Forge(FRGE) - 2025 Q2 - Quarterly Report

Part I - Financial Information Overview of Forge Global Holdings, Inc.'s unaudited condensed consolidated financial statements and related disclosures Item 1. Condensed Consolidated Financial Statements (Unaudited) Presents Forge Global Holdings, Inc.'s unaudited condensed consolidated financial statements, detailing financial position and performance Unaudited Condensed Consolidated Balance Sheets Provides a snapshot of the company's financial position, detailing assets, liabilities, and equity at specific dates | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Assets | | | | Cash and cash equivalents | $54,310 | $105,140 | | Total current assets | $99,980 | $119,167 | | Total assets | $242,845 | $263,506 | | Liabilities | | | | Total current liabilities | $25,141 | $25,144 | | Total liabilities | $38,601 | $36,764 | | Equity | | | | Total stockholders' equity | $204,244 | $226,742 | - Cash and cash equivalents decreased by $50.83 million from December 31, 2024, to June 30, 2025, reflecting a significant reduction in liquidity[17] - Total assets decreased by $20.66 million, while total liabilities increased by $1.84 million, leading to a decrease in total stockholders' equity by $22.498 million[17] Unaudited Condensed Consolidated Statements of Operations Details the company's revenues, expenses, and net loss over specific three and six-month periods | Metric (in thousands, except per share) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total revenues | $27,739 | $22,282 | $53,035 | $41,524 | | Total revenues, less transaction-based expenses | $27,584 | $22,026 | $52,688 | $41,239 | | Total operating expenses | $40,419 | $39,677 | $81,992 | $83,900 | | Operating loss | $(12,835) | $(17,651) | $(29,304) | $(42,661) | | Net loss | $(12,439) | $(14,040) | $(28,637) | $(33,034) | | Net loss attributable to Forge Global Holdings, Inc. | $(12,580) | $(13,724) | $(28,752) | $(32,348) | | Basic Net loss per share | $(1.01) | $(1.13) | $(2.30) | $(2.67) | - Total revenues increased by 24.5% for the three months ended June 30, 2025, compared to the same period in 2024, and by 27.7% for the six months ended June 30, 2025, compared to 2024[19] - Operating loss significantly improved, decreasing by 27.3% for the three months and 31.3% for the six months ended June 30, 2025, year-over-year[19] Unaudited Condensed Consolidated Statements of Comprehensive Loss Presents the net loss and other comprehensive income/loss components for the reporting periods | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net loss | $(12,439) | $(14,040) | $(28,637) | $(33,034) | | Foreign currency translation adjustment | $711 | $(76) | $1,069 | $(331) | | Comprehensive loss | $(11,728) | $(14,116) | $(27,568) | $(33,365) | | Comprehensive loss attributable to Forge Global Holdings, Inc. | $(12,181) | $(13,768) | $(28,131) | $(32,538) | - The company reported a comprehensive loss of $(11.728) million for the three months ended June 30, 2025, an improvement from $(14.116) million in the prior year, primarily due to a positive foreign currency translation adjustment[21] Unaudited Condensed Consolidated Statements of Changes in Stockholders' Equity Outlines changes in equity components, including common stock, additional paid-in capital, and accumulated deficit | Metric (in thousands) | Balance as of Dec 31, 2024 | Balance as of June 30, 2025 | | :-------------------- | :------------------------- | :-------------------------- | | Common Stock (Amount) | $1 | $1 | | Treasury Stock | $(625) | $(625) | | Additional Paid-In Capital | $570,606 | $575,676 | | Accumulated Deficit | $(346,972) | $(375,724) | | Accumulated Other Comprehensive Income | $572 | $1,193 | | Noncontrolling Interest | $3,160 | $3,723 | | Total Stockholders' Equity | $226,742 | $204,244 | - Total stockholders' equity decreased from $226.742 million as of December 31, 2024, to $204.244 million as of June 30, 2025, primarily due to accumulated deficit and share buybacks[22] - Share-based compensation expense for the six months ended June 30, 2025, was $9.955 million, contributing to additional paid-in capital[22] Unaudited Condensed Consolidated Statements of Cash Flows Summarizes cash inflows and outflows from operating, investing, and financing activities | Metric (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(20,605) | $(26,806) | | Net cash used in investing activities | $(26,353) | $5,892 | | Net cash used in financing activities | $(4,919) | $(2,976) | | Net decrease in cash and cash equivalents | $(50,808) | $(24,221) | | Cash, cash equivalents and restricted cash, end of period | $55,448 | $121,564 | - Net cash used in operating activities improved to $(20.605) million for the six months ended June 30, 2025, from $(26.806) million in the prior year[27] - Investing