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01/10 16:57
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call summary and Q&A suggest mixed financial performance with declining revenue and increasing losses. Despite optimistic guidance, there are concerns over macroeconomic factors, election uncertainty, and operational risks. The absence of a share buyback program and cautious investor sentiment further contribute to a negative outlook. The Q&A section did not provide significant positive insights, and management's lack of clarity on certain metrics adds to the uncertainty. Overall, the sentiment leans towards a negative stock price movement over the next two weeks.
Total Revenue less Transaction-Based Expenses $19.1 million, down from $22 million quarter-over-quarter, but up from $18.4 million year-over-year.
Net Marketplace Revenue $8.6 million, down from $11.4 million quarter-over-quarter, but up 21% from $7.1 million year-over-year.
Transaction Volume $338 million, decreased from $426 million quarter-over-quarter, but year-to-date volume is up 99% to $1 billion from $515 million year-over-year.
Net Take Rate 2.6%, slightly down from 2.7% in the prior quarter.
Total Custodial Administration Fees $10.5 million, roughly flat compared to the prior quarter.
Custodial Cash Balances $470 million, down from $495 million in the prior quarter and $505 million at the end of 2023.
Net Loss $18.8 million, increased from $14 million quarter-over-quarter.
Adjusted EBITDA Loss $11.4 million, compared to a loss of $7.9 million last quarter.
Net Cash Used in Operations $5.8 million, compared to $14.4 million last quarter.
Cash, Cash Equivalents, and Restricted Cash $115.6 million, down from $121.6 million last quarter.
Employee Headcount 307, down from 327 at June 30.
Weighted Average Basic Shares for Net Loss Calculation 184 million shares.
Fully Diluted Outstanding Share Count 201 million shares.
Forge Price: A breakthrough in pricing transparency for the private market, providing a single derived share price for over 240 liquid private companies.
Forge Next Generation Platform: Continued investment aimed at improving client experience and driving efficiency in the trading process.
Forge Pro: Combines comprehensive data and order management capabilities, with 280 active clients contributing to 16% of revenue.
Forge Global Advisors: Created over 150 investment vehicles, strengthening relationships with companies and providing access to private shares.
Private Market Magnificent 7: Identified a group of the largest, most resilient, and best performing companies in the private market.
Median Valuations: Median valuations for companies trading on the Forge Platform are trending up, with the lowest monthly discounts recorded in the last 2 years.
AI Influence: AI is increasingly influencing private market performance, with 34 AI companies in the Forge Private Market Index.
Adjusted EBITDA Loss: Increased to $11.4 million due to severance expenses and operational adjustments.
Transaction Volume: Decreased to $338 million from $426 million in the prior quarter, but year-to-date volume is up 99%.
Custodial Cash Balances: Declined to $470 million, but the rate of decline has improved compared to previous years.
Profitability Timeline: Accelerating timeline to reach breakeven adjusted EBITDA by 2026, with actions taken in Q3 to support this goal.
Cost Discipline: Focus on maintaining cost discipline while balancing investment opportunities for strong ROI.
Competitive Pressures: The company faces competitive pressures as it observes greater customer interest in third-party investment vehicles, which often have lower take rates.
Regulatory Issues: The highly contentious U.S. presidential election is creating uncertainty that weighs on investor sentiment.
Economic Factors: The uncertain pace of Fed interest rate reductions and continued geopolitical instability and conflicts are impacting investor confidence.
Supply Chain Challenges: The company is investing in offshore resources to reduce future engineering costs, which may lead to increased engineering spend in the short term.
Operational Risks: The company experienced a one-time severance expense related to a reduction in force, which contributed to an increase in adjusted EBITDA loss.
Market Sentiment: Investor sentiment is currently cautious due to mixed macroeconomic signals and the upcoming election.
Forge Price: A breakthrough in pricing transparency for the private market, providing a single derived share price for over 240 liquid private companies.
Forge Next Generation Platform: Investment aimed at improving client experience and efficiency in trading processes.
Forge Pro: Data-enabled revenue expected to grow substantially, with 280 active clients representing over 16% of revenue.
Forge Global Advisors: Creation of over 150 investment vehicles to strengthen relationships with companies and provide access to private shares.
Adjusted EBITDA: Aiming for breakeven adjusted EBITDA by 2026, with anticipated narrowing of adjusted EBITDA losses in upcoming quarters.
Marketplace Revenue Outlook: Expecting marketplace revenue to be at par or better than the current quarter, with hopes for improved investor confidence post-election.
Primary Funding and IPO Markets: Expecting a meaningful recovery in primary funding and IPO markets in 2025.
Share Buyback Program: None
The earnings call showed improved financial metrics, such as a 28% increase in revenues and a 33% improvement in adjusted EBITDA loss, which are strong indicators of positive performance. Despite a net loss, the company has reduced cash used in operations and improved adjusted EPS by 29%. The cautious optimism in the Q&A and exploration of new partnerships in tokenization further support a positive outlook. However, the lack of specific breakeven guidance tempers the sentiment slightly, keeping it in the positive range rather than strong positive.
The earnings call shows strong financial performance with increased revenue and trading volume, improved EBITDA losses, and growth in custody accounts. The Q&A session highlights strategic initiatives in automation and blockchain, aligning with market trends. Despite uncertainties in IPO timing, the company is optimistic about 2025. Overall, the positive financial metrics, strategic vision, and growth potential suggest a positive stock price movement in the near term.
The earnings call reflects mixed signals: a slight revenue decline and ongoing losses contrast with optimistic future projections and a stock buyback program. Positive elements include improved EBITDA losses and strategic investments in automation and blockchain. However, unclear management responses in the Q&A and a lack of immediate catalysts, such as new partnerships or guidance changes, suggest limited short-term impact on stock price. The neutral sentiment is driven by balancing these factors.
The earnings call summary and Q&A suggest mixed financial performance with declining revenue and increasing losses. Despite optimistic guidance, there are concerns over macroeconomic factors, election uncertainty, and operational risks. The absence of a share buyback program and cautious investor sentiment further contribute to a negative outlook. The Q&A section did not provide significant positive insights, and management's lack of clarity on certain metrics adds to the uncertainty. Overall, the sentiment leans towards a negative stock price movement over the next two weeks.
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