Ginkgo Bioworks Q1 2025 Earnings Report

Ginkgo Bioworks EPS Results

• Actual EPS: -$1.58
• Consensus EPS: -$1.23
• Beat/Miss: Missed by -$0.35
• One Year Ago EPS: N/A

Ginkgo Bioworks Revenue Results

• Actual Revenue: $48.32 million
• Expected Revenue: $38.70 million
• Beat/Miss: Beat by +$9.62 million
• YoY Revenue Growth: N/A

Ginkgo Bioworks Announcement Details

• Quarter: Q1 2025
• Date: 5/6/2025
• Time: After Market Closes
• Conference Call Date: Tuesday, May 6, 2025
• Conference Call Time: 5:30PM ET

Ginkgo Bioworks (NYSE:DNA) Holdings Inc. is a biotech company attempting to revolutionize the biotechnology industry by engineering completely new organisms. Founded in 2008 by Jason Kelly, Austin Che, Thomas Knight Jr. and Bartholomew Canton, the company operates a market-agnostic platform utilizing the latest technologies to pioneer the development of more sustainable biotechnology and bioengineering applications. 

Ginkgo Bioworks Holdings Inc. develops multiple platforms for food production, agriculture, industrial and pharmaceuticals. These platforms enable bioengineering applications across diverse markets, and the company customizes organisms for customers ranging from large companies to smaller startups. The company also creates proprietary software, algorithms and automation to engineer "customizable organisms" for their customers and the development of new products for the industrial and consumer markets. 

The company has earned multiple awards for its innovative technology in biologics, including the National Science Foundation's Innovation Corps Award, the National Academy of Engineering's Grand Challenges Award and the World Economic Forum's Technology Pioneers Award. 

Ginkgo Bioworks Holdings Inc. has partnered with prestigious organizations, including the Broad Institute of MIT, Harvard, Genomics England, the National Institutes of Health and the National Science Foundation's Innovation Corps to further their mission of making biotechnology more accessible to smaller and medium-sized organizations. 

Ginkgo Bioworks Holdings Inc. strives to revolutionize the biotech industry, attempting to pioneer the development of an ecosystem that will provide more sustainable and accessible biotechnology systems. With the help of innovative technology and strategic partnerships with prestigious organizations, Ginkgo Bioworks Holdings Inc. is well on its way to achieving this goal and making biotechnology more accessible to smaller and medium-sized organizations.

Ginkgo Bioworks Holdings Inc. has a market cap of approximately $2.97 billion, down from $3.98 in 2022. However, the company has seen rapid growth since 2020, increasing revenues from $3.8 million in 2017 to $313.8 million in 2022. 

Ginkgo Bioworks Q1 2025 Earnings Call Transcript

Presentation

[Daniel Marshall, Senior Manager, Communications & Ownership at Ginkgo Bioworks]

Communications and ownership. It's my third year here at Ginkgo. I've spent much of that time working behind the scenes with our investor relations team on these earnings calls, but I'm thrilled to be joining you for the first time live on air. I'm joined by Jason Kelly, our cofounder and CEO, and Mark Demetriuk, our CFO. Thanks as always for joining us.

[Daniel Marshall, Senior Manager, Communications & Ownership at Ginkgo Bioworks]

We're looking forward to updating you on our progress. As a reminder, during the presentation today, we'll be making forward looking statements, which involve risks and uncertainties. Please refer to our filings with the SEC to learn more about these risks and uncertainties, including our most recent 10 k. Today, in addition to updating you on the quarter results, we're gonna provide updates on our path towards adjusted EBITDA breakeven, traction with our government clients, as well as new offerings and opportunities emerging for our tools businesses. As usual, we'll end with a q and a session, and I'll take questions from analysts, investors, and the public.

[Daniel Marshall, Senior Manager, Communications & Ownership at Ginkgo Bioworks]

You can submit those questions to us in advance via x hashtag ginkgo results or email investors@ginkgobioworks.com. Alright. Over to you, Jason.

[Jason Kelly, Co-Founder & CEO at Ginkgo Bioworks]

Thanks, Daniel. We always start off with our mission here at Ginkgo, which is to make biology easier to engineer. And then we had three objectives. And and I I first showed these or close variants of these, about a year ago when we announced that we were gonna be doing a major restructuring of the company. And these three objectives were to reach adjusted EBITDA breakeven by the end of twenty twenty six, and importantly, doing that while maintaining a cash margin of safety.

[Jason Kelly, Co-Founder & CEO at Ginkgo Bioworks]

In other words, we didn't wanna get in a position where we're gonna need to fundraise, when we didn't want to. Right? We wanted to be doing that if we needed to fundraise from a position of strength, but ideally not even need to fundraise. Second, we wanted to cut cost while, importantly, serving our current customers. We had a lot of amazing customers, large pharmas, large ag biotechs, industrial biotechs, well as the government.

[Jason Kelly, Co-Founder & CEO at Ginkgo Bioworks]

We wanted to keep serving those customers well while at the same time focusing the company. And then finally, we wanted to expand the way we sold our platform, and I'll talk more about this, in the strategic section. But, from not just r and d solutions where we do an end to end research project, but also directly as a tools business, like a traditional CRO or an equipment, vendor would. These were new ways to go to to market to a wider set of potential customers, than we had with our solutions business. So those were our our three objectives.

[Jason Kelly, Co-Founder & CEO at Ginkgo Bioworks]

And I'm very happy to say we made progress on all of them. But after a year, we've just made unbelievable progress on on taking out costs while still serving our customers. So, you know, we're we're I'm very happy to say we're at a $205,000,000 reduction in our annual run rate between q one twenty twenty four and q one twenty five. You might remember, the target I had set was 200,000,000, I think, by q three or something of this year, you know, like halfway through this year. We already beat that.

[Jason Kelly, Co-Founder & CEO at Ginkgo Bioworks]

We're moving you know, we've we've taken actions in the first quarter that are gonna improve this even further, Mark will mention. And so I I I really think this, sets us up, to be in an incredibly strong position. And importantly, because we did it faster, we're we are at this, at this place while still having, you know, 517,000,000 in cash and cash equivalents on the balance sheet and no, you know, no no no bank debt. So so we're we're, that among our peers, in sort of the advanced sort of platform technology space, in the market today, I think is a uniquely strong position. And look, biotech on the capital market is going through a tough time right now.

[Jason Kelly, Co-Founder & CEO at Ginkgo Bioworks]

That is challenging for the companies in it. It's also opportunity, I would say, for investors. And from my standpoint, the companies that can make it out the other side of that are in a particularly strong position, as since biotechnology is, you know, I think, a fundamental industry that's not going away. And so, this sets us up, to be in a place to do that, and I wanna be just, you know, give my thanks to the team for what's been an incredibly, difficult, challenging ton of work last year to get us to where we are, but it puts us in a very, very strong spot, going forward. So with that, I'm gonna hand it to Mark, to go off, over this quarter's financials.

[Mark Dmytruk, CFO at Ginkgo Bioworks]

Thanks, Jason. I'll start with the cell engineering business. Cell engineering revenue was $38,000,000 in the first quarter of twenty twenty five, up 37% compared to the first quarter of twenty twenty four. The first quarter this year included $7,500,000 in noncash revenue from a from a release of deferred revenue relating to the mutual termination of a customer agreement we had with Biome Edit, one of our platform ventures. Excluding this impact, cell engineering revenue was $31,000,000, up 10% compared to the first quarter of twenty twenty four.

[Mark Dmytruk, CFO at Ginkgo Bioworks]

This increase was primarily driven by strong growth with biopharma and government customers. In the first quarter of twenty twenty five, we supported a total of 123 revenue generating programs on the cell engineering platform. This represents a 32% increase in revenue generating programs year over year. As discussed on our last earnings call, this quarter represents the first time we are reporting the new revenue generating program metric and are no longer reporting the original program metrics. As a reminder on the rationale here, the nature of programs that we take on with our customers has evolved significantly following our adjustments to commercial terms and the launch of our tools offerings in 2024.

[Mark Dmytruk, CFO at Ginkgo Bioworks]

This new metric includes all programs that generated meaningful revenue in the quarter, including smaller programs that were previously reported as other contracts, and further excludes programs that did not generate meaningful revenue in the quarter, which typically would be those programs either just starting or in final stages of completion. We believe the new metric will be more useful to analysts who are using this to model revenue. We have also updated the 2024 comparables using this new metric in the appendix. Now turning to biosecurity. Our biosecurity business generated $10,000,000 of revenue in the first quarter of twenty twenty five at a segment gross margin of 28%.

[Mark Dmytruk, CFO at Ginkgo Bioworks]

Segment gross margin excludes stock based compensation. Turning to the next slide, I'll provide more commentary on key items for the rest of the p and l. Now that we are almost a year into our restructuring, you can see the various substantial cost reductions and improvements in profitability that we have executed when compared to the first quarter of twenty twenty four. As a reminder, a full reconciliation between segment operating loss, adjusted EBITDA and GAAP net loss can be found in the appendix. Starting with the more significant items in segment OpEx.

