- Total Revenue Less Transaction Based Expenses Was $15.5 million
in 1Q23
- Trading Volume Was $128.2 million in 1Q23
- Net Take Rate Was 3.6% in 1Q23
- Forge Trust Custodial Cash Was $574 million in 1Q23
- The Launch of Forge Private Market Index
Forge Global Holdings, Inc. (“Forge,” or the “Company”) (NYSE:
FRGE), a leading private securities marketplace, today announced
its financial results for the quarter ended March 31, 2023.
"Despite continued macroeconomic uncertainty, we remain focused
on advancing the private market ecosystem and building the
solutions and capabilities required of a liquid, transparent and
accessible private market asset class,” said Kelly Rodriques, CEO
of Forge. “As we prepare for an eventual market rebound, we’re
encouraged that market participants are turning to Forge for the
insights and unique data they need to successfully navigate this
market. Our first index — the Forge Private Market Index — is a
reflection of our deep expertise in this market, and the critical
role Forge plays in driving this market into the future.”
Financial Highlights for the First
Quarter 2023
Given the unique economic environment, Forge believes that
quarter-over-quarter comparisons are more indicative of the current
state of the business. For year-ago-quarter comparisons, please
reference the unaudited condensed consolidated financial statements
in the Quarterly Report on Form 10-Q that will be filed on or
around the date of this press release.
Revenue: Total revenue less transaction-based expenses
was $15.5 million compared to $16.7 million in the quarter ended
December 31, 2022.
Operating Loss: Total operating loss was $23.0 million
compared to total operating loss of $27.8 million in the quarter
ended December 31, 2022.
Net Loss: Net loss was $21.3 million compared to net loss
of $26.2 million in the quarter ended December 31, 2022.
Adjusted EBITDA: Total adjusted EBITDA was a loss of
$13.0 million compared to total adjusted EBITDA loss of $14.3
million in the quarter ended December 31, 2022.
Cash Flow from Operating Activities: Net cash used in
operating activities was $17.7 million compared to $9.0 million in
the quarter ended December 31, 2022.
Cash Flow from Financing Activities: Net cash used in
financing activities was $0.5 million compared to net cash provided
by financing activities of $0.1 million in the quarter ended
December 31, 2022.
Ending Cash Balance: Cash and cash equivalents as of
March 31, 2023 was $175.3 million.
Share Count: Basic weighted-average number of shares used
to compute net loss per share attributable to common stockholders
for the quarter ended March 31, 2023, was 172 million shares and
fully diluted outstanding share count as of March 31, 2023 was 187
million shares.
We estimate for the quarter ended June 30, 2023 that Forge will
have 173 million weighted average basic shares outstanding, which
will be used to calculate earnings per share in a loss
position.
Fully diluted outstanding share count includes all common shares
outstanding plus shares that would be issued in respect to
outstanding options and warrants, net of shares to be withheld in
respect to exercise price of the respective instruments.
Instruments that are out of the money are excluded from the fully
diluted outstanding share count.
KPIs for the First Quarter
2023
- Trading Volume was $128.2 million, down 48%
quarter-over-quarter.
- Net Take Rate was 3.6%, up 29% quarter-over-quarter.
- Total Placement Fee revenues, less transaction-based expenses,
totaled $4.6 million, down 32% quarter-over-quarter.
- Total Custodial Administration Fee revenues totaled $10.8
million, up 9% quarter-over-quarter.
- Total Custodial Accounts increased from 1.87 million to 1.94
million, up 4% quarter-over-quarter.
- Total Assets Under Custody decreased from $14.9 billion to
$14.8 billion, down an immaterial percent
quarter-over-quarter.
Additional Business Metrics for the
First Quarter 2023
- Forge Trust Custodial Cash: Forge Trust Custodial Cash
totaled $574 million, down 9.6% quarter-over-quarter from $635
million.
- Total Number of Companies with Indications of Interest
(IOIs): The total number of companies with IOIs were 492, up
12.8% quarter-over-quarter.
- Headcount: Forge finished out the quarter ended March
31, 2023 with a total headcount of 339.
Please refer to the section titled “Use of Non-GAAP Financial
Information” and the tables within this press release which contain
explanations and reconciliations of the Company’s non-GAAP
financial measures.
