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 June 30, 2024 As of December 31, 2023 Assets Current assets: Cash and cash equivalents $ 730,367 $ 944,073 Accounts receivable, net 18,589 17,157 Accounts receivable - related parties 302 742 Prepaid expenses and other current assets 34,104 39,777 Total current assets 783,362 1,001,749 Property, plant, and equipment, net 210,582 188,193 Operating lease right-of-use assets 418,008 206,801 Investments 62,490 78,565 Intangible assets, net 90,602 82,741 Goodwill — 49,238 Other non-current assets 60,211 58,055 Total assets $ 1,625,255 $ 1,665,342 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable $ 23,029 $ 9,323 Deferred revenue (includes $ 2,152 and $ 5,426 from related parties) 26,007 44,486 Accrued expenses and other current liabilities 117,118 110,051 Total current liabilities 166,154 163,860 Non-current liabilities: Deferred revenue, net of current portion (includes $ 117,750 and $ 119,053 from related parties) 152,869 158,062 Operating lease liabilities, non-current 452,265 221,835 Other non-current liabilities 20,895 24,433 Total liabilities 792,183 568,190 Commitments and contingencies (Note 9) Stockholders’ equity: Preferred stock, $ 0.0001 par value; 200,000 shares authorized; none issued — — Common stock, $ 0.0001 par value (Note 7) 206 199 Additional paid-in capital 6,508,209 6,385,997 Accumulated deficit ( 5,673,620 ) ( 5,290,528 ) Accumulated other comprehensive (loss) income ( 1,723 ) 1,484 Total stockholders’ equity 833,072 1,097,152 Total liabilities and stockholders’ equity $ 1,625,255 $ 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 June 30, Six Months Ended June 30, 2024 2023 2024 2023 Cell Engineering revenue (1) $ 36,205 $ 45,283 $ 64,094 $ 79,379 Biosecurity revenue: Product — 10,788 — 22,454 Service 20,001 24,497 30,056 59,437 Total revenue 56,206 80,568 94,150 161,270 Costs and operating expenses: Cost of Biosecurity product revenue — 2,034 — 6,575 Cost of Biosecurity service revenue 11,807 16,062 21,009 33,896 Cost of other revenue 1,914 — 1,914 — Research and development 134,221 144,282 270,678 306,921 General and administrative 66,285 102,341 136,572 213,774 Goodwill impairment 47,858 — 47,858 — Restructuring charges 17,066 — 17,066 — Total operating expenses 279,151 264,719 495,097 561,166 Loss from operations ( 222,945 ) ( 184,151 ) ( 400,947 ) ( 399,896 ) Other income (expense): Interest income, net 10,313 14,349 22,024 28,894 Loss on equity method investments — ( 67 ) — ( 1,516 ) Loss on investments ( 6,826 ) ( 2,121 ) ( 9,370 ) ( 8,491 ) Change in fair value of warrant liabilities 3,233 ( 4,482 ) 4,173 ( 3,278 ) Other income (expense), net ( 766 ) 3,224 1,249 6,152 Total other income 5,954 10,903 18,076 21,761 Loss before income taxes ( 216,991 ) ( 173,248 ) ( 382,871 ) ( 378,135 ) Income tax expense 190 67 221 149 Net loss $ ( 217,181 ) $ ( 173,315 ) ( 383,092 ) $ ( 378,284 ) Net loss per share, basic and diluted $ ( 0.11 ) $ ( 0.09 ) $ ( 0.19 ) $ ( 0.20 ) Weighted average common shares outstanding: Basic 2,054,801 1,933,437 2,029,630 1,924,251 Diluted 2,055,024 1,933,437 2,029,853 1,924,251 Comprehensive loss: Net loss $ ( 217,181 ) $ ( 173,315 ) $ ( 383,092 ) $ ( 378,284 ) Other comprehensive (loss) income: Foreign currency translation adjustment ( 172 ) 314 ( 3,207 ) 1,332 Total other comprehensive (loss) income ( 172 ) 314 ( 3,207 ) 1,332 Comprehensive loss $ ( 217,353 ) $ ( 173,001 ) $ ( 386,299 ) $ ( 376,952 ) (1) Includes related party revenue of $ 5,146 and $ 6,507 for the three months ended June 30, 2024 and 2023, respectively, and $ 5,819 and $ 11,212 for the six months ended June 30, 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 June 30, 2024 Common Stock Shares Amount Additional Paid-In Capital Accumulated Deficit Accumulated Other Comprehensive Loss Total Stockholders’ Equity Balance as of March 31, 2024 2,033,624 $ 202 $ 6,445,058 $ ( 5,456,439 ) $ ( 1,551 ) $ 987,270 Issuance of common stock upon exercise or vesting of equity awards 21,472 2 12 — — 14 Settlement of contingent consideration 1,972 — 2,570 — — 2,570 Issuance of common stock for asset acquisitions 18,949 2 20,923 — — 20,925 Issuance of common stock in exchange for services 2,720 — 2,500 — — 2,500 Stock-based compensation expense — — 37,146 — — 37,146 Foreign currency translation — — — — ( 172 ) ( 172 ) Net loss — — — ( 217,181 ) — ( 217,181 ) Balance as of June 30, 2024 2,078,737 $ 206 $ 6,508,209 $ ( 5,673,620 ) $ ( 1,723 ) $ 833,072 Six Months Ended June 30, 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 39,662 4 539 — — 543 Settlement of contingent consideration 2,958 — 4,447 — — 4,447 Issuance of common stock for asset acquisitions 32,082 3 36,798 — — 36,801 Issuance of common stock in exchange for services 2,720 — 2,500 — — 2,500 Stock-based compensation expense — — 77,928 — — 77,928 Foreign currency translation — — — — ( 3,207 ) ( 3,207 ) Net loss — — — ( 383,092 ) — ( 383,092 ) Balance as of June 30, 2024 2,078,737 $ 206 $ 6,508,209 $ ( 5,673,620 ) $ ( 1,723 ) $ 833,072 