- Total Revenue Less Transaction Based Expenses increased to
$22.0 million in 2Q24, up 15% quarter-over-quarter and 32% over the
year-ago quarter
- Total Marketplace Revenues, Less Transaction Based Expenses
increased to $11.4 million in 2Q24, up 35% quarter-over-quarter and
103% over the year-ago quarter
- Trading Volume increased to $426.3 million in 2Q24, up 62%
quarter-over-quarter and 178% over the year-ago quarter
- Net Take Rate was 2.7% in 2Q24
- Planned Expense Reductions are expected to improve margins and
savings, on an annualized basis, of an estimated $11.3 million
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, 2024.
“In Q2, we recorded our fifth consecutive quarter of revenue
growth – with a 15% increase over Q1, attributable to increased
trading activity as the market reawakens,” said Kelly Rodriques,
CEO of Forge. “Throughout the downturn, we continued to invest in
our Next Generation Platform technology while delivering additional
products and capabilities to market to prepare Forge for this
moment. Because of the targeted investments we’ve made, we’re in a
position now to advance planned cost savings and deliver them to
our bottom line. And to that end, we announced today a decisive
action to reduce our expenses and to accelerate our timeline to
profitability.”
Financial Highlights for the Second
Quarter 2024
Revenue: Total revenue less transaction-based
expenses was $22.0 million compared to $19.2 million in the quarter
ended March 31, 2024.
Operating Loss: Total operating loss was $17.7 million
compared to total operating loss of $25.0 million in the quarter
ended March 31, 2024.
Net Loss: Net loss was $14.0 million compared to net loss
of $19.0 million in the quarter ended March 31, 2024.
Adjusted EBITDA: Total adjusted EBITDA was a loss of $7.9
million compared to total adjusted EBITDA loss of $13.5 million in
the quarter ended March 31, 2024. Adjusted EBITDA in the quarter
ended March 31, 2024 included non-recurring charges of $2.8 million
in connection with legacy legal matters.
Cash Flow from Operating Activities: Net cash used in
operating activities was $14.4 million compared to $12.4 million in
the quarter ended March 31, 2024.
Cash Flow from Investing Activities: Net cash provided
from investing activities was $6.3 million compared to net cash
used in investing activities of $0.4 million for the quarter ended
March 31, 2024.
Cash Flow from Financing Activities: Net cash used in
financing activities was $0.9 million compared to $2.1 million in
the quarter ended March 31, 2024.
Ending Cash Balance: Cash and cash equivalents as of June
30, 2024 was $120.5 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, 2024, was 183 million
shares and fully diluted outstanding share count as of June 30,
2024 was 201 million shares.
We estimate for the quarter ended September 30, 2024 that Forge
will have 184 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
2024
- Trading Volume increased from $262.5 million to $426.3 million,
up 62% quarter-over-quarter.
- Net Take Rate was 2.7%, down from 3.2% prior quarter.
- Total Marketplace revenues, less transaction-based expenses,
increased from $8.5 million to $11.4 million, up 35%
quarter-over-quarter.
- Total Custodial Administration Fee revenues decreased from
$10.7 million to $10.6 million, down 1% quarter-over-quarter.
- Total Custodial Accounts increased from 2.15 million to 2.21
million, up 3% quarter-over-quarter.
- Total Assets Under Custody increased from $16.5 billion to
$16.6 billion, up 1% quarter-over-quarter.
Additional Business Metrics for the
Second Quarter 2024
- Forge Trust Custodial Cash: Forge Trust Custodial
Cash totaled $495 million, up 3% quarter-over-quarter from $481
million.
- Total Number of Companies with Indications of Interest
(IOIs): The total number of companies with IOIs were
551, up 1% quarter-over-quarter.
- Headcount: Forge finished out the quarter ended June 30,
2024 with a total headcount of 338. Additionally, Forge announced
planned expense reductions today which include a reduction in
headcount costs by roughly 11%, as well as additional expense
reductions. This action is expected to improve margins and produce
savings of an estimated $11.3 million on an annualized basis.
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.
