Q2 2023 Forge Global Holdings Inc Earnings Call
Good afternoon, My name is Emma and I will be your conference operator today.
At this time I would like to welcome everyone to the forge global second quarter 20, twenty-three financial results Conference call.
All lines have been placed on mute to prevent any background noise.
After the speaker's remarks, there'll be a question and answer session.
If you would like to ask a question. During this time simply press star followed by the number one on your telephone keypad.
If you would like to withdraw your question again press the start one thank you.
<unk> you may begin your conference.
Thank you and thank you all for joining us today.
Second quarter 2023.
Joining me today or Kelly Rodriguez.
C O.
Four G.
They will share prepared remarks regarding the salt and they will take your questions up here.
Just after market closed today, we issued a press release announcing.
2023 and financial results.
Discussion of our results today.
Three to the press room, which is available on the <unk>.
Dot com.
First conference call is being webcast right.
And will be available for 30 days.
<unk>.
Beginning about one hour after the conclusion of this call.
That.
There will also be as a company name voucher supplemental.
<unk>.
During this conference call we made.
Forward looking statements based on current expectations.
<unk>.
And projections today's date.
Any forward looking statements that we make our subject to various risks.
<unk>.
There are important factors that could cause actual outcomes to differ materially.
Those.
Included in the space.
We discuss these factors in our LCC filings, including our quarterly report.
10-Q, which came out.
A few minutes ago.
As a reminder, we are not required to update our forward looking statements.
In our presentation today, unless otherwise noted.
We will be discussing adjusted financial measures.
Which are non-GAAP .
Aleve or meaningful when evaluating gorgeous performance.
For detailed disclosure some of these measures.
Gap reconciliations.
You should refer to the financial data contained within our press release, which is also posted on the R. H.
Additionally, we have posted a second quarter supplemental information on the same day, so as I mentioned.
Today's discussion will focus on the second quarter of 2023.
As always we encourage you to be down.
Oh, the annual and quarterly results for a full picture.
<unk> performance.
Without.
I'll turn it over to Kelly.
Thank you everybody for joining.
Just like in past quarters.
We'll talk about some of the highlights from Q2.
And then Mark will give you a deeper dive into our financials from the corner.
We'll close with some insight.
It's a house.
The private market asset class is performance.
But first just a quick reminder of why forward this year.
And what we're trying to do.
There is an inevitable opportunity before us.
Thousands of technology companies.
The potential for high growth our heads down right now.
Solving some of the world's most challenging problems.
They are creating the technologies of tomorrow.
Artificial intelligence.
Satellite networks.
Rockets to Mars.
And food made from air.
Technologies that are helping cure.
Or prevent disease.
And that are changing the way we work.
And how efficiently and effectively all of us can do our jobs.
These disruptive technologies.
Time to create.
And investors aren't just clamoring for exposure.
World changing companies.
It won't regular access.
They want to dedicate portions of their total portfolios.
They want to participate in Holy New financial products.
Track private market performance.
Forge was created at the central is once.
Okay.
Inefficient and you'll liquid market.
Sabrina disruptive technology to bear to transform the private market.
And even through challenging market conditions over the past cycle.
We've made progress and doing the difficult work.
To push this asset class forward.
Through our data investors, including institutions have new information and.
A new access to insights that are helping them time their market re entry and plan for the long term.
The <unk> private market index, which attracts the performance of the 75, most liquid names in the private market.
It is providing new one side and transparency.
It is the blueprint on which new innovations are possible.
And on which new financial products will be built.
We've worked imposition forge at the center of the private market ecosystem.
With the technology data expertise of network.
It will allow us to capture more of the pent up demand from existing and wholly new audiences as private market activity continues to expand as the market continues to reset.
So with that.
Let's get into some of the financial and business highlights from the second quarter.
And Q2 gorgeous total revenue less transaction based expenses was up 8% to 16.6 million from $15.5 million in Q1.
Placements D revenue less transaction based expenses for forge a cue to improve for the first time in six quarters.
Up 22% to $5 $6 million compared to Q1.
This was due to slightly improving market conditions.
Benefited our markets business.
And while we cannot predict the future.
This is a positive indicator that the private markets may have troughed.
We'll need to see more of a trend before drawing absolute conclusions.
Another encouraging indicator with the rise in transaction volume, which increased 20% to.
Two $153 $2 million you too.
Forges adjusted EBITDA loss narrow.
In the second quarter to $11.8 million better than last quarter's loss of 13 million.
At $12.3 million loss and Q2 last year.
This reflects revenue growth.
And.
Discipline, the deliberate cost management strategy, including intentional cost cutting enacted in prior quarters.
This cost discipline has extended into the third quarter.
