FRGE - Earnings call transcript Q1 2024 | Forge Global Holdings, Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good afternoon. My name is Jerico, and I will be your conference operator today. At this time, I would like to welcome everyone to the Forge First Quarter 24 Financial Results Conference Call. On today's Forge Global's call will be Kelly Rodriques, CEO; Mark Lee, CFO; Lindsay Riddell, Executive Vice President of Corporate Marketing and Communication; and Dominic Paschel, SVP of Finance and Investor Relations. All lines have been placed on mute to prevent any background noise. there a remarks, session. speakers' the will question-and-answer be After [Operator Instructions]. now And over turn to will Lindsay call the I Riddell, Ms. Riddell, your conference. begin you may

Lindsay Riddell

today Thank for XXXX thank and Call. for us Earnings you, Quarter Forge's you First operator, joining all

Rodriques; at Joining Mark Forge's the remarks the end. Lee. CEO, then and prepared CFO quarter's share and results me will take Forge's today regarding are Kelly They your questions

our announcing results market call. call Investor Just conference is available also A presentation investor we Forge's release our days, This available first about an as today, IR press results. is live replay on quarter closed the after page. discussion Relations to is a of website. today this complementary which and beginning our will the press be financial XXXX There's being webcast after issued page X release, company XX for hour of the on a of conclusion

current During uncertainties, this cause and subject are we forward-looking of may various projections make make conference factors that based important call, there actual date. the and forward-looking statements. differ risks filings Form soon SEC those from to we statements in discuss SEC's on expectations, the report included found to as are that our forecasts our and today's Any could be outcomes on factors and these website. XX-Q, of in filings, the website quarterly materially our can statements including We on which page IR

we when company's which are today, As adjusted measures, be otherwise measures will a forward-looking that noted, discussing update our statements. In reminder, are unless performance. believe our evaluating presentation to we not meaningful required financial the are non-GAAP we

the financial our the on to IR these page you website. contained our to is measures press within detailed data reconciliations, also refer GAAP posted which disclosures of For and should release, the

the page. the Additionally, have posted XXXX first will results. quarter on Today's first information on supplemental discussion our same we quarter focus

results our outside quarterly over by picture Forge's annual I'll you are evaluate it that, of be encourage With to we for always, performance, of a which control. both Kelly. and that As affected events to turn can full unexpected

Kelly Rodriques

thanks is believe today. I only outlook in same joining and know today. largely our X Lindsey, after we continues earnings the ago, the weeks all to progressively and a We Thanks, cold reported market momentum private long build winter. us for

clients. was we stayed focused emerging significant from As data X made market first we technology downturn more week a over first milestone and development We interest Pro technology and the the from may in major the our our I'll data traction while seeing demonstrable lead trading are Forge that environment already professional in signals, participation from launch, which new And with encouraged and Forge also and validating murky. and existing in including investors. tools is We're in place Pro the the our of a since as remains exposure later this Pro, throughout consistently our proprietary signaled company one rate and call, stronger portfolio. years, trading to in more last We've hypothesis next-generation interest we the past positive years leader, end the institutional with X a Forge address in robust to engagement market in strides March. even on platform released more seen at

in as the quarter X% up from with marketplace of of QX, pleased consecutive fourth improvement delivered quarter, market highlights continues revenue first that business terms In I'm our its we to the share recovery. revenue

has achieved now Europe. it's all our past data in report and in the Europe. the are team often. believe a we And Market team index, milestones you, build Liquidity as Forge and market I've X, trades say into Through early to our Private official by to to also global Europe, is our year days, beginning being we've executed Forge I first and investable now steady... and and in still pleased Index Equidity-Megacorn quarter through in into the announced Fund. April tracked April while the the index the technology, of continues As that said the this We're have in we launch our expansion this over culminated strong we're first to its of position this that market momentum

