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Ginkgo Bioworks Reports Second Quarter 2023 Financial Results

August 9, 2023

Ginkgo added 21 new Cell Programs to the Foundry platform in Q2 2023

Highlighted continued success selling into large established biotech R&D organizations with recently expanded relationships with Sumitomo, Novo Nordisk, and Merck

Ginkgo ended Q2 2023 with approximately $1.1 billion in cash and cash equivalents, providing a strong multi-year runway as Ginkgo continues to drive towards profitability

BOSTON, Aug. 9, 2023 /PRNewswire/ -- Ginkgo Bioworks Holdings, Inc. (NYSE: DNA, "Ginkgo"), which is building the leading platform for cell programming and biosecurity, today announced its results for the second quarter ended June 30, 2023. The update, including a webcast slide presentation with additional details on the second quarter and supplemental financial information, will be available at investors.ginkgobioworks.com.

"I'm really energized by the work that we have done at Ginkgo this past quarter," said Jason Kelly, co-founder and CEO of Ginkgo. "This has been a record quarter on several dimensions, we launched more programs than we ever have before and are seeing strong output from our Foundry.  While we still have much more to do, many of the investments we have made to make biology more like an engineering discipline are paying off.  This is being reflected not only in our output but also in the outcomes we're delivering for our partners, and we're honored to have more and more technically sophisticated customers trusting Ginkgo to manage their R&D efforts."

Recent Business Highlights & Strategic Positioning

  • Added 21 new Cell Programs to the Foundry platform in Q2 2023, representing 62% growth over the prior year period
    • In addition to bringing new customers onto the platform, Ginkgo progressed and/or expanded several partnerships with market leading companies including Sumitomo, Novo Nordisk, and Merck
  • Ginkgo's Cell Engineering segment generated services revenue, which does not include downstream value share revenue, of $44 million, a 72% increase versus the second quarter of 2022
  • Ginkgo's Biosecurity segment generated $35 million of revenue in the second quarter. As the COVID-19 public health emergency came to an end in the United States during the quarter, Biosecurity revenue continues to shift away from COVID-19 testing programs in schools and communities towards a more recurring model focused on long-term biosecurity infrastructure
    • Concentric continues to expand internationally, with partnerships in 10 countries outside the U.S., including a recently announced Memorandum of Understanding in Panama, our first partnership in Latin America and a key international hub
  • Across both segments, Ginkgo continues to advance its relationships with the US government and has been recently awarded contracts from the Intelligence Advanced Research Projects Agency (IARPA) and the Defense Advanced Research Projects Agency (DARPA) to develop improvements in biosecurity and biomanufacturing, in addition to ongoing biosecurity work with the US Centers for Disease Control and Prevention (CDC)

Appointment of Shyam Sankar as Chair of Ginkgo's Board of Directors
Shyam Sankar, who has served on Ginkgo's board of directors since 2015, has been unanimously appointed Chair of Ginkgo's board. Mr. Sankar is the Chief Technology Officer at Palantir Technologies and brings a wealth of experience in key technology and growth areas for Ginkgo, including artificial intelligence and government partnerships. Marijn Dekkers, who has served as Ginkgo's Chair since joining the board in 2019, will remain an active director on the board.

"We are so excited to have Shyam step into this leadership position on our board as we see real opportunities in areas in which he's a world expert, including artificial intelligence," said Jason Kelly, co-founder and CEO of Ginkgo. "Shyam has been extremely helpful over the last eight years of tremendous growth, and we look forward to his guidance and leadership as he steps into this new role. Shyam is building on the strong foundation Marijn has built.  I'm extremely grateful for Marijn's leadership and partnership throughout his tenure as Chair and look forward to continued collaboration as he continues in a director role. We look forward to working with both Shyam and Marijn in Ginkgo's next phase of growth."