And we're reiterating our commitment to lowering our burn for twenty-three and for 2024, Mark will talk more about this in his section.
Custody administration fees for the seventh straight quarter continued to rise to 11 million in Q2.
Benefiting again from the higher interest rate environment.
In addition to our financial highlights for the quarter.
<unk> was added to the Russell 2000, as part of the indexes annual reconstitution.
Which helps to validate our business as a category leader.
Finally.
And our ongoing effort to drive deeper engagement and provide more value to institutional investors in July we launched the forge investment outlook.
This is a new quarterly content franchise from forge it.
It contains institutional grade research designed to help the most advanced investors understand and go deeper into this market.
It demonstrates the new level of transparency, we're bringing to the private market.
<unk> data that we believe sheds new light on private market performance.
With that let me turn it over to Mark.
Thank you Kelly.
And Q2, four just total revenue last transaction based expenses.
About $16.6 million up 8% from $15.5 million last quarter.
The increase was largely driven by placement fee revenue.
Total placement fee revenues last transaction basic expenses reached 5.6 million up 22%.
$4.6 million last border.
Transaction volume for the corner increased 20% to $153.2 million in Q2.
While our overall net hey, great increased from 3.6% last quarter to 3.7% in queue, too, which is slightly higher than our historical averages.
[noise] study, our administration fees, whereas one per cent and Q2.
$11 million.
From 10.8 million last quarter and up 93% year over year.
A custodial business continues to provide stability and balance to our revenue streams.
Particularly through uncertain macroeconomic periods.
For just custodial cash balance is $550 million at the end of two two.
$574 million at the end of last quarter.
This decline is primarily driven by cash sweating and search for Ya.
This decrease was more than offset by the increase in the fed funds rate and our cats administration fees.
Total custody accounts totaled $2 million in queue to essentially flat from last quarter.
Assets under Cassidy worth $15.3 billion at the end of Q2 verses 14.8 billion last quarter.
Kris at 3%.
Total headcount was 358 at the end of June .
[noise] Kelly highlighted our commitment to reducing burglary.
Such.
Cost reduction actions were taken in the current third quarter, bringing head count down to 339 down.
Down from 349 at the start of the year.
Second quarter net loss increased to $25.1 million compared to $21.3 million last quarter.
This change is driven by an increase of $6.4 million in non-cash expense going from $9.7 million in Q1.
$16.2 million and cute too.
This includes shares space compensation and an increase in the fair value of a warrant liabilities due to a rising share price.
And the second quarter adjusted EBITDA loss improved.
$11.8 million compared to a loss of $13 million last quarter, driven by improve revenues and type cost controls.
Net cash used an operating activities was $13.6 million in the quarter and.
An improvement compared to net cash used an operating activities 17.7 minutes last corner.
As a reminder, the first half of our fiscal years include timing driven cashflows, such as pay out of our annual bonuses and pay him in that annual corporate insurance premiums, which will not recur in the second half of 2023.
Ah corporate cash and cash equivalents, including term deposits in excess of 90 days and.
Ended the quarter at approximately $162 $2 million.
Compared to $175.3 million.
From a housekeeping perspective.
Weighted average basic number of shares used to compute net loss.
173 million shares.
Fully diluted outstanding chef count as of June 30th.
199 million shares.
Q3.
Estimated 173 million weighted average basic common shares.
E P S modeling purposes.
Historically, there is an inherent summer seasonality, which tends to result in lower third quarter trading volumes similar.
Similar to what you see across Wall Street.
However.
And the visibility that we have at this point in the quarter, We believe third Carter the third quarter volume.
Cool are slightly exceed that of two two which is a positive indicator relative to historic trends.
So in summary, we.
We continue to monitor the state of the markets and actively manage our cost structure.
<unk> remains committed to lowering our overall use cash in 2023.
Being good stewards of our capital.
And a <unk> for a brief private market overview before we turn it over for questions.
Thank you.
As Mark said.
We'll continue to monitor costs.
We're on track with our commitment to lower our cash use it taken intentional and thoughtful measures to reduce costs as it remained focused on the road.
Meanwhile, there are reasons to feel encouraged that the market may be warming.
For example, we closed 46% more trades in queue to get in Q1, and a number of issues, we transacted in was up by 25% quarter over quarter.
Looking at the overall market trends, we believe the market is working through what we call the great reset.
A mass revaluation that is pressuring companies to adopt lead growth and prioritize profitability.
In this era of the great reset.
Our data is showing the company's valuations today are closer to their second to last funding round then.
Their most recent funding round in our queue to private market update we reported median trade prices for companies trading on the forge platform imply valuations, 5% below the company's second to last primary funding rounds.
About 51% below their most recent funding round.
Some companies have recognized this valuation reset publicly.