Additional Business
Highlights
- Debra Chrapaty added to Forge Board of Directors — Ms.
Chrapaty brings decades of corporate leadership in large-scale
technical infrastructure, cloud, operations management, and product
management. Since 2022, she has served as the Chief Technology
Officer of Toast. Ms. Chrapaty previously served as the VP and COO
of Amazon Alexa from 2020 to 2022, and served in multiple
leadership positions for Wells Fargo, the National Basketball
Association, E*TRADE, Microsoft, Cisco, and Zynga. Forge believes
Ms. Chrapaty’s extensive leadership experience across world-class
financial services, technology, and consumer companies makes for a
valuable addition to its Board and the execution of Forge’s
long-term strategic plan.
- Index Launch: Forge launched its first index — The Forge
Private Market Index — which reflects the up-to-date performance
and pricing activity of venture-backed, late-stage companies that
are actively traded in the secondary market. Unlike most private
indices, the Forge Private Market Index reflects up-to-date
performance and pricing activity of its underlying constituents
based on secondary activities derived from Forge’s leading trading
platform, as well as data collected from other private market
trading platforms.
Webcast/Conference Call
Details
Forge will host a webcast conference call today, May 9th, 2023,
at 5:00 p.m. Eastern Time / 2:00 p.m Pacific Time to discuss these
financial results and business highlights. The listen-only webcast
is available at https://ir.forgeglobal.com. Investors and
participants can access the conference call over the phone by
dialing 1 (888) 440-4165 from the United States, or +1 (646)
960-0858 internationally. The conference ID is 5410143. The First
Quarter Investor Supplemental is also posted on
https://ir.forgeglobal.com
Use of Non-GAAP Financial
Information
In addition to our financial results determined in accordance
with generally accepted accounting principles in the United States
of America ("GAAP"), we present Adjusted EBITDA, a non-GAAP
financial measure. We use Adjusted EBITDA to evaluate our ongoing
operations and for internal planning and forecasting purposes. We
believe that Adjusted EBITDA, when taken together with the
corresponding GAAP financial measure, provides meaningful
supplemental information regarding our performance by excluding
specific financial items that have less bearing on our core
operating performance. We consider Adjusted EBITDA to be an
important measure because it helps illustrate underlying trends in
our business and our historical operating performance on a more
consistent basis.
However, non-GAAP financial information is presented for
supplemental informational purposes only, has limitations as an
analytical tool and should not be considered in isolation or as a
substitute for financial information presented in accordance with
GAAP. In addition, other companies, including companies in our
industry, may calculate similarly titled non-GAAP financial
measures differently or may use other measures to evaluate their
performance, all of which could reduce the usefulness of Adjusted
EBITDA as a tool for comparison. A reconciliation is provided below
for Adjusted EBITDA to net loss, the most directly comparable
financial measure stated in accordance with GAAP. Investors are
encouraged to review Adjusted EBITDA and the reconciliation of
Adjusted EBITDA to net loss, and not to rely on any single
financial measure to evaluate our business.
We defined Adjusted EBITDA as net loss, adjusted to exclude: (i)
interest expense, net, (ii) provision for or benefit from income
taxes, (iii) depreciation and amortization, (iv) share-based
compensation expense, (v) change in fair value of warrant
liabilities, (vi) acquisition-related transaction costs, and (vii)
other significant gains, losses, and expenses (such as impairments,
transaction bonus) that we believe are not indicative of our
ongoing results.
Forward-Looking
Statements
This press release contains “forward-looking statements, ”which
generally are accompanied by words such as “believe,” “may,”
”could,” “will,” “estimate,” “continue,” “anticipate,” “intend,”
“target,” “goal,” “expect,” “should,” “would,” “plan,” “predict,”
“project,” “forecast,” “potential,” “seem,” “seek,” “future,”
“outlook,” and similar expressions that predict, indicate or relate
to future events or trends or Forge’s future financial or operating
performance, or that are not statements of historical matters.
