What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2024-05-09 compared with 2023-11-08 · 230 added, 527 removed, 415 unchanged (65% of the section changed)

3 unchanged sentences

(in thousands, except per share data)

As of September 30, As of December 31,

As of March 31, As of December 31,

Current assets:

2 unchanged sentences

Accounts receivable - related parties 370 742

Inventory, net 70 4,364

Prepaid expenses and other current assets 38,021 39,777

3 unchanged sentences

Investments 76,021 78,565

Equity method investments 1,120 1,543

Intangible assets, net 77,407 82,741

13 unchanged sentences

Operating lease liabilities, non-current 234,497 221,835

Warrant liabilities 12,255 10,868

Other non-current liabilities 24,884 24,433

7 unchanged sentences

Accumulated deficit ( 5,456,439 ) ( 5,290,528 )

Accumulated other comprehensive loss ( 2,899 ) ( 2,632 )

Accumulated other comprehensive (loss) income ( 1,551 ) 1,484

Total stockholders’ equity 987,270 1,097,152

4 unchanged sentences

(in thousands, except per share data)

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 (as adjusted)* 2023 2022 (as adjusted)*

Three Months Ended March 31,

Cell Engineering revenue (1)

9 unchanged sentences

General and administrative 70,287 111,433

Impairment of lease assets 96,210 — 96,210 —

Total operating expenses 215,946 296,447

Loss from operations ( 178,002 ) ( 215,745 )

Other (expense) income:

Other income (expense):

Interest income, net 11,711 14,545

2 unchanged sentences

Change in fair value of warrant liabilities 940 1,204

Gain on deconsolidation of subsidiaries — 15,989 — 31,889

Other income (expense), net 2,893 ( 676 ) 9,045 1,473

Total other (expense) income, net ( 16,520 ) ( 15,221 ) 5,241 44,537

Other income, net 2,015 2,928

Total other income (expense) 12,122 10,858

Loss before income taxes ( 165,880 ) ( 204,887 )

Income tax (benefit) provision ( 22 ) ( 28 ) 127 ( 257 )

Income tax expense 31 82

Net loss $ ( 165,911 ) $ ( 204,969 )

Loss attributable to non-controlling interest — — — ( 3,833 )

Net loss attributable to Ginkgo Bioworks Holdings, Inc.

stockholders $ ( 302,891 ) $ ( 670,131 ) $ ( 681,175 ) $ ( 1,929,461 )

Net loss per share attributable to Ginkgo Bioworks Holdings, Inc.

common stockholders, basic and diluted $ ( 0.16 ) $ ( 0.41 ) $ ( 0.35 ) $ ( 1.19 )

Weighted average common shares outstanding, basic and diluted 1,950,814 1,630,911 1,933,202 1,619,790

Net loss per share, basic and diluted $ ( 0.08 ) $ ( 0.11 )

Weighted average common shares outstanding:

Basic 2,004,460 1,914,963

Diluted 2,005,336 1,916,637

Comprehensive loss:

Net loss $ ( 165,911 ) $ ( 204,969 )

Other comprehensive loss:

Other comprehensive (loss) income:

Foreign currency translation adjustment ( 3,035 ) 1,018

Total other comprehensive loss ( 1,599 ) ( 2,414 ) ( 267 ) ( 6,195 )

Total other comprehensive (loss) income ( 3,035 ) 1,018

Comprehensive loss $ ( 168,946 ) $ ( 203,951 )

* As adjusted to reflect the impact of the adoption of Accounting Standards Codification Topic 842, Leases (“ASC 842”) as of January 1, 2022.

See Note 1 for a summary of the adjustments.

(1) Includes related party revenue of $ 8,727 and $ 10,032 for the three months ended September 30, 2023 and 2022, respectively, and $ 19,912 and $ 31,557 for the nine months ended September 30, 2023 and 2022, respectively.

(1) Includes related party revenue of $ 733 and $ 4,703 for the three months ended March 31, 2024 and 2023, respectively.

The accompanying notes are an integral part of these condensed consolidated financial statements.

2 unchanged sentences

(in thousands)

Three Months Ended September 30, 2023

Three Months Ended March 31, 2023

Amount Additional

2 unchanged sentences

Stockholders’

Balance as of June 30, 2023 1,954,704 $ 196 $ 6,280,632 $ ( 4,775,943 ) $ ( 1,300 ) $ 1,503,585

Balance as of December 31, 2022 1,891,976 $ 190 $ 6,136,378 $ ( 4,397,659 ) $ ( 2,632 ) $ 1,736,277

Issuance of common stock upon exercise or vesting of equity awards 41,904 4 12 — — 16

Settlement of contingent consideration 440 — 960 — — 960

Settlement of contingent consideration - restricted stock — — 2,262 — — 2,262

Stock-based compensation expense — — 72,982 — — 72,982

1 unchanged sentence

Net loss — — — ( 204,969 ) — ( 204,969 )

Balance as of September 30, 2023 1,972,725 $ 198 $ 6,334,218 $ ( 5,078,834 ) $ ( 2,899 ) $ 1,252,683

Nine Months Ended September 30, 2023

Balance as of March 31, 2023 1,933,880 $ 194 $ 6,211,634 $ ( 4,602,628 ) $ ( 1,614 ) $ 1,607,586

Three Months Ended March 31, 2024

Amount Additional

4 unchanged sentences

Issuance of common stock upon exercise or vesting of equity awards 18,190 2 527 — — 529

Tax withholdings related to net share settlement of equity awards ( 14 ) — ( 23 ) — — ( 23 )

Settlement of contingent consideration 986 — 1,877 — — 1,877

Issuance of common stock for asset acquisition 2,820 — 3,581 — — 3,581

Issuance of common stock in exchange for services 2,023 — 2,500 — — 2,500

Stock-based compensation expense and other — — 188,029 — — 188,029

Foreign currency translation — — — — ( 267 ) ( 267 )

Net loss — — — ( 681,175 ) — ( 681,175 )

Balance as of September 30, 2023 1,972,725 $ 198 $ 6,334,218 $ ( 5,078,834 ) $ ( 2,899 ) $ 1,252,683

The accompanying notes are an integral part of these condensed consolidated financial statements.

Three Months Ended September 30, 2022

Amount Additional

Comprehensive

Stockholders’

Balance as of June 30, 2022 1,635,634 $ 164 $ 5,098,018 $ ( 3,552,060 ) $ ( 5,496 ) $ 31,625 $ 1,572,251

Issuance of common stock upon exercise or vesting of equity awards 10,041 1 44 — — — 45

Issuance of common stock for acquisitions, net of forfeitures 2,588 — 7,592 — — — 7,592

Deconsolidation of subsidiaries — — — — — ( 26,625 ) ( 26,625 )

Stock-based compensation expense — — 563,137 — — — 563,137

Foreign currency translation — — — — ( 2,414 ) — ( 2,414 )

Net loss — — — ( 670,131 ) — — ( 670,131 )

Balance as of September 30, 2022 (as adjusted)* 1,648,263 $ 165 $ 5,668,791 $ ( 4,222,191 ) $ ( 7,910 ) $ 5,000 $ 1,443,855

Nine Months Ended September 30, 2022

Amount Additional

Comprehensive

Stockholders’

Balance as of December 31, 2021 1,611,392 $ 161 $ 3,804,844 $ ( 2,297,925 ) $ ( 1,715 ) $ 62,014 $ 1,567,379

Adoption of ASC 842 — — — 5,195 — — 5,195

Issuance of common stock upon exercise or vesting of equity awards 29,025 3 120 — — — 123

Tax withholdings related to net share settlement of equity awards ( 296 ) — ( 981 ) — — — ( 981 )

Issuance of common stock for acquisitions, net of forfeitures 8,142 1 27,719 — — — 27,720

Deconsolidation of subsidiaries — — — — — ( 55,408 ) ( 55,408 )

Issuance of common stock for asset acquisitions 13,133 1 15,875 — — 15,876

Stock-based compensation expense — — 40,782 — — 40,782

1 unchanged sentence

Net loss — — — ( 165,911 ) — ( 165,911 )

Balance as of September 30, 2022 (as adjusted)* 1,648,263 $ 165 $ 5,668,791 $ ( 4,222,191 ) $ ( 7,910 ) $ 5,000 $ 1,443,855

* As adjusted to reflect the impact of the adoption of ASC 842 as of January 1, 2022.

See Note 1 for a summary of the adjustments.

Balance as of March 31, 2024 2,033,624 $ 202 $ 6,445,058 $ ( 5,456,439 ) $ ( 1,551 ) $ 987,270

The accompanying notes are an integral part of these condensed consolidated financial statements.

2 unchanged sentences

(in thousands)

Nine Months Ended September 30,

2023 2022 (as adjusted)*

Three Months Ended March 31,

Cash flows from operating activities:

6 unchanged sentences

Change in fair value of contingent consideration liability ( 926 ) 5,177

Gain on deconsolidation of subsidiaries — ( 31,889 )

Impairment of long-lived assets 121,404 —

Non-cash customer consideration ( 884 ) ( 18,139 )

Non-cash lease expense 5,637 8,039

14 unchanged sentences

Cash flows from investing activities:

Purchase of convertible note (related party) — ( 10,000 )

Purchases of property and equipment ( 6,710 ) ( 19,441 )

Proceeds from sale of equipment 3,000 110

Purchase of investment in equity securities — ( 3,691 )

Deconsolidation of subsidiaries - cash — ( 55,721 )

Other 336 ( 1,206 )

Business acquisition ( 5,400 ) —

Net cash used in investing activities ( 12,110 ) ( 19,414 )

Cash flows from financing activities:

Proceeds from exercise of stock options 70 12

Principal payments on finance leases ( 294 ) ( 322 )

Contingent consideration payment ( 621 ) —

Other ( 525 ) ( 993 )

Payment of equity issuance costs — ( 578 )

Net cash used in financing activities ( 845 ) ( 888 )

7 unchanged sentences

Cash, cash equivalents and restricted cash, end of period $ 887,213 $ 1,258,668

* As adjusted to reflect the impact of the adoption of ASC 842 as of January 1, 2022.

See Note 1 for a summary of the adjustments.

The accompanying notes are an integral part of these condensed consolidated financial statements.

6 unchanged sentences

Since inception, the Company has devoted its efforts to improving its platform for programming cells to enable customers to leverage biology to create impactful products across a range of industries.

The Company’s platform comprises (i) equipment, robotic automation, software, data pipelines and tools, and standard operating procedures for high throughput genetic engineering, fermentation, and analytics (referred to collectively as the “Foundry”), (ii) a library of proprietary genetic assets and associated performance data (referred to collectively as “Codebase”), and (iii) the Company’s team of expert users, developers and operators of the Foundry and Codebase.