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 Stockholders’ Equity (unaudited) (in thousands) Three Months Ended June 30, 2023 Common Stock Shares Amount Additional Paid-In Capital Accumulated Deficit Accumulated Other Comprehensive Loss Total Stockholders’ Equity Balance as of March 31, 2023 1,933,880 $ 194 $ 6,211,634 $ ( 4,602,628 ) $ ( 1,614 ) $ 1,607,586 Issuance of common stock upon exercise or vesting of equity awards 15,995 2 470 — — 472 Tax withholdings related to net share settlement of equity awards ( 14 ) — ( 23 ) — — ( 23 ) Issuance of common stock for asset acquisitions 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 — — 62,470 — — 62,470 Foreign currency translation — — — — 314 314 Net loss — — — ( 173,315 ) — ( 173,315 ) Balance as of June 30, 2023 1,954,704 $ 196 $ 6,280,632 $ ( 4,775,943 ) $ ( 1,300 ) $ 1,503,585 Six Months Ended June 30, 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 57,899 6 478 — — 484 Tax withholdings related to net share settlement of equity awards ( 14 ) — ( 23 ) — — ( 23 ) Settlement of contingent consideration - restricted stock — — 2,262 — — 2,262 Issuance of common stock for asset acquisitions 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 — — 135,456 — — 135,456 Foreign currency translation — — — — 1,332 1,332 Net loss — — — ( 378,284 ) — ( 378,284 ) Balance as of June 30, 2023 1,954,704 $ 196 $ 6,280,632 $ ( 4,775,943 ) $ ( 1,300 ) $ 1,503,585 The accompanying notes are an integral part of these condensed consolidated financial statements. 4 Table of Contents Ginkgo Bioworks Holdings, Inc. Condensed Consolidated Statements of Cash Flows (unaudited) (in thousands) Six Months Ended June 30, 2024 2023 Cash flows from operating activities: Net loss $ ( 383,092 ) $ ( 378,284 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 30,199 36,610 Stock-based compensation 77,928 134,474 Goodwill impairment 47,858 — Restructuring related impairment charges 4,823 — Loss on investments and equity method investments 9,370 10,007 Change in fair value of warrant liabilities ( 4,173 ) 3,278 Change in fair value of contingent consideration liability 2,284 8,453 Non-cash lease expense 13,070 16,327 Non-cash in-process research and development 19,795 3,981 Impairment loss on assets held for sale — 9,001 Other non-cash activity 2,097 2,429 Changes in operating assets and liabilities: Accounts receivable ( 1,102 ) 15,397 Prepaid expenses and other current assets 1,770 12,087 Operating lease right-of-use assets 14,373 4,096 Other non-current assets ( 833 ) ( 2,426 ) Accounts payable, accrued expenses and other current liabilities 10,864 ( 4,004 ) Deferred revenue, current and non-current ($( 4,577 ) and $( 7,718 ) from related parties) ( 17,012 ) ( 21,372 ) Operating lease liabilities, current and non-current ( 3,866 ) ( 13,250 ) Other non-current liabilities 1,998 ( 922 ) Net cash used in operating activities ( 173,649 ) ( 164,118 ) Cash flows from investing activities: Purchases of property and equipment ( 33,742 ) ( 32,974 ) Business acquisition ( 5,400 ) — Proceeds from sale of equipment 191 2,926 Other — ( 590 ) Net cash used in investing activities ( 38,951 ) ( 30,638 ) Cash flows from financing activities: Proceeds from exercise of stock options 84 24 Principal payments on finance leases ( 494 ) ( 648 ) Contingent consideration payment ( 661 ) ( 1,042 ) Other — ( 603 ) Net cash used in financing activities ( 1,071 ) ( 2,269 ) Effect of foreign exchange rates on cash and cash equivalents ( 173 ) ( 495 ) Net decrease in cash, cash equivalents and restricted cash ( 213,844 ) ( 197,520 ) 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 730,367 1,105,787 Restricted cash, end of period 45,373 66,274 Cash, cash equivalents and restricted cash, end of period $ 775,740 $ 1,172,061 The accompanying notes are an integral part of these condensed consolidated financial statements. 5 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 six months ended June 30, 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. 6 Table of Contents Ginkgo Bioworks Holdings, Inc. Notes to Condensed Consolidated Financial Statements (unaudited) 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. 2. Acquisitions AgBiome On April 10, 2024, the Company acquired certain platform assets, including fully sequenced and isolated strains, unique gene sequences, relevant functional data and metadata, and a development pipeline from AgBiome, Inc. (“AgBiome”), a biotechnology company in the agriculture industry. These assets expand the Company’s proprietary unified metagenomics database. The fair value of the consideration transferred totaled $ 18.2 million and was paid with the issuance of 16.3 million shares of Ginkgo's Class A common stock. The Company accounted for the transaction as an asset acquisition since substantially all of the value received was concentrated in the acquired developed technology, which is being amortized over a useful life of three years . Zymergen 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 six months ended June 30, 