Ginkgo Bioworks Holdings, Inc. 10-Q

Item 1. Financial Statements. Ginkgo Bioworks Holdings, Inc. Condensed Consolidated Balance Sheets (unaudited) (in thousands, except per share data) As of March 31, As of December 31, 2024 2023 Assets Current assets: Cash and cash equivalents $ 840,440 $ 944,073 Accounts receivable, net 24,189 17,157 Accounts receivable - related parties 370 742 Prepaid expenses and other current assets 38,021 39,777 Total current assets 903,020 1,001,749 Property, plant, and equipment, net 195,992 188,193 Operating lease right-of-use assets 220,785 206,801 Investments 76,021 78,565 Intangible assets, net 77,407 82,741 Goodwill 47,909 49,238 Other non-current assets 60,627 58,055 Total assets $ 1,581,761 $ 1,665,342 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable $ 26,995 $ 9,323 Deferred revenue (includes $ 707 and $ 5,426 from related parties) 33,612 44,486 Accrued expenses and other current liabilities 108,436 110,051 Total current liabilities 169,043 163,860 Non-current liabilities: Deferred revenue, net of current portion (includes $ 123,549 and $ 119,053 from related parties) 166,067 158,062 Operating lease liabilities, non-current 234,497 221,835 Other non-current liabilities 24,884 24,433 Total liabilities 594,491 568,190 Commitments and contingencies (Note 8) Stockholders’ equity: Preferred stock, $ 0.0001 par value; 200,000 shares authorized; none issued — — Common stock, $ 0.0001 par value (Note 6) 202 199 Additional paid-in capital 6,445,058 6,385,997 Accumulated deficit ( 5,456,439 ) ( 5,290,528 ) Accumulated other comprehensive (loss) income ( 1,551 ) 1,484 Total stockholders’ equity 987,270 1,097,152 Total liabilities and stockholders’ equity $ 1,581,761 $ 1,665,342 The accompanying notes are an integral part of these condensed consolidated financial statements. 1 Table of Contents Ginkgo Bioworks Holdings, Inc. Condensed Consolidated Statements of Operations and Comprehensive Loss (unaudited) (in thousands, except per share data) Three Months Ended March 31, 2024 2023 Cell Engineering revenue (1) $ 27,889 $ 34,096 Biosecurity revenue: Product — 11,666 Service 10,055 34,940 Total revenue 37,944 80,702 Costs and operating expenses: Cost of Biosecurity product revenue — 4,541 Cost of Biosecurity service revenue 9,202 17,834 Research and development 136,457 162,639 General and administrative 70,287 111,433 Total operating expenses 215,946 296,447 Loss from operations ( 178,002 ) ( 215,745 ) Other income (expense): Interest income, net 11,711 14,545 Loss on equity method investments — ( 1,449 ) Loss on investments ( 2,544 ) ( 6,370 ) Change in fair value of warrant liabilities 940 1,204 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 expense 31 82 Net loss $ ( 165,911 ) $ ( 204,969 ) 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) income: Foreign currency translation adjustment ( 3,035 ) 1,018 Total other comprehensive (loss) income ( 3,035 ) 1,018 Comprehensive loss $ ( 168,946 ) $ ( 203,951 ) (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 Table of Contents Ginkgo Bioworks Holdings, Inc. Condensed Consolidated Statements of Stockholders’ Equity (unaudited) (in thousands) Three Months Ended March 31, 2023 Common Stock Shares Amount Additional Paid-In Capital Accumulated Deficit Accumulated Other Comprehensive Loss Total Stockholders’ Equity 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 - restricted stock — — 2,262 — — 2,262 Stock-based compensation expense — — 72,982 — — 72,982 Foreign currency translation — — — — 1,018 1,018 Net loss — — — ( 204,969 ) — ( 204,969 ) 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 Common Stock Shares Amount Additional Paid-In Capital Accumulated Deficit Accumulated Other Comprehensive Loss Total Stockholders’ Equity Balance as of December 31, 2023 2,001,315 $ 199 $ 6,385,997 $ ( 5,290,528 ) $ 1,484 $ 1,097,152 Issuance of common stock upon exercise or vesting of equity awards 18,190 2 527 — — 529 Settlement of contingent consideration 986 — 1,877 — — 1,877 Issuance of common stock for asset acquisitions 13,133 1 15,875 — — 15,876 Stock-based compensation expense — — 40,782 — — 40,782 Foreign currency translation — — — — ( 3,035 ) ( 3,035 ) Net loss — — — ( 165,911 ) — ( 165,911 ) 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. 