[Mark Dmytruk, CFO at Ginkgo Bioworks]

In the first quarter of twenty twenty five, cell engineering r and d expense decreased 41% from $82,000,000 in the first quarter of twenty twenty four to $49,000,000 in the first quarter of twenty twenty five. Cell engineering g and a expense decreased 53% from $38,000,000 in the first quarter of twenty twenty four to $18,000,000 in the first quarter of twenty twenty five. And while smaller in amount, you can also see a decrease in biosecurity operating expenses by 33% year over year. All these decreases were driven by our restructuring efforts. Net loss.

[Mark Dmytruk, CFO at Ginkgo Bioworks]

It is important to note that our net loss includes a number of noncash income and or expenses as detailed more fully in our financial statements. Because of these non cash and other non recurring items, we believe adjusted EBITDA is a more indicative measure of our profitability. And we are now showing you adjusted EBITDA at the segment level so that you can more clearly see the relative profitability of cell engineering and biosecurity. The significant improvement in cell engineering segment operating loss in the first quarter of twenty twenty five compared to the comparable prior year period was due to the previously discussed drivers of improved revenue and reduced operating expenses as well as the noncash deferred revenue release within the quarter. Biosecurity segment operating loss also improved significantly due to the primarily cost reduction efforts.

[Mark Dmytruk, CFO at Ginkgo Bioworks]

Moving further down the page, you'll note that total company adjusted EBITDA in the first quarter of twenty twenty five was negative $47,000,000, which was up from negative $117,000,000 in the first quarter of twenty twenty four. The principal differences between segment operating loss and total company adjusted EBITDA in the first quarter relates to the carrying cost of excess leased space, which you can see was $12,000,000 in q one this year. This cost represents the base rent and other charges relating to leased space, which we are not occupying, net of sublease income. We'll continue to break that out for you going forward since that is a cash operating cost that is not related to driving revenue right now and can be potentially mitigated through subleasing. And finally, I'll just make one additional comment relating to cash burn in the quarter.

[Mark Dmytruk, CFO at Ginkgo Bioworks]

Cash burn in the first quarter of twenty twenty five was $58,000,000 down from $104,000,000 in the first quarter of twenty twenty four. This significant decrease in cash burn was a result of the restructuring. We expect to further reduce the cash burn run rate significantly from this level by the fourth quarter of twenty twenty five, though we expect some lumpiness in the progression during the year due to timing of working capital. In terms of outlook for the full year, we previously issued guidance for total revenue of 160 to $180,000,000, cell engineering services revenue of 110 to $130,000,000, and biosecurity revenue of at least $50,000,000 We update this previously issued guidance solely to reflect the impact of the previously mentioned $7,500,000 noncash deferred revenue release in the first quarter. With this in mind, we now expect our total revenue to be $167,000,000 to $187,000,000 cell engineering revenue to be $117,000,000 to $137,000,000 and biosecurity to remain the same of at least $50,000,000.

[Mark Dmytruk, CFO at Ginkgo Bioworks]

In conclusion, we're pleased with the substantial improvements in cash burn and profitability when looking back over the past year. In the first quarter, we continued to execute against our core objectives while navigating significant uncertainty in the macro environment. And with that, I will hand it back over to you, Jason.

[Jason Kelly, Co-Founder & CEO at Ginkgo Bioworks]

Thanks, Mark. So in the strategic section, we're gonna cover three topics today. The first, I wanna touch again on our our continued restructuring efforts and how well that's going on the cash take outside and our path to sort of EBITDA breakeven by the end of next year. Second, there's been a lot of changes in the administration and the US government here in terms of sort of approach to to research spending and biosecurity and things like that. And I wanna just highlight that I think biotech remains a critical emerging tech in The US, and I think it goes well positioned for it.

[Jason Kelly, Co-Founder & CEO at Ginkgo Bioworks]

And then third topic, I wanna talk about our tools businesses, data points and automation. This has been our our big motion over the last year is expanding into the tool space, and that's going really well, and I wanna give an update on that. Okay. So first, you know, I I I talked earlier. I'm really happy to, you know, have that highlighted in the middle of that $205,000,000, of annualized run rate cost takeout that we've achieved in the year since we announced the the restructuring.

[Jason Kelly, Co-Founder & CEO at Ginkgo Bioworks]

Our goal, of course, is to get to adjusted EBITDA breakeven in 2026. And so I really like this, chart on the left. You can see, you know, back in q one twenty twenty four where we were on the cash expenses and total revenues. And what we wanna do is just shrink that gray bar and grow the green bar and eventually get those to be the same size. And and so we are pushing at that.

[Jason Kelly, Co-Founder & CEO at Ginkgo Bioworks]

That is sort of the relentless focus here on the team. Again, I'm really happy to to see the progress. It's going in the right direction. We already have made changes in the first quarter that that you'll see reflected in the coming quarters to continue to take costs out. And hopefully, our our efforts in the tool space will keep growing sales as well.

[Jason Kelly, Co-Founder & CEO at Ginkgo Bioworks]

I will mention if you look and and see the segment breakout here, you know, in biosecurity, again, q one twenty twenty four or sorry, q four twenty twenty four to q one twenty twenty five, We're at $5,000,000, on on a run rate burn. That's that's one where we're hoping to really get biosecurity to breakeven this year. And then cell engineering, you can see the enormous progress we've made since q one of twenty twenty four over last year, but I need to continue squeezing on on that in order to reach adjusted EBITDA breakeven next year. So I think we've got a path to it. It it will be a serious amount of work, but, I've been extraordinarily impressed.

[Jason Kelly, Co-Founder & CEO at Ginkgo Bioworks]

And, again, kudos, to the team here at Ginkgo and all the work to date, to get to the strong position we're in today. And, again, I I don't have it on these slides here, but over half a billion dollars in cash in the bank. This has been a tough market for biotechnology. The companies, I think, that make it out the other side of it will be in an especially, strong position. And so the fact that we're so well shored up is is thanks to the team's efforts over the last year.

[Jason Kelly, Co-Founder & CEO at Ginkgo Bioworks]

Alright. Next, I wanna talk about the new administration and what the US government is doing in biotechnology and biosecurity. There's actually a great speech. I really encourage you to either watch it or read it from the president's science adviser, Michael Kratios. It's a cabinet position as of the last administration.

[Jason Kelly, Co-Founder & CEO at Ginkgo Bioworks]

It was turned into a cabinet position. And he had a great, speech where he talked about sort of how the administration was gonna invest in technology and science. And he said whether in AI, quantum, biotech, or next gen semiconductors, it's the duty of the government to enable scientists to create new theories, empower engineers to put them into practice. Practice. And so what's important there is that's your shortlist of critical technologies for The US, AI, quantum, biotech, and chips.

[Jason Kelly, Co-Founder & CEO at Ginkgo Bioworks]

Alright? So it's good to see biotech on that list. It's been on the list, for a while, certainly, in the last administration as well. And so I'm happy to see it. It's still there, from the president's science adviser.

[Jason Kelly, Co-Founder & CEO at Ginkgo Bioworks]

This is a report that came out. You might remember I was actually, chairing this commission. I'm I'm very thankful that, senator Young is now the chair. That's a load off me. And Michelle Rose is the vice chair.

[Jason Kelly, Co-Founder & CEO at Ginkgo Bioworks]

The final report from this National Security Commission on Emerging Biotech, just came out a few weeks ago. I highly encourage folks to read it. Just a quote here. We stand at the edge of a new industrial revolution, one that depends on our ability to engineer biology. So this is a bipartisan commission.

[Jason Kelly, Co-Founder & CEO at Ginkgo Bioworks]

Obviously, senator Young's Republican. I I see, again, a push here, really coming on the legislative side, for improved you know, reduction in regulations, new sources of funding. I think you will see, this administration fund fund things differently, than than the previous administration, but I think you will still see funds continue to go out the door towards biotechnology. And importantly, our solutions business at Ginkgo is a trusted R and D service provider to the US government. So we have 28 government projects across both cell engineering and biosecurity, about 180,000,000 plus of contracted backlog or unfunded potential backlog.

[Jason Kelly, Co-Founder & CEO at Ginkgo Bioworks]

These are sort of like options on some of our contracts depending on how things go. And just to highlight a couple wins since, president Trump's election, we won an ARPA a a grant called ARPA h React. This is in partnership with Carnegie Mellon, about a $9,000,000 program sort of for bioelectronic devices in the in disease treatment. But then I really wanted to highlight, a new program we just announced, a few weeks ago, called Wheat. So a $29,000,000 funded program.

[Jason Kelly, Co-Founder & CEO at Ginkgo Bioworks]

And if you go to the next slide, the the applications, here is really around, how do we bring, manufacturing of critical raw materials in the pharmaceutical industry back onshore. And I think there's a ton of work to do here. You're already starting to see emotions happen here. Pharmaceutical companies investing in manufacturing plants. That's usually around their newer drugs.

[Jason Kelly, Co-Founder & CEO at Ginkgo Bioworks]

We also have a lot of critical drug that, you know, are antibiotics, a lot of our front you know, sort of frontline medications, that have really, been moved overseas over the last twenty, thirty years. I think some of those we do wanna bring back. So some of that's just gonna be building manufacturing plants. But what this program is is actually to make use of, wheat germ. So this is well, it it's an extract, that can that comes as a byproduct of, growing wheat.

