Ginkgo Bioworks (DNA) 9 Aug 232023 Q2 Earnings call transcript

Good evening. I am Anna Marie Wagner, SVP of Corporate Development at Ginkgo Bioworks. I’m joined by Jason Kelly, our Co-Founder and CEO; and Mark Dmytruk, our CFO. Thanks as always for joining us.

We’re looking forward to updating you on our progress.

the involve we’ll risks during forward-looking making reminder, which statements, and a presentation be today, some As uncertainties. uncertainties. about Please the refer risks more Securities with and these and Exchange to Commission to our filings learn we’re Today, in addition across on dive relationships. updating our you our progress platform, into continued operational customer going successes expanding strong our and on deeper driving to our to quarter, efficiency some recent government

the end we’ll from a Q&A I’ll and questions and with session, analysts, take investors As public. usual,

submit investors@ginkgobioworks.com. you, can e-mail advance to via Twitter, in You those us Alright. questions #Ginkgoresults or Jason. at to Over

I’m to super our strategic the and team as you’ll chatting biology our mission, particularly to make our we with you for celebrating I today, progress making Ginkgo. profitability, all that always the start easier to excited scaling today to through be at path a into dig quarter driving is on sections a here we’re And efficiency strong of on reminder that with the see engineer. platform. our mission

also platform growth Alongside the we cell has programs as are the more this quarter customers. XXX representing quarter, scale Ginkgo continue year. We engineering of work to I’m accomplished we active our for work on team over platform. the last XX% this proud had delivering that,

what We’ll into same versus So year we dive saw the a enabling and growth XX% next engineering improvement services quarter in last the efficiently. driving growth this quarter this cell revenue section. in we’re productivity that is

And resources might remember, automation to they they Ginkgo most the some have scale those sophisticated side, meet companies obvious, to in-house. assets already considerable doing business, something companies, have that the to in in-house. hire of has state to our the really On are work in customers Ginkgo’s the add largest, to have at where bar showcase the to of they choosing considered R&D customer

Sumitomo these in and the strong see our programs. technically the who of our of on excited couple advanced performance most Merck last progress expanded And customers. at delivery customers Novo-Nordisk, am to the super of and all We’ve their on are so, basis I months among with relationships

in You’ll you see customer success us more future. on the this with sharing

balance capitalize and really these the market, coming assets are our and and performance I’m unique excited Our in on sheet months years. to in

cash We about margin towards a from fees That by on march value continue call of runway to us those have balance multiyear gives our investments, and programs. of over this operational on service improving eventually on by me sheet. our of billion with you’re as later both via potential hear to $X.X safety well our runway strong going and the the margin to downstream profitability, portfolio from reaching

our really ago. Palantir to Ginkgo’s Board to into One currently to is more hand news performance of leadership. it back thrilled and Shyam before piece about Mark Sankar I Board share Shyam agreed provide joined the more has dive deeply. that I’m CEO exciting of X our years to be his

about is after Ginkgo. some give a So this year perspective you

us absolutely biotech opportunities for now coming to critical generative opening especially work is AI I be up. coming particularly invaluable up, And from learned company the that about year that and that think technologies grow to experience our between go people go more Board about going a And tech tech current Palantir, for and interface Ginkgo Ginkgo so Shyam you XX he’s even what biotechnology scale together. last Ginkgo on going is industry that the built Palantir like see new at has has Shyam’s and as is today. the over seen he’s are natively to of be for building the to up he intuition being that

Chair. Board we’re So over super to happy taking as have him

like team last put which happy also into start-up hands team. X the CEOs report the year company public, he do Bayer we’re chair tools led and science executives dominant special be was would I’ll business a the the the Brian for grow going the the growing And current Shyam. more, as the in company from years. fast or to to Ginkgo with me culture. am we XXXX. large not reins over thank this at staying as turn our a absolutely company effort meeting a in his I on I’d the in leaders the been critical to model coming the knowledge leadership Marijn he as management designed Marijn with to often In Chair, company stay senior Board over took a of Fisher first day. tapped in And take company our week, to being fit acquisition But to be life on XXs, the he Dekkers time called go was Marijn growth at think day industry on Board was quite struggling and that have spend multinational Marijn a in to created his as that them institutional Thermo our Board, around leaders, Fisher honest, really our sort of will Thermo Electron. CEO still Marijn minute I personally has of

part across similar a of industry. me for Marijn with making redesign conducted get on biotechnology his here contributions, easier mission I R&D model the our personally of is to ambitions how has Ginkgo biology thank directly to is engineer. delivering to right want That I working – to at really Ginkgo. to business our be to huge And want going

will years to always Ginkgo. to to work Shyam look Marijn be both to in that contribution I I forward thankful and continuing to so for And Marijn with come. the

Alright.

over performance color Mark more quarter. financial to our to Now, let hand a give me it on this little

of platform and the agriculture sub-segments. a active quarter across start a engineering XX% of on engineering year-over-year represents supported We Thanks, increase in food significant biopharma, business. This with XX I’ll our programs and programs growth in XXXX. total Jason. industrial XXX discussing cell second new active programs in customers XX the and by cell added cell

Cell engineering revenue up large XXXX, a second quarter, mile from quarter to the in the onetime benefited $XX was which X% had statement. of million compared

when Importantly, up engineering new progress services impact revenue cell of is strong share, driving value and adding year-over-year. excluding efficiency program cell customers, and largest revenue services was downstream execution. in for engineering This XX% demonstrates programs the quarter the our we’ve platform made ever and

Now turning to Biosecurity.