3 Table of Contents Ginkgo Bioworks Holdings, Inc. Condensed Consolidated Statements of Cash Flows (unaudited) (in thousands) Three Months Ended March 31, 2024 2023 Cash flows from operating activities: Net loss $ ( 165,911 ) $ ( 204,969 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 12,869 18,958 Stock-based compensation 40,782 72,986 Loss on investments and equity method investments 2,544 7,819 Change in fair value of warrant liabilities ( 940 ) ( 1,204 ) Change in fair value of contingent consideration liability ( 926 ) 5,177 Non-cash lease expense 5,637 8,039 Non-cash in-process research and development 16,816 — Other non-cash activity ( 442 ) 1,121 Changes in operating assets and liabilities: Accounts receivable ($ 372 and $( 26 ) from related parties) ( 6,770 ) ( 526 ) Prepaid expenses and other current assets 1,154 7,442 Operating lease right-of-use assets — 2,665 Other non-current assets ( 707 ) ( 2,036 ) Accounts payable, accrued expenses and other current liabilities 10,871 19,080 Deferred revenue, current and non-current ($( 223 ) and $( 2,226 ) from related parties) ( 2,912 ) ( 17,233 ) Operating lease liabilities, current and non-current ( 4,097 ) ( 8,521 ) Other non-current liabilities 2,773 617 Net cash used in operating activities ( 89,259 ) ( 90,585 ) Cash flows from investing activities: Purchases of property and equipment ( 6,710 ) ( 19,441 ) Business acquisition ( 5,400 ) — Other — 27 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 ) — Payment of equity issuance costs — ( 578 ) Net cash used in financing activities ( 845 ) ( 888 ) Effect of foreign exchange rates on cash and cash equivalents ( 157 ) ( 26 ) Net decrease in cash, cash equivalents and restricted cash ( 102,371 ) ( 110,913 ) Cash and cash equivalents, beginning of period 944,073 1,315,792 Restricted cash, beginning of period 45,511 53,789 Cash, cash equivalents and restricted cash, beginning of period 989,584 1,369,581 Cash and cash equivalents, end of period 840,440 1,206,086 Restricted cash, end of period 46,773 52,582 Cash, cash equivalents and restricted cash, end of period $ 887,213 $ 1,258,668 The accompanying notes are an integral part of these condensed consolidated financial statements. 4 Table of Contents Ginkgo Bioworks Holdings, Inc. Notes to Condensed Consolidated Financial Statements (unaudited) 1. Basis of Presentation and Summary of Significant Accounting Policies Business The mission of Ginkgo Bioworks Holdings, Inc. (“Ginkgo” or the “Company”) is to make biology easier to engineer. The Company designs custom cells for customers across multiple markets. 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 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 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 The accompanying condensed consolidated financial statements have been prepared in conformity with the rules and regulations of the Securities and Exchange Commission and generally accepted accounting principles in the United States (“GAAP”) for interim financial reporting. Accordingly, certain detailed disclosures which would normally be included with annual financial statements have been omitted. In the opinion of management, all normal recurring adjustments necessary for a fair presentation have been made. These condensed consolidated financial statements should be read in conjunction with the Company's 2023 Annual Report on Form 10-K. Interim results are not necessarily indicative of results for a full year. Principles of Consolidation 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 consolidated financial statements. The Company bases its estimates on historical experience and other market-specific or relevant assumptions that it believes to be reasonable under the circumstances. Reported amounts and disclosures reflect the overall economic conditions that management believes are most likely to occur, and the anticipated measures management intends to take. Actual results could differ materially from those estimates. All revisions to accounting estimates are recognized in the period in which the estimates are revised. Significant Accounting Policies 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 within Note 2 to the Company's 2023 consolidated financial statements included in the 2023 Annual Report on Form 10-K. 5 Table of Contents Ginkgo Bioworks Holdings, Inc. Notes to Condensed Consolidated Financial Statements (unaudited) 2. Acquisitions 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. 3. 