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01/10 16:37
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Despite strong cash reserves and cost management, the company faces challenges with declining revenues and increased losses in Cell Engineering. Positive aspects include restructuring efforts, optimism about government partnerships, and new product launches. However, the lack of significant revenue growth, increased operating losses, and the necessity to reset commitments with Google Cloud temper the outlook. The Q&A reveals optimism about AI and robotics, but the absence of immediate financial benefits suggests a neutral outlook for the stock price in the short term.
Cash and Cash Equivalents $462 million as of Q3 2025, with no bank debt. This reflects a strong cash position despite a tough biotech market.
Cell Engineering Revenue $29 million in Q3 2025, down 61% year-over-year. The decline is primarily due to a $45 million noncash revenue in Q3 2024 from the termination of a customer agreement with Motif FoodWorks. Excluding this, revenue was down 11% year-over-year.
Revenue-Generating Cell Engineering Programs 102 programs in Q3 2025, a 5% decrease year-over-year. This decrease is attributed to ongoing program rationalization as part of restructuring activities.
Biosecurity Revenue $9 million in Q3 2025, with a segment gross margin of 19%. No specific year-over-year comparison provided.
Cell Engineering R&D Expense $51 million in Q3 2025, down 8% from $55 million in Q3 2024. The 2025 expense included a $21 million shortfall obligation related to a Google Cloud partnership, which was later settled for $14 million.
Cell Engineering G&A Expense $12 million in Q3 2025, down 47% from $23 million in Q3 2024. The decrease was driven by restructuring efforts.
Cell Engineering Segment Operating Loss $37 million in Q3 2025, compared to a $5 million loss in Q3 2024. The increased loss is due to the $21 million Google Cloud shortfall expense and the absence of $45 million noncash revenue from the Motif contract termination in Q3 2024.
Biosecurity Segment Operating Loss Improved by 21% in Q3 2025 compared to Q3 2024. Specific figures not provided.
Total Adjusted EBITDA Negative $56 million in Q3 2025, down from negative $20 million in Q3 2024. The decline is attributed to the Google Cloud shortfall expense and the absence of Motif-related noncash revenue in Q3 2024.
Cash Burn $28 million in Q3 2025, down 75% from $114 million in Q3 2024. The significant decrease is a direct result of restructuring efforts.
Autonomous Labs: Ginkgo is focusing on delivering robotics and software for autonomous labs at customer sites, enabling them to run labs independently using Ginkgo's tools.
AI Integration: Ginkgo is leveraging AI to control robotics in labs and train neural networks on biological data, positioning itself as a leader in AI-enabled biotechnology tools.
RAC Technology: Ginkgo's reconfigurable automation carts (RACs) allow for modular and scalable lab setups, controlled by software, enabling AI-driven experiments.
AI and Automation Expansion: Ginkgo is expanding its frontier autonomous lab in Boston and positioning itself as a leader in AI-enabled science, particularly in the U.S. biotechnology sector.
Global Competition: Ginkgo is addressing competition from China in biotechnology by focusing on robotics and AI to maintain U.S. leadership in the field.
Cost Reduction: Achieved a 75% reduction in cash burn in Q3 2025 compared to Q3 2024, driven by restructuring efforts.
Revenue Guidance: Reaffirmed 2025 revenue guidance of $167M-$187M, with $117M-$137M from Cell Engineering and at least $40M from Biosecurity.
AI and Robotics Investment: Ginkgo is heavily investing in AI and robotics to drive growth and innovation in biotechnology.
Partnerships and Collaborations: Secured a $22M BARDA contract for monoclonal antibody manufacturing and extended a 5-year partnership with Bayer for engineering microbes for fertilizer production.
Cell Engineering Revenue Decline: Cell Engineering revenue decreased by 61% in Q3 2025 compared to Q3 2024, primarily due to the absence of $45 million in noncash revenue from a terminated customer agreement. Excluding this, revenue was still down 11% year-over-year, reflecting ongoing program rationalization and restructuring activities.
Biosecurity Revenue and Margins: Biosecurity revenue was $9 million in Q3 2025 with a segment gross margin of 19%, indicating limited profitability in this segment.
