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Ginkgo Bioworks (DNA) - 2024 Q2 - Earnings Call Transcript
DNAGinkgo Bioworks (DNA)2024-08-09 01:02
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Financial Data and Key Metrics Changes - The company ended the quarter with 730millionincashandnobankdebt,indicatingastrongcashposition[3]−AdjustedEBITDAforthequarterwasnegative730 million in cash and no bank debt, indicating a strong cash position [3] - Adjusted EBITDA for the quarter was negative 99 million, down from negative 80millioninQ22023,drivenbyadecreaseintotalrevenue[12]−Thenetlossincludesnoncashincomeandexpenses,makingadjustedEBITDAamoreindicativemeasureofprofitability[12]BusinessLineDataandKeyMetricsChanges−Cellengineeringrevenuewas80 million in Q2 2023, driven by a decrease in total revenue [12] - The net loss includes noncash income and expenses, making adjusted EBITDA a more indicative measure of profitability [12] Business Line Data and Key Metrics Changes - Cell engineering revenue was 36 million, down 20% compared to Q2 2023, primarily due to a decrease in revenue from early-stage customers [7] - Biosecurity revenue generated 20millioninQ22024,withagrossmarginof4120 million in Q2 2024, with a gross margin of 41%, significantly up due to the timing of a customer contract [9] Market Data and Key Metrics Changes - The company supported a total of 140 active programs across 82 customers on the cell engineering platform, representing a 33% increase in active programs year-over-year [7] - The sales pipeline for both cell engineering and biosecurity categories remains solid, with new contracts and programs being added [8] Company Strategy and Development Direction - The company aims to reach adjusted EBITDA breakeven while maintaining a cash margin of safety, with plans to cut annualized operating expenses by 200 million by mid-2025 [3][4] - Ginkgo is focusing on opening its platform directly to customer scientists, democratizing access to its technology assets [4] - The company is narrowing its focus on specific offerings in agriculture and biopharma to improve efficiency and profitability [31][34] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the restructuring efforts and the ability to continue delivering for customers while implementing cost-cutting initiatives [20] - The company reaffirmed its guidance for 2024, expecting cell engineering revenue between 120millionto120 million to 140 million and biosecurity revenue of at least 50million[13]OtherImportantInformation−Thecompanyhasnotifiedapproximately450employees,orroughly3550 million [13] Other Important Information - The company has notified approximately 450 employees, or roughly 35% of the workforce, about the reduction in force, which is expected to save over 85 million in annualized costs [5] - The company is implementing a genomic analysis program for H5N1, leveraging existing practices to monitor and respond to biological threats [45][46] Q&A Session Summary Question: What is the current outlook on some of Ginkgo tech? Any signs of breakthroughs in the next 1 to 2 years? - Management discussed the democratization of access to their platform and the effectiveness of their automation technology, which has shown promising results [49][50] Question: How has the progress been with accelerating the start-up time for new projects using the racks? - Management noted improvements in the scalability and manufacturability of their rack systems, allowing for quicker deployment and integration into existing setups [55][56] Question: What is the perspective on the demand environment for biosecurity and cell engineering? - Management indicated that while biosecurity revenue saw a spike, it should not be viewed as a new run rate, and they are cautious about the cell engineering side due to ongoing restructuring [58][59] Question: How is the organization adapting to the headcount cuts? - Management confirmed that restructuring has led to the creation of smaller business units to enhance accountability and efficiency in delivering customer services [60][61]