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 March 31, 2024 Classification Total Level 1 Level 2 Level 3 Assets: Money market funds Cash and cash equivalents $ 816,947 $ 816,947 $ — $ — Synlogic, Inc. warrants (1) Investments 304 — 304 — 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 Total assets $ 866,730 $ 839,156 $ 12,434 $ 15,140 Liabilities: Public Warrants Warrant liabilities $ 3,105 $ 3,105 $ — $ — Private Placement Warrants (3) Warrant liabilities 1,655 — 118 1,537 Contingent consideration Accrued expenses and other current liabilities 15,320 — — 15,320 Contingent consideration Other non-current liabilities 5,274 — — 5,274 Total liabilities $ 25,354 $ 3,105 $ 118 $ 22,131 6 Table of Contents Ginkgo Bioworks Holdings, Inc. Notes to Condensed Consolidated Financial Statements (unaudited) As of December 31, 2023 Classification Total Level 1 Level 2 Level 3 Assets: Money market funds Cash and cash equivalents $ 913,729 $ 913,729 $ — $ — Synlogic, Inc. warrants (1) Investments 654 — 654 — Marketable equity securities (2) 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 Total assets $ 959,467 $ 932,130 $ 13,208 $ 14,129 Liabilities: Public Warrants Warrant liabilities $ 3,794 $ 3,794 $ — $ — Private Placement Warrants (3) Warrant liabilities 1,906 — 60 1,846 Contingent consideration Accrued expenses and other current liabilities 18,468 — — 18,468 Contingent consideration Other non-current liabilities 5,805 — — 5,805 Total liabilities $ 29,973 $ 3,794 $ 60 $ 26,119 (1) The fair value of Synlogic, Inc. warrants is calculated as the quoted price of the underlying common stock, less the unpaid exercise price of the warrants. (2) Marketable equity securities classified as Level 2 reflect a discount for lack of marketability due to regulatory sales restrictions. (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 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 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. Under this method, the estimated future cash flows, consisting of principal and interest payments, are discounted to present value using an applicable market yield or discount rate. 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 7 Table of Contents Ginkgo Bioworks Holdings, Inc. Notes to Condensed Consolidated Financial Statements (unaudited) 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 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): 2024 2023 Balance at January 1, $ 14,129 $ 7,660 Additions 50 1,998 Change in fair value 961 ( 1,565 ) Balance at March 31, $ 15,140 $ 8,093 Warrant Liabilities In connection with the Company's merger with Soaring Eagle Acquisition Corp. (“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 (“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. The primary unobservable input used in the valuation of the Private Placement Warrants is expected stock-price volatility. The Company estimated the volatility of its Private Placement Warrants using a Monte-Carlo simulation of the redeemable Public Warrants that assumes optimal exercise of the Company's redemption option at the earliest possible date. The risk-free interest rate is based on the U.S. Treasury zero-coupon yield curve for a maturity similar to the expected remaining life of the warrants. The expected life of the warrants is assumed to be equivalent to their remaining contractual term. The dividend yield is based on the historical rate, which the Company anticipates remaining at zero. 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: March 31, 2024 December 31, 2023 Exercise price $ 11.50 $ 11.50 Stock price $ 1.16 $ 1.69 Volatility 87.8 % 70.5 % Term (in years) 2.46 2.71 Risk-free interest rate 4.54 % 4.01 % 8 Table of Contents Ginkgo Bioworks Holdings, Inc. Notes to Condensed Consolidated Financial Statements (unaudited) 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): 2024 2023 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 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. 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. 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 following table provides quantitative information regarding Level 3 inputs used in the fair value measurements of contingent consideration liabilities as of the periods presented: March 31, 2024 December 31, 2023 Contingent Consideration Liability Valuation Technique Unobservable Input Range Range Earnout payments (FGen and Dutch DNA acquisitions) Probability-weighted present value Probability of payment 10 % - 80 % 10 % - 100 % Discount rate 15.8 % 13.4 % Earnout payments (Dutch DNA acquisition) Discounted cash flow Projected years of payments 2028 - 2031 2025 - 2028 Discount rate 10.5 % 10.3 % The following table provides a reconciliation of the contingent consideration measured at fair value using Level 3 significant unobservable inputs (in thousands): 2024 2023 Balance at January 1, $ 24,273 $ 24,473 Change in fair value ( 926 ) 5,177 Settlements and payments ( 2,753 ) ( 864 ) Balance at March 31, $ 20,594 $ 28,786 9 Table of Contents Ginkgo Bioworks Holdings, Inc. Notes to Condensed Consolidated Financial Statements (unaudited) 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 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 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 (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. 