[Jason Kelly, Co-Founder & CEO at Ginkgo Bioworks]

And what's cool about it is you are able to essentially take that wheat germ extract, which has all the components, like the low level components of cells. Right? So this is part of the magic of biology. Our, our cells, weed cells, insect cells, bacterial cells, at the lowest level, the DNA, the ribosomes, the mRNA, that's all the same. And so you could actually reuse the material that comes from that wheat germ, add in a piece of DNA that, say, encodes for a human insulin or or another, therapeutic, and then in that cell free system, in that extract, actually produce, that therapeutic drug.

[Jason Kelly, Co-Founder & CEO at Ginkgo Bioworks]

And and this is not a technology that's coming out tomorrow, but this is a a much lower cost source for this sort of cell free extract than what you can currently get on the market today if we're able to be successful in this r research project, for ARPAH. And so this is the kind of stuff I think is, obviously, I'm excited that we're being a part of this, but I'm just glad to see the government funding this. And and this is the type of thing that Ginkgo's solutions business, where we do these end to end projects and deliver a scientific result, this is an example of where we're doing that, for the US government. And I expect we'll see more of those. Okay.

[Jason Kelly, Co-Founder & CEO at Ginkgo Bioworks]

So I wanna talk a little bit now about, Ginkgo Biosecurity, which is the other big area where we work with the US government. We really have two, big, offerings product offerings here. The first, we call Canopy. And you might remember, we I'm not gonna go into great detail, but we collect, wastewater from, planes, inbound planes into international airports. We collect metadata, where did that plane come from, and then we look in the wastewater for whole panel.

[Jason Kelly, Co-Founder & CEO at Ginkgo Bioworks]

I think we're up to, like, 60 now different infectious diseases. If we see them, then, like, if we see a virus, we can sequence it and get that variance genomes. Remember all the COVID variants? We can get the variance sequence and then give that back to, you know, the government or whoever, is having us do that particular work. And so that's the actual physical collection of data.

[Jason Kelly, Co-Founder & CEO at Ginkgo Bioworks]

And then our Horizon platform is when we take all that data and we try to give actionable information back to decision makers. And you can imagine there's a lot of great opportunities for AI, and sort of automated, learning and data parsing there, on the Horizon platform. These types of we we think of these like almost like radar stations, for monitoring for infectious disease. I mentioned airports, but absolutely, we should be doing this on ships. Should be doing this at mass gatherings, military installations, embassy embassies, BSL three and four labs.

[Jason Kelly, Co-Founder & CEO at Ginkgo Bioworks]

Like, this is a very obvious thing to me. Like, we ought to be monitoring the effluent, like, what's what's coming out of these labs and the surrounding area around these labs just to, you know, to to keep an eye out if there's a leak or or things like that. This type of of really, we we consider it passive monitoring, like, you're just looking all the time. We think it's gonna be actually critical in terms of having a strong biosecurity, defense network here in The United States. And I think this is particularly salient, coming up because, as you know, The United States has stepped out of the WHO.

[Jason Kelly, Co-Founder & CEO at Ginkgo Bioworks]

And if you look at how the WHO, did its work, that was based on voluntary information sharing. So in other words, you know, there'd be an outbreak in a country, and that country's equivalent of the CDC would share that information back with the WHO. WHO would would disseminate information globally. I think that's getting outdated in this era. One, you know, there's a lot less cooperation among countries at the moment.

[Jason Kelly, Co-Founder & CEO at Ginkgo Bioworks]

Number two, post COVID, it's very clear the economic impact of these things. So once a country has an outbreak, they gotta there's often a reticence, to share that information. We even saw that with with COVID itself. And also the technology has just changed a lot, in the last twenty years. And passive monitoring, like like I talked about in the last couple slides, can turn, a political problem where you have to ask people for things, and have the politics to to have them give it to you, into a technological problem where we're just looking.

[Jason Kelly, Co-Founder & CEO at Ginkgo Bioworks]

And if something happens, we see it. And just to be clear, that's how we approach cybersecurity. That's how we approach missile defense. We don't ask, you know, did you launch a missile? We have the satellites up there looking all the time for them.

[Jason Kelly, Co-Founder & CEO at Ginkgo Bioworks]

And that that's really how we should, move to a platform like that for monitoring infectious disease, and I'm hopeful there'll be opportunities to do that, as The US considers how to build our infrastructure, outside of the WHO. Okay. I wanna now talk about, Ginkgo's data points, and automation offerings, where I see new deals and opportunities emerging. Okay. So, so about a year ago, I showed this slide for the first time.

[Jason Kelly, Co-Founder & CEO at Ginkgo Bioworks]

So Ginkgo's historical, the way we brought our platform to customers was through what we call solutions, where our customer is really the head of r and d. So this is the, person who is in charge of, say, drug development at a company like, Merck or Pfizer and Novo Nordisk, some of our customers. And Ginkgo is an outsourced, scientific team with access to a highly automated, unique platform here in the 200,000 square foot lab over here next to me in Boston. And we would give that customer back a scientific result. So a good example is that week program I just mentioned.

[Jason Kelly, Co-Founder & CEO at Ginkgo Bioworks]

The customer there is a a program manager, sort of a head of r and d for, the government at Arpaech, and our job is to give them back a scientific result over a period of, you know, one to two years with milestones along the way. Very similar to our our commercial relationships. Alright. About a year ago, we said, hey. We're gonna keep doing that.

[Jason Kelly, Co-Founder & CEO at Ginkgo Bioworks]

We're gonna do it in a more focused set of areas. That's a lot of how we took the cost down. But we're also gonna start offering that very same platform, the same robotics, the same integrated systems directly to customer scientists, okay, to the many scientists that are at an open Orisk or a Merck, and give them tools so that they could do the job of scientific discovery. And that was a new way to go to market. You know, I really like this chart, this curve here.

[Jason Kelly, Co-Founder & CEO at Ginkgo Bioworks]

I've shown this before. But on the y axis, the idea here is, as you go up the axis, you have increased customization and technical risk for the customer. And the reason I'm I'm highlighting this is because there's sort of a business model shift in the middle of this chart. So, at the extreme left end of this, I'm designing a custom drug. I'm taking all the risk on it, and I'm hoping, that when I get great phase two results or phase three results, I can sell it to a large pharma company.

[Jason Kelly, Co-Founder & CEO at Ginkgo Bioworks]

I make an enormous amount of value. Alright? But I take a lot of risk, and it's very custom. As you go down the chart, you have our research solutions business. So we are doing custom work.

[Jason Kelly, Co-Founder & CEO at Ginkgo Bioworks]

Like, every one of these customer projects is different. And it is it is, technical risk. Like, we get paid if we are and we hit certain technical milestones. And so as a result, we're able to get royalties and milestones. We're able to get a piece of the customer's product revenue, essentially, okay, in one form or another.

[Jason Kelly, Co-Founder & CEO at Ginkgo Bioworks]

That's sort of on the left hand side of that dotted green line. On the right hand side, you have our our tools offerings. And here, we are not taking a royalty. We're, we're not taking any milestones from the customer. And what we're really offering is sort of fee for service, work for that customer so that they can ultimately develop their own products.

[Jason Kelly, Co-Founder & CEO at Ginkgo Bioworks]

And that's either going to market with sort of attritional, like, CRO style business model with data points or via an equipment business model with automation. And, you know, this really does change. If you go to the next slide, you know, the solutions business is really based on sort of longer term but bigger upside per project. You know, we're getting a piece of that long of that, you know, drug value, for example, in the long run. It just takes a long time.

[Jason Kelly, Co-Founder & CEO at Ginkgo Bioworks]

The advantage of our tools business is its near term fees. It's a faster sales cycle, and we have many, many more, potential customers for that product in any organization. And the reason I'm excited about this is, you know, Ginkgo has worked out the hard challenges over the last ten years, of building out our own automation and software stack. If you go to the next slide. And and this is not just hardware.

[Jason Kelly, Co-Founder & CEO at Ginkgo Bioworks]

It's also our code base, our operations, our data stack, and everything else. And we've done this over 200 r and d projects in agricultural, industrial, and pharma biotechnology. So we have the scars of knowing sort of what works and what doesn't work when you're doing this work at a high throughput. And if you go to the next slide, you know, our interest from customers is really around sort of large dataset generation for AI. This has been wind in our sails as we've opened our platform up.

[Jason Kelly, Co-Founder & CEO at Ginkgo Bioworks]

Companies like Genentech and Recursion have been showing that, that you can use these AI models in service of drug discovery. That's meaning a lot more, companies are interested in sort of automated data generation, and that's exactly what we've built the reps doing over the last ten years. And so that's been, an excellent conversation to have with customers. Now go to the next slide. You know, Ginkgo's technology, is shown on the right here.

[Jason Kelly, Co-Founder & CEO at Ginkgo Bioworks]

That's our our facility in Boston with our automated, racks. You know, I I will highlight the left hand side of this chart, you know, the lab bench with, you know, the Fisher catalog to order whatever reagents you need, is actually a very effective way to go do drug discovery. Right? It's a go a very effective way to go discover plant traits and things like that. It had you know, it allows scientists to order what they need when they need it.

