Yahoo Finance Forge Global Holdings Inc (FRGE) (Q1 2024) Earnings Call Transcript Highlights: Navigating ...
Total Revenue: $19.2 million, up 2% from last quarter.
Marketplace Revenue: $8.5 million, up from $8 million last quarter.
Net Loss: Declined to $19 million from $26.2 million quarter over quarter.
Adjusted EBITDA Loss: $13.5 million, slightly improved from $13.6 million last quarter.
Custodial Cash Balances: $481 million, down from $505 million at year end.
Total Custody Accounts: Increased to 2.2 million from 2.1 million last quarter.
Assets Under Custody: $16.5 billion, up from $15.6 billion last quarter.
Cash and Equivalents: Ended the quarter at approximately $130.7 million, down from $145.8 million last quarter.
Total Headcount: Decreased to 337 at the end of March.
Release Date: May 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
Forge Global Holdings Inc reported a fourth consecutive quarter of revenue improvement with marketplace revenue up 5%.
The launch of Forge Pro, a next-generation platform, has seen positive traction and interest from both existing and new clients.
Expansion into the European market has begun, with the team successfully executing trades, indicating progress in global reach.
The introduction of the first investable index for liquidity in private markets, tracked by the Liquidity Megacorn Fund, marks a significant milestone.
Forge Global Holdings Inc has maintained a stable net take rate of 3.2% and has seen an increase in total marketplace revenues and volume.
Negative Points
Forge Global Holdings Inc reported a net loss of $19 million in Q1 2024, although this was an improvement from the previous quarter.
Custodial cash balances decreased by 2%, and total custodial administration fees dropped from the previous quarter.
The company experienced a decline in cash, cash equivalents, and restricted cash from the previous quarter.
Forge Global Holdings Inc continues to face a challenging interest rate environment which could impact trading volumes and investor sentiment.
Despite improvements, significant increases in trading volumes are contingent on a sustained recovery in the IPO market and investor sentiment.
Q & A Highlights
Q: Can you discuss the significance of the Forge Index and its impact on opening market access to retail investors? A: Kelly Rodriques, CEO of Forge Global Holdings, highlighted the Forge Index as a pivotal development in democratizing access to private markets for investors previously unable to participate. This move is seen as a key step in making private market investments a mainstream asset class. The partnership with liquidity firms like Acuity is expected to enhance this access further, providing a low-cost, efficient investment avenue into alternative assets.
Q: What are your thoughts on M&A opportunities and their potential impact on Forge's strategy and financial health? A: Kelly Rodriques and CFO Mark Lee discussed the strategic approach to M&A, focusing on acquisitions that align with Forge's core objectives, such as enhancing institutional offerings and expanding data capabilities. Financial accretion is important, but strategic fit takes precedence to ensure long-term value creation and scalability.
Q: How is the buyer to seller ratio evolving, and what does this indicate about the market's health? A: Kelly Rodriques noted a significant improvement in the buyer to seller ratio, with buyers constituting over 60% of new indications of interest. This shift from a previous seller-heavy market to a more balanced or buyer-favoring scenario suggests a healthier, more active market conducive to increased trading volumes.
Q: With the launch of Forge in Europe, what are the next steps, and how do you plan to manage growth in this new market? A: Addressing Forge's European expansion, Kelly Rodriques outlined a cautious approach focused on regulatory approvals and revenue generation before significant staffing increases. The goal is to integrate European investors into Forge's global order book efficiently, leveraging existing infrastructure to gain a competitive edge in the region.
Q: What factors are needed to support an increase in transaction volumes, and how do current market conditions affect this? A: CFO Mark Lee discussed several factors influencing transaction volumes, including IPO market improvements, valuation resets, and investor sentiment. The alignment of these factors, along with continued market recovery, is essential for sustaining the positive trends observed in transaction activities.
Q: Can you elaborate on the financial performance and outlook for Forge, particularly concerning profitability and cash flow management? A: Mark Lee provided insights into Forge's financial health, noting improvements in revenue and a strategic focus on expense management to reduce cash burn. The company remains committed to achieving profitability through both organic growth and potential strategic acquisitions, supported by a recovering market and robust operational strategies.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