revenue of XXXX, from away this business services. quarter Our million $XX line business expectations COVID testing Biosecurity with transitions the generated as in of in solid result second a K-XX

now America either active gain to countries on MOUs new with an pilots international hub. and first or Panama, international a scale, totaling We with XX program an traction important Latin and MOU continuing in our programs, are including

margin in product XX% higher-margin gross to sales. quarter Biosecurity second of the XXXX, was shift mix benefited which a from

our strategic these We our is P&L. discuss rest programs I’ll Jason priorities partnerships exclude with figures domestically And section. and provide span have expense, stock-based new DARPA, engineering U.S. expanded more cell in which Biosecurity and also the which Where separately. that compensation noted, of government commentary shown the will now the both with IARPA on

the by the in significant second Bayer’s the Ag We particular, non-cash. and fourth G&A excluding in second the which stock-based onetime million acquisitions in year, $XX stock-based of in increase G&A, Zymergen. XXXX on comp, in reconciliation adjusted representing of several million and was XXXX, of $XX particularly additional quarter expenses of facility expense, including second to impacted in XXXX. was in capabilities, the quarter growth expense, R&D million in increased second increased $XXX The quarter last quarter quarter, the costs appendix. OpEx. in details million biologicals with of this the our in of $XX provide from quarter the from EBITDA and XXXX operating to excluding majority Starting from our comp,

fast roughly as on items, driving Excluding we expenses platform. services operating start grew our these efficiencies revenue as onetime as twice

Stock-based comp, of similar this saw in a step down what this we in to notice year. comp you QX stock-based quarter, will again significant

adjustment reminder, went starting public off. catch-up of when is because roll is of restricted a to units we the to the this As stock modification accounting related

While the prior to is public. done, to expense RSUs related the of adjustment million still stock about total comp is bulk us going XX% issued $XX of that in the quarter

in the to appendix presentation. this provided are details Additional

Net financial measure statements. a our that of appendix. our number note income adjusted a adjusted loss fully other to profitability. of reconciliation non-cash more also of more the is indicative included important non-cash We’ve loss It includes these in net detailed Because EBITDA net and EBITDA is and/or of in our we loss. a expenses to believe items, as nonrecurring

was $XX of lab. the of as-expected the attributable Biosecurity in comparable prior in the adjusted and finally, an compared Adjusted higher million, the million negative $XX which engineering in was of expansion to million includes EBITDA decline And period. both to quarter expenses The rate year in run was $XX in EBITDA the quarter engineering second process cell in revenue. decline CapEx XXXX our negative

of have by which terms our improve to launch have growth we as rapid than made next will and segment. require operational we launch programs. full program new we more strong our XXX supported before. target team for to investments ever pipeline year, our a This Jason discuss sequential outlook In programs process, continue the target This will is late-stage the in represents cell well to as

segment some more program due divergence revenue size program with recognition. affecting and starts both as made in as decisions are, revenue timing impacts which biotech our We pricing however, the market strategic seeing between we fixed a programs industrial structure pressure to and have milestones, the of our well to

our about to of for a excited the are we million revenue cell $XXX to While work services we’re in expect year. we launching, $XXX engineering now the land million range

some decisions on of strategic made. note quick we’ve the A

recognized fixed program. the structured in milestones, of pricing a contracts less with customer we’ve more we As revenue early phases as

But that the we size recognized the program. early a of relatively example, with multiyear cash have achieved only revenue will Ginkgo the of million a milestone recognize recently as that part course $X and million from $XX contract. program, in rest over stage larger of customer because of about of XXXX an For a as large

proposition market delivery. a the pricing a Similarly, we unique believe opportunity success-based also Ginkgo for value in to and model on capture our strong is additional value

those is program. However, at end the of the revenue programs nature means of only the that recognized

are so timing our improvements economics beyond the market programs and not in and and QX seeing of are updating XXXX. confident in a these in unit remain guidance We recognition but in to our our pipeline any subset dynamics. launching revenue of reflect will And programs have

the very opportunities is largely K-XX resources accordingly, Biosecurity refocusing significant business the million, we to restructured the on of to in business As year We and our look the build different lasting $XXX a the off. of discussed expected infrastructure. international our for federal with original quarters, rolling the previous maintain the represents public in half the shift second Biosecurity, of guidance emergency health as and business end

revenue mention to the ahead addition, we’ve not I’ll also thoughtfully efficiencies despite we And forecast across internal that flow for guidance, we changed because receive some driven our not cash EBITDA do year moved while we the for the lower just have guide flow provide cash or expenditures have recognition. cash in constrained cases, revenue of in as platform. cash

progress the environment. summary, our In overall macroeconomic navigating pleased business in we’re while with a challenging

our cash while strategic and end. strong sheet long with of flows our liquidity scale business we on engineering capitalize runway and continue the delivered, largest to $X.X quarter cell opportunities continuing We’re billion ever at flexibility we’ve quarter a to of near-term services additions program manage to and in revenue obtaining with balance

And now, to you. Jason, back

to in just We we ever the services Ginkgo thus but before. up, coming ever more and signed core strongest programs platform to drove why had I’m going had we than taking want more detail Thanks we address higher higher I before this revenue quarter Mark. down dive despite drivers and and we’re had into behind performance. its services than guidance started output also strength. the in

part this some right. is market weakness, of So

although we industrial across This seeing sizes We introduced market we’re But on a to we’re is pricing this a really because Mark have our for particular, model the we the trade in revenue deal structures, when pricing biotech, year I growth that funding biotech, still dry near-term having largely mentioned hoping minute were smaller that is other industrial up in the second even all a this April. see of seen our And is new programs terms customers in signing that if in of some seeing programs we’re impact, back offerings that potentially want in worth the up. certainly particularly means Ginkgo the of venture I this than space factor in making, spend segments. less model think frankly in we half of year. it success-based

to about I so you way the think analogy. And like an pricing, give to success-based

right? this there. banner of as is right? model in if back an like it’s pay-per-click to So right? XXXXs, pay a If you anything And don’t And ad, was it early worth you with right? things You’re issue look the going idea this, know impression, to customer, ads, dominant prior show Google the the up per popularized a you impression to really

know largely. at the they click through whereas adds to and impressions the have ultimately as sold the and and that if of going go of surety so your odds much the model than customer to could You and don’t price of replaced to offer opinions a higher person customers very is click impression, different about success the paper impressions a website value,