2024. Other Acquisitions The Company completed three other asset acquisitions during the six months ended June 30, 2024. The aggregate purchase price for the three acquisitions was $ 19.8 million and was paid with the issuance of 15.8 million shares of Ginkgo's Class A common stock. Each transaction was accounted for as an asset acquisition as the acquired assets, consisting primarily of intellectual property rights, did not meet the definition of a business. The assets acquired represent in-process research and development with no alternative future use. Accordingly, the Company recorded $ 3.0 million and $ 19.8 million as acquired in-process research and development expense in the accompanying condensed consolidated statements of operations and comprehensive loss for the three and six months ended June 30, 2024, respectively. 3. Restructuring In the three months ended June 30, 2024, in connection with the Company’s plans to reduce operational expenditures, management, with the approval of the Board of Directors, approved a restructuring plan. This plan includes an expected reduction in labor expenses, primarily through a workforce reduction of at least 35 %, and a planned consolidation and sublease of certain facilities. Initial workforce reductions commenced in June 2024, with further reductions expected in the second half of 2024. All reductions are expected to be substantially completed in 2025, subject to compliance with 7 Table of Contents Ginkgo Bioworks Holdings, Inc. Notes to Condensed Consolidated Financial Statements (unaudited) applicable laws. The Company plans to consolidate certain facilities through various actions, including the consolidation of office and laboratory operations into fewer locations, subleasing unused facilities, and other related measures. While the Company aims to complete the majority of its facility consolidation actions in 2025, the actual timing may vary. The costs for the reduction in force are expected to range from $ 18.0 million to $ 22.0 million primarily in the Cell Engineering segment and consist of one-time cash severance and related costs. The employee termination costs are recognized as of the communication date to employees, given (i) the Company instituted a one-time employee termination benefit related to its restructuring, and (ii) the employees will not be retained to render service beyond a minimum retention period. The Company is currently unable to estimate the costs associated with consolidating its facilities. These costs may include, but are not limited to, losses on subleases, contract terminations, asset impairments, sale or disposal of equipment or other long-lived assets, and related costs and fees pertaining to the consolidation, closure, or disposition of facilities. Additional charges may be incurred as the Company progresses its restructuring plan and such charges could be material. During the three and six months ended June 30, 2024, the Company incurred $ 17.1 million in restructuring costs, which are recorded as “Restructuring charges” in the condensed consolidated statements of operations and comprehensive loss. The following table presents details of expenses incurred including a summary of the changes in the accrued liability balance related to the restructuring activities, which is included in “Accounts payable” and “Accrued expenses and other current liabilities” in the accompanying condensed consolidated balance sheet as of June 30, 2024 (in thousands): Employee Termination Costs and Other Impairment of Right-of-Use Asset (1) Total Expenses incurred $ 12,243 $ 4,823 $ 17,066 Cash payments ( 489 ) Liability balance at June 30, 2024 $ 11,754 (1) Relates to a decision to sublease a certain facility in connection with the restructuring and reflects the excess of the right-of-use asset's carrying value over its fair value, which was determined based on estimates of future discounted cash flows and is classified as Level 3 in the fair value hierarchy. 8 Table of Contents Ginkgo Bioworks Holdings, Inc. Notes to Condensed Consolidated Financial Statements (unaudited) 4. 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 June 30, 2024 Classification Total Level 1 Level 2 Level 3 Assets: Money market funds Cash and cash equivalents $ 686,688 $ 686,688 $ — $ — Synlogic, Inc. warrants (1) Investments 255 — 255 — Marketable equity securities Investments 20,332 20,332 — — Notes receivable Prepaid expenses and other current assets 10,937 — — 10,937 Notes receivable Other non-current assets 14,776 — 12,498 2,278 Total assets $ 732,988 $ 707,020 $ 12,753 $ 13,215 Liabilities: Public Warrants Warrant liabilities $ 1,035 $ 1,035 $ — $ — Private Placement Warrants (3) Warrant liabilities 493 — 120 373 Contingent consideration Accrued expenses and other current liabilities 15,953 — — 15,953 Contingent consideration Other non-current liabilities 5,241 — — 5,241 Total liabilities $ 22,722 $ 1,035 $ 120 $ 21,567 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 current assets 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. 