Writing down their valuations to set investor expectations and prepare for their next capital race or exit.
For many others.
That recognition won't come unless and until they need to raise a new round of primary funds.
Many companies continue to delay new primary rentals, but at the time stamp between their last primary extends to an average of 20 months.
<unk> demand for liquidity from employees and investors only grows.
While still only a handful of unicorn waded into the public market waters.
The reception to those who have.
As demonstrated enthusiastic investor demand for public investment opportunities.
Which could encourage more large unicorn to seek public exits.
Investors have in past cycles shown they are motivated by signs of impending exits to get into the private market to invest early.
The Wall Street Journal headlined recently on July 24th captured that sentiment.
We are feeling fomo drives investors as I P O market awakens from long slumber.
Signs that investors have worried about missing the bottom are good for forge, even as the lead lag in the private versus public market persists.
And while we've noted positive momentum and some of the major public indices. The forge private market index is down 17%.
For the year to the end of Q2.
However.
The three month period ending in July the fourth private market index remained flat.
That's the first three months period, where the index performance did not decline since the market turned at the beginning of 2022.
We've also noted a narrowing of the bid ask spread.
On the Forbes platform from 30% in April .
Between 17, and 18% in May and June .
Through the end of July we saw the bid ask spread narrow further to 15%.
That's a positive signal, but buyers and sellers are getting closer on price and perhaps that some investors believe they've reached the bottom.
We've also seen elevated right of first refusal or Rover rates continue.
Meaning existing investors of these companies are seeing prices that sellers are agree too as attractive.
In closing.
We are feeling some momentum and interest and activity on the platform.
And as Mark mentioned based on what we can see so far on the corner, we expect third quarter market's results to come in on par or better than the second quarter.
As the market real wages.
Continuing to invest in our disruptive technology and data offerings and to exercise lean growth.
As we look forward to continuing our positive momentum.
Thank you and <unk>.
Yeah. Thank you Kelly.
And what can we please open to questions from the line.
As a reminder.
If you would like to ask a question press star followed by the number one on your telephone keypad.
Your first question comes from the line.
With Oppenheimer.
Your line is open.
Good afternoon. Thank you for taking my questions. So for public markets I think many people. Some people would say we have passed the worst time for private markets County, you just mentioned that the private market has probably troughed, but you still have some reservations. So what are the potential wall <unk>.
<unk>. Thank you.
I'm, sorry could you repeat what are the potential what.
Like potential I like <unk> any any any potential reason that you would see.
We cut free may not materialize.
Huh.
Well well I'll start in Denmark, you can you can jump in I mean I think.
Well, we've been watching the last year and a half or big.
Anomic trends in the world.
And will continue to watch those but clearly the private markets take take longer.
So what I think you're seeing as you are seeing the reaction.
Finally, coming to the private markets that have been present in public pricing in public markets for awhile. So I can't I can't say anything specifically jumps jumps out at me I'd say the only other factor is this delay in fund raising I think companies.
Are continuing to delay their next capital round until they see performance improve and probably some degree of recovery and I'd say the irony is that until they start fund raising and those mark start hitting the streets. You know that will continue to keep things running at a pace that may not be as quickly as the public markets, but all that mark.
<unk>.
Comment on this winter.
Yeah, Oh, and I think it's it's pretty much kind of them you know.
Comment Sunday, the variables that we <unk>.
And the call right. We are seeing signs of improvement, we're seeing this spread narrow and the private markets.
We're seeing the performance private companies as expressed through the private market index darker Latin I think the fact that the there hasn't been recovery when I looked at the stats for the public and the C. Three last Friday, not counting yesterday and today, you know <unk> or about 41% NASDAQ was up.
34% SMP up 17% Russell 2000 up 12%. So when you look at the disparity in investment performance.
Between the public and private markets with a private markets.
<unk> by our index down 17% this year for the last three quarters.
I think that represents an opportunity.
Wrong with the public markets don't fly back you know.
That that could potentially be an opportunity for people who.
The willingness to kind of and that's in the.
Private market.
And even though even though of course, it's the last liquid market than the public side. So.
I think I think we're seeing that the right positive signs and it's a question of the market's continuing to return to normalcy, whether that's as Kelly said kind of company is starting to get.
Get back into the I P O market and companies starting to do that.
Next funding round right and those will all be kind of continuing signs of improvement that will support.
The.
And our business.
Got it I think this is very helpful and and in terms of valuation I think you mentioned a medium discount to the most funding ran into the second most funding wrong shrunk in the second quarter compared to the first quarter.
Could you please talk about how much of that shrink cage, it's driven by like the valuation of a I company and do you see any sign that this trend like these increased valuation has brought an O. Two auto company, it's outside of AI companies. Thank you.
So.