These forward-looking statements include, but are not limited to,
statements regarding Forge’s beliefs regarding its financial
position and operating performance, as well as future opportunities
for Forge to expand its business. Forward-looking statements are
predictions, projections and other statements about future events
that are based on current expectations and assumptions and, as a
result, while considered reasonable by Forge and its management,
are subject to risks and uncertainties that may cause actual
results to differ materially from current expectations. You should
carefully consider the risks and uncertainties described in Forge’s
documents filed, or to be filed, with the SEC, including in its
Quarterly Report on Form 10-Q that will be filed on or around the
date of this press release. There may be additional risks that
Forge presently does not know of or that it currently believes are
immaterial that could also cause actual results to differ
materially from those contained in the forward-looking statements.
In addition, forward-looking statements reflect Forge’s
expectations, plans or forecasts of future events and views as of
the date of this press release. Forge anticipates that subsequent
events and developments will cause its assessments to change.
However, while Forge may elect to update these forward-looking
statements at some point in the future, Forge specifically
disclaims any obligation to do so. These forward-looking statements
should not be relied upon as representing Forge’s assessments as of
any date subsequent to the date of this press release. Accordingly,
undue reliance should not be placed upon the forward-looking
statements.
About Forge
Forge is a leading provider of marketplace infrastructure, data
services and technology solutions for private market participants.
Forge Securities is a registered broker-dealer and a Member of
FINRA that operates an alternative trading system.
FORGE GLOBAL HOLDINGS,
INC.
Unaudited Condensed
Consolidated Balance Sheets
(In thousands of U.S. dollars,
except share and per share data)
March 31, 2023
December 31,
2022
Assets
Current assets:
Cash and cash equivalents
$
175,268
$
193,136
Restricted cash
1,643
1,829
Accounts receivable, net
3,286
3,544
Prepaid expenses and other current
assets
5,882
8,379
Total current assets
$
186,079
$
206,888
Property and equipment, net
373
359
Internal-use software, net
6,369
7,640
Goodwill and other intangible assets,
net
132,891
133,887
Operating lease right-of-use assets
4,861
5,706
Payment-dependent notes receivable,
noncurrent
5,830
7,371
Other assets, noncurrent
1,926
1,878
Total assets
$
338,329
$
363,729
Liabilities, convertible preferred
stock and stockholders’ equity
Current liabilities:
Accounts payable
$
1,420
$
2,797
Accrued compensation and benefits
6,539
13,271
Accrued expenses and other current
liabilities
5,884
6,421
Operating lease liabilities, current
3,352
3,896
Total current liabilities
$
17,195
$
26,385
Operating lease liabilities,
noncurrent
3,037
3,541
Payment-dependent notes payable,
noncurrent
5,830
7,371
Warrant liabilities
437
606
Other liabilities, noncurrent
366
365
Total liabilities
$
26,865
$
38,268
Commitments and contingencies
Stockholders’ equity:
Common stock, $0.0001 par value;
173,808,155 and 172,560,916 shares issued and outstanding as of
March 31, 2023 and December 31, 2022, respectively
18
18
Additional paid-in capital
516,130
509,094
Accumulated other comprehensive loss
830
693
Accumulated deficit
(211,606
)
(190,418
)
Total Forge Global Holdings, Inc.
stockholders’ equity
$
305,372
$
319,387
Noncontrolling Interest
6,092
6,074
Total stockholders’ equity
$
311,464
$
325,461
Total liabilities, convertible
preferred stock and stockholders’ equity
$
338,329
$
363,729
FORGE GLOBAL HOLDINGS,
INC.
Unaudited Condensed
Consolidated Statements of Operations
(In thousands of U.S. dollars,
except share and per share data)
Three Months Ended March
31,
2023
2022
Revenues:
Placement fees
$
4,632
$
14,585
Custodial administration fees
10,847
5,437
Total revenues
$
15,479
$
20,022
Transaction-based expenses:
Transaction-based expenses
(19
)
(132
)
Total revenues, less transaction-based
expenses
$
15,460
$
19,890
Operating expenses:
Compensation and benefits
25,762
43,640
Professional services
2,736
3,518
Acquisition-related transaction costs
—
3,706
Advertising and market development
677
1,504
Rent and occupancy
1,326
1,566
Technology and communications
3,390
2,023
General and administrative
2,748
1,602
Depreciation and amortization
1,789
1,082
Total operating expenses
$
38,428
$
58,641
Operating loss
$
(22,968
)
$
(38,751
)
Interest and other income (expenses):
Interest income
1,509
21
Change in fair value of warrant
liabilities
168
(25,959
)
Other income (expenses), net
215
388
Total interest income and other income
(expenses)
$
1,892
$
(25,550
)
Loss before provision for income
taxes
$
(21,076
)
$
(64,301
)
Provision for income taxes
185
123
Net loss
$
(21,261
)
$
(64,424
)
Net loss attributable to noncontrolling
interest
$
(73
)
$
—
Net loss attributable to Forge Global
Holdings, Inc.