The Company’s platform comprises (i) equipment, robotic automation, software, data pipelines and tools, and standard operating procedures for high throughput cell engineering, fermentation, and analytics (referred to collectively as the “Foundry”), (ii) a library of proprietary biological assets and associated performance data (referred to collectively as “Codebase”), and (iii) the Company’s team of expert users, developers and operators of the Foundry and Codebase.

With a mission to make biology easier to engineer, the Company has recognized the need to invest in biosecurity as a key component of its platform.

The Company’s biosecurity and public health unit, Concentric by Ginkgo, is building a global infrastructure for biosecurity to empower governments, communities, and public health leaders to prevent, detect and respond to a wide variety of biological threats.

The Company’s Biosecurity business is building a global infrastructure for biosecurity to empower governments, communities, and public health leaders to prevent, detect and respond to a wide variety of biological threats.

Basis of Presentation

5 unchanged sentences

Principles of Consolidation

The accompanying condensed consolidated financial statements include the accounts of the Company, its wholly owned subsidiaries, majority owned subsidiaries and variable interest entities if the Company is the primary beneficiary.

The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries.

All intercompany accounts and transactions have been eliminated.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses, and the disclosure of contingent liabilities in the condensed consolidated financial statements.

Estimates used in the preparation of these condensed consolidated financial statements include, among others, revenue recognition, stock-based compensation, the fair value of assets acquired and liabilities assumed in a business combination, the fair value of non-cash consideration received from customers, the fair value of certain notes receivable, the fair value of certain investments including equity method investments, the fair value of warrant liabilities, the allocation of equity method investment losses under the hypothetical liquidation at book value (“HLBV”) method, the incremental borrowing rate used in determining lease liabilities, impairment of long-lived assets, allowance for credit losses, accrued expenses and income taxes.

The Company bases its estimates on historical experience and other market-specific or relevant assumptions that it believes to be reasonable under the circumstances.

2 unchanged sentences

All revisions to accounting estimates are recognized in the period in which the estimates are revised.

Ginkgo Bioworks Holdings, Inc.

Notes to Condensed Consolidated Financial Statements

Significant Accounting Policies

There have been no new or material changes to the Company’s significant accounting policies during the nine months ended September 30, 2023 as compared to the significant accounting policies described in Note 2 to the Company's 2022 consolidated financial statements included in the 2022 Annual Report on Form 10-K.

Retrospective Application of a Change in Accounting Principle

The Company adopted Accounting Standards Update No.

2016-02, Leases (“ASC 842”), which supersedes the guidance in Accounting Standards Codification Topic 840, Leases (“ASC 840”), effective January 1, 2022.

As the Company elected the extended transition period for complying with new or revised accounting standards pursuant to Section 107(b) of the Jumpstart Our Business Startups Act of 2012, ASC 842 was adopted in connection with the preparation of the Company’s annual consolidated financial statements as of and for the year ended December 31, 2022.

As such, the comparative information for the three and nine months ended September 30, 2022 has been adjusted herein to reflect the impact of the adoption of ASC 842 as of January 1, 2022.

Select line items from the condensed consolidated statement of operations and comprehensive loss reflecting the adoption of ASC 842 are as follows (in thousands):

Three Months Ended September 30, 2022 Nine Months Ended September 30, 2022

As Previously Reported Adjustments As Adjusted As Previously Reported Adjustments As Adjusted

Costs and operating expenses:

Research and development $ 259,580 $ 1,880 $ 261,460 $ 871,488 $ 3,607 $ 875,095

General and administrative 435,184 37 435,221 1,308,379 37 1,308,416

Total operating expenses 719,419 1,917 721,336 2,353,865 3,644 2,357,509

Loss from operations ( 653,021 ) ( 1,917 ) ( 654,938 ) ( 1,974,444 ) ( 3,644 ) ( 1,978,088 )

Other (expense) income:

Interest income, net 5,820 560 6,380 7,097 1,724 8,821

Other income (expense), net ( 957 ) 281 ( 676 ) 629 844 1,473

Total other (expense) income, net ( 16,062 ) 841 ( 15,221 ) 41,969 2,568 44,537

Loss before income taxes ( 669,083 ) ( 1,076 ) ( 670,159 ) ( 1,932,475 ) ( 1,076 ) ( 1,933,551 )

Net loss ( 669,055 ) ( 1,076 ) ( 670,131 ) ( 1,932,218 ) ( 1,076 ) ( 1,933,294 )

Net loss attributable to Ginkgo Bioworks Holdings, Inc.

stockholders ( 669,055 ) ( 1,076 ) ( 670,131 ) ( 1,928,385 ) ( 1,076 ) ( 1,929,461 )

Select line items from the condensed consolidated statements of stockholders’ equity reflecting the adoption of ASC 842 are as follows (in thousands):

As of September 30, 2022

As Previously Reported Adjustments As Adjusted

Accumulated deficit $ ( 4,226,310 ) $ 4,119 $ ( 4,222,191 )

Total stockholders' equity 1,439,736 4,119 1,443,855

Ginkgo Bioworks Holdings, Inc.

Notes to Condensed Consolidated Financial Statements

Select line items from the condensed consolidated statements of cash flows reflecting the adoption of ASC 842 are as follows (in thousands):

Nine Months Ended September 30, 2022

As Previously Reported Adjustments As Adjusted

Cash flows from operating activities:

Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation and amortization $ 28,602 $ ( 1,717 ) $ 26,885

Amortization of finance lease right-of-use assets (1) — 1,535 1,535

Non-cash lease expense — 11,877 11,877

Changes in operating assets and liabilities:

Prepaid expenses and other current assets 5,849 ( 619 ) 5,230

Accounts payable, accrued expenses and other current liabilities ( 11,744 ) ( 108 ) ( 11,852 )

Operating lease liabilities, current and non-current — ( 7,807 ) ( 7,807 )

Deferred rent, non-current 2,255 ( 2,255 ) —

Cash flows from financing activities:

Principal payments on finance leases — ( 912 ) ( 912 )

Principal payments on capital leases and lease financing obligation ( 1,082 ) 1,082 —

(1) Presented in other non-cash activity

There have been no new or material changes to the Company’s significant accounting policies during the three months ended March 31, 2024 as compared to the significant accounting policies described in Note 2 to the Company's 2023 consolidated financial statements included in the Company's 2023 Annual Report on Form 10-K.

Recently Issued Accounting Pronouncements

There were no new recently issued accounting pronouncements that are of significance or potential significance to the Company from those disclosed herein and within Note 2 to the Company's 2022 consolidated financial statements included in the 2022 Annual Report on Form 10-K.

Business Combination

On April 1, 2022, the Company acquired all of the outstanding equity interests of FGen AG (“FGen”), a company organized under the laws of Switzerland that specializes in strain development and optimization and has developed an ultra-high-throughput screening platform.

The Company accounted for the transaction as a business combination under ASC 805, Business Combinations .

The consideration paid was comprised of common stock and contingent consideration as follows (in thousands):

Fair value of Class A common stock $ 17,015

Fair value of contingent consideration - restricted stock 3,842

Fair value of contingent consideration - milestones 8,464

Total FGen consideration $ 29,321

The Company issued 5.7 million shares of its Class A common stock on the acquisition date comprised of 4.0 million unrestricted shares valued at $ 17.0 million based on the closing market price of $ 4.20 per share and 1.7 million restricted shares classified as contingent consideration and subject to vesting conditions.

Of the restricted shares, 0.6 million shares were subsequently forfeited during the quarter ended June 30, 2022 when the contingency related to the filing of a registration statement was resolved.

The Company incurred $ 1.7 million of acquisition-related costs which were included in general and administrative expenses in the condensed consolidated statements of operations and comprehensive loss for the nine months ended September 30, 2022.

There were no new recently issued accounting pronouncements that are of significance or potential significance to the Company from those disclosed within Note 2 to the Company's 2023 consolidated financial statements included in the 2023 Annual Report on Form 10-K.

Ginkgo Bioworks Holdings, Inc.

Notes to Condensed Consolidated Financial Statements

The following table presents the final allocation of the purchase price to the assets acquired and liabilities assumed as of the acquisition date (in thousands):

Final Allocation

Cash and cash equivalents $ 1,430

Accounts receivable 144

Other non-current assets 10

Property and equipment 34

Intangible assets (1)

Accounts payable and accrued expenses ( 29 )

Deferred revenue ( 104 )

Deferred tax liability ( 3,879 )

Net assets acquired $ 29,321

(1) Estimated useful life of 15 years .

(2) Non-deductible for tax purposes.

On October 3, 2023, and in connection with the Zymergen Bankruptcy, as defined and discussed in the Company’s 2023 Annual Report on Form 10-K, the Company entered into an asset purchase agreement with Zymergen (the “Zymergen APA”) as the stalking horse bidder under Section 363 of the U.S.

Bankruptcy Code to acquire exclusive rights to substantially all of Zymergen’s intellectual property assets and certain other assets.

On January 18, 2024 (the “Closing Date”), the Company, through certain of its affiliates, completed its acquisition of substantially all of Zymergen’s assets under the Zymergen APA, and on February 5, 2024, Zymergen’s plan of liquidation was confirmed by the Bankruptcy Court.

All of the Company’s interests in the Zymergen entities were extinguished and terminated as of February 23, 2024.

The acquisition under the Zymergen APA was accounted for as a business combination in accordance with ASC 805 and was not material to the Company's consolidated financial statements.

The total cash purchase price was $ 6.2 million, with $ 5.4 million paid at closing and $ 0.8 million released from escrow.

The allocation of the purchase price to the assets acquired and liabilities assumed as of the acquisition date primarily includes $ 19.9 million of operating lease right-of-use assets, $ 6.0 million of property and equipment, and $ 19.9 million of operating lease liabilities.

No goodwill or intangible assets were recognized.

Transaction costs associated with the Zymergen APA were not material for the three months ended March 31, 2024.

In the three months ended March 31, 2024, the Company issued 13.1 million shares of Class A common stock to acquire certain assets, which did not meet the definition of a business for accounting purposes.

The assets acquired consisted of intellectual property with an aggregate estimated fair value of $ 16.9 million, all of which was expensed as in-process research and development in the accompanying condensed consolidated statements of operations and comprehensive loss during the period, as the assets did not have an alternative use.