activities shifted from providing $5.892 million in 2024 to using $(26.353) million in 2025, primarily due to purchases of investments[27] - The company experienced a net decrease in cash and cash equivalents of $(50.808) million for the six months ended June 30, 2025, more than double the decrease in the prior year[27] Notes to Condensed Consolidated Financial Statements (Unaudited) Provides detailed notes to the unaudited condensed consolidated financial statements, covering organization, accounting policies, and key disclosures 1 Organization and Description of Business Describes Forge Global Holdings, Inc.'s business as a financial services platform democratizing private market access - Forge Global Holdings, Inc. is a financial services platform based in San Francisco, California, focused on democratizing access to private markets through a technology-driven platform[30] - The company offers an integrated platform of complementary solutions for investors, shareholders, and companies, aiming to create strong network effects and fuel growth in the private market[30] 2 Summary of Significant Accounting Policies Outlines the key accounting principles and methods used in preparing the financial statements - The financial statements are prepared in accordance with GAAP and SEC rules, with all intercompany balances and transactions eliminated[31] - Effective April 14, 2025, the Company executed a 1-for-15 reverse stock split, retroactively adjusting all share and per share amounts[36] - The Company operates as a single operating and reportable segment, with the CEO as the chief operating decision maker[38] - Total assets under custody by Forge Trust Co. increased from $16.9 billion as of December 31, 2024, to $18.1 billion as of June 30, 2025[43] - No impairment charges were recognized for goodwill during the three and six months ended June 30, 2025 and 2024[45] - The FASB issued ASU 2024-03 and ASU 2023-09, requiring additional disclosures for income statement expenses and income taxes, respectively, with the Company currently evaluating their impact[52][53] 3 Fair Value Measurements Details the classification and valuation of financial instruments using a three-level fair value hierarchy - The Company classifies financial instruments into Level 1 (quoted market prices), Level 2 (observable market inputs), and Level 3 (unobservable inputs) of the fair value hierarchy[55] | Financial Assets (in thousands) | Level 1 (June 30, 2025) | Level 2 (June 30, 2025) | Level 3 (June 30, 2025) | Total (June 30, 2025) | | :------------------------------ | :---------------------- | :---------------------- | :---------------------- | :-------------------- | | Money market funds | $15,451 | — | — | $15,451 | | Corporate debt securities | — | $15,031 | — | $15,031 | | U.S. government agency bonds | — | $14,771 | — | $14,771 | | Term deposits | — | $8,408 | — | $8,408 | | Payment-dependent notes receivable | — | — | $9,604 | $9,604 | | Total financial assets | $15,451 | $39,707 | $9,604 | $64,762 | | Financial Liabilities (in thousands) | Level 1 (June 30, 2025) | Level 2 (June 30, 2025) | Level 3 (June 30, 2025) | Total (June 30, 2025) | | Payment-dependent notes payable | — | — | $9,604 | $9,604 | | December 2023 Warrants | — | $30 | — | $30 | | Private Placement Warrants | — | — | $266 | $266 | | Total financial liabilities | — | $30 | $9,870 | $9,900 | | Private Placement Warrants Valuation Assumptions | As of June 30, 2025 | As of December 31, 2024 | | :----------------------------------------------- | :------------------ | :---------------------- | | Fair value of underlying securities | $19.04 | $13.95 | | Expected term (years) | 1.7 | 2.2 | | Expected volatility | 95.0 % | 82.5 % | | Risk-free interest rate | 3.8 % | 4.3 % | | Expected dividend yield | — % | — % | | Fair value per warrant | $0.54 | $0.30 | - The fair value of Private Placement Warrants increased from $0.30 per warrant as of December 31, 2024, to $0.54 per warrant as of June 30, 2025, driven by an increase in the fair value of underlying securities and expected volatility[60] 4 Goodwill and Intangible Assets, Net Reports the carrying amounts of goodwill and intangible assets, net of accumulated amortization | Asset Category (in thousands) | Net Carrying Amount (June 30, 2025) | Net Carrying Amount (December 31, 2024) | | :---------------------------- | :---------------------------------- | :------------------------------------ | | Goodwill from acquisitions | $120,948 | $120,948 | | Client relationships | $2,643 | $2,948 | | Launched IPR&D assets | $240 | $336 | | Trade name - website domain | $2,224 | $2,224 | | Total goodwill and intangible assets | $126,055 | $126,456 | - Total goodwill and intangible assets decreased slightly from $126.456 million as of December 31, 2024, to $126.055 million as