[Jason Kelly, Co-Founder & CEO at Ginkgo Bioworks]

It's very quick. You get, you know, turnaround in twenty four hours, massively customizable. There's nothing wrong with the left hand side. It just is not great at generating low cost data points. In other words, if you wanna make a lot of data from an AI model or for high throughput screening or things like that, the bench is not your friend.

[Jason Kelly, Co-Founder & CEO at Ginkgo Bioworks]

You do need to move on to something like robotics. And I highlight that on the next slide as well. You know, these are just two different approaches that are quite complementary. Right? It isn't like one has to replace the other.

[Jason Kelly, Co-Founder & CEO at Ginkgo Bioworks]

That's a lot of the conversations we have with customers. It's really that, particularly as these AI models are gaining in prominence, you're gonna wanna have what we call a foundry, basically, a generalized automated facility that can be quickly reprogrammed to make new large datasets to support your AI and ML teams alongside of the benches where your scientists are still doing small batch, very hypothesis driven research. And by the way, what you learn over here from the Foundry and the AI models is gonna inform those scientists hypotheses. Absolutely. That's exactly what we've seen, you know, with with the recursions in the Genentech's of the world where you can use the foundry for, say, target discovery and then get in the lab at the bench and and go test those targets out quickly, by hand.

[Jason Kelly, Co-Founder & CEO at Ginkgo Bioworks]

So that type of feedback loop, I think every major pharma, every large research institute will ultimately need to have sort of a foundry type setup to complement their lab benches. Alright. So Ginkgo DataPoints is our first offering in this area. I'm not gonna spend I talked a lot about it at the last earnings call. Just a quick update on this.

[Jason Kelly, Co-Founder & CEO at Ginkgo Bioworks]

We launched actually just yes well, on Monday, yeah, Monday, our GDP a one dataset. And these these data drops are very valuable for the community, and they showcase the output of our data point services. So this is a a really great one. There's a there's a new preprint that came out. You can see on the right.

[Jason Kelly, Co-Founder & CEO at Ginkgo Bioworks]

There's a link at the bottom to go download the data set. But, you know, 246 different therapeutic antibodies, and you can see these 10 different developability assays listed on the left. And then importantly, all that data is in a really clean format for your AI or ML team to go play around with it. And so we're gonna keep doing this. You'll see us keep putting out datasets.

[Jason Kelly, Co-Founder & CEO at Ginkgo Bioworks]

The the data scientists love these. It creates new customer demand for us, and it showcases just what our platform can do. Okay. So I wanna spend a a chunk of time, real quick talking about Gigco automation and some of the interest we've seen around, in particular, AI reasoning models and connecting those, to automated platforms in the lab. First, I wanna mention we had a big win.

[Jason Kelly, Co-Founder & CEO at Ginkgo Bioworks]

So, we announced a week or two ago, that we, our pet partner and sold a system to Aura Genetics. This is a a diagnostics company building out a new facility. This is really exciting to me because, you know, on the next slide, you know, we've obviously had a lot of success with early customers like Octant in the drug discovery space, you know, seven x throughput increase, 88% reduction in hands on time. They've been using the system for two years. They were kind of our original drug discovery beta customer.

[Jason Kelly, Co-Founder & CEO at Ginkgo Bioworks]

Lot of conversations with high throughput screening. Pharma company is definitely gonna buy this, but diagnostics companies is a is really a new market for Ginkgo. So I'm really excited to see the automation going there. And I think this is one of the exciting things about Ginkgo's platform going out as tools. Okay?

[Jason Kelly, Co-Founder & CEO at Ginkgo Bioworks]

When we're offering solutions, we had sort of, like, a much more narrow window of where we could apply, say, our automation. Right? It was ultimately going up through this kind of window of of a research project associated with cell engineering. Now the automation could really go anywhere to any lab, that would benefit from integrated automation. And, you know, you can see that with our rack carts.

[Jason Kelly, Co-Founder & CEO at Ginkgo Bioworks]

If you go to the next slide, you know, the idea behind the Giggo automation is we're basically creating a standardized physical wrapper around a piece of laboratory, you know, essentially benchtop hardware. So that's that's a centrifuge there, that orange thing inside the rack. Then we have a robotic arm, and then we have a piece of MagnaMotion track, which is a a a kind of like a little railroad track that can move material along it and deliver a 96 or three eighty four or whatever well plate to that robotic arm. The arm picks it up and puts it onto the, in this case, centrifuge. Alright.

[Jason Kelly, Co-Founder & CEO at Ginkgo Bioworks]

And so what you've done is you've taken a piece of lab equipment that today is very custom. Right? You know, like, it's coming from some particular vendor. It's got its own software. You gotta walk up to it and interact with it, and you put it inside this box.

[Jason Kelly, Co-Founder & CEO at Ginkgo Bioworks]

And once you've done that, if you go to the next slide, you can stick that that rack card together with as many other ones as you want in a line. And let's say you had 10 pieces of equipment you wanted to integrate, we would send you the 10 carts with that equipment. You would stick them in a line, and then you would use our cloud software to control it. And suddenly, you don't need to be in the weeds in the software on all 10 pieces of lab equipment because our software, has parameterized control of all of them. And we didn't have to like, a traditional integrated automation vendor would basically do a big custom design for you, a custom engineering project that would take, you know, a year or something to ultimately design and build and get it shipped and installed for you.

[Jason Kelly, Co-Founder & CEO at Ginkgo Bioworks]

If we had these 10 racks available, we could send them over and put them together in a very short period of time. And so so, you know, a matter of weeks. And and so that that is really exciting and a and a big change to how you build out integrated automation. The other big change in other than just speed to deploy is it's expandable. So when you normally build a custom integrated setup for automation, it's built to do one thing.

[Jason Kelly, Co-Founder & CEO at Ginkgo Bioworks]

Right? With these rack systems, for example, this is our system we have in Boston. We had five of these to start with, I think, or six doing, NGS prep. That was, like, the original application. And then we were able to keep adding more racks.

[Jason Kelly, Co-Founder & CEO at Ginkgo Bioworks]

We now have 25 racks on this setup. And and we have a whole range of different, you can see it here, equipment that have been integrated into these systems. We have three different sizes of racks so that we can integrate this equipment. This is out of date. We we keep adding stuff.

[Jason Kelly, Co-Founder & CEO at Ginkgo Bioworks]

Whatever customers want in their setup, if there's a piece of equipment that we haven't yet integrated, we can get it integrated in a few weeks. And so really excited about this kinda general concept. And and customers are loving this as well. You can see our booth, here at the SLAS show on the next slide. You know?

[Jason Kelly, Co-Founder & CEO at Ginkgo Bioworks]

And what what I like about this, actually, top right corner, there's a, this is actually a JPMorgan Recursion at a party. Can we bring the racks? And so we were able to set them up, you know, in a few hours in the afternoon before the cocktail party and have them moving plates around. So that's the kind of speed in terms of deploying an integrated automation setup, that you just really don't see, with other technology.

[Jason Kelly, Co-Founder & CEO at Ginkgo Bioworks]

This next slide is a picture of our facility in Boston. That's at yeah. There's an older picture, that's that 25 rack setup I was mentioning. And another thing that's unique about Ginkgo is that we actually run our own automation. This is a you know, in our BSL two lab here in Boston to do high throughput debt data generation for these research projects we're doing for customers.

[Jason Kelly, Co-Founder & CEO at Ginkgo Bioworks]

So we have a lot of experience understanding sort of bio validation and moving these high throughput protocols, onto onto integrated automation. So one of the things, I'm really excited and we have have customers reaching out to us about this system, if you go to the next slide, is this application of what what people are calling lab in the loop, or sort of physical AI, in in the lab. And so just to give you an example of this, so if you were to go on to ChatGPT, and click that little deep research button and you ask it a question, instead of getting an answer in five seconds, it's gonna give you an answer in, five minutes. And the reason for that and you can even ask it if you wanna see it doing this. You can say, hey.

[Jason Kelly, Co-Founder & CEO at Ginkgo Bioworks]

Show your thinking. And you'll see what's called chain of thought reasoning. And so what the model does is it says, okay. Based on your what you've asked me to do, I've broken this problem into pieces. And for piece number one, I'm gonna go call up a web browser and do some research on the Internet.

[Jason Kelly, Co-Founder & CEO at Ginkgo Bioworks]

And then for based on that information I get back, there's a bunch of numeric data in there. So I'm gonna write a Python script, to analyze that data. And based on the results of the Python script, I'm gonna do some more thinking and analysis, then I'm gonna write you a summary. And it goes and then it does all this. It's it's absolutely fabulous.

[Jason Kelly, Co-Founder & CEO at Ginkgo Bioworks]

Like like, you really should see it if you haven't. But what's gotten people excited is that type of reasoning and analysis. What if you were to then connect a reasoning model like that into the physical world? And so there's a lot of activity right now, a lot of startups getting funded to do, like, robotic hands to, like, pick things up and fold shirts or assemble electronics. But what I think is really exciting is could we give that reasoning model hands in the lab?

