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Forge Global (FRGE) 6 Nov 24 2024 Q3 Earnings call transcript

AInvestThursday, Nov 7, 2024 8:21 pm ET
2min read

Forge, a leading player in the private market, recently held its third quarter fiscal 2024 earnings call, offering insights into its financial performance and strategic plans for the future. The call, featuring key executives including CEO Kelly Rodriques, CFO Mark Lee, and Executive Vice President of Corporate Marketing and Communications Lindsay Riddell, provided a comprehensive overview of Forge's current standing and future outlook.

Financial Performance and Strategic Priorities

Forge reported a total revenue less transaction-based expenses of $19.1 million for the third quarter, down from the previous quarter but up compared to the year-ago quarter. Despite the anticipated seasonal summer slowdown, the company saw a 21% year-over-year increase in net marketplace revenue. Institutional investors remain a significant portion of Forge's clientele, with over 20,000 institutions registered on the platform and representing at least two-thirds of the company's buy-side volume since 2021. This focus on institutional clients underscores Forge's credibility and commitment to delivering access and closing trades in the private market.

A notable highlight of the quarter was the introduction of Forge Price, a breakthrough in pricing transparency for the private market. This innovation provides a single derived share price for over 240 of the most liquid private companies, serving as an indicator of the most current price per share and enabling more informed investment decisions. This data-driven approach is a testament to Forge's commitment to leveraging technology and data to enhance its platform and better serve its clients.

Investment in Technology and Innovation

Forge's continued investment in its Next Generation Platform has enabled it to better expose pricing data, improve client experience, and drive efficiency into the trading process. This strategic focus on technology is evident in the company's efforts to enhance the client onboarding experience and expand access for participants in support of capital and liquidity needs.

In addition to these enhancements, Forge has also taken steps to accelerate its timeline to profitability. The company announced its intention to reach breakeven adjusted EBITDA in 2026, with actions taken in Q3 to set this goal in motion. These actions include onetime severance expenses associated with workforce reductions and investments in engineering support from offshore resources to reduce future engineering costs.

Market Outlook and Competitive Positioning

Looking ahead, Forge remains optimistic about the potential for growth in the private market, particularly in the context of the evolving regulatory landscape and potential changes in the IPO environment. The company's data-driven strategies, including the Forge Price feature and the expansion of its RIA offerings, position it well to capitalize on these opportunities.

Despite competition from new entrants like Nasdaq Private Market, Forge remains confident in its market position. With a strong focus on scale, reputation, and innovation, the company is well-positioned to navigate the competitive landscape and continue its growth trajectory.

Investor Relations and Shareholder Engagement

During the call, key shareholders and investors had the opportunity to engage with Forge's management team, raising questions about market trends, competition, and future plans. These interactions provided valuable insights into the concerns and expectations of influential stakeholders, highlighting the importance of transparency and investor engagement in shaping Forge's strategic direction.

Conclusion

Forge's third quarter fiscal 2024 earnings call offered a comprehensive overview of the company's financial performance and strategic outlook. With a focus on technology, institutional engagement, and data-driven innovation, Forge is well-positioned to capitalize on opportunities in the private market and navigate the competitive landscape. As the company looks ahead to profitability and continued growth, its commitment to transparency and investor engagement will be key to its success.

Disclaimer: the above is a summary showing certain market information. AInvest is not responsible for any data errors, omissions or other information that may be displayed incorrectly as the data is derived from a third party source. Communications displaying market prices, data and other information available in this post are meant for informational purposes only and are not intended as an offer or solicitation for the purchase or sale of any security. Please do your own research when investing. All investments involve risk and the past performance of a security, or financial product does not guarantee future results or returns. Keep in mind that while diversification may help spread risk, it does not assure a profit, or protect against loss in a down market.