of June 30, 2025, primarily due to amortization of finite-lived intangible assets[66] - Amortization expense for finite-lived intangible assets was $0.2 million for Q2 2025 and $0.4 million for H1 2025, significantly lower than $1.0 million for Q2 2024 and $2.0 million for H1 2024[66] 5 Leases Details the company's lease expenses, right-of-use assets, and lease liabilities for operating leases | Lease Expense (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Operating lease expense | $594 | $923 | $1,379 | $1,706 | | Variable lease expense | $126 | $97 | $223 | $201 | | Total operating lease expenses | $720 | $1,020 | $1,602 | $1,907 | | Sublease income | $137 | $95 | $242 | $191 | - Total operating lease expenses decreased by 29.4% for the three months ended June 30, 2025, and by 16.0% for the six months ended June 30, 2025, compared to the prior year periods[68] - The weighted-average remaining lease term as of June 30, 2025, was 4.1 years, with a weighted-average discount rate of 7.2%[69] 6 Commitments and Contingencies Outlines the company's legal claims, purchase obligations, and other potential liabilities - The Company is subject to claims and lawsuits in the ordinary course of business but had no accrual for loss contingencies as of June 30, 2025, and December 31, 2024[71] - 401(k) contribution expense was $0.3 million for Q2 2025 and $0.6 million for H1 2025, an increase from $0.3 million and $0.5 million respectively in 2024[72] | Non-Cancelable Purchase Obligations (in thousands) | Amount | | :----------------------------------------------- | :----- | | Remainder of 2025 | $2,853 | | 2026 | $1,323 | | 2027 | $727 | | 2028 | $325 | | 2029 | $325 | | Thereafter | $162 | | Total | $5,715 | - The Company resolved a self-identified informational filing matter with the IRS in May 2025, agreeing to pay an immaterial compliance fee[75] 7 Share-Based Compensation Details the company's equity incentive plans, share repurchase program, and related compensation expenses - A 1-for-15 reverse stock split was effected on April 14, 2025, with proportional adjustments to equity incentive plans[76] - The Company adopted the 2025 Inducement Plan in March 2025, reserving 100,000 shares for new employees, and amended it in July 2025 to reserve an additional 83,330 shares[77][92] - A share repurchase program of up to $10.0 million was approved in March 2025; as of June 30, 2025, 314,701 shares were repurchased for approximately $4.139 million, with $5.9 million remaining[78][163] | Share-Based Compensation (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | RSUs | $3,225 | $7,083 | $9,298 | $15,750 | | Stock options | $211 | $776 | $657 | $1,576 | | Total share-based compensation | $3,436 | $7,859 | $9,955 | $17,326 | - Total share-based compensation decreased by 56.3% for the three months ended June 30, 2025, and by 42.6% for the six months ended June 30, 2025, compared to the prior year periods[79] 8 Income Taxes Discusses the company's effective tax rates, tax impacts, and the assessment of new tax legislation - The effective tax rate was 1.5% for Q2 2025 and 4.4% for H1 2025, compared to 2.1% and 1.6% for the same periods in 2024[82] - The 2025 effective tax rate was impacted by an $0.8 million reserve against a prior year federal net operating loss carry-back claim[82] - New tax legislation, the One Big Beautiful Bill Act (OBBBA), enacted on July 4, 2025, is retroactive for the 2025 tax year, and the Company is assessing its impact on federal net operating loss deferred tax assets[83] 9 Net Loss per Share Presents basic and diluted net loss per share calculations and the factors affecting them | Metric (in thousands, except per share) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net loss attributable to common stockholders | $(12,580) | $(13,724) | $(28,752) | $(32,348) | | Weighted-average shares (basic & diluted) | 12,474 | 12,179 | 12,503 | 12,112 | | Basic Net loss per share | $(1.01) | $(1.13) | $(2.30) | $(2.67) | | Diluted Net loss per share | $(1.01) | $(1.13) | $(2.30) | $(2.67) | - Basic and diluted net loss per share improved to $(1.01) for Q2 2025 from $(1.13) for Q2 2024, and to $(2.30) for H1 2025 from $(2.67) for H1 2024[85] - Potentially dilutive shares, including warrants, common stock subject to repurchase, outstanding options, and restricted stock units, were excluded from diluted EPS calculation due to their anti-dilutive effect[84][85] 10 Related Party Transactions Discloses transactions and relationships with related parties, including joint ventures and investment funds - Forge Europe GmbH was formed with Deutsche Börse Aktiengesellschaft (DBAG), a related party, in September 2022[86] - Forge Global Advisors LLC (FGA), a wholly-owned subsidiary, advises Single Asset Funds (SAFs) but has no ownership interest or participation in