- Total Revenue Less Transaction Based Expenses Was $16.6 million
in 2Q23
- Trading Volume Was $153.2 million in 2Q23
- Net Take Rate Was 3.7% in 2Q23
- Forge Trust Custodial Cash Was $550 million in 2Q23
- Forge Added to U.S. Small-Cap Russell 2000® 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 June 30, 2023.
“As the private market resets after a challenging cycle, Forge
remains focused on helping institutions and stakeholders navigate
this moment. Through accelerated technology development and product
solutions, and enhanced data offerings, analysis and insights — we
are demonstrating progress in support of the continued evolution of
the private market and bolstering our leadership position in this
category,” said Kelly Rodriques, CEO of Forge.
Financial Highlights for the Second
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 $16.6 million compared to $15.5 million in the quarter ended
March 31, 2023.
Operating Loss: Total operating loss was $22.6 million
compared to total operating loss of $23.0 million in the quarter
ended March 31, 2023.
Net Loss: Net loss was $25.1 million compared to net loss
of $21.3 million in the quarter ended March 31, 2023. This includes
$16.2 million compared to $9.7 million in non-cash expenses,
including share-based compensation, unfavorable changes in the fair
value of warrant liabilities and an increase in contingent current
liabilities.
Adjusted EBITDA: Total adjusted EBITDA was a loss of
$11.8 million compared to total adjusted EBITDA loss of $13.0
million in the quarter ended March 31, 2023.
Cash Flow from Operating Activities: Net cash used in
operating activities was $13.6 million compared to $17.7 million in
the quarter ended March 31, 2023.
Cash Flow from Investing Activities: Net cash used in
investing activities was $2.7 million compared to net cash used in
investing activities of less than $0.1 million in the quarter ended
March 31, 2023. Forge moved and invested approximately $2.7 million
in term deposits for optimal yield, which do not qualify for cash
and cash equivalents classification.
Cash Flow from Financing Activities: Net cash provided by
financing activities was $0.3 million compared to net cash used in
financing activities of $0.5 million in the quarter ended March 31,
2023.
Ending Cash Balance: Cash and cash equivalents as of June
30, 2023 was $159.5 million.
Share Count: Basic weighted-average number of shares used
to compute net loss per share attributable to common stockholders
for the quarter ended June 30, 2023, was 173 million shares and
fully diluted outstanding share count as of June 30, 2023 was 199
million shares.
We estimate for the quarter ended September 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 Second Quarter
2023
- Trading Volume was $153.2 million, up 20%
quarter-over-quarter.
- Net Take Rate was 3.7%, up 3% quarter-over-quarter.
- Total Placement Fee revenues, less transaction-based expenses,
totaled $5.6 million, up 22% quarter-over-quarter.
- Total Custodial Administration Fee revenues totaled $11.0
million, up 1% quarter-over-quarter.
- Total Custodial Accounts increased from 1.94 million to 1.97
million, up 2% quarter-over-quarter.
- Total Assets Under Custody increased from $14.8 billion to
$15.3 billion, up 3% quarter-over-quarter.
Additional Business Metrics for the
Second Quarter 2023
- Forge Trust Custodial Cash: Forge Trust Custodial Cash
totaled $550 million, down 4% quarter-over-quarter.
- Total Number of Companies with Indications of Interest
(IOIs): The total number of companies with IOIs were 486, down
1% quarter-over-quarter.
- Headcount: Forge finished out the quarter ended June 30,
2023 with a total headcount of 358, an increase of 6%
quarter-over-quarter.
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
Highlight
- Forge Global Added to U.S. Small-Cap Russell 2000®
Index: Added as a member of the U.S. Small-Cap Russell 2000®
Index (the “Russell 2000® Index”), as part of the 2023 Russell U.S.
Index’s annual reconstitution. Membership in the Russell 2000®
Index, which remains in place for one year, is based on membership
in the broad-market Russell 3000® Index. Approximately $12.1
trillion in assets are benchmarked against Russell’s U.S. indexes.