Second Quarter 2023 Financial Highlights

  • Second quarter 2023 Total revenue of $81 million, down from $145 million in the comparable prior year period, a decrease of 44% primarily driven by the expected ramp down of K-12 testing in Ginkgo's Biosecurity segment
  • Second quarter 2023 Cell Engineering revenue of $45 million, up from $44 million in the comparable prior year period
    • Cell Engineering services revenue, which does not include downstream value share revenue, increased by 72% in the second quarter of 2023 compared to the prior year period
  • Second quarter 2023 Biosecurity revenue of $35 million with gross profit margin of 49%
  • Second quarter 2023 Loss from operations of $(184) million (inclusive of stock-based compensation expense of $62 million), compared to Loss from operations of $(648) million in the comparable prior year period (inclusive of stock-based compensation expense of $607 million). The stock-based compensation expense primarily relates to the continued GAAP accounting for the modification of restricted stock units issued prior to Ginkgo becoming a public company, as disclosed in our annual report on Form 10-K filed with the SEC on March 13, 2023, and which we expect will continue to ramp down significantly in the second half of 2023
  • Second quarter 2023 Adjusted EBITDA of $(75) million, down from $(24) million in the comparable prior year period driven by both the higher run-rate of expenses in Cell Engineering and the as-expected decline in Biosecurity revenue
  • Cash and cash equivalents balance as of the end of the second quarter of approximately $1.1 billion puts Ginkgo in a strong financial position to pursue its strategic objectives

Full Year 2023 Outlook

  • Ginkgo is targeting 100 new Cell Programs to the Foundry platform in 2023
  • Ginkgo is expecting Total revenue of $245 to $260 million in 2023
    • Ginkgo revised its expectation for Cell Engineering revenue to $145 to $160 million in 2023. This guidance excludes the impact of any downstream value share revenue. This revision is driven by an evolution in the typical size and structure of our contracts, including success-based pricing which is impacting the timing of revenue recognition. The flexibility we're able to provide to customers during an ongoing challenging environment, particularly for industrial biotechnology, is a key part of our value proposition.
    • While Biosecurity remains an uncertain business, Ginkgo continues to expect Biosecurity revenue in 2023 of at least $100 million, including a mix shift towards emerging product lines that are expected to be more recurring in nature, such as federal and international partnerships supporting pathogen monitoring and biosecurity infrastructure development

Conference Call Details
Ginkgo will host a videoconference today, Wednesday, August 9, 2023, beginning at 5:30 p.m. ET. The presentation will include an overview of the second quarter financial performance, recent business updates, a discussion on Ginkgo's outlook, as well as a moderated question and answer session.

To ask a question ahead of the presentation, please submit your questions to @Ginkgo on X (the social network formerly known as Twitter) (hashtag #GinkgoResults) or by sending an e-mail to investors@ginkgobioworks.com.

A webcast link is available on Ginkgo's Investor Relations website and a replay will be made available following the presentation.

Ginkgo Investor Website: https://investors.ginkgobioworks.com/events/

Audio-Only Dial Ins:
+1 646 876 9923 (New York)
+1 301 715 8592 (Washington DC)
+1 312 626 6799 (Chicago)
+1 669 900 6833 (San Jose)
+1 253 215 8782 (Tacoma)
+1 346 248 7799 (Houston)
+1 408 638 0968 (San Jose)

Webinar ID: 914 4736 3590

If you experience technical difficulties with any of these dial-ins or if you need international dial-in numbers, please visit our web site at https://investors.ginkgobioworks.com/events/ for updated dial-in information.

About Ginkgo Bioworks
Ginkgo Bioworks is the leading horizontal platform for cell programming, providing flexible, end-to-end services that solve challenges for organizations across diverse markets, from food and agriculture to pharmaceuticals to industrial and specialty chemicals. Ginkgo's biosecurity and public health unit, Concentric by Ginkgo, is building global infrastructure for biosecurity to empower governments, communities, and public health leaders to prevent, detect and respond to a wide variety of biological threats. For more information, visit ginkgobioworks.com and concentricbyginkgo.com, read our blog, or follow us on social media channels such as X (the social network formerly known as Twitter) (@Ginkgo and @ConcentricByGBW), Instagram (@GinkgoBioworks and @ConcentricByGinkgo), Threads (@GinkgoBioworks) or LinkedIn.