their gains/losses[87] - Professional services expenses of $0.4 million (Q2 2025) and $0.7 million (H1 2025) were recognized for services absorbed on behalf of SAFs[88] - The Company recorded $0.2 million in commissions for services provided to an investment fund managed by a family member of a former executive officer for Q2 and H1 2025[89] - The Company holds a 25.8% ownership in EQUIAM, LLC, and invested $0.5 million in an unsecured convertible note and warrant offering by Equiam in May 2024[90] 11 Subsequent Events Reports significant events occurring after the balance sheet date, including acquisitions and plan amendments - On July 1, 2025, the Company acquired Accuidity, LLC, a U.S. privately held asset management firm, for $10.0 million cash and 1.2 million shares of newly issued common stock[91] - On July 1, 2025, the Inducement Plan was amended and restated to reserve an additional 83,330 shares of common stock[92] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management's perspective on financial condition and results, covering key metrics, revenue drivers, operating expenses, and liquidity Business Overview Describes Forge's mission to democratize private market access through its technology-driven platform - Forge aims to democratize private market access through its technology-driven platform, connecting buyers and sellers of private shares and offering investment and custody opportunities[96] - The platform includes a marketplace for data and tools, Private Company Solutions (PCS), asset management, data solutions, and custodial services[96] - Revenue is primarily generated from fees from the marketplace and custody solutions, including private market transaction fees and account/asset management fees[98] Key Factors Affecting our Financial Performance Identifies private market trends, consumer behavior, macroeconomic environment, and product mix as key influences - Private market trends, including IPOs, M&A, funding activity, and investor demand, significantly influence the supply and demand for private company shares[100] - Consumer behavior, affected by economic factors, liquidity needs, interest rates, and market volatility, impacts interest in Forge's products and solutions[101] - The macroeconomic environment, including interest rates and private equity valuations, affects investor risk appetites and custodial cash administration fees[102] - Revenue and take rate are influenced by the mix of product offerings and client types (institutional vs. individual, third-party brokers), which can affect fee rates[103][104] Key Business Metrics Presents key performance indicators for marketplace and custody solutions, including volume, take rate, and assets under custody | Metric | Three Months Ended June 30, 2025 | Three Months Ended March 31, 2025 | QoQ Change | % Change | | :------------------------------------ | :------------------------------- | :-------------------------------- | :--------- | :------- | | MARKETPLACE SOLUTIONS | | | | | | Trades | 927 | 963 | (36) | (4)% | | Volume (in thousands) | $756,110 | $692,391 | $63,719 | 9% | | Net Take Rate | 2.4% | 2.3% | 0.1% | 4% | | Marketplace revenues, less transaction-based expenses (in thousands) | $18,490 | $15,831 | $2,659 | 17% | | CUSTODY SOLUTIONS | | | | | | Total Custodial Accounts | 2,598,846 | 2,508,443 | 90,403 | 4% | | Assets Under Custody (in thousands) | $18,132,637 | $17,635,034 | $497,603 | 3% | | Custodial Client Cash (in thousands) | $440,278 | $459,685 | $(19,407) | (4)% | | Custodial administration fees, less transaction-based expenses (in thousands) | $9,094 | $9,273 | $(179) | (2)% | | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | YoY Change | % Change | | :------------------------------------ | :----------------------------- | :----------------------------- | :--------- | :------- | | MARKETPLACE SOLUTIONS | | | | | | Trades | 1,890 | 1,436 | 454 | 32% | | Volume (in thousands) | $1,448,501 | $688,856 | $759,645 | 110% | | Net Take Rate | 2.4% | 2.9% | (0.5)% | (17)% | | Marketplace revenues, less transaction-based expenses (in thousands) | $34,321 | $19,914 | $14,407 | 72% | | CUSTODY SOLUTIONS | | | | | | Total Custodial Accounts | 2,598,846 | 2,211,108 | 387,738 | 18% | | Assets Under Custody (in thousands) | $18,132,637 | $16,600,408 | $1,532,229 | 9% | | Custodial Client Cash (in thousands) | $440,278 | $494,972 | $(54,694) | (11)% | | Custodial administration fees, less transaction-based expenses (in thousands) | $18,367 | $21,325 | $(2,958) | (14)% | - Marketplace volume increased by 110% year-over-year for the six months ended June 30, 2025, driving a 72% increase in marketplace revenues, less transaction-based expenses, despite a 17% decrease in Net Take Rate[107] - Custodial administration fees, less transaction-based expenses, decreased by 