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 September 30, 2024 As of December 31, 2023 Assets Current assets: Cash and cash equivalents $ 616,214 $ 944,073 Accounts receivable, net 23,411 17,157 Accounts receivable - related parties 531 742 Prepaid expenses and other current assets 22,324 39,777 Total current assets 662,480 1,001,749 Property, plant, and equipment, net 211,035 188,193 Operating lease right-of-use assets 405,911 206,801 Investments 62,103 78,565 Intangible assets, net 79,566 82,741 Goodwill — 49,238 Other non-current assets 59,788 58,055 Total assets $ 1,480,883 $ 1,665,342 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable $ 15,700 $ 9,323 Deferred revenue (includes $ 1,434 and $ 5,426 from related parties) 22,894 44,486 Accrued expenses and other current liabilities 75,833 110,051 Total current liabilities 114,427 163,860 Non-current liabilities: Deferred revenue, net of current portion (includes $ 72,186 and $ 119,053 from related parties) 105,247 158,062 Operating lease liabilities, non-current 445,592 221,835 Other non-current liabilities 17,674 24,433 Total liabilities 682,940 568,190 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) 5 5 Additional paid-in capital 6,527,698 6,386,191 Accumulated deficit ( 5,730,023 ) ( 5,290,528 ) Accumulated other comprehensive income 263 1,484 Total stockholders’ equity 797,943 1,097,152 Total liabilities and stockholders’ equity $ 1,480,883 $ 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 September 30, Nine Months Ended September 30, 2024 2023 2024 2023 Cell Engineering revenue (1) $ 75,089 $ 37,176 $ 139,183 $ 116,555 Biosecurity revenue: Product — 6,495 — 28,949 Service 13,957 11,759 44,013 71,196 Total revenue 89,046 55,430 183,196 216,700 Costs and operating expenses: Cost of Biosecurity product revenue — 906 — 7,481 Cost of Biosecurity service revenue 9,987 6,017 30,996 39,913 Cost of other revenue 2,016 — 3,930 — Research and development 77,006 156,662 347,684 463,583 General and administrative 52,292 82,028 188,864 295,802 Impairment of lease assets — 96,210 — 96,210 Goodwill impairment — — 47,858 — Restructuring charges 2,949 — 20,015 — Total operating expenses 144,250 341,823 639,347 902,989 Loss from operations ( 55,204 ) ( 286,393 ) ( 456,151 ) ( 686,289 ) Other income (expense): Interest income, net 9,251 15,020 31,275 43,914 Loss on equity method investments — — — ( 1,516 ) Loss on investments ( 6,912 ) ( 36,324 ) ( 16,282 ) ( 44,815 ) Loss on deconsolidation of subsidiary ( 7,013 ) — ( 7,013 ) — Change in fair value of warrant liabilities 1,528 1,891 5,701 ( 1,387 ) Other income, net 1,572 2,893 2,821 9,045 Total other income (expense) ( 1,574 ) ( 16,520 ) 16,502 5,241 Loss before income taxes ( 56,778 ) ( 302,913 ) ( 439,649 ) ( 681,048 ) Income tax expense (benefit) ( 375 ) ( 22 ) ( 154 ) 127 Net loss $ ( 56,403 ) $ ( 302,891 ) $ ( 439,495 ) $ ( 681,175 ) Net loss per share, basic and diluted $ ( 1.08 ) $ ( 6.21 ) $ ( 8.58 ) $ ( 14.09 ) Weighted average common shares outstanding: Basic 52,240 48,770 51,244 48,330 Diluted 52,246 48,770 51,250 48,330 Comprehensive loss: Net loss $ ( 56,403 ) $ ( 302,891 ) $ ( 439,495 ) $ ( 681,175 ) Other comprehensive income (loss): Foreign currency translation adjustment 494 ( 1,599 ) ( 2,713 ) ( 267 ) Reclassification of foreign currency translation adjustment realized upon sale of foreign subsidiary 1,492 — 1,492 — Total other comprehensive income (loss) 1,986 ( 1,599 ) ( 1,221 ) ( 267 ) Comprehensive loss $ ( 54,417 ) $ ( 304,490 ) $ ( 440,716 ) $ ( 681,442 ) (1) Includes related party revenue of $ 46,659 and $ 8,727 for the three months ended September 30, 2024 and 2023, respectively, and $ 51,990 and $ 19,912 for the nine months ended September 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 September 30, 2024 Common Stock Shares Amount Additional Paid-In Capital Accumulated Deficit Accumulated Other Comprehensive Income (Loss) Total Stockholders’ Equity Balance as of June 30, 2024 51,970 $ 5 $ 6,508,410 $ ( 5,673,620 ) $ ( 1,723 ) $ 833,072 Issuance of common stock upon exercise or vesting of equity awards 422 — — — — — Settlement of contingent consideration 690 — 5,437 — — 5,437 Payment for fractional shares after reverse stock split — — ( 4 ) — — ( 4 ) Stock-based compensation expense — — 13,855 — — 13,855 Reclassification of foreign currency translation adjustment realized upon sale of foreign subsidiary — — — — 1,492 1,492 Foreign currency translation — — — — 494 494 Net loss — — — ( 56,403 ) — ( 56,403 ) Balance as of September 30, 2024 53,082 $ 5 $ 6,527,698 $ ( 5,730,023 ) $ 263 $ 797,943 Nine Months Ended September 30, 2024 Common Stock Shares Amount Additional Paid-In Capital Accumulated Deficit Accumulated Other Comprehensive Income (Loss) Total Stockholders’ Equity Balance as of December 31, 2023 50,034 $ 5 $ 6,386,191 $ ( 5,290,528 ) $ 1,484 $ 1,097,152 Issuance of common stock upon exercise or vesting of equity awards 1,414 — 543 — — 543 Payment for fractional shares after reverse stock split — — ( 4 ) — — ( 4 ) Settlement of contingent consideration 764 — 9,884 — — 9,884 Issuance of common stock for asset acquisitions 802 — 36,801 — — 36,801 Issuance of common stock in exchange for services 68 — 2,500 — — 2,500 Stock-based compensation expense — — 91,783 — — 91,783 Reclassification of foreign currency translation adjustment realized upon sale of foreign subsidiary — — — — 1,492 1,492 Foreign