Fair Value Measurements

The following tables present information about the Company’s financial assets and liabilities measured at fair value on a recurring basis (in thousands):

As of September 30, 2023

As of March 31, 2024

Classification Total Level 1 Level 2 Level 3

2 unchanged sentences

Investments 304 — 304 —

Marketable equity securities (2)

Investments 20,148 18,842 1,306 —

Loan receivable Prepaid expenses and other current assets 100 — — 100

Marketable equity securities Investments 22,209 22,209 — —

Notes receivable Prepaid expenses and other assets 12,795 — — 12,795

Notes receivable Other non-current assets 14,475 — 12,130 2,345

15 unchanged sentences

Investments 19,190 18,401 789 —

Notes receivable Prepaid expenses and other 12,293 — — 12,293

Notes receivable Other non-current assets 13,601 — 11,765 1,836

10 unchanged sentences

(3) The fair value of Private Placement Warrants classified as Level 2 is equivalent to that of Public Warrants as the transfer of Private Placement Warrants to anyone other than the initial purchasers or any of their permitted transferees results in the Private Placement Warrants having substantially the same terms as the Public Warrants.

Transfers to/from Levels 1, 2 and 3 are recognized at the end of the reporting period in which a change in valuation technique or methodology occurs.

Transfers from Level 2 to Level 1 during the nine months ended September 30, 2022 were due to a lapse on regulatory sales restrictions on marketable equity securities.

There were no other transfers to/from Levels 1, 2, or 3 during the nine months ended September 30, 2023 and 2022.

Transfers to and from Levels 1, 2 and 3 are recognized at the end of the reporting period in which a change in valuation technique or methodology occurs.

During the three months ended March 31, 2024, transfers from Level 2 to Level 1 occurred due to lapse of regulatory sales restrictions on marketable equity securities.

Additionally, as of March 31, 2024, a portion of the Private Placement Warrants' estimated fair value was transferred from Level 3 to Level 2 as a result of the Private Placement Warrants having substantially the same terms as the Public Warrants when transferred to anyone other than the initial purchasers or their permitted transferees, leading the Company to determine their fair value to be equivalent to that of the Public Warrants.

There were no other transfers between Levels 1, 2, or 3 during the three months ended March 31, 2024 or 2023.

Notes Receivable

The Company has elected the fair value option under ASC 825, Financial Instruments , to account for its notes receivable.

Notes receivable accounted for under the fair value option are marked to market as of each balance sheet date with changes in fair value recorded in other income (expense), net in the condensed consolidated statements of operations and comprehensive loss.

As of September 30, 2023 and December 31, 2022, notes receivable measured at fair value on a recurring basis primarily consisted of a $ 30.0 million senior secured note (“Senior Secured Note”) purchased from Bolt Threads, Inc.

and a series of convertible promissory notes issued by customers as payment for Cell Engineering services.

For all of its notes receivable, the Company has elected the fair value option, for which changes in fair value are recorded in other income, net in the condensed consolidated statements of operations and comprehensive loss.

As of March 31, 2024 and December 31, 2023, the Company held a senior secured note in the principal amount of $ 11.8 million and a convertible promissory note in the principal amount of $ 10.0 million, both issued by Bolt Threads, Inc.

(“Bolt Threads”).

The senior secured note bears interest at 12 % per annum, is due December 31, 2027 and is included in other non-current assets at its estimated fair value.

The convertible promissory note bears interest at 8 % per annum, is convertible into equity securities of Bolt Threads upon a qualified financing, a non-qualified financing, or special purpose acquisition company transaction, at a conversion price equal to 80 % of the price paid per share under the conversion scenario, or is otherwise payable on demand any time after the maturity date of October 4, 2024.

The convertible promissory note is included in prepaid expenses and other current assets at its estimated fair value.

The Company used the yield method to value the senior secured note.

1 unchanged sentence

Increases or decreases in the market yield or discount rate would result in a decrease or increase, respectively, in the fair value measurement.

The market yield is determined using a corporate bond yield curve corresponding to the credit rating category of the issuer.

The fair value of the Senior Secured Note is based on observable market inputs, which represents a Level 2 measurement within the fair value hierarchy.

The Company used a scenario-based method to value the series of convertible promissory notes from customers.

Under the scenario-based method, future cash flows are evaluated under qualified financing, maturity and dissolution scenarios, probability-weighted, and discounted to present value.

The significant unobservable (Level 3) inputs used in the fair value measurement as of September 30, 2023 were scenario probabilities of 15 % to 55 %, a discount rate of 17 % and estimated time to event date of one to three years .

The significant unobservable (Level 3) inputs used in the fair value measurement

The market yield is determined using a corporate bond yield curve corresponding to the credit

Ginkgo Bioworks Holdings, Inc.

Notes to Condensed Consolidated Financial Statements

as of December 31, 2022 were scenario probabilities of 15 % to 55 %, a discount rate of 12.5 % and estimated time to event date of one to three years .

rating category of the issuer.

The fair value of the senior secured note is based on observable market inputs, which represents a Level 2 measurement within the fair value hierarchy.

In addition to the convertible promissory note issued by Bolt Threads, the Company holds a series of convertible debt instruments issued by customers as payment for Cell Engineering services.

The Company used a scenario-based method to value the convertible debt instruments issued by customers and by Bolt Threads.

Under this method, future cash flows are evaluated under various payoff scenarios, probability-weighted, and discounted to present value.

The significant unobservable (Level 3) inputs used in the fair value measurement as of March 31, 2024 were scenario probabilities of between 5 % and 85 %, a discount rate of 17 % and estimated time to event date of up to two years .

The significant unobservable (Level 3) inputs used in the fair value measurement as of December 31, 2023 were scenario probabilities of between 5 % and 85 %, a discount rate of 17 % and estimated time to event date of one to two years .

Significant changes in these inputs could have resulted in a significantly lower or higher fair value measurement.

As of September 30, 2023, the convertible promissory notes had an unpaid principal balance of $ 12.7 million and a fair value of $ 10.0 million.

As of December 31, 2022, the convertible promissory notes had an unpaid principal balance of $ 7.5 million and a fair value of $ 7.7 million.

The following table provides a reconciliation of notes and loans receivable measured at fair value using Level 3 significant unobservable inputs for the nine months ended September 30 (in thousands):

As of March 31, 2024, the convertible debt instruments had an unpaid principal balance of $ 21.9 million and a fair value of $ 15.1 million.

As of December 31, 2023, the convertible debt instruments had an unpaid principal balance of $ 21.0 million and a fair value of $ 14.1 million.

The following table provides a reconciliation of notes receivable measured at fair value using Level 3 significant unobservable inputs for the three months ended March 31 (in thousands):

Balance at January 1, $ 14,129 $ 7,660

1 unchanged sentence

Change in fair value 961 ( 1,565 )

Balance at September 30, $ 9,960 $ 11,828

Balance at March 31, $ 15,140 $ 8,093

Warrant Liabilities

1 unchanged sentence

(“SRNG”) on September 16, 2021, the Company assumed 34.5 million publicly-traded warrants (“Public Warrants”) and 17.3 million private placement warrants (the “Private Placement Warrants”) previously issued in connection with SRNG’s initial public offering.

The fair value of the Public Warrants is based on the observable quoted price of such warrants on the New York Stock Exchange.

The fair value of the Public Warrants is based on the observable quoted price of such warrants on the New York Stock Exchange (“NYSE”).

The fair value of the Private Placement Warrants is estimated using the Black-Scholes option pricing model, which is considered to be a Level 3 fair value measurement.

6 unchanged sentences

The following table provides quantitative information regarding Level 3 inputs used in the recurring valuation of the Private Placement Warrants as of their measurement dates:

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Exercise price $ 11.50 $ 11.50

3 unchanged sentences

Risk-free interest rate 4.54 % 4.01 %

The following table provides a reconciliation of the Private Placement Warrants measured at fair value using Level 3 significant unobservable inputs for the nine months ended September 30 (in thousands):

Balance at January 1, $ 3,860 $ 58,558

Change in fair value 336 ( 43,658 )

Balance at September 30, $ 4,196 $ 14,900

Ginkgo Bioworks Holdings, Inc.

Notes to Condensed Consolidated Financial Statements

The following table provides a reconciliation of the Private Placement Warrants measured at fair value using Level 3 significant unobservable inputs for the three months ended March 31 (in thousands):

Balance at January 1, $ 1,846 $ 3,860

Change in fair value ( 309 ) ( 503 )

Balance at March 31, $ 1,537 $ 3,357

Contingent Consideration

In connection with the acquisition of FGen in April 2022, the Company is required to make contingent earnout payments up to $ 20.0 million primarily related to the successful integration and deployment of the FGen technology across the Company's programs.

In connection with the acquisition of Dutch DNA Biotech B.V.

(“Dutch DNA”) in July 2021, the Company is required to make contingent earnout payments up to a maximum of $ 20.0 million payable upon the achievement of certain technical and commercial milestones by Dutch DNA pursuant to a Technical Development Agreement executed between the Company and Dutch DNA prior to the close of the acquisition.

In connection with the acquisition of Circularis Biotechnologies, Inc., (“Circularis”) in October 2022, the Company is required to make contingent earnout payments up to a maximum of $ 37.5 million payable primarily upon the achievement of certain clinical trial milestones over a five-year period, $ 2.5 million of which was achieved in October 2023.

In connection with the acquisition of Altar SAS (“Altar”) in October 2022, the Company is required to make contingent earnout payments up to $ 2.5 million upon the successful transfer of the Altar technology to Ginkgo's sites in the U.S.

The Company also issued restricted stock related to acquisitions that is subject to vesting conditions and is classified as contingent consideration liability.

The fair value of contingent consideration related to restricted stock was estimated using the quoted price of Ginkgo's Class A common stock, an estimate of the number of shares expected to vest, probability of vesting, and a discount rate.

In connection with various business acquisitions, the Company is required to make contingent earnout payments payable upon the achievement of certain technical, commercial and/or performance milestones.

The Company also issued restricted stock in connection with acquisitions, which is subject to vesting conditions and is classified as contingent consideration liability.

The Company can settle a majority of its contingent consideration liabilities in cash or shares of Class A common stock at the Company’s election with the remainder payable in cash.

During the three months ended March 31, 2024, the Company settled $ 2.8 million in contingent consideration liabilities through payment of $ 0.9 million in cash and vesting of 1.2 million shares of restricted stock valued at $ 1.9 million.

During the three months ended March 31, 2023, the Company settled $ 2.3 million in contingent consideration liability related to restricted stock that was contingent on the filing of a registration statement to register the shares issued as purchase consideration for acquisitions.

Of that amount, $ 1.4 million was recorded as an increase to the acquired intangible asset with an offset to additional paid-in-capital as the contingent consideration liability was deemed not probable until the filing of the registration statement.

The fair value of contingent consideration related to earnout payments from acquisitions was estimated using unobservable (Level 3) inputs as illustrated in the table below.

Material increases or decreases in these inputs could result in a higher or lower fair value measurement.