14% year-over-year for the six months ended June 30, 2025, primarily due to an 11% decline in custodial client cash[108] Non-GAAP Financial Measures Discusses the use of Adjusted EBITDA and Adjusted EPS as non-GAAP measures for evaluating core operating performance - Forge uses Adjusted EBITDA and Adjusted EPS as non-GAAP financial measures to evaluate ongoing operations and for internal planning, excluding specific financial items less indicative of core operating performance[111] | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended March 31, 2025 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :-------------------------------- | :----------------------------- | :----------------------------- | | Net loss attributable to Forge Global Holdings, Inc. | $(12,580) | $(16,172) | $(28,752) | $(32,348) | | Adjusted EBITDA | $(5,433) | $(8,910) | $(14,343) | $(21,382) | | Metric (in thousands, except per share) | Three Months Ended June 30, 2025 | Three Months Ended March 31, 2025 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :-------------------------------- | :----------------------------- | :----------------------------- | | EPS - basic and diluted | $(1.01) | $(1.29) | $(2.30) | $(2.67) | | Adjusted EPS - basic and diluted | $(0.99) | $(1.30) | $(2.30) | $(3.22) | - Adjusted EBITDA improved significantly, reducing from $(21.382) million for the six months ended June 30, 2024, to $(14.343) million for the same period in 2025[114] - Adjusted EPS improved to $(2.30) for the six months ended June 30, 2025, from $(3.22) in the prior year[116] Basis of Presentation Explains that financial statements are prepared under GAAP and include consolidated subsidiaries - The unaudited condensed consolidated financial statements are prepared in accordance with GAAP and include the accounts of Forge Global Holdings, Inc. and its consolidated subsidiaries[117] Components of Results of Operations Breaks down revenue sources, operating expenses, and other income/expense items impacting financial results - Marketplace revenue includes fees from the marketplace, PCS, asset management, and data solutions, with key metrics being trades, dollar volume, and Net Take Rate[118] - Custodial administration fees are generated from cash administration, account maintenance, asset, and transaction fees, primarily driven by prevailing interest rates and client cash balances[119] - Transaction-based expenses are third-party fees for marketplace and custody solutions, expected to increase with revenue growth[120] - Compensation and benefits, the most significant operating expense, includes wages, bonuses, share-based compensation, and severance, with a focus on aligning headcount with business needs[121] - Other operating expenses include professional services, advertising and market development, rent and occupancy, technology and communications, general and administrative, and depreciation and amortization[122][123][124][125][126][127] - Interest and other income includes interest on cash/investments, changes in fair value of warrant liabilities, and other non-operating income/expenditures[128][129][130] Results of Operations Analyzes the company's financial performance, detailing revenue, operating expenses, and other income/expense trends | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended March 31, 2025 | QoQ Change | % Change | | :-------------------- | :------------------------------- | :-------------------------------- | :--------- | :------- | | Total revenues, less transaction-based expenses | $27,584 | $25,104 | $2,480 | 10% | | Marketplace revenue | $18,597 | $15,997 | $2,600 | 16% | | Custodial administration fees | $9,142 | $9,299 | $(157) | (2)% | - Total revenues, less transaction-based expenses, increased by 10% quarter-over-quarter, driven by a 16% increase in marketplace revenue due to higher trading volumes and a 15 basis point increase in net take rate[134] - Custodial administration fees decreased by 2% quarter-over-quarter due to a 4% decline in custodial client cash balances[135] | Metric (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | YoY Change | % Change | | :-------------------- | :----------------------------- | :----------------------------- | :--------- | :------- | | Total revenues, less transaction-based expenses | $52,688 | $41,239 | $11,449 | 28% | | Marketplace revenue | $34,594 | $20,199 | $14,395 | 71% | | Custodial administration fees | $18,441 | $21,325 | $(2,884) | (14)% | - Total revenues, less transaction-based expenses, increased by 28% year-over-year, primarily from a 71% increase in marketplace revenue driven by a 110% increase in trading volume, despite a 52 basis point decrease in net take rate[136][137] - Custodial administration fees decreased by 14% year-over-year due to lower interest rates and an 11% decline in custodial