Ginkgo Bioworks Holdings, Inc. — FY2022 Form 10-K
Reporting period: Year ended December 31, 2022. Although the request refers to 2022 Q4, this filing reports full-year results; standalone fourth-quarter financial figures are not provided in the supplied text.
Business context
Ginkgo operates a cell-programming platform (“Foundry” and “Codebase”) that provides research and development services to customers across multiple industries. Its Biosecurity segment primarily provided COVID-19 testing products and services. In 2022, the company began reporting these as two operating segments.
Financial performance and liquidity
| Metric | FY2022 | FY2021 |
|---|---|---|
| Total revenue | $477.7 million | $313.8 million |
| Foundry revenue | $143.7 million | $113.0 million |
| Biosecurity revenue | $334.0 million | $200.8 million |
| Operating loss | $(2,209.0) million | $(1,828.5) million |
| Net loss attributable to Ginkgo stockholders | $(2,104.9) million | $(1,830.0) million |
| Adjusted EBITDA (non-GAAP) | $(172.8) million | $(106.0) million |
| Net cash used in operating activities | $(252.2) million | $(253.8) million |
| Cash and cash equivalents at year-end | $1,315.8 million | $1,550.0 million |
Revenue grew 52% year over year. Biosecurity service revenue was $298.6 million and product revenue was $35.5 million. Foundry revenue included $75.8 million of non-cash consideration, versus $39.9 million in 2021; reported Foundry revenue therefore should not be read as equivalent to cash collected.
Operating expenses were $2,686.7 million. Stock-based compensation was $1,940.9 million, a major contributor to the reported loss. Biosecurity product and service revenue less their stated direct costs totaled approximately $129.8 million, before other segment expenses. The filing does not present a consolidated gross margin measure.
Cash, cash equivalents and restricted cash totaled $1,369.6 million at year-end, including $53.8 million of restricted cash. Operating cash use remained broadly flat year over year. The balance sheet reported $441.3 million of operating lease liabilities and $2.8 million of finance lease liabilities; no material conventional borrowings are identified in the supplied text. Management said cash and investments were expected to fund projected operations for several years and at least the next 12 months. The filing also disclosed $420.9 million of undiscounted commitments for signed but not yet commenced real-estate leases.
Material changes versus FY2021
- Biosecurity revenue increased $133.2 million, while Foundry revenue increased $30.7 million. The growth in Biosecurity depended heavily on COVID-19 testing demand.
- New programs increased to 59 from 31; active programs rose to 112 from 71; cumulative programs rose to 164 from 105. Customers increased to 56 from 33.
- Two customers each represented more than 10% of revenue and together accounted for 22%, down from 28% in 2021.
- G&A expense rose $566.8 million, including a $444.9 million increase in stock-based compensation expense. R&D expense fell $97.0 million, primarily because of lower stock-based compensation, partly offset by higher operating costs.
- Cash and cash equivalents declined $234.2 million. The company raised approximately $98.9 million net through a November 2022 public offering.
- Acquisitions expanded the platform: Zymergen was acquired for stock consideration valued at approximately $231.8 million; Bayer assets were acquired for approximately $80 million cash; and the company also acquired FGen, Altar and Circularis, among other assets.
Outlook, risks and unusual items
- Outlook: The filing provides no formal numerical revenue or earnings guidance. Management expects continued investment in R&D, Foundry capacity, Biosecurity and acquisitions. It expects COVID-19 testing demand to diminish, while newer biosecurity offerings were not material revenue in 2022.
- Profitability and funding: Ginkgo has a history of substantial losses and expects losses to continue; it may need additional capital. Downstream royalties, milestones and equity value depend on technical progress and customers’ commercialization, and are uncertain.
- Non-cash revenue and investments: Revenue may include equity or other non-cash consideration measured using estimates; later value and eventual cash proceeds can be lower. Private-company equity positions may be illiquid or impaired.
- Acquisition and dilution: Integration and synergy benefits, particularly from Zymergen, are uncertain. Acquisitions involved share issuance, contingent consideration and integration costs. The company reported $46.2 million of M&A-related expenses in its Adjusted EBITDA reconciliation.
- Cash concentration event: Following Silicon Valley Bank’s closure in March 2023, Zymergen had approximately $74 million on deposit there, about 6% of Ginkgo’s year-end cash and cash equivalents; approximately $10 million secured lease letters of credit. The company said the balance was immaterial to liquidity but was evaluating broader impacts on counterparties.
- Controls and audit: Management and the auditor identified material weaknesses in financial-reporting controls, including management review and IT/data controls. The auditor issued an adverse opinion on internal control effectiveness; the financial-statement audit opinion was unqualified. The weaknesses did not result in a reported material misstatement.
- Other notable risks: Customer concentration, supply dependence, regulatory and biosecurity risks, GMO acceptance, intellectual-property protection, and multi-class voting control. Class B shares carry ten votes per share; the filing says directors and executive officers held approximately 47.4% of total voting power as of year-end.
- Legal matters: The filing describes securities and derivative litigation involving Zymergen and a separate 2023 complaint concerning Zymergen’s Lodo acquisition; damages sought were unspecified. Zymergen is also cooperating with government information requests relating to a 2021 disclosure.
Investor facts to verify
- How much of reported Foundry revenue converts to cash, and what is the realizable value and liquidity of non-cash consideration and equity holdings?
- Whether Biosecurity revenue can be replaced as COVID-19 testing demand falls, and whether newer monitoring offerings generate material revenue.
- Progress toward reducing operating losses and cash use, including the effect of stock-based compensation and planned capital spending.
- Integration results and contingent payments for Zymergen and other acquisitions, and whether expected cost and platform benefits materialize.
- Remediation of the disclosed financial-control weaknesses, including whether controls over management review and IT/data systems become effective.
- Exposure to SVB-related counterparty impacts, lease commitments, supplier minimums and the outcome of Zymergen-related litigation and investigations.