currency translation — — — — ( 2,713 ) ( 2,713 ) Net loss — — — ( 439,495 ) — ( 439,495 ) Balance as of September 30, 2024 53,082 $ 5 $ 6,527,698 $ ( 5,730,023 ) $ 263 $ 797,943 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 September 30, 2023 Common Stock Shares Amount Additional Paid-In Capital Accumulated Deficit Accumulated Other Comprehensive Loss Total Stockholders’ Equity Balance as of June 30, 2023 48,869 $ 5 $ 6,280,823 $ ( 4,775,943 ) $ ( 1,300 ) $ 1,503,585 Issuance of common stock upon exercise or vesting of equity awards 440 — 55 — — 55 Settlement of contingent consideration 11 — 960 — — 960 Stock-based compensation expense — — 52,573 — — 52,573 Foreign currency translation — — — — ( 1,599 ) ( 1,599 ) Net loss — — — ( 302,891 ) — ( 302,891 ) Balance as of September 30, 2023 49,320 $ 5 $ 6,334,411 $ ( 5,078,834 ) $ ( 2,899 ) $ 1,252,683 Nine Months Ended September 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 47,300 $ 5 $ 6,136,563 $ ( 4,397,659 ) $ ( 2,632 ) $ 1,736,277 Issuance of common stock upon exercise or vesting of equity awards 1,888 — 539 — — 539 Tax withholdings related to net share settlement of equity awards — — ( 23 ) — — ( 23 ) Settlement of contingent consideration 11 — 3,222 — — 3,222 Issuance of common stock for asset acquisitions 70 — 3,581 — — 3,581 Issuance of common stock in exchange for services 51 — 2,500 — — 2,500 Stock-based compensation expense and other — — 188,029 — — 188,029 Foreign currency translation — — — — ( 267 ) ( 267 ) Net loss — — — ( 681,175 ) — ( 681,175 ) Balance as of September 30, 2023 49,320 $ 5 $ 6,334,411 $ ( 5,078,834 ) $ ( 2,899 ) $ 1,252,683 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) Nine Months Ended September 30, 2024 2023 Cash flows from operating activities: Net loss $ ( 439,495 ) $ ( 681,175 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 47,368 57,670 Stock-based compensation 91,783 187,047 Goodwill impairment 47,858 — Restructuring related impairment charges 4,823 — Loss on investments and equity method investments 16,282 46,331 Loss on deconsolidation of subsidiary 7,013 — Change in fair value of warrant liabilities ( 5,701 ) 1,387 Change in fair value of contingent consideration liability 3,698 10,217 Non-cash lease expense 20,619 24,635 Non-cash in-process research and development 19,796 3,981 Impairment of long-lived assets — 121,404 Other non-cash activity 655 3,053 Changes in operating assets and liabilities: Accounts receivable ( 6,101 ) 21,168 Prepaid expenses and other current assets 3,487 13,557 Operating lease right-of-use assets 19,224 9,277 Other non-current assets ( 196 ) ( 2,733 ) Accounts payable, accrued expenses and other current liabilities ( 31,099 ) ( 4,822 ) Deferred revenue, current and non-current ($( 50,858 ) and $( 15,482 ) from related parties) ( 67,779 ) ( 29,382 ) Operating lease liabilities, current and non-current ( 11,383 ) ( 18,310 ) Other non-current liabilities 1,998 ( 974 ) Net cash used in operating activities ( 277,150 ) ( 237,669 ) Cash flows from investing activities: Purchases of property and equipment ( 48,831 ) ( 37,355 ) Business acquisition ( 5,400 ) — Proceeds from sales of marketable securities 3,951 — Proceeds from sale of equipment 591 3,000 Other 538 336 Net cash used in investing activities ( 49,151 ) ( 34,019 ) Cash flows from financing activities: Proceeds from exercise of stock options 84 79 Principal payments on finance leases ( 694 ) ( 977 ) Contingent consideration payment ( 922 ) ( 1,082 ) Other ( 4 ) ( 604 ) Net cash used in financing activities ( 1,536 ) ( 2,584 ) Effect of foreign exchange rates on cash and cash equivalents ( 208 ) ( 690 ) Net decrease in cash, cash equivalents and restricted cash ( 328,045 ) ( 274,962 ) 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 616,214 1,049,244 Restricted cash, end of period 45,325 45,375 Cash, cash equivalents and restricted cash, end of period $ 661,539 $ 1,094,619 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. Reverse Stock Split On August 19, 2024 (the “Effective Date”), with the approval of the Company's board of directors and shareholders, the Company effected a one-for-forty (1:40) reverse stock split (the “Reverse Stock Split”) for the Company’s common stock (inclusive of Class A common stock, Class B common stock and Class C common stock, par value $0.0001 per share). Accordingly, all common shares, common stock equity awards and common stock per share amounts presented herein have been retrospectively adjusted to reflect the Reverse Stock Split. On the Effective Date, every forty shares of common stock issued and outstanding immediately prior to the Effective Date were automatically combined into one share of such class of common stock without any change to the par value per share. The number of shares reserved under the Company’s equity plans and the number of shares underlying awards outstanding under the Company’s equity plans was reduced proportionately. No fractional shares were issued in connection with the Reverse Stock Split. Shareholders entitled to receive a fractional share as a result of the Reverse Stock Split received a cash payment in lieu of such fractional shares. The number of authorized shares of common stock was not reduced. In respect of the underlying common stock split, an adjustment to the exercise price of the Company’s warrants (the “Warrants”) and the number of shares of the Company’s Class A common stock issuable on exercise of each Warrant was adjusted in proportion to the Reverse Stock Split. As of the effectiveness of the Reverse Stock Split, the exercise price to purchase one share of Class A common stock equals $ 460.00 ($ 11.50 per Warrant). Each Warrant equals one-fortieth (1/40) of one share of Class A common stock ( 40 Warrants must be exercised for one share of Class A common stock). No fractional shares of Class A common stock will be issued upon exercise of the Warrants; therefore, a minimum of 40 Warrants must be exercised to receive any entitlement. For the avoidance of doubt, no other amendment, modification, alteration or change was made to the terms of the Warrants as a result of the Reverse Stock Split. 