Changes in the fair value of contingent consideration are recorded in general and administrative expense in the condensed consolidated statements of operations and comprehensive loss.

The Company can settle all contingent consideration liabilities, other than those related to the Dutch DNA acquisition, in cash or shares of Class A common stock at the Company’s election.

During the nine months ended September 30, 2023, the Company settled $ 4.8 million in contingent consideration liabilities through payment of $ 1.5 million in cash and vesting of 1.6 million shares of restricted stock valued at $ 3.2 million.

Of that amount, $ 1.4 million related to the Circularis asset acquisition was recorded as an increase to the acquired intangible asset with an offset to additional paid-in-capital as the contingent consideration liability was deemed not probable until the filing of a registration statement.

The following table provides quantitative information regarding Level 3 inputs used in the fair value measurements of contingent consideration liabilities as of the periods presented:

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Contingent Consideration Liability Valuation Technique Unobservable Input Range Range

Earnout payments (FGen, Dutch DNA, Circularis and Altar acquisitions) Probability-weighted present value Probability of payment 10 % - 100 %

Earnout payments (FGen and Dutch DNA acquisitions) Probability-weighted present value Probability of payment 10 % - 80 %

Discount rate 15.8 %

12.2 % - 13.1 %

Earnout payments (Dutch DNA acquisition) Discounted cash flow Projected years of payments 2028 - 2031

Discount rate 10.5 % 10.3 %

Ginkgo Bioworks Holdings, Inc.

Notes to Condensed Consolidated Financial Statements

The following table provides a reconciliation of the contingent consideration measured at fair value using Level 3 significant unobservable inputs for the nine months ended September 30 (in thousands):

The following table provides a reconciliation of the contingent consideration measured at fair value using Level 3 significant unobservable inputs (in thousands):

Balance at January 1, $ 24,273 $ 24,473

Additions 1,397 13,150

Change in fair value ( 926 ) 5,177

Settlements and payments ( 2,753 ) ( 864 )

Balance at September 30, $ 31,326 $ 19,031

Balance at March 31, $ 20,594 $ 28,786

Ginkgo Bioworks Holdings, Inc.

Notes to Condensed Consolidated Financial Statements

Nonrecurring Fair Value Measurements

The Company measures the fair value of certain assets, including investments in privately held companies without readily determinable fair values, on a nonrecurring basis when events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable and when there are observable price changes for the identical or similar security of the same issuer.

The Company measures the fair value of certain assets, including investments in privately held companies without readily determinable fair values, on a nonrecurring basis when events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable and when observable price changes occur for the identical or similar security of the same issuer.

The fair value of non-marketable equity securities is classified within Level 3 in the fair value hierarchy when the Company estimates fair value using unobservable inputs to measure the amount of the impairment loss.

The fair value of non-marketable equity securities is classified within Level 2 in the fair value hierarchy when the Company estimates fair value using the observable transaction price paid by third party investors for the identical or similar security of the same issuer.

During the three and nine months ended September 30, 2023, the Company recorded a $ 33.0 million impairment loss related to its investment in Genomatica preferred stock.

The fair value measurement was determined using the guideline public company method under the market approach.

The significant unobservable inputs used in the valuation included the selection and analysis of guideline public companies, revenue multiple and other unobservable assumptions.

Additionally, during the three and nine months ended September 30, 2023, the Company recorded a $ 1.6 million downward adjustment from an observable price change related to one of its investments in non-marketable equity securities.

During the nine months ended September 30, 2023, the Company received $ 11.0 million in Simple Agreement for Future Equity arrangements (“SAFEs”) from customers as prepayment for Cell Engineering services.

The Company used a scenario-based method to value the SAFEs at contract inception, which resulted in a total fair value of $ 4.5 million.

During the three months ended March 31, 2023, the Company received a total purchase amount of $ 11.0 million in Simple Agreement for Future Equity (“SAFEs”) from customers as prepayment for Cell Engineering services.

The Company used a scenario-based method to value the SAFEs as of each contract inception date, which resulted in total fair value of $ 4.5 million.

Under the scenario-based method, future cash flows were evaluated under qualified financing and dissolution scenarios with partial recovery and no recovery in dissolution.

The cash flows under each scenario were probability-weighted and discounted to present value.

The significant unobservable inputs used in the fair value measurement were scenario probabilities of 20 % to 60 %, a discount rate of 14 % and estimated time to event date of one to two years .

During the nine months ended September 30, 2023, the Company recorded a $ 1.8 million impairment loss related to a SAFE to write-down its carrying amount to its estimated fair value.

The fair value measurement of the impairment loss was determined using the scenario-based method, whereby dissolution scenarios with partial recovery and no recovery were probability weighted 15 % and 85 %, respectively, and discounted to present value using a discount rate of 14 %.

Additionally, the Company recorded impairments of lab equipment and assets related to an operating lease.

Refer to Note 6 for additional detail.

The significant unobservable (Level 3) inputs used in the fair value measurement were scenario probabilities of 20 % to 60 %, a discount rate of 14 % and estimated time to event date of one to two years .

During the three months ended March 31, 2024 and 2023, the Company recorded impairment losses of $ 5.2 million and $ 1.8 million, respectively, related to SAFEs.

The fair value was generally estimated using the scenario-based method, whereby various payout scenarios were probability weighted and discounted to present value.

Investments and Equity Method Investments

4 unchanged sentences

(“Synlogic”) (collectively, “Legacy Structured Partnerships”) with complementary assets for high potential synthetic biology applications.

The Company holds equity interests in these Platform Ventures and Structured Partnerships.

The Company holds equity interests in these Platform Ventures and Legacy Structured Partnerships.

The Company also holds equity interests in other public and private companies as a result of entering into collaboration and license revenue arrangements with these entities.

Ginkgo Bioworks Holdings, Inc.

Notes to Condensed Consolidated Financial Statements

The Company accounts for its investments in Platform Ventures under the equity method.

The Company's marketable equity securities consist of Synlogic common stock, Synlogic warrants and the shares of common stock of other publicly traded companies.

Marketable equity securities are measured at fair value with changes in fair value recorded in other (expense) income in the condensed consolidated statements of operations and comprehensive loss.

Marketable equity securities are measured at fair value with changes in fair value recorded in other income (expense) in the condensed consolidated statements of operations and comprehensive loss.

The Company’s non-marketable equity securities consist of preferred stock of Genomatica and preferred and common stock of other privately held companies without readily determinable fair values.

Non-marketable equity securities are initially recorded using the measurement alternative at cost and subsequently adjusted for any impairment and observable price changes in orderly transactions for the identical or a similar security of the same issuer.

The Company recorded a $ 33.0 million impairment loss related to its investment in Genomatica for the three and nine months ended September 30, 2023, and a $ 10.1 million impairment loss related to its investment in Genomatica for the nine months ended September 30, 2022.

During the three and nine months ended September 30, 2023, the Company recorded a $ 1.6 million downward adjustment from an observable price change related to its investments in non-marketable equity securities.

There were no adjustments from observable price changes during the three and nine months ended September 30, 2022.

Impairment losses and adjustments from observable price changes are recorded in loss on investments in the condensed consolidated statements of operations and comprehensive loss.

3 unchanged sentences

The SAFEs also provide the Company with the right to future equity of the entity in a liquidation scenario or the cash-out amount in liquidation and dissolution scenarios or at the election of the SAFE issuer prior to an agreed outside date.

The Company initially records SAFEs at fair value (see Note 3) and adjusts the carrying amount of the instrument at each reporting period for any impairment, plus or minus changes resulting from observable price changes in orderly transactions for an identical or similar instrument of the same issuer.

During the nine months ended September 30, 2023, the Company recorded a $ 1.8 million impairment charge related to SAFEs, included as a component of loss on investments in the condensed consolidated statements of operations and comprehensive loss.

There was no impairment recorded during the three or nine months ended September 30, 2022 and no adjustments from observable price changes during any of the periods presented.

Investments and equity method investments consisted of the following (in thousands):

As of September 30, As of December 31,

Genomatica, Inc.

preferred stock $ 11,885 $ 44,885

Synlogic, Inc.

common stock 1,188 4,819

Synlogic, Inc.

warrants 477 1,937

Marketable equity securities 18,960 20,895

Non-marketable equity securities 27,631 17,544

SAFEs 24,829 22,108

Total $ 84,970 $ 112,188

Equity method investments (1) :

BiomEdit, LLC $ — $ 369

Other 1,120 1,174

Total $ 1,120 $ 1,543

(1) Equity method investments in Platform Ventures with a carrying value of zero as of September 30, 2023 and December 31, 2022 were excluded from the table.

The Company initially records SAFEs at fair value (see Note 3 ) and adjusts the carrying amount of the instrument at each reporting period for any impairments.

Ginkgo Bioworks Holdings, Inc.

Notes to Condensed Consolidated Financial Statements

(Losses) gains on investments and equity method investments consisted of the following (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

(Loss) gain on investments:

Synlogic, Inc.

common stock $ ( 1,538 ) $ ( 1,268 ) $ ( 3,631 ) $ ( 9,321 )

Synlogic, Inc.

warrants ( 618 ) ( 510 ) ( 1,459 ) ( 3,746 )

Genomatica, Inc.

( 33,000 ) — ( 33,000 ) ( 10,115 )

Marketable equity securities 460 215 ( 3,286 ) ( 16,604 )

Investments consisted of the following (in thousands):

As of March 31, As of December 31,

SAFEs $ 18,686 $ 23,898

Non-marketable equity securities 22,937 22,938

Marketable equity securities 21,452 17,563

Genomatica preferred stock 11,885 11,885

Synlogic common stock 757 1,627

Synlogic warrants 304 654

Total $ 76,021 $ 78,565

Loss on investments and equity method investments consisted of the following (in thousands):

Three Months Ended March 31,

Gain (loss) on investments:

Synlogic common stock $ ( 871 ) $ ( 812 )

Synlogic warrants ( 350 ) ( 326 )

Marketable equity securities 3,889 ( 3,421 )

SAFEs ( 5,212 ) ( 1,811 )

Total $ ( 2,544 ) $ ( 6,370 )

Loss on equity method investments:

Joyn Bio, LLC $ — $ ( 5,226 ) $ — $ ( 15,637 )

Verb Biotics, LLC — — — ( 15,900 )

BiomEdit, LLC — ( 1,308 ) ( 1,462 ) ( 5,860 )

Ayana, LLC — ( 15,989 ) — ( 15,989 )

Other — ( 188 ) ( 54 ) ( 378 )

Gain (loss) on equity method investments:

BiomEdit $ — $ ( 1,462 )

Total $ — $ ( 1,449 )

Variable Interest Entities

Consolidated Variable Interest Entity

The Company consolidated Cooksonia, LLC (“Cooksonia”), a variable interest entity (“VIE”) formed by the Company and certain other investors for the purposes of holding the Company’s investment in the Joyn Bio, LLC (“Joyn Bio”) joint venture, prior to the joint venture's termination in the fourth quarter of 2022.

