- Total Revenue Less Transaction Based Expenses Was $16.5 million
in 2Q22
- Trading Volume Was $331.8 million in 2Q22
- Net Take Rate Was 3.2% in 2Q22
- Forge Trust Custodial Cash Was $680 million in 2Q22
- Signed Strategic Partnership Agreement with Morgan Stanley in
2Q22
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, 2022.
“The challenging macro environment and ongoing uncertainty
continued to disrupt pricing equilibrium in Q2,” said Kelly
Rodriques, CEO of Forge. “However, investors, company leaders and
private company equity holders turned to Forge for our expertise,
our unique ability to provide real time insights on pricing and
valuation of private companies and to offer solutions for employee
liquidity, the value of which is even more catalyzed in periods of
disruption. We continued to expand our sell-side interest and grow
our strategic partnerships in the quarter and are confident that as
markets recalibrate, Forge is well-positioned to enable liquidity
and deliver long-term returns for our shareholders.”
Financial Highlights for the Second
Quarter of 2022
Revenue: Total revenue less transaction-based expenses
was $16.5 million compared to revenue less transaction-based
expenses of $37.1 million in the quarter ended June 30, 2021.
Operating Income: Total operating loss for the quarter
was $26.0 million, compared to the total operating loss of $0.8
million in the quarter ended June 30, 2021.
Net Loss: Net loss of $5.1 million, compared to the net
loss of $8.0 million in the quarter ended June 30, 2021.
Adjusted EBITDA: Total Adjusted EBITDA for the quarter
was a loss of $12.3 million, compared to the total Adjusted EBITDA
gain of $6.5 million in the quarter ended June 30, 2021.
Cash Flow from Operating Activities: Net cash used in
operating activities was $18.2 million in the three months ended
June 30, 2022 compared to net cash provided by operating activities
of $19.2 million in the three months ended June 30, 2021.
Cash Flow from Financing Activities: Net cash provided by
financing activities was $22.6 million in the three months ended
June 30, 2022 compared to net cash provided by financing activities
of $32.7 million in the three months ended June 30, 2021.
Ending Cash Balance: Cash and cash equivalents as of June
30, 2022 was $204.9 million.
Share Count: Weighted-average number of shares used to
compute net loss per share attributable to common stockholders,
basic for 2Q22 was 167 million shares and fully diluted outstanding
shares count as of June 30, 2022 was 189 million shares.
Fully diluted outstanding shares 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 of exercise price of the respective instruments.
Instruments that are out of the money are excluded from the fully
diluted outstanding shares count.
KPIs:
- Trading Volume was $331.8 million in the quarter, down 64%
year-over-year.
- Net Take Rate for the quarter was 3.2%, down 6%
year-over-year.
- Total Placement Fee revenues totaled $11.0 million, down 67%
year-over-year.
- Total Custodial Accounts decreased from 1.88 million to 1.74
million, down 7% year-over-year.
- Total Assets Under Custody increased from $14.6 billion to
$15.3 billion, up 5% 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:
- Strategic Alliances: In 2Q22, we signed an agreement
with Morgan Stanley Smith Barney LLC (“MSSB”) under which MSSB may
direct their customers’ orders of equity securities of private
issuers to the Forge Markets platform.
- New Products/Services: Within Forge Data, we announced
upgrades to Forge Intelligence designed to enhance the experience
for our customers and provide even more visibility into the private
market and enable more intelligent investing.
- Redemption of Public Warrants: In 2Q22, we announced
that we would redeem all of our public warrants on July 11, 2022
pursuant to the terms of the warrant agreement governing the
warrants. Of the 18,466,604 public warrants outstanding as of 1Q22,
approximately 2 million were exercised, and cash proceeds generated
from these warrant exercises were approximately $22.9 million.
Additional Business
Metrics:
- Forge Trust Custodial Cash: In 2Q22, Forge Trust
Custodial Cash totaled $680 million up 10% year-over-year from $620
million.
- Total Number of Companies with Indications of Interest
(IOIs): In 2Q22, the total number of companies with Indications
of Interests were 463 up 26% year-over-year from 368 last
year.
- Headcount: We finished out 2Q22 with a total headcount
of 350, an increase of 36% year-over-year.