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. 6 Table of Contents Ginkgo Bioworks Holdings, Inc. Notes to Condensed Consolidated Financial Statements (unaudited) Reclassifications Certain prior year amounts have been reclassified for consistency with the current year presentation. In the accompanying condensed consolidated statements of cash flows for the nine months ended September 31, 2023, (i) $ 0.9 million was reclassified from non-cash customer consideration to other non-cash activity and (ii) $ 0.1 million was reclassified from other financing activities to proceeds from exercise of stock options. The total cash used in operating and financing activities for the nine months ended September 31, 2023 is not changed as a result of these reclassifications. 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 nine months ended September 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. 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 and Divestiture 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 0.4 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 7 Table of Contents Ginkgo Bioworks Holdings, Inc. Notes to Condensed Consolidated Financial Statements (unaudited) 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 nine months ended September 30, 2024. Other Acquisitions The Company completed three other asset acquisitions during the nine months ended September 30, 2024. The aggregate purchase price for the three acquisitions was $ 19.8 million and was paid with the issuance of 0.4 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 $ 19.8 million as acquired in-process research and development expense in the accompanying condensed consolidated statements of operations and comprehensive loss for the nine months ended September 30, 2024. Divestiture On September 30, 2024, the Company sold the equity interests of its former subsidiary Altar SAS (“Altar”) for a nominal amount. As a result of the sale, the Company deconsolidated all of Altar's assets and liabilities from its consolidated financial statements effective September 30, 2024, and recognized a loss on deconsolidation of $7.0 million in the condensed consolidated statements of operations and comprehensive loss for the three and nine months ended September 30, 2024. The loss on deconsolidation includes a $1.5 million reclassification of accumulated currency translation adjustments to earnings. The sale did not meet the criteria to be reported as a discontinued operation. 3. Restructuring In the second quarter of 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 the planned consolidation and sublease of certain facilities. Initial workforce reductions commenced in June 2024 and continued into the third quarter, with further reductions expected in the fourth quarter of 2024 and into 2025. All reductions are expected to be substantially completed in 2025, subject to compliance with applicable laws. The Company plans to consolidate certain facilities through various actions, including combining office and laboratory operations into fewer locations, subleasing unused facilities, and has taken or plans to take other related measures, such as the sale of its subsidiary, Altar, in the third quarter of 2024 (see Note 2 ). While the Company aims to complete the majority of its facility consolidation actions in 2025, the actual timing may vary, especially for subleasing unused or underutilized facilities, which may extend beyond 2025 or may not occur prior to termination of such lease, depending on market conditions. Additionally, restructuring expenses related to potential asset impairments or contract amendments or terminations for any facilities no longer in use or underutilized could be material. 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. 8 Table of Contents Ginkgo Bioworks Holdings, Inc. Notes to Condensed Consolidated Financial Statements (unaudited) The following table presents restructuring costs incurred during the periods presented, which are recorded as “Restructuring charges” in the condensed consolidated statements of operations and comprehensive loss (in thousands): Three Months Ended September 30, 2024 Nine Months Ended September 30, 2024 Employee termination costs and other $ 2,949 $ 15,192 Impairment of right-of-use asset (1) — 4,823 Total restructuring $ 2,949 $ 20,015 (1) Relates to a sublease of a 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. Additionally, the Company recorded a $7.0 million loss on the sale and deconsolidation of Altar as a component of other income (expense) in the condensed consolidated statements of operations and comprehensive loss for the three and nine months ended September 30, 2024. The