The Company concluded that it held a variable interest in and was the primary beneficiary of Cooksonia as it controlled the most significant activities of Cooksonia by controlling 100 % of the board of directors of Cooksonia and held a controlling financial interest in Cooksonia.

Unconsolidated Variable Interest Entities

During the nine months ended September 30, 2022, Verb and Ayana each hired a new chief executive officer who was not an affiliate, related party or agent of Ginkgo.

The respective chief executive officer was also appointed to each entity's joint steering committee (“JSC”) and board of directors.

As a result, the Company concluded it no longer had substantive control of each entity's JSC and board of directors.

Accordingly, the Company concluded that it was no longer the primary beneficiary of Verb and Ayana as it no longer controlled the most significant activities of the entities.

As a result of this change in the primary beneficiary determination, the Company deconsolidated Verb in the first quarter of 2022 and Ayana in the third quarter of 2022 and recorded a gain on deconsolidation of $ 16.0 million and $ 31.9 million for the three and nine months ended September 30, 2022, respectively, in the condensed consolidated statements of operations and comprehensive loss.

The gain on deconsolidation was equal to the fair value of the retained interest in each entity as of the deconsolidation date and was calculated using the option pricing method.

The option pricing method used a back-solve methodology to infer the total equity value based on the pricing of the Series A preferred unit financing, which is the most recent financing transaction to the deconsolidation event.

As of September 30, 2023 and December 31, 2022, the Company has concluded that its investments in Motif, Allonnia, Genomatica, Arcaea, BiomEdit, Verb and Ayana (collectively, the “Unconsolidated VIEs”) represent variable interests and that these entities are VIEs.

Although the Company may have board representation and is involved in the ongoing development activities of the entities via its participation on the JSC, the Company has concluded that it is not the primary

The components of loss on investments for each period were as follows (in thousands):

Three Months Ended March 31,

Impairment charges $ ( 5,212 ) $ ( 1,811 )

Ongoing mark-to-market adjustments on marketable equity securities 2,668 ( 4,559 )

Total loss on investments $ ( 2,544 ) $ ( 6,370 )

The carrying value for non-marketable equity securities accounted for using the fair value measurement alternative and held as of March 31, 2024, including cumulative unrealized losses, were as follows (in thousands):

As of March 31, 2024

Total initial cost $ 114,701

Impairment charges ( 59,566 )

Downward adjustments from observable price changes ( 1,627 )

Carrying value $ 53,508

Ginkgo Bioworks Holdings, Inc.

Notes to Condensed Consolidated Financial Statements

beneficiary of these entities.

This conclusion is supported by the fact that:

Variable Interest Entities

With respect to the Company’s investments in Motif, Allonnia, Genomatica, Arcaea, BiomEdit, Verb and Ayana (collectively, the “Unconsolidated VIEs”), the Company has concluded these entities represent variable interest entities (“VIEs”).

While the Company has board representation on certain of these entities and is involved in the ongoing development activities of these entities via its participation on such entities’ joint steering committees (“JSC”), the Company has concluded that it is not the primary beneficiary of these entities because:

(i) the Company does not control the board of directors of any of the Unconsolidated VIEs, and no voting or consent agreements exist between the Company and other members of each respective board of directors or other investors, (ii) the holders of preferred security interests in the Unconsolidated VIEs hold certain rights that require their consent prior to taking certain actions, which include certain significant operating and financing decisions, and (iii) the Company’s representation on the JSC of each respective entity does not give it control over the development activities of any of the Unconsolidated VIEs, as all JSC decisions are made by consensus and there are no agreements in place that would require any of the entities to vote in alignment with the Company.

1 unchanged sentence

Additionally, the Company holds equity interests in certain privately-held companies that are not consolidated as the Company is not the primary beneficiary.

As of September 30, 2023 and December 31, 2022, the maximum risk of loss related to the Company’s unconsolidated VIEs was limited to the carrying value of its investments in such entities.

As of March 31, 2024 and December 31, 2023, the maximum risk of loss related to the Company’s VIEs was limited to the carrying value of its investments in such entities.

Refer to Note 4 for additional details on the Company’s investments and equity method investments.

2 unchanged sentences

The reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheet to the totals shown within the condensed consolidated statement of cash flows is as follows (in thousands):

As of September 30,

As of March 31,

Cash and cash equivalents $ 840,440 $ 1,206,086

3 unchanged sentences

Total cash, cash equivalents and restricted cash $ 887,213 $ 1,258,668

(1) Includes cash balances collateralizing letters of credit associated with the Company’s facility leases and a customer prepayment requiring segregation and restrictions in its use in accordance with the customer agreement.

(1) Includes cash balances collateralizing letters of credit associated with the Company’s facility leases and customer prepayments requiring segregation and restrictions in its use in accordance with the customer agreement.

Ginkgo Bioworks Holdings, Inc.

Notes to Condensed Consolidated Financial Statements

Supplemental cash flow information

The following table presents non-cash investing and financing activities (in thousands):

Three Months Ended March 31,

Supplemental disclosure of non-cash investing and financing activities:

Purchases of property and equipment included in accounts payable and accrued expenses $ 7,886 $ 8,247

Convertible financial instruments received for Cell Engineering services — 4,478

Equity securities and warrants received for Cell Engineering services — 12,493

Common stock issued as settlement of contingent consideration liability 1,877 2,262

Property, Plant, and Equipment, net

Property, plant, and equipment, net consisted of the following (in thousands):

As of September 30, As of December 31,

As of March 31, As of December 31,

Lab equipment $ 152,105 $ 147,185

8 unchanged sentences

Property, plant, and equipment, net $ 195,992 $ 188,193

Ginkgo Bioworks Holdings, Inc.

Notes to Condensed Consolidated Financial Statements

During the three and nine months ended September 30, 2023, the Company identified excess lab equipment at two of its facilities whereby the assets were sold, classified as held for sale or otherwise impaired, resulting in aggregate impairment losses of $ 16.2 million and $ 25.2 million for the three and nine months ended September 30, 2023, respectively, included in general and administrative expense in the condensed consolidated statement of operations and comprehensive loss.

Exit of a Leased Facility

In September 2023, Zymergen Inc.

(“Zymergen”) ceased the use of and exited a leased facility consisting of approximately 300,000 square feet of office and laboratory space in Emeryville, California.

The facility was used pursuant to an operating lease with a minimum term expiring in August 2033.

Zymergen's ceasing to use the space resulted in an impairment loss of $ 96.2 million, including $ 36.6 million for the right-of-use asset and $ 59.6 million for the related leasehold improvements.

The impairment loss represents the amount by which the carrying value of the assets exceed their estimated fair values as of September 30, 2023, as determined using a discounted cash flow model under the income approach.

The fair value measurements are based on significant inputs not observable in the market and therefore represent Level 3 fair value measurements.

The key inputs used in the valuation were estimated sublease rental income and a discount rate of 8.5 %.

The impairments are presented as impairment of lease assets in the condensed consolidated statement of operations and comprehensive loss for the three and nine months ended September 30, 2023.

Capitalization

1 unchanged sentence

Authorized Issued Outstanding

Common stock as of September 30, 2023:

Common stock as of March 31, 2024:

Class A 10,500,000 1,669,628 1,554,178

7 unchanged sentences

15,800,000 2,138,993 2,001,315

On April 3, 2023, the Company issued 2.8 million shares of its Class A common stock as purchase consideration for the acquisition of StrideBio, Inc.

(“StrideBio”) (see Note 8).

On May 9, 2023, the Company issued 2.0 million shares of its Class A common stock, valued at approximately $ 2.5 million, as settlement for employee retention payments associated with the FGen acquisition.

Refer to Note 9, Stock-Based Compensation, for shares of common stock issued in relation to the Company’s equity incentive plans.

Changes in the number of shares of Class C common stock issued and outstanding represent an exchange of Class C common stock for the same number of shares of Class A common stock pursuant to a stockholder exchange agreement.

Ginkgo Bioworks Holdings, Inc.

Notes to Condensed Consolidated Financial Statements

Supplemental cash flow information

The following table presents non-cash investing and financing activities (in thousands):

Nine Months Ended September 30,

2023 2022 (as adjusted)*

Supplemental disclosure of non-cash investing and financing activities:

ROU Asset obtained in exchange for new operating lease liabilities upon adoption of ASC 842 $ — $ 147,744

ROU Asset obtained in exchange for new finance lease liabilities upon adoption of ASC 842 — 3,397

ROU Asset obtained in exchange for new operating lease liabilities 13,770 75,198

ROU Asset obtained in exchange for new finance lease liabilities — 1,370

Purchases of property and equipment included in accounts payable and accrued expenses 1,563 7,959

Equity received in related parties — 8,873

Convertible financial instruments received for Cell Engineering services 5,595 13,689

Equity securities and warrants received for Cell Engineering services 13,843 3,423

Settlement of contingent consideration 3,222 —

Common stock issued for business and asset acquisitions 3,581 24,607

Contingent consideration for business acquisition — 13,150

Deferred offering and acquisition costs in accounts payable and accrued expenses — 1,660

* As adjusted to reflect the impact of the adoption of ASC 842 as of January 1, 2022.

See Note 1 for a summary of the adjustments.

Goodwill and Intangible Assets, net

3 unchanged sentences

Impact of foreign currency translation ( 1,329 )

Measurement period adjustments ( 1,973 )

Balance as of September 30, 2023 $ 58,057

During the nine months ended September 30, 2023, the Company recognized a measurement period adjustment related to the Zymergen acquisition, which resulted in a decrease to goodwill of $ 2.2 million, an increase to accounts receivable of $ 1.8 million, and a decrease to accrued expenses and other current liabilities of $ 0.4 million.

The adjustment was a result of updated information about facts and circumstances that existed at the acquisition date regarding the collectability of an acquired accounts receivable and accrued expenses under a collaboration agreement.

Additionally, $ 0.2 million was added to goodwill related to the Altar SAS acquisition.

Ginkgo Bioworks Holdings, Inc.

Notes to Condensed Consolidated Financial Statements

Balance as of March 31, 2024 $ 47,909

Intangible assets, net consisted of the following (in thousands):

2 unchanged sentences

Amortization Period

September 30, 2023:

March 31, 2024:

Developed technology $ 103,099 $ ( 25,763 ) $ 77,336 8.6

Database 3,700 ( 503 ) 3,197 6.0

Customer relationships 380 ( 309 ) 71 0.4

3 unchanged sentences

Developed technology $ 105,279 $ ( 22,663 ) $ 82,616 8.8

Database 3,700 ( 107 ) 3,593 6.8

Customer relationships 380 ( 261 ) 119 0.9

2 unchanged sentences

(1) Gross carrying value and accumulated amortization include the impact of cumulative foreign currency translation adjustments.

