Ginkgo Bioworks Holdings, Inc. — 2023 Form 10-K
Reporting period: Fiscal year ended December 31, 2023. This is an annual report; the supplied filing text does not provide a clear standalone fourth-quarter income statement. Ginkgo operates two reportable segments: Cell Engineering, which provides cell-programming R&D services, and Biosecurity, which provides biomonitoring and bioinformatic services.
Financial performance and liquidity
| Metric | 2023 | 2022 |
|---|---|---|
| Total revenue | $251.5 million | $477.7 million |
| Cell Engineering revenue | $143.5 million | $143.7 million |
| Biosecurity revenue | $107.9 million | $334.0 million |
| Operating loss | $864.4 million | $2.209 billion |
| Net loss attributable to Ginkgo stockholders | $892.9 million | $2.105 billion |
| Adjusted EBITDA (non-GAAP) | $(355.4) million | $(172.8) million |
| Cash used in operating activities | $295.5 million | $252.2 million |
| Cash and cash equivalents at year-end | $944.1 million | $1.316 billion |
Biosecurity service revenue was $79.0 million and product revenue was $28.9 million. Biosecurity segment operating loss was $3.2 million, versus segment operating income of $71.5 million in 2022. Cell Engineering segment operating loss was $425.2 million, versus $298.3 million. Segment measures exclude stock-based compensation, depreciation and amortization, and changes in fair value of certain contingent liabilities; they are not GAAP operating income.
Year-end current assets were $1.002 billion and current liabilities were $163.9 million. Total assets were $1.665 billion and total liabilities were $568.2 million. The balance sheet reports operating lease liabilities of $240.7 million and finance lease liabilities of $1.5 million; it does not report material conventional borrowings. Cash, cash equivalents, short-term investments and investment interest are expected by management to fund projected operations for several years, but the filing cautions that assumptions may prove incorrect. Management states cash is expected to cover projected operations through at least the next 12 months.
Changes versus 2022 and unusual items
- Revenue declined 47%, primarily because COVID-19 school testing demand fell after the public health emergency ended; school testing ceased by the third quarter of 2023. Biosecurity revenue fell by $226.1 million, while Cell Engineering revenue was essentially flat.
- Net loss narrowed by $1.212 billion, largely because stock-based compensation fell to $234.9 million from $1.941 billion following the substantial 2021 equity-award modification. Despite the lower GAAP net loss, Adjusted EBITDA loss widened to $355.4 million from $172.8 million, and operating cash use increased by $43.3 million.
- Ginkgo recorded a $96.2 million impairment of lease assets after Zymergen exited an Emeryville facility, and a $42.5 million loss when it deconsolidated Zymergen following its October 2023 bankruptcy filing. Ginkgo completed the acquisition of substantially all of Zymergen’s assets in January 2024.
- Investment losses were $54.8 million, including a $33.0 million impairment of Genomatica preferred stock. The carrying value of that investment was $11.9 million at year-end.
- Ginkgo started 78 new programs, had 162 active programs, and had 242 cumulative programs, compared with 59, 112, and 164, respectively, in 2022. Customer count increased to 91 from 56. Two customers each contributed more than 10% of 2023 revenue and together accounted for 23%.
Outlook, risks and contingencies
- Management expects expenditures to exceed revenue through at least the next 12 months. It expects organic operating expenses to remain consistent with or decline from 2023 levels in 2024, and anticipates approximately $70 million of capital expenditures over the next 12 months. No specific revenue or profitability guidance is provided.
- Ginkgo’s strategy is to expand Foundry capacity and Codebase, grow Cell Engineering programs, and build recurring Biosecurity monitoring, analytics and service contracts. Potential downstream royalties, milestones and equity proceeds depend on customers’ development and commercialization success and are uncertain in timing and amount.
- Material commitments include $286.1 million remaining under a five-year Google Cloud agreement, with minimum cloud-service purchases and up to $56.3 million of milestone-based cash funding; and a $58.0 million minimum purchase commitment under a four-year Twist supply agreement. A signed but not yet commenced Boston lease had $396.5 million of undiscounted commitments at year-end. The filing also lists $43.6 million of 2024 and $387.5 million thereafter in minimum commitments under existing noncancelable operating leases.
- Management identified a material weakness in internal control over financial reporting involving insufficiently precise and timely management review controls over significant accounts and the completeness and accuracy of supporting data. Disclosure controls were deemed ineffective at December 31, 2023, and the auditor issued an adverse opinion on internal control. The weakness did not result in a material misstatement; the financial statements received an unqualified audit opinion. Remediation is ongoing in 2024.
- Key risks include continuing losses and cash burn, possible need for additional capital, customer and revenue concentration, reliance on customers to commercialize programs, uncertain Biosecurity demand and public-sector funding, equity-investment valuation and liquidity risk, competition and rapid technological change, supplier concentration, regulatory and biosafety exposure, cybersecurity and AI risks, and the voting influence of the ten-vote Class B shares.
- Subsequent events include Synlogic’s February 2024 announcement that it would cease operations and evaluate strategic options. Ginkgo reported Synlogic common stock and warrants with year-end fair values of $1.6 million and $0.7 million, respectively. In February 2024, Ginkgo also entered into a Qatar facility development and lease agreement with an 18-year lease term and a $5.0 million minimum capital-expenditure commitment.
Important facts for investors to verify
- Whether Cell Engineering growth and new program activity translate into higher cash service revenue, and whether customers advance programs to commercialization.
- How quickly operating cash use and Adjusted EBITDA loss can be reduced after the loss of COVID-testing revenue; reconcile management’s cash-runway statement with commitments, lease costs and planned capital expenditures.
- The terms, timing and potential cancellation costs of the Google Cloud, Twist and facility commitments, including the future Boston lease and Qatar agreement.
- Progress and independent evidence of remediation of the material weakness in financial reporting controls.
- Recoverability and eventual cash realization of non-cash customer consideration, private-company investments and contingent downstream value; specifically monitor Synlogic and Genomatica.
- Customer concentration, government funding and contract renewal for Biosecurity, and whether the international monitoring network can generate sustainable recurring revenue.
- Potential share dilution and governance effects: the filing reported 2.001 billion common shares outstanding at December 31, 2023, plus substantial outstanding equity awards and warrants; Class B shares carry ten votes per share.