Forward-Looking Statements of Ginkgo Bioworks 
This press release, the presentation, and the conference call and webcast contain certain forward-looking statements within the meaning of the federal securities laws, including statements regarding our plans, strategies, including with respect to our balance sheet and cash runway, acquisitions, current expectations, operations and anticipated results of operations, both business and financial, including opportunities for increased operational efficiency, potential customer success, including successful application of our offerings by our customers, expectations with regard to revenue, the nature of such revenue and any related downstream value share associated with such revenue, expenses, including our stock-based compensation expenses, our full year 2023 outlook, and the market environment, all of which are subject to known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements, market trends, or industry results to differ materially from those expressed or implied by such forward-looking statements. These forward-looking statements generally are identified by the words "believe," "can," "project," "potential," "expect," "anticipate," "estimate," "intend," "strategy," "future," "opportunity," "plan," "may," "should," "will," "would," "will be," "will continue," "will likely result," and similar expressions. Forward-looking statements are predictions, projections and other statements about future events that are based on current expectations and assumptions and, as a result, are subject to risks and uncertainties. Many factors could cause actual future events to differ materially from the forward-looking statements in this document, including but not limited to: (i) volatility in the price of Ginkgo's securities due to a variety of factors, including changes in the competitive and highly regulated industries in which Ginkgo operates and plans to operate, variations in performance across competitors, and changes in laws and regulations affecting Ginkgo's business, (ii) the ability to implement business plans, forecasts, and other expectations, and to identify and realize additional business opportunities, (iii) the risk of downturns in demand for products using synthetic biology, (iv) the uncertainty regarding the demand for passive monitoring programs and biosecurity services, (v) changes to the biosecurity industry, including due to advancements in technology, emerging competition and evolution in industry demands, standards and regulations, (vi) our ability to realize the expected benefits of merger and acquisition transactions, (vii) the outcome of any legal proceedings against Ginkgo, including as a result of recent acquisitions, (viii) our ability to realize the expected benefits from and the success of our Foundry platform programs, (ix) our ability to successfully develop engineered cells, bioprocesses, data packages or other deliverables, and (x) the product development or commercialization success of our customers. The foregoing list of factors is not exhaustive. You should carefully consider the foregoing factors and the other risks and uncertainties described in the "Risk Factors" section of Ginkgo's most recent quarterly report on Form 10-Q filed with the U.S. Securities and Exchange Commission (the "SEC"), and other documents filed by Ginkgo from time to time with the SEC. These filings identify and address other important risks and uncertainties that could cause actual events and results to differ materially from those contained in the forward-looking statements. Forward-looking statements speak only as of the date they are made. Readers are cautioned not to put undue reliance on forward-looking statements, and Ginkgo assumes no obligation and does not intend to update or revise these forward-looking statements, whether as a result of new information, future events, or otherwise. Ginkgo does not give any assurance that it will achieve its expectations.

Use of Non-GAAP Financial Measures
Certain of the financial measures included in this release, including Adjusted EBITDA, have not been prepared in accordance with generally accepted accounting principles ("GAAP"), and constitute "non-GAAP financial measures" as defined by the SEC.  Ginkgo has included these non-GAAP financial measures because it believes they provide an additional tool for investors to use in evaluating Ginkgo's financial performance and prospects. Due to the nature and/or size of the items being excluded, such items do not reflect future gains, losses, expenses or benefits and are not indicative of our future operating performance. These non-GAAP financial measures are supplemental to, should not be considered in isolation from, or as an alternative to, financial measures determined in accordance with GAAP. In addition, these non-GAAP financial measures may differ from non-GAAP financial measures with comparable names used by other companies. See the reconciliation below for additional information regarding certain of the non-GAAP financial measures included in this release, including a description of these non-GAAP financial measures and a reconciliation of the historic measures to Ginkgo's most comparable GAAP financial measures.

Ginkgo Bioworks Contacts: 

INVESTOR CONTACT:
investors@ginkgobioworks.com  

MEDIA CONTACT:
press@ginkgobioworks.com  

 

Ginkgo Bioworks Holdings, Inc.