Webcast/Conference Call
Details
Forge will host a webcast conference call today, August 11th,
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, and (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 or around August 12, 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)
June 30,
2022
December 31,
2021
Assets
Current assets:
Cash and cash equivalents
$
204,942
$
74,781
Restricted cash
1,819
1,623
Accounts receivable, net
2,279
5,380
Payment-dependent notes receivable,
current
14
1,153
Prepaid expenses and other current
assets
12,201
5,148
Total current assets
$
221,255
$
88,085
Property and equipment, net
310
497
Internal-use software, net
5,342
2,691
Goodwill and other intangible assets,
net
135,859
137,774
Operating lease right-of-use assets
5,373
7,881
Payment-dependent notes receivable,
noncurrent
16,287
13,453
Other assets, noncurrent
1,680
7,514
Total assets
$
386,106
$
257,895
Liabilities, convertible preferred
stock and stockholders’ equity (deficit)
Current liabilities:
Accounts payable
$
3,773
$
1,920
Accrued compensation and benefits
8,636
21,240
Accrued expenses and other current
liabilities
6,132
8,343
Operating lease liabilities, current
4,827
5,367
Payment-dependent notes payable,
current
14
1,153
Total current liabilities
$
23,382
$
38,023
Operating lease liabilities,
noncurrent
2,859
5,159
Payment-dependent notes payable,
noncurrent
16,287
13,453
Warrant liabilities
26,660
7,844
Other liabilities, noncurrent
427
—
Total liabilities
$
69,615
$
64,479
Commitments and contingencies (Note 8)
Convertible preferred stock, net of
issuance costs, $0.00001 par value; nil and 86,815,192 shares
authorized as of June 30, 2022 and December 31, 2021, respectively;
nil and 73,914,149 shares issued and outstanding as of June 30,
2022 and December 31, 2021, respectively; aggregate liquidation
preference of $0 and $271,845 as of June 30, 2022 and December 31,
2021, respectively
—
246,056
Stockholders’ equity (deficit):
Common stock, $0.0001 par value;
171,364,080 and 63,090,701 shares issued and outstanding as of June
30, 2022 and December 31, 2021, respectively
17
—
Additional paid-in capital
464,576
25,919
Accumulated deficit
(148,102
)
(78,559
)
Total stockholders’ equity
(deficit)
$
316,491
$
(52,640
)
Total liabilities, convertible
preferred stock and stockholders’ equity (deficit)
$
386,106
$
257,895
FORGE GLOBAL HOLDINGS,
INC.
Unaudited Condensed
Consolidated Statements of Operations and
Comprehensive Loss
(In thousands of U.S. dollars,
except share and per share data)
Three Months Ended June
30,
Six Months Ended June
30,
2022
2021
2022
2021
Revenues:
Placement fees
$
10,951
$
32,945
$
25,536
$
60,454
Custodial administration fees
5,689
5,728
11,126
10,274
Total revenues
$
16,640
$
38,673
$
36,662
$
70,728
Transaction-based expenses:
Transaction-based expenses
(178
)
(1,616
)
(311
)
(2,592
)
Total revenues, less transaction-based
expenses
$
16,462
$
37,057
$
36,351
$
68,136
Operating expenses:
Compensation and benefits
$
27,384
$
27,361
$
71,024
$
47,857
Professional services
3,853
4,104
7,370
6,804
Acquisition-related transaction costs
692
92
4,398
92
Advertising and market development
1,441
858
2,945
1,845
Rent and occupancy
1,140
910
2,706
1,797
Technology and communications
2,809
2,146
4,832
3,580
General and administrative
3,170
1,035
4,772
1,988
Depreciation and amortization
2,021
1,356
3,103
2,752
Total operating expenses
$
42,510
$
37,862
$
101,150
$
66,715
Operating (loss) income
$
(26,048
)
$
(805
)
$
(64,799
)
$
1,421
Interest expenses and other income
(expenses):
Interest income (expenses), net
266
(1,780
)
287
(2,334
)
Change in fair value of warrant
liabilities
20,558
(5,404
)
(5,402
)
(6,312
)
Other income (loss), net
140
(10
)
529
156
Total interest income (expenses) and
other income (expenses)
$
20,964
$
(7,194
)
$
(4,586
)
$
(8,490
)
Loss before provision for income
taxes
(5,084
)
(7,999
)
(69,385
)
(7,069
)
Provision for (benefit from) income
taxes
35
4
158
(4
)
Net loss and comprehensive loss
$
(5,119
)
$
(8,003
)
$
(69,543
)
$
(7,065
)
Net loss per share attributable to common
stockholders:
Basic
$
(0.03
)
$
(0.15
)
$
(0.60
)
$
(0.12
)
Diluted
$
(0.20
)
$
(0.15
)
$
(0.66
)
$
(0.12
)
Weighted-average shares used in computing
net loss per share attributable to common stockholders:
Basic
167,052,900
52,504,601
116,815,363
57,038,093
Diluted
173,578,093
52,504,601
120,584,585
57,038,093
FORGE GLOBAL HOLDINGS,
INC.
Unaudited Condensed
Consolidated Statements of Cash Flows
(In thousands of U.S.