lot value. but our banner So it of will better do sales pay-per-click. programs. that pricing a that’s with is team our But our the until right? complete does introducing of problem." won’t and The business customer we’ll the knows weapon that work And a for the "Hey, mean R&D want, succeed, it we’ll getting a can job technical asked, not right? meet pricing work, a goes successful company like will good conversions I better we success they’re R&D we look an although what is today, says drive services to version those that hopefully, that over we do the time, you recognize feels revenue to and okay? unpredictable, Success-based is it that spec ads, something of you customer, at ultimately, service Whether

pushes your new that so signed. in out program And revenue from

good outcomes them scale programs and but from some of customers. Overall, all, Ginkgo is not at really about moving that the It’s consider and we’re for R&D built offer sort of receive class here I’m making I’d and moving pricing to it of this pricing platform Ginkgo is really our that pay-per-click. engineering, of It to excited surety. good that engineer a certainty customers start reflect into uncertain to innovation. mission our is the reality for biology on big is move at of what some world we they’ll programs, of can doing more that with easier part bucket to much to more where Ginkgo of the value And that

Okay.

by driving gains minute I productivity is So in spend our about want Ginkgo to first, a technology. how towards profitability platform unlocking

success large today I’m to to topic are able and you excited of is biotech how our talk penetrating to second some The be R&D about most stories existing bids. recent we customer

of cell about convergence then innovative and And our now, engineering customers in We’ve talk about take broadly recently. contracts I’m programs. government engineering, most some government few commercial working spend a and about a to And a announced I’m we seeing. between get excited as moment as want of the about our transitions, that Biosecurity finally, we’ve we I been on and lot about decade did for a especially to they’re more cell typically talking questions that, most our of time relationships biosecurity

forward So to that. looking talking about

Okay.

in. jump Let’s

and with like platform that platform about it because today, bring their at more and the part drives cheaper our risky. I how a about efficiency and our we’re I talked we do build that engineering in-house. flywheel because Ginkgo, and more to platform down customers Ginkgo. and going I out to want service could and a business why to of bottom add customers and customers, pricing flywheel bigger economics that choosing customers as So improved want than So those are how But is we cell to they at faster us to get right? bigger talk this shows slide continue offering domain less they look when success-based

the a So we’ve semiconductor from lot us of taken industry. of journey in this history the

the in of So automate vacuum places upper sort electronics manufacturing. if is could scale you to there, you manufacturing semiconductor up of technology, In right? enormous electronics, by And in and Intel manufactured manufacturing left This semiconductor economic. like the right? hand, words, Palantir of saw and with the look Palantir tube so on, Fairchild, largely an used other be advent electronics eventually

the And so ultimately this And Law. fell chips the became cost per called transistor dramatically. on Moore’s

that that in this chip in You just is see cost expanded which improvement and reduction market. ultimately quality took quarter, the down electronics in radios can in from electronics being exponential and and the XXXXs consumer the TVs dramatically

everything today. So it’s almost in

and era limits of hand of we’re biotech our that drive that high hope biotech to products. this will cost being done it – We – agriculture version ultimately of for potential automating XXXXs that comes is that’s much by cell and these the believe quality Well, therapeutics is really scale for to into bigger in own that the get that can by some is Law the engineering Moore’s a sort move biotech right? low new our and today these we processes, and and economic today, when markets. ultimately market It’s

of but X tapping And scale, important much really, the at has broaden mammalian fungal. automation started capital and infrastructure years our notably different cells of serve in previous our X Ginkgo, platform venture over microbial the we could different invest infrastructure we with added to focus, been history markets, in in last the in starting as into of species years, certainly pharmaceuticals. to That’s to last been really increasing and

XXX talked infrastructure while these So big common all across more earlier. this there’s the it been running than we active through about broadening platform, the of programs

of the processes. to ago, operations to an increased through existing through infrastructure, just more infrastructure not opportunity utilization year was adding a better drive there with scale, About and start better but

or a do who called time deep diving the and built clipboards with hired their platform. how the that, going engineering, industrial equipment in Literally tracking And we and using team of support diagnostic – it’s so people foundry, a exactly how did and have and much of often on. to utilization world-class so around operations we different in who are

of are OPE. people effectiveness, terms effectiveness, overall the industrial overall this And for engineering equipment nerdy and OEE, sort

to so equipment that hand drive through a we diagnostic process that productivity throughput Xx And across needing in use tracked a that saw systems. we improvement higher that see our our X.X nearly we could could all and major And how we without improvement additions. Xx

by to to quarter adding going we’re going is this additional coming the year into programs. already this be future so in and you’re is near why And see general many this

And be really keep We’re I’m all while that spending our as going constraining most company total the the going level. And happy for year. those where to second rubber plays at to signing programs to is that’s year continued doing right in operational the the this our up that think I And the at you to road meet this how the goals. half of strive now. improvements company out it’s important meet watching we’re we thing on

some Now seeing as we been results. started recommendations, already teams to great the of ops we’ve deploy

launch just reason reduced days. a And is record it’s not to programs it This long various through of Ginkgo. We programs just that at process and already could takes through improvements. that’s by by driven for It process services the reduce Ginkgo. XX% our time matter revenue. And we part cell engineering takes a to that of program time including the this way, year, a process. So by launch additions time leads quarter the program we start and at operational launch debottlenecking we’ve program had several improvements, accelerating diagnosed

as cut our X able of of were out processes we internal So part weeks this. to

of knock-on so these imagine the efficiencies. that you can And effects driving

we projects, Our can faster. team we more and up can ramp believe handle programs

fees high as side, cost reducing professional cost cost well driving we in-year estate driving significant the efficiencies. down items team fixed reductions such real by – on overall are driving as Separately, as expenses, up

Okay.

we’re bottom to today, a this ample are line we keeping to is have operational a while result. going and believe the cash that key expenses growth improvements have path we near-term drive and the runway So profitability really as we these in line year, with cash alongside

Alright.