Condensed Consolidated Balance Sheets

(in thousands, except per share data, unaudited)








As of June 30, 2023


As of December 31, 2022

Assets





Current assets:





Cash and cash equivalents


$                  1,105,787


$                   1,315,792

Accounts receivable, net


68,019


80,907

Accounts receivable - related parties


899


1,558

Inventory, net


391


4,364

Prepaid expenses and other current assets


48,357


47,458

Total current assets


1,223,453


1,450,079

Property, plant and equipment, net


294,244


314,773

Operating lease right-of-use assets


391,430


400,762

Investments


119,944


112,188

Equity method investments


1,120


1,543

Intangible assets, net


105,033


111,041

Goodwill


58,829


60,210

Other non-current assets


97,946


88,725

Total assets


$                  2,291,999


$                   2,539,321

Liabilities and Stockholders' Equity





Current liabilities:





Accounts payable


$                       13,630


$                        10,451

Deferred revenue


39,223


47,817

Accrued expenses and other current liabilities


110,478


114,694

Total current liabilities


163,331


172,962

Non-current liabilities:





Deferred revenue, net of current portion


179,903


174,767

Operating lease liabilities, non-current


410,938


413,256

Warrant liabilities


14,146


10,868

Other non-current liabilities


20,096


31,191

Total liabilities


788,414


803,044

Commitments and contingencies





Stockholders' equity:





Preferred stock, $0.0001 par value



Common stock, $0.0001 par value


196


190

Additional paid-in capital


6,280,632


6,136,378

Accumulated deficit


(4,775,943)


(4,397,659)

Accumulated other comprehensive loss


(1,300)


(2,632)

Total stockholders' equity


1,503,585


1,736,277

Total liabilities and stockholders' equity


$                  2,291,999


$                   2,539,321

 

Ginkgo Bioworks Holdings, Inc.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(in thousands, except per share data, unaudited)












Three Months Ended June 30,


Six Months Ended June 30,



2023


2022 (as adjusted*)


2023


2022 (as adjusted*)

Cell Engineering revenue


$         45,283


$         44,242


$         79,379


$         65,730

Biosecurity revenue:









Product


10,788


3,887


22,454


17,834

Service


24,497


96,489


59,437


229,459

Total revenue


80,568


144,618


161,270


313,023

Costs and operating expenses:









Cost of Biosecurity product revenue


2,034


2,444


6,575


10,539

Cost of Biosecurity service revenue


16,062


61,467


33,896


138,804

Research and development (1)


144,282


290,059


306,921


613,635

General and administrative (1)


102,341


438,427


213,774


873,195

Total operating expenses


264,719


792,397


561,166


1,636,173

Loss from operations


(184,151)


(647,779)


(399,896)


(1,323,150)

Other income (expense):









Interest income, net


14,349


2,264


28,894


2,441

Loss on equity method investments


(67)


(10,166)


(1,516)


(31,053)

Loss on investments


(2,121)


(38,673)


(8,491)


(38,223)

Change in fair value of warrant liabilities


(4,482)


23,509


(3,278)


108,544

Gain on deconsolidation of subsidiary





15,900

Other income, net


3,224


230


6,152


2,149

Total other income (expense), net


10,903


(22,836)


21,761


59,758

Loss before income taxes


(173,248)


(670,615)


(378,135)


(1,263,392)

Income tax expense (benefit)


67


(45)


149


(229)

Net loss


(173,315)


(670,570)


(378,284)


(1,263,163)

Loss attributable to non-controlling interest



(1,745)



(3,833)

Net loss attributable to Ginkgo Bioworks
Holdings, Inc. stockholders


$     (173,315)


$    (668,825)


$    (378,284)


$ (1,259,330)

Net loss per share attributable to Ginkgo Bioworks
Holdings, Inc. common stockholders, basic and
diluted


$           (0.09)


$          (0.41)


$          (0.20)


$          (0.78)

Weighted average common shares outstanding,
basic and diluted


1,933,437


1,620,704


1,924,251


1,614,138

Comprehensive loss:









Net loss


$     (173,315)


$    (670,570)


$    (378,284)


$ (1,263,163)

Other comprehensive income (loss):









Foreign currency translation adjustment


314


(3,141)


1,332


(3,781)

Total other comprehensive income (loss)


314


(3,141)


1,332


(3,781)

Comprehensive loss


$     (173,001)


$    (673,711)


$    (376,952)


$ (1,266,944)


* As adjusted to reflect the impact of the adoption of Accounting Standards Codification Topic 842, Leases ("ASC 842"). See Note
1 to the condensed consolidated financial statements contained in Part I, Item 1 of this Quarterly Report on Form 10-Q for a
summary of the adjustments.