Mark Lee

we X.X expect Based will reflecting the equal recorded million, the and in on from of modestly up second our pipeline quarter continued the into million, weeks X% current from X be XXXX. to that last $X last improvement quarter. $X.X up visibility, QX trough quarter, the from million quarter,

As a solutions quick as fees called our reminder, believe the placement describes include marketplace revenue previously earned placement marketplace better subscription was name we data which company revenue. revenue, we as included revenue of have renamed fees, private this the our revenue revenues products category and from fee

We change to have and aspects revenue as based our at the and increased of of remains net quarter period Transaction a category not adjusted the a presentations. methodology, this million. on fee making name assumptions revenue, to million $XXX for take number X% volumes marketplace changed factors, as such rate mix. the prior QX, or of revenue otherwise this and reminder, any can $XXX individual institutional comparable from And vary quarter-to-quarter placement

custodian custodial in in down majority the million cash Total QX. increase between attributable accounts. quarter million in the totaled $X.X growth to million $XX.X resulting custodial cash custody accounts of to the $XXX a service Our million accounts $X.X decline accounts which was a a Q fees, at $XXX in balances year-end, end our from accounts generate QX from custody during in in at dropped the QX, increased total while administration in from million core Core revenue, as company X% versus [Indiscernible] of administration or from $XX.X vast million accounts. cash

in liabilities. favorable fair at Assets custody of million $X.X the the change quarter-over-quarter. billion of an XX.X versus from noncash $XX.X million warrant under to QX end included declined $XX.X were value $XX This million

heavily As G&A with Both impacted were of million charges these to legal respective a in liabilities variability. and our periods legacy reminder, of of our recorded million and the price $X.X share expenses nonrecurring price related resolution warrant quarter prior and first share matters. the quarter the by fair $X.X the in matters. is value include connection

ongoing Following currently impacts do was first expect matters, any the we conditions the resolution to of million million loss our not loss certain respective $XX.X expense $XX.X in compared management of operating other course quarter ordinary our material these activities to million EBITDA arising cash modest connection net matters. as nonrecurring cash the the charges quarter-over-quarter of includes improvement financial used quarter in legal used to was in in business. periods increase quarter. $XX.X the the Net with legacy of in matters In to last from last continue million quarter, revenue activities resolution a of adjusted legal operating of $X.X legacy drive compared in the

used committed XXX at from payment net do million period Including see hiring This ended cash cash stands compared operating have less said, ending classified lag replacement the at deposits $XXX.X and headcount approximately bonuses, to of our would discipline annual count at in period current as and Excluding been restricted total of headcount $XXX.X prior to the remain cash the cash head keeping in and assets. our in $X.X term excludes other than million activities $XXX.X March. variability our quarter. maintaining to these cash, million terms we We to as quarter the Cash, decreased expense Total equivalents flat. quarter. as end of the deposits million. That turnover. last

to remain our we stewards lowering we of as XXXX in committed XXXX. shareholder capital, in As cash burn overall did

shares. expenses, managing loss and weighted was compute build diluted improve our was fully shares share our XXX on services. a XXX focus platform, Forge's We used continue as average and continue million housekeeping shares net to XX March count outstanding our of to of number From perspective, to basic and products million

million the common second average estimate basic quarter in purposes we position. of For XXX EPS modeling for the XXXX, loss shares weighted

of strongly ahead we of buyers -- indicators, the ratio are uptick several the of as spreads, by the of increase sellers in versus in of As the the interest leading narrowing QX. our for such overall indications encouraged in bid-ask and look we remainder

in investor However, in rates trading to that interest outlook nameable a before improvement over Kelly continued of overview back brief the the for in and it turn questions. a a hand we on year require and increases will sustained by sports significant for driven recovery improvement as it IPO market I'll this sentiment believe volumes market. we