4. Investments and Equity Method Investments The Company partners with other investors to form business ventures, including Motif FoodWorks, Inc. (“Motif”), Allonnia, LLC (“Allonnia”), Arcaea, LLC (“Arcaea”), Verb Biotics, LLC (“Verb”), BiomEdit, LLC (“BiomEdit”) and Ayana Bio, LLC (“Ayana”) (collectively “Platform Ventures”). The Company also partners with existing entities, including Genomatica, Inc. (“Genomatica”) and Synlogic, Inc. (“Synlogic”) (collectively, “Legacy Structured Partnerships”) with complementary assets for high potential synthetic biology applications. 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. 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 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. Impairment losses and adjustments from observable price changes are recorded in loss on investments in the condensed consolidated statements of operations and comprehensive loss. The Company also holds investments in early-stage synthetic biology product companies via SAFEs. The Company enters into SAFE agreements in conjunction with a revenue contract with a customer under which the Company grants the customer a prepaid Cell Engineering services credit equal to the principal amount of the SAFE (the “Purchase Amount”), which may be used and drawn down as payment for the Company’s research and development services. The SAFEs will automatically convert into shares of preferred stock equal to the Purchase Amount divided by the discount price, which is calculated as the price per share sold in a qualified equity financing multiplied by a discount rate. 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 impairments. 10 Table of Contents Ginkgo Bioworks Holdings, Inc. Notes to Condensed Consolidated Financial Statements (unaudited) Investments consisted of the following (in thousands): As of March 31, As of December 31, 2024 2023 Investments: 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, 2024 2023 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 ) Gain (loss) on equity method investments: BiomEdit $ — $ ( 1,462 ) Other — 13 Total $ — $ ( 1,449 ) The components of loss on investments for each period were as follows (in thousands): Three Months Ended March 31, 2024 2023 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 11 Table of Contents Ginkgo Bioworks Holdings, Inc. Notes to Condensed Consolidated Financial Statements (unaudited) 5. 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. As the Company’s involvement in the Unconsolidated VIEs does not give it the power to control the decisions with respect to their development or other activities, which are their most significant activities, the Company has concluded that it is not the primary beneficiary of the Unconsolidated VIEs. 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 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. 6. Supplemental Financial Information Cash, Cash Equivalents and Restricted Cash 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 March 31, 2024 2023 Cash and cash equivalents $ 840,440 $ 1,206,086 Restricted cash included in prepaid expenses and other current assets (1) 3,328 8,149 Restricted cash included in other non-current assets (1) 43,445 44,433 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 customer prepayments requiring segregation and restrictions in its use in accordance with the customer agreement. 12 Table of Contents Ginkgo Bioworks Holdings, Inc. Notes to Condensed Consolidated Financial Statements (unaudited) Supplemental cash flow information The following table presents non-cash investing and financing activities (in thousands): Three Months Ended March 31, 2024 2023 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 March 31, As of December 31, 2024 2023 Lab equipment $ 152,105 $ 147,185 Leasehold improvements 76,146 71,564 Buildings and facilities 47,572 47,034 Construction in progress 22,731 15,830 Computer equipment and software 14,950 14,780 Furniture and fixtures 6,515 6,458 Land 6,060 6,060 Total property, plant, and equipment 326,079 308,911 Less: Accumulated depreciation and amortization ( 130,087 ) ( 120,718 ) Property, plant, and equipment, net $ 195,992 $ 188,193 Capitalization The following table presents the Company’s authorized, issued, and