client cash balances[138] | Operating Expense (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended March 31, 2025 | QoQ Change | % Change | | :------------------------------- | :------------------------------- | :-------------------------------- | :--------- | :------- | | Compensation and benefits | $27,193 | $29,491 | $(2,298) | (8)% | | Salary | $13,288 | $13,334 | $(46) | (0.3)% | | Incentive compensation and other bonus | $7,381 | $6,633 | $748 | 11% | | Share-based compensation | $3,436 | $6,519 | $(3,083) | (47)% | | Severance | $1,212 | $1,323 | $(111) | (8)% | - Compensation and benefits decreased by 8% quarter-over-quarter, mainly due to a 47% decrease in share-based compensation, partially offset by an 11% increase in incentive compensation[139][140][141] | Operating Expense (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | YoY Change | % Change | | :------------------------------- | :----------------------------- | :----------------------------- | :--------- | :------- | | Compensation and benefits | $56,684 | $58,627 | $(1,943) | (3)% | | Salary | $26,622 | $28,335 | $(1,713) | (6)% | | Incentive compensation and other bonus | $14,014 | $8,778 | $5,236 | 60% | | Share-based compensation | $9,955 | $17,326 | $(7,371) | (43)% | | Severance | $2,535 | $1,008 | $1,527 | 151% | - Compensation and benefits decreased by 3% year-over-year, driven by a 43% decrease in share-based compensation and a 6% decrease in salary expense, partially offset by a 60% increase in incentive compensation and a 151% increase in severance[142][143][144] | Other Operating Expenses (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended March 31, 2025 | QoQ Change | % Change | | :------------------------------------ | :------------------------------- | :-------------------------------- | :--------- | :------- | | Technology and communications | $4,667 | $4,349 | $318 | 7% | | General and administrative | $2,144 | $2,254 | $(110) | (5)% | | Professional services | $1,204 | $2,332 | $(1,128) | (48)% | | Advertising and market development | $1,528 | $1,215 | $313 | 26% | | Acquisition-related transaction costs | $1,988 | — | $1,988 | n/m | | Depreciation and amortization | $909 | $986 | $(77) | (8)% | | Rent and occupancy | $786 | $946 | $(160) | (17)% | | Total other operating expenses | $13,226 | $12,082 | $1,144 | 9% | - Other operating expenses increased by 9% quarter-over-quarter, primarily due to $1.988 million in acquisition-related costs for Accuidity, higher advertising spend, and increased third-party software engineer expenses[147][148] | Other Operating Expenses (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | YoY Change | % Change | | :------------------------------------ | :----------------------------- | :----------------------------- | :--------- | :------- | | Technology and communications | $9,016 | $5,709 | $3,307 | 58% | | General and administrative | $4,398 | $7,570 | $(3,172) | (42)% | | Professional services | $3,536 | $3,822 | $(286) | (7)% | | Advertising and market development | $2,743 | $2,333 | $410 | 18% | | Acquisition-related transaction costs | $1,988 | — | $1,988 | n/m | | Depreciation and amortization | $1,895 | $3,597 | $(1,702) | (47)% | | Rent and occupancy | $1,732 | $2,242 | $(510) | (23)% | | Total other operating expenses | $25,308 | $25,273 | $35 | 0.1% | - Total other operating expenses remained flat year-over-year, with acquisition-related costs, higher advertising, and technology expenses offset by lower depreciation, rent, and professional services[149][150] | Interest and Other Income (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended March 31, 2025 | QoQ Change | % Change | | :--------------------------------------- | :------------------------------- | :-------------------------------- | :--------- | :------- | | Interest income | $803 | $1,042 | $(239) | (23)% | | Change in fair value of warrant liabilities | $(294) | $191 | $(485) | (254)% | | Other income, net | $76 | $54 | $22 | 41% | | Total interest and other (expense) income | $585 | $1,287 | $(702) | (55)% | - Total interest and other income decreased by 55% quarter-over-quarter, primarily due to a $0.3 million loss from warrant revaluations in Q2 2025 compared to a $0.2 million gain in Q1 2025, and a decline in interest income[153][154] | Interest and Other Income (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | YoY Change | % Change | | :--------------------------------------- | :----------------------------- | :----------------------------- | :--------- | :------- | | Interest income | $1,845 | $3,204 | $(1,359) | (42)% | | Change in fair value of warrant liabilities | $(103) | $6,727 | $(6,830) | (102)% | | Other income, net | $130 | $170 | $(40) | (23)% | | Total interest and other (expense) income | $1,872 | $10,101 | $(8,229) | (81)% | - Total interest and other income decreased by 81% year-over-year, mainly due to an unfavorable change of $0.1 million in warrant liabilities in 2025 compared to a favorable change of $6.7 million in 2024, and a 42% decrease in interest income[155][156] Liquidity and Capital Resources Assesses the company's ability to meet short-term and long-term obligations, including cash, investments, and cash flow activities - As of June 30, 2025, the Company's primary liquidity sources were $54.3 million in cash and cash equivalents and $26.4 million in investments[157] - Management believes existing liquidity will be sufficient for operating working capital and capital expenditure requirements for the next twelve months and the foreseeable future[158] - The investment policy focuses on capital preservation and liquidity, investing in highly-rated debt securities with short durations (average < 3 months, max 6 months)[161] - The Company repurchased 314,701 shares for approximately $4.139 million under its $10.0 million share repurchase program, with $5.9 million remaining as of June 30, 2025[163] | Cash Flow Summary (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------- | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(20,605) | $(26,806) | | Net cash used in investing activities | $(26,353) | $5,892 | | Net cash used in financing activities | $(4,919) | $(2,976) | - Cash used in operating activities improved by $6.2 million year-over-year, driven by a lower net loss and changes in operating assets and liabilities[165][166] - Investing activities shifted from providing cash in 2024 to using $26.4 million in 2025, primarily due to investments of excess corporate cash[167] - Cash used in financing activities increased by $1.9 million year-over-year, mainly due to share repurchases[168] Contractual Obligations Refers to Note 6 for details on the company's commitments and contingencies, noting no material changes - Contractual obligations have not materially changed outside the normal course of business, as detailed in Note 6, 'Commitments and Contingencies'[169] Critical Accounting Policies and Estimates Highlights key accounting policies and estimates requiring significant management judgment and assumptions - The preparation of financial statements requires management to make estimates and assumptions, which are evaluated on an ongoing basis and may differ from actual results[170][171] - Goodwill is tested for impairment annually or more frequently if circumstances indicate impairment; no impairment charges were recognized for the six months ended June 30, 2025, or 2024[172][173] - No other material changes to critical accounting policies and estimates were reported compared to the Annual Report[174] Item 3. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, Forge Global Holdings, Inc. is not required to provide quantitative and qualitative disclosures about market risk - The Company is a smaller reporting company and is not required to provide disclosures about market risk[177] Item 4. Controls and Procedures Management concluded disclosure controls were ineffective due to a material weakness in fair value calculation of warrant liabilities; remediation is underway Evaluation of Disclosure Controls and Procedures Management assessed the effectiveness of disclosure controls, identifying a material weakness in financial reporting - Management, including the CEO and CFO, concluded that disclosure controls and procedures were not effective as of June 30, 2025, due to a material weakness in internal control over financial reporting[178] - Despite the material weakness, management believes the unaudited condensed consolidated financial statements fairly present the company's financial position, results of operations, and cash flows in accordance with GAAP[179] Material Weakness in Internal Control over Financial Reporting Identifies a material weakness in fair value calculation of warrant liabilities due to inadequate risk assessment - A material weakness was identified in internal control over the calculation of fair value of warrant liabilities, specifically regarding capturing changes in the number of outstanding warrants and identifying errors in fluctuation analysis[183] - These deficiencies resulted from the risk assessment not adequately identifying risks associated with new, unusual, or significant transactions[183] - The error did not cause material misstatements in previously issued financial statements and was corrected prior to the issuance of the current report[185] Management's Plan to Remediate the Material Weakness Outlines the company's plan to implement controls, enhance analytical reviews, and assess risks for new transactions - The Company plans to design and implement controls to address new, unusual, or significant transaction