Russell Indexes are part of FTSE Russell, a leading global index
provider.
Webcast/Conference Call
Details
Forge will host a webcast conference call today, August 8th,
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
Supplemental Investor Information for this quarter 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 LLC 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)
June 30,
2023
December 31,
2022
Assets
Current assets:
Cash and cash equivalents
$
159,526
$
193,136
Restricted cash
1,286
1,829
Accounts receivable, net
4,685
3,544
Prepaid expenses and other current
assets
10,806
8,379
Total current assets
$
176,303
$
206,888
Property and equipment, net
341
359
Internal-use software, net
5,678
7,640
Goodwill and other intangible assets,
net
131,894
133,887
Operating lease right-of-use assets
4,127
5,706
Payment-dependent notes receivable,
noncurrent
5,830
7,371
Other assets, noncurrent
1,894
1,878
Total assets
$
326,067
$
363,729
Liabilities, convertible preferred
stock and stockholders’ equity
Current liabilities:
Accounts payable
$
1,568
$
2,797
Accrued compensation and benefits
5,738
13,271
Accrued expenses and other current
liabilities
7,437
6,421
Operating lease liabilities, current
2,832
3,896
Total current liabilities
$
17,575
$
26,385
Operating lease liabilities,
noncurrent
2,525
3,541
Payment-dependent notes payable,
noncurrent
5,830
7,371
Warrant liabilities
4,228
606
Other liabilities, noncurrent
453
365
Total liabilities
$
30,611
$
38,268
Commitments and contingencies
Stockholders’ equity:
Common stock, $0.0001 par value;
174,386,713 and 172,560,916 shares issued and outstanding as of
June 30, 2023 and December 31, 2022, respectively
18
18
Additional paid-in capital
525,275
509,094
Accumulated other comprehensive loss
798
693
Accumulated deficit
(236,495
)
(190,418
)
Total Forge Global Holdings, Inc.
stockholders’ equity
$
289,596
$
319,387
Noncontrolling Interest
5,860
6,074
Total stockholders’ equity
$
295,456
$
325,461
Total liabilities, convertible
preferred stock and stockholders’ equity
$
326,067
$
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
Six Months Ended
June 30,
2023
March 31,
2023
June 30,
2022
June 30,
2023
June 30,
2022
Revenues:
Placement fees
$
5,723
$
4,632
$
10,951
$
10,355
$
25,536
Custodial administration fees
10,997
10,847
5,689
21,844
11,126
Total revenues
$
16,720
$
15,479
$
16,640
$
32,199
$
36,662
Transaction-based expenses:
Transaction-based expenses
(83
)
(19
)
(178
)
(102
)
(311
)
Total revenues, less transaction-based
expenses
$
16,637
$
15,460
$
16,462
$
32,097
$
36,351
Operating expenses:
Compensation and benefits
25,154
25,762
27,384
50,916
71,024
Professional services
3,265
2,736
3,853
6,001
7,370
Acquisition-related transaction costs
—
—
692
—
4,398
Advertising and market development
876
677
1,441
1,553
2,945
Rent and occupancy
1,148
1,326
1,140
2,474
2,706
Technology and communications
3,475
3,390
2,809
6,865
4,832
General and administrative
3,525
2,748
3,170
6,273
4,772
Depreciation and amortization
1,747
1,789
2,021
3,536
3,103
Total operating expenses
$
39,190
$
38,428
$
42,510
$
77,618
$
101,150
Operating loss
$
(22,553
)
$
(22,968
)
$
(26,048
)
$
(45,521
)
$
(64,799
)
Interest and other income (expenses):
Interest income
1,319
1,509
266
2,828
287
Change in fair value of warrant
liabilities
(3,790
)
168
20,558
(3,622
)
(5,402
)
Other income (expenses), net
217
215
140
432
529
Total interest income and other income
(expenses)
$
(2,254
)
$
1,892
$
20,964
$
(362
)
$
(4,586
)
Loss before provision for income
taxes
$
(24,807
)
$
(21,076
)
$
(5,084
)
$
(45,883
)
$
(69,385
)
Provision for income taxes
293
185
35
478
158
Net loss
$
(25,100
)
$
(21,261
)
$
(5,119
)
$
(46,361
)
$
(69,543
)
Net loss attributable to noncontrolling
interest
$
(211
)
$
(73
)
$
—
$
(284
)
$
—
Net loss attributable to Forge Global
Holdings, Inc.