9 Table of Contents Ginkgo Bioworks Holdings, Inc. Notes to Condensed Consolidated Financial Statements (unaudited) 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 six months ended June 30, 2024, transfers from Level 2 to Level 1 occurred due to lapse of regulatory sales restrictions on marketable equity securities. Additionally, as of June 30, 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 six months ended June 30, 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 (expense), net in the condensed consolidated statements of operations and comprehensive loss. As of June 30, 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 based on certain conditions as defined in the note agreement, 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 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. 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 June 30, 2024, included scenario probabilities ranging from 20 % to 27 %, a discount rate of 15 %, and estimated time to event date of up to 2 years. The significant unobservable (Level 3) inputs used in the fair value measurement as of December 31, 2023, included scenario probabilities ranging from 5 % to 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 June 30, 2024, the convertible debt instruments had an unpaid principal balance of $ 22.7 million and a fair value of $ 13.2 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 six months ended June 30 (in thousands): 2024 2023 Balance at January 1, $ 14,129 $ 7,660 Additions 665 3,137 Change in fair value ( 1,579 ) ( 1,489 ) Balance at June 30, $ 13,215 $ 9,308 10 Table of Contents Ginkgo Bioworks Holdings, Inc. Notes to Condensed Consolidated Financial Statements (unaudited) 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: June 30, 2024 December 31, 2023 Exercise price $ 11.50 $ 11.50 Stock price $ 0.33 $ 1.69 Volatility 122.8 % 70.5 % Term (in years) 2.21 2.71 Risk-free interest rate 4.70 % 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 six months ended June 30 (in thousands): 2024 2023 Balance at January 1, $ 1,846 $ 3,860 Change in fair value ( 1,324 ) 1,175 Transfers to Level 2 ( 149 ) — Balance at June 30, $ 373 $ 5,035 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 six months ended June 30, 2024, the Company settled $ 5.4 million in contingent consideration liabilities through payment of $ 0.9 million in cash and vesting of 3.9 million shares of restricted stock valued at $ 4.4 million. During the six months ended June 30, 2023, the Company settled $ 3.8 million in contingent consideration liability through payment of $ 1.5 million in cash and vesting of 1.2 million shares of restricted stock valued at $ 2.3 million. 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 of occurring. 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 11 Table of Contents Ginkgo Bioworks Holdings, Inc. Notes to Condensed Consolidated Financial Statements (unaudited) 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: June 30, 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 5 % - 100 % 10 % - 100 % Discount rate 19.5 % 13.4 % Earnout payments (Dutch DNA acquisition) Discounted cash flow Projected years of payments 2028 - 2031 2025 - 2028 Discount rate 10.6 % 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 2,284 8,453 Settlements and payments ( 5,363 ) ( 2,364 ) Balance at June 30, $ 21,194 $ 30,562 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 June 30, 2024, the Company recorded a $ 4.9 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. The fair value measurement is classified as Level 3 in the fair value hierarchy. During the six months ended June 30, 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 . 12 Table of Contents Ginkgo Bioworks Holdings, Inc. Notes to Condensed Consolidated Financial Statements (unaudited) The Company recorded impairment losses of zero and $ 1.8 million related to SAFEs during the three months ended June 30, 2024 and 2023, respectively, and $ 5.2 million and $ 1.8 million during the six months ended June 30, 2024 and 2023, respectively. The fair value was generally estimated using the scenario-based method, where various payout scenarios were probability-weighted and discounted to present value. 5. 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 4 ) and adjusts the carrying amount of the instrument at each reporting period for any impairments. Investments consisted of the following (in thousands): Investments: As of June 30, 2024 As of December 31, 2023 SAFEs $ 18,686 $ 23,898 Non-marketable equity securities 16,232 22,938 Marketable equity securities 19,698 17,563 Genomatica preferred stock 6,985 11,885 Synlogic common stock 634 1,627 Synlogic warrants 255 654 Total $ 62,490 $ 78,565 13 Table of Contents Ginkgo Bioworks Holdings, Inc. Notes to Condensed Consolidated Financial Statements (unaudited) Loss on investments and equity method investments consisted of the following (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 (Loss) gain on investments: Synlogic common