[Jason Kelly, Co-Founder & CEO at Ginkgo Bioworks]

And that's how we see our racks. They're they're actually, like, a perfect fit for this. We're able to integrate you know, I mean, you could integrate a hundred pieces of equipment. We we have a one project where we're we're scoping that with racks. But in Boston, for example, we already have a setup with 25 pieces of lab equipment set up.

[Jason Kelly, Co-Founder & CEO at Ginkgo Bioworks]

And if you go to the next slide, a reasoning model could go ask that that set of equipment to run some experiments and then get back really rich data, Time series data, raw data files, the racks give a whole bunch of event data, LIMS metadata, you know, about exactly what's going on inside that experiment. A lot more data than you would get if you were doing the the experiment by hand at the lab bench. These are just things that you wouldn't be collecting. You just wouldn't be collecting them because you're doing a lot of small things as you as you work at the bench that aren't really being recorded. But everything is being recorded when it's being run, on automated setups.

[Jason Kelly, Co-Founder & CEO at Ginkgo Bioworks]

And if you go to the next slide, you can see we've already demonstrated this is a a twenty four hour protocol without any human intervention, 10,000 qPCR reactions. These are the types of things we can do. This is just one example of sort of just a large dataset on a complex protocol being run over a long period of time. So these sort of, like, long continuous experiments, ideally with a reasoning model, controlling it, and talking, you know, being able being able to having those hands in the lab, is something we're really excited about, and we have a lot of customers excited about too. And so if you go to the next slide, I'll just say for customers tuning in, again, this is what's special about Ginkgo compared to a traditional automation vendor.

[Jason Kelly, Co-Founder & CEO at Ginkgo Bioworks]

Over the last ten years, we have been building and running a highly automated lab. And that's not just having the automation set up and doing one thing over and over again. It's doing many things, collecting the data off that automation, getting it cleaned up and back to the scientists. There's a whole software and data stack needed to really make the most out of these sort of automated data foundries. And so if you're tasked to, bring AI, know, into your research department or deploy these sort of lab and the loop models, we're more than happy not just to engage with you on the automation, but really on a consultative basis, to help you build out your whole, technology stack internally.

[Jason Kelly, Co-Founder & CEO at Ginkgo Bioworks]

And we are, we've actually started doing that for some large pharmas now as well. So so these are, I think, just some of the things I wanted to update on. I think this whole push on the reasoning model and AI side is really exciting. And, again, I wanna just highlight, and thank the team for an enormous, enormous amount of work over the last year. For us to be in the position we're at today, where we have growing opportunities on the tool side, we have world leading automation, we have over half a billion dollars in the bank, and our spending is under control, is a far cry from where we were a year ago.

[Jason Kelly, Co-Founder & CEO at Ginkgo Bioworks]

And so, again, kudos to the team for pulling that off, and, look forward to hearing your questions. Thank you so much.

[Daniel Marshall, Senior Manager, Communications & Ownership at Ginkgo Bioworks]

Great. Thanks, Jason. As usual, I'll start with a question from the public and remind the analysts on the line that if they'd like to ask a question, please just raise your hand on Zoom, and I'll call on you and open up your line. Thanks, everyone. Alright.

[Daniel Marshall, Senior Manager, Communications & Ownership at Ginkgo Bioworks]

Getting started. So our first question is from x.com, and this question is from That's Brendan. Excuse me. The question is, does Jason think there's a possible opportunity for data points to evolve into a SaaS cloud computing product tool to compete with traditional companies in the space like Viva Systems?

[Jason Kelly, Co-Founder & CEO at Ginkgo Bioworks]

Yeah. It's actually a good question. So I mentioned this a little bit at the end, but we've been starting to do more of these, like well, at least kinda, I'll call it consultative, almost like tech enabled consulting for a large pharma company where we're actually coming in helping them think about their data architecture and, like, how you should you know, if you're gonna run a big automated lab, what does it look like? What do what software do you need to have in place to do that? What kind of data systems do you need to have in place to do that and so forth.

[Jason Kelly, Co-Founder & CEO at Ginkgo Bioworks]

And I and I think this is something that Ginkgo has a lot of very uniquely specialized expertise in. There's a question of, like, how to go to market with that. Like, do do you actually wanna go all the way into offering, like, SaaS software, or do you wanna just do consultative work and then be able to bring in things like our automation technology alongside that and so on? We're we're sort of figuring that stuff out, but certainly companies do do make plenty of money in the sort of cloud and SaaS space. So if we saw an opening there, I would say the research side of the house is a little different when it comes to commercial, where I think you already have a lot of these tools in, like, pharma sales and things like that.

[Jason Kelly, Co-Founder & CEO at Ginkgo Bioworks]

But when it comes to the research side of the house, many many companies are not don't already have in place large sort of data infrastructure. And so, again, most of the work is done at the bench. Most of it is not large data sets with the exception of things like high throughput screening. So as they build out more of that, I do think there's an opening. We'll we'll have to see if if if it's a business for us, but I definitely it's a place we can help, I would say.

[Daniel Marshall, Senior Manager, Communications & Ownership at Ginkgo Bioworks]

Alright. Now for some questions from our analysts. The first question is from Michael Ryskin from Bank of America. Michael, you are your line is open.

[Michael Ryskin, Managing Director at Bank of America Merrill Lynch]

Great.

[Michael Ryskin, Managing Director at Bank of America Merrill Lynch]

Can you guys hear me?

[Jason Kelly, Co-Founder & CEO at Ginkgo Bioworks]

Yeah. Hey, Michael. Hey.

[Michael Ryskin, Managing Director at Bank of America Merrill Lynch]

How are you? Thanks for taking the question. I wanted to ask kind of a two parter but on the same topic. One is on the ARPA H, news you provided. Just sort of wondering, if you could provide a little bit more details on, some of the economics beyond that.

[Michael Ryskin, Managing Director at Bank of America Merrill Lynch]

You know, we have the headline number in terms of the the $29,000,000 contract, but just thoughts on how and when that will be recognized, how that contributes to revenues. And then related to that, you had a couple of slides where you talked about government contracts, government relationship, things like that. Just wondering what the latest, on those is, given the current environment with Doge cutting back a lot of that funding. Have they been reviewed already? Are those sort of how how safe are those?

[Michael Ryskin, Managing Director at Bank of America Merrill Lynch]

And if you could talk about, you know, any take or pay considerations there, that'd be helpful.

[Mark Dmytruk, CFO at Ginkgo Bioworks]

So so, Jason, I'd I'd be happy to take the first Yeah. Part of that. So the ARPA h, just in terms of kinda economics, how the revenue flows. So it's a $29,000,000 2 year contract. So you can sort of expect sort of generally revenue to be recognized over two years.

[Mark Dmytruk, CFO at Ginkgo Bioworks]

And then I guess the second point I would just make is that from our perspective, that really significantly derisks the guide for the year. And so, yeah. So so so I I I think it was, very good news to be getting that from the perspective of this year.

[Jason Kelly, Co-Founder & CEO at Ginkgo Bioworks]

Yeah. That to sort of speak to the second part. Yeah. That was one of the ones we're keeping an eye on that we had sorta gotten awarded, knew we were gonna get it, but we hadn't closed on contracting. So I I do think in general, like I I mentioned, I I I think biotechnology is still on the shortlist of of critical emerging technology.

[Jason Kelly, Co-Founder & CEO at Ginkgo Bioworks]

So I'm generally hopeful that, any additional, programs that we have that aren't quite contracted yet will will move through. But importantly, that they'll still continue to be funding. Like like Mark said, the the and we were sort of the big bogey on that for us for this year. But, in general, what's more important is, like, do we keep seeing the funding of, you know, advanced research in this area? We think so.

[Jason Kelly, Co-Founder & CEO at Ginkgo Bioworks]

And then certainly, on the, biosecurity side, you know, there's a there was a couple executive orders just today related to bio. I don't know if you saw that, but, there's there was one on, regulatory relief to promote domestic production of critical medicines. So that's right in line, with with sort of the weed project and generally onshoring. It's basically reducing regulation for people building out, manufacturing for pharma, not something we do, but just to speak to this being a critical priority. And then second was improving safety and security of biological research.

[Jason Kelly, Co-Founder & CEO at Ginkgo Bioworks]

This is around, like, not funding data function work, but, again, speaks to, I'd say, biosecurity being on the list of things that are not being written off is not important. So I'm, you know, cautiously but, of course, you never know.

[Michael Ryskin, Managing Director at Bank of America Merrill Lynch]

If if I could, if I could squeeze in just a follow-up, Mark, on the first point on the ARPRH. Just clarify, there's there's multiple partners in that. Right? So so is there any clarity ahead of time how that 29,000,000 gets split up? Or

[Mark Dmytruk, CFO at Ginkgo Bioworks]

Yeah. So so we're the prime, which means we will recognize all the revenue on that, and you would then see, sort of in the cost of sales or in the r and d expense line, the effect of the subcontractor costs on that, but but we would be recognizing the full amount of revenue.

