- Total Revenue Less
Transaction Based Expenses Was $19.9 million in 1Q22
- Newly Publicly Traded on NYSE
after Raising $215.9 Million in Gross Cash Proceeds
- Trading Volume Was $418.0
Million in 1Q22
- Net Take Rate Was Constant for 1Q22 at 3.5%
- Signed Strategic Partnership Agreement with Wells Fargo in
1Q22
- Signed First Six-figure Forge Data customer in 1Q22
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, 2022.
“The private market opportunity remains as clear in volatile
times as it does in stable times,” said Kelly Rodriques, CEO of
Forge. “More companies are staying private longer. They are
creating more value while private and we believe that the need for
employees and shareholders to access liquidity while a company is
private will only continue to grow. Even amid the volatility in Q1,
there were more distinct private companies with shares offered for
sale on the Forge platform than in any previous quarter. Forge is
well positioned to meet the demand for liquidity and access to this
new asset class as pricing expectations stabilize and markets find
equilibrium.”
Financial Highlights for the First
Quarter of 2022
Revenue: Total revenue less transaction-based expenses
was $19.9 million, compared to revenue less transaction-based
expenses of $31.1 million in the quarter ended March 31, 2021.
Operating Income: Total operating loss for the quarter
was $38.8 million, compared to the total operating gain of $2.2
million in the quarter ended March 31, 2021. This includes $27.2
million of one-time expenses incurred as part of the business
combination between Motive Capital Corp and Forge Global, Inc. that
closed in March 2022.
Net Loss: Net loss of $64.4 million, compared to the net
gain of $938 thousand in the quarter ended March 31, 2021. This
includes $58.6 million in one-time and non-cash expenses, of which
$21.4 million were one-time expenses of acquisition bonuses and
transaction costs and $31.8 million were non-cash expenses due to
change in fair value of warrant liabilities and share-based
compensation catch-up.
Adjusted EBITDA: Total Adjusted EBITDA for the quarter
was a loss of $7.1 million, compared to the total Adjusted EBITDA
gain of $5.0 million in the quarter ended March 31, 2021.
Cash Flow from Operating activities: Net cash used in
operating activities was $30.2 million in the quarter ended March
31, 2022 compared to net cash used in operating activities of $1.2
million in the quarter ended March 31, 2021. This includes payment
of a one-time transaction bonus of $10.4 million and payment of
annual bonuses of $10.7 million in the quarter ended March 31,
2022.
KPIs:
- Trading Volume was $418.0 million in the quarter, down 45%
year-over-year.
- Net Take Rate for the quarter was constant at 3.5%, reflecting
no year-over-year change.
- Total Placement Fee revenues totaled $14.6 million, down 47%
year-over-year.
- Total Custodial Accounts increased from 1.8 million to 2.2
million, up 25% year-over-year.
- Total Assets Under Custody increased from $13.8 billion to
$14.9 billion, up 8% year-over-year.
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.
Recent Business
Highlights
- Publicly Traded: Raised $215.9 million in gross cash
proceeds in conjunction with the business combination in March
2022. Forge is now publicly listed on NYSE under the ticker symbol
“FRGE”.
- Strategic Partnerships: In 1Q22, Forge signed an
agreement with Wells Fargo Securities, LLC, to provide their
customers with access to pre-IPO private shares through the Forge
Markets platform.
- New Products/Services: Forge launched Forge
Intelligence, its first data product, and its Forge Company
Solutions offerings in 2021 to provide market-based liquidity
programs for private companies.
- Hiring: Forge ended 1Q22 with 312 full-time employees
and contractors.
Financial Outlook
Given the present volatility and uncertain market conditions,
Forge will neither re-affirm the full-year 2022 revenue outlook
previously provided in February 2022 prior to completion of the
business combination nor provide any guidance at this point in
time. Forge will continue to monitor and evaluate to determine
whether to change our forward guidance practice in the future.
Webcast/Conference Call
Details
Forge will host a webcast conference call today, May 16, 2022,
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.
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 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, (vii) acquisition-related transaction costs, (vi)
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, the benefits of Forge’s
business combination with Motive Capital Corp, and 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 May 16, 2022. 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.