Amortization expense was $ 4.0 million and $ 1.0 million for the three months ended September 30, 2023 and 2022, respectively, and $ 12.2 million and $ 2.3 million for the nine months ended September 30, 2023 and 2022, respectively.

As of September 30, 2023, estimated future amortization expense for identifiable intangible assets is as follows (in thousands):

Amortization expense was $ 3.4 million and $ 4.3 million for the three months ended March 31, 2024 and 2023, respectively.

As of March 31, 2024, estimated future amortization expense for identifiable intangible assets is as follows (in thousands):

Remainder of 2024 $ 10,179

2 unchanged sentences

Commitments and Contingencies

Purchase Obligations

On August 29, 2023, the Company entered into a five-year strategic cloud and artificial intelligence (“AI”) partnership with Google Cloud, intended to enable the Company to develop and deploy AI tools for biology and biosecurity.

The partnership includes minimum annual commitments to purchase cloud hosting services in exchange for various discounts on such services.

The minimum annual commitments are as follows:

year 1, $ 8.0 million;

year 2, $ 28.0 million;

year 3, $ 54.0 million;

year 4, $ 86.0 million;

and year 5, $ 113.0 million.

The minimum commitments may be terminated by the Company upon payment of a cancellation fee representing a percentage of the remaining purchase commitment.

The Company also entered into an agreement pursuant to which Google Cloud will provide up to $ 56.3 million in cash funding upon the Company’s achievement of certain milestones, which are expected over the next three years .

The net service costs under the arrangement are recorded as research and development expenses in the accompanying condensed consolidated statements of operations and comprehensive loss for the three and nine months ended September 30, 2023.

As of September 30, 2023, the remaining aggregate commitment was $ 289.0 million.

Ginkgo Bioworks Holdings, Inc.

Notes to Condensed Consolidated Financial Statements

Contingent Consideration Related to Asset Acquisitions

On April 5, 2023, the Company entered into an Asset Purchase Agreement (“APA”) with StrideBio to acquire StrideBio's adeno-associated virus capsid discovery and engineering platform assets, with a secondary close contingent upon the transfer of certain additional in-license agreements to Ginkgo.

The Company accounted for the transaction as an asset acquisition as substantially all of the fair value of the assets acquired is concentrated in a single identifiable asset.

The fair value of the consideration transferred totaled $ 4.0 million and consisted of 2.8 million shares of Ginkgo's Class A common stock valued at $ 3.6 million and a $ 0.4 million contingent holdback, all of which was expensed as in-process research and development during the nine months ended September 30, 2023.

In October 2023, the Company completed the secondary closing for an additional purchase price of $ 3.8 million, which was paid by issuing 2.0 million shares of Class A common stock and remains subject to a $ 0.4 million contingent holdback.

The APA, as amended, also provides for royalty payments of up to $ 21.3 million payable in cash or shares of Class A common stock at the Company's election until the earlier of the tenth anniversary date of the initial closing and the date on which the aggregate amount of the royalty payments equals the amount cap.

The royalties are calculated based on 10 % of the net licensing revenue and 40 % of all consideration received for a license or sale of a product incorporating the acquired platform assets.

No amounts for the royalty payments have been recorded during the three or nine months ended September 30, 2023.

The Company routinely acquires rights to intellectual property that may provide for payment of future contingent consideration, including royalties, should revenue be generated from the use of such.

Legal Proceedings

From time to time, the Company may in the ordinary course of business be named as a defendant in lawsuits, indemnity claims and other legal proceedings.

Except as described below, the Company does not believe any pending litigation to be material, or that the outcome of any such pending litigation, in management’s judgment based on information currently available, would have a material adverse effect on the Company’s results of operations, cash flows or financial condition.

On August 4, 2021, a putative securities class action was filed on behalf of purchasers of the common stock of Zymergen, pursuant to or traceable to the registration statement for Zymergen’s initial public offering (“IPO”).

The action is pending in the United States District Court for the Northern District of California, and is captioned Wang v.

Zymergen Inc., et al., Case No.

3:21-cv-06028-VC.

The action alleges violations of Sections 11 and 15 of the Securities Act of 1933, as amended (the “Securities Act”) in connection with Zymergen’s IPO, names Zymergen, certain of its former officers and directors, and its IPO underwriters as defendants and seeks damages in an unspecified amount, attorneys’ fees, and other remedies.

On October 5, 2023, a Suggestion of Bankruptcy of Defendant Zymergen Inc.

was filed in this action.

On November 9, 2021, one of Zymergen’s then purported shareholders filed a putative derivative lawsuit in the United States District Court for the Northern District of California that is captioned Mellor v.

Hoffman, et al., Case No.

3:21-cv-08723-VC.

The complaint names certain of Zymergen’s former officers and directors as defendants and Zymergen as nominal defendant based on allegations substantially similar to those in the securities class action.

The complaint purports to assert claims on Zymergen’s behalf for breach of fiduciary duty, unjust enrichment, abuse of control, gross mismanagement, corporate waste, and contribution under the federal securities laws and seeks corporate reforms, unspecified damages and restitution, and fees and costs.

On October 5, 2023, a Suggestion of Bankruptcy of Defendant Zymergen Inc.

was filed in this action.

On or about February 7, 2023, a complaint was filed by Fortis Advisors LLC, solely in its capacity as Stockholders’ Representative for the holders of convertible promissory notes of Lodo Therapeutics Corporation (“Lodo”), against the Company's subsidiary, Zymergen, in Delaware Superior Court.

The complaint purports to allege violations of California securities laws based on Zymergen’s exchange of its common stock for convertible promissory notes issued by Lodo in connection with Zymergen’s May 2021 acquisition of Lodo.

The complaint seeks damages in an unspecified amount, attorneys’ fees, and other remedies.

On October 5, 2023, a Suggestion of Bankruptcy of Defendant Zymergen Inc.

was filed in this action.

In addition, certain government agencies, including the SEC, have requested information related to Zymergen’s August 3, 2021 disclosure.

Zymergen is cooperating fully.

The Company accrues for a loss contingency when it concludes that the likelihood of a loss is probable and the amount of loss can be reasonably estimated.

The Company adjusts its accruals from time to time as it receives additional information.

The Company does not believe any pending litigation to be material, or that the outcome of any such pending litigation, in management’s judgment based on information currently available, would have a material adverse effect on the Company’s results of operations, cash flows or financial condition.

Ginkgo Bioworks Holdings, Inc.

2 unchanged sentences

The following table summarizes stock-based compensation expense by financial statement line item in the Company’s condensed consolidated statement of operations and comprehensive loss for the periods presented (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

Three Months Ended March 31,

Research and development $ 23,192 $ 46,500

2 unchanged sentences

The Company grants stock-based incentive awards pursuant to the 2021 Incentive Award Plan (the “2021 Plan”) and the 2022 Inducement Plan (the “2022 Inducement Plan”).

As of September 30, 2023, there were approximately 189.0 million shares and 8.6 million shares available for future issuance under the 2021 Plan and 2022 Inducement Plan, respectively.

As of March 31, 2024, there were approximately 173.2 million shares and 3.1 million shares available for future issuance under the 2021 Plan and 2022 Inducement Plan, respectively.

Stock Options

A summary of stock option activity for the nine months ended September 30, 2023 is presented below:

A summary of stock option activity for the three months ended March 31, 2024 is presented below:

(in thousands)

(in years) (in thousands)

(in thousands)

Outstanding as of December 31, 2023 6,049 $ 0.89

Granted 979 1.90

Exercised ( 3,405 ) 0.02

Outstanding as of September 30, 2023 6,780 0.80 3.20 $ 8,609

Exercisable as of September 30, 2023 5,659 0.52 1.94 8,609

Outstanding as of March 31, 2024 2,644 2.01 6.55 $ 768

Exercisable as of March 31, 2024 1,523 1.89 4.68 768

(1) Excludes 1.5 million shares underlying options issued outside the accounting for compensation awards under ASC 718.

(2) The aggregate intrinsic value is calculated as the difference between the Company's closing stock price on the last trading day of the quarter and the exercise prices, multiplied by the number of in-the-money stock options.

The aggregate intrinsic value of stock options exercised during the nine months ended September 30, 2023 and 2022 was $ 8.4 million and $ 18.8 million, respectively.

During the nine months ended September 30, 2023 and 2022, the Company granted options with an aggregate fair value of $ 1.4 million and $ 1.8 million, respectively.

The weighted-average fair value of options granted during the nine months ended September 30, 2023 and 2022 was $ 1.43 and $ 1.92 per share, respectively, and was calculated using the following key input assumptions in the Black-Scholes option-pricing model:

Nine Months Ended September 30,

Risk-free interest rate 3.94 % 2.95 %

Expected volatility 93 % 80 %

Expected term (in years) 5.5 5.8

Dividend yield 0 % 0 %

As of September 30, 2023, there was $ 1.4 million of unrecognized compensation expense related to stock options recognizable over a weighted-average period of 1 year.

Ginkgo Bioworks Holdings, Inc.

Notes to Condensed Consolidated Financial Statements

Restricted Stock and Restricted Stock Units

During the nine months ended September 30, 2022, the Company cash settled approximately 3.2 million restricted stock units (“RSUs”) granted to non-employee directors for a total cash payment of $ 9.8 million.

A summary of the RSU and restricted stock award (“RSA”) activity for the nine months ended September 30, 2023 is presented below:

Restricted Stock Units Restricted Stock Awards

(in thousands) Weighted

Fair Value Number of

The aggregate intrinsic value of stock options exercised during the three months ended March 31, 2024 and 2023 was $ 3.9 million and $ 1.5 million, respectively.

As of March 31, 2024, there was $ 0.5 million of unrecognized compensation expense related to stock options recognizable over a weighted-average period of 0.7 years.

Restricted Stock Units

A summary of the restricted stock units (“RSU”) activity for the three months ended March 31, 2024 is presented below:

(in thousands) Weighted

3 unchanged sentences

Forfeited ( 2,260 ) 2.97

Nonvested as of September 30, 2023 168,766 3.39 — —

The weighted average grant date fair value of RSUs granted during the nine months ended September 30, 2023 and 2022 was $ 1.38 and $ 3.68 , respectively.

No RSAs were granted during the nine months ended September 30, 2023 and 2022.

The aggregate grant date fair value of the RSUs that vested during the nine months ended September 30, 2023 and 2022 was $ 271.2 million and $ 290.4 million, respectively.