[Michael Ryskin, Managing Director at Bank of America Merrill Lynch]

Okay. Alright. Thanks.

[Daniel Marshall, Senior Manager, Communications & Ownership at Ginkgo Bioworks]

Alright. Our next question is from Mark Massaro who's from BTIG. Mark, you're live.

[Jason Kelly, Co-Founder & CEO at Ginkgo Bioworks]

Mark, you're muted. You're

[Daniel Marshall, Senior Manager, Communications & Ownership at Ginkgo Bioworks]

Alright. Maybe we can No. We got

[Jason Kelly, Co-Founder & CEO at Ginkgo Bioworks]

you, Mark.

[Mark Massaro, Managing Director - Senior Equity Research Analyst at BTIG]

Now you got him. Okay. Cool.

[Jason Kelly, Co-Founder & CEO at Ginkgo Bioworks]

Yep.

[Mark Massaro, Managing Director - Senior Equity Research Analyst at BTIG]

Alright.

[Mark Massaro, Managing Director - Senior Equity Research Analyst at BTIG]

Sorry. You got me now?

[Jason Kelly, Co-Founder & CEO at Ginkgo Bioworks]

Yep. Yeah.

[Mark Massaro, Managing Director - Senior Equity Research Analyst at BTIG]

Yeah.

[Mark Massaro, Managing Director - Senior Equity Research Analyst at BTIG]

Awesome. Thank you for the question.

[Mark Massaro, Managing Director - Senior Equity Research Analyst at BTIG]

So I wanted to just ask a question about the revenue generating program metric. Maybe this could be for you, Mark. Just help us think about how we should be tracking the economics per program.

[Mark Massaro, Managing Director - Senior Equity Research Analyst at BTIG]

So if I'm doing the math right, it looks like the revenue per program might be down in the quarter. Can you just give us a sense for how we should think about that? Is that something that should grow, or is it because you're onboarding newer programs that are just starting to generate revenue, it takes some time to move up?

[Mark Dmytruk, CFO at Ginkgo Bioworks]

It it's actually a a little bit bit of a mix shift from sort of the bigger solutions deals. To data points. When, in the metric, went from about 10 to 20 when you compare q '4 to

[Mark Massaro, Managing Director - Senior Equity Research Analyst at BTIG]

Okay. And then the other one is just, and I I recognize the the new reporting structures is early days. But if I have this right, looks like your revenue to think about them, progressing throughout the year. And then, I would just be curious if you could just give us any color as to sort of, like, the flavor of some of these prized you in the court.

[Mark Dmytruk, CFO at Ginkgo Bioworks]

So it's so you're gonna have programs that complete and programs that onboard. And so the kinda net impact of that means you you probably are not gonna see a net plus 20 sort of quarter after quarter after quarter after quarter. You're gonna have some quarters where we, where we finish a bunch of programs. And so, again, still early days, Mark, with the metric, but but but I think we're all sort of keeping our eye on that trend line. The flavor in terms of what's in there.

[Mark Dmytruk, CFO at Ginkgo Bioworks]

So there's still I I would say, like, generally speaking, the solutions deals, of course, are bigger. The data points deals are smaller. There are just a few automation deals in the mix right now because that's really the newest of the tools offerings. We did sign a bunch of ag solutions deals in q one, which is new. I I think it might have been the most new programs that I remember in that sort of part of the business, in a single quarter.

[Mark Dmytruk, CFO at Ginkgo Bioworks]

That that said, they're all relatively small in size. And so you could think of those as almost, pilot in terms of scale relative to, the solution side of the business. So, yeah, I I would just say probably, like, the flavor is good diversity in terms of what we're seeing, with big programs, small programs across ag, biopharma, etcetera, data points, solutions.

[Mark Massaro, Managing Director - Senior Equity Research Analyst at BTIG]

Great. Thank you.

[Jason Kelly, Co-Founder & CEO at Ginkgo Bioworks]

Thanks, Mark.

[Daniel Marshall, Senior Manager, Communications & Ownership at Ginkgo Bioworks]

Alright. Next question from Tejas, who's coming from Morgan Stanley. Your line is open.

[Tejas Savant, Executive Director & Senior Healthcare Equity Analyst at Morgan Stanley]

Hey, guys. Good evening, and, thanks for the time here. So maybe, you know, sort of predictable question for you, Jason, just on the the continued pressure on on on pharma and biotech here. You know, the commentary from the service providers, you know, through the starting season has gotten incrementally more cautious,

[Jason Kelly, Co-Founder & CEO at Ginkgo Bioworks]

I guess. Yeah. Yeah.

[Tejas Savant, Executive Director & Senior Healthcare Equity Analyst at Morgan Stanley]

And I guess, you know, a lot of sort of nebulous concerns out there, you know, things like tariffs and reference pricing. This afternoon, we heard of, you know, the appointment of a new head of CBOR today. With a pretty vocal stance and accelerated approvals and surrogate endpoints and whatnot. So I'm just curious as to, you know, what you're hearing from your customers, especially over, you know, the last, like, six to eight weeks when, things seem to have sort of ratcheted up a little bit, if you will.

[Jason Kelly, Co-Founder & CEO at Ginkgo Bioworks]

Yeah. I mean, I I would say overall, it is like like, there is a lot of sort of hesitancy in general around r and d services. So so, like, I think you're just seeing, a, less outsourcing of stuff. People are, like, more protective of their internal teams. So that's, like, been headwinds for us on the solution side.

[Jason Kelly, Co-Founder & CEO at Ginkgo Bioworks]

I think if you look across the industry broadly, the like, there's less demand going to, like, basically all CRO and equipment and tools vendors. I think that's then you've seen that reflected in in the pressure on all of them. You know, I I mentioned this before. Ginkgo's new in the tools industry. So so on unlike, you know, say, a WuXi or somebody that's, like, highly penetrated across the whole industry and sort of moves with the total demand, we're more winning pie, you know, from others.

[Jason Kelly, Co-Founder & CEO at Ginkgo Bioworks]

And so I think there I think there's a lot of opportunity for us still uniquely in tools, but I would say the whole sector is definitely under pressure. You know, I think that probably means places invest less in new advanced technologies. You know? Right? Like, I think you're you're less likely to see a lot of the current players, like, doing some big project to expand in a new area right now.

[Jason Kelly, Co-Founder & CEO at Ginkgo Bioworks]

So that's maybe good for us because we're sort of an innovative, new entrant. And so but but I I would say across the industry, I'm I'm hearing from people what you're hearing, which is pullback on on things. But I don't know that that Ginkgo maybe gets affected a little less on that when it comes to our tools business. I do think on solutions, it makes it tougher for us.

[Tejas Savant, Executive Director & Senior Healthcare Equity Analyst at Morgan Stanley]

Got it. That's helpful. A couple of quick cleanups for Mark. Mark, can you just share some color or just ballpark numbers to help us bridge from, you know, your old program ad metric to the new revenue generating programs? And then, you know, I think on the last call, you guys

[Tejas Savant, Executive Director & Senior Healthcare Equity Analyst at Morgan Stanley]

had talked about, you know, a little bit

[Tejas Savant, Executive Director & Senior Healthcare Equity Analyst at Morgan Stanley]

of potential upside from the tools offering and a number of pharma deals that closed in the fourth quarter. So just curious as to, you know, how those those opportunities have evolved since. And then, you know, on this sort of pharma reshoring point, Jason, which you alluded to a little bit earlier, is there an opportunity beyond sort of the work you're doing with ARPAH here in your mind for Genco to participate in?

[Mark Dmytruk, CFO at Ginkgo Bioworks]

Alright. So what why don't I start there? So in terms of bridging the old metric to the new, so the new metric, very importantly, excludes programs with de minimis revenue in the quarter. So that would typically be a program that is either just starting or is in the final stages of completion. And we really, in any particular quarter in the past, had quite a lot of those.

[Mark Dmytruk, CFO at Ginkgo Bioworks]

Like like, we might have had, you know, just, like, rough numbers, 20 to 30 programs that were in kind of a start mode and a maybe similar number that we're in a final stage of completion mode. And so those would be kinda out of the mix right now completely. However, it's not a straight subtract because we're now including programs that wouldn't have been included in the past because they didn't meet the sort of definition of what we thought of as a major program. And so a lot of the sort of smaller data points programs or even small solutions programs wouldn't necessarily have been included in the past at all under the definition. And so those are now kind of in the mix.

[Mark Dmytruk, CFO at Ginkgo Bioworks]

So so that's sort of, like, the rough bridge here. Now if you look in the appendix to the presentation, we have included a, a a restatement of or or I would just say the historical comparables that you need on the current metric so that you can see what it was in each quarter of last year. So that'll help you kinda bridge the old to the new. On your second question, upside on tools and pharma. So I I think probably the best way to put it is in terms of the revenue guide, yes, the guide is still being, I would say, relatively conservative in terms of what we're expecting from tools this year.

[Mark Dmytruk, CFO at Ginkgo Bioworks]

So so still kind of in that, you know, low double digit million dollar contribution on a full year basis. And and just to put that in context, in the first quarter, tools contributed sort of low single digit millions in terms of revenue. So less than 10% of the cell engineering revenue in q one came from the tools offering, and then we would expect that number to increase, as we get sort of through the year. But, it's still early days, so we're being conservative there. But I would say there's there's upside potential on the tools side of the business, particularly on data points.

