Good evening. I'm Megan LeDuc, Manager of Investor Relations at Ginkgo Bioworks. I'm joined by Jason Kelly, our Co-Founder and CEO; and Mark Dmytruk, our CFO. Thanks, as always for joining us. We're looking forward to updating you on our progress. As a reminder, during the presentation today, we will be making forward-looking statements, which involve risks and uncertainties. Please refer to our filings with the SEC to learn more about these risks and uncertainties. Today, in addition to updating you on the quarter, we are going to provide updates on our path towards adjusted EBITDA breakeven as well as customer progress in our cell engineering business and our latest H5N1 offerings. As usual, we'll end with a Q&A session, and I'll take questions from analysts, investors and the public. You can submit those questions to us in advance via X at #GinkgoResults or e-mail investors at ginkgobio.com. All right. Over to you, Jason.

Thanks, Megan, and thanks, everyone, for joining us. We always start with our mission of making biology easier to engineer here at Ginkgo and similar to last quarter, we continue to focus on three key objectives. First, we want to reach adjusted EBITDA breakeven while maintaining a cash margin of safety. And we ended this quarter with $616 million in cash and no bank debt and have already exceeded our cost-cutting target for 2024. In other words, we've hit the target we're trying to hit by the end of the year. At the rate we were dropping costs, that makes for a nice cash margin of safety, in my opinion. Second, while we cut costs, we need to keep serving our current customers and adding new customers. I'll dive into this in the strategic section, but I'm very happy about achieving the $9 million technical milestone with Merck that we just announced this morning. That's a great indication of Ginkgo delivering R&D solutions to blue chip customers in biopharma. Finally, we want to grow our revenue in solutions while also expanding into selling tools. And I'll cover this more on the strategic section, but we're excited by the traction we are seeing in our newly launched data points business with a couple of recent wins with top 25 biopharmas that are new customers to Ginkgo. As a reminder, in the last quarter's call, we talked about how we expect to see $100 million of costs taken out on an annualized run rate basis this year with an additional $100 million coming out by mid-'25. I am happy to report we're not just in line to reach those goals, but we are actually ahead on those metrics. You'll see in the deck that our Q3 results indicate we're ahead of schedule in cost cutting with a $125 million annualized run rate cash OpEx improvement relative to Q1. Okay. I'm excited to get into all of that more in the strategic section. But before that, I want to hand it over to Mark to discuss the financial results for the quarter.