following table presents the change 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 September 30, 2024 (in thousands): Employee Termination Costs and Other Expenses incurred $ 15,191 Cash payments ( 12,558 ) Liability balance at September 30, 2024 $ 2,633 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 September 30, 2024 Classification Total Level 1 Level 2 Level 3 Assets: Money market funds Cash and cash equivalents $ 595,003 $ 595,003 $ — $ — Synlogic, Inc. warrants (1) Investments 253 — 253 — Marketable equity securities Investments 19,947 19,947 — — Notes receivable Prepaid expenses and other current assets 523 — — 523 Notes receivable Other non-current assets 14,608 — 11,960 2,648 Total assets $ 630,334 $ 614,950 $ 12,213 $ 3,171 Liabilities: Contingent consideration Accrued expenses and other current liabilities $ 10,296 $ — $ — $ 10,296 Contingent consideration Other non-current liabilities 4,968 — — 4,968 Total liabilities $ 15,264 $ — $ — $ 15,264 9 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 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. 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 nine months ended September 30, 2024, transfers from Level 2 to Level 1 occurred due to lapse of regulatory sales restrictions on marketable equity securities. Additionally, during the nine months ended September 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 nine months ended September 30, 2024 or 2023. 10 Table of Contents Ginkgo Bioworks Holdings, Inc. Notes to Condensed Consolidated Financial Statements (unaudited) The table below provides a reconciliation of the beginning and ending balances for assets and liabilities measured at fair value using Level 3 significant unobservable inputs for the nine months ended September 30 (in thousands): Notes Receivable Private Placement Warrants Contingent Consideration Balance at January 1, 2024 $ 14,129 $ 1,846 $ 24,274 Additions 1,377 — — Change in fair value ( 1,859 ) ( 1,697 ) 3,698 Settlements and payments — — ( 12,708 ) Transfers to Level 2 — ( 149 ) — Conversion to common stock ( 10,476 ) — — Balance at September 30, 2024 $ 3,171 $ — $ 15,264 Balance at January 1, 2023 $ 7,660 $ 3,860 $ 24,473 Additions 4,106 — 1,397 Change in fair value ( 1,806 ) 336 10,217 Settlements and payments — — ( 4,761 ) Balance at September 30, 2023 $ 9,960 $ 4,196 $ 31,326 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. The Company's notes receivable consisted of 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 bore interest at 8 % per annum, was 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 was otherwise payable on demand any time after the maturity date of October 4, 2024. During the three months ended September 30, 2024, $10.5 million in principal and accrued interest on the convertible promissory note was converted into 2.7 million shares of Bolt Threads' common stock, which is classified as a marketable equity security. 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 September 30, 2024, included scenario probabilities ranging from 20 % to 27 %, a discount rate of 16 %, 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, 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 September 30, 2024, the convertible debt instruments had an unpaid principal balance of $ 13.1 million and a fair value of $ 3.2 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. 11 Table of Contents Ginkgo Bioworks Holdings, Inc. Notes to Condensed Consolidated Financial Statements (unaudited) 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 nine months ended September 30, 2024, the Company settled $ 12.7 million in contingent consideration liabilities through payment of $ 2.8 million in cash and vesting of 0.8 million shares of restricted stock valued at $ 9.9 million. During the nine months ended September 30, 2023, the Company settled $ 4.8 million in contingent consideration liability through payment of $ 1.5 million in cash and vesting of 1.6 million shares of restricted stock valued at $ 3.2 million. Of that amount, $ 1.4 million 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 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: September 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 10 % - 100 % 10 % - 100 % Discount rate 12.4 % 13.4 % Earnout payments (Dutch DNA acquisition) Discounted cash flow Projected years of payments 2028 - 2031 2025 - 2028 Discount rate 10.6 % 10.3 % 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, or when observable price changes occur for identical or similar securities from 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 nine months ended September 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. 12 Table of Contents Ginkgo Bioworks Holdings, Inc. Notes to Condensed Consolidated Financial Statements (unaudited) During the nine months ended September 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 . The Company recorded impairment losses of $5.2 million and $1.8 million related to SAFEs during the nine months ended September 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 has partnered 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. 