$
(24,889
)
$
(21,188
)
$
(5,119
)
$
(46,077
)
$
(69,543
)
Net loss per share attributable to Forge
Global Holdings, Inc. common stockholders:
Basic
$
(0.14
)
$
(0.12
)
$
(0.03
)
$
(0.27
)
$
(0.60
)
Diluted
$
(0.14
)
$
(0.12
)
$
(0.20
)
$
(0.27
)
$
(0.66
)
Weighted-average shares used in computing
net loss per share attributable to Forge Global Holdings, Inc.
common stockholders:
Basic
173,289,549
171,816,522
167,052,900
172,565,508
116,815,363
Diluted
173,289,549
171,816,522
173,578,093
172,565,508
120,584,585
FORGE GLOBAL HOLDINGS,
INC.
Unaudited Condensed
Consolidated Statements of Cash Flows
(In thousands of U.S.
dollars)
Three Months Ended
Six Months Ended
June 30,
2023
March 31,
2023
June 30,
2022
June 30,
2023
June 30,
2022
Cash flows from operating
activities:
Net loss
$
(25,100
)
$
(21,261
)
$
(5,119
)
$
(46,361
)
$
(69,543
)
Adjustments to reconcile net loss
including noncontrolling interest to net cash (used in) provided by
operations:
Share-based compensation
8,809
7,401
10,740
16,210
19,262
Depreciation and amortization
1,747
1,789
2,020
3,536
3,103
Transaction expenses related to the
Merger
—
—
—
—
3,132
Amortization of right-of-use assets
734
845
905
1,579
1,961
Loss on impairment of long lived
assets
—
536
181
536
446
Allowance for doubtful accounts
49
122
(33
)
171
269
Change in fair value of warrant
liabilities
3,790
(168
)
(20,557
)
3,622
5,402
Settlement of related party promissory
notes
—
—
—
—
5,517
Changes in operating assets and
liabilities:
Accounts receivable
(1,448
)
135
1,611
(1,313
)
3,628
Prepaid expenses and other assets
(2,227
)
2,446
(6,025
)
219
(6,943
)
Accounts payable
148
(1,377
)
982
(1,229
)
1,843
Accrued expenses and other liabilities
1,691
(403
)
(441
)
1,288
(1,182
)
Accrued compensation and benefits
(783
)
(6,731
)
(1,070
)
(7,514
)
(12,676
)
Operating lease liabilities
(1,032
)
(1,049
)
(1,379
)
(2,081
)
(2,581
)
Net cash used in operating
activities
$
(13,622
)
$
(17,715
)
$
(18,185
)
$
(31,337
)
$
(48,362
)
Cash flows from investing
activities:
Purchases of property and equipment
(28
)
(71
)
(95
)
(99
)
(106
)
Purchases of intangible assets
—
—
(97
)
—
(97
)
Capitalized internal-use software
development costs
—
—
(1,551
)
—
(3,232
)
Purchases of certificates of deposit
(2,665
)
—
—
(2,665
)
—
Net cash used in investing
activities
$
(2,693
)
$
(71
)
$
(1,743
)
$
(2,764
)
$
(3,435
)
Cash flows from financing
activities:
Proceeds from the Merger
—
—
—
—
7,865
Proceeds from PIPE investment and A&R
FPA investors
—
—
500
—
208,500
Payments for offering costs
—
—
(473
)
—
(56,852
)
Proceeds from exercise of Public
Warrants
—
—
22,136
—
22,136
Proceeds from exercise of options,
including proceeds from repayment of promissory notes
269
61
400
330
505
Taxes withheld and paid related to net
share settlement of equity awards
—
(557
)
—
(557
)
—