value. real drives what is execution successful So

of is day, at brings so into how how projects up, me And I’m large are coming that of second and directly drives existing customers penetration strategic for thing R&D about our the certain the of a budgets which we on customers. delivering this class the loyalty topic most and excited

how So experts reminder, large customers breadth and with across to things alliance the as customers, scale Ginkgo? to with we service customers. delivering they And are wide all major a management the become their they they’re start-up with Are We’ve work? a this. one in coming operates across of right? for Ginkgo Are from pay is close had in back of industries Are getting doing on order we more satisfied specs? both to attention we

things most hard account industry, while to it’s This comparisons have mode accelerated new Ginkgo’s of even I’m to third into our typically choose apples-to-apples of as every over broken competencies, growth use returning our customers we’ve is new right? really of of our greatest for And industries. create that Customers of is sort programs platforms. proud in one the to year, and

this whether have of And coming in highlight examples few to check with I a nice terms back. those of We today. want they’re reality

So we’re horizontal a I mentioned platform.

industry we’re agnostic. so And

company. actually it’s And in – often customer we market engagements end is so then state find of the what a more the variable relevant our are

is other thing a the then this here. look their to biotechnology we to They’re company majority or much a majority already So research. that R&D do, company on at you the company of Y-axis, on right? biotech R&D company. their does goes can And see R&D the the Are small in-house going a where is X-axis, petrochemical pharma chemical of how large they or company or big a actually spending

with companies how grow okay? building fall And affects relationship with we so those and them, where variables two you the really we’re these on

natively half life great Ginkgo. are words, the In chart, as built for our the a platform. in other early a So start-ups on of are often customer left early Ginkgo. on They

building cloud start the of So to like where So platform and late launching this Ginkgo native is that. without right? is mid- native like This equivalent, a kind things the had here they’ll of that. own of XXXXs at We’ve startups Amazon think seen up bit labs. like on their you you

typically they to clinic, where like things kind develop to run However, wave end want And want drug their a sign to clinical our a then they that’s back the R&D, they here a if bunch the on they of whether on depending R&D they’re – trial platform and like they this go they come on want off spending and company therapeutic that on R&D They save in R&D into they’ll of phase, for trials. the don’t that, of do platform. right? on well, to then capital to their the expand in spend and come back have again

words, we in period doing other so a platform is And we a middle, less. in doing? that R&D lot well way, or see they’re In And them, in well just off that sometimes how these during not you’ll the drop they’re start-ups second but they’re with it because grow work doing of do half, question this right? the

Okay.

in biological at your of engineering, chemicals the adopt are industrial-oriented like that quickly chemical mature On these biological other chemical more and right? stable the look yet. big key right, you made segment solutions, in lower companies, right? we if relatively most words, say is R&D dynamic have And the budgets. companies engineering today they have how with Not will just this by R&D tools So

Sumitomo, and hub innovation excited we’ve in and So relationships their here year were with long Roberta. establish had with we Solvay Boston, this Givaudan work biotech to to

into leading similar all R&D in that helping have talking And biotech. electronics, with this are it’s market these what to companies really they bet start I and big are Even earlier that on though right? budgets, they about was more we care to move biotechs. so And more more

with technology, the want this category Law as grows category. we’re fundamental do thing R&D to on, opportunity see And grow how to for then That’s if us. they there, the already think happen We this to with like their the customers and Solvay more right? these I places in grow they electronics, in we As choice, markets in make like are biotech biotech started we that budgets. Moore’s improved have adopt same early

– with but And so grow their think appetite for fit technology. a a sticky I for see real us, it’s us it’s you’ll

A them to areas bio-based of highlighting since customers. is into first recent example they with have days signed And business. now, Sumitomo. their in Sumitomo help two commercial develop on those one chemicals. is of other in of that more here our Givaudan, with broader our new we’ve successful sustainable progress them out And of technology. in XXXX the We One early worth customer back deal launched that this based a programs make in product coming program, earliest we

to today, continue We collaboration work with larger them years ago. a of platform couple signing a

I upper your of spend particular. little right The a that focus Okay. is the kind today attention category to on in want

I think near-end has march it really is So one I’m into, that of most excited to us most the about this because it’s one potential. the the newer for areas but

it these sell existing for So state but hard for obvious, in And the time, this companies into big reason very to a the long not is players right? to Ginkgo have space, biotech assets. was

infrastructure a a they like place a huge have Novo, chemical that’s new to or startup over a company biotechnology decade. a Merck or biotech, built unlike So of kind large a

higher. is something So that they to is additive the bar to have what have much

So we R&D already challenge are into to that’s opportunity bought companies, because really demonstrate the existing they with budget But the there. on as in their have we biotechnology. success grow these

of so recent great we’ve to had want a highlight briefly. success stories And I that couple

different program. right? and biocatalysis is technical Nordisk a broad announce This Novo deal and to success success a showing builds unlocking we’re year. not opportunity. launched This great within And exciting chance R&D scientists to group as I their started with a just Merck So manufacturing it customer, program. they across And help It’s and rapidly broader where our a than is late started announced operation door Monday, recently their second we happy because to broader just have that our seeing last with progress therapeutics, a then the enterprise is know platform open saw you with of us can how, customers stories example developing major Quick see first apply that, on our whole So like group get was in. this to a a the and Merck. relationships. collaboration this highlights on we

Merck. a partners have Novo you, really respect it bar, like get to we tell let of go and push So high me ton a have they better. and They for

the about excited very we’re with so them that. with expanding and And progress

programs and Okay. relationships sector about the in it’s we help private because lot that sure a push platform they I talk often that government to are make clear ways. of just most our want innovative our some our forward of

And we so the planting seeds Biosecurity the of industry. are

lot me a our in government heard since customers on about partnerships Ginkgo You’ve talk the The are reflected calls. previous U.S. bit we started instrumental governments And company. how market have ultimately worldwide. been a that for that