$
(21,188
)
$
(64,424
)
Net loss per share attributable to Forge
Global Holdings, Inc. common stockholders:
Basic
$
(0.12
)
$
(0.98
)
Diluted
$
(0.12
)
$
(0.98
)
Weighted-average shares used in computing
net loss per share attributable to Forge Global Holdings, Inc.
common stockholders:
Basic
171,816,522
66,007,461
Diluted
171,816,522
66,007,461
FORGE GLOBAL HOLDINGS,
INC.
Unaudited Condensed
Consolidated Statements of Cash Flows
(In thousands of U.S.
dollars)
Three Months Ended March
31,
2023
2022
Cash flows from operating
activities:
Net loss
$
(21,261
)
$
(64,424
)
Adjustments to reconcile net loss
including noncontrolling interest to net cash (used in) provided by
operations:
Share-based compensation
7,401
8,522
Depreciation and amortization
1,789
1,083
Transaction expenses related to the
Merger
—
3,132
Amortization of right-of-use assets
845
1,056
Loss on impairment of long lived
assets
536
265
Allowance for doubtful accounts
122
302
Change in fair value of warrant
liabilities
(168
)
25,959
Settlement of related party promissory
notes
—
5,517
Changes in operating assets and
liabilities:
Accounts receivable
135
2,017
Prepaid expenses and other assets
2,446
(918
)
Accounts payable
(1,377
)
861
Accrued expenses and other liabilities
(403
)
(741
)
Accrued compensation and benefits
(6,731
)
(11,606
)
Operating lease liabilities
(1,049
)
(1,202
)
Net cash used in operating
activities
$
(17,715
)
$
(30,177
)
Cash flows from investing
activities:
Purchases of property and equipment
(71
)
(11
)
Capitalized internal-use software
development costs
—
(1,681
)
Net cash used in investing
activities
$
(71
)
$
(1,692
)
Cash flows from financing
activities:
Proceeds from the Merger
—
7,865
Proceeds from PIPE investment and A&R
FPA investors
—
208,000
Payments for offering costs
—
(56,379
)
Proceeds from exercise of options,
including proceeds from repayment of promissory notes
61
105
Taxes withheld and paid related to net
share settlement of equity awards
(557
)
—
Net cash (used in) provided by
financing activities
$
(496
)
$
159,591
Effect of changes in currency exchange
rates on cash and cash equivalents
228
—
Net (decrease) increase in cash and cash
equivalents
(18,054
)
127,722
Cash, cash equivalents and restricted
cash, beginning of the period
194,965
76,404
Cash, cash equivalents and restricted
cash, end of the period
$
176,911
$
204,126
Reconciliation of cash, cash
equivalents and restricted cash to the amounts reported within the
consolidated balance sheets
Cash and cash equivalents
$
175,268
$
202,502
Restricted cash
1,643
1,624
Total cash, cash equivalents and
restricted cash, end of the period
$
176,911
$
204,126
FORGE GLOBAL HOLDINGS, INC.
Reconciliation of GAAP to Non-GAAP
Results
(In thousands of U.S. dollars)
Three Months Ended March
31,
2023
2022
Net loss
$
(21,261
)
$
(64,424
)
Add:
Interest income (expense), net
(1,509
)
(21
)
Provision for (benefit from) income
taxes
185
123
Depreciation and amortization
1,789
1,082
Loss or impairment on long lived
assets
536
265
Share-based compensation expense
7,401
8,522
Change in fair value of warrant
liabilities
(168
)
25,959
Acquisition-related transaction costs
(1)
—
3,706
Transaction bonus (2)
—
17,735
Adjusted EBITDA
$
(13,027
)
$
(7,053
)
- Acquisition-related transaction costs represent charges
involved in the merger between Forge Global, Inc. and Motive
Capital Corp as further described in our Annual Report on Form 10-K
for the year ended December 31, 2022 (the “Merger”), other business
combinations, and strategic opportunities. These expenses include
legal, accounting, and investment banking advisory services.