By combining world-class trading technology and operating
expertise, Forge Markets enables private company shareholders to
trade private company shares with accredited investors. Forge
Company Solutions, Forge Data and Forge Trust along with Forge
Markets help provide additional transparency, access and solutions
that companies as well as institutional and accredited investors
need to confidently navigate and efficiently transact in the
private markets. Securities-related services are offered through
Forge Securities LLC (“Forge Securities”), a wholly-owned
subsidiary of Forge. Forge Securities is a registered Broker Dealer
and Member of FINRA/SIPC, 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, 2022
December 31, 2021
Assets
Current assets:
Cash and cash equivalents
$
202,502
$
74,781
Restricted cash
1,624
1,623
Accounts receivable, net
3,561
5,380
Payment-dependent notes receivable,
current
243
1,153
Prepaid expenses and other current
assets
6,170
5,148
Total current assets
$
214,100
$
88,085
Property and equipment, net
535
497
Internal-use software, net
4,481
2,691
Goodwill and other intangible assets,
net
136,843
137,774
Operating lease right-of-use assets
6,560
7,881
Payment-dependent notes receivable,
noncurrent
14,975
13,453
Other assets, noncurrent
1,679
7,514
Total assets
$
379,173
$
257,895
Liabilities, convertible preferred
stock and stockholders’ equity (deficit)
Current liabilities:
Accounts payable
$
2,888
$
1,920
Accrued compensation and benefits
9,706
21,240
Accrued expenses and other current
liabilities
8,083
8,343
Operating lease liabilities, current
5,221
5,367
Payment-dependent notes payable,
current
243
1,153
Total current liabilities
$
26,141
$
38,023
Operating lease liabilities,
noncurrent
4,102
5,159
Payment-dependent notes payable,
noncurrent
14,975
13,453
Warrant liabilities
47,916
7,844
Total liabilities
$
93,134
$
64,479
Commitments and contingencies
Convertible preferred stock, net of
issuance costs, $0.00001 par value; nil and 86,815,192 shares
authorized as of March 31, 2022 and December 31, 2021,
respectively; nil and 73,914,150 shares issued and outstanding as
of March 31, 2022 and December 31, 2021, respectively; aggregate
liquidation preference of $0 and $271,845 as of March 31, 2022 and
December 31, 2021, respectively
—
246,056
Stockholders’ equity (deficit):
Common stock, $0.0001 par value;
169,223,826 and 63,301,388 shares issued and outstanding as of
March 31, 2022 and December 31, 2021, respectively
17
—
Additional paid-in capital
429,005
25,919
Accumulated deficit
(142,983
)
(78,559
)
Total stockholders’ equity
(deficit)
$
286,039
$
(52,640
)
Total liabilities, convertible
preferred stock and stockholders’ equity (deficit)
$
379,173
$
257,895
FORGE GLOBAL HOLDINGS,
INC.
Unaudited Condensed
Consolidated Statements of Operations and
Comprehensive (Loss)
Income
(In thousands of U.S. dollars,
except share and per share data)
Three months ended March
31,
2022
2021
Revenues:
Placement fees
$
14,585
$
27,509
Custodial administration fees
5,437
4,546
Total revenues
$
20,022
$
32,055
Transaction-based expenses:
Transaction-based expenses
(132
)
(976
)
Total revenues, less transaction-based
expenses
$
19,890
$
31,079
Operating expenses:
Compensation and benefits
$
43,640
$
20,496
Professional services
3,518
2,700
Acquisition-related transaction costs
3,706
—
Advertising and market development
1,504
987
Rent and occupancy
1,566
887
Technology and communications
2,023
1,434
General and administrative
1,602
953
Depreciation and amortization
1,082
1,396
Total operating expenses
$
58,641
$
28,853
Operating (loss) income
$
(38,751
)
$
2,226
Interest expenses and other income
(expenses): Interest income (expense), net
21
(554
)
Change in fair value of warrant
liabilities
(25,959
)
(908
)
Other income, net
388
166
Total interest expenses and other
expenses
$
(25,550
)
$
(1,296
)
(Loss) income before provision for
income taxes
(64,301
)
930
Provision for (benefit from) income
taxes
123
(8
)
Net (loss) income and comprehensive
(loss) income
$
(64,424
)
$
938
Net (loss) income per share attributable
to common stockholders:
Basic
$
(0.98
)
$
0.00
Diluted
$
(0.98
)
$
0.00
Weighted-average shares used in computing
net (loss) income per share attributable to common
stockholders:
Basic
66,007,461
61,598,361
Diluted
66,007,461
116,312,835
FORGE GLOBAL HOLDINGS,
INC.