Thanks, Jason. I'll start with the cell engineering business. I'll start by noting that during the quarter, Ginkgo recognized $45 million in noncash revenue from a release of deferred revenue relating to the mutual termination of a customer agreement we had with Motif FoodWorks, one of our platform ventures. We have no further obligations to perform services under this agreement and hence, the accounting for the deferred revenue release. Excluding this impact, cell engineering revenue was $30 million in the quarter, down 20% compared to the third quarter of 2023. Similar to prior quarters of this year, this decline was driven primarily by the continued shift from small early-stage customers to large enterprise customers, along with the changes we've made as part of the restructuring. In the quarter, we supported a total of 136 active programs across 81 customers on the cell engineering platform. This represents a 17% increase in active programs year-over-year with the largest amount of growth coming from food and ag and government customers. As we discussed in our Q1 and Q2 earnings calls, the nature of programs that we take on with our customers has evolved following our recent adjustments to commercial terms and the launch of our data points offering. While still very early days, this slide gives you some detail on how the nature of programs is changing. We added a total of 25 new programs and contracts in Q3 2024, of which 11 were generally comparable in size and scope to historically reported new programs and were included in the current active program count on the prior slide. Importantly, you'll note that of those, nine out of the 11 deals were either government or biopharma programs. In addition, we commenced 14 other customer contracts in the quarter that represent a variety of small deal archetypes, these are generally much smaller in scope and shorter in duration and include two data points deals as well as seven other biopharma deals. The current sales pipeline for both categories of deals is strong, and we are encouraged that we've been able to execute on existing customer programs while converting new opportunities, which Jason will talk more about in the strategic section of the presentation. Now turning to biosecurity. Our biosecurity business generated $14 million of revenue in the third quarter of 2024 at a gross margin of 28%. Revenue and gross margin were down quarter-over-quarter. And as you'll note, lumpy during the course of the year due partly to the timing of signing of a customer contract in Q2 of this year. And now, I'll provide more commentary on the rest of the P&L, where noted, these figures exclude stock-based compensation expense, which is shown separately. And we are also breaking out M&A and restructuring-related expenses to provide you with additional comparability. A full reconciliation of the M&A and restructuring-related costs can also be found in the appendix. Starting with OpEx. R&D expense, excluding stock-based comp and M&A and restructuring costs decreased from $108 million in the third quarter of 2023 to $74 million in the third quarter 2024. This decrease was primarily driven by our restructuring efforts. G&A expense, excluding stock-based comp and M&A and restructuring costs, decreased from $49 million in the third quarter of 2023 to $42 million in the third quarter of 2024, which also reflects cost reduction actions we've taken this year. Stock-based comp. So again, you'll see a significant drop in stock-based comp this quarter, similar to what we have seen over the past year as we complete the roll-off of the original catch-up accounting adjustment related to the modification of restricted stock units when we first went public. Additional details are provided in the appendix. Net loss. It is important to note that our net loss includes a number of noncash income and/or expenses as detailed more fully in our financial statements. Because of these noncash and other nonrecurring items, we believe adjusted EBITDA is a more indicative measure of our profitability. We've also included a reconciliation of adjusted EBITDA to net loss in the appendix. Adjusted EBITDA in the quarter was negative $20 million, which was down from negative $84 million in Q3 2023. This significant improvement in adjusted EBITDA can be attributed to the impact of the previously mentioned noncash deferred revenue release as well as the major cost-cutting initiatives implemented over the last two quarters. And finally, I'll just make one additional comment relating to cash burn in the quarter as compared to Q2. The cash burn in Q3 was impacted by some nonrecurring items including a litigation settlement and employee severance related to the restructuring. Those two items together resulted in cash payments of approximately $23 million in the quarter. So, if you factor that in, along with some working capital timing impact in Q3, that will help explain why the cash burn was relatively high in the quarter despite the OpEx reduction. We would, therefore, expect to see a significant decrease in cash burn in Q4 as a result of the restructuring. In terms of outlook for the full year, we previously issued guidance for total revenue of $170 million to $190 million, cell engineering services revenue of $120 million to $140 million and biosecurity revenue of at least $50 million. We update this previously issued guidance solely to reflect the impact of the previously mentioned $45 million noncash deferred revenue release in the third quarter. With this impact in mind, we now expect our total revenue to be $215 million to $235 million, cell engineering services revenue to be $165 million to $185 million and biosecurity to remain the same of at least $50 million. In conclusion, we're pleased with our overall execution of the restructuring thus far as we navigate substantial cost reductions and commercial changes, which we see as foundational to our path to adjusted EBITDA breakeven. Back over to you, Jason.

