Ginkgo Bioworks Q1 Sales Beat Expectations, But Analyst Downgrades Stock On Guidance Concerns

Ginkgo Bioworks Holdings Inc DNA reported Q1 sales of $80.70 million, beating the consensus of $71.68 million.

The sales declined 52%, driven by the expected ramp-down of K-12 testing in Ginkgo's Biosecurity business unit.

The company expects FY23 revenues of at least $275 million, compared to the consensus of $304.06 million.

William Blair notes that the company's large cash balance gives it a multiyear runway, but in the near term, it does not have confidence in the guidance and thus is lowering the rating to Market Perform from Outperform.

The analyst says that while the quarter beat its model, Ginkgo only added 13 new Cell Engineering programs, much lower than its estimated 23 programs, and left guidance for 100 new programs intact. 

This leaves 29 programs per quarter to hit guidance versus an average of 14 over the last six quarters. 

Citing the challenging macro backdrop and indications of longer sales cycles and cautious spending, the analyst does not have confidence that the company will hit its target this year, likely leading to a miss in Cell Engineering revenue absent a significant pick-up in royalties.

Price Action: DNA shares are down 2.22% at $1.32 on the last check Thursday.