Forge Global Holdings, Inc. (FRGE Q3 FY2023 earnings call

• The private market saw a cautious return of investors, driving higher volumes and revenue in the markets business. Placement fee revenue improved due to modestly improving market conditions.
• Transaction volume increased 53%, and adjusted EBITDA loss narrowed. Custody administration fees rose for the seventh quarter.
• Progress in technology and platform development, including investment in institutional product suite and data strategy, with plans to debut new products related to data in 2024.
• Committed to lowering burn for 2023 and 2024 while making strategic investments in areas like data.

Forge Global's total revenue less transaction-based expenses in Q3 2023 was $18.4 million, up 11% from $16.6 million in Q2. Placement fee revenue less transaction-based expenses improved to $7.1 million in Q3, a 27% increase from Q2. Transaction volume surged 53% to $234 million in Q3. Custody administration fees reached $11.3 million for the seventh consecutive quarter. Adjusted EBITDA loss narrowed to $10.4 million in Q3, better than prior quarters. Revenue contribution: Placement fees contributed significantly to the revenue growth, with transaction volume growth also playing a key role, and custody fees continuing to benefit from the interest rate environment.

• Reiterated commitment to lowering cash burn for 2023 and 2024.
• Intends to debut new products related to data strategy in 2024.
• Continues to monitor geopolitical environment, Fed, interest rate direction, and investor sentiment.

• Geopolitical conflicts and interest rate concerns could impact market conditions.
• Potential fee pressure due to cash sorting affecting custodial fees.
• Volatility in the market, especially with the new war in the Middle East, may affect Q4 performance.

Q: Inquiry about retail vs institutional improvement trends and impact on take rates.

A: Kelly and Mark discuss bid-ask spread narrowing, improvement in institutional participation, and how the market's choppiness impacts take rates.

Q: Update on cost reduction focus and changes due to better environment.

A: Kelly reaffirms commitment to reducing burn, stating it's a top priority, with Mark noting headcount reduction in July.

Q: Color on trading volume in October and Q4 expectation.

A: Mark discusses historical volume patterns, macroeconomic factors, and key indicators like funding rounds and IPOs affecting Q4 volume expectations.

Q: Update on international strategy.

A: Kelly mentions European team building, positive receptivity in Europe, and expectation of revenue contributions from Europe in 2024.

Q: Competitive pressures on take rates and consolidation appetite.

A: Mark and Kelly discuss Forge's balance sheet strength, competitive landscape, and consideration of consolidation while focusing on organic performance.

Q: Data index revenues and cash sorting trends.

A: Mark states data business not yet broken out for revenue, and cash sorting tracked closely but no additional details shared.