13 Table of Contents Ginkgo Bioworks Holdings, Inc. Notes to Condensed Consolidated Financial Statements (unaudited) Investments consisted of the following (in thousands): Investments: As of September 30, 2024 As of December 31, 2023 SAFEs $ 18,686 $ 23,898 Non-marketable equity securities 16,232 22,938 Marketable equity securities 19,317 17,563 Genomatica preferred stock 6,985 11,885 Synlogic common stock 630 1,627 Synlogic warrants 253 654 Total $ 62,103 $ 78,565 Loss on investments and equity method investments consisted of the following (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 (Loss) gain on investments: Synlogic common stock $ ( 4 ) $ ( 1,538 ) $ ( 998 ) $ ( 3,631 ) Synlogic warrants ( 2 ) ( 618 ) ( 401 ) ( 1,459 ) Genomatica preferred stock — ( 33,000 ) ( 4,900 ) ( 33,000 ) Marketable equity securities ( 6,906 ) 460 ( 4,771 ) ( 3,286 ) Non-marketable equity securities — ( 1,628 ) — ( 1,628 ) SAFEs — — ( 5,212 ) ( 1,811 ) Total $ ( 6,912 ) $ ( 36,324 ) $ ( 16,282 ) $ ( 44,815 ) Loss on equity method investments: BiomEdit $ — $ — $ — $ ( 1,462 ) Other — — — ( 54 ) Total $ — $ — $ — $ ( 1,516 ) The components of loss on investments for each period were as follows (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 Impairment charges $ — $ ( 33,000 ) $ ( 10,112 ) $ ( 34,811 ) Realized and unrealized losses recognized on marketable equity securities ( 6,912 ) ( 1,696 ) ( 6,170 ) ( 8,376 ) Downward adjustments from observable price changes — ( 1,628 ) — ( 1,628 ) Total loss on investments $ ( 6,912 ) $ ( 36,324 ) $ ( 16,282 ) $ ( 44,815 ) 14 Table of Contents Ginkgo Bioworks Holdings, Inc. Notes to Condensed Consolidated Financial Statements (unaudited) Total realized and unrealized gains and losses associated with equity investments accounted for at fair value or the fair value measurement alternative consisted of the following (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 Net realized loss recognized on equity investments sold (1) $ ( 844 ) $ — $ ( 844 ) $ — Net unrealized losses recognized on equity investments held as of the end of the period ( 6,068 ) ( 36,324 ) ( 15,438 ) ( 44,815 ) Total loss on investments $ ( 6,912 ) $ ( 36,324 ) $ ( 16,282 ) $ ( 44,815 ) (1) Reflects the difference between the sale proceeds and the carrying value of the equity investments at the beginning of the period or the acquisition date, if later. The carrying value of non-marketable equity securities accounted for using the fair value measurement alternative and still held as of September 30, 2024, including cumulative unrealized losses, were as follows (in thousands): As of September 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. Additionally, the Company holds equity interests in certain privately-held companies that are not consolidated as the Company is not the primary beneficiary. As of September 30, 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. 15 Table of Contents Ginkgo Bioworks Holdings, Inc. Notes to Condensed Consolidated Financial Statements (unaudited) 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 September 30, 2024 As of September 30, 2023 Cash and cash equivalents $ 616,214 $ 1,049,244 Restricted cash included in prepaid expenses and other current assets (1) 2,855 3,347 Restricted cash included in other non-current assets (1) 42,470 42,028 Total cash, cash equivalents and restricted cash $ 661,539 $ 1,094,619 (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): Nine Months Ended September 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 $ 13,770 Common stock issued for asset acquisitions 18,245 3,581 Purchases of property and equipment included in accounts payable and accrued expenses 6,142 1,563 Return of investment in equity securities for reduction in deferred revenue 6,760 — Common stock issued as settlement of contingent consideration liability 9,884 3,222 Common stock issued for retention payments related to business and asset acquisitions 2,959 — Equity securities received for Cell Engineering services 55 13,843 Convertible financial instruments received for Cell Engineering services — 5,595 Conversion of notes receivable for common stock 10,476 — Property, Plant, and Equipment, net Property, plant, and equipment, net consisted of the following (in thousands): September 30, 2024 December 31, 2023 Lab equipment $ 150,183 $ 147,185 Leasehold improvements 77,847 71,564 Buildings and facilities 48,129 47,034 Construction in progress 57,975 15,830 Computer equipment and software 15,009 14,780 Furniture and fixtures 6,567 6,458 Land 6,060 6,060 Total property, plant, and equipment 361,770 308,911 Less: Accumulated depreciation and amortization ( 150,735 ) ( 120,718 ) Property, plant, and equipment, net $ 211,035 $ 188,193 16 Table of Contents Ginkgo Bioworks Holdings, Inc. Notes to Condensed Consolidated Financial Statements (unaudited) 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. Exit of a Leased Facility In September 2023, the Company’s former subsidiary, Zymergen, ceased the use of and exited a leased facility consisting of approximately 300,000 square feet of office and laboratory space in Emeryville, California. The facility was used pursuant to an operating lease with a minimum term expiring in August 2033. Zymergen's exit resulted in an impairment loss of $ 96.2 million, including $ 36.6 million for the right-of-use asset and $ 59.6 million for the related leasehold improvements. The impairment loss represents the amount by which the carrying value of the assets exceed their estimated fair values as of September 30, 2023, as determined using a discounted cash flow model under the income approach. The fair value measurements are based on significant