Increased Operating Loss: Cell Engineering segment operating loss increased to $37 million in Q3 2025 from $5 million in Q3 2024, driven by a $21 million shortfall obligation related to a Google Cloud contract and the absence of prior year noncash revenue.
Adjusted EBITDA Decline: Adjusted EBITDA was negative $56 million in Q3 2025, down from negative $20 million in Q3 2024, reflecting increased operating losses and restructuring costs.
Excess Lease Space Costs: The company incurred $14 million in costs related to excess lease space in Q3 2025, representing a cash operating cost not contributing to revenue.
Macroeconomic Uncertainty: The company acknowledged ongoing uncertainty in the macroeconomic environment, which could impact future operations and financial performance.
Competition from China: The U.S. biotechnology sector faces competitive pressures from China, where biotech is cheaper and faster due to lower labor costs and comparable academic and startup ecosystems.
Dependence on AI and Robotics: The company’s future growth strategy heavily relies on AI and robotics, which may face challenges in adoption, execution, and integration with existing systems.
Restructuring Risks: While restructuring has reduced costs, it has also led to a decrease in revenue-generating programs and could impact long-term growth.
Google Cloud Contract Obligation: The company faced a $21 million shortfall obligation related to its multiyear strategic cloud and AI partnership with Google Cloud, which was settled for $14 million.
Robotics and Software for Autonomous Labs: Ginkgo aims to deliver robotics and software for autonomous labs at customer sites by 2026, enabling customers to run labs independently using Ginkgo's tools.
Expansion of Frontier Autonomous Lab: Plans to expand the Boston-based autonomous lab, which currently has the largest RAC install globally, to showcase advanced robotic setups controlled by AI.
Best-in-Class CRO Services: Ginkgo intends to offer top-tier CRO services leveraging in-house robotic infrastructure to demonstrate the potential of robotics and provide superior services to customers.
Revenue Guidance for 2025: Reaffirmed overall revenue guidance for 2025 at $167 million to $187 million, with Cell Engineering revenue projected at $117 million to $137 million and Biosecurity revenue at least $40 million.
AI and Automation Investments: Focus on investments in AI and automation for growth in 2026, moving away from cost reduction efforts.
AI-Enabled Science and Robotics: Positioned to capitalize on AI-enabled science by integrating reasoning models with robotic lab setups, supported by U.S. government initiatives like the AI programmable cloud labs.
AI in Biological Data: Plans to expand the use of AI in biological data through services like Ginkgo Data Points, fostering a community for training AI models on biological data.
Customer Lab Installations: Encouraging customers to adopt Ginkgo's RAC systems for in-house labs, offering scalable and software-controlled automation solutions.
The selected topic was not discussed during the call.
Despite strong cash reserves and cost management, the company faces challenges with declining revenues and increased losses in Cell Engineering. Positive aspects include restructuring efforts, optimism about government partnerships, and new product launches. However, the lack of significant revenue growth, increased operating losses, and the necessity to reset commitments with Google Cloud temper the outlook. The Q&A reveals optimism about AI and robotics, but the absence of immediate financial benefits suggests a neutral outlook for the stock price in the short term.
The earnings call presents a mixed picture. While there are positives like improved EBITDA, cost reductions, and strong cash position, there are concerns about macroeconomic uncertainties, execution risks in new markets, and a reduction in biosecurity guidance. The Q&A section reveals potential in automation and RNA solutions but lacks clarity on timelines and geopolitical impacts. Overall, the mixed signals and lack of strong catalysts suggest a neutral stock price movement in the short term.
The earnings call reveals positive financial performance with significant cost reductions, strong revenue growth in cell engineering, and improved EBITDA. The company has a solid cash position and no bank debt. Despite some uncertainties in the Q&A, the ARPA H contract and government projects provide revenue stability. The company is also exploring new opportunities in SaaS and automation, which could drive future growth. The overall sentiment is positive, with potential for stock price appreciation.
The earnings call highlights significant cost reductions, improved cash position, and positive revenue growth in Cell Engineering. Despite challenges in supply chains and government funding, the company's focus on cost management and potential SaaS revenue provides optimism. The Q&A section reveals cautious optimism about government funding and potential SaaS opportunities. The lack of shareholder return plans is a slight negative, but the overall sentiment is positive due to strong financial performance and strategic initiatives.
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