outstanding common stock as of the dates indicated (in thousands): Authorized Issued Outstanding Common stock as of March 31, 2024: Class A 10,500,000 1,669,628 1,554,178 Class B 4,500,000 382,399 359,446 Class C 800,000 120,000 120,000 15,800,000 2,172,027 2,033,624 Common stock as of December 31, 2023: Class A 10,500,000 1,639,885 1,525,058 Class B 4,500,000 379,108 356,257 Class C 800,000 120,000 120,000 15,800,000 2,138,993 2,001,315 13 Table of Contents Ginkgo Bioworks Holdings, Inc. Notes to Condensed Consolidated Financial Statements (unaudited) 7. Goodwill and Intangible Assets, net All goodwill is allocated to the Cell Engineering reporting unit and segment identified in Note 11 . Changes in the carrying amount of goodwill consisted of the following (in thousands): Balance as of December 31, 2023 $ 49,238 Impact of foreign currency translation ( 1,329 ) Balance as of March 31, 2024 $ 47,909 Intangible assets, net consisted of the following (in thousands): Gross Carrying Value (1) Accumulated Amortization (1) Net Carrying Value Weighted Average Amortization Period March 31, 2024: Developed technology $ 103,099 $ ( 25,763 ) $ 77,336 8.6 Customer relationships 380 ( 309 ) 71 0.4 Assembled workforce 190 ( 190 ) — 0 Total intangible assets $ 103,669 $ ( 26,262 ) $ 77,407 December 31, 2023: Developed technology $ 105,279 $ ( 22,663 ) $ 82,616 8.8 Customer relationships 380 ( 261 ) 119 0.9 Assembled workforce 190 ( 184 ) 6 0.3 Total intangible assets $ 105,849 $ ( 23,108 ) $ 82,741 (1) Gross carrying value and accumulated amortization include the impact of cumulative foreign currency translation adjustments. 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 2025 13,478 2026 13,478 2027 10,403 2028 3,296 Thereafter 26,573 Total $ 77,407 8. Commitments and Contingencies 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. 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. 14 Table of Contents Ginkgo Bioworks Holdings, Inc. Notes to Condensed Consolidated Financial Statements (unaudited) 9. Stock-Based Compensation 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 March 31, 2024 2023 Research and development $ 23,192 $ 46,500 General and administrative 17,590 26,486 Total $ 40,782 $ 72,986 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 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 three months ended March 31, 2024 is presented below: Number of Shares (1) (in thousands) Weighted Average Exercise Price per Share Weighted Average Remaining Contractual Term (in years) Aggregate Intrinsic Value (2) (in thousands) Outstanding as of December 31, 2023 6,049 $ 0.89 Exercised ( 3,405 ) 0.02 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 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: Number of Shares (in thousands) Weighted Average Grant Date Fair Value Nonvested as of December 31, 2023 152,168 $ 3.15 Granted 103,480 1.21 Vested ( 14,683 ) 4.36 Forfeited ( 2,260 ) 2.97 Nonvested as of March 31, 2024 238,705 2.24 15 Table of Contents Ginkgo Bioworks Holdings, Inc. Notes to Condensed Consolidated Financial Statements (unaudited) 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. Earnouts 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). Additionally, the earnout shares are subject to a market condition that will be met when the trading price of the Company's common stock is greater than or equal to $ 12.50 , $ 15.00 , $ 17.50 and $ 20.00 for any 20 trading days within any period of 30 consecutive trading days, on or before the fifth anniversary of the Closing Date (collectively, the “Earnout Targets”). The first Earnout Target of $ 12.50 per share was met on November 15, 2021. A summary of activity during the three months ended March 31, 2024 for the earnout shares is presented below: Number of Shares (in thousands) Weighted Average Grant Date Fair Value Nonvested as of December 31, 2023 22,610 $ 12.78 Vested ( 89 ) 13.34 Forfeited ( 17 ) 12.92 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. 10. Revenue Recognition Disaggregation of Revenue The following table sets forth the percentage of Cell Engineering revenues by industry based on total Cell Engineering revenue: Three Months Ended March 31, 2024 2023 Pharma and biotech 28 % 30 % Agriculture 28 27 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 March 31, 2024 and 2023, the Company’s revenue from customers within the United States comprised 70 % and 84 %, respectively, of total revenue. 