(1)

R&D and G&A expenses included a significant charge for stock-based compensation expense as a result of the modification
of the vesting terms of RSUs and all related earnout shares. Total stock-based compensation expense, inclusive of employer
payroll taxes, was allocated as follows (in thousands):

 



Three Months Ended June 30,


Six Months Ended June 30,

(in thousands)


2023


2022 (as
adjusted*)


2023


2022 (as
adjusted*)

Research and development


$       40,569


$      217,291


$       88,110


$     483,631

General and administrative


21,908


389,979


49,567


782,674

Total


$        62,477


$      607,270


$     137,677


$  1,266,305

 

Ginkgo Bioworks Holdings, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands, unaudited)








Six Months Ended June 30,



2023


2022 (as adjusted*)

Cash flows from operating activities:





Net loss


$              (378,284)


$           (1,263,163)

Adjustments to reconcile net loss to net cash used in operating activities:





Depreciation and amortization


36,610


17,968

Stock-based compensation


134,474


1,259,336

Loss on equity method investments


1,516


31,053

Loss on investments


8,491


38,223

Change in fair value of warrant liabilities


3,278


(108,544)

Change in fair value of contingent consideration liability


8,453


300

Gain on deconsolidation of subsidiary



(15,900)

Impairment loss on assets held for sale


9,001


Non-cash customer consideration


(353)


(18,139)

Non-cash lease expense


16,327


7,536

Amortization of finance lease right-of-use assets


569


1,004

Non-cash in-process research and development


3,981


1,162

Other non-cash activity


2,213


502

Changes in operating assets and liabilities:





Accounts receivable


15,397


(38,598)

Prepaid expenses and other current assets


9,538


4,373

Inventory


2,549


(4,740)

Operating lease right-of-use assets


4,096


Other non-current assets


(2,426)


(419)

Accounts payable


2,993


10,650

Accrued expenses and other current liabilities


(6,997)


(12,881)

Deferred revenue, current and non-current


(21,372)


(19,708)

Operating lease liabilities, current and non-current


(13,250)


(5,332)

Other non-current liabilities


(922)


(3,989)

Net cash used in operating activities


(164,118)


(119,306)

Cash flows from investing activities:





Cash acquired in acquisition



1,440

Purchase of convertible note



(6,500)

Purchases of property and equipment


(32,974)


(13,153)

Proceeds from sale of equipment


2,926


77

Prepayment for marketable equity securities



(3,691)

Deconsolidation of subsidiaries - cash



(28,772)

Other


(590)


(49)

Net cash used in investing activities


(30,638)


(50,648)

Cash flows from financing activities:





Principal payments on finance leases


(648)


(609)

Contingent consideration payment


(1,042)


(521)

Other


(579)


(905)

Net cash provided by financing activities


(2,269)


(2,035)

Effect of foreign exchange rates on cash and cash equivalents


(495)


(104)

Net (decrease) increase in cash, cash equivalents and restricted cash


(197,520)


(172,093)






Cash and cash equivalents, beginning of period


1,315,792


1,550,004

Restricted cash, beginning of period


53,789


42,924

Cash, cash equivalents and restricted cash, beginning of period


1,369,581


1,592,928






Cash and cash equivalents, end of period


1,105,787


1,377,152

Restricted cash, end of period


66,274


43,683

Cash, cash equivalents and restricted cash, end of period


$              1,172,061


$              1,420,835






* As adjusted to reflect the impact of the adoption of ASC 842. See Note 1 to the condensed consolidated financial statements
contained in Part I, Item 1 of this Quarterly Report on Form 10-Q for a summary of the adjustments.

 

Ginkgo Bioworks Holdings, Inc.

