveries, it's going to be lumpy until the business becomes large enough where we get some kind of a smoothing effect. So I would say overall, the trend should be up in the next couple of years because of the increased interest in on-premise QPUs from governments and national labs, but it's going to be lumpy until we get bigger and smoothing effect starts coming in. I know you wanted a more specific answer, but I think that's the best I can give right now. Jeff, do you want to add anything?

[Jeffrey Bertelsen, executive]

No, I think that's a good response, Subodh. That's the way I would see it, too.

[Quinn Bolton, analyst]

Okay. And then maybe just one quick one for you, Jeff, just OpEx should -- looks like it's been sort of hovering about $15 million on a non-GAAP basis backing out stock-based compensation. Is that sort of a decent level to be thinking about on a go-forward basis? Or do you have plans to ramp headcount?

[Jeffrey Bertelsen, executive]

No, I think that's reasonable. I mean there'll be a few headcount adds here and there, but we aren't planning to significantly increase the headcount. So I think our recent results should really reflect our spending in the upcoming quarters.

[Operator]

David Williams from Benchmark.

[David Williams, analyst]

I just had a question on the 24-qubit system. How quickly can you bring those up? And is the same process that you go through internally, as you're bringing a chip up for use in internal?

[Subodh Kulkarni, executive]

Thanks, David. So typically, when we have a new chip, the majority of the time first goes in cooling the dilution refrigeration system. We are talking about day or 2 days to bring the dilution refrigeration to the 10-milikelvin kind of temperatures. After that, it does depend on how long you want to optimize the performance of the chip.

I mean, if it starts functioning well from the get-go and most of the 9-qubit chips, we are making these days, are in that range. We can bring them up within a few hours right away [indiscernible]. So you're talking a couple of days to bring up the system, if you will, and then it stays stable at that condition, whatever practically until something goes wrong with the DR or somewhere else in the system.

24-qubit, we are learning as we go along because we don't have that much experience as we have with 9-qubit systems, but the time lines are similar, a couple of days to get the DR polled a day or 2 to do the initial optimization and if everything looks good, you are up and running, if we have to do more tuning and optimization depends on how extensive it is. But we are talking days here. So essentially, once the chip is ready within a few days, we can be up and urning as a system.

[David Williams, analyst]

Okay. Great. And then maybe if you could talk a little bit more, and you mentioned on the Quinn's question about the government funding. But I know a couple of quarters ago, you were quite encouraged by some activity you've seen, clearly that still exist or is still the case? Can you talk about maybe any specifics or areas where you're maybe more enthusiastic about opportunities within government funding?

And how big of a piece of the business do you think that, that would be near term? I'm assuming with research and development, that could be a larger chunk. But how do you think about that relative to maybe some of the interest that you're receiving outside of government entities for processors?

[Subodh Kulkarni, executive]

I mean, overall, the government funding situation is improving nicely. There are many studies that have been done, but most of the business that is expected in the next 3 to 4 years is expected to come from the government side. So IDC ran a report a couple of months ago, and they quantified the total quantum computing business to be roughly $7.5 billion in 2027.

And most of that was government spending. Longer term, once we reach the, what we call [indiscernible] quantum computing or quantum advantage, then the commercial business is expected to grow significantly. So when you look at 2035 and 2040, the commercial business starts dominating the numbers when you are talking about tens of billions, if not like $100 billion kind of number.

That's in the commercial business, is the larger entity. But for the first $5 billion to $10 billion business, which is the next 5 years, it's mostly going to be government. That number is definitely in a healthy situation right now. All the governments, including U.S. are planning to increase funding significantly for quantum computing. So we feel pretty good about that opportunity for the foreseeable future.

[Operator]

Krish Sankar with TD Cowen.

[Kinney Chin, analyst]

Sorry, this is Steven calling on behalf of Krish. First one, Subodh, in terms of the competitive environment, I think there's 1 or 2 major other modalities that are currently generating some reasonable amounts of commercial revenues. And I guess just from your perspective, any thoughts on where some of the puts and takes for you guys in generating or at least gaining some mind share in the commercial revenue space? Whether it's 1 or 2 years out once you guys reach the 99% plus fidelity rates for your systems? And what -- I guess, what kind of technical merits would allow you guys to gain the mind share with commercial customers?