Kelly Rodriques

In platform Forge made quarter, and which interest QX. that market our Forge's XX% the in The In a liquid reengaged Private the Thank in that the new fell which the total, Buy market long Market up of you, update buyers of the market into on we reported interest quickly market of sign in quarter. latest XX% touch for was rise another closely Mark. rose submitted end X below our that on names of side private interest XX period. X-year at on the spread to most after X.X% platform median. private in I'll month to indications watching April, have the we're tracks is in the indications bid-ask the Forge X.X% risk-off the Index, up indicators continued QX, March.

as We methodology January methodology update than spreads since. again, it's reminder, private more performing to just And quarter activity. bid-ask spread are noted in the past, our headed change beat in Forge of tend that it's meet and into market question now was XXXX January the private are business, continued beget use or rather stronger our IPOs to we not of also though point And starting a our served improving of the markets this average XXXX likely second our In Forge IPOs We we IOI. starting calculating droves, it's velocity. median the market pipeline issuer As to adjusted certainly since years happen to been view use is than in in the market has, believe but positive a for to this in for individual quarter XXXX. QX QX. have beacon investment this a certainly at IPOs. and that

of control play, a can't you.Â development, market that right as macro we we're and want variables to be technology the cycle. Thank feel expertise, begins all data new we where in through our our While the we

Dominic Paschel

can first Jerico, how our With to to ask go we that, the one. you questions remind can and participants

Operator

Yes.

now be your open will floor the questions. for So

So this to ask a question time. [Operator Instructions]. I get

the So Citizens of the first comes Devin from JMP. with Ryan line question

Alex Jenkins

the where in line Ryan. want retail broader just access should guess to material market guess firms investors. This the on out? like I could a an and What playing that to touch I this a this with Acuity to the become is up see Alex start, implications Jenkins results? open we settling partnerships become I the Devin index. you And index It could seems much for important gateway to think group about do for time how are Forge? of how for Forge to

Kelly Rodriques

get to problem needed I'll be solved tipping point private start, for viewed over years for the really to part And turn didn't have access part the this I'll private Part class. becomes class. business. felt asset about market Mark, private innovation thesis class the and as asset X where of the we excited investors this We're the market to mandate asset that question. the of access of our our market in a we mainstream it was that our previously ago to glad for

So evolutionary trend that we intend to of lead. this part an is

of proprietary in of first fund. it's very indication Mark to this the one is by point couldn't the I'll span can But a specifically flows this our an platform more liquidity access, effort you actually up for to data. let and that data are that group be years to invest the build a impressive more the managers and now create opening Forge's a an more next so will revenue not And should who but previously market access used thus talk because beginning where consider team. those we asset few only across group this at

talk Mark, about more liquidity. let directly So you I'll

Mark Lee

vehicles and index adoption some I couple It companies Look, of of business the it to we comments. brings question of will our direct Thanks in think AUM buyers from Alex. I private question. up in a massive products think and I take one, terms But business. that TAM, on track and timing. just a business individual mean, do think for the building to said, the focused time. that cost-efficient our who now their investors the new opens low Yes, Kelly the alternative exposure sellers efficient of number way affluent has a of portfolio. as into quantitative exposure. of to universe of get lot to team experience the with this space. a to I I of top with this get are products probably And working kind really this that is in out partnering firm fee, Acuity, mean, past kind and looking one and index we with picked a assets guess, most TAM had

really the rebalance trading services a of where from will using And This the we of portfolios activity, new with see their so they home products. also revenue out need their to right? private and -- asset time remind come All proud on leading of also by will also to with addition of I expand these drive that we'll in the fill expanded the would you find time, bringing AUM place to and exposure kind the bring Acuity. this And our index Forge's licensing need markets. we're opportunity investors data for will as partnership data earning into Forge. managers want to to and they'll products

I so kind of streams. on opportunities many think our revenue And of there's

Alex Jenkins

gears little guess just bit. I to switch a

couple maybe financially about not year accelerate last profitability? not new potentially to that Would or do might is there M&A but really times to You opportunities add accretive to industry are recovery spoke deals but a you in capability calls EBITDA M&A a scale a and add the also consolidate. being the earnings way of the for about