Thanks, Mark. I want to emphasize my satisfaction with our revenue performance this quarter and clarify the situation regarding the Motif noncash deferred revenue release. Motif, a company founded on Ginkgo's platform, provided us with equity in exchange for preferred access to our services, alongside cash R&D fees for our work with them. However, we won’t recognize the equity as revenue until we've completed more work across a batch of programs. Now that our relationship with Motif has ended, we are catching up and recognizing the value of that work all at once. Given the significant downturn in the alternative meat market and Motif's wind-down status, we don’t consider this equity to hold value at this moment, which is why we accounted for it this way. We have made it clear that analysts and investors should not view this as cash revenue. Let's move into the strategic section. Similar to last quarter, I will begin by discussing our cost reduction efforts and providing an update on our consolidation initiatives. I am proud of the achievements we have made with our customers despite our cost-cutting measures, and I look forward to highlighting some successful cell engineering projects, along with new partnerships with esteemed clients, as we discuss our new data offerings that are gaining traction. Additionally, I will touch upon the new services our biosecurity team is developing in response to the recent H5N1 outbreak. During our Q2 call, we reiterated our plans to reduce spending by a run rate of $100 million by the end of 2024 and an additional $100 million by mid-2025. Although our overall cash burn has not significantly decreased this quarter due to various one-off costs, our key recurring expenditures have declined by $125 million on an annualized basis since Q1. We aim for further reductions as the year concludes. I want to outline some key measures we have taken to lower costs. Firstly, we announced a 35% reduction that is nearly completed. Secondly, we have cut our contractor and temporary labor force by almost 60%, alongside a reduction of about 40% in professional fees since Q1. We have also significantly minimized the number of software licenses and applications used at Ginkgo, and made notable advancements in consolidating our real estate by closing several offices. It’s important to note that these cost reductions come with trade-offs. Specifically, we can no longer afford to sell our solutions in an open-ended manner. Previously, we would engage with large industrial companies like Merck to provide various cell engineering services and then expand our offerings. We are now more focused and deliberate about our sales strategy in the solutions business, concentrating on proven offerings to enhance efficiency. Consequently, we will be expanding through our tool sales, which I will discuss shortly. I also want to highlight our site consolidation efforts, which have progressed about six months ahead of our initial timeline. In September, we announced the sale of Altar, our French subsidiary, to Lesaffre. This deal allows Ginkgo to reduce costs and streamline operations, while still maintaining access to the technology developed at Altar, which was crucial for us. Kudos to the team for successfully executing this deal; Lesaffre is an excellent fit for this technology and for the Altar employees. We have also commenced the shutdown of operations in the Netherlands, expected to be completed by December 1. In the U.S., we plan to consolidate our Boston area footprint by year’s end, ahead of schedule. We have successfully closed the Atwell facility and our Cambridge sites by the end of November, with one already completed. We’ll remain in our current site rather than moving to Biofab-1, though that location may become available for us in the future as our business grows. I am pleased with the advancements we have made in our cost-reduction initiatives so far, but we have more opportunities to cut costs. For instance, we are aiming to sublease additional space, so feel free to send any interested parties our way. We are also streamlining our lab supplies and reducing inventory. Finally, we continue to rationalize our expenses across both personnel and non-personnel areas. We have implemented many changes over the summer, giving us a clearer view of what is effective and what isn't. I still see significant opportunities to enhance productivity and capitalize on cost-saving measures company-wide. If we succeed in this, I hope we can surpass our target of $200 million in annualized cost reductions by mid-next year, all while continuing to provide exceptional service to our customers and adding new ones. That's an update on where we expect our cost reductions to come from. Next, I want to discuss our cell engineering business and our customer successes. As a reminder of our previous discussions, I want to explain our offerings at Ginkgo. On the vertical axis, you can see the level of customization for our customers and the amount of technical risk we assume as you move up the axis. At the top, you see the most customized, high-risk B2B solutions like developing a drug asset for a small biotech and hoping to sell it to a larger biotech firm. However, that's not the approach we take at Ginkgo. Instead, we've focused on our cell engineering solutions, where we take on less technical risk compared to doing it ourselves, but there is still some risk involved. You may have noticed the milestone we announced with Merck this morning, which reflects our success in achieving a technical goal that was uncertain. Because we take this risk and it’s highly customized, we're able to request commercial milestones and royalties from the products stemming from our solutions. To the left of the dotted line, you see where we can secure those royalties. This business offers significant upside potential with milestones and royalties, but the timeline for biopharma product market entry is slow. Many of our challenges have originated from the industrial sector, which typically advances more quickly, but that area has diminished over the last couple of years. We're engaging more in biopharma, even though the pathway to securing milestones and royalties takes longer. A lot of our adjustments in solutions aim to align our costs closer to the revenue generated from these deals. In other words, we don't need to rush for those milestones; we can patiently wait to see higher returns over time as our customers bring products to market. Meanwhile, we're finding ways to utilize our underlying assets—robotics, data and AI models, along with our capacity to generate complex lab data at scale through our tools business model. Thus, on the right side of those dotted lines, we're not seeking royalties; the customer retains the intellectual property developed in the project, and we charge service fees or for equipment use. In the last quarter, we made numerous announcements launching our first products related to our AI API, robotics, and data points offerings. I'm eager to discuss data points in a moment, but first, I'd like to quickly update you on our progress in solutions. I'm incredibly proud of the work our solutions team at Ginkgo has accomplished, effecting significant changes in that group while still delivering results. I want to highlight the announcement this morning regarding Merck. This program pertains to our previously announced biologic manufacturing efforts. The Ginkgo team has reached its first technical milestone, which is a significant achievement and has impressed our customer, along with a $9 million cash research milestone payment that will be reflected in our Q4 financials. We're thrilled about the progress made here and look forward to advancing our relationship with Merck. In addition to accomplishing specific technical milestones, we've also added new customer agreements, such as the ones shown here with Novo Nordisk. This expansion has occurred over the past few years, and most recently, we announced a new deal centered around an umbrella agreement that allows us to add new programs with Novo more efficiently, avoiding the need for renegotiation to initiate new work. This has led to a new collaboration with Novo focused on protein discovery and development. Moreover, we've expanded our existing collaboration for expression systems for pharmaceutical products, enhancing our previous work by incorporating new initiatives. This is the first time we’re publicly discussing these updated deals, and I’m really excited about the potential they signify because achieving our revenue and EBITDA targets heavily depends on our ability to execute internal sales deals with key customers. Essentially, when we sign a new large biopharma for the first time—like we're currently doing with our data points products—it mirrors where we were with Novo in June 2022, as we initiate that relationship and prove ourselves to the customer. Success