Some technologies earliest the DARPA, came right? the dozen ambition, our that about National We’ve the seed over same of and from with agency launched Internet other Science privileged and half years. work the funding been many to programs a

to they product products flourish the be whole in only think a the what’s infrastructure necessary that new categories and also about about customer that industries useful as today critical And future. don’t allow unique would is government the but to

open of idea all future think to for new the big I industry up there. a As able And this my from real be biology a how I mentioned, the government markets we can is are synthetic the leader applications. is standpoint new in

be we obviously you Ginkgo, with several a date, to an COVID future. investments before the years release when example, Biosecurity Biosecurity from range world X working look as a on in we the agencies government at was is need in bigger programs of the ultimately making XXXX, to started demonstrated So much that press there

of forward-looking type places like that activity exist. think these IARPA is I and why others so exactly And

of we’ve last And version with of IARPA, DARPA. couple months, the added and in particular, kind agencies, new both is in of of programs so intelligence a couple DARPA great like the which

producing security rapid the so sell DARPA therapeutic protein protein make on national without And human enable with proteins recent proteins to focused being program able the synthesis supporting high-yield distributed objectives. most – of cell-free a is production to

response rapid allowing to hard it, threats as and supply a able being that both stable something So as more make emerging to to well a otherwise in chain. would place make be for

has can a for such program, engineering, a sort like which check us like of look we and on with at programs genetic collaborated as [indiscernible], that of you think that IARPA, sequence previously the focused And engineered, be storage recently, program biosensors, record and and might new right? it expression radar that Imagine data. we useful. is continuously most all on say, was why genetic

like So it exists? analogies the IARPA that is recorder in flight what airplane, of and DARPA to already Okay. think these it of like like kind an

same cockpit what’s what’s going on action idea Well, and of of to to the to So efficiently. like think going emerging for have want we to recording inside able for understand respond of reporter, that cells it that on. be threats mechanisms

Okay.

like insights building monitoring then contributing types is more this as So we’re this the structured right? you benefiting coming sets increasingly platform, we our I’m This strategic tools Biosecurity out things New our that deploying and from excited one the where we business stronger. and future. particularly it’s valuable. theme. tools that biosecurity be can value is business the between of and back on leverage the engineering to that across both to that, data our But that back transition make up AI you business is is cell unstructured valuable strategic sensors imagine from and getting things picking of are might in interface Biosecurity as work, the becoming about most Biosecurity Across internationally and cell chain, the engineering

the great company. the I’m They In scale And efficiency platform proud paying quarter. our for gains dividends of already really the forward this continuing the delivered from to on looking team it. that are in work should Okay. summary, excited I’m really be about

Alright.

it Q&A. I’ll back for to Marie Anna hand Now

Jason. Thanks, Great.

the I’ll everyone. raise from and As the call on soon, the start your open just public. on then reminding And on line. question usual, you’d line that analysts like I’ll please question, Thanks, to and ask up a with your you the if hand

Alright. Welcome everyone. back,

and usual, folks I’m the hand. As a raise their and we’ll order go question, down then start to just with retail going

I’ll you’ll your Rahul, So line. up be and first, open

And it’s Or order is another a it’s Twitter. both? you called do best a called computational why to believe is question engineer? software heavy to mix approach? path biology it an in brute A of AI future, first X on, comes I X, there The from XXX force Brandon think make future, Do easier robotics now, envision you the

something attention a large super made Ginkgo And paying a good it’s investments we’re lot automation. considering of it’s at question. to laboratory Yes, we’ve in

of that’s one strongest I our assets of think the company today.

So to other the a that and I going is I spaces, models. about task-specific you’re to in looking AI is easy of models this lot top of those on generative think And think, task biology space. ultimately, way – train you’re what’s have we’ve to foundation going those at training kind foundation and going on of spending been with what time using – call sort of data then models the

sort be more of to, And the be, a get might of biology foundation the kind that aspect might of that the a example, or you say, specific it activity the an for an data enzyme whatever that can’t of of would of raw antibody this data some binding feature of just model. is train unstructured from or DNA

And models so data, get think, large type ask models of generate of and top of data of But our we think value aware us in data biology. foundry, task-specific to the train large a sets So also, where very how today right? do foundation sort actually is can as more come generate I in data trading all I becoming to position will they’re of strong up with on type training that automation customers, us in TAS-specific biology. you Ginkgo that that to a of

and during infrastructure things in I that for lots make about I’ll it’s to a talked one of go scientists that infrastructure, and they us how their hard point have call. to extensively work. and outsource the this last It’s to R&D that. do large our convince And like companies in existing on change

thing I people access today research AI how the all the data something different? into Ginkgo’s yes, think, headed biotech, automation that, do Could to good, really current could those be set, answer in good I is my is of to the I tools. and going great is companies how and I play to where I work going could revolution well are we’re do to huge question, about infrastructure today? know this had and my So that’s my do add are I to asking I – with And that’s well, AI one but if I

up and Thanks, be your ask Rahul, line, question. I’ve Jason. Alright. you opened your to able should just

okay? Terrific. Can you hear me

Yes.

questions. Thanks to start pretty quickly by project taking for Wars as want [indiscernible] Thanks so [indiscernible] to much. appeals just Star sounds so Jason, me our Henry, a taking much awesome. I the Marie. Nerd

landed. I’m glad that Yes.

there in deal the clearly base. success base changes the So be some you’ve that fixed structure pricing, big announced the

looking a then could a little the now you into of you’re how into for give us a this color And to backdrop as there in the QX years, the future the sort reversion So previous some seeing also evolving potential pipeline? hybrid? more changes, or forward model is

Yes.