- Represents a one-time transaction bonus to certain executives
as a result of the consummation of the Merger.
FORGE GLOBAL HOLDINGS, INC.
SUPPLEMENTAL FINANCIAL INFORMATION KEY OPERATING
METRICS (In thousands of U.S. dollars)
Key Business Metrics
We monitor the following key business metrics to help us
evaluate our business, identify trends affecting our business,
formulate business plans and make strategic decisions. The tables
below reflect period-over-period changes in our key business
metrics, along with the percentage change between such periods. We
believe the following business metrics are useful in evaluating our
business:
Three Months Ended
Dollars in thousands
March 31, 2023
December 31, 2022
Change
% Change
TRADING
BUSINESS
Trades
306
532
(226
)
(42
) %
Volume
$
128,163
$
246,895
$
(118,732
)
(48
) %
Net Take Rate
3.6
%
2.8
%
0.8
%
29
%
Placement fee revenues, less
transaction-based expenses
$
4,613
$
6,816
$
(2,203
)
(32
) %
- Trades are defined as the total number of orders executed by us
and acquired entities buying and selling private stocks on behalf
of private investors and shareholders. Increasing the number of
orders is critical to increasing our revenue and, in turn, to
achieving profitability.
- Volume is defined as the total sales value for all securities
traded through our Forge Markets platform. Volume is defined as the
aggregate value of the issuer company’s equity attributed to both
the buyer and seller in a trade and as such a $100 trade of equity
between buyer and seller would be captured as $200 volume for us.
Although we typically capture a commission on each side of a trade,
we may not in certain cases due to factors such as the use of an
external broker by one of the parties or supply factors that would
not allow us to attract sellers of shares of certain issuers.
Volume is influenced by, among other things, the pricing and
quality of our services as well as market conditions that affect
private company valuations, such as increases in valuations of
comparable companies at IPO.
- Net Take Rates are defined as our placement fee revenues, less
transaction-based expenses (defined below), divided by Volume.
These represent the percentage of fees earned by our marketplace on
any transactions executed from the commission we charged on such
transactions (less transaction-based expenses), which is a
determining factor in our revenue. The Net Take Rate can vary based
upon the service or product offering and is also affected by the
average order size and transaction frequency. Transaction-based
expenses represent fees incurred to support placement activities.
These include, but are not limited to, those for fund management,
fund and trade settlement, external broker fees and transfer
fees.
As of
Dollars in thousands
March 31, 2023
December 31, 2022
Change
% Change
CUSTODY
BUSINESS
Total Custodial Accounts
1,937,248
1,871,146
66,102
4
%
Assets Under Custody
$
14,828,350
$
14,870,257
$
(41,907
)
Nominal
- Total Custodial Accounts, previously called Billable Core and
Platform Accounts, are defined as our direct customers’ existing or
new custodial accounts that are funded, or unfunded accounts that
are in the process of funding with active transfer activity on the
account. These relate to our Custodial Administration fees revenue
stream and are an important measure of our business as the number
of Total Custodial Accounts is an indicator of our future revenues
from certain account maintenance, transaction and sub-account
fees.
- Assets Under Custody is the reported value of all client
holdings held under our agreements, including cash submitted to us
by the responsible party. These assets can be held at various
financial institutions, issuers and in our vault. As the custodian
of the accounts, we collect all interest and dividends, handle all
fees and transactions and any other considerations for the assets
concerned. Our fees are earned from the overall maintenance
activities of all assets and are not charged on the basis of the
dollar value of Assets Under Custody, but we believe that Assets
Under Custody is a useful metric for assessing the relative size
and scope of our business.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230509005915/en/
Investor Relations Contact: Dominic Paschel
ir@forgeglobal.com
Media Contact: Lindsay Riddell press@forgeglobal.com
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