Selected Non-GAAP Financial Measures

(in thousands, unaudited)












Three Months Ended June 30,


Six Months Ended June 30,



2023


2022 (as
adjusted*)


2023


2022 (as
adjusted*)

Net loss attributable to Ginkgo Bioworks
Holdings, Inc. stockholders


$      (173,315)


$   (668,825)


$     (378,284)


$(1,259,330)

Interest income, net


(14,349)


(2,264)


(28,894)


(2,441)

Income tax expense (benefit)


67


(45)


149


(229)

Depreciation and amortization


17,652


9,028


36,610


17,968

EBITDA


(169,945)


(662,106)


(370,419)


(1,244,032)

Stock-based compensation (1)


62,477


607,270


137,677


1,266,305

Loss on equity method investments (2)


67


9,952


1,516


30,216

Loss on investments


2,121


38,673


8,491


38,223

Change in fair value of warrant liabilities


4,482


(23,509)


3,278


(108,544)

Gain on deconsolidation of subsidiary





(15,900)

Merger and acquisition related expenses
(3)


16,493


4,321


34,855


8,167

Asset impairment (4)


9,001



9,001


Change in fair value of convertible notes


(152)


906


(196)


332

Adjusted EBITDA


$        (75,456)


$     (24,493)


$     (175,797)


$     (25,233)




* As adjusted to reflect the impact of the adoption of ASC 842. See Note 1 to the condensed consolidated financial statements
contained in Part I, Item 1 of this Quarterly Report on Form 10-Q for a summary of the adjustments.




(1)

For the three and six months ended June 30, 2023, includes $1.0 million and $3.2 million, respectively, in employer payroll
taxes. For the three and six months ended June 30, 2022, includes $0.8 million and $7.0 million, respectively, in employer
payroll taxes.

(2)

Represents losses on equity method investments under the hypothetical liquidation at book value method, net of losses
attributable to non-controlling interests.

(3)

Represents transaction and integration costs directly related to mergers and acquisitions including (i) due diligence, legal,
consulting and accounting fees associated with acquisitions, (ii) post-acquisition employee retention bonuses and severance
payments, (iii) the fair value adjustments to contingent consideration liabilities resulting from acquisitions, and (iv) acquired
intangible assets expensed as in-process research and development associated with asset acquisitions.

(4)

Represents impairment loss on lab equipment acquired as part of the Zymergen, Inc. acquisition.

 

Ginkgo Bioworks Holdings, Inc.

Segment Information

(in thousands, unaudited)










Three Months Ended June 30,


Six Months Ended June 30,


2023


2022 (as
adjusted*)


2023


2022 (as
adjusted*)

Revenue:








Cell Engineering

$          45,283


$         44,242


$         79,379


$         65,730

Biosecurity

35,285


100,376


81,891


247,293

Total revenue

80,568


144,618


161,270


313,023

Segment cost of revenue:








Biosecurity

18,096


63,911


40,471


149,343

Segment research and development expense:








Cell Engineering

86,083


63,948


184,605


112,359

Biosecurity

528


443


1,095


960

Total segment research and development
expense

86,611


64,391


185,700


113,319

Segment general and administrative expense:








Cell Engineering

50,907


36,601


112,599


63,294

Biosecurity

16,699


12,409


30,655


25,644

Total segment general and administrative
expense

67,606


49,010


143,254


88,938

Segment operating (loss) income:








Cell Engineering

(91,707)


(56,307)


(217,825)


(109,923)

Biosecurity

(38)


23,613


9,670


71,346

Total segment operating loss

(91,745)


(32,694)


(208,155)


(38,577)

Operating expenses not allocated to segments:








Stock-based compensation (1)

62,477


607,270


137,677


1,266,305

Depreciation and amortization

17,652


9,028


36,610


17,968

Asset impairment

9,001



9,001


Change in fair value of contingent
consideration liability

3,276


(1,213)


8,453


300

Loss from operations

$     (184,151)


$    (647,779)


$    (399,896)


$ (1,323,150)









* As adjusted to reflect the impact of the adoption of ASC 842. See Note 1 to the condensed consolidated financial statements
contained in Part I, Item 1 of this Quarterly Report on Form 10-Q for a summary of the adjustments.

(1)

Includes $1.0 million and $0.8 million in employer payroll taxes for the three months ended June 30, 2023 and 2022,
respectively, and $3.2 million and $7.0 million in employer payroll taxes for the six months ended June 30, 2023 and 2022,
respectively.

 

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