Ginkgo Bioworks Holdings Inc

Good afternoon. I'm Anna Marie Wagner, SVP of Corporate Development at Ginkgo Bioworks. I'm joined by Jason Kelly, our co-founder and CEO, and Mark Dimitrick, our CFO. Thanks, as always, for joining us. We're looking forward to updating you on our progress. As a reminder, during the presentation today, we'll be making forward-looking statements which involve risks and uncertainties. Please refer to our filings with the Securities and Exchange Commission to learn more about these risks and uncertainties. So we just hosted our annual conference for Mint, and while that's geared towards our customers, understanding why customers are choosing Ginkgo is important to our investors. And so we're going to spend some time today recapping some of the themes from that event. As usual, we'll end with a Q&A session, and I'll take questions from analysts, investors, and the public. You can submit those questions to us in advance via Twitter, hashtag GinkgoResults, or email at investors at ginkgobioworks.com. All right, over to you, Jason.

Thanks, Annemarie. I'm super excited to be chatting with all of you today. We just hosted Ginkgo Ferment, our big meeting. We had about a thousand people there in person, plus folks on the live stream as well. In my keynote, I reminded the audience that at Ginkgo, we're not spending our cash just on clinical trials or field trials or cosmetic launches. These are sort of end product activities that our customers are doing. At Ginkgo, we're spending all our capital on improving our platform for our customers. So a big goal of the day was learning from our customers about what they want us to build. And I firmly believe that if we deliver on those requests, then we ultimately deliver for all of our investors. If we do right by our customers, we do right by all of you. And so you're going to hear a lot more from me today about why customers are choosing to sign up for Genco's platform and what I heard it from Matt. You know, when we launched Ginkgo, one of the big criticisms of our whole model was that a general purpose platform would not work in biotech, right? It might work in the tech industry, but in biology, you know, the lab work you do to engineer a mammalian cell is just too different from the lab work you do to engineer a bacterial cell to get that working on a common robotics platform and automate it, for example. Or, you know, the data and machine learning models that would be relevant in the biopharma industry would never port over to work in agriculture. So I'm happy to say we are proving these people wrong. This is a sampling of our customers at Ginkgo. You know, we have some of the largest biopharma companies in the world now. Novonordis, Merck, you know, we just announced a large deal with BI. You know, chemical majors like Sumitomo just announced last quarter. Solvay, longtime customers like Givadon, one of the largest flavor and fragrance companies in the world. Ad majors, Corteva, Syngenta just joined the platform this last quarter. And our large long-term customer, Bayer in agriculture. Importantly, you know, that's the top of this chart. If you look down at the bottom, you'll see all the startups in these same range of industries, right? And these are the companies that are working to make the new disruptive innovations in these markets. You know, this breadth of our platform and business model, being able to work across such a wide range of industries and customer scales, it is a real strength for Ginkgo, and we'll talk about that later. You know, one of the best things about this year's Ferment was that the majority of the folks that went up on stage were our customers. right? And so you had, you know, amazing customers joining us on panels. We heard 12 lightning talks from customers about what they were building by leveraging GitGo's platform. And that's really important, right? People in the audience and on the live stream that are thinking about joining GitGo's platform, you know, they might like to hear from GitGo folks, but they really want to hear from people like them that are getting value out of using our platform. And so I think we did a nice job of doing that. I really encourage you to watch, you know, all those videos are up on YouTube and you should check that out. And I think the diversity of what our customers are building with the platform gets folks really excited. And it also gets people thinking about outsourcing from our platform as they hear those different applications. I've shown this flywheel to you all before, but it's important to highlight that our customers help make our platform better. So we improve with scale, and this is a scale economic thing, like a auto manufacturing plant or a chip fab or things like that, as we add new customers, we can invest more in our platform and our platform improves. We get larger facilities, which drops our costs, and we learn from the data from one project to make another project faster and less risky. And so even though all of you, our investors, should be excited when we add a new customer to the platform, I think our customers should also be excited every time they see a new announcement of a customer joining GECO's platform because they are getting better infrastructure out of that. And so that's why it's so exciting that in 2022, we increased our active programs by 60% and the rate of new program additions by 90%. That's why I talk about these numbers. It shows that the flywheel is spinning for our customers and we expect it to keep driving improvements that pay off for decades to come for our customers. Okay, I'm going to hand it over to Mark, who's going to walk you through our Q1 financials, and then we're going to dive in on some of the key themes coming out of Ferment. Over to you, Mark.

