Ginkgo Bioworks Holdings, Inc. Q4 FY2024 earnings call

• Restructuring efforts: Achieved $190 million annualized run rate cost reduction by Q4 2024, with cash burn in Q4 2024 at $55 million, significantly down from $114 million in Q3 2024. Remediated SOX material weakness. - Tools and services expansion: Data points business generates large data assets for AI model training, with 7 new data points deals and 5 new logos in Q4. Automation product with reconfigurable automation cards gained traction, showcased at industry conferences. New Biosecurity project in Europe funded by EU for disease monitoring infrastructure.

Cell Engineering: In the fourth quarter of 2024, Cell Engineering revenue was $35 million, up 29% compared to Q4 2023, driven by growth with large biopharma customers and government accounts, offsetting declines with smaller industrial biotech customers. Full-year 2024 Cell Engineering services revenue was $174 million. Excluding a noncash revenue item from Q3 2024, cell engineering revenue was $129 million in 2024, down 10% y/y. In Q4 2024, 138 active programs across 85 customers were supported, a 5% increase year-over-year. 31 new programs and contracts were added in Q4, including 14 comparable to historical new programs and 17 small deal archetypes. Biosecurity: Q4 2024 revenue was $9 million at a 17% gross margin. Full-year 2024 Biosecurity revenue was $53 million, down 51% from 2023, due in part to the timing of customer contract signings.

• Cell Engineering revenue guidance for 2025: $110 million to $130 million, with potential upside from tools offerings. - Biosecurity revenue guidance for 2025: at least $50 million, based on contracted backlog. - Total revenue guidance for 2025: $160 million to $180 million. Aim to reduce cash burn run rate significantly by Q4 2025, with a target OpEx reduction of $60 million annual improvement.

• Uncertain macro environment impacting revenue and government contract stability. - Challenges in subleasing excess space to mitigate carrying costs. - Impact of changes in government research funding policies affecting Cell Engineering government contracts.

Q: What are the ideal customer personas Ginkgo needs to close for new client acquisition?

A: For solutions deals, ideal personas are heads of R&D for large biopharma or CEOs for small biotech. For data points, it's leads for drug programs (1-2 levels below head of R&D). For automation, it's automation leads in companies.

Q: What are your assumptions in the 2025 guide for new offerings like tools, data points, and automation?

A: Relatively conservative, anticipating at least double-digit million revenue contribution from new offerings, but being cautious given newness.

Q: How should we think about margin profile differences between traditional foundry data points and automation?

A: Data points target 40%+ gross margins like CRO services. Automation business is in early stages, with potential for scaling into growth cost-effectively.

Q: What are you seeing in your sales funnel now for tools?

A: Seeing volume pickup with 7 new data points deals and 5 new logos in Q4, with customers responding positively to the new business model.

Q: Can you talk about Biosecurity guidance and government contract assumptions?

A: Biosecurity guidance assumes no change to government contracts, but there's uncertainty due to new administration policies and changes in research funding for Cell Engineering government contracts.

Q: How to track the health of the funnel now that new program metric is not reported?

A: Use an enhanced current active program metric that shows revenue per program, providing a better sense of revenue trends over time.

Q: How do you arrive at conservative guidance for tools and data points?

A: Conservative guidance reflects shorter sales cycles for tools but still uncertainty around government contracts and the newness of tools offerings.

Q: Is Ginkgo revenue impacted by avian flu or potential pandemics?

A: Biosecurity is building infrastructure for surveillance, and H5N1 and other potential pandemics could create spot demand, with interest in preserving food security also a factor.