[Mark Dmytruk, CFO at Ginkgo Bioworks]

I I think what we're learning on automation is that is a longer sell cycle. With respect to some of the bigger like, buy your point on biopharma, yes, I mean, I I think we're happy with how we're executing on those deals right now. And I think we'll be looking to, see whether or not we can kind of expand the relationships with some of those biopharma as we execute on some of the first projects that we have with them in data points.

[Jason Kelly, Co-Founder & CEO at Ginkgo Bioworks]

Yeah. I remember that. Would say, I think one of the things with the biopharma is is we can get in with a proof of concept. We we we we're adding and continue to add, like, new logos there, which is always exciting for Ginkgo because we have a variety of things we can sell to people. And so getting in, improving ourselves, and getting set up with the procurement system at these places is all just, like, wins for us.

[Jason Kelly, Co-Founder & CEO at Ginkgo Bioworks]

So that that continues to work, like, proof of concept deals. The the hope is that those then grow into larger programs and data points or maybe an automation purchase. And then when it comes to the onshoring that you asked about, Tayas, the I think one application there for us would be using the automation for some of the QC on so there's usually a variety of different assays that are being included in the in the quality control for therapeutics coming off the manufacturing. Those are often, like can be pretty complicated experiments and are are can be a good fit depending on the drug for some of our automation. So that's one place I I think we could play.

[Jason Kelly, Co-Founder & CEO at Ginkgo Bioworks]

We obviously don't do we're not a manufacturer, so we're you know, you won't see us, like, building a, a new site. We're not like Alonza or something. But, I do think on the automation side, we could play.

[Tejas Savant, Executive Director & Senior Healthcare Equity Analyst at Morgan Stanley]

Got it. Super helpful. Thanks, guys. Appreciate the time.

[Jason Kelly, Co-Founder & CEO at Ginkgo Bioworks]

Yep.

[Daniel Marshall, Senior Manager, Communications & Ownership at Ginkgo Bioworks]

Alright. Next up, we have Matt Sykes from Goldman Sachs. Matt, your line is open.

[Elizabeth Koslosky, Global Investment Research Associate at Goldman Sachs]

Hi. This is Evie on for Matt. Thanks for taking my questions. So the first one, great to see the deal with Aura. How do you view the longer term opportunity within the diagnostics for racks?

[Elizabeth Koslosky, Global Investment Research Associate at Goldman Sachs]

And then are you seeing any interest from customers in this space on a broader scale, especially given the durability of that end market versus earlier stage R and D spending?

[Jason Kelly, Co-Founder & CEO at Ginkgo Bioworks]

Yeah. We think it's a great great fit for diagnostics. I mean I mean, the what makes the racks unique compared to, like, a traditional integrated setup is that it is expandable. So so, you know, when you're getting a work cell set up to do, you know, whatever your particular diagnostic reaction, like, you're trying to predict how much demand you have. That work cell has a certain capacity.

[Jason Kelly, Co-Founder & CEO at Ginkgo Bioworks]

If you start to exceed that, the current industry standard is basically build a whole another work cell. Whereas with the racks, you could take whatever piece of equipment it is that your current bottleneck on your on your diagnostic process and just add a second one to the setup and and and potentially alleviate that bottleneck. So that's really exciting. It's also, like, not something that sunsets in the event that your mix of diagnostic demand changes in the future. Right?

[Jason Kelly, Co-Founder & CEO at Ginkgo Bioworks]

So what's what's great about the racks is some of the equipment is likely to be common across different protocols you're running. And you could if you had, say, a new protocol you brought online, let's say you wanted to add some sort of, like, NGS diagnostic to your current setup, you know, you could then add a few pieces of equipment to the very same rack setup you had running your first protocol and add a second one. So this is a I I you know? I mean, like, we're obviously biased, but, like, we really think of it like you're building an automation core that can be used for lots of different things rather than a work cell that's meant to do one thing. And that's really compelling and totally changes the ROI calculation for people building out integrated automation.

[Jason Kelly, Co-Founder & CEO at Ginkgo Bioworks]

So we think we should be on the RFP and the look for anybody building a a new automation facility. We gotta get the word out in the market, but it's really exciting to me to see us getting this first diagnostics deal like that. We we we really see ourselves able to play in that space.

[Elizabeth Koslosky, Global Investment Research Associate at Goldman Sachs]

Okay. Great. And then on the EBITDA breakeven target for the end of twenty twenty six, what are the areas are you or have you uncovered any areas of upside as you work through the cost cutting exercises? And then on the flip side, how are you able to balance the spending to make sure that the new offerings get good initial traction commercially while also meeting the profitability goals?

[Mark Dmytruk, CFO at Ginkgo Bioworks]

So, Jason, I'd be happy to take the first part and maybe hand the second part over to you. So, so so we do still have room to go on cost, and that's why we upped the target to 250,000,000. I would say, Eby, yeah, there's probably still some room after we get to that level. We largely, at this point, have taken the actions that we need to take in order to get to the $2.50. There's still a little bit of work to do there.

[Mark Dmytruk, CFO at Ginkgo Bioworks]

So you'll start to see the impact of, that part of the cost reduction roll through the kinda q two, q '3 numbers. But we are, I I think, sort of being careful at this point that and I'll let Jason just talk about the kind of new opportunities. I I I wouldn't say though, Evie, there's some, like, very large, you know, sort of sort of silver bullet kind of upside cost reduction opportunity other than, of course, subleasing the excess space, which we all know is a challenge in this market. Other than that, we're more we're much more into the weeds on looking at sort of small dollar kind of line items, and that that's sort of where we're at right now. There there aren't, like, these big chunks of upside anymore.

[Jason Kelly, Co-Founder & CEO at Ginkgo Bioworks]

Yeah. And and just a comment on the tool side. I mean, I I you won't see us do anything pathological Right? Like, so so the you know, if we see opportunity where, you know, by investing in you know, for example, just, you know, today, we we put out another sort of data drop from data points for cell paintings.

[Jason Kelly, Co-Founder & CEO at Ginkgo Bioworks]

This is like a imaging based dataset. So you can have Brightfield. You can do the cell painting. These are becoming, like, common high content data sources for people doing, like, AIML for drug discovery. Right?

[Jason Kelly, Co-Founder & CEO at Ginkgo Bioworks]

Like, that that's an that's the first time we put out a dataset like that. We love to do stuff like that. We already have a ton of, like, interest in that. A lot of people downloading it. You'll see us keep doing that, investing in new areas for data points.

[Jason Kelly, Co-Founder & CEO at Ginkgo Bioworks]

No brainer. As long as we when we put out a new one, we we see new customers, you won't see me stop investing in that sort of thing. Same with, like, on the automation side. We we see opportunities to demonstrate particular workflows and show people. You know, we put out these sort of, like, white papers and demonstrations of what you can do on the racks.

[Jason Kelly, Co-Founder & CEO at Ginkgo Bioworks]

You know, I see a lot of upside in all those things. You won't see a slowdown there just to just to meet an EBITDA target. But, you know, all all things equal, we we do see a good line of sight to getting to it in by the end of twenty six. So it is a focus. But a lot of it is really just tightening up on the solution side so that we have room to invest in tools.

[Jason Kelly, Co-Founder & CEO at Ginkgo Bioworks]

That that's that's really the big motion.

[Analyst]

Great. Thank you so much.

[Daniel Marshall, Senior Manager, Communications & Ownership at Ginkgo Bioworks]

Yep. Thank you. I think we have one last question. I saw another pop up, but I think we probably just have time for one more from, Matt Larue, who's coming to us from William Blair. Hey, Matt.

[Matt Larew, Research Analyst - Healthcare at William Blair]

Hey. Good afternoon. Thanks for taking the question. Jason, if I think back to, you know, 2324 when when there were perhaps different, but, in some way similar macro constraints with respect to biotech funding, you know, you really were selling

[Jason Kelly, Co-Founder & CEO at Ginkgo Bioworks]

end sometime. You know?

[Matt Larew, Research Analyst - Healthcare at William Blair]

Well, we have, like, three weeks of positivity at the beginning of this year. The you know, you you're really selling one or at least just a couple of solutions. The the contract structure was perhaps more onerous to get deals done in terms of longer, lead times. And there was maybe more of a focus on biopharma, but I know that remains today. If I then fast forward to today and and maybe we're entering, you know, more macro uncertainty from a variety of different angles, you now have a number of different product offerings that span content, tools, automation, etcetera.

[Matt Larew, Research Analyst - Healthcare at William Blair]

You've opened up the way you're thinking about, you know, doing deals and and, oh, in different sizes and structures. But you also alluded to in your earlier comments this sort of inherent push pull between the willingness to outsource.

[Jason Kelly, Co-Founder & CEO at Ginkgo Bioworks]

Yep.