Kelly Rodriques

can are it. think our of primarily market. I'll wrap under the objectives what in start the Mark of priority and it We heading

I companies launching. talked with I our effort so I our services to with And relationships And adoption capability, call, and Forge about our data think strategy. themselves. last more institutional I about about talked talked Pro build efforts

those we as at at it's looking will that consolidation and we a while So believe think, segment do this that We're we opportunity, look or the service evolves. still, pending in is of companies as happen there market the -- are that are turning, participation. areas market

crazy But the financial scale side deals first, that looking not about let it. strategy any add aren't lens I'll doing So the I'm of Mark accretive. of really at through this color to further second. we're

Mark Lee

Alex. to Not too add, much

we growth acquired able inorganic have past to mentioned and our primary through the companies think to reasons of to become a public in the go was to I public in had acquisitions. to path first continue the in grow place X that one company. be We

do and that a we so expect private continue And a we've public done to that company. as company, as to

get which is to with and we which question breakeven often we And our had in ready XXXX. think path asked I had to XXXX, connection grow we the other profitability. stand breakeven, to question while back been in this back been -- profitable organically we in this to back have get we

that companies consolidate see to way businesses and point. profitability the to also We our quickly to the new a and industry as add and more to and scale opportunity get breakeven platform

there's us. out So monitor opportunities to we and to a of available lot are continue opportunities there, that the

Operator

Next from question JPMorgan. comes Worthington of line of the Ken

Kenneth Worthington

marketplace I has that piece has couple -- X/X the you but IOIs and I the the up The indicated, are of was so IOIs buyers the said buyers sort believe call were been in And presentation think in and been conclusions from of XX% of of to best Forge sellers. XQ that X/X there IOIs buyers? buyer buyers that Forge sellers then and information? a of its closer regard market at were of it business equation 'XX. we sort past to up sellers asking, then Are come seeing more seems conclude that years, mentioned the missing. over to to all the made has split by recovery is should with guess on more maybe you between more from a than transition transition this and I And -- and made sellers a seems the health seeing XX-XX buyers the optimal, truly you I'll like are and when it the just intuitive the

back, IPO we really though market the optimal is are are of not even sort So that operating mix? you now are -- you at --

Kelly Rodriques

a optimal the is think mix probably I range.

since seen buyers and X/X to haven't We XXXX. -- sellers

'XX, in If has and And a remember different But data, you XX coming that's we a off the are really anything you period. good demand look been back XX-XX quite the XX-XX between over we time. from were where these fact, buyer. X/X And in in 'XX, early completely there 'XX with late calls particular, that than inverted. we it were had and less in was times down

out that the think control at So into we But since -- we're to started what continue. this or in pointed the particular 'XX watchful that the definitely say the to that with is the Mark we've drops the obviously of indicator interest one we to and if of. But that. We half is too. seen in needed factors it I IPO the so time remain XX-XX, really and And 'XX. over high there, still second I'd activity great relating rates to other early XX decline first don't happen market,

Mark Lee

And comments fund there kind for now from mean let late-stage a add as aware of venture generally to a more I all the there's me we're huge right space think equity, private in LPs. Kelly's. liquidity out demand few I

is a still of of have issuers. levels interest kind a level very across We of still there on sell record soft So demand side. record sell-side for the

trade. and there's IOI so want to the number activity the will of interest as still -- in between of still on catalyst. increase I relationship culminating act that an and buy one-to-one a think And a is caution buyback in I I not think side very there's that welcome would kind

to and interest sell-side that since opposed steady as highest level careful the seen interest, of want and of quarter-over-quarter in side terms we've the from So XX% IOI was came the we a buy-side of there. really buy doubling QX that be about little XXXX. it side, interest increase talked very in really to I a a of increase buy strong would But the

think of -- really IOIs the QX I let me so So is highest level back. The of go number XXXX. overall highest buyback seen since the it's sorry, of encouraging in you've of QX XXXX. It's thing

we're So terms over not And will we encouraging total want IOIs of or all going in this saw of to of buy-side up don't see going I to it's compared doubling skis levels in next us. being example, get to to of our that far we number mean these translate what right? back the for [Indiscernible]. quarter, XXXX, whether the too assuming But trades for that we're doing back into that's extremely IOIs. metrics it's

