Ginkgo Bioworks stock slips on guidance cut (NYSE:DNA)

Ginkgo Bioworks (NYSE:DNA) lost ~11% premarket Friday after the cell platform company slashed its full-year revenue outlook, citing business headwinds and effects from a newly announced restructuring program. William Blair downgraded the stock in reaction.

The guidance cut came with Ginkgo’s (DNA) Q1 2024 results, which fell short of Street forecasts as the company’s topline contracted ~53% YoY to $38M, and its adjusted EBITDA loss held steady at $100.1M.

Boston, Massachusetts-based Ginkgo (DNA) attributed the revenue decline to underperformance in its Biosecurity segment, where sales fell ~71% YoY to $10.1M.

“We’ve demonstrated that we can serve a large number of diverse programs on a common platform, but I’m disappointed in our revenues in Q1,” CEO and co-founder of DNA, Jason Kelly, added.

The company also slashed its full-year revenue outlook to $170M–$190M, down from $215M–$235M previously and $223.3M in Bloomberg consensus.

Ginkgo (DNA) said that the updated outlook indicates a weaker-than-expected revenue ramp, uncertainty over the timing of technical milestones, and the near-term effects of restructuring initiatives.

The company noted that restructuring activities, which include a ~25% cut to labor expenses and layoffs at its G&A and R&D functions, will help it become adj. EBITDA break-even by the end of 2026 on an annualized run-rate basis.

However, after the results, William Blair downgraded DNA to Underperform from Market Perform, with analyst Matt Larew arguing that there “were a lot of moving pieces to unpack in this update from Ginkgo.”

“While we applaud the new emphasis on cost control (particularly in the current challenging macro environment), we do not have full confidence in the company’s ability to successfully hit all of the targets as outlined given Ginkgo’s execution track record,” the analyst wrote.