fosters further success in these partnerships, particularly in solutions that require close collaboration with the partners team in complex R&D partnerships. I’m truly excited about this and anticipate we will continue to pursue these opportunities, especially with large biopharma customers. I want to discuss our new tools, particularly our data points, which are gaining significant traction in the market. Many customers, including startups and large biopharma companies, are looking to create large data sets for training AI models in target discovery and therapeutic development. They aim to generate these data sets in-house to enhance their capabilities in these areas. Our first data points product is functional genomics, which offers extensive perturbation data sets to support the development of target discovery AI models at our customers' facilities. This product addresses major challenges faced by customers, such as data availability, quality, and uniformity. We produce large, high-quality transcriptomic and phenotypic data sets tailored to the disease context chosen by the customer. This involves introducing genetic modifications, like CRISPR edits, and using chemical perturbations, such as a compound library, in key cell types, including their own internal cell line if desired. We provide the readouts the customer prefers, and our highly automated workflow allows us to deliver data in as little as three weeks for chemical screens and within three months for genetic screens, depending on the type of cells and genetic changes requested. We can handle over 10,000 perturbations for both chemical and genetic analysis, providing the scale of data necessary for AI model training. We believe this service is unique in the current market. We also have a sample data set available for download on our website, which includes compressed data, metadata, raw UMI counts, and a brief report outlining the workflow and data, along with a link to the full data set. Customers have responded positively to this, so if you are a bioinformatician or a drug discovery expert, you should check it out. Additionally, I'm pleased to share that we have recently secured deals with a leading tech bio company and a top 10 pharma company for functional genomics, which will be included in our Q4 program count. The second data point product we recently launched is antibody developability, focusing on the development of new drug assets. Our advanced wet lab infrastructure enables customers to unlock AI in this domain. Customers provide us with their antibody sequences, and we conduct high-throughput wet lab workflows to deliver AI-ready data sets. This includes synthesizing, expressing, and purifying antibodies, performing extensive biophysical characterization across more than 10 developability assays, analyzing and integrating that data for use by the customer's machine learning team. We have created a sample data set with 20 IgG antibodies previously characterized in a well-known antibody study from 2017, which is also available for download on our website. Furthermore, we have tested over 200 commercial antibodies using the same set of developability assays. Interested parties can email us for access to this additional data. The downloadable data set contains assay parameters and outputs for each of the 10 different assays, along with a read-me file that includes detailed information about the assays and data set fields. Like our functional genomics offering, we have already signed a pioneering deal with a top 25 pharma company that will be counted in our Q4 program. One of the aspects that excites me is that since the data point deals are initially smaller than solutions and do not involve royalties, we can sell them through traditional procurement channels. This results in a much quicker sales cycle compared to solutions where we collaborate with the business development teams for longer-term deals and partnerships. Closing these deals can take as little as a few weeks. This rapid process is particularly exciting when it allows us to secure initial agreements with new large biopharma companies with whom we do not already have relationships, and we've been able to achieve a couple of those. I believe that proving ourselves in the data points area will enhance our ability to sell solutions or robotics offerings in the future. I'm very enthusiastic about this, and I want to congratulate the data points team at Ginkgo for successfully launching and quickly adopting these projects. All right. That illustrates the catalysts we're observing in our cell engineering business. Now, I will discuss what we see in our biosecurity business, particularly with the recent emergence of H5N1 in the U.S. and recently in Canada as well. We mentioned H5N1 last quarter, but you can see how the disease's spread has evolved in just the past few months. We have moved from discussing the flu's impact on birds, livestock, and wildlife to significant detections of the disease in humans, raising concerns about a potential pandemic if we don't act decisively. Last quarter, I mentioned our efforts to validate a new method for genomic surveillance of H5N1 in dairy cow populations. The map on the left illustrates how this outbreak is now impacting various species, including humans. Due to the rapid spread, we are enhancing our offerings to include DNA sequencing of raw milk, bioinformatics as a service, and comprehensive analyzed datasets. Our initial testing method detects and provides genomic data for flu A in raw milk. This genomic sequencing is essential for speeding up the development of diagnostics, vaccines, and therapeutics, as well as providing early warnings. Our approach of testing raw milk from various sources protects farmers' privacy. There are many parallels here to COVID, where people may be reluctant to know their status due to economic concerns. Hence, we safeguard farmers' privacy while still deriving insights that might not be captured by only tracking symptomatic cows. Next, we offer bioinformatics as a service, with our bioinformatics experts conducting thorough analyses of genomic data through a range of tools and capabilities, whether it's raw milk or wastewater, utilizing cutting-edge AI tools for data processing, and custom genome analysis to assess the concern level of viral sequences. Finally, we can provide comprehensive analyzed datasets by collecting and standardizing a large volume of data from various sources, including our proprietary international nodes for aircraft wastewater and wildlife surveillance. This integrated, analyzed data enables us to create a common operating picture, which offers valuable insights to decision-makers, typically within government bodies. With last week's CDC announcement underscoring the need to identify and implement strategies to prevent transmission among dairy cattle and mitigate worker exposure, this focuses on quickly identifying infected herds to initiate monitoring, testing, and treatment for human illness. It seems the CDC is starting to engage, and we hope Ginkgo can be instrumental in these efforts. The primary concern for everyone is to avoid human-to-human transmission of the disease, which is currently spreading in livestock and occasionally affecting nearby humans. The question remains whether it will mutate to allow human-to-human spread, which would be catastrophic. Thus, we continue to communicate these risks with the U.S. government, and we are in discussions with potential commercial partners to expand our testing capabilities. Our strategy could allow us to monitor around 50% of the milk supply. However, current participation in government voluntary programs is low, meaning this is not yet a viable business opportunity for us. Nonetheless, we believe our approach provides a sensible solution that protects farmers and producers while allowing for the necessary testing of the milk supply to help mitigate the spread and lower the risk of human-to-human transmission. Our pooled testing method offers quick turnaround results, supported by our K-12 testing program, demonstrating that large-scale surveillance can be effective. We have extensive experience managing the complexities of testing and privacy during COVID-19. Therefore, we are prepared to assist the dairy industry with tools that can be applied to herds as well as to exposed farm workers. This is a promising initiative, and I hope the U.S. government remains proactive. In conclusion, I am very proud of our performance this quarter as we continue to reduce costs while meeting our revenue targets and achieving critical technical milestones for our customers. We are delivering value for our customers with both our traditional and new offerings, and I am excited about the opportunities ahead as we work towards adjusted EBITDA breakeven by mid-2026 while maintaining a cash margin of safety. Now, I will return the floor to Megan for Q&A.