super So excited of add get love to tried to statements, I’d Rahul. but sort of about in I’m again to this. I it some across my it,

not It’s pharmaceutical And industry, industries, still even because say of a in R&D it And the we think company’s the of works, that a research goods hope like services chemicals, kind or fundamentally And of work. is cost industry, market, thing low, of in something right? of what not particularly their to spend you but out a So may the – and why fragrance offer what answer is for projects you the you on budget thing. the special R&D products? other is may money odds and R&D if right? again, there’s coming food, success are is

even it it squarely a unpredictable. be whole, Our the genetic bucket term view engineering, is use R&D considers you in engineering, to the all as like might biotechnology of falls today. Everyone

at finding models at certain certain the what a we’re work. so in of is that amount the things of infrastructure a to and predictability learning Ginkgo can scale and we all doing use we’re and previous And training that drive

which make we to is I the the to that to Once – you and project works want a that click pay if impression. of of obvious project a have it the bar it’s come get to higher, budget, point customer. pay the paying to you you’re driven when a a for getting per for to predictable, I was you us class works might that know would me. ad It particularly budget basically trying out click per a pay project be only is turn obvious to get make obvious like I that certain about that to customer, as it Google And much your that must only offering And pay instead of a them when click. you this is because that you exciting be and able want be a isn’t R&D even is

this a about have I’m on take so And It really this does our excited direction. like while. projects

year. more a half so nature coming as that success-based year, of they And because of it’s the particular, work, in project in of now count that’s how all X-month next pricing deals if the it second than the we’re signing has

revert just that so it And wouldn’t to back. is what us is. I expect But

What types have kind it’s to Today, would is could enzyme haven’t offer expand maybe the of to ready. it’s you hoping this the But I’m seen value to expanded just Ferment, of customers. giving conveying for. question in protein other aperture better ultimately I we this as success-based think is – a at when to something yet. I I’m of the that pricing that space. the of is But love Ginkgo areas and I’d we’re programs

so Thanks, taking our for Great. question. much

Goldman you chat. free to line, Thanks just much, Rahul. so be Matt Sykes Sachs. opened I’ve from you’re should

active? do I’m sorry, of get of in going to model average bit just based? is kind a that be to actually of at percentage about of really that Thanks phasing as programs you pricing the without disclosing of you size the Maybe or – taking the What are are programs to change on Rahul’s pipeline good following to success-based maybe revenue sort of to better, going duration a Hey, how sort many up are what question. help we trying kind success-based of us little Could the And how expect be? if success-based talk sort for the question envision you on my success programs of that those much so pricing. what is afternoon.

in after, you line if design These long of for and one success of types the shorter sort can that enzyme some know is of are to year, the Mark, order time a protein probably don’t want X other in think months, something questions on there. that. you space, a going little contracts, be bit. area I of on chime a I which this Mark, we’re Yes. comment this the But again right? say like programs for should of production. So would

Yes.

plus the to say, of X average some around let’s sort range with duration, that range. months minus XX or that So in

So are they programs. in much They also faster program size. lower duration are

mitigated budget. be smaller by When you therefore, but to sort think a of would expect lower the lower seen from an we like it is that past, as be the a per that you what So, also in lower revenue about, right. would – duration, it the somewhat program, Matt, than quarter is average

we push to, effect, in of that quarter. revenue of amount in the through able sort So, are a

of So, that’s sort of it. side one

The other revenue the it side is recognition. of

you X to push of program, months over of you have push the the are to to it the a all the success-based progressing revenue though for end that all to revenue, have months, of XX you So, program. even

new of so sort for And that’s the that’s affect phasing going to the way Ginkgo. in

so guess So, of it I terms percent kind if you that’s about in the the XXX would just – then target. is way XXXX, think think of programs, the of and program about I

So, number. just a let’s kind of call round it

We more to programs have XX go.

It’s success-based go. a to majority. It’s meaningful the the So, component programs not of a XX half, programs not to of but the to expect program example, we meaningful that, do payment it’s the go. less than it’s be like component for XX type

thinking terms helps if of of bit So, little business. that in percentage you total about a

helpful. just And one then really That’s follow-up.

it, Is acquisitions for QX look about organic? there the of that sort come payments to at kind we organic? there As as for of I buyer engineering, or the modeling are of revenue, sort services million like cell business is this And things like year. to the generally it in that about we from we just as terms like well? of is sort should think again that million as thinking are, that as we growth But on all $XX be of know in how the and generally of side of in. there $XX should thought

was you effect a yes, we so. just in book think with that contract acquired part as have a as It in after contract organic. do acquisition. effect it Generally, as large remember, Yes. of That or of should the business. Bayer. of – wasn’t transaction, But given that of We was a part to that us

much. Thank it. you Got very

to Edmund I Morgan Edmund, trying Alright. are if you just Matt. mute. Thanks speak from Stanley, line. are have your you opened on up

Thanks taking my for guys. today. Hey questions

weakness? guidance adjustment margin In terms cellular the versus versus was models milestone-based engineering, in by driven pricing price wondering out of the more in contracts success-based of reduced the was I fixed how you much if parse can guys

Mark, to that Yes. want you speak do to one?

could repeat… Sorry, you

I broke Edmund, do to want repeat think it bit. you a Yes, sorry? guy of you He why yourself, up – sort was don’t how little

milestone-based parse versus how guys outlook weakness? driven versus if the pricing and for I the out of market could contracts wondering engineering, by reduced cellular price more fixed On models adjustment was success-based you much was

revenue the on payment XX-XX, remainder side. of that the market the the fixed is so recognition. of of I seeing say in the And And industrial timing think – say certainly, of Yes. sort then about impact because sort that would plus, milestone component. be million revenue $XXX reduction from about biotech – success-based the the of would I the it’s recognition, the we if you majority component are the terms reduction would and timing of of price

does So, that Edmund? help,

the Yes. model, finally only in of your terms heard No, correctly. that’s I the then success correct? in if on And check very Is that wanting offering. enzyme just to It’s am helpful. I payment services available

It’s services Yes. and protein production. enzyme also like

look want as us a class you in but – still are more – at is we And to like it. right. hey, if to it want stretch, project, risk be our be this research based this That interested to protein. protein certain to spec we it we would doing and But it, if take bands, would remember, customers you we Like, be on titer, then would would risky the have a be say, real a doesn’t protein like would a it view will do non-success of it scientists still, like a If price I at and project, and want in they to of that’s our success-based. falls that’s hit, a paid our traditionally. more do would a is coming – it get manufacturing. So, right, that

but also area yes, of production. enzyme so do protein we area in And analysis, design the it’s the that of in and

this And that Biosecurity sounds business, IARPA the successful And or quarter you some it. these contract, as us on about your interesting. study and cellular with Got more contract. could be economics then every new behind applications share Can engineering very should well? there biosensors be in you tell be leverage also

