DNA Experiences Decrease in Biosecurity Revenue

Segments of Revenue

DNA's revenue is divided into two main segments: Cell Engineering and Biosecurity. Cell Engineering revenue is derived from service fees and downstream value share in the form of milestone payments, royalties, or equity interests. Biosecurity revenue, on the other hand, comes from fees for data, analytics, and services. However, it's worth noting that until the fourth quarter of 2023, Biosecurity revenue also included sales from test kits.

Strengths

DNA's strength lies in its Cell Engineering segment, which is a key enabling technology and source of intellectual property for its customers' products. The company earns revenue for its R&D services as well as through a share of the value of products created using its platform. The number of customers increased to 91 in 2023 from 56 in 2022, indicating a growing customer base.

Challenges

The company faced a significant challenge in its Biosecurity segment, where revenue decreased by $226.1 million in 2023 compared to 2022. This decrease was comprised of a $6.5 million drop in product revenue and a $219.6 million decrease in service revenue.

Noteworthy

It's noteworthy that the company expects downstream value share in the form of equity interest appreciation to contribute to future cash flows upon liquidation, although the amount and timing of this is unpredictable.

Summary

In summary, while DNA has seen growth in its Cell Engineering segment, it has faced a substantial decrease in its Biosecurity revenue. The company's future cash flows are expected to be bolstered by equity interest appreciation, but the timing and amount of this are uncertain. The company will need to address the challenges in its Biosecurity segment to improve its overall financial performance.