Forge(US:FRGE)2025-05-07 13:02Financial Data and Key Metrics Changes - Forge reported total revenue of $25.3 million for Q1 2025, a 36% increase from the previous quarter, marking the best revenue quarter as a public company [14] - Marketplace revenue reached $16 million, up 85% from the last quarter, with trading volume increasing 132% to $692 million [14][15] - Custodial administration fees totaled $9.3 million, reflecting a 7% decline from the previous quarter due to the impact of rate cuts [15][16] - The net loss for Q1 2025 was $16.2 million, nearly flat compared to the $16 million loss in the previous quarter [17] Business Line Data and Key Metrics Changes - The increase in marketplace revenue was driven by improved market dynamics and several large institutional block trades [7][11] - SPV (Special Purpose Vehicle) volume continued to increase, reinforcing the value of the RIA (Registered Investment Advisor) business [12] - The net take rate declined from 2.8% to 2.3% due to the rates achieved on large block trades [15] Market Data and Key Metrics Changes - The Forge Private Market Index decreased by 1.9% in April, indicating some softening in buy-side demand and valuations [23] - Despite macroeconomic volatility, the private market is seen as increasingly important for providing liquidity [7][23] Company Strategy and Development Direction - Forge is focusing on expanding its wealth management capabilities and has announced plans to acquire Acquidity Capital Management to enhance its asset management offerings [9][10] - The company aims to build an ecosystem that facilitates access to private assets, with a vision of private assets comprising 20% of investment portfolios [7][8] - Forge is preparing to launch key parts of a fully automated experience to enhance efficiency in the private market [24] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the strong deal pipeline despite the unpredictable economic landscape due to tariffs and potential recession [13][22] - The company remains cautious about the impact of tariffs on the economy but is encouraged by the continued momentum in the private market [22][23] - Management noted that the first quarter saw a broad re-engagement from various market participants, particularly in the AI sector [44] Other Important Information - Forge has commenced a share buyback program, repurchasing approximately 315,000 shares at an average price of $13.15 per share [19][20] - The company completed a planned 15:1 reverse stock split to comply with listing standards [20] Q&A Session Summary Question: Rationale behind the equity acquisition - Management highlighted the strategic opportunity to expand AUM through passive data-driven funds and the potential for high-margin recurring revenue [27][28][30] Question: Considerations for setting up SPVs - Management explained that SPVs provide a more efficient way for investors to enter and exit investments, with expectations of several hundred SPVs in the future [37][38] Question: Characterization of customer re-engagement - Management noted a broad re-engagement across institutions and individuals, with AI being a significant driver, but acknowledged uncertainty due to tariffs [44][45] Question: Update on Forge's data business - Management emphasized the strategy to increase the visibility and reliability of Forge's data offerings, with a focus on establishing a strong brand presence [54][55] Question: Regulatory backdrop for retail access to private markets - Management discussed ongoing efforts to rewrite rules around accredited investors to enhance access to private markets for a broader audience [68][70] Question: Expectations around cash burn - Management indicated that cash burn in 2025 is expected to be less than previous years, with a target of reaching breakeven by 2026 [73]