Business Highlights
- Forge Global’s Private Market Index Now Tracked by Accuidity
Strategy, Offering Diversified Exposure to Late-Stage
Companies: The Forge Accuidity Private Market Index – which
tracks the performance of late-stage, venture-backed companies -
has been adopted by Accuidity within their Megacorn strategy
(“Accuidity”). Accuidity is a Boston-based institutional asset
manager that is seeking to replicate this newly created Forge
index. The Forge Accuidity Private Market Index tracks the
performance of 60 venture-backed, late-stage, private growth
companies including SpaceX, Anduril, Scale AI, Epic Games, Chime
and others. All names are ranked according to a modified
capitalization weighting methodology with an annual rebalance
frequency.
- Forge Launches in Europe Amidst Growing Demand for Access to
Private Company Liquidity: Connecting directly to the
global interest book and leveraging Forge’s infrastructure, data
services and technology solutions, Forge Europe provides sellers
with access to an extensive pool of liquidity and buyers with the
opportunity to buy shares in some of the world’s most exciting
growth companies. With operational hubs in Berlin, Germany,
integrated within the Deutsche B�rse network, as well as in London,
UK, Forge Europe has now closed its first trades in cooperation
with local partners and is planning to further expand across Europe
into Austria, Switzerland and France.
Webcast/Conference Call
Details
Forge will host a webcast conference call today, August 7th,
2024, at 4:30 p.m. Eastern Time / 1:30 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 (800) 715-9871 from the United States, or +1 (646)
307-1963 internationally. The conference ID is 6194475.
Following the conference call, an on-demand replay of the
webcast will be made available on the Investor Relations page of
the Company’s website at 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 define Adjusted EBITDA as net loss attributable to Forge
Global Holdings, Inc., adjusted to exclude: (i) net loss
attributable to noncontrolling interest, (ii) provision for income
taxes, (iii) interest (income) expense, net, (iv) depreciation and
amortization, (v) share-based compensation expense, (vi) change in
fair value of warrant liabilities, and (vii) other significant
gains, losses, and expenses such as impairments or
acquisition-related transaction costs 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.
Consolidated Balance
Sheets
(In thousands of U.S. dollars,
except share and per share data)
June 30, 2024
(Unaudited)
December 31,
2023
Assets
Current assets:
Cash and cash equivalents
$
120,475
$
144,722
Restricted cash
1,089
1,062
Accounts receivable, net
4,524
4,067
Prepaid expenses and other current
assets
10,930
13,253
Total current assets
137,018
163,104
Internal-use software, property and
equipment, net
3,993
5,192
Goodwill and other intangible assets,
net
127,961
129,919
Operating lease right-of-use assets
7,324
4,308
Payment-dependent notes receivable,
noncurrent
6,758
5,593
Other assets, noncurrent
2,606
2,615
Total assets
$
285,660
$
310,731
Liabilities and stockholders’
equity
Current liabilities:
Accounts payable
$
1,656
$
1,831
Accrued compensation and benefits
9,079
11,004
Accrued expenses and other current
liabilities
6,818
8,861
Operating lease liabilities, current
3,357
2,516
Total current liabilities
20,910
24,212
Operating lease liabilities,
noncurrent
5,326
2,707
Payment-dependent notes payable,
noncurrent
6,758
5,593
Warrant liabilities
2,889
9,616
Other liabilities, noncurrent
303
185
Total liabilities
36,186
42,313
Commitments and contingencies
Stockholders’ equity:
Common stock, $0.0001 par value;
182,670,074 and 176,899,814 shares issued and outstanding as of
June 30, 2024 and December 31, 2023, respectively
19
18
Treasury stock, at cost; 157,193 shares as
of June 30, 2024 and December 31, 2023, respectively
(625
)
(625
)
Additional paid-in capital
558,266
543,846
Accumulated other comprehensive income
721
911
Accumulated deficit
(312,986
)
(280,638
)
Total Forge Global Holdings, Inc.