stock $ ( 123 ) $ ( 1,281 ) $ ( 993 ) $ ( 2,092 ) Synlogic warrants ( 49 ) ( 514 ) ( 399 ) ( 841 ) Genomatica preferred stock ( 4,900 ) — ( 4,900 ) — Marketable equity securities ( 1,754 ) ( 326 ) 2,134 ( 3,747 ) SAFEs — — ( 5,212 ) ( 1,811 ) Total $ ( 6,826 ) $ ( 2,121 ) $ ( 9,370 ) $ ( 8,491 ) Loss on equity method investments: BiomEdit $ — $ — $ — $ ( 1,462 ) Other — ( 67 ) — ( 54 ) Total $ — $ ( 67 ) $ — $ ( 1,516 ) The components of loss on investments for each period were as follows (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Impairment charges $ ( 4,900 ) $ — $ ( 10,112 ) $ ( 1,811 ) Ongoing mark-to-market adjustments on marketable equity securities ( 1,926 ) ( 2,121 ) 742 ( 6,680 ) Total loss on investments $ ( 6,826 ) $ ( 2,121 ) $ ( 9,370 ) $ ( 8,491 ) The carrying value for non-marketable equity securities accounted for using the fair value measurement alternative and held as of June 30, 2024, including cumulative unrealized losses, were as follows (in thousands): As of June 30, 2024 Total initial cost $ 107,996 Impairment charges ( 64,465 ) Downward adjustments from observable price changes ( 1,628 ) Carrying value $ 41,903 6. 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. 14 Table of Contents Ginkgo Bioworks Holdings, Inc. Notes to Condensed Consolidated Financial Statements (unaudited) 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 June 30, 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 5 for additional details on the Company’s investments and equity method investments. 7. 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 June 30, 2024 As of June 30, 2023 Cash and cash equivalents $ 730,367 $ 1,105,787 Restricted cash included in prepaid expenses and other current assets (1) 2,353 22,483 Restricted cash included in other non-current assets (1) 43,020 43,791 Total cash, cash equivalents and restricted cash $ 775,740 $ 1,172,061 (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. Supplemental cash flow information The following table presents non-cash investing and financing activities (in thousands): Six Months Ended June 30, 2024 2023 Supplemental disclosure of non-cash investing and financing activities: Right-of-use assets obtained in exchange for new operating lease liabilities $ 223,853 $ 13,649 Common stock issued for asset acquisitions 18,245 3,581 Purchases of property and equipment included in accounts payable and accrued expenses 7,936 2,324 Return of investment in equity securities for reduction in deferred revenue 6,760 — Common stock issued as settlement of contingent consideration liability 4,447 2,262 Common stock issued for retention payments related to business and asset acquisitions 2,959 2,500 Equity securities received for Cell Engineering services 55 12,493 Convertible financial instruments received for Cell Engineering services — 5,595 15 Table of Contents Ginkgo Bioworks Holdings, Inc. Notes to Condensed Consolidated Financial Statements (unaudited) Property, Plant, and Equipment, net Property, plant, and equipment, net consisted of the following (in thousands): June 30, 2024 December 31, 2023 Lab equipment $ 147,487 $ 147,185 Leasehold improvements 77,198 71,564 Buildings and facilities 48,088 47,034 Construction in progress 46,426 15,830 Computer equipment and software 15,035 14,780 Furniture and fixtures 6,514 6,458 Land 6,060 6,060 Total property, plant, and equipment 346,808 308,911 Less: Accumulated depreciation and amortization ( 136,226 ) ( 120,718 ) Property, plant, and equipment, net $ 210,582 $ 188,193 Operating Lease In April 2024, the Company commenced its 15-year lease of a new office and laboratory space located in Boston, Massachusetts. The leased property consists of approximately 260,000 rentable square feet and is expected to be occupied by mid-2025. The lease agreement includes an option to extend the lease for ten years at then-market rates. The Company is not reasonably certain to exercise this option at lease commencement. The lease is classified as an operating lease, includes a period of free rent and also tenant improvement incentives. The lease does not contain material restrictive covenants or residual value guarantees. Upon the lease commencement, the Company recorded a right-of-use asset of $ 213.3 million, net of lease incentives received, and a lease liability of $ 223.9 million. The discount rate used in determining the lease liability was the Company's estimated incremental borrowing rate of 7.8 %. Base rent during the first lease year is approximately $ 21.1 million and is subject to annual increases of 3 % thereafter. 