inputs not observable in the market and therefore represent Level 3 fair value measurements. The key inputs used in the valuation were estimated sublease rental income and a discount rate of 8.5 %. The impairments are presented as impairment of lease assets in the condensed consolidated statement of operations and comprehensive loss for the three and nine months ended September 30, 2023. Capitalization 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 September 30, 2024: Class A 10,500,000 44,256 41,371 Class B 4,500,000 9,282 8,711 Class C 800,000 3,000 3,000 15,800,000 56,538 53,082 Common stock as of December 31, 2023: Class A 10,500,000 40,997 38,126 Class B 4,500,000 9,478 8,906 Class C 800,000 3,000 3,000 15,800,000 53,475 50,032 On April 3, 2023, the Company issued 0.1 million shares of its Class A common stock as purchase consideration for the acquisition of certain intellectual property assets of StrideBio, Inc. Refer to Note 2 , Acquisitions, for shares of common stock issued related to fiscal 2024 acquisitions. On May 9, 2023, the Company issued 0.1 million shares of Class A common stock, valued at $ 2.5 million, as settlement for an employee retention milestone related to the FGen AG business acquisition. An additional 0.1 million shares, valued at $ 2.5 million, were issued on April 26, 2024 for the final milestone payable in connection with that acquisition. Refer to Note 10 , Stock-Based Compensation, for a summary of shares of common stock issued in connection with the Company’s equity incentive plans. 17 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 . 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 nine months ended September 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 September 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) September 30, 2024: Developed technology (2) $ 114,272 $ ( 34,706 ) $ 79,566 6.8 Customer relationships 380 ( 380 ) — 0.0 Assembled workforce 190 ( 190 ) — 0.0 Total intangible assets $ 114,842 $ ( 35,276 ) $ 79,566 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. (2) During the third quarter of 2024, the Company deconsolidated $ 8.3 million of developed technology intangible assets related to the deconsolidation of Altar (see Note 2 ). In the second quarter of 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 . 18 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 September 30, 2024 and 2023, respectively, and $ 13.3 million and $ 12.2 million for the nine months ended September 30, 2024 and 2023, respectively. As of September 30, 2024, estimated future amortization expense for identifiable intangible assets is as follows (in thousands): Remainder of 2024 $ 4,771 2025 19,088 2026 19,088 2027 11,452 2028 2,824 Thereafter 22,343 Total $ 79,566 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 September 30, Nine Months Ended September 30, 2024 2023 2024 2023 Research and development $ 3,121 $ 33,250 $ 46,379 $ 119,676 General and administrative 10,734 19,323 45,404 67,371 Total $ 13,855 $ 52,573 $ 91,783 $ 187,047 The Company grants stock-based incentive awards pursuant to the 2021 Incentive Award Plan (the “2021 Plan”) and the 2022 Inducement Plan (the “2022 Inducement Plan”). As of September 30, 2024, there were approximately 4.6 million shares and 0.1 million shares available for future issuance under the 2021 Plan and 2022 Inducement Plan, respectively. 19 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 nine months ended September 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 151 $ 35.59 Granted 156 18.48 Exercised ( 102 ) 0.80 Forfeited ( 14 ) 136.79 Outstanding as of September 30, 2024 191 32.73 9.44 $ — Exercisable as of September 30, 2024 34 94.75 8.25 — (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 nine months ended September 30, 2024 and 2023 was $ 0.7 million and $ 8.4 million, respectively. The weighted-average grant-date fair value of options granted during the nine months ended September 30, 2024 and 2023 was $ 14.14 and $ 57.20 per share, respectively, and was calculated using the following key assumptions in the Black-Scholes option-pricing model: Nine Months Ended September 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 September 30, 2024, there was $ 1.8 million of unrecognized compensation expense related to time-based stock options recognizable over a weighted-average period of 1.6 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 0.1 million shares of Ginkgo's Class A common stock with an exercise price of $ 100.00 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 $ 200.00 , 10 % of the Founder Options vesting based on the achievement of a 90-calendar-day average stock price of $ 300.00 , 20 % of the Founder Options vesting based on the achievement of a 90-calendar-day average stock price of $ 400.00 and the remaining 60 % of the Founder Options vesting based on the achievement of a 90-calendar-day average stock price of $ 500.00 . 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. 