stockholders’ equity
245,395
263,512
Noncontrolling interest
4,079
4,906
Total stockholders’ equity
249,474
268,418
Total liabilities and stockholders’
equity
$
285,660
$
310,731
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,
2024
March 31,
2024
June 30,
2023
June 30,
2024
June 30,
2023
Revenues:
Marketplace revenues
$
11,679
$
8,520
$
5,723
$
20,199
$
10,355
Custodial administration fees
10,603
10,722
10,997
21,325
21,844
Total revenues
22,282
19,242
16,720
41,524
32,199
Transaction-based expenses:
Transaction-based expenses
(256
)
(29
)
(83
)
(285
)
(102
)
Total revenues, less transaction-based
expenses
22,026
19,213
16,637
41,239
32,097
Operating expenses:
Compensation and benefits
28,784
29,843
25,154
58,627
50,916
Technology and communications
2,649
3,060
3,475
5,709
6,865
Professional services
1,605
2,217
3,265
3,822
6,001
Advertising and market development
1,243
1,090
876
2,333
1,553
Rent and occupancy
1,107
1,135
1,148
2,242
2,474
General and administrative
2,508
5,062
3,525
7,570
6,273
Depreciation and amortization
1,781
1,816
1,747
3,597
3,536
Total operating expenses
39,677
44,223
39,190
83,900
77,618
Operating loss
(17,651
)
(25,010
)
(22,553
)
(42,661
)
(45,521
)
Interest and other income (expense):
Interest income
1,495
1,709
1,319
3,204
2,828
Change in fair value of warrant
liabilities
2,280
4,447
(3,790
)
6,727
(3,622
)
Other income, net
94
76
217
170
432
Total interest and other income
(expense)
3,869
6,232
(2,254
)
10,101
(362
)
Loss before provision for income
taxes
(13,782
)
(18,778
)
(24,807
)
(32,560
)
(45,883
)
Provision for income taxes
258
216
293
474
478
Net loss
(14,040
)
(18,994
)
(25,100
)
(33,034
)
(46,361
)
Net loss attributable to noncontrolling
interest
(316
)
(370
)
(211
)
(686
)
(284
)
Net loss attributable to Forge Global
Holdings, Inc.
$
(13,724
)
$
(18,624
)
$
(24,889
)
$
(32,348
)
$
(46,077
)
Net loss per share attributable to Forge
Global Holdings, Inc. common stockholders:
Basic
$
(0.08
)
$
(0.10
)
$
(0.14
)
$
(0.18
)
$
(0.27
)
Diluted
$
(0.08
)
$
(0.10
)
$
(0.14
)
$
(0.18
)
$
(0.27
)
Weighted-average shares used in computing
net loss per share attributable to Forge Global Holdings, Inc.
common stockholders:
Basic
182,681,065
179,910,522
173,289,549
181,680,268
172,565,508
Diluted
182,681,065
179,910,522
173,289,549
181,680,268
172,565,508
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, 2024
March 31, 2024
June 30, 2023
June 30, 2024
June 30, 2023
Cash flows from operating
activities:
Net loss
$
(14,040
)
$
(18,994
)
$
(25,100
)
$
(33,034
)
$
(46,361
)
Adjustments to reconcile net loss to net
cash used in operations:
Share-based compensation
7,859
9,467
8,809
17,326
16,210
Depreciation and amortization
1,781
1,816
1,747
3,597
3,536
Amortization of right-of-use assets
662
643
734
1,305
1,579
Loss on impairment of long lived
assets
—
—
—
—
536
Impairment of right-of-use assets
—
186
—
186
—
Allowance for doubtful accounts
107
109
49
216
171
Change in fair value of warrant
liabilities
(2,280
)
(4,447
)
3,790
(6,727
)
3,622
Changes in operating assets and
liabilities:
Accounts receivable
923
(1,596
)
(1,448
)
(673
)
(1,313
)
Prepaid expenses and other assets
(5,353
)
1,125
(2,227
)
(4,228
)
219
Accounts payable
(1,004
)
1,066
148
62
(1,229
)
Accrued expenses and other liabilities
(4,636
)
2,782
1,691
(1,854
)
1,288
Accrued compensation and benefits
2,041
(3,967
)
(783
)
(1,926
)
(7,514
)
Operating lease liabilities
(491
)
(555
)
(1,032
)
(1,046
)
(2,081
)
Other
—
(10
)
—
(10
)
—
Net cash used in operating
activities
(14,431
)
(12,375
)
(13,622
)
(26,806
)
(31,337
)
Cash flows from investing