Kenneth Worthington

And of I up on good years? of what to seems follow industry, and a competitors So is of taking comments public consolidator this we Do you're to haven't would currency? challenging to level ripe through some position then given don't your growth. I why just degree It period you the to you want actually over you your we've couple seen the that for in a through feel here. sort on consolidation. the me guess consolidation inorganic actually with your And last it pretty a come take thoughts know, be see like I probably consolidation? of

Kelly Rodriques

this Yes. Kelly. of all is Well, first --

the attractive on we've as of quarter still the we recovers, the private player QX and currency we I think be in all, you in expectation have valuations, public I started to those be I end earnings are us are as to early back of And years. out these 'XX space. we First we versus stock for our if many recover you to of X the 'XX, first climb 'XX, coming -- the X public this now private. this. of calls revenues would ability only And call at think from decreasing price for in, through starting now know, acquirer in been that We're of first And market. the in our been quarters that who gives and think an public reporting steadily look

one raising pretty I we really interesting the state in market recovery question I general most consolidate that of also is capital tools impaired. private believe think providing a our in answer to one have share the competitors. of we're compelling think offer important the patient. is And still I is price the to

become so impairment in matter combination the earlier of time just capital at recovering And that same of stock got it's the recovery convergent that I companies our we our kind up interested means strategy companies in you've more until mentioned starting earlier. raising, the we're that a particularly lined see private stock. in to time mid-stage of meaningfully private where that with get point that the And to we're in

are a for watching line So timing waiting for that and moment it's answer, I up And to us. we just think.

Operator

Lau comes next from Oppenheimer. Our Owen the of question with line

Kwun Sum Lau

So the there the Europe X you please step? in you and talk grow Forge and hiring launched executives hired further. is London month, to your and Germany. next plan how Could last What about business

Kelly Rodriques

Yes.

So for Owen, thanks the question.

the next apply our least quarters, things X could so getting in BaFin fully European there: approved, application and short our on focused for think we're the I X we also term, expand one, at for passport.

So revenue we've got focused a And we're that regulatory until now. right we're then, on. really track

to significant the staffing to we're of So QX. success from revenues print be do going any starting through that to now is going sequentially trailing

very being we're So cautious.

the not Europe about made headcount, now. includes forget comments which Let's Mark

committed expand the apply staffing same we time, our and operation. to way European that at keep to our to burn in keep our the decreasing, discipline will flat headcount same So we've

overall plan down, the need against Forge we to velocity to to So European for revenue the the model. of about for flat headcount very keep us staffing cautious be

last we're that what to on, investors the be to is trades, going haven't access built order European printing provide the before. access So expanding decade we've to tell over I you, can to book had this focused who global

that's region there's a being Europe. was this another integrated to the little trying a There last access the order competitor second of to of bunch competitors around the a private to that whole running book competitor or the isn't quarter got global strength be So in participant markets. in API-connected Europe

a out and So printing we go start to position trades. we're in unique think there

hiring totally that through very be to tracks going we're as the we focused move with against traction So between modest year. QX revenue now revenue and

Mark Lee

mentioned we a when Pro, recall order now there's and announced real-time Owen, book. also live Forge that how we And

book. as to the order Forge mentioned, connecting Kelly So Global Europe

can Now IOIs, in reflected see you're time of you're putting offers spread of you and a kind in and and customer kind business are you Europe, the real now see your how IOI changing. your