20 Table of Contents Ginkgo Bioworks Holdings, Inc. Notes to Condensed Consolidated Financial Statements (unaudited) The weighted-average grant-date fair value of the options granted was $ 7.80 per share and was calculated using a Monte Carlo simulation model with the following assumptions: Nine Months Ended September 30, 2024 Risk-free interest rate 4.65 % Expected volatility 71.8 % Suboptimal exercise multiple 2.8 Dividend yield — % As of September 30, 2024, there was $ 3.6 million of unrecognized compensation expense related to the market-based stock options recognizable over a weighted-average period of 4.6 years. Restricted Stock Units A summary of the restricted stock units (“RSU”) activity for the nine months ended September 30, 2024 is presented below: Number of Shares (in thousands) Weighted Average Grant Date Fair Value Nonvested as of December 31, 2023 3,805 $ 125.89 Granted 3,001 44.73 Vested ( 1,303 ) 145.83 Forfeited ( 1,425 ) 84.45 Nonvested as of September 30, 2024 4,078 74.44 The weighted average grant date fair value of RSUs granted during the nine months ended September 30, 2024 and 2023 was $ 44.73 and $ 55.20 , respectively. As of September 30, 2024, there was $ 241.1 million of unrecognized compensation expense related to RSUs recognizable over a weighted-average period of 2.8 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 Class A common stock is greater than or equal to $ 500.00 , $ 600.00 , $ 700.00 and $ 800.00 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 $ 500.00 per share was met on November 15, 2021. 21 Table of Contents Ginkgo Bioworks Holdings, Inc. Notes to Condensed Consolidated Financial Statements (unaudited) A summary of activity during the nine months ended September 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 564 $ 511.17 Vested ( 7 ) 533.60 Forfeited ( 2 ) 516.15 Nonvested as of September 30, 2024 555 510.85 As of September 30, 2024, there was $ 0.4 million of unrecognized compensation expense related to earnout shares recognizable over a weighted-average period of 0.7 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 September 30, Nine Months Ended September 30, 2024 2023 2024 2023 Food and nutrition 64 % 24 % 39 % 17 % Pharma and biotech 14 30 19 33 Agriculture 11 22 18 23 Government and defense 7 6 14 5 Industrial and environment 3 16 6 13 Consumer and technology 1 2 4 9 Total Cell Engineering revenue 100 % 100 % 100 % 100 % For the three months ended September 30, 2024 and 2023, the Company’s revenue from customers within the United States comprised 89 % and 81 %, respectively, of total revenue. For the nine months ended September 30, 2024 and 2023, the Company's revenue from customers within the United States comprised 84 % and 83 %, 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 September 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 $ 8.1 million and $ 9.1 million as of September 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 22 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 nine months ended September 30, 2024, the Company recognized $ 84.3 million of revenue that was included in the contract liabilities balance of $ 202.5 million as of December 31, 2023. During the nine months ended September 30, 2023, the Company recognized $ 59.8 million of revenue that was included in the contract liabilities balance of $ 222.6 million as of December 31, 2022. Performance Obligations The aggregate amount of the transaction price that was allocated to performance obligations that have not yet been satisfied or are partially satisfied as of September 30, 2024 and December 31, 2023 was $ 68.0 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 September 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 2029. 23 Table of Contents Ginkgo Bioworks Holdings, Inc. Notes to Condensed Consolidated Financial Statements (unaudited) 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. The following table presents summary results of the Company’s reportable segments for the periods indicated (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 Revenue: Cell Engineering $ 75,089 $ 37,176 $ 139,183 $ 116,555 Biosecurity 13,957 18,254 44,013 100,145 Total revenue 89,046 55,430 183,196 216,700 Segment cost of revenue: Cell Engineering 2,016 — 3,930 — Biosecurity 9,987 6,923 30,996 47,394 Segment research and development expense: Cell Engineering 57,201 90,889 253,790 275,494 Biosecurity 141 313 720 1,408 Total segment research and development expense 57,342 91,202 254,510 276,902 Segment general and administrative expense: Cell Engineering 29,319 42,617 103,167 155,216 Biosecurity 10,040 12,207 33,169 42,862 Total segment general and administrative expense 39,359 54,824 136,336 198,078 Segment operating (loss) income: Cell Engineering ( 13,447 ) ( 96,330 ) ( 221,704 ) ( 314,155 ) Biosecurity ( 6,211 ) ( 1,189 ) ( 20,872 ) 8,481 Total segment operating loss ( 19,658 ) ( 97,519 ) ( 242,576 ) ( 305,674 ) Operating expenses not allocated to segments: Stock-based compensation (1) 14,013 53,647 94,636 191,324 Depreciation and amortization 17,171 21,060 47,368 57,670 Impairment expense (2) — 112,403 47,858 121,404 Restructuring charges (3) 2,949 — 20,015 — Change in fair value of contingent consideration liability 1,413 1,764 3,698 10,217 Loss from operations $ ( 55,204 ) $ ( 286,393 ) $ ( 456,151 ) $ ( 686,289 ) (1) Includes $ 0.2 million and $ 1.1 million in employer payroll taxes for the three months ended September 30, 2024 and 2023, respectively, and $ 2.9 million and $ 4.3 million in employer payroll taxes for the nine months ended September 30, 2024 and 2023, respectively. (2) For 2024, includes $ 47.9 million related to goodwill impairment. For the three months ended September 30, 2023, includes a $ 16.2 million impairment loss on lab equipment and a $96.2 million impairment loss on an operating lease right-of-use asset and related leasehold improvements associated with an exited Zymergen leased facility. For the nine months ended September 30, 2023, includes a $ 25.2 million impairment loss on lab equipment and a $96.2 million impairment loss on lease assets associated with the exited Zymergen leased facility. (3) See Note 3 , Restructuring, for composition of costs. 