activities:
Purchases of term deposits
—
—
(2,665
)
—
(2,665
)
Receipts of term deposit maturities
6,559
—
—
6,559
—
Purchases of property and equipment
(267
)
(400
)
(28
)
(667
)
(99
)
Net cash provided by (used in)
investing activities
6,292
(400
)
(2,693
)
5,892
(2,764
)
Cash flows from financing
activities:
Proceeds from exercise of options
235
226
269
461
330
Taxes withheld and paid related to net
share settlement of equity awards
(1,135
)
(2,302
)
—
(3,437
)
(557
)
Net cash used in financing
activities
(900
)
(2,076
)
269
(2,976
)
(227
)
Effect of changes in currency exchange
rates on cash and cash equivalents
(78
)
(253
)
(53
)
(331
)
175
Net decrease in cash and cash
equivalents
(9,117
)
(15,104
)
(16,099
)
(24,221
)
(34,153
)
Cash, cash equivalents and restricted
cash, beginning of the period
130,681
145,785
176,911
145,785
194,965
Cash, cash equivalents and restricted
cash, end of the period
$
121,564
$
130,681
$
160,812
$
121,564
$
160,812
Reconciliation of cash, cash
equivalents and restricted cash to the amounts reported within the
consolidated balance sheets
Cash and cash equivalents
$
120,475
$
129,606
$
159,526
$
120,475
$
159,526
Restricted cash
1,089
1,075
1,286
1,089
1,286
Total cash, cash equivalents and
restricted cash, end of the period
$
121,564
$
130,681
$
160,812
$
121,564
$
160,812
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, 2024
March 31, 2023
June 30, 2023
June 30, 2024
June 30, 2023
Net loss attributable to Forge Global
Holdings, Inc.
$
(13,724
)
$
(18,624
)
$
(24,889
)
$
(32,348
)
$
(46,077
)
Add:
Net loss attributable to noncontrolling
interest
(316
)
(370
)
(211
)
(686
)
(284
)
Provision for income taxes
258
216
293
474
478
Interest (income) expense, net
(1,495
)
(1,709
)
(1,319
)
(3,204
)
(2,828
)
Depreciation and amortization
1,781
1,816
1,747
3,597
3,536
Share-based compensation expense
7,859
9,467
8,809
17,326
16,210
Change in fair value of warrant
liabilities
(2,280
)
(4,447
)
3,790
(6,727
)
3,622
Impairment of right-of-use assets
—
186
—
186
—
Loss on impairment of long lived
assets
—
—
—
—
536
Adjusted EBITDA
$
(7,917
)
$
(13,465
)
$
(11,780
)
$
(21,382
)
$
(24,807
)
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, 2024
March 31, 2024
June 30, 2023
June 30, 2024
June 30, 2023
TRADING
SOLUTIONS
Trades
831
605
448
1,436
754
Volume
$
426,318
262,538
153,182
688,856
281,345
Net Take Rate
2.7
%
3.2
%
3.7
%
2.9
%
3.6
%
Marketplace revenues, less
transaction-based expenses
$
11,423
8,491
5,640
19,914
10,253
- Trades are defined as the total number of orders executed by us
and entities we have acquired on behalf of private investors and
stockholders. 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 which is 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 a
third-party 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 marketplace revenues, less
transaction-based expenses, 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.
As of
Dollars in thousands
June 30, 2024
March 31, 2024
June 30, 2023
CUSTODY
SOLUTIONS
Total Custodial Accounts
2,211,108
2,152,777
1,970,617
Assets Under Custody
$
16,600,408
$
16,454,323
$
15,299,816
- Total Custodial Accounts are defined as our customers’
custodial accounts that are established on our platform and
billable. 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 cash
administration 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/20240807409110/en/
Investor Relations Contact: Dominic Paschel
ir@forgeglobal.com
Media Contact: Lindsay Riddell press@forgeglobal.com
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