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 June 30, 2024: Class A 10,500,000 1,723,919 1,603,066 Class B 4,500,000 378,597 355,671 Class C 800,000 120,000 120,000 15,800,000 2,222,516 2,078,737 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 16 Table of Contents Ginkgo Bioworks Holdings, Inc. Notes to Condensed Consolidated Financial Statements (unaudited) 8. Goodwill and Intangible Assets, net All goodwill is allocated to the Cell Engineering reporting unit and segment identified in Note 12 . During the three months ended June 30, 2024, due to a sustained decrease in the market price of the Company's Class A common stock and market capitalization, the Company identified that an indicator of impairment was present as of June 30, 2024. As such, the Company completed a quantitative impairment test related to its Cell Engineering reporting unit. To conduct the impairment test of goodwill, the estimated fair value of the reporting unit was compared to its carrying value. The estimated fair value of the reporting unit was determined using a weighted approach that considered a discounted cash flow (“DCF”) model under the income approach and the guideline public company (“GPC”) method under the market approach. Significant inputs used in the DCF model included the projected future operating results of the reporting unit and the applicable discount rate, while inputs used in the GPC method consisted of a revenue multiple. The fair value measurement of the reporting unit is classified as Level 3 in the fair value hierarchy because it involves significant unobservable inputs. The Company reconciled the resulting fair value of its reporting unit to the market capitalization of the Company to corroborate the fair value estimate used in the impairment test. The result of the interim impairment test indicated that the estimated fair value of the reporting unit was less than its carrying value. As a result, the Company recorded a $ 47.9 million goodwill impairment charge during the three and six months ended June 30, 2024. Changes in the carrying amount of goodwill consisted of the following (in thousands): Balance as of December 31, 2023 $ 49,238 Goodwill impairment (accumulated impairment loss) ( 47,858 ) Impact of foreign currency translation ( 1,380 ) Balance as of June 30, 2024 $ — Intangible assets, net consisted of the following (in thousands): Gross Carrying Value (1) Accumulated Amortization (1) Net Carrying Value Weighted Average Amortization Period (in Years) June 30, 2024: Developed technology $ 121,206 $ ( 30,628 ) $ 90,578 7.4 Customer relationships 380 ( 356 ) 24 0.2 Assembled workforce 190 ( 190 ) — 0.0 Total intangible assets $ 121,776 $ ( 31,174 ) $ 90,602 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) The gross carrying value and accumulated amortization balances include the impact of cumulative foreign currency translation adjustments. During the three months ended June 30, 2024, in connection with the acquisition of AgBiome, the Company acquired developed technology with an aggregate fair value of $ 18.2 million and an estimated useful life of three years . For further information, see Note 2 . 17 Table of Contents Ginkgo Bioworks Holdings, Inc. Notes to Condensed Consolidated Financial Statements (unaudited) Amortization expense was $ 4.9 million and $ 4.0 million for the three months ended June 30, 2024 and 2023, respectively, and $ 8.4 million and $ 8.3 million for the six months ended June 30, 2024 and 2023, respectively. As of June 30, 2024, estimated future amortization expense for identifiable intangible assets is as follows (in thousands): Remainder of 2024 $ 9,798 2025 19,550 2026 19,550 2027 11,914 2028 3,287 Thereafter 26,503 Total $ 90,602 9. 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. 10. 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 June 30, Six Months Ended June 30, 2024 2023 2024 2023 Research and development $ 20,066 $ 39,927 $ 43,258 $ 86,427 General and administrative 17,080 21,561 34,670 48,047 Total $ 37,146 $ 61,488 $ 77,928 $ 134,474 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 June 30, 2024, there were approximately 147.1 million shares and 3.1 million shares available for future issuance under the 2021 Plan and 2022 Inducement Plan, respectively. 18 Table of Contents Ginkgo Bioworks Holdings, Inc. Notes to Condensed Consolidated Financial Statements (unaudited) Time-based Stock Options A summary of stock option activity for options that are subject to time-based vesting conditions for the six months ended June 30, 2024, is presented below: Number of Shares (in thousands) Weighted Average Exercise Price per Share Weighted Average Remaining Contractual Term (in years) Aggregate Intrinsic Value (1) (in thousands) Outstanding as of December 31, 2023 6,049 $ 0.89 Granted 6,222 0.46 Exercised ( 4,078 ) 0.02 Forfeited ( 17 ) 11.42 Outstanding as of June 30, 2024 8,176 0.98 9.05 $ — Exercisable as of June 30, 2024 1,829 2.59 6.03 — (1) 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 options exercised during the six months ended June 30, 2024 and 2023 was $ 1.3 million and $ 2.9 million, respectively. The weighted-average grant-date fair value of options granted during the six months ended June 30, 2024 and 2023 was $ 0.35 and $ 1.43 per share, respectively, and was calculated using the following key assumptions in the Black-Scholes option-pricing model: Six Months Ended June 30, 2024 2023 Risk-free interest rate 4.24 % 3.94 % Expected volatility 