Great. Thanks, Jason. As usual, I’ll start with the question from the public and remind the analysts on the line that if they like to ask a question, please raise their hand on Zoom and I’ll call on you and open up your line. Thanks all. Okay. Welcome back, everyone. As usual, we'll start with a retail question, and then we will go down our list of analysts. So Tejas, you'll be up first after our retail question. But the first one is from our strain box and is for you, Jason. Can you provide more clarity into what the Company's strategy is? With the new tools business, it feels like Ginkgo is pursuing a lot of different opportunities with an unknown return.

This is a good question. I attempted to illustrate a chart during the earnings call to explain this. Ginkgo has our historical solutions business and is broadening into tools, and I'll share some reasoning behind this strategy. The main observation I've made while engaging with the market recently is that Ginkgo offers advanced bioengineering technologies at a level that I don't see other companies achieving. We continue to be a distinctive technical asset in the market, and I don’t currently see a lot of competition. In light of the current biotech market downturn, Ginkgo needs to be in a strong position to capitalize on future demand, which many of us who believe in the biotech industry anticipate. Hence, my primary focus is on achieving breakeven, meaning Ginkgo will not need to raise further capital, tightening our expenses, and reducing our cash burn. Those within the Company are well-aware that this is the emphasis being reinforced throughout the organization. Now, why are we expanding into tools? The straightforward reason is that it enables us to leverage our existing assets, such as robotics, data and AI infrastructure, and our capability to create complex datasets, and sell these assets in a different way. I do not need to spend years developing a new product line for launch. As you've seen, we are already attracting new large customers in the tools business because these assets are already in place. My hope is that this represents a new approach to the market that generates revenue for our existing base without incurring significant additional costs for product development. This is the reasoning behind our strategy; while it adds a new dimension, it’s essentially a new way to market assets we already possess.

Thanks, Jason. Like I said, Tejas, you're up first. Your line is now open.