[Subodh Kulkarni, executive]

So certainly, I mean, the first part of your question was the competitive modalities. We feel pretty good about where we are on the superconducting modality right now. We believe it's a leading modality. I answered -- that's in our press release. I answered that in the first question. And the primary reason is our qubit count, fidelity.

But importantly, the gate speed, I think many people forget that. Gate speed is important, and we are 3 to 4 orders of magnitude faster than trapped-ion and pure atom kind of modalities. And that puts us in a huge advantageous position when it comes to practical computing.

Regarding commercial opportunities, our view is that we need to demonstrate what we call narrow quantum advantage, which means better performance in terms of either speed or accuracy or better cost compared to classical computation. Before commercial as customers can do an ROI and start showing real interest, we always get a few contracts.

I mean, right now, we work with companies like Moody's and HSBC and Standard Charter and a few other companies like that, who do give us some dollars for doing some specialized projects for them. And yes, we do count them as sales, obviously, but that's really not the classical commercial sales where we are giving them a quantum computer, and they can do an internal ROI and see the benefit they get with quantum computers.

They can't do that today with the performance we are. So in the current era, which is called NISQ era, noisy intermediate-scale quantum computing, we really don't think commercial customers are going to show much interest, except for cursory search level interest. So most of the business that we see in the next 3 to 5 years at least is going to be dominated by government and national lab type customers.

I know some of our competitors are saying more about commercial customers and the interest that they are seeing. We -- as I said, we do talk to a few, and there is some research level interest, but it's not like they are really interested in buying a 24-qubit or a 84-qubit quantum computer for their data center and then hook it up with their HPC.

And if they are not talking to the superconducting people like us, I doubt if they are talking to other modalities like trapped-ion and pure atom. I mean, right now, if you put a GPU next to a trapped-ion or pure atom quantum computer, I mean, you're literally dealing with 4 to 5 orders of magnitude.

I mean, the GPU will be idle for most of the time that the quantum computer has to keep churning. And it doesn't make any sense when you have 4 and 5 orders of magnitude clock speed difference between a GPU and a trapper-ion or a pure atom computer. So I doubt if any commercial customer is really going to put any kind of quantum computer in the data center until we get over that MQA threshold and have clock speeds that are commensurate with their HPC servers. Hopefully, that answers your question.

[Kinney Chin, analyst]

It does. And a couple of quick follow-ups for the current Ankaa-3 or the upcoming Ankaa-3 84-qubit chip milestones. Once you guys hit or reach and exceed that 99% fidelity rate exiting this year, what are the thoughts on potential timing of generating GPU chip sale from Ankaa-3? Would that be like 1, 2, 3 quarters after you guys reach the technical milestones here?

[Subodh Kulkarni, executive]

So our plan really is to get Ankaa-3, the 84-qubit chip 99-plus percent level. Fidelity 2 -- median 2-qubit gets fidelity by the end of this year, as we have stated. After that, as we have said, we want to increase the qubit count. But at the same time, we want to keep increasing fidelity, and we frankly prioritize fidelity over qubit count. So we will look at where to go next and some of the words that we have disclosed today and then we have disclosed in scientific journals this whole concept of modular chiplet effectively.

So we have demonstrated that you can do quantum computation with a chiplet like concept. And we definitely want to -- we have a lot of IP in that area. We have a lot of know-how in that area, and we definitely want to leverage all that. So we are looking at -- once we get to Ankaa-3, are we going to be timing 84-qubit, if so how many times or are we going to take a subset of 84, like a 9-quit or 24-qubit and do timing of that? And if so, how many?

So we are going through those calculations and plans right now. But certainly, we will continue to improve fidelity and qubit count 2025. That's where I believe -- we believe the narrow quantum advantage that we have talked in the past. A, it's going to need obviously very higher qubit count than where we are right now and certainly a little higher fidelity than where we are right now. Exact numbers, it's not clear, but we certainly think between the fidelity improvement and qubit count improvement, we plan to achieve next year. We should be able to demonstrate narrow quantum advantage before the end of next year. That's our current plan. Hopefully, I answered your question.

