DNA

Business Context and Reporting Period

Company: Ginkgo Bioworks Holdings, Inc. (NYSE: DNA)
Filing Type: Form 10-Q (Unaudited)
Period: Three months ended March 31, 2026
Business Overview: Ginkgo provides cell engineering biological R&D services and tools to government and commercial customers. The company operates as a single reportable segment following the divestiture of its Biosecurity business, which was completed in April 2026 and is now reported as discontinued operations.

Key Financial Metrics

Note: Q1 2025 revenue included a one-time $7.5 million non-cash recognition from a terminated contract.

Material Changes vs. Prior Period

• Revenue Decline: Revenue decreased 49% year-over-year to $19.5 million. This was primarily driven by the absence of the $7.5 million non-cash revenue recognized in Q1 2025 from the BiomEdit contract termination and a reduction in scope for a large agriculture customer.
• Expense Reduction: Total operating expenses decreased 24% to $90.8 million. Research and Development (R&D) expenses dropped 29.6% to $49.9 million, and General and Administrative (G&A) expenses fell 4.8% to $37.8 million, reflecting the impact of the 2024 restructuring plan (workforce reduction and facility consolidation).
• Restructuring Charges: No restructuring charges were recorded in Q1 2026, compared to $4.5 million in Q1 2025, as the initial workforce reduction substantially concluded in late 2025.
• Investment Losses: The company recorded a $6.8 million loss on the change in fair value of a note receivable (Bolt Threads) in Q1 2026 after the borrower ceased operations, compared to a $3.7 million loss on investments in Q1 2025.

Outlook, Risks, and Unusual Items

• Discontinued Operations: The Biosecurity business was sold in April 2026. Results are now classified as discontinued operations. The company retained a minority equity interest in the purchaser.
• Liquidity and Capital: Management believes existing cash and marketable securities ($373.5 million) are sufficient to fund operations for at least the next 12 months. However, $47.0 million of cash was restricted in April 2026 to secure a surety bond for a government contract, expected to remain restricted until 2029.
• Restructuring Continuation: While workforce reductions are complete, facility consolidation and subleasing efforts are expected to continue throughout 2026. Future costs related to sublease losses or asset impairments may be material.
• Guidance: Management expects R&D and G&A expenses to remain consistent or decline in 2026 compared to 2025, though expenses could increase due to investments in tools offerings or employee incentive programs.
• Risks: Key risks include the ability to raise additional capital, intense competition in synthetic biology, reliance on customers to commercialize products, and the volatility of equity interests held in customers.

Investor Verification Checklist

• Cash Runway: Verify the impact of the $47.0 million restricted cash on the company's effective liquidity and ability to fund operations through 2027.
• Revenue Quality: Assess the sustainability of revenue growth excluding one-time non-cash considerations (e.g., the $7.5 million BiomEdit release in 2025).
• Facility Costs: Monitor the "carrying cost of excess space" ($15.8 million in Q1 2026) and the timeline for subleasing unused facilities to reduce this burden.
• Investment Portfolio: Review the status of remaining equity investments and notes receivable, particularly given the total write-down of the Bolt Threads note.
• Restructuring Completion: Confirm the final costs associated with facility consolidation and whether additional impairment charges are anticipated in 2026.