Perfect. Jason, to start, last quarter, you mentioned a more focused approach in pharma and industrial, along with agriculture. Have you seen any noticeable improvements in resource utilization and efficiency? Additionally, you've discussed a significant reduction that could lead to attrition within the delivery teams and foundry side of the business. Could you provide some insights on that situation?

Yes, I can address that. To summarize, we have been tightening our focus over the past three years since going public, transitioning from a significant emphasis on the industrial biotech sector to primarily focusing on government, pharmaceuticals, and agriculture, which now represent over 70% of our business. This change occurred as companies shifted away from exploring new biotech applications, previously bolstered by looser capital and a willingness to invest in a lower interest rate environment, toward proven therapeutics and funded research and development by the government. This has become the cornerstone of our platform's focus in the market. Additionally, as I mentioned earlier, we are selective about the types of cell engineering projects we take on. We concentrate on our strengths, such as protein production, protein design, enzyme engineering, and RNA work. This targeted approach has enabled us to reduce costs while meeting our revenue goals, and we are witnessing efficiency gains reflected in this quarter's numbers. Regarding attrition, we monitor that closely. The team has successfully restructured our work processes to enhance efficiency, and I am optimistic about continuing this trend of reducing costs in the future. With the same foundational assets, we are looking to offer them in innovative ways through our solutions, which will help mitigate our cash spending.

Got it. That's helpful. I have a quick follow-up. Regarding biopharma funding, are you seeing any signs of stabilization? I think it's too early to determine a trend, but I'm curious about your insights based on recent conversations. Additionally, on the biosecurity front, we've been hearing questions about how confident you are in the government's commitment to funding biosecurity initiatives, pathogen monitoring, and even H5N1 surveillance at airports. I noticed that one of Mark's slides included several government programs in cell engineering this quarter. Can you provide any insights on how the upcoming election might impact this?

Yes, I can address this again. On the biopharma side, we are noticing some increases in venture capital, growth, and generally R&D spending. There are signs of improvement, although the biotech industry remains challenging. We have the advantage of establishing our first deals with major biopharma companies. It's important to note that Ginkgo hasn't broadly penetrated the market with our offerings yet. Therefore, the current macro conditions don't significantly affect us as a newer player. Our focus is primarily on building and expanding those initial relationships in this sector. Outside of biopharma, we faced significant challenges. However, biopharma has been relatively stable. Start-up companies in biopharma have historically been tough for us due to their protective stance on R&D. They have been hesitant about our work regarding intellectual property and similar issues. Our tools business, however, might enable us to engage more effectively with start-ups. We will see how that develops. Overall, I'm optimistic about the progress and the promising data points we've observed. Does that make sense?

Yes. I think that makes sense.

On biosecurity and the changes in administration, I want to highlight Matt McKnight, who leads our biosecurity business. He had an op-ed in the Washington Post yesterday with Ashish Jha, a senior COVID coordinator from the Biden administration, and Matt Pottinger, who was part of the National Security Council during the Trump administration and is now focusing on China. The editorial primarily addressed biological weapons rather than infectious diseases and public health. Recently, there was another article in the Washington Post discussing Russia's expansion of what was previously a biological weapons facility, with satellite images showing the growth of several fermentation plants and underground tunnels. I anticipate that there will be a shift towards increased defense efforts in monitoring the weaponization of this technology under the current administration.

Next up, we have Matt Sykes at Goldman Sachs. Matt, your line is now open.

Jason, maybe a high-level one for you. Just given sort of all the changes you made the addition of various products and services over the last year, how has the transition been towards what I would call a multiproduct or multiservice company in a time when you're actually cutting spend? Well, meaning like, has that expanded market opportunity from new products and services offset potential friction with the focus being kind of spread across multiple products? Or are there synergies between these offerings are the decision-makers the same ones that you might have been approaching on the cell engineering? And then to kind of close that out, how have you changed the commercial focus of the Company to make sure that the commercial team is on the same page as the product development team as you're making all of these changes?