Unaudited Condensed
Consolidated Statements of Cash Flows
(In thousands of U.S.
dollars)
Three months ended March
31,
2022
2021
Cash flows from operating
activities:
Net (loss) income
$
(64,424
)
$
938
Adjustments to reconcile net loss to net
cash provided by operations:
Share-based compensation
8,522
1,259
Depreciation and amortization
1,083
1,396
Transaction expenses related to the
Merger
3,132
—
Amortization of right-of-use assets
1,056
651
Impairment of right-of-use assets
265
—
Bad debt allowance
302
100
Change in fair value of warrant
liabilities
25,959
908
Settlement of related party promissory
notes
5,517
—
Other
—
71
Changes in operating assets and
liabilities:
Accounts receivable
2,017
(331
)
Prepaid expenses and other assets
(918
)
(537
)
Accounts payable
861
(926
)
Accrued expenses and other current
liabilities
(741
)
(3,572
)
Accrued compensation and benefits
(11,606
)
(340
)
Operating lease liabilities
(1,202
)
(860
)
Net cash used in operating
activities
$
(30,177
)
$
(1,243
)
Cash flows from investing
activities:
Purchases of property and equipment
(11
)
—
Capitalized internal-use software
development costs
(1,681
)
(117
)
Net cash used in investing
activities
$
(1,692
)
$
(117
)
Cash flows from financing
activities:
Proceeds from the Merger
7,865
—
Proceeds from PIPE 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
105
432
Repayment of notes payable
—
(2,863
)
Net cash provided by (used in)
financing activities
$
159,591
$
(2,431
)
Net increase (decrease) in cash and cash
equivalents
127,722
(3,791
)
Cash, cash equivalents and restricted
cash, beginning of the period
76,404
42,179
Cash, cash equivalents and restricted
cash, end of the period
$
204,126
$
38,388
Supplemental disclosures of cash flow
information:
Cash paid for interest
$
—
$
642
Supplemental disclosure of non-cash
investing and financing activities:
Property and equipment purchases not yet
paid
$
95
$
—
Deferred offering costs accrued and not
yet paid
$
473
$
—
Capitalized internal-use software
development costs accrued and not yet paid
$
360
$
101
Reclassification of deferred offering
costs to equity
$
5,923
$
—
Conversion of preferred stock
$
246,049
$
—
Conversion of May 2020 and October 2020
preferred stock warrants of Legacy Forge to common stock
warrants
$
2,949
$
—
Non-cash assets acquired in the Merger
$
193
$
—
Warrants issued in connection with FPA
$
3,080
$
—
Assumption of merger warrants
liability
$
13,983
$
—
Recapitalization of Legacy Forge common
stock
$
5
$
—
Vesting of early exercised stock options
and restricted stock awards
$
409
$
11
Issuance of common stock upon settlement
of related party promissory notes
$
4,207
$
—
Early exercise of common stock options
upon settlement of related party promissory notes
$
1,310
$
—
FORGE GLOBAL HOLDINGS,
INC.
Reconciliation of GAAP to
Non-GAAP Results
Three Months Ended March
31,
2022
2021
Net (loss) income
$
(64,424
)
$
938
Add:
Interest income (expense), net
(21
)
554
Provision for (benefit from) income
taxes
123
(8
)
Depreciation and amortization
1,082
1,396
Impairment of right-of-use assets
265
—
Share-based compensation expense
8,522
1,259
Change in fair value of warrant
liabilities
25,959
908
Acquisition-related transaction
costs(1)
3,706
—
Transaction bonus (2)
17,735
—
Adjusted EBITDA
$
(7,053
)
$
5,047
(1)
Represents direct and incremental costs in
connection with business acquisitions and consists primarily of
professional services fees for investment banking advisors, legal
services, accounting advisory, and other external costs directly
related to acquisitions and other strategic opportunities.
Acquisition-related transaction costs also include transaction
costs related to the Business Combination, which consisted of
legal, accounting, and other professional services directly related
to the Merger.
(2)
Represents a one-time transaction bonus to
certain executives as a result of 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. Our
trading business, comprised of Forge Markets offering, is presented
for the interim periods presented, while our custody business,
comprised of Forge Custody offering, presents data as of the dates
presented. We believe the following business metrics are useful in
evaluating our business:
Three Months Ended March
31,
Dollars in thousands
2022
2021
Change
% Change
TRADING
BUSINESS
Trades
596
1,514
(918
)
(61
)%
Volume
$
417,961
$
757,851
$
(338,890
)
(45
)%
Net Take Rate
3.5
%
3.5
%
—
—
%
Placement fee revenues, less
transaction-based expenses
$
14,453
$
26,533
$
(12,080
)
(46
)%
Dollars in thousands
March 31, 2022
March 31,2021
Change
% Change
CUSTODY
BUSINESS
Total Custodial Accounts
2,228,101
1,787,208
440,893
25
%
Assets Under Custody
$
14,933,379
$
13,827,501
$
1,105,878
8
%
- Trades are defined as the total number of orders executed by
the Company 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 on 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; the Company typically captures a
commission on both sides, and as such a $100 trade of equity
between buyer and seller would be captured as $200 volume for the
Company. 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 initial public offering.
- 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, 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.
- 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/20220516005843/en/
Investor Relations Contact: Dominic Paschel
ir@forgeglobal.com
Media Contact: Lindsay Riddell press@forgeglobal.com
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