The aggregate grant date fair value of the RSAs that vested during the nine months ended September 30, 2023 and 2022 was de minimis.

As of September 30, 2023, there was $ 355.9 million of unrecognized compensation expense related to RSUs recognizable over a weighted-average period of 3.1 years.

Earnout shares represent equity awards in the form of RSUs and RSAs that were granted to existing shareholders of the Company as of the closing date of the Company's merger with SRNG on September 16, 2021 (the “Closing Date”).

Nonvested as of March 31, 2024 238,705 2.24

Ginkgo Bioworks Holdings, Inc.

Notes to Condensed Consolidated Financial Statements

The weighted average grant date fair value of RSUs granted during the three months ended March 31, 2024 and 2023 was $ 1.21 and $ 1.32 , respectively.

As of March 31, 2024, there was $ 395.8 million of unrecognized compensation expense related to RSUs recognizable over a weighted-average period of 3.2 years.

Earnout shares represent equity awards in the form of RSUs and restricted stock awards (“RSAs”) that were granted to existing shareholders of the Company as of the closing date of the Company's merger with SRNG on September 16, 2021 (the “Closing Date”).

The earnout shares are subject to the same terms and conditions as the underlying awards (including with respect to vesting and termination-related provisions).

1 unchanged sentence

The first Earnout Target of $ 12.50 per share was met on November 15, 2021.

A summary of activity during the nine months ended September 30, 2023 for the earnout shares is presented below:

A summary of activity during the three months ended March 31, 2024 for the earnout shares is presented below:

(in thousands)

2 unchanged sentences

Forfeited ( 17 ) 12.92

Nonvested as of September 30, 2023 22,788 12.78

The aggregate grant date fair value of the earnout shares that vested during the nine months ended September 30, 2023 and 2022 was $ 5.9 million and $ 8.3 million, respectively.

Ginkgo Bioworks Holdings, Inc.

Notes to Condensed Consolidated Financial Statements

As of September 30, 2023, there was $ 6.5 million of unrecognized compensation expense related to earnout shares recognizable over a weighted-average period of 1.48 years.

Nonvested as of March 31, 2024 22,504 12.78

As of March 31, 2024, there was $ 2.5 million of unrecognized compensation expense related to earnout shares recognizable over a weighted-average period of 1.1 years.

Revenue Recognition

1 unchanged sentence

The following table sets forth the percentage of Cell Engineering revenues by industry based on total Cell Engineering revenue:

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

Three Months Ended March 31,

Pharma and biotech 28 % 30 %

Food and nutrition 24 17 17 11

Agriculture 28 27

Industrial and environment 16 15 13 16

Food and nutrition 17 16

Government and defense 16 5

Industrial and environment 10 12

Consumer and technology 1 10

Total Cell Engineering revenue 100 % 100 %

For the three months ended September 30, 2023 and 2022, the Company’s revenue from customers within the United States comprised 81 % and 94 %, respectively, of total revenue.

For the nine months ended September 30, 2023 and 2022, the Company’s revenue from customers within the United States comprised 83 % and 91 %, respectively, of total revenue.

For the three months ended March 31, 2024 and 2023, the Company’s revenue from customers within the United States comprised 70 % and 84 %, respectively, of total revenue.

Ginkgo Bioworks Holdings, Inc.

Notes to Condensed Consolidated Financial Statements

Contract Balances

The Company recognizes a contract asset when the Company transfers goods or services to a customer before the customer pays consideration or before payment is due, excluding any amounts presented as accounts receivable.

The Company had no contract asset balances as of September 30, 2023 and December 31, 2022.

The Company had no contract asset balances as of March 31, 2024 and December 31, 2023.

Contract liabilities, or deferred revenue, primarily consist of payments received in advance of performance under the contract or when the Company has an unconditional right to consideration under the terms of the contract before it transfers goods or services to the customer.

3 unchanged sentences

Contract liabilities are recognized as revenue as (or when) the Company performs under the contract.

During the nine months ended September 30, 2023, the Company recognized $ 59.8 million of revenue that was included in the contract liabilities balance of $ 222.6 million as of December 31, 2022.

During the nine months ended September 30, 2022, the Company recognized $ 37.3 million of revenue that was included in the contract liabilities balance of $ 189.2 million as of December 31, 2021.

During the three months ended March 31, 2024, the Company recognized $ 13.8 million of revenue that was included in the contract liabilities balance of $ 202.5 million as of December 31, 2023.

During the three months ended March 31, 2023, the Company recognized $ 24.4 million of revenue that was included in the contract liabilities balance of $ 222.6 million as of December 31, 2022.

Performance Obligations

The aggregate amount of the transaction price that was allocated to performance obligations that have not yet been satisfied or are partially satisfied as of September 30, 2023 and December 31, 2022 was $ 116.9 million and $ 123.5 million, respectively.

The Company has elected the practical expedient not to provide the remaining performance obligation disclosures related to contracts for which the Company recognizes revenue on a cost-plus basis in the amount to which it

The aggregate amount of the transaction price that was allocated to performance obligations that have not yet been satisfied or are partially satisfied as of March 31, 2024 and December 31, 2023 was $ 96.9 million and $ 110.0 million, respectively.

As of March 31, 2024, of the performance obligations not yet satisfied or partially satisfied, nearly all is expected to be recognized as revenue during the years 2024 to 2027.

Ginkgo Bioworks Holdings, Inc.

Notes to Condensed Consolidated Financial Statements

has the right to invoice, and for contracts with a term of one year or less.

As of September 30, 2023, of the performance obligations not yet satisfied or partially satisfied, nearly all is expected to be recognized as revenue during the years 2023 to 2027.

Segment Information

2 unchanged sentences

The following table presents summary results of the Company’s reportable segments for the periods indicated (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 (as adjusted)* 2023 2022 (as adjusted)*

Three Months Ended March 31,

Cell Engineering $ 27,889 $ 34,096

19 unchanged sentences

Depreciation and amortization 12,869 18,958

Impairment of long-lived assets 112,403 — 121,404 —

Change in fair value of contingent consideration liability ( 926 ) 5,177

Loss from operations $ ( 178,002 ) $ ( 215,745 )

* As adjusted to reflect the impact of the adoption of ASC 842 as of January 1, 2022.

See Note 1 for a summary of the adjustments.

(1) Includes $ 1.1 million and $ 0.2 million in employer payroll taxes for the three months ended September 30, 2023 and 2022, respectively, and $ 4.3 million and $ 7.2 million in employer payroll taxes for the nine months ended September 30, 2023 and 2022, respectively.

Significant Collaboration Transactions

BiomEdit, LLC

In April 2022, the Company, along with one of its investors and third-party investors, including Elanco Animal Health Inc.

(“Elanco”), launched BiomEdit, LLC (“BiomEdit”), a microbiome innovation company that intends to discover, design and develop novel probiotics, microbiome derived bioactives and engineered microbial medicines in the field of animal health.

Concurrently with the launch, the Company entered into (i) an Intellectual Property Contribution Agreement (“BiomEdit IP

Ginkgo Bioworks Holdings, Inc.

Notes to Condensed Consolidated Financial Statements

Agreement”) that granted BiomEdit a license to certain of the Company’s intellectual property, (ii) a Technical Development Agreement (“BiomEdit TDA”) that establishes the terms under which the Company will provide technical research and development services, and (iii) a Common Unit Issuance Agreement (“BiomEdit CUIA”) which compensates the Company for its intellectual property contribution.

Contemporaneous with these agreements, BiomEdit entered into a Series A Preferred Unit Purchase Agreement under which it sold 6.7 million Series A preferred units to one of the Company’s investors and a third-party investor, for aggregate proceeds of approximately $ 32.5 million.

After the initial closing, BiomEdit may issue up to an additional 1.5 million Series A preferred units (the “Additional Units”) to one or more purchasers reasonably acceptable to the existing holders of Series A preferred units.

In a subsequent closing during the first quarter of 2023, BiomEdit sold 0.8 million Additional Units for aggregate proceeds of $ 4.0 million and closed its Series A preferred unit financing.

Under the BiomEdit IP Agreement, the Company licensed certain intellectual property to BiomEdit for use in the development or production of BiomEdit’s products that the parties will subsequently agree to research and develop under technical development plans (“TDP”).

The license rights provide BiomEdit with the ability to commercialize the specified products from the corresponding TDP under the BiomEdit TDA.

In return for the license to the intellectual property, BiomEdit issued the Company 3.9 million common units upon execution of the BiomEdit CUIA, with 0.7 million of those units subject to forfeiture in the event BiomEdit does not sell all of the Additional Units.

Under the BiomEdit TDA, the parties jointly agree on TDPs, through equal representation on a joint steering committee, under which the Company will perform agreed-upon research and development services in return for consideration on a fixed fee or cost-plus basis for all services provided.

Accounting Analysis

The common unit investment in BiomEdit is considered an equity method investment as a result of the Company’s ability to exercise significant influence over BiomEdit’s financial and operating policies through its ownership of common units.

The initial carrying value of the equity method investment in BiomEdit is the fair value of the nonforfeitable common units of $ 8.9 million received in exchange for the BiomEdit IP Agreement which, as discussed below, is being accounted for as non-cash consideration under ASC 606.

The Company determined that the 0.7 million common units held by Ginkgo subject to forfeiture are considered variable consideration that is fully constrained at contract inception until the contingencies related to the issuance of the additional shares are resolved.

Upon the closing of BiomEdit's Series A preferred unit financing in the first quarter of 2023, Ginkgo forfeited 0.3 million common units and retained 0.4 million common units for total consideration of $ 1.1 million.

The fair value of BiomEdit’s common units was determined at inception of the agreements using the option pricing method.

The option pricing method used a back-solve methodology to infer the total equity value based on the pricing of the Series A preferred unit financing, which was contemporaneous with the BiomEdit IP Agreement.

The Series A preferred units issued by BiomEdit receive a liquidation preference prior to common units.

As such, the Company concluded that this represents a substantive profit-sharing arrangement, and the Company is recognizing earnings and losses on the equity method investment using the HLBV method.

The Company recorded a $ 1.5 million loss on its equity method investment in BiomEdit during the nine months ended September 30, 2023, which reduced the carrying value of the equity method investment in BiomEdit to zero .

There is no commitment for the Company to provide further financial support to BiomEdit, and therefore the carrying value of the equity method investment will not be reduced below zero.

The relationship with BiomEdit is a vendor-customer relationship and is within the scope of ASC 606, as the provision of services and corresponding license rights are considered a part of the Company’s ordinary activities.

The common units issued to the Company represent non-cash consideration.