Yes. I’ll address that from both the internal and customer perspectives. From the customer standpoint, it's generally beneficial because when we approach someone about solutions, it can be a challenging sale. Success relies on identifying individuals who genuinely have a need or a research project they’re struggling with. In these discussions, our salespeople engage with them to understand their challenges and suggest our new offerings in functional genomics for target discovery or neural cells. This handoff feels very natural for us, as all our products are designed for the research sector. The key factor is identifying the level of the decision-maker within the organization. In terms of solutions deals, we often work with high-level leadership in research organizations, which is due to the substantial nature of these deals and the presence of milestones and royalties. Typically, this involves collaboration between our business development team and senior research and development leadership. For proof of concept deals, like testing our antibody developability, these can be smaller, under $100,000, which allows for engagement at the scientist or mid-level R&D roles. This provides us with an entry point, and I see the potential for us to return after securing some wins to discuss more comprehensive solutions. Overall, I don’t think there’s confusion on the sales side. If you observe companies in the life sciences tools sector, such as Thermo or Danaher, they cover a vast range—demonstrating that focus doesn't necessarily hinder success. Therefore, I don't view this as a significant issue regarding customer confusion. Internally, however, there are concerns about the integration of our offerings. We have strategically organized our teams to ensure each is concentrated on their product delivery, whether it's our solutions or new tools. We’ve encouraged our teams to focus clearly on their objectives for customer delivery. Despite the sales teams needing some flexibility, this organization is proving effective so far. But yes, we must remain vigilant.

Got it. For my follow-up, Mark, as we consider Lab Data as a Service and the data point offering, how should we perceive the margin profile of these offerings? I'm assuming the capital intensity is considerably lower. As these areas begin to grow while legacy cell engineering continues, how should we view the breakeven point that you're nearing? Could that lead to an accelerated path to breakeven? Are the margins significantly higher and more substantial than the other businesses, suggesting a potential shift in profitability moving forward?

I mean it's still early days on the revenue side with those products. And so, you really have to think about kind of at scale what would the gross margin profile look like? And certainly, we're targeting margins that sort of look normal for kind of services in this space. But I think, Matt, it's just still too early like we need to get to a higher revenue scale before the margin profile for the tools businesses would have a kind of move the needle impact on the whole company.

Next up, we have John Kim from Bank of America. John, your line is now open.

So, as you continue to take out costs, I would think there would continue to be also severance packages and also one-off costs. So, can we expect those costs to repeat? And if so, what sort of impact should we model in for the next few quarters?

Yes. We have disclosed in our quarterly update that we anticipate total one-time costs related to the restructuring to be between $18 million and $22 million. To date, approximately $15 million of that has been accrued. Thus, as of the third quarter, around $15 million or $16 million has been recorded. This indicates what remains to be accounted for. However, this estimate does not consider any unforeseen costs that may arise. For instance, in the case of site consolidation, it's challenging to predict the exact costs involved in such a transition, as it depends on the specific outcome for that space, whether it's a sublease or another type of exit. Currently, the range of $18 million to $22 million stands, with more than half of that already booked.

Our next question comes from Mark Massaro at BTIG. Mark, your line is now open.

Yes, I appreciate all the breakouts and the detail. So, you signed 11 new programs in Q3 that are sort of comparable to what you've signed in prior years. Last quarter, it was 10, is it fair to think that like this low double-digit number might be a run rate going forward, recognizing that you're clearly also promoting some data point products and fee-for-service products. So, I'm just trying to get a sense, as we think about modeling out, how do you think about prioritizing sort of the traditional programs with some of the newer product offers?

Yes, that's a good question. I believe you'll see us trying to grow the second category of our new tool sales, which we had 14 of this quarter. We value the solutions deals, but it really depends on how quickly people will adopt these R&D partnerships. Additionally, the size of these deals varies, with some being significantly more valuable than others. This variability is part of why we decided to step back from certain metrics this year. I'm not sure how reflective those metrics are. Solutions have always been challenging for us to model. As for milestones, we often mention how much we have, and while it’s a significant amount, it remains uncertain and somewhat unpredictable. I'm not sure which direction it will go in terms of numbers. I don't believe it's the best way to track progress in solutions. However, as you can see over the year, it has been around that low double-digit range.

Okay, great. And I recognize you're not planning to provide guidance for 2025 today, though, when I look at your cell engineering services guide for this year, at the high end, you're close to growth. And so, with the combination of some new product offerings, I'm curious if you think you have an opportunity to grow that business in '25. And then the second part of that is, I think last year, you reported the aggregate future cash revenue potential added, I think it was $2 billion last year. Should we expect an update to that in the coming months?

You mean on that last point, Mark, you're talking about downstream value share?

Yes, yes, yes. The first part was on the cell engineering services growth.