Net cash (used in) provided by
financing activities
$
269
$
(496
)
$
22,563
$
(227
)
$
182,154
Effect of changes in currency exchange
rates on cash and cash
(53
)
228
—
175
—
Net (decrease) increase in cash and cash
equivalents
(16,099
)
(18,054
)
2,635
(34,153
)
130,357
Cash, cash equivalents and restricted
cash, beginning of the period
176,911
194,965
204,126
194,965
76,404
Cash, cash equivalents and restricted
cash, end of the period
$
160,812
$
176,911
$
206,761
$
160,812
$
206,761
Reconciliation of cash, cash
equivalents and restricted cash to the amounts reported within the
consolidated balance sheets
Cash and cash equivalents
$
159,526
$
175,268
$
204,942
$
159,526
$
204,942
Restricted cash
1,286
1,643
1,819
1,286
1,819
Total cash, cash equivalents and
restricted cash, end of the period
$
160,812
$
176,911
$
206,761
$
160,812
$
206,761
FORGE GLOBAL HOLDINGS,
INC.
Reconciliation of GAAP to
Non-GAAP Results
(In thousands of U.S.
dollars)
Three Months Ended
Six Months Ended
June 30,
2023
March 31,
2023
June 30,
2022
June 30,
2023
June 30,
2022
Net loss
$
(25,100
)
$
(21,261
)
$
(5,119
)
$
(46,361
)
$
(69,543
)
Add:
Interest income (expense), net
(1,319
)
(1,509
)
(266
)
(2,828
)
(287
)
Provision for (benefit from) income
taxes
293
185
35
478
158
Depreciation and amortization
1,747
1,789
2,021
3,536
3,103
Loss or impairment on long lived
assets
—
536
181
536
446
Share-based compensation expense
8,809
7,401
10,740
16,210
19,262
Change in fair value of warrant
liabilities
3,790
(168
)
(20,558
)
3,622
5,402
Acquisition-related transaction costs
(1)
—
—
692
—
4,398
Transaction bonus (2)
—
—
—
—
17,735
Adjusted EBITDA
$
(11,780
)
$
(13,027
)
$
(12,274
)
$
(24,807
)
$
(19,326
)
(1)
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.
(2)
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
Six Months Ended
Dollars in thousands
June 30,
2023
March 31,
2023
Change
% Change
June 30,
2023
June 30,
2022
Change
% Change
TRADING
BUSINESS
Trades
448
306
142
46
%
754
1,226
(472
)
(38
)%
Volume
153,182
128,163
25,019
20
%
281,345
749,755
(468,410
)
(62
)%
Net Take Rate
3.7
%
3.6
%
0.1
%
3
%
3.6
%
3.4
%
0.2
%
6
%
Placement fee revenues, less
transaction-based expenses
5,640
4,613
1,027
22
%
10,253
25,225
(14,972
)
(59
)%
- 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
QoQ
YoY
Dollars in thousands
June 30,
2023
March 31,
2023
June 30,
2022
Change
%
Change
Change
%
Change
CUSTODY
BUSINESS
Total Custodial Accounts
1,970,617
1,937,248
1,739,838
33,369
2
%
230,779
13
%
Assets Under Custody
$
15,299,816
$
14,828,350
$
15,274,252
$
471,466
3
%
$
25,564
—
%
- 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/20230808767193/en/
Investor Relations Contact: Dominic Paschel
ir@forgeglobal.com
Media Contact: Lindsay Riddell press@forgeglobal.com
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