Release Date: November 12, 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) reported a 17% increase in active programs year over year, indicating growth in their cell engineering platform.
- The company successfully reduced R&D and G&A expenses significantly due to restructuring efforts, reflecting effective cost management.
- Ginkgo Bioworks Holdings Inc (DNA) achieved a significant improvement in adjusted EBITDA, which was negative $20 million, down from negative $84 million in Q3 2023.
- The company has made progress in its site consolidation efforts, moving faster than planned, which is expected to further reduce costs.
- Ginkgo Bioworks Holdings Inc (DNA) has launched new tools offerings, such as data points, which are gaining traction and have already signed deals with major pharma companies.
Negative Points
- The biosecurity business experienced a decline in revenue and gross margins quarter over quarter, indicating volatility in this segment.
- Despite cost reductions, the cash burn in Q3 was high due to nonrecurring items like litigation settlements and employee severance.
- The company's net loss includes several non-cash items, complicating the assessment of its financial health.
- Ginkgo Bioworks Holdings Inc (DNA) is facing challenges in the solutions business due to the long timeframes for milestones and royalties to materialize.
- The company is undergoing significant restructuring, which includes a 35% reduction in workforce, potentially impacting operations and morale.
Q & A Highlights
Q: Can you provide more clarity into what the company's strategy is with the new tools business? It feels like Ginkgo is pursuing a lot of different opportunities with an unknown return.
A: Jason Kelly, CEO: Ginkgo is expanding into tools to leverage existing assets like robotics and AI infrastructure. This strategy allows us to generate revenue without significant additional development costs. The focus is on reaching breakeven and reducing cash burn, ensuring Ginkgo's sustainability through the biotech market downturn.
Q: Have you noticed a clear improvement in resource utilization and efficiency after narrowing your focus in pharma, industrial, and ag sectors?
A: Jason Kelly, CEO: Yes, the shift to focus on pharma, government, and ag sectors has improved efficiency, as reflected in our numbers. We've aligned our cost structure with revenue-generating programs, allowing us to reduce costs while maintaining revenue targets.
Q: Are there any signs of stabilization in biopharma funding, and how confident are you in government funding for biosecurity initiatives?
A: Jason Kelly, CEO: There are some positive signs in biopharma funding, though it's still a challenging environment. On biosecurity, we expect a shift towards monitoring biological weapons under the current administration, which could impact funding and focus.
Q: How has the transition been towards a multiproduct company while cutting spending? Are there synergies between the offerings?
A: Jason Kelly, CEO: The transition has been positive, with synergies between offerings allowing us to address customer needs more comprehensively. Internally, teams are focused on delivering specific products, while sales teams can cross-sell, enhancing customer engagement.
Q: As you continue to take out costs, will there be ongoing severance and one-off costs?
A: Mark Dmytruk, CFO: We expect total one-time restructuring costs to be between $18 million and $22 million, with around $15 million accrued to date. Future costs will depend on site consolidations and other factors, but the majority of known costs have been accounted for.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