I believe a good perspective on cell engineering growth is that the tools business, starting with nearly zero revenue, is expected to contribute to growth in 2025, supplementing what we’ll observe in 2024 comparisons. However, we’re uncertain about the exact extent of this contribution. For solutions, our main focus is on aligning our cost structure with revenue-generating programs that we prefer, especially considering our objectives to reduce cash burn and reach adjusted EBITDA breakeven. We will not prioritize growing cell engineering solutions revenue if it jeopardizes our cash burn targets or undermines our cash margin of safety. We will be carefully assessing the appropriate level of growth and identifying the true baseline for cell engineering solutions. While growth is possible, we want to ensure it aligns with the cash flow profile we are aiming for in 2025. Additionally, we are unsure how the capital markets will evolve. Notably, our recent programs have primarily involved biopharma and government clients rather than industrial biotech customers. Should the industrial biotech market recover due to improved capital market conditions, that could also present another growth opportunity for us in 2025.

I would like to add some clarification regarding our retail strategy. In our solutions business, we mentioned last year that we had several billion dollars in milestone payments. A significant focus for us is whether we can navigate through this successfully. When I evaluate our technology competitors, I don't perceive anyone closely competing with us. Therefore, in 2025, whether we cut costs or increase revenue, I see them as equally important. My main objective is that Ginkgo does not need to secure funding under challenging conditions and that we can successfully move forward. I believe this is the most advantageous approach. We will avoid unnecessary risks. As for the changes in capital markets and customer dynamics, we will adapt our strategy accordingly, which is part of my responsibility. However, as Mark indicated, we will not sacrifice cash flow for revenue in 2025.

Other questions, Megan?

Our last set of questions comes from Jacquie Kesa at TD Cowen. Jacquie, your line is now open.

Sorry, this is Jacquie on for Brent. Just one on your AI capabilities. I'm pretty curious as to what your next steps are when you're thinking about building out your platform. Are you kind of aiming to develop larger-scale data generation capabilities and sort of drill down on that main offering or are you thinking of it spending into like different analysis tools and generating more of a full software platform for your customers?

Yes, that's a great question. Firstly, AI is currently the most significant factor driving change in biopharma and biotech R&D departments. Most R&D leaders are seeking to adopt new technologies, with AI being a primary focus. Ginkgo aims to be part of this development. Our AI team has been launching models that users can access via our API, similar to how they would interact with OpenAI. This process is straightforward, involving token payments with a credit card. Our goal is to engage with the community through these advanced models in the protein field, incorporating open-source models into a format that scientists can utilize easily. From this foundation, we can explore various avenues. For example, our data points business, which generates extensive data sets, pairs naturally with these AI models. A customer might be interested in using a model we have, such as an mRNA or antibody model, to produce numerous designs and develop associated data points, which in turn refines the model. This could lead to our data points business, consultancy services from our AI team, and cloud offerings, creating a comprehensive package. Alternatively, many users might develop their applications on top of what we've created, similar to what we see with OpenAI. Currently, we're open to different possibilities as technology continues to evolve, which is both positive and exciting. However, we are cautious with our spending while monitoring the development of technology. We view ourselves as a leader in this space and are proud of launching these models through a user-friendly API. I'm enthusiastic about the potential in this area.

That's great. And then maybe just one more on Q4 OpEx. And apologies if you mentioned this before, my YouTube really just crash at an opportune time. Given you've already hit your goal for fiscal year '24, should we expect cost savings and OpEx rate to continue at the same rate quarter-over-quarter for the fourth quarter as it did for Q3? Or do you think it's going to kind of level out a little bit when we get to Q4?

Yes, you won't see the same magnitude of quarter-over-quarter reduction. But we are continuing to take costs out. Just for example, like not all of the headcount reduction that has happened this year is even reflected in the Q3 numbers, but every cost line item in the Company is under a pretty high level of scrutiny. So, you'll see costs come down, but it was a pretty significant drop in Q2 to Q3, and you're not going to see the same drop in Q4.

That concludes the Q&A portion of the call. So, I'm going to hand it over to Jason for any last closing thoughts.

Closing thoughts. I think it's the right quarter. Really happy we established sort of getting our cost out and holding the line on revenue. I think that's really been critical, and I want to congratulate the Ginkgo team on that. I will say we did have one question on the call about voluntary attrition and what's happening there. And I do want to call out there is one voluntary attrition I'm quite sad about, which is Megan, will be leaving us, she had great opportunity, good growth opportunity to go to a new place. They're very lucky to have her. So, Megan, I want to say thank you for doing a great job being a steady hand on IR for us, particularly over the last six months, but the whole time you've been here. So, thank you.

Well, thank you. And the team is in very good hands with everyone that's taking over my responsibility. So, I appreciate it.

Yes. Thanks, everybody. Appreciate the questions.

Bye.