Rigetti's Revenue Delays Amplify Execution and Dilution Risks Despite Technical Gains

What happened

Rigetti announced significant sales in October that are deferred until 2026, delaying potential revenue recognition. The company's 2025 sales could fall below 2024 levels, highlighting its reliance on sub-scale, contract-driven income. While Rigetti has made technical strides, including 99.5% median two-qubit gate fidelity on a modular 36-qubit system and a target for a 100+ qubit chiplet by end-2025, these advancements have not yet spurred commercial momentum. The $350M ATM program established in May 2025 raises dilution concerns, as capital needs may intensify amid revenue shortfalls. This underscores the execution- and financing-sensitive thesis, where delayed sales expose the gap between technological promise and financial execution.

Implication

The delayed sales to 2026 and projected 2025 revenue drop indicate Rigetti's slow transition to recurring commercial revenue, increasing dependence on volatile development contracts. This revenue weakness could pressure the stock and prompt more aggressive use of the $350M ATM, leading to shareholder dilution. Technical achievements like fidelity improvements are positive but insufficient to de-risk the investment without tangible commercial wins. Investors must closely monitor the delivery of the 100+ qubit system and new contract announcements, as setbacks could further erode confidence. Overall, the HOLD/NEUTRAL stance remains appropriate, with a potential downgrade if revenue trends worsen or key milestones are missed.

Thesis delta

The news of delayed sales and potential 2025 revenue decline reinforces the execution and financing risks already highlighted in the DeepValue report, such as reliance on sub-scale contracts and dilution overhang. It does not shift the core HOLD/NEUTRAL stance but increases the urgency for monitoring contract conversions and milestone deliveries. If revenue shortfalls persist or the 100+ qubit system delivery slips, it could trigger a downgrade to a more cautious view.