Ginkgo Bioworks Holdings, Inc. — 2021 Form 10-K
Reporting period: Fiscal year ended December 31, 2021. This is an annual report, not a standalone fourth-quarter filing; quarterly financial results are not clearly provided in the supplied filing text. The company completed its business combination and became publicly traded in September 2021.
Business context
Ginkgo operates a cell-programming platform for customers across industries. It earns Foundry revenue from research and development services and may receive downstream royalties, milestones, or equity value if customer programs succeed. Biosecurity revenue primarily came from COVID-19 testing products and services. Management reported 105 cumulative programs, 71 active programs, and 31 new programs commenced in 2021.
Financial performance and liquidity
| Metric | 2021 | 2020 |
|---|---|---|
| Total revenue | $313.8 million | $76.7 million |
| Foundry revenue | $113.0 million | $59.2 million |
| Biosecurity revenue | $200.8 million | $17.4 million |
| Operating loss | $(1,828.5) million | $(137.0) million |
| Net loss attributable to Ginkgo stockholders | $(1,830.0) million | $(126.6) million |
| Adjusted EBITDA (non-GAAP) | $(106.0) million | $(121.4) million |
| Operating cash flow | $(253.8) million | $(135.8) million |
- Revenue rose about 309%, led by a $183.4 million increase in Biosecurity revenue and a $53.8 million increase in Foundry revenue. Biosecurity product and service costs totaled $129.7 million, implying approximately $71.2 million of gross profit, or a 35% gross margin, before other operating expenses.
- Research and development expense was $1,149.7 million and general and administrative expense was $863.0 million. These included approximately $1,687.6 million of stock-based compensation, largely following November 2021 changes to RSU vesting conditions. The unusual noncash charge was a major driver of the reported net loss.
- Cash and cash equivalents were $1,550.0 million at year-end; current assets were $1,723.0 million and current liabilities $134.8 million. The company said available liquidity was expected to fund projected operations for at least 12 months from filing. Net proceeds from the business combination and PIPE were approximately $1,509.6 million.
- Investing cash outflow was $73.3 million and financing cash inflow was $1,534.1 million. Year-end total liabilities were $503.6 million, including $22.3 million of lease financing obligations and $135.8 million of warrant liabilities. No conventional borrowing balance is clearly identified in the supplied text.
- Future minimum operating-lease payments were $685.4 million, including a new Boston campus lease; approximately $115 million of capital expenditures was anticipated over the next 12 months.
Material changes versus 2020
- Biosecurity revenue expanded sharply with pooled COVID-19 testing; management cautioned that demand and revenue beyond 2021 were uncertain.
- Foundry customers increased from 22 to 33, active programs from 49 to 71, and cumulative programs from 74 to 105. Two customers represented 28% of revenue, down from 39% in 2020; customer concentration nevertheless remained material.
- Net loss widened substantially, principally due to the RSU modification and related stock-based compensation. Adjusted EBITDA improved by $15.4 million but remained negative.
- The September business combination added substantial cash, while public-company costs and equity-award expense increased reported expenses. Ginkgo acquired Dutch DNA in July 2021 for total consideration of approximately $35.3 million.
Outlook, risks and unusual items
- Management expects continued losses and increased spending on R&D, Foundry capacity, personnel, facilities, Biosecurity, and public-company operations. It provided no specific revenue or profitability guidance in the supplied text.
- Management cited Foundry scaling and reusable biological data as growth drivers, while acknowledging that technical progress, customer commercialization, and downstream royalties, milestones, and equity proceeds are uncertain. It reported Foundry output had historically scaled roughly threefold annually, with unit-operation costs declining about 50% annually, but cautioned that these trends may not continue.
- COVID-19 testing is exposed to reduced demand, changing public funding, competition, test authorization requirements, and dependence on third-party laboratories and telehealth partners. Ginkgo also faces regulatory, biosecurity, environmental, intellectual-property, supply-chain, cybersecurity, and customer-concentration risks.
- The filing disclosed a preliminary, informal Department of Justice inquiry following an October 2021 short-seller report. Management said it was not aware of material pending litigation; the filing does not establish the outcome of the inquiry.
- Ginkgo has a multi-class share structure: Class B shares carry 10 votes each, Class A one vote, and Class C generally no votes. This concentrates voting power and may limit Class A holders’ influence. Two customers accounted for 17.0% and 10.5% of 2021 revenue.
- Ernst & Young issued an unqualified opinion on the consolidated financial statements. The filing did not include management’s assessment or auditor attestation of internal control over financial reporting because of the transition period for newly public companies; it notes material weaknesses had been identified in the past. Management concluded disclosure controls were effective at year-end.
Important facts for investors to verify
- How much of 2021 revenue and cash generation was recurring Foundry work versus COVID-19 testing, and how testing demand developed after year-end.
- The composition, timing, and cash consequences of the $1.688 billion stock-based compensation charge, including remaining unrecognized compensation and potential dilution.
- Whether customer concentration declines and whether customers successfully commercialize programs that could generate downstream value.
- Cash burn, receivable collection, capital spending, lease commitments, and the company’s liquidity runway against its stated plans.
- The status and potential consequences of the DOJ inquiry, and progress in remediating financial-reporting control weaknesses.
- The terms and performance obligations under major supplier arrangements, including the Berkeley Lights commitment, and whether the planned Foundry expansion earns adequate returns.