Forge(US:FRGE)2023-03-01 02:32Financial Data and Key Metrics Changes - In Q4 2022, Forge's total revenue, less transaction-based expenses, rose to $16.7 million, up 6% from $15.8 million in the previous quarter [13] - Total placement fee revenues, less transaction-based expenses, reached $6.8 million, down 16% from $8.1 million last quarter [13] - Adjusted EBITDA loss was $14.3 million in Q4, slightly higher than the loss of $13.3 million in the previous quarter [15] - Full-year net loss was $111.9 million in 2022, compared to a net loss of $18.5 million in 2021 [18] - Total custodial administration fees increased by 29% in Q4 to $9.9 million from $7.7 million last quarter [14] Business Line Data and Key Metrics Changes - Data bookings grew approximately 392% from $244,000 to about $1.2 million by the end of 2022, indicating diversification in revenue mix [12] - Total custodial accounts increased approximately 3% over the quarter to 1.9 million in Q4, up from 1.8 million last quarter [36] - Total custodial administration fees for the full year increased by 41% to $28.7 million from $20.3 million in 2021 [39] Market Data and Key Metrics Changes - Transaction volume increased 9% from $226 million last quarter to $247 million in Q4 [35] - The average net take rate for 2022 remained constant at 3.3% year-over-year [17] - The number of distinct companies listing shares on the platform remained above historic averages, despite a decline in active shares trading [25] Company Strategy and Development Direction - The company is focused on enhancing its trading platform and data products to improve market participation efficiency [22] - Forge is expanding its international presence, with plans to launch in Germany and other European markets pending regulatory approvals [68][70] - The strategic evolution centers around customer needs, streamlining business units, and enhancing technology to support a unified customer experience [24] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenging market conditions in 2022 but noted signs of leveling out in pricing and increased buy-side interest [26][42] - The company remains optimistic about future opportunities as market conditions normalize, emphasizing the importance of managing cash burn while investing in growth [70] - Management highlighted the potential for increased trading volumes and improved market sentiment in 2023, despite current softness [57][71] Other Important Information - The company recognized employee separation costs of $2.2 million in Q4 related to efficiency initiatives [15] - Cash and cash equivalents at the end of the quarter were approximately $193.1 million, down from $202.6 million last quarter [16] - The company is committed to lowering overall cash burn in 2023 compared to 2022 [41] Q&A Session Questions and Answers Question: What are the dynamics of the market and how is Forge positioned? - Management indicated that the market remains a buyer's market, with elevated spreads and ongoing competition, but they are well-positioned to capture trades as market conditions improve [76][77] Question: Can you provide insights on the international expansion strategy? - The company is on track to launch in Germany this year, focusing on capital formation and secondary needs in the European market [108][110] Question: How is Forge managing costs in a growth environment? - Management stated that they are maintaining a hiring freeze and focusing on managing expenses while balancing the need to invest in growth [60][88]