The axe has come down on quantum computing firm Rigetti, which laid off 28 percent of its staff on Monday.
The company also switched to a more conservative product roadmap, but is on track to release an 84-qubit system this quarter. The updated roadmap now does not have a release date for a 336-qubit system, which was previously projected by the end of this year.
Rigetti laid off 50 employees, and is also implementing a revised business plan and a new technology roadmap, the company said in a filing with the U.S. Securities and Exchange Commission late last week.
The cost-cutting measure comes as the company faces delisting on the Nasdaq stock exchange.
The company had to take decisive action amid continuing losses and dwindling cash reserves. The company reported $161.0 million in “cash, cash equivalents and available-for-sale investments” on September 30 last year. That was a decline from cash and cash reserves of $184.0 million as of June 30 last year, and $206.6 million as of March 31.
The company’s cash reserves at the end of 2021 stood at $11.7 million, but it received a cash infusion after going public through a merger deal with SPAC (special purpose acquisition company) Supernova Partners Acquisition II Ltd in October 2021, which valued the company $1.5 billion. Rigetti’s market cap has declined considerably, and was at just $126.72 million at the end of trading on February 13.
A revised technology roadmap focuses on a new product called Ankaa. Rigetti expects to launch an 84-qubit system called Ankaa-1 in the first quarter of this year, which improves on the current 80-qubit system called Aspen-M.
After that, Rigetti will refocus on “99% 2-qubit gate fidelity on the anticipated Ankaa-2 84-qubit system, and if this target is achieved, Rigetti plans to shift its focus to scaling to develop the anticipated Lyra 336-qubit system,” the company said in a statement last week.
The new roadmap does not provide a specific release date for the 336-qubit system, which the company last May said was expected to release this year.
Quantum companies D-Wave and IonQ, which also went public through multi-billion dollar SPAC deals, are also trading in single digits. D-Wave traded at under $1 and IonQ at $4.89 on Nasdaq at the close of market on Monday.
While the stock price may not accurately reflect a company’s actual health, the reduced market value does limit the ability to raise capital. The development of quantum hardware is capital intensive with a lot of money spent on research and development. Quantum computing companies require continuous cash infusion to fund the hardware development. The poor economic projections for 2023 may raise the pressure on other quantum computing companies maintain liquidity by cutting costs and preserving cash on hand.
The publicly listed quantum computing companies have been burning more cash than bringing in revenue. Rigetti late last year said it expected 2022 fiscal revenue to be between $12.0 million and $13.0 million, and full-year losses of between $56 and $58 million. D-Wave has projected fiscal 2022 revenue to be between $7 million and $9 million, while IonQ is expecting 2022 revenue to be between $10.2 million to $10.7 million.
The lack of commercial quantum deployments may be an issue for venture capitalists, who are pushing more cash to generative AI companies. VCs pushed $1.37 billion in generative AI across 78 deals, according to numbers from Pitchbook.
In the last month, Google announced it was investing $300 million in Anthropic, which focuses on generative AI. Anthropic was founded by former employees at OpenAI, which itself got a $10 billion infusion from Microsoft. Google and Microsoft announced plans to incorporate AI into search products.
By comparison, the quantum investments have been modest. Some notable deals include a series-B investment worth $110 million in ColdQuanta and a $100 million investment in Xanadu.
Rigetti is developing a superconducting qubit, which is similar to the quantum technologies being developing by Google and IBM. By comparison, Google and IBM have deep pockets and strong partnerships. Rigetti, whose quantum computer is available through AWS, touts an internal manufacturing ability as a core advantage.