Ginkgo Bioworks (DNA)2024-08-08 21:06Financial Performance - Total revenue for Q2 2024 was $56.2 million, down $24.4 million (30.3%) from $80.6 million in Q2 2023, and $94.2 million in the first half of 2024, down $67.1 million (71.5%) from $161.3 million in the first half of 2023[156]. - Cell Engineering revenue decreased by $9.1 million (20.1%) in Q2 2024 compared to Q2 2023, and by $15.3 million (19.3%) in the first half of 2024 compared to the same period in 2023[156]. - Biosecurity revenue decreased by $15.3 million (25.5%) in Q2 2024 compared to Q2 2023, and by $51.8 million (51.8%) in the first half of 2024 compared to the same period in 2023[159]. - Net loss for Q2 2024 was $217.2 million, an increase of $43.9 million (25.3%) compared to a net loss of $173.3 million in Q2 2023[156]. - Adjusted EBITDA for the six months ended June 30, 2024, was $(216.2) million, compared to $(179.8) million for the same period in 2023[178]. Revenue Streams - The Cell Engineering segment generates revenue through service fees and downstream value share, with a focus on milestone payments and royalties[115]. - Biosecurity revenue is derived from fees for data and analytics services, with a shift in focus from test kit sales to biomonitoring and bioinformatic support[115]. - Cell Engineering revenue is generated through license and collaboration agreements, with service fees including upfront payments, reimbursements, and milestone payments[133]. Operational Changes - Ginkgo has entered into multiple Platform Ventures, including Motif FoodWorks, which raised approximately $119 million in gross proceeds, and Allonnia, which raised about $52 million[118][119]. - The company announced changes in commercial terms, including new intellectual property terms and the removal of downstream value share from certain program types[135]. - The company anticipates that scaling its platform will lead to lower program costs, driving additional demand for its cell programming capabilities[112]. - The company anticipates expenditures will exceed revenue for at least the next 12 months, focusing on R&D, operational upgrades, and acquisitions[181]. Investment and Impairment - Genomatica's investment value was $55.0 million, with a carrying value of $7.0 million as of June 30, 2024, reflecting impairment losses[126]. - Goodwill impairment of the Cell Engineering reporting unit was fully recognized in Q2 2024[144]. - The company recorded a goodwill impairment loss of $47.9 million due to a decrease in market capitalization and stock price, indicating a potential impairment as of June 30, 2024[189]. - The company recorded a $47.9 million impairment expense related to goodwill for the six months ended June 30, 2024[175]. Program Metrics - New Programs decreased from 21 in 2023 to 10 in 2024, indicating a potential slowdown in future revenue growth[130]. - Current Active Programs increased from 105 in 2023 to 140 in 2024, suggesting a positive trend in ongoing projects[130]. - Cumulative Programs remained stable at 269, indicating a consistent level of program initiation over time[130]. - The number of Current Active Programs increased to 140 in Q2 2024, up from 105 in Q2 2023, and the number of customers grew to 82 from 63 in the prior year period[157]. Cost Management - R&D expenses are expected to decrease due to a restructuring plan initiated in Q2 2024, focusing on prioritizing investments in key areas[142]. - General and Administrative expenses are anticipated to lower as a result of the restructuring plan, while maintaining a strategic approach to inorganic growth initiatives[143]. - Restructuring charges incurred were $17.1 million in Q2 2024, primarily related to employee termination costs and facility consolidation[166]. Cash Flow and Liquidity - Net cash used in operating activities was $173.6 million for the six months ended June 30, 2024, compared to $164.1 million for the same period in 2023[182]. - Cash and cash equivalents as of June 30, 2024, were $730.4 million, expected to fund projected operations for at least the next 12 months[180]. - Net cash used in investing activities for the six months ended June 30, 2024, was $38.9 million, primarily for property and equipment purchases and the acquisition of Zymergen[186]. Market and Economic Factors - Inflation has not had a material effect on the company's business, financial condition, or results of operations during the three and six months ended June 30, 2024[193]. - The company does not expect an immediate 10% change in the relative value of the U.S. dollar to other currencies to materially affect its operating results or financial condition[192]. - An immediate change in market interest rates of 100 basis points would not have a material impact on the fair market value of the company's cash and cash equivalents[191].