[Matt Larew, Research Analyst - Healthcare at William Blair]

You know, it it does the same dollar amount mean that less work gets done, or does it push people to do more work to work more efficiently? Right? So some of these tensions. And so I'd just be curious either in the first couple months of the year or what you're seeing and hearing from customers, how you think Geico can fit into if this macro situation deteriorates or makes uncertain, how you fit into the picture differently this time than perhaps, you know, a couple years ago.

[Jason Kelly, Co-Founder & CEO at Ginkgo Bioworks]

Yeah. I mean, I I think the biggest thing is with the tools offering, like, you can you can, like, take smaller bites and engage with us. Right? Like, the the what I woulda had '23, '20 '4 was there was the really only way to to deal with Ginkgo was these sort of big r and d projects, that type of big outsourced r and d work across the industry. Like, you you know, pick your favorite small biotech in Cambridge.

[Jason Kelly, Co-Founder & CEO at Ginkgo Bioworks]

It's not getting, like, a large research partnership right now with, like, major pharmas or midsized pharmas. So that that that's just that's just the reality. Right? So I think the thing we've done well in the last year and, again, I think this continues to speak to, a, the the flexibility of the platform we built at Ginkgo, where really, like, the core heart of it is is sort of a lot of this automation and software infrastructure and approaching a a bio lab like a factory. That that's proving, like, very durable to be able to take in different directions all the way from industrial biotech, you know, when we first would have been talking to you through ag to pharma to now different styles, whether you're selling it as solutions and tools, you know, I I think, like, you know, we're we're we're tough to kill.

[Jason Kelly, Co-Founder & CEO at Ginkgo Bioworks]

Right? I think that that's sort of what's been proven over the last couple years here at Ginkgo. And so so I I think that that that speaks to the strength of the platform. I would I do think there is some, you know, looking for silver linings, like, whenever there's churn, you know, right like, right now, like, for example, with the FDA, you're seeing a lot of interest around changing how we approach, you know, things like toxicology with, you know, with the government in general, a lot of issues around how we're approaching other countries, particularly China doing our work. I mean, look.

[Jason Kelly, Co-Founder & CEO at Ginkgo Bioworks]

If if WuXi gets nuked, that that's, like, a that's a huge opening for us. Right? Like, you know, like, if if it's like, hey. You can't use them, then there's a lot of new CRO business to be had. Right?

[Jason Kelly, Co-Founder & CEO at Ginkgo Bioworks]

So so there are things there that could change the macro for Ginkgo specifically. We'll see. Right? But I think what we've shown is Ginkgo's resilient. Ginkgo will will change as the market changes around us, and, you know, we're not gonna die.

[Jason Kelly, Co-Founder & CEO at Ginkgo Bioworks]

Right? So so that that, I think, remains the case '23 to now. But certainly, the the I'd say the biggest change is us going to market as with tools, which is much more favorable for this current environment in terms of what customers are up for buying. Smaller chunks, more arm's length is is what the market demands right now.

[Matt Larew, Research Analyst - Healthcare at William Blair]

Got it. And then maybe as as a as a follow-up to that, curious, the the, lead generation and closes for the newer programs, you know, data points tool the tools offerings. Are most of those internal in the sense that perhaps you were actively engaging with the customer maybe on a a broader or different project, and then that didn't work, but, hey, you know, something else, popped up you could do? Or or most of those external at this point as people get more awareness about them?

[Jason Kelly, Co-Founder & CEO at Ginkgo Bioworks]

It's a lot more stuff coming externally now. That's what they are. I think that's great about the tools business. Like, we we put these data drops up like the one we did today, and people just download it and give us the emails. We follow-up, and we've gotten, you know, chunks of business that way.

[Jason Kelly, Co-Founder & CEO at Ginkgo Bioworks]

It's pretty neat. So so that so that's exciting. Within our closed accounts, we certainly are able to expand. Right? So, like, you know, there's RFPs out right now for automation systems with customers that we've had multiyear engagements with on the solution side.

[Jason Kelly, Co-Founder & CEO at Ginkgo Bioworks]

That's obviously puts us in a really nice spot. So so we do see some of that, but it's not the only source of leads. We are, again, with the tools business. And, ideally, I'd actually like the tools business to keep enabling smaller and smaller bite sized chunks. Right?

[Jason Kelly, Co-Founder & CEO at Ginkgo Bioworks]

So so, you you know, watch us over the course of the year, hopefully be able to launch other things that let people bite off even smaller bits because I just think that's that's what's still selling. And so but yeah. But it it it is definitely we're also getting external inbound now, which is nice.

[Matt Larew, Research Analyst - Healthcare at William Blair]

Alright. Great. Thanks for the updates.

[Daniel Marshall, Senior Manager, Communications & Ownership at Ginkgo Bioworks]

Yep. Unfortunately, I think we're out of time.

[Mark Dmytruk, CFO at Ginkgo Bioworks]

Hey. Hey, Daniel. I think I see Brendan with a with his hand up.

[Daniel Marshall, Senior Manager, Communications & Ownership at Ginkgo Bioworks]

Oh, sure.

[Mark Dmytruk, CFO at Ginkgo Bioworks]

Yes. So I think we can fit in one more for sure.

[Daniel Marshall, Senior Manager, Communications & Ownership at Ginkgo Bioworks]

Sure. Go ahead, Brendan.

[Brendan Smith, Director & Senior Analyst at TD Cowen]

Awesome. Thanks, guys. Can you hear me okay?

[Jason Kelly, Co-Founder & CEO at Ginkgo Bioworks]

Yeah. Yeah.

[Brendan Smith, Director & Senior Analyst at TD Cowen]

Awesome. Thanks for squeezing me in.

[Jason Kelly, Co-Founder & CEO at Ginkgo Bioworks]

Mark, I don't know

[Brendan Smith, Director & Senior Analyst at TD Cowen]

how you really quickly. Know

[Jason Kelly, Co-Founder & CEO at Ginkgo Bioworks]

how you do that. That's amazing. That is beyond my my Zoom skills. So, yeah, Brennan, appreciate the question. Go ahead.

[Brendan Smith, Director & Senior Analyst at TD Cowen]

Always happy to. I'm impressed. Yeah. So maybe just quickly kind of kind of expounding on a couple of the questions previously. Really on the AI tools offering, can you speak maybe just a little bit more on kind of the training data you're using for some of these models and really just where you're sourcing some of that from?

[Brendan Smith, Director & Senior Analyst at TD Cowen]

Just because we're starting to get questions on where as there are more offerings kind of across the sector where people are kind of sourcing a lot of this stuff from, are you able to use partner or licensee datasets to back in your models, or is everything kind of proprietary and generated in house? Really more so understand trying to understand how how scalable some of those could be over the longer term for you guys.

[Jason Kelly, Co-Founder & CEO at Ginkgo Bioworks]

Yeah. I can speak to that. So, we've we've done a few experiments with this. So so just so you know, like, the the models we've put out, like a zero, for example, which is like an ESM style model trained on our both the public data plus our internal, you know, where we acquired, like, Warp Drive Bio and Radiant Genomics, Zymergen. There there you know, AgBio.

[Jason Kelly, Co-Founder & CEO at Ginkgo Bioworks]

We there's all these, like, genomic assets we've kind of piled up over time that are actually larger than the public dataset, I I believe, at this point or at least comparable. We we we trained it up on that. So that is proprietary data. I will say, like, I think that market's early. Right?

[Jason Kelly, Co-Founder & CEO at Ginkgo Bioworks]

Like, we're not like, the ability to go to market as just a pure model company right now in the way that, like, the tech companies have been able to do on the language side, I don't think it's really bearing out in the market yet. So that served as, like, kind of a, like, an appetizer to help people come in for data points to, like, generate their proprietary data at the large midsize pharmas. But, like, just going to market as a like, purely as a model, I don't really see it working in the market today. Certainly, people are trying it. We tried it, but it hasn't been a big revenue driver for us yet, unfortunately.

[Brendan Smith, Director & Senior Analyst at TD Cowen]

Okay. Alright. Gotcha. Thanks, guys. Appreciate the time.

[Jason Kelly, Co-Founder & CEO at Ginkgo Bioworks]

Yep.

[Daniel Marshall, Senior Manager, Communications & Ownership at Ginkgo Bioworks]

Thanks, Brendan. Alright. I think that's, that's all for tonight. Just a reminder, if you have any other questions, you can always, email us at investors@gankobuyerworks.com. Thanks for joining us.

[Jason Kelly, Co-Founder & CEO at Ginkgo Bioworks]

Yep. Appreciate all the questions, everybody. Thank

Participants

Executives

• Daniel Marshall, Senior Manager, Communications & Ownership
• Jason Kelly, Co-Founder & CEO
• Mark Dmytruk, CFO

Analysts

• Michael Ryskin, Managing Director at Bank of America Merrill Lynch
• Mark Massaro, Managing Director - Senior Equity Research Analyst at BTIG
• Tejas Savant, Executive Director & Senior Healthcare Equity Analyst at Morgan Stanley
• Elizabeth Koslosky, Global Investment Research Associate at Goldman Sachs
• Analyst
• Matt Larew, Research Analyst - Healthcare at William Blair
• Brendan Smith, Director & Senior Analyst at TD Cowen