96 % 93 % Expected term (in years) 5.7 5.5 Dividend yield — % — % As of June 30, 2024, there was $ 2.3 million of unrecognized compensation expense related to time-based stock options recognizable over a weighted-average period of 1.7 years. Market-based Stock Options In April 2024, the Company granted to each of the Company's four founders an option to purchase in aggregate 5.0 million shares of Ginkgo's Class A common stock with an exercise price of $ 2.50 per share, subject both to time-based and market-based vesting criteria (the “Founder Options”). The market-based vesting is tied to the achievement of four specified stock price hurdles within a five-year period, with 10 % of the Founder Options vesting based on the achievement of a 90-calendar-day average stock price of $ 5.00 , 10 % of the Founder Options vesting based on the achievement of a 90-calendar-day average stock price of $ 7.50 , 20 % of the Founder Options vesting based on the achievement of a 90-calendar-day average stock price of $ 10.00 and the remaining 60 % of the Founder Options vesting based on the achievement of a 90- 19 Table of Contents Ginkgo Bioworks Holdings, Inc. Notes to Condensed Consolidated Financial Statements (unaudited) calendar-day average stock price of $ 12.50 . If the market-based criteria are achieved during the five-year period, the awards will vest on the five-year anniversary of the grant date. The weighted-average grant-date fair value of the options granted was $0 .20 per share and was calculated using a Monte Carlo simulation model with the following assumptions: Six Months Ended June 30, 2024 Risk-free interest rate 4.65 % Expected volatility 71.8 % Suboptimal exercise multiple 2.8 Dividend yield — % As of June 30, 2024, there was $ 3.8 million of unrecognized compensation expense related to the market-based stock options recognizable over a weighted-average period of 4.8 years. Restricted Stock Units A summary of the restricted stock units (“RSU”) activity for the six months ended June 30, 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 110,994 1.18 Vested ( 35,380 ) 3.86 Forfeited ( 8,605 ) 2.33 Nonvested as of June 30, 2024 219,177 2.07 The weighted average grant date fair value of RSUs granted during the six months ended June 30, 2024 and 2023 was $ 1.18 and $ 1.32 , respectively. As of June 30, 2024, there was $ 360.8 million of unrecognized compensation expense related to RSUs recognizable over a weighted-average period of 2.9 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 time vesting and performance conditions (change in control or an initial public offering) 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. 20 Table of Contents Ginkgo Bioworks Holdings, Inc. Notes to Condensed Consolidated Financial Statements (unaudited) A summary of activity during the six months ended June 30, 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 ( 177 ) 13.34 Forfeited ( 43 ) 12.92 Nonvested as of June 30, 2024 22,390 12.77 As of June 30, 2024, there was $ 2.3 million of unrecognized compensation expense related to earnout shares recognizable over a weighted-average period of 0.8 years. 11. 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 June 30, Six Months Ended June 30, 2024 2023 2024 2023 Government and defense 25 % 4 % 21 % 5 % Agriculture 23 20 25 23 Pharma and biotech 22 40 25 35 Consumer and technology 15 14 9 12 Industrial and environment 11 11 10 12 Food and nutrition 4 11 10 13 Total Cell Engineering revenue 100 % 100 % 100 % 100 % For both the three months ended June 30, 2024 and 2023, the Company’s revenue from customers within the United States comprised 84 % of total revenue. For the six months ended June 30, 2024 and 2023, the Company's revenue from customers within the United States comprised 79 % and 84 %, respectively, of total revenue. 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 June 30, 2024 and December 31, 2023. The Company's accounts receivable consists of both billed and unbilled amounts. Unbilled receivables arise when revenue is recognized in excess of invoiced amounts and represent the Company’s unconditional right to consideration for goods or services already transferred to the customer. The balance of unbilled accounts receivable, included in accounts receivable, net in the accompanying condensed consolidated balance sheets, was $ 10.8 million and $ 9.1 million as of June 30, 2024 and December 31, 2023, respectively. 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 21 Table of Contents Ginkgo Bioworks Holdings, Inc. Notes to Condensed Consolidated Financial Statements (unaudited) 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 six months ended June 30, 2024, the Company recognized $ 29.4 million of revenue that was included in the contract liabilities balance of $ 202.5 million as of December 31, 2023. During the six months ended June 30, 2023, the Company recognized $ 44.1 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 June 30, 2024 and December 31, 2023 was $ 76.8 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 June 30, 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. 