24 Table of Contents Ginkgo Bioworks Holdings, Inc. Notes to Condensed Consolidated Financial Statements (unaudited) 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): Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 Numerator: Net loss, basic $ ( 56,403 ) $ ( 302,891 ) $ ( 439,495 ) $ ( 681,175 ) Change in fair value of contingent consideration common shares liability 29 — 331 — Net loss, diluted $ ( 56,432 ) $ ( 302,891 ) $ ( 439,826 ) $ ( 681,175 ) Denominator: Weighted average common shares outstanding, basic 52,240 48,770 51,244 48,330 Effect of dilutive securities: Contingent consideration common shares 6 — 6 — Weighted average common shares outstanding, diluted 52,246 48,770 51,250 48,330 Basic and diluted net loss per share $ ( 1.08 ) $ ( 6.21 ) $ ( 8.58 ) $ ( 14.09 ) 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 September 30, 2024 As of September 30, 2023 Warrants to purchase Class A common stock (1) 51,825 51,825 Outstanding stock options 691 211 Unvested RSUs 4,078 4,219 Earnout shares (2) 3,796 3,808 Escrow shares (3) 26 — 60,416 60,063 (1) In connection with the Company's merger with Soaring Eagle Acquisition Corp. (“SRNG”) on September 16, 2021, the Company assumed 34.5 million formerly publicly traded warrants (“Public Warrants”) and 17.3 million private placement warrants (the “Private Placement Warrants”), initially issued in connection with SRNG’s initial public offering. Each Warrant equals one-fortieth (1/40) of one share of Class A common stock (40 Warrants must be exercised for one share of Class A common stock). (2) Represents earnout shares for which the service-based and/or market-based vesting conditions have not been satisfied. (3) Represents restricted common stock issued in connection with asset acquisitions, held in escrow for indemnification purposes, and subject to forfeiture. 25 Table of Contents Ginkgo Bioworks Holdings, Inc. Notes to Condensed Consolidated Financial Statements (unaudited) 14. Related Parties The Company’s significant transactions with its related parties are primarily comprised of revenue generating activities under collaboration and license agreements. Significant related party transactions included in the condensed consolidated balance sheet are summarized below (in thousands): As of September 30, 2024 As of December 31, 2023 Deferred revenue, current and non-current: Allonnia $ 36,397 $ 36,062 Arcaea 28,413 33,066 BiomEdit 7,711 7,712 Genomatica 1,099 2,018 Motif FoodWorks — 45,426 Ayana Bio — 56 Other equity investees — 139 $ 73,620 $ 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 September 30, Nine Months Ended September 30, 2024 2023 2024 2023 Cell Engineering revenue: Motif FoodWorks $ 45,426 $ 6,303 $ 45,445 $ 6,306 Allonnia 391 180 77 425 Genomatica 337 1,011 919 2,999 BiomEdit 268 632 70 2,410 Ayana Bio 237 326 687 961 Arcaea — — 4,653 5,669 Verb Biotics — 70 — 588 Other equity investees — 205 139 554 $ 46,659 $ 8,727 $ 51,990 $ 19,912 Motif FoodWorks In September 2018, the Company entered into (i) an Intellectual Property Contribution Agreement (“IPCA”) with Motif that granted Motif a license to certain of the Company’s intellectual property and (ii) a Technical Development Agreement (“TDA”) that established the terms under which the Company was to provide technical development services. In return for the Company's contribution of intellectual property and access to its platform, the Company received shares of common stock in Motif. The initial fair value of the common stock investment in Motif was $65.1 million, which has subsequently been reduced to a carrying value of zero as a result of the allocation of losses under the accounting for equity method investments. The initial non-refundable fair value of the equity received, totaling $65.1 million and considered non-cash consideration under ASC 606, was accounted for as material rights under ASC 606. The material rights pertained to Motif's license rights for a set of ingredients that the parties intended to develop within the first two years. This amount was recorded as deferred revenue for the future license rights and recognizable as revenue as the Company performed qualifying services for Motif, or when such rights expire upon termination of the agreements. As of December 31, 2023, the Company had a remaining 26 Table of Contents Ginkgo Bioworks Holdings, Inc. Notes to Condensed Consolidated Financial Statements (unaudited) deferred revenue balance of $45.4 million with Motif under this arrangement. Effective in August 2024, the Motif IPCA and the TDA agreements were mutually terminated with no adjustment to the original consideration. As a result, the Company has no further obligation to perform services for Motif and, accordingly, the remaining $45.4 million in deferred revenue under this arrangement has been recognized in full as revenue in the three and nine months ended September 30, 2024. Refer to Note 5 for additional details on the Company’s investments and equity method investments held in its related parties. 27 Table of Contents