risks, including reconciliation and review controls for outstanding warrants[186][189] - Remediation actions include enhancing analytical reviews of valuation inputs and assumptions and incorporating an accounting and disclosure risk assessment process for new transactions[189] - The material weakness will not be remediated until the plan is fully implemented and operating effectively for a sufficient period[186] Changes in Internal Control over Financial Reporting Reports no material changes in internal control over financial reporting, aside from the identified weakness - Other than the material weakness discussed, no other material changes in internal control over financial reporting occurred during the reporting period[187] Inherent Limitations on Effectiveness of Controls Acknowledges that control systems provide reasonable, not absolute, assurance due to inherent limitations and potential for circumvention - Control systems provide only reasonable, not absolute, assurance due to inherent limitations such as faulty judgments, simple errors, circumvention by individual acts or collusion, and management override[188] - The effectiveness of controls can deteriorate over time due to changing conditions or compliance issues, meaning misstatements may occur and not be detected[188] Part II - Other Information Presents additional information not covered in the financial statements, including legal, risk, and equity details Item 1. Legal Proceedings Information regarding legal proceedings is incorporated by reference from Note 6, 'Commitments and Contingencies,' in the financial statements - Legal proceedings information is available in Note 6, 'Commitments and Contingencies'[191] Item 1A. Risk Factors No material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K were reported - No material changes from the risk factors previously described in the Annual Report[192] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds Details the company's share repurchase activity for the three months ended June 30, 2025, as part of its publicly announced program Issuer Purchases of Equity Securities Reports the company's share repurchase activities, including the number of shares and average price paid | Period | Total Number of Shares Purchased | Average Price Paid Per Share (1) | Total Number of Shares Purchased as Part of Publicly Announced Program | Approximate Dollar Value of Shares That May Yet Be Purchased Under the Program (2) (in thousands) | | :-------------------------- | :------------------------------- | :------------------------------- | :------------------------------------------------------------------- | :------------------------------------------------------------------------------------------------ | | April 1, 2025 to April 30, 2025 | 264,701 | $13.11 | 264,701 | $6,529,770 | | May 1, 2025 to May 31, 2025 | 50,000 | $13.36 | 50,000 | $5,861,770 | | June 1, 2025 to June 30, 2025 | — | — | — | — | | Total | 314,701 | $13.15 | 314,701 | | - During the three months ended June 30, 2025, the Company repurchased 314,701 shares at an average price of $13.15 per share[193] - Approximately $5.9 million remains available for repurchase under the $10.0 million share repurchase program authorized in March 2025[194] Item 3. Defaults Upon Senior Securities The company reported no defaults upon senior securities during the period - No defaults upon senior securities were reported[195] Item 4. Mine Safety Disclosures The company has no mine safety disclosures to report - No mine safety disclosures were reported[196] Item 5. Other Information This section provides other information, including details on securities trading plans of directors and executive officers Securities Trading Plans of Directors and Executive Officers Reports on the adoption or termination of securities trading plans by directors and executive officers - No director or officer adopted or terminated a 'Rule 10b5-1 trading arrangement' or a 'non-Rule 10b5-1 trading arrangement' during the three months ended June 30, 2025[197] Item 6. Exhibits Lists exhibits filed or incorporated by reference, including agreements, certificates, policies, and certifications - Key exhibits include the Agreement and Plan of Merger for Accuidity, Certificate of Amendment to the Certificate of Incorporation, Consulting Agreements, Outside Director Compensation Policy, and the Amended and Restated 2025 Inducement Plan[200] - Certifications from the Chief Executive Officer and Chief Financial Officer pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act are also included[200] Signatures Confirms the official signing of the report by the Chief Executive Officer and Chief Financial Officer - The report was signed by Kelly Rodriques, Chief Executive Officer, and James Nevin, Chief Financial Officer, on August 7, 2025[205]