While the BiomEdit TDA has been executed by the parties and provides the payment terms for future services, the BiomEdit TDA does not provide for any transfer of goods or services between the parties.

However, the Company will provide licenses and services upon execution of the contemplated TDPs.

Accordingly, the Company concluded that the BiomEdit TDA, in combination with the BiomEdit CUIA, met the definition of a contract under ASC 606.

Each TDP executed under the BiomEdit TDA will be accounted for in accordance with ASC 606.

The Company’s performance obligations under the BiomEdit TDA consist of four material rights to future technical research and development services and commercial licenses under individual TDPs that the Company expects to execute.

Ginkgo Bioworks Holdings, Inc.

Notes to Condensed Consolidated Financial Statements

The material rights represent an advance payment for the license rights, which will be granted upon the execution of future TDPs.

As there is no additional payment for these license rights when future TDPs are executed, the Company has determined that there is a material right associated with each of the contemplated TDPs under the BiomEdit TDA.

The Company has allocated approximately $ 2.2 million of the upfront non-cash consideration to each of the four material rights based on the estimated standalone selling price of the performance obligations.

During the first quarter of 2023, the additional $ 1.1 million of non-cash consideration, which represents previously constrained variable consideration, was allocated to each of the four performance obligations under the arrangement with BiomEdit of $ 0.3 million each consistent with the initial relative selling price allocation.

Upon the execution of a TDP underlying a material right, the Company is obligated to provide technical research and development services under the TDP and a license to applicable patents and other intellectual property designed and developed under the TDP.

The technical research and development services and license provided under a TDP are highly interdependent and interrelated with one another.

Without the Company’s knowledge, expertise, and platform, there would not be a licensable strain or other commercializable product to transfer to BiomEdit.

Further, BiomEdit has rights to intellectual property created as part of each TDP, irrespective of the result of the development.

Therefore, each executed TDP underlying a material right consists of one combined performance obligation for the technical research and development services and license to be provided by the Company.

For each TDP underlying a material right, the transaction price consists of (i) either a fixed fee or, if a cost-plus arrangement, variable consideration for the most likely amount of estimated consideration to be received and (ii) non-cash consideration allocated to the material rights.

As the services performed by the Company under a TDP create or enhance an asset that BiomEdit controls as the asset is created or enhanced, the Company satisfies the performance obligation and recognizes revenue over time.

The Company uses an input method that compares total costs incurred relative to total estimated cost to complete to estimate progress under the contract.

Any revisions to the estimated total budgeted costs to complete, and the resulting impact on revenue recognition, are reflected in the period of the change through a cumulative catch-up adjustment.

As of September 30, 2023 and December 31, 2022 the Company had a deferred revenue balance of $ 7.5 million and $ 8.1 million, respectively, with BiomEdit.

During the three and nine months ended September 30, 2023, the Company recognized revenue of $ 0.6 million and $ 2.4 million, respectively, from services provided to BiomEdit.

(1) Includes $ 1.6 million and $ 2.2 million in employer payroll taxes for the three months ended March 31, 2024 and 2023, respectively.

Net Loss per Share

The Company computes net loss per share of Class A common stock and Class B common stock using the two-class method required for participating securities.

The Company computes net loss per share using the two-class method required for participating securities.

The earnings per share amounts are the same for the different classes of common stock because the holders of each class are legally entitled to equal per share distributions whether through dividends or liquidation.

The following potential common shares, presented based on amounts outstanding at each period end, were excluded from the calculation of diluted net loss per share attributable to Ginkgo Bioworks Holdings, Inc.

common stockholders for the periods presented because including them would have been anti-dilutive (in thousands):

As of September 30,

Warrants to purchase Class A common stock 51,825 51,825

Outstanding stock options 8,420 19,541

The calculation of basic and diluted earnings per common share are as follows (in thousands, except per share amounts):

Ginkgo Bioworks Holdings, Inc.

Notes to Condensed Consolidated Financial Statements

Three Months Ended March 31,

Net loss, basic $ ( 165,911 ) $ ( 204,969 )

Change in fair value of contingent consideration common shares liability 464 611

Net loss, diluted $ ( 166,375 ) $ ( 205,580 )

Weighted average common shares outstanding, basic 2,004,460 1,914,963

Effect of dilutive securities:

Contingent consideration common shares 876 1,674

Weighted average common shares outstanding, diluted 2,005,336 1,916,637

Basic net loss per share $ ( 0.08 ) $ ( 0.11 )

Diluted net loss per share $ ( 0.08 ) $ ( 0.11 )

The following potential common shares, presented based on amounts outstanding at each period end, were excluded from the calculation of diluted net loss per share for the periods presented because including them would have been anti-dilutive (in thousands):

As of March 31,

Unvested RSUs 238,705 197,108

Unvested RSAs — 49

Earnout shares (1)

152,135 156,457

Warrants to purchase Class A common stock 51,825 51,825

Outstanding stock options 4,165 11,588

Escrow shares (2)

447,561 416,978

(1) Represents earnout shares for which the service-based vesting conditions and/or market conditions have not been met.

Ginkgo Bioworks Holdings, Inc.

Notes to Condensed Consolidated Financial Statements

(1) Represents earnout shares for which the service-based and/or market-based vesting conditions have not been satisfied.

(2) Represents restricted common stock issued in connection with asset acquisitions, held in escrow for indemnification purposes, and subject to forfeiture.

Related Parties

The Company’s significant transactions with its related parties are primarily comprised of revenue generating activities under collaboration and license agreements.

Ginkgo Bioworks Holdings, Inc.

Notes to Condensed Consolidated Financial Statements

Significant related party transactions included in the condensed consolidated balance sheet are summarized below (in thousands):

As of September 30, As of December 31,

As of March 31, As of December 31,

Accounts receivable:

Allonnia, LLC $ 427 $ 140

Arcaea, LLC 6 335

Verb Biotics, LLC 337 361

Ayana Bio, LLC 381 403

BiomEdit, LLC 95 288

Other equity investees — 31

$ 1,246 $ 1,558

Ayana Bio $ 277 $ 233

Allonnia 71 322

BiomEdit 21 —

Verb Biotics 1 61

Deferred revenue, current and non-current:

Motif FoodWorks, Inc.

$ 45,752 $ 52,018

Genomatica, Inc.

Allonnia, LLC 35,920 35,876

Arcaea, LLC 33,256 38,334

BiomEdit, LLC 7,473 8,144

Motif FoodWorks $ 45,426 $ 45,426

Allonnia 36,056 36,062

Arcaea 33,066 33,066

BiomEdit 7,877 7,712

Genomatica 1,649 2,018

Ayana Bio 182 56

2 unchanged sentences

Significant related party transactions included in the condensed consolidated statement of operations and comprehensive loss are summarized below (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

Three Months Ended March 31,

Cell Engineering revenue:

Joyn Bio, LLC $ — $ 694 $ — $ 2,842

Motif FoodWorks, Inc.

6,303 83 6,306 1,930

Genomatica, Inc.

1,011 2,737 2,999 8,500

Allonnia, LLC 180 580 425 4,240

Arcaea, LLC — 4,014 5,669 10,311

Verb Biotics, LLC 70 825 588 1,763

Ayana Bio, LLC 326 685 961 685

BiomEdit, LLC 632 — 2,410 —

Genomatica $ 369 $ 1,209

Ayana Bio 147 451

Allonnia 59 86

Motif FoodWorks 19 —

Arcaea — 1,462

BiomEdit — 908

Verb Biotics — 437

Other equity investees 139 150

3 unchanged sentences

Notes to Condensed Consolidated Financial Statements

Subsequent Event

On October 3, 2023, Zymergen and certain of its subsidiaries filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code (the “Zymergen Bankruptcy”) in the U.S.

Bankruptcy Court for the District of Delaware (“Bankruptcy Court”).

Neither the Company nor any of its other subsidiaries filed for bankruptcy protection, and the Company and its other subsidiaries will continue to operate their businesses as usual.

Zymergen has been operated as a distinct legal entity, separate and apart from the Company, since it was acquired in October 2022.

Shortly after its acquisition, the Company entered into an arms-length non-exclusive license with Zymergen with respect to Zymergen’s intellectual property, including its databases, automation, and software capabilities.

The Zymergen Bankruptcy will not impact this non-exclusive license, and the Company’s rights under this license will not be affected.

In connection with the Zymergen Bankruptcy, also on October 3, 2023, the Company entered into an asset purchase agreement with Zymergen (the “Zymergen APA”) as the stalking horse bidder under Section 363 of the U.S.

Bankruptcy Code to acquire exclusive rights to substantially all of Zymergen’s intellectual property assets and certain other assets.

The Company’s bid included a $ 5.0 million cash component and the potential assumption of a facility lease (currently included in the Company's consolidated financial statements) with a remaining minimum commitment of $ 37.4 million and a remaining lease term of approximately 9 years.

The Company’s bid also included an undertaking by the Company to offer employment to 91 of Zymergen’s employees (provided such employees remain employed by Zymergen at the closing of the transactions contemplated by the Zymergen APA) whereby the Company would assume any post-closing employment obligations and maintain salary and certain employee benefits levels for a one-year period.

The bid is subject to approval by the Bankruptcy Court, and a process under which Zymergen may consider alternative bids.

The accounting for the Zymergen Bankruptcy is not yet complete, but the Company expects to deconsolidate Zymergen from its consolidated financial statements effective October 3, 2023 and accordingly, Zymergen’s consolidated balance sheet, statement of operations and cash flows will be removed from the Company’s consolidated financial statements.

The Company expects to record a non-cash loss as a result of the deconsolidation of Zymergen in the fourth quarter of 2023 and may incur additional related costs.

Subsequent Events

On May 9, 2024, in connection with the Company’s plans to reduce operational expenditures, management approved a plan for restructuring actions, including an expected reduction in labor expenses and a planned consolidation of certain of its facilities.

Initial headcount reductions are expected to commence in the second quarter of 2024 and be substantially completed in 2025, subject to local laws.

The aggregate expected costs and overall timing for completion of the restructuring plan is not yet known.

On April 10, 2024, the Company acquired platform assets, including fully sequenced and isolated strains, unique gene sequences, and relevant functional data and metadata, as well as a development pipeline from AgBiome, Inc.

These assets will be integrated into the Company’s Ag Biologicals Services, established with the acquisition of a Bayer agricultural biologicals R&D facility in 2022, and expands Ginkgo’s proprietary unified metagenomics database.

The acquisition was completed with the issuance of unregistered Class A common stock with registration rights and a price protection provision that requires the issuance of additional shares should the price per Class A common shares decline by more than a specified threshold prior to registration of the shares or 6 months, whichever is sooner.

The Company has not yet completed its accounting for the acquisition.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements