Forge Global Holdings, Inc. (NYSE:FRGE) Q4 2023 Earnings Conference Call March 26, 2024 5:00 PM ET Company Participants Lindsay Riddell - Executive Vice President, Corporate, Marketing & Communications Kelly Rodriques - Chief Executive Officer Mark Lee - Chief Financial Officer Dominic Paschel - Senior Vice President, Finance & Investor Relations Conference Call Participants Devin Ryan - Citizens JMP Patrick Moley - Piper Sandler Alex Kramm - UBS Financial Owen Lau - Oppenheimer Michael Cho - JPMorgan Oper ...

1 On March 25, 2022, the Company filed a Current Report on Form 8-K (the "Form 8-K") which, among other things, included the audited financial statements (and notes thereto) of Forge Global as of and for the fiscal years ended December 31, 2021 and 2020 (the "Forge Global 2021 Financial Statements"), Management's Discussion and Analysis of Financial Condition and Results of Operations for Forge Global for the years ended December 31, 2021 and 2020 (the "Forge Global 2021 MD&A"), and Unaudited Pro Forma Cond ...

Part I [Business](index=6&type=section&id=Item%201.%20Business) Forge Global Holdings, Inc. operates a financial services platform for the private market, offering trading, custody, and data solutions - Forge's platform is built on three core, complementary solutions: Trading (Forge Markets), Custody (Forge Trust), and Data (Forge Data)[20](index=20&type=chunk)[25](index=25&type=chunk) Key Business Metrics (as of December 31, 2023) | Metric | Value | | :--- | :--- | | Assets Under Custody (Forge Trust) | $15.6 billion | | Custodial Accounts (Forge Trust) | 2.1 million | | Transaction Volume (since inception) | Over $14 billion | | Number of Transactions (since inception) | Approx. 25,000 | | Companies Traded (since inception) | Approx. 570 | | Registered Users | Approx. 636,000 | - The company's growth strategy focuses on scaling its platform, introducing new products, forming partnerships, expanding internationally (e.g., Forge Europe with Deutsche Börse), exploring new asset classes, and pursuing strategic acquisitions[46](index=46&type=chunk)[47](index=47&type=chunk)[48](index=48&type=chunk) - Forge operates several regulated subsidiaries in the U.S., including a broker-dealer (Forge Securities LLC), an investment adviser (Forge Global Advisors LLC), a non-depository trust company (Forge Trust Co.), and a licensed lender (Forge Lending LLC)[71](index=71&type=chunk)[72](index=72&type=chunk)[73](index=73&type=chunk)[74](index=74&type=chunk) [Risk Factors](index=15&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks, including a history of net losses ($90.2 million in 2023) and uncertainty in achieving future profitability, intense competition, dependence on volatile macroeconomic and private market conditions, and an extensive and complex regulatory environment Recent Financial Performance | Metric | 2023 | 2022 | | :--- | :--- | :--- | | Net Loss | $90.2 million | $111.9 million | | Accumulated Deficit (as of Dec 31, 2023) | $280.6 million | | - The business is subject to extensive regulation by U.S. state, federal, and non-U.S. authorities, including the SEC and FINRA, which requires significant expense and resources for compliance[88](index=88&type=chunk)[120](index=120&type=chunk) - International expansion, such as the establishment of Forge Europe, exposes the company to new risks including managing international operations, navigating different regulatory environments (e.g., BaFin in Germany), and currency fluctuations[129](index=129&type=chunk)[130](index=130&type=chunk)[132](index=132&type=chunk) - The company is exposed to significant cybersecurity risks, including data breaches and system disruptions, and is subject to stringent data privacy laws like GDPR and CCPA, which could result in significant penalties for non-compliance[145](index=145&type=chunk)[153](index=153&type=chunk)[177](index=177&type=chunk) [Unresolved Staff Comments](index=38&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments from the SEC - None[194](index=194&type=chunk) [Cybersecurity](index=38&type=section&id=Item%201C.%20Cybersecurity) Forge has established a comprehensive cybersecurity risk management program integrated into its overall risk framework, overseen by the Head of Information Security (CISO) and a dedicated team, with regular reporting to management-level risk committees and oversight from the Board of Directors - Cybersecurity risk management is integrated into the overall risk framework, with processes for assessing, identifying, and managing threats[195](index=195&type=chunk) - Governance includes a CISO reporting to a management-level risk committee, with ultimate oversight by the Board of Directors and its risk committee[201](index=201&type=chunk)[202](index=202&type=chunk) - The company has not experienced any cybersecurity incidents that have materially impacted its business, strategy, results of operations, or financial condition to date[200](index=200&type=chunk) [Properties](index=39&type=section&id=Item%202.%20Properties) The company's corporate headquarters is located in San Francisco, California, occupying approximately 21,800 square feet under a sublease expiring in December 2025, with additional leased office spaces in California, South Dakota, and New York - The main corporate headquarters is in San Francisco, CA, under a sublease agreement that expires in December 2025[203](index=203&type=chunk) [Legal Proceedings](index=40&type=section&id=Item%203.%20Legal%20Proceedings) Information regarding the company's legal proceedings is disclosed in Note 8, "Commitments and Contingencies," of the consolidated financial statements - Details on legal proceedings are available in Note 8 to the consolidated financial statements[206](index=206&type=chunk) [Mine Safety Disclosures](index=40&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - None[207](index=207&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=41&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Forge's common stock trades on the New York Stock Exchange under the symbol "FRGE", with approximately 120 stockholders of record as of December 31, 2023, and the company has never paid cash dividends nor anticipates doing so in the foreseeable future - Common stock is traded on the NYSE under the symbol "**FRGE**"[210](index=210&type=chunk) - The company has never paid cash dividends and does not intend to in the foreseeable future[212](index=212&type=chunk) - There were no repurchases of equity securities during the three months ended December 31, 2023[215](index=215&type=chunk) [Reserved](index=41&type=section&id=Item%206.%20%5BReserved%5D) This item is reserved [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=42&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) For the year ended December 31, 2023, total revenues less transaction-based expenses were **$69.4 million**, a slight increase from **$68.9 million** in 2022, driven by a **53% increase** in Custodial administration fees to **$44.0 million** offsetting a **37% decrease** in Marketplace revenue to **$25.8 million**, resulting in a net loss of **$90.2 million**, an improvement from a **$111.9 million** net loss in 2022, primarily due to a **27% reduction** in compensation and benefits expense, with Adjusted EBITDA at a loss of **$48.8 million** and **$144.7 million** in cash and cash equivalents at year-end Key Business Metrics (Year Ended Dec 31) | Metric | 2023 | 2022 | % Change | | :--- | :--- | :--- | :--- | | Trades | 1,756 | 2,184 | (20)% | | Volume | $765.9 million | $1.22 billion | (37)% | | Net Take Rate | 3.3% | 3.3% | 0% | | Total Custodial Accounts | 2,078,868 | 1,871,146 | 11% | | Assets Under Custody | $15.65 billion | $14.87 billion | 5% | Consolidated Results of Operations | Line Item | 2023 | 2022 | % Change | | :--- | :--- | :--- | :--- | | Marketplace revenue | $25.8 million | $40.7 million | (37)% | | Custodial administration fees | $44.0 million | $28.7 million | 53% | | **Total revenues, less transaction-based expenses** | **$69.4 million** | **$68.9 million** | **1%** | | Compensation and benefits | $106.6 million | $145.5 million | (27)% | | **Operating loss** | **($91.4 million)** | **($135.0 million)** | **(32)%** | | **Net loss attributable to Forge** | **($90.2 million)** | **($111.9 million)** | **(19)%** | | **Adjusted EBITDA** | **($48.8 million)** | **($46.9 million)** | **4%** | - The decrease in Marketplace revenue was driven by lower trading volumes attributed to macroeconomic conditions and pricing volatility[268](index=268&type=chunk) - The increase in Custodial administration fees was driven by higher cash administration fees from the higher interest rate environment[269](index=269&type=chunk) - Compensation and benefits expense decreased by **$38.9 million (27%)**, primarily due to a **$22.1 million** decrease in incentive compensation (including the absence of a one-time **$17.7 million** transaction bonus from 2022) and a **$23.6 million** decrease in share-based compensation expense[270](index=270&type=chunk)[271](index=271&type=chunk)[272](index=272&type=chunk)[273](index=273&type=chunk) - As of December 31, 2023, the company had cash and cash equivalents of **$144.7 million** and an accumulated deficit of **$280.6 million**, with management believing existing cash is sufficient to meet operating needs for the next twelve months[281](index=281&type=chunk)[282](index=282&type=chunk) [Financial Statements and Supplementary Data](index=58&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section contains the audited consolidated financial statements of Forge Global Holdings, Inc. for the fiscal years ended December 31, 2023, 2022, and 2021, including the report from the independent registered public accounting firm, Ernst & Young LLP, and detailed notes - The independent auditor, Ernst & Young LLP, issued an unqualified opinion on the consolidated financial statements[316](index=316&type=chunk) - The auditor's report identifies the impairment assessment of goodwill as a Critical Audit Matter due to the subjectivity and complexity of estimating the reporting unit's fair value, which involves significant assumptions like discount rates and growth projections[320](index=320&type=chunk)[322](index=322&type=chunk) Consolidated Balance Sheet Highlights (as of Dec 31) | Account | 2023 | 2022 | | :--- | :--- | :--- | | Cash and cash equivalents | $144.7 million | $193.1 million | | Goodwill and other intangible assets, net | $129.9 million | $133.9 million | | **Total Assets** | **$310.7 million** | **$363.7 million** | | Total Liabilities | $42.3 million | $38.3 million | | **Total Stockholders' Equity** | **$268.4 million** | **$325.5 million** | Net Loss Per Share | Metric | 2023 | 2022 | | :--- | :--- | :--- | | Basic Net Loss Per Share | ($0.52) | ($0.78) | | Diluted Net Loss Per Share | ($0.52) | ($0.80) | [Changes in and Disagreements With Accountants on Accounting and Financial Disclosures](index=107&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20With%20Accountants%20on%20Accounting%20and%20Financial%20Disclosures) The company reports no changes in or disagreements with its accountants on accounting and financial disclosures - None[520](index=520&type=chunk) [Controls and Procedures](index=107&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures and concluded they were effective as of December 31, 2023, and also assessed the internal control over financial reporting based on the COSO framework, concluding it was effective with no material changes during the period - Management concluded that disclosure controls and procedures were effective as of December 31, 2023[521](index=521&type=chunk) - Based on the COSO framework, management concluded that internal control over financial reporting was effective as of December 31, 2023[523](index=523&type=chunk) [Other Information](index=107&type=section&id=Item%209B.%20Other%20Information) During the fourth quarter of 2023, several executive officers, including the CEO, COO, and CGO, adopted or modified Rule 10b5-1 trading plans for the sale of company common stock, with some plans specifically for selling shares to cover tax withholding obligations upon the settlement of RSUs - CEO Kelly Rodriques modified a Rule 10b5-1 trading plan on December 8, 2023, to increase the number of shares covered, up to a maximum of **3,989,958 shares**, contingent on performance conditions[527](index=527&type=chunk) - COO Drew Sievers adopted a Rule 10b5-1 trading plan on December 15, 2023, for the sale of up to **225,000 shares**[528](index=528&type=chunk) - On December 15, 2023, several executive officers adopted trading plans exclusively for selling shares to satisfy tax withholding obligations related to RSU settlements[530](index=530&type=chunk) [Disclosure Regarding Foreign Jurisdiction that Prevent Inspections](index=108&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdiction%20that%20Prevent%20Inspections) This item is not applicable to the company - None[531](index=531&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=109&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) The information required for this item will be incorporated by reference from the company's definitive proxy statement for its 2024 Annual Meeting of Stockholders - Information is incorporated by reference from the 2024 Proxy Statement[535](index=535&type=chunk) [Executive Compensation](index=109&type=section&id=Item%2011.%20Executive%20Compensation) The information required for this item will be incorporated by reference from the company's definitive proxy statement for its 2024 Annual Meeting of Stockholders - Information is incorporated by reference from the 2024 Proxy Statement[536](index=536&type=chunk) [Security Ownership of Certain Beneficial Owner and Management and Related Stockholder Matters](index=109&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owner%20and%20Management%20and%20Related%20Stockholder%20Matters) The information required for this item will be incorporated by reference from the company's definitive proxy statement for its 2024 Annual Meeting of Stockholders - Information is incorporated by reference from the 2024 Proxy Statement[537](index=537&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=109&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) The information required for this item will be incorporated by reference from the company's definitive proxy statement for its 2024 Annual Meeting of Stockholders - Information is incorporated by reference from the 2024 Proxy Statement[538](index=538&type=chunk) [Principal Accounting Fees and Services](index=109&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) The information required for this item will be incorporated by reference from the company's definitive proxy statement for its 2024 Annual Meeting of Stockholders - Information is incorporated by reference from the 2024 Proxy Statement[539](index=539&type=chunk) Part IV [Exhibits, Financial Statement Schedules](index=110&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) This section lists the exhibits filed with or incorporated by reference into the Form 10-K report, including the Merger Agreement, Certificate of Incorporation, Bylaws, various compensatory plans, and certifications - This section contains the Exhibit Index, which lists all documents filed as part of the report[541](index=541&type=chunk)[542](index=542&type=chunk) [Form 10-K Summary](index=111&type=section&id=Item%2016.%20Form%2010-K%20Summary) The company has not provided a summary for this item - None[547](index=547&type=chunk)

Revenue and Financial Performance - Total revenue less transaction-based expenses increased from $18.4 million in Q3 2023 to $18.9 million in Q4 2023, a 13% year-over-year increase[4][10] - Total revenues for the year ended December 31, 2023, were $69.82 million, compared to $69.38 million in 2022, showing a slight increase of 0.6%[36] - Marketplace revenue for the year ended December 31, 2023, was $25.79 million, a decrease of 36.5% compared to $40.67 million in 2022[36] - Custodial administration fees increased to $44.03 million in 2023, up 53.3% from $28.72 million in 2022[36] - Marketplace revenues, less transaction-based expenses, for the year ended December 31, 2023, were $25.4 million, a 37% decrease from $40.2 million in 2022[44] Trading and Volume Metrics - Trading volume in Q4 2023 was $250.4 million, up 1% year-over-year and 7% quarter-over-quarter[10][17] - Volume for the three months ended December 31, 2023, was $250.4 million, a 7% increase from $234.1 million in the previous quarter[44] - Trading volume for the year ended December 31, 2023, was $765.9 million, a 37% decrease from $1.22 billion in 2022[44] - Trades for the year ended December 31, 2023, were 1,756, a 20% decrease from 2,184 in 2022[44] Net Loss and Adjusted EBITDA - Net loss increased from $19.0 million in Q3 2023 to $26.2 million in Q4 2023, primarily due to a $2.5 million increase in accrued legal expenses[5] - Adjusted EBITDA loss increased from $10.4 million in Q3 2023 to $13.6 million in Q4 2023[5] - Net loss for the year ended December 31, 2023, was $91.55 million, an improvement from the $111.91 million net loss in 2022, reflecting a reduction of 18.2%[36] - Net loss for the year ended December 31, 2023, was $91.5 million, compared to $111.9 million in 2022, showing a reduction in losses[38] - Adjusted EBITDA for the year ended December 31, 2023, was $(48.8) million, compared to $(46.9) million in 2022[40] Cash and Liquidity - Cash and cash equivalents as of December 31, 2023 was $144.7 million[7] - Cash and cash equivalents decreased from $193.14 million in 2022 to $144.72 million in 2023, a decline of 25.1%[34] - Net cash used in operating activities for the year ended December 31, 2023, was $41.5 million, compared to $68.8 million in 2022[38] - Cash, cash equivalents, and restricted cash at the end of December 31, 2023, were $145.8 million, down from $194.9 million at the end of 2022[38] Custodial Accounts and Assets Under Custody - Total assets under custody increased from $14.9 billion in 2022 to $15.6 billion in 2023, a 5% year-over-year increase[10][25] - Total custodial accounts increased from 1.87 million in 2022 to 2.08 million in 2023, an 11% year-over-year increase[25] - Total Custodial Accounts increased by 55,112 (3%) to 2,078,868 as of December 31, 2023, compared to September 30, 2023[46] - Assets Under Custody grew by $498.99 million (3%) to $15.647 billion as of December 31, 2023, compared to September 30, 2023[46] - Total Custodial Accounts increased by 207,722 (11%) to 2,078,868 as of December 31, 2023, compared to December 31, 2022[46] - Assets Under Custody increased by $777.21 million (5%) to $15.647 billion as of December 31, 2023, compared to December 31, 2022[46] - Total Custodial Accounts represent funded or unfunded accounts with active transfer activity, indicating future revenue potential from maintenance and transaction fees[46] - Assets Under Custody include all client holdings managed by the company, with fees earned from maintenance activities rather than asset value[46] Net Take Rate and Interest Income - Net take rate was 3.2% in Q4 2023 and 3.3% for the full year 2023[10][17] - Net Take Rate remained stable at 3.3% for both 2023 and 2022[44] - Interest income, net, increased to $6.42 million in 2023, up 139.5% from $2.68 million in 2022[36] Operating Expenses and Share-Based Compensation - Total operating expenses for the year ended December 31, 2023, were $160.84 million, down from $203.94 million in 2022, a reduction of 21.1%[36] - Share-based compensation for the year ended December 31, 2023, was $34.3 million, down from $57.9 million in 2022[38] Total Assets and Liabilities - Total assets decreased from $363.73 million in 2022 to $310.73 million in 2023, a decline of 14.6%[34] - Total liabilities increased from $38.27 million in 2022 to $42.31 million in 2023, a rise of 10.6%[34] Forge Trust Custodial Cash and IOIs - Forge Trust Custodial Cash totaled $505 million in Q4 2023, down 20% year-over-year from $635 million[17] - Total number of companies with indications of interest (IOIs) was 485 in Q4 2023, up 11% year-over-year[17] Net Loss Per Share - Net loss per share attributable to Forge Global Holdings, Inc. common stockholders was $0.52 for the year ended December 31, 2023, compared to $0.78 in 2022, showing a reduction of 33.3%[36]

SAN FRANCISCO--(BUSINESS WIRE)--Forge Global Holdings, Inc. (NYSE: FRGE) (“Forge”), a global private securities marketplace, today announced that it will report fourth quarter and full year 2023 financial results on Tuesday, March 26, 2024. Management will host a conference call and webcast at 5:00 p.m. Eastern Time / 2:00 p.m. Pacific Time, following the release of its earnings materials, to discuss the Forge’s financial and business results. What: Forge Global Holdings, Inc. - Fourth Quarter and Full Yea ...

SAN FRANCISCO--(BUSINESS WIRE)--Forge Global Holdings, Inc. (“Forge”) (NYSE: FRGE), a leading provider of marketplace infrastructure, data services and technology solutions for private market participants, today announced the addition of Natasha Brooks, SVP, Head of Data Sales, and Harnalli DeepaSwamy, Vice President of Data, AI & Analytics Platform Engineering, to its team. Brooks is focused on accelerating the adoption of Forge data products and solutions among institutional and professional investors, wh ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2023 OR o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 001-04321 Forge Global Holdings, Inc. (Exact name of registrant as specified in its charter) Delaware 98-15611 ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2023 OR o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 001-04321 Forge Global Holdings, Inc. (Exact name of registrant as specified in its charter) Delaware 98-1561111 (S ...

Forge Global Holdings, Inc. (NYSE:FRGE) Q1 2023 Results Conference Call May 9, 2023 5:00 PM ET Company Participants Dominic Paschel - IR Kelly Rodrigues - CEO Mark Lee - CFO Conference Call Participants Mike Falco - JMP Securities Rich Repetto - Piper Sandler Owen Lau - Oppenheimer Michael Cho - JP Morgan Operator Hello. My name is Mallory, and I will be your conference operator today. At this time, I would like to welcome everyone to the Forge Global First Quarter Financial Results Conference Call. All lin ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2023 OR o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 001-04321 Forge Global Holdings, Inc. (Exact name of registrant as specified in its charter) Delaware 98-1561111 ( ...