12. Segment Information The Company has identified two operating and reportable segments: Cell Engineering and Biosecurity. The Company’s chief operating decision makers (“CODMs”) evaluate the financial performance of the Company’s segments based upon segment revenues and operating results. The Company’s measure of segment operating results for management reporting purposes excludes the impact of stock-based compensation expense, depreciation and amortization, asset impairment charges, restructuring charges, and change in fair value of certain contingent liabilities. 22 Table of Contents Ginkgo Bioworks Holdings, Inc. Notes to Condensed Consolidated Financial Statements (unaudited) The following table presents summary results of the Company’s reportable segments for the periods indicated (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Revenue: Cell Engineering $ 36,205 $ 45,283 $ 64,094 $ 79,379 Biosecurity 20,001 35,285 30,056 81,891 Total revenue 56,206 80,568 94,150 161,270 Segment cost of revenue: Cell Engineering 1,914 — 1,914 — Biosecurity 11,807 18,096 21,009 40,471 Segment research and development expense: Cell Engineering 96,487 86,083 196,588 184,605 Biosecurity 458 528 578 1,095 Total segment research and development expense 96,945 86,611 197,166 185,700 Segment general and administrative expense: Cell Engineering 33,615 50,907 73,848 112,599 Biosecurity 11,179 16,699 23,130 30,655 Total segment general and administrative expense 44,794 67,606 96,978 143,254 Segment operating (loss) income: Cell Engineering ( 95,811 ) ( 91,707 ) ( 208,256 ) ( 217,825 ) Biosecurity ( 3,443 ) ( 38 ) ( 14,661 ) 9,670 Total segment operating loss ( 99,254 ) ( 91,745 ) ( 222,917 ) ( 208,155 ) Operating expenses not allocated to segments: Stock-based compensation (1) 38,226 62,477 80,623 137,677 Depreciation and amortization 17,330 17,652 30,199 36,610 Impairment expense (2) 47,858 9,001 47,858 9,001 Restructuring charges (3) 17,066 — 17,066 — Change in fair value of contingent consideration liability 3,211 3,276 2,284 8,453 Loss from operations $ ( 222,945 ) $ ( 184,151 ) $ ( 400,947 ) $ ( 399,896 ) (1) Includes $ 1.1 million and $ 1.0 million in employer payroll taxes for the three months ended June 30, 2024 and 2023, respectively, and $ 2.7 million and $ 3.2 million in employer payroll taxes for the six months ended June 30, 2024 and 2023, respectively. (2) Includes $ 47.9 million related to goodwill impairment in the three and six months ended June 30, 2024 and $ 9.0 million related to impairment of lab equipment acquired as part of the Zymergen acquisition in the three and six months ended June 30, 2023. (3) See Note 3 , Restructuring, for composition of costs. 13. 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): 23 Table of Contents Ginkgo Bioworks Holdings, Inc. Notes to Condensed Consolidated Financial Statements (unaudited) Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Numerator: Net loss, basic $ ( 217,181 ) $ ( 173,315 ) $ ( 383,092 ) $ ( 378,284 ) Change in fair value of contingent consideration common shares liability 184 — 302 — Net loss, diluted $ ( 217,365 ) $ ( 173,315 ) $ ( 383,394 ) $ ( 378,284 ) Denominator: Weighted average common shares outstanding, basic 2,054,801 1,933,437 2,029,630 1,924,251 Effect of dilutive securities: Contingent consideration common shares 223 — 223 — Weighted average common shares outstanding, diluted 2,055,024 1,933,437 2,029,853 1,924,251 Basic net loss per share $ ( 0.11 ) $ ( 0.09 ) $ ( 0.19 ) $ ( 0.20 ) Diluted net loss per share $ ( 0.11 ) $ ( 0.09 ) $ ( 0.19 ) $ ( 0.20 ) 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 June 30, 2024 As of June 30, 2023 Unvested RSUs 219,177 184,236 Earnout shares (1) 152,021 152,318 Warrants to purchase Class A common stock 51,825 51,825 Outstanding stock options 28,203 11,796 Escrow shares (2) 997 — 452,223 400,175 (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. 14. Related Parties The Company’s significant transactions with its related parties are primarily comprised of revenue generating activities under collaboration and license agreements. 24 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 June 30, 2024 As of December 31, 2023 Deferred revenue, current and non-current: Motif FoodWorks $ 45,511 $ 45,426 Allonnia 36,446 36,062 Arcaea 28,413 33,066 BiomEdit 7,979 7,712 Genomatica 1,436 2,018 Ayana Bio 117 56 Other equity investees — 139 $ 119,902 $ 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 June 30, Six Months Ended June 30, 2024 2023 2024 2023 Cell Engineering revenue: Genomatica $ 213 $ 779 $ 582 $ 1,988 Ayana Bio 280 184 426 636 Allonnia — 159 — 245 Motif FoodWorks — 2 19 3 Arcaea 4,653 4,234 4,653 5,696 BiomEdit — 869 — 1,777 Verb Biotics — 81 — 518 Other equity investees — 199 139 349 $ 5,146 $ 6,507 $ 5,819 $ 11,212 Refer to Note 5 for additional details on the Company’s investments and equity method investments held in its related parties. 25 Table of Contents