Yes. I know what I released we exactly contract economics. don’t would guess be have the on

but ahead, otherwise. Financials go aren’t released,

can in I what just biosensors I would are speak with where could like usually what you broadly. these of a the they envelope And do biosensors and about is I generally technology, this to is play. say so Yes. but pushing I the – mean programs – do the opportunity

Like the record what’s sort imagine walking ideally sense sniffing the is powerful, that the in can able airports, this of dogs around you things on able bombs deploy right. are going apparatus absolutely, of and reason is to which pretty one right. is with like being that sensing are biology, So, to field

system. or like of system, that all things You powerful sort factory distributed sensor

that’s for of one again, reasons And you interest, for see do that type application. of So, a variety technology.

foundry, other in our is The right.

biosensors certain you those the engineering of you types itself incorporate for vivo pull and can you the you of for have the of performance the then an the can cell, are designs of can that use of dollar. if DNA like off, of your per where up genetic check that scale When really test you into number to in – can that design. you can cell use you are performance So, features a rest

activities throughput group of of selection are customers. in does at have strain that generating biosensors expensive less really whole there So, to Ginkgo a higher where real our kind and type here we for that experts make projects sort

that’s of the here we can too. So, leverage part strength IARPA with

to it while, you this imagine some a doing could field. out things have we been is in it So, for with but of new do the the

so you Edmund. from William Blair. much, Thank Madeline

line. at. I opened up have are You your just

with. have Hi. Thank has feel like Matt a with Madeline programs customers, any little customers there for you you so with? economics do know talk Can This will much. you with or that do recently lot organizations One you the previous announced this covered that is on all, programs question, sort new bulk of for you bit deal of I deck, at the is you differ economics Larew. you programs in do a multiple done that but repeat

Yes.

right. two – I But we project-to-project, we have the customers Remember, in customer. than would different our way think with first think pilot. publicly a a we of general, don’t think – position things. I specified on I particular gets like is say doing other announced projects So, don’t things, because would future doing a In we like what tires, project in kick I are a better have the like again,

up So, in can people are what whether can for often to around them. sounds just arms really hold hold Ginkgo practice like up, it we trying their wrap

get I that, general the deals trend over would say, better so is And time. in we

call of to would You Yes, deal, like like an answer we that also this yes. the umbrella what up brought idea is

that can programs gigantic where it renegotiating customers very the That everything of new am to with we pricing excited without of and else. see and contract great. more is number I a set easy have that. to up now We all our IP a make longer term add

into of one larger in us. new at and companies and to getting have umbrella. a have of early the fan first deals, each we these markets, future I very a are of great, beginning. with deals, remember, it’s those for lot a customers into expand then customer an are lot deals lot then could ourselves these You much we you we very the but are of penetrating to deals the mean for business particularly right. are Like can like But mean a – to I prove they

yes, love It So, now. thing when we times to get contract. customer a has an to happened to. great do But we umbrella few a it’s a get

you the quarter, expect helpful. anticipated about for give trending that XX% of Is super any see of be That just me, I what this recurring. long-term then K-XX the and can think way was as more some Great. was revenue for color one And last rolls you revenue how you Biosecurity would that said on you off? quarter there to

Yes. Mark, do you that? to to speak want

that. Sure, will take I

similar So, sort – year. a but about number in the in think just of think or – importantly, more of I more if the half back QX QX, you

the out it so of second call has assume guidance it, revenue half the off rolled that you So, the implies, of number. or if million $XXX almost plus completely largely year, of in million of should K-XX the that $XX or

that rate that know the But the assume, right is what sort have signed kind those in should sort run memorandums various pipeline gives just of we you activating that of the based and a even a we kind that the of exit stage. course in countries, business based there of play bit or to on state of sort looking of contracts you getting of on the is have a sense what opportunities today, business of on into some a that’s of of of we in we are So, understanding of And revenue sort current that now. close significant that today.

echo would that. I Yes.

saying been we of X.X Biosecurity. is a and a which for – in a pandemic, It general Our now volatility. market an of combination have and this lot emerging had years

telling hand as they our what you add trying would go them happens. overstate when we then pop letting in and basically then always to that were we know so where and best And and things large new had contracts up doing to not

And that. so we will doing keep

our than best to guiding But right that’s still try for would other the for think I second us comments. I all. to job that, way do Mark’s you

much. so Thanks Great.

have Thanks Madeline. line. I Mah just up Alright. your Steve Cowen. opened from

Any some for deviations the program Great. be strength program new you could sectors you appreciated from questions. what the areas Okay. on in? previously adds? were have new color has Of what these provide on Thanks particular been on program there the color and adds, any any would XX adds new of industry seen

coming that sectors was the is count. the in. a pretty story, slide seen past, same The the there the from the good in of program adds kind as contributor, a the deck, mean are Steve, in active which we slide have play much current but bridges we industrial It’s contributor. early across I is program that was biopharma a

back the And of again, the are industries, same. can industry segments. the adds pretty we are it’s roughly all happening the happy with so But you like but into sort coming what’s across

you. that Okay. are How could K-XX? Thanks. then you we should the margin And getting Biosecurity away gross if Thank sneak now about I one from in. think of business the

that margin plus of or sort in should gross us that as to XX% expect that business you I range. Yes. of a target develop we say would kind minus

at go you of the sort quite bit, well, line that’s If you sort draw but sometimes quarter-to-quarter, it and say, and was Biosecurity, fluctuated history could where back from a of it – a look of it normalizes.

