Ginkgo Bioworks Holdings Inc

11. Commitments and Contingencies

Purchase Obligations

On August 29, 2023, the Company entered into afive-year strategic cloud and artificial intelligence (“AI”) partnership with Google Cloud, intended to enable the Company to develop and deploy AI tools for biology and biosecurity. The partnership includes minimum annual commitments over the contract year ending August 31 to purchase cloud hosting services in exchange for various discounts on such services. The minimum annual commitments are as follows: year 1, $8.0 million; year 2, $28.0 million; year 3, $54.0 million; year 4, $86.0 million; and year 5, $113.0 million. The Company purchased $11.6 million in year 1 of the contract and currently expects to have a shortfall in year 2. The minimum commitments may be terminated by the Company upon payment of a cancellation fee representing a percentage of the remaining purchase commitment. If the Company is unable to negotiate a modification to the annual commitments that align with its projected requirements, material losses could be incurred. As of December 31, 2024, the aggregate remaining purchase commitment was $279.3 million.

The Company also entered into an agreement pursuant to which Google Cloud will provide up to $56.3 million in cash funding upon the Company’s achievement of certain milestones by the target completion dates through September 2026. The costs of Google Cloud services are recorded as research and development expenses as incurred in the accompanying consolidated statements of operations and comprehensive loss. Milestone payments received are recognized as a reduction of the associated Google Cloud services costs within research and development expenses when achieved. The firsttwo milestones are initially recognized as liabilities until they become non-refundable upon the Company's achievement of a certain milestone. As of December 31, 2024, the Company has received three milestone payments totaling $10.0 million, with $5.0 million recorded as a reduction to research and development expenses during the year ended December 31, 2024 and $5.0 million recorded as other non-current liability on the balance sheet.

On March 31, 2022, the Company entered into afour-year supply agreement with Twist for the purchase of diverse products including synthetic DNA. The agreement is effective as of April 1, 2022 and obligates the Company to spend a minimum of $58.0 million over thefour-year term with the following minimum annual commitments (each annual year is defined as April 1 to March 31): year 1, $10.0 million; year 2, $13.0 million; year 3, $16.0 million; and year 4, $19.0 million. During the contract period ended March 31, 2024, the Company purchased $13.0 million and currently expects to have a shortfall for year 3 of the contract. If the Company is unable to negotiate a modification to the annual commitments that align with its expected requirements, losses could be incurred. As of December 31, 2024, the aggregate remaining purchase commitment was $29.6 million.

Contingent Consideration Related to Asset Acquisitions

In connection with the StrideBio acquisition (see Note 4), the Company is obligated to make royalty payments of up to $21.3 million payable in cash or shares of Class A common stock at the Company's election until the earlier of the tenth anniversary date of the initial closing and the date on which the aggregate amount of the royalty payments equals the amount cap. The royalties are calculated based on 10% of the net licensing revenue and 40% of all consideration received for a license or sale of a product incorporating the acquired platform assets. No amounts for the royalty payments have been recorded during the years ended December 31, 2024 and 2023.

The Company routinely acquires rights to intellectual property that may provide for payment of future contingent consideration, including royalties, should revenue be generated from the use of such.

Legal Proceedings

From time to time, the Company may in the ordinary course of business be named as a defendant in lawsuits, indemnity claims and other legal proceedings. The Company accrues for a loss contingency when it concludes that the likelihood of a loss is probable and the amount of loss can be reasonably estimated. The Company adjusts its accruals from time to time as it receives additional information. The Company does not believe any pending litigation to be material, or that the outcome of any such pending litigation, in management’s judgment based on information currently available, would have a material adverse effect on the Company’s results of operations, cash flows or financial condition.

Indemnification Agreements

The Company enters into standard indemnification agreements and has agreements with indemnification clauses in the ordinary course of business. Under such arrangements, the Company indemnifies, holds harmless and agrees to reimburse the indemnified party for losses suffered or incurred by the indemnified party, who are generally the Company’s business partners. The terms of these indemnification arrangements are generally perpetual and effective any time after contract execution. The maximum potential liability resulting from these indemnification arrangements may be unlimited. The Company has never incurred costs to defend lawsuits or settle claims as a result of such indemnifications and the Company is not aware of any indemnification arrangements that could have a material effect on its financial position, results of operations or cash flows, and it has not accrued any liabilities related to such obligations as of December 31, 2024.