Le Lézard
Classified in: Science and technology, Business
Subjects: EARNINGS, Conference Call, Webcast

Forge Global Holdings, Inc. Reports Second Quarter 2022 Results


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:

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:

Additional Business Metrics:

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

)%

 

 

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

%

 


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