dollars)
Three Months Ended June
30,
Six Months Ended June
30,
2022
2021
2022
2021
Cash flows from operating
activities:
Net loss
$
(5,119
)
$
(8,003
)
$
(69,543
)
$
(7,065
)
Adjustments to reconcile net loss to net
cash provided by
Share-based compensation
10,740
5,892
19,262
7,151
Depreciation and amortization
2,021
1,356
3,103
2,752
Transaction expenses related to the
Merger
—
—
3,132
—
Amortization of right-of-use assets
905
666
1,961
1,317
Loss on impairment of long lived
assets
181
—
446
—
Bad debt allowance
(33
)
114
269
214
Change in fair value of warrant
liabilities
(20,558
)
5,404
5,402
6,312
Settlement of related party promissory
notes (Note 3)
—
—
5,517
—
Other
—
53
—
125
Changes in operating assets and
liabilities:
Accounts receivable
1,611
1,919
3,628
1,588
Prepaid expenses and other assets
(6,025
)
715
(6,943
)
178
Accounts payable
982
813
1,843
(113
)
Accrued expenses and other liabilities
(441
)
6,409
(1,182
)
2,837
Accrued compensation and benefits
(1,070
)
4,717
(12,676
)
4,377
Operating lease liabilities
(1,379
)
(875
)
(2,581
)
(1,735
)
Net cash (used in) provided by
operating activities
$
(18,185
)
$
19,180
$
(48,362
)
$
17,938
Cash flows from investing
activities:
Purchases of property and equipment
(95
)
—
(106
)
—
Purchases of intangible assets
(97
)
—
(97
)
—
Capitalized internal-use software
development costs
(1,551
)
(289
)
(3,232
)
(406
)
Net cash used in investing
activities
$
(1,743
)
$
(289
)
$
(3,435
)
$
(406
)
Cash flows from financing
activities:
Proceeds from the Merger
—
—
7,865
—
Proceeds from PIPE and A&R FPA
investors
500
—
208,500
—
Payments for offering costs
(473
)
(740
)
(56,852
)
(740
)
Proceeds from exercise of Public
Warrants
22,136
—
22,136
—
Proceeds from exercise of options,
including proceeds from repayment of promissory notes
400
682
505
1,114
Proceeds from issuance of Series B-1
convertible preferred stock, net of issuance costs
—
47,735
—
47,735
Proceeds from issuance of Series B-2
convertible preferred stock, net of issuance costs
—
1,640
—
1,640
Repayment of notes payable
—
(16,574
)
—
(19,437
)
Payments to repurchase early exercised
stock options
—
(3
)
—
(3
)
Net cash provided by financing
activities
$
22,563
$
32,740
$
182,154
$
30,309
Net increase in cash and cash
equivalents
2,635
51,631
130,357
47,841
Cash, cash equivalents and restricted
cash, beginning of the period
204,126
38,388
76,404
42,178
Cash, cash equivalents and restricted
cash, end of the period
$
206,761
$
90,019
$
206,761
$
90,019
Reconciliation of cash, cash
equivalents and restricted cash to the amounts reported within the
condensed consolidated balance sheets
Cash and cash equivalents
$
204,942
88,396
$
204,942
88,396
Restricted cash
1,819
1,623
1,819
1,623
Total cash, cash equivalents and
restricted cash, end of the period
$
206,761
$
90,019
$
206,761
$
90,019
FORGE GLOBAL HOLDINGS,
INC.
Reconciliation of GAAP to
Non-GAAP Results
Three Months Ended June
30,
Six Months Ended June
30,
2022
2021
2022
2021
Net loss
$
(5,119
)
$
(8,003
)
$
(69,543
)
$
(7,065
)
Add:
Interest (income) expense, net
(266
)
1,780
(287
)
2,334
Provision for (benefit from) income
taxes
35
4
158
(4
)
Depreciation and amortization
2,021
1,356
3,103
2,752
Loss on impairment of long lived
assets
181
—
446
—
Share-based compensation expense
10,740
5,892
19,262
7,151
Change in fair value of warrant
liabilities
(20,558
)
5,404
5,402
6,312
Acquisition-related transaction
costs(1)
692
92
4,398
92
Transaction bonus (2)
—
—
17,735
—
Adjusted EBITDA
$
(12,274
)
$
6,525
$
(19,326
)
$
11,572
(1)
Acquisition-related transaction costs
represent charges involved in the merger between Forge Global, Inc.
and Motive Capital Corp as further described in our Form 10-Q for
the three months ended March 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 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. The
results of our trading business (Forge Markets) and our custody
business (Forge Custody) are presented for the interim periods
below. We believe the following business metrics are useful in
evaluating our business:
Three Months Ended June
30,
Six Months Ended June
30,
Dollars in thousands
2022
2021
Change
% Change
2022
2021
Change
% Change
TRADING
BUSINESS
Trades
630
1,370
(740
)
(54
)%
1,226
2,884
(1,658
)
(57
)%
Volume
$
331,794
$
914,990
$
(583,196
)
(64
)%
$
749,755
$
1,672,841
$
(923,086
)
(55
)%
Net Take Rate
3.2
%
3.4
%
(0.2
)%
(6.0
)%
3.4
%
3.5
%
(0.1
)%
(3.0
)%
Placement fee revenues, less
transaction-based expenses
$
10,773
$
31,329
$
(20,556
)
(66
)%
$
25,225
$
57,862
$
(32,637
)
(56
)%
- 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 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; 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.
As of June 30,
Dollars in thousands
2022
2021
Change
% Change
CUSTODY
BUSINESS
Total Custodial Accounts
1,739,838
1,880,564
(140,726
)
(7
)%
Assets Under Custody
$
15,274,252
$
14,585,683
$
688,569
5
%
- 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/20220811005598/en/
Investor Relations Contact: Dominic Paschel
ir@forgeglobal.com
Media Contact: Lindsay Riddell press@forgeglobal.com
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