16 Table of Contents Ginkgo Bioworks Holdings, Inc. Notes to Condensed Consolidated Financial Statements (unaudited) 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 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. The Company’s collaborative arrangements with its investees and related parties typically include upfront payments consisting of cash or non-cash consideration for future research and development services and non-cash consideration in the form of convertible financial instruments and equity securities for licenses that will be transferred in the future. The Company records the upfront cash payments and fair value of the convertible financial instruments and equity securities as deferred revenue. The Company also invoices customers based on contractual billing schedules, which results in the recording of deferred revenue to the extent payment is received prior to the Company’s performance of the related services. Contract liabilities are recognized as revenue as (or when) the Company performs under the contract. 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 March 31, 2024 and December 31, 2023 was $ 96.9 million and $ 110.0 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 has the right to invoice, and for contracts with a term of one year or less. 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. 17 Table of Contents Ginkgo Bioworks Holdings, Inc. Notes to Condensed Consolidated Financial Statements (unaudited) 11. Segment Information The Company has identified two operating and reportable segments: Cell Engineering and Biosecurity. The following table presents summary results of the Company’s reportable segments for the periods indicated (in thousands): Three Months Ended March 31, 2024 2023 Revenue: Cell Engineering $ 27,889 $ 34,096 Biosecurity 10,055 46,606 Total revenue 37,944 80,702 Segment cost of revenue: Biosecurity 9,202 22,375 Segment research and development expense: Cell Engineering 100,101 98,522 Biosecurity 120 567 Total segment research and development expense 100,221 99,089 Segment general and administrative expense: Cell Engineering 40,232 61,692 Biosecurity 11,951 13,956 Total segment general and administrative expense 52,183 75,648 Segment operating (loss) income: Cell Engineering ( 112,444 ) ( 126,118 ) Biosecurity ( 11,218 ) 9,708 Total segment operating loss ( 123,662 ) ( 116,410 ) Operating expenses not allocated to segments: Stock-based compensation (1) 42,397 75,200 Depreciation and amortization 12,869 18,958 Change in fair value of contingent consideration liability ( 926 ) 5,177 Loss from operations $ ( 178,002 ) $ ( 215,745 ) (1) Includes $ 1.6 million and $ 2.2 million in employer payroll taxes for the three months ended March 31, 2024 and 2023, respectively. 12. Net Loss per Share 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 calculation of basic and diluted earnings per common share are as follows (in thousands, except per share amounts): 18 Table of Contents Ginkgo Bioworks Holdings, Inc. Notes to Condensed Consolidated Financial Statements (unaudited) Three Months Ended March 31, 2024 2023 Numerator: 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 ) Denominator: 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, 2024 2023 Unvested RSUs 238,705 197,108 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) 731 — 447,561 416,978 (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. 13. Related Parties The Company’s significant transactions with its related parties are primarily comprised of revenue generating activities under collaboration and license agreements. 19 Table of Contents Ginkgo Bioworks Holdings, Inc. Notes to Condensed Consolidated Financial Statements (unaudited) Significant related party transactions included in the condensed consolidated balance sheet are summarized below (in thousands): As of March 31, As of December 31, 2024 2023 Accounts receivable: Ayana Bio $ 277 $ 233 Allonnia 71 322 BiomEdit 21 — Verb Biotics 1 61 Arcaea — 126 $ 370 $ 742 Deferred revenue, current and non-current: 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 Other equity investees — 139 $ 124,256 $ 124,479 Significant related party transactions included in the condensed consolidated statement of operations and comprehensive loss are summarized below (in thousands): Three Months Ended March 31, 2024 2023 Cell Engineering revenue: 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 $ 733 $ 4,703 Refer to Note 4 for additional details on the Company’s investments and equity method investments held in its related parties. 20 Table of Contents Ginkgo Bioworks Holdings, Inc. Notes to Condensed Consolidated Financial Statements (unaudited) 14. 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. 21 Table of Contents