Release Date: August 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Ginkgo Bioworks Holdings Inc (DNA, Financial) ended the quarter with $730 million in cash and no bank debt, providing a strong cash margin of safety.
- The company is on track to achieve $100 million in annualized cost savings by the end of 2024 through aggressive headcount and operational cost reductions.
- Ginkgo Bioworks Holdings Inc (DNA) has successfully increased the number of active cell engineering programs by 33% year over year, indicating solid growth across most verticals.
- The company is expanding its offerings by opening its bioengineering platform directly to customer scientists, which could drive future revenue growth.
- Ginkgo Bioworks Holdings Inc (DNA) reaffirmed its 2024 revenue guidance, indicating confidence in its ability to execute despite restructuring efforts.
Negative Points
- Cell engineering revenue decreased by 20% compared to the second quarter of 2023, primarily due to a decline in revenue from early-stage customers.
- The company reported an adjusted EBITDA of negative $99 million, down from negative $80 million in Q2 2023, driven by a decrease in total revenue.
- Ginkgo Bioworks Holdings Inc (DNA) is undergoing significant restructuring, including notifying approximately 450 employees of job impacts, which could affect morale and operational stability.
- R&D expenses increased due to higher rent and AI-related spending, which may pressure margins if not offset by revenue growth.
- The company faces competitive challenges in the high-throughput functional genomics and antibody development space, where other players have established a presence.
Q & A Highlights
Q: What is the current outlook on some of Ginkgo's technology? Any signs of breakthroughs in the next one to two years?
A: Jason Kelly, CEO, explained that Ginkgo is focusing on democratizing access to its infrastructure, which doesn't require a major tech breakthrough. The company is excited about opening its platform to customer scientists, leveraging existing infrastructure like rack automation and Lab Data as a Service, which have shown effectiveness in-house.
Q: How has the progress been with accelerating the start-up time for new projects using the racks in your Boston facility? Are there any metrics to benchmark progress?
A: Jason Kelly noted that the rack system has been improved for manufacturability and scalability. Ginkgo has been able to quickly integrate new equipment into its existing automation setup, which is a significant advantage over traditional automation systems. This capability allows for rapid expansion and adaptation to new projects.
Q: How do you ensure your commercial capabilities match your shift into the tools market, especially with cost reductions?
A: Jason Kelly stated that Ginkgo's internal structure already operates with a tools-like model, which should ease the transition to external customers. The company has experience managing multiple projects efficiently, and this will help in scaling the tools business without significant changes.
Q: Can you talk about your confidence in servicing existing customers and onboarding new ones after the reduction in force?
A: Jason Kelly emphasized that maintaining customer relationships was a priority during the restructuring. The company restructured to ensure consistency in delivery for current projects and protected commercial teams to continue selling new solutions. Ginkgo is prepared to scale resources behind successful new initiatives.
Q: How should we think about the potential value or economics of Lab Data as a Service deals compared to existing cell programs?
A: Mark Dmytruk, CFO, explained that Lab Data as a Service projects are smaller and shorter in duration than typical cell engineering programs. However, the expectation is that customers will purchase multiple data sets over time, potentially matching the revenue of larger cell engineering programs.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