Kwun Sum Lau

a going then volume just transaction forward. about broader And the question

So the first data there positive some were quarter. in points

investors up You think, sequentially, a improving spread And the a of average companies next high? like else I some I funding from going it barrier talked down, transaction? you first bit, of looks transactions more about XX% higher here? was what to still quite the things below bid-ask up. see see come so still think last Do and even support went IOI think were support because question movement issuers quarter. you to on remained number to have what not people is, down there's rate in need markets with historical is to mean psychological It level. IPO round I kind need mean, the I valuation? guess my to

Kelly Rodriques

take you don't why this. Mark,

Mark Lee

go point that a it's their the year. that the into great following before And lower than bit market QX well. next is of some we trades pretty of typically, by investors squeeze Owen, calendar we the a their to are answer that the QX QX, in public let when because in of a QX always improvement little talk common And out year, think in strongest that's the QX into trying quarter way, as the over historically, typically me is QX I so I when question. question, Look, Yes. year. And about

and case of X always for the XXXX. XXXX. the look high year exceptional packs weaker. and if with QX mean of rates us I exception historically, course, and XXXX, that QX that's a threadliftings So strongest an been in But was IPOs, all-time is you was interest little bit only QX's The quarter

coming that's in I as in add see continued growth of you as spread very of would has The quarter-over-quarter. year, So given talked the down. think we're that winter, positive. right? our performance trending seasonality far are But the our I of throughout we're the really that as Kelly good, proud out about something coming is indicators volume that feeling All particularly QX, typical

versus X.X%. we talk The the thing was one which Now XXXX, the average. year a was about average a is X-year X.X% in spreads, spread about unique XX.X%

we about spreads see But improves, could think good I the as feel on well. So the improvement as X.X% we very a market spread.

about, IOI, if very about we we was In side. As seeing our side FIO, mean, The talked 'XX far But year-over-year, there IPOs the know, and as QX. and talked as business, there's good signs I in XX% to some debt encouraging 'XX IPOs improvement earlier, all IPO of are fizzle. that liquid QX of compared And about products, a We Fanatics the kind saw XX% out, know we Stripe, IPOs, still being of on upcoming all play Klarna in recent signs to that that in IOI we right? improvement. talked right? IPOs we we the need see encouraging XX

the about I you we're IPO in encouraged turning talk But then in finally, valuations when valuations at discounts median. Market now, XX% the look and round that Private market. last watch performance of with the past the performance. QX. by they're Index continuing we're you mean at our are valuation to And data in positive X.X% So the seen the to the we've a still the discount in right, line trading Forge PMU, right

there's our companies of capital have track. if raised out we're that we And so recovering. were terms private of the time of Right this I reset. look raised that now, of that last universe The market that still earlier. at it helpful be companies grade to you will in help think would IPOs capital that valuations improving are XX% expectations kind that It and relates people's they saying was the would mid-XXXX in and

companies of a And I price will And that part in of one to that's think still help valuations It's to great forward. help It of the there's greater also lot a going I rightsize the drive little that help components of will So also important an raised time. bit discovery. companies. think confidence trading in volume right? of the haven't will reset capital

We're factors. order lengthy by our have lot So of and encouraged to room in of there's lot increases to very sum volumes. kind still I drive opportunity trading the significant up, magnitude We answer. order signs. in this of There's a think a of

Operator

further questions this I'll Paschel. the time. over turn at back no call are There Mr. to Dominic

Dominic Paschel

a Thank Quarter everyone, to Forge equity Call. We Conference XXXX second you, will and Jerico, Financial with thank joining quarter analysts the the that engaging for time. conferences you, and forward and throughout be investors look throughout First pending

free the until myself summer. and out close coming to team call the the feel enjoy always, can As reach Jerico. We to then,

Operator

Yes, and this concludes...

Forge Global (FRGE) 7 May 242024 Q1 Earnings call transcript