[Kinney Chin, analyst]

Yes. And then just a last quick one for Jeff. Jeff, just a quick question on the at-the-market sales program. I know the market volatility has led to a lot of dispersion valuation. But just kind of curious, like in terms of when you guys might next utilize the program? Would it be based on certain timing relative to your financial planning? Or is it just being opportunistic relative to any recovery in the stock valuation?

[Jeffrey Bertelsen, executive]

Yes. Thanks. I mean I certainly would definitely be more opportunistic, I think. Certainly, we're sensitive to the share price and the current pullback given the overall pullback in the market. So I think going forward, we would tend to look at it opportunistically and go from there.

[Operator]

Brian Kinstlinger from Alliance Global Partners.

[Brian Kinstlinger, analyst]

I just wanted to follow-up. I have 2 questions. The first one is on the progress you're making on the road map and how it's impacting the pipeline. You've obviously talked about it at nauseam. You moved from a 9-qubit to 24 at 99% fidelity. Is there a way to quantify the pipeline of how many national labs maybe you're talking to or in active discussions with versus maybe a year ago? Is that having an impact on that pipeline?

[Subodh Kulkarni, executive]

Good question, Brian. So yes, absolutely, the pipeline continues to increase. So there are many national labs we are talking to right now, certainly, the DOE labs, DOD labs. But U.K. obviously chose us over competition for delivering the 24-qubit system this year.

But you go around Europe and Asia, pretty much many countries advanced economies, I would say, are viewing quantum computing as very strategic, and they each have their plan on how they want to play in the quantum computing era. And many of them view superconducting quantum computing as the leading modality of any many regions that we have talked about in the past.

And they are talking to us -- I assume that they are talking to some of our other larger tech competitors as well. But they are definitely taking a close look. But overall, the pipeline is definitely much larger today than what it was a year ago when we were dealing with mid-90s or fidelity, as we have approached -- and our 9-qubit is already well past 99%.

We are in the 99.3% median 2-qubit gate fidelity for 9-qubit. We are at approach 99% for -- we are at 99% for 24-qubit now. And our customers see that certainly, the value that this team when we get those kinds of fidelities at that kind of qubit count, with that gate speed becomes very attractive for them to start thinking tactical applications.

They're still in research stage, but they are starting to see how this all fits them. So the pipeline definitely has increased. The national labs of most advanced countries are beginning to take an active interest in quantum computing. Each country is slightly different in the way they pass their budgets and how it goes to the various parliamentary bodies, if you will, and on which national labs take the lead and so on.

So time lines can be different for different countries. But overall, the pipeline is a lot bigger today and a lot healthier today than what it was a year ago.

[Brian Kinstlinger, analyst]

Great. My second question, my follow-up is, you could speak to your ability to hire and retain top talent as employee turnover remained low, while the excitement at Rigetti of improving and progressing on the road map continues.

[Subodh Kulkarni, executive]

Great question. We look at our attrition rate very, very seriously. And we are in -- obviously, most of our employees are in the Bay Area where in general, the tech market is very good, as you know. Our attrition rate has been extremely low, much, much lower than an average company in the Northern California region, and certainly a lot lower than when I came in the company just about 18 months ago.

And most of it is because people see where we are headed. They like the fact that we are hitting our milestones. We are executing our road map very well. And they see the bright future ahead for when we reach this 100-qubit type numbers at the 99.5-plus percent level, and we think will be there in a year or so.

That makes quantum computing really practically feasible for many interesting applications. So our employees see the NQA around the corner, they see the potential, they see the interest. So excitement is high and moral is very, very good. And that usually means much lower attrition, right? And that's what we are seeing. So we really haven't lost any key employees in the last at least 6 months and maybe getting close to 9 months or so, right now. So we feel really good about the employee situation right now.

[Operator]

That concludes our Q&A session. I will now turn the conference back over to Subodh Kulkarni for closing remarks.

[Subodh Kulkarni, executive]

Thank you for your interest and questions. We look forward to updating you with your progress as the year continues. Thank you again.

[Operator]

Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.