Thanks, Jason. I'll start by discussing our cell engineering business. As a reminder, we now refer to cell engineering revenue rather than foundry revenue, as it is more reflective of the business. You'll see that updated throughout our 10Q. We added 13 new cell programs and supported a total of 97 active programs across 60 customers on the cell engineering platform in the first quarter of 2023. This represents substantial growth and diversification in programs relative to the 64 active programs in the first quarter of 2022, with strong growth coming from the pharma and biotech and the food and agriculture segments. We added several large new customers to the platform, including Boehringer Ingelheim, Syngenta, Solvay, and a new program with Sumitomo, in addition to a good mix of programs with earlier stage customers across industries. As Jason mentioned, we think both of these customer segments are important. It's an important validation of our capabilities when we add large multinational customers like BI and Syngenta who have strong internal R&D capabilities, but we're also very proud of our ability to enable the next generation of leaders. Cell engineering revenue was $34 million in the quarter, up 59% compared to the first quarter of 2022. As you can see in the charts at the bottom of the page, this growth was driven entirely by our services revenue with third-party customers and is reflective of diversification in the customer base. Now, turning to biosecurity. Our biosecurity business generated $47 million of revenue in the first quarter of 2022, a solid result as this business transitions away from K-12 COVID testing services. Importantly, over 20% of this revenue came from what we believe will become more recurring sources, such as federal and international contracts, while that proportion was well under 10% in Q4 of last year. Biosecurity gross margin was 52% in the first quarter of 2023, which benefited from some one-time items. You can see on the right that we're really thinking about this business globally now and not just domestically. We believe there will be strong network effects in this business as biology does not respect borders. We have now collected samples from flights originating in 72 countries through our airport program. We believe this type of infrastructure provide an early warning system for future biological threats and now i'll provide more commentary on the rest of the pnl where noted these figures exclude stock-based compensation expense which is shown separately starting with opex r d expense excluding stock-based comp increased from 57 million dollars in the first quarter of 2022 to 115 million dollars in the first quarter of 2023 gna expense excluding stock-based comp increased from $42 million in the first quarter of 2022 to $84 million in the first quarter of 2023. These operating expense items increased year over year as expected as we invested in our platform and various functions to support our growth during the past year and layered in the four acquisitions we closed in the fourth quarter of last year. Included in these numbers in the first quarter of 2023 is approximately $19 million of one-time M&A and integration-related expenses. Stock-based comp. You'll notice the significant step down in stock-based comp year over year. As a reminder, this is because the catch-up accounting adjustment related to the modification of restricted stock units when we went public is rolling off. Over 60% of the total $75 million stock comp expense in the quarter related to RSUs issued prior to us going public. To help folks model this more precisely, we have provided a new appendix slide in this deck for your reference. Net loss. It is important to note that our net loss includes a number of non-cash income and or expenses as detailed more fully in our financial statements. Because of these non-cash and other non-recurring items, we believe adjusted EBITDA is a more indicative measure of our profitability. We've also included a reconciliation of adjusted EBITDA to net loss in the appendix. Adjusted EBITDA in the quarter was negative $100 million compared to negative $1 million in the comparable prior year period. The decline in adjusted EBITDA was attributable to both the higher run rate of expenses in cell engineering and the as-expected decline in biosecurity revenue. And finally, CapEx in the first quarter of 2023 was $19 million, reflecting foundry capacity and capability investments, as well as leasehold improvements. CapEx was impacted by timing of equipment purchases and projects, and we would therefore expect lower levels of CapEx on average in subsequent quarters this year. In terms of our outlook for the full year, we are reaffirming our guidance for 2023, including 100 new cell programs, at least $175 million of cell engineering revenue driven by services revenue with additional revenue potential from downstream value share, and at least $100 million of biosecurity revenue. As we shared in our last quarterly update call, we expect our new program additions and revenue to ramp during the year and believe we have a solid backlog and pipeline to support our outlook. In conclusion, we're pleased with our overall progress in the business while navigating a challenging macroeconomic environment. We're adding new programs to the platform in a way that improves the platform and balances both near-term and long-term economics. We are focused on our cost structure with new investments and spend generally targeted to discrete areas such as our mammalian capabilities. And we continue to manage our balance sheet and cash flows to maintain a long runway while retaining flexibility to capitalize on near-term strategic opportunities with $1.2 billion of liquidity at quarter end. And now Jason, back to you.