So, sort business. we it’s where that said, with now. would to think about effect That when business we of new like in be a

right sort seeing us sort even us scale It And a a is. gross to margin. while Biosecurity margin of sort certain time figure of out of before to got will take gross so started where until normal with the it normalized some took a we we

kind going it. something type it’s the but target to to are to think same So, we of trying evolution, to that’s get it’s time some normalized, of how to I that’s going take be

question advanced has to I listens want is Steve, type R&D Maybe first like think whatever – valuable a is a of that machine number then do now up this to really on add, a have give of shout the We since one R&D, per the around the pipelines I done to building do sales our had how like lot I would think I closed sort selling we general Like team I type and that to and want this, team adds. fields. your we also program all thing pipeline certain services of quarter it do this that here. you commercial call or a really what of unique sales that for the of to want deals

feels it healthier felt. ever than So, it’s

me into yes. So, half that’s really the so exciting the year, of going to latter

up I Mark just Thanks BTIG. your opened have Steve. Massaro Alright. from line.

you Can hear Great. me?

Yes.

that we And heard beyond be the may then that do whole. the indicated you enzyme as Well, based cell to that is it Jason, thanks engineering initial design relates that would call you am guys. of may time, a you little – cell might this on structures that maybe percentage where expand your or I for first more ready. revenue programs have I curious the what in related indicated success are protein love program. work production. that And a just you as insight to you when

what readiness? about that how transition? we of timing think So, constitute I And should would guess the

want You do Mark? one, first the to

Yes.

have back to get from don’t percentage you the at. of to ask design cuts and we revenue comes would to we that. think production, look the like enzyme just That’s I back on to that that get and would protein I

seeing what it requests something – program. are do is of with, constitutes enough a largely that the similar customers type to into moving are to we sufficiently success the On domain, based from

a of good We where have our sense have calculus. of success That done probability enough is of is. to the basic

And and on. have of that a many so because so we that we going ton Ginkgo, across the subcomponents engineering – of have protein projects production sort protein at of done programs of been like hundreds because are actually

other be. have we could good data, have and still order in what out what felt we And a so we our to have sense That’s of go accumulated to move to so like good success and would to areas. rate we get

what as customers it’s Does got see sense? last from it of reps, have is while there we in, So, this rate so where are one. also we different, similar if would have a like. idea we we feeling we get brand And area enough still to success kind a program, to slightly have of some an the make new have that then in probability similar coming that stuff looks

of is of guide back in XX didn’t funnel. some cell some my structures. XX on would It lowered but does. the half. year helpful? question. guide. cell then your hitting related Any am to sense you I Obviously, the you in half just the that of confidence I elaborate you funnel on could if And need engineering helpful. the guide, be program first the Obviously, the curious around That’s success-based the second you lower to revenue from guess your transition

mentioned Steve. I on with Yes. answer to And this – that

think I we in health since the I this really So, for best I started you and said, we sales position to funnel, is history like the have feel all of talking have like certainly of been in generally company. would the like

say over That for in of a just deals not year way second a So, I Ginkgo success-based the the where I generally is and work. compared the close that types feature number in feel is is first pricing. the more economically us favorable. still that more have efficiently We a half hopefully, that good it about time, for would obviously that. of were like, because to hit for we to do like It of big customers overwhelmingly to half.

– what’s program confidence been That driving like in is really what’s sales the so year in And that’s is would our the I that. driving have really say infrastructure counts building. just we

so has paying year, the that’s that – off and last remained And in now. I think major and growth

everybody So, and it’s because do from that have funnel the we is into And all we in that being where and more visibility have decent stuff. really the Hubspot that.

So in two close right. our don’t deals weeks, and –

exactly are are closer when don’t they we but visibility. the – know some it’s when So, they have so. We we to to going end, close, know

you. Okay. Great. Thank

line. Thanks run from before out just least, but have up Berenberg, Last your opened time of Alright. I we not Gaurav Mark. here,

Thank on taking Annabel for you the much question. for is This Hi. Gaurav. so

could last Going are much all? Mark’s you of programs, if how a off headwinds macro affecting on new question, at bit elaborate

answer of So, yes I category is right. Mark the industrial can say comment much. biotechnology, on in the will how

a three biotech, is lot, biotech There market you like companies the So, Ginkgo biotech. that, a not also, could There agriculture materials other biotech. but are Those big existing serves industrial imagine, future building pharma is few markets. biotech, okay.

rates start-ups food, I big So, those industrial animal-free in gotten that’s people. you things And headwinds all what can we really has area. just done, meat, like That categories, three tightening think and bank venture and created with mean really in interest That of stuff or has that in work capital doesn’t someone the that can’t like space. new squeezed that sort that.

savings, cost it does earlier. deal appetite was In fact, Mark mentioning of like in little more but to a kind shrink people some ways, drives for outsource the it for size

so And headwind. market say that I of would more a really is

of And we little want I reality you to aren’t where get because little then You that quite are at just a comment a little that? got there. in don’t the certain Mark, industrial more the is – sector if one bit. momentum that’s that the as funded see going today. see a just ecosystem more it like the don’t therapeutic in you to much little industry just has venture categories capital But out and a know space behind, where on now

to maybe Yes. I – that reiterate I the earlier. mean made covers just that point

payments, would of that timing but the what way about of think the majority in is But price fixed attribute the contracts reduction the biotech are reduction rest A you the would the structured. to is just of on part just of is impact guide, the If specifically. that of I market that that recognition. I the success-based revenue call industrial part milestone

much. Great. Okay. Thank you so

Alright. Annabel. Thanks

We time. are at

thoughts, to go closing Jason? we any Before

I it, about was – much greatly our programs my first of company-wide adding category too strategic talked haven’t We topics spend. without around of but did increasing lots

towards pull be am really platform industrial think a exciting a think folks gains the excited we half do can transformation team that to through expect year, are listening, the but profitability. those and more efficiency part all of I push watch so efficient the our to that the of engineering I like a seeing yields the big able on the do are all on and off, I that Ginkgo I way, that’s And that of motion like in again, way in spoke something numbers efficiency like being here, sort about. would from that you delivering our second those for programs new in the

other So, but in that’s questions, much it’s we the everybody. maybe Thanks think didn’t just that the thing I cover important.

Thanks.