No not at all I mean AI is definitely.
The sector of the moment.
We don't see valuations overall being driven by by AI companies at this point.
I you know I think I think we're probably talking more about.
Companies that are raising capital.
Having more to do companies raising capital in the last three to six months, having more to do with valuations.
Improving and just the overall macro environment finally, getting people comfortable to come back into the market.
But we're still early and and part of what I've been commenting on and depressed about the great reset has to do with the fact that we're at the beginning stages of it.
I think we've got a fairly small percentage of companies that have traded in the last three to six months.
Raise new round, it's still relatively early in the great reset. So this will play out we take over the next one to three quarters. So we'll continue to watch it but AI as exciting certainly there's a lot of interest in it is just not affecting overall valuations as much as you might say.
And Cal I can't really watch.
Hey, Owen.
Alright, now if I could add one more thing hopefully you've had a chance to read the forge investment outlook.
Recently.
I would refer you to that publication on page nine we actually break out the forge private market index across sectors. So when you're asking a question specifically about what parts of the index or the market are performing asking you specifically on that page show you Q2 returns on the different sectors.
Embedded within our index, so we break up enterprise software and test.
Consumer lifestyle Industrials, Foodtech transportation health care education of real estate and you can see on that page kind of the dispersion and the average returns for each of those subsectors within are over there. So I think that would go a long way.
Giving you another and other readers and investors kind of insights into what we're seeing across sectors on companies.
Thanks, a lot we appreciate your answer.
Your next question comes from the line at Jeffrey Schmidt with William Blair.
You're liable Nelson.
Thanks So.
You continue to build out the data platform. He continued at products and capabilities. There how how does grow for that segment look and you know when might you start breaking that out separately.
Well at this point, we feel like we've we've reached pre.
Pretty good product markets to it I mean, it's been about a year and a half since we brought it out.
And we don't want to make any any forward statements commuting to and we're gonna do it.
Whereas as we look into 20, the rest of 23 to 24, we're certainly looking at how our organization.
Set up to go out and expand.
But we've already begun to put more marketing emphasis and more of our messaging emphasis as you can hear on data and the index. So I'm not making any specific commitments, but we are looking at 2024 to continue to make that one of our top two investment priorities.
Okay.
It.
Go ahead, Mark Oh, Oh, sorry, I was just kinda has a reminder, we didn't disclose our annual bookings at the end of the year and at a minimum.
Orange tend to be disclosed our annual data bookings each year on an annual basis.
Yeah that was 1.2 million up from 200000.
Got it okay.
And then transaction.
Volume was up nicely in the quarter, but looking at volume portrayed it seemed to be down a fair amount. So was there sort of a mixture fair to more retail investors trading on the on the platform and a quarter.
[noise] drive that.
Take right up at all.
Yeah Yeah.
It's a great observation.
So I mean, just just in terms of kind of bashful numbers, we did do.
A fever amount large large block trades.
The measure that in terms of credits over $5 million and so we did fewer large blocks.
But obviously the positive was we did a significantly more number of smaller craze and as you pointed out that drove up or over I'll take right and so you know that 3.7% a great compares to the average of 3.3% per full year 2022, and 2021. So it was a quarter where it was.
You know more more dominated by smaller trades. Although early into Q3. We are seeing are average face eyes start to pick up again, so that is something that as we thought that in the past that next of business.
For all take rates and and.
Trade sizes.
Okay very helpful. Thank you.
Your next question comes from the line of Kevin Ryan, which anti Securities.
Line is now open.
A Kelly hi, Mark how are you.
Great. Thanks.
A couple questions just on the outlook and you're good to get all the color from you guys and your outlook report as well so you'll get to see some of the building evidence around a recovery I guess the first question is.
What do you guys think recovery really looks like we're obviously troughing your feels like it in starting a recovery, but do you see kind of a level of pent up demand to transact that maybe we get to a point, where there's a little bit of a quilt spring once there's a higher degree of confidence and maybe equilibrium between buyers and sellers and just trying to think about it.
Maybe that's when the IPL window openings and that will be the catalyst to really kind of drive that cold spring or if we're not thinking about it the right way do you just feel like this is going to be a steady grind higher over the next couple of years and extent, we are recovering well I'll just get a little flavor for how you guys are thinking about it.
Yeah. So the the data would suggest that there is pent up.
Demand and we've been watching the date of birth for several quarters.
But at the same time.
We are hopeful we've been really careful about about cost control.
In particular make.
Making sure that we're running the business in a manner that assumes it's not gonna come.
Back in the kind of return to 2021.
Volume an evaluation so I'd say, we're we're watching it we're optimistic.
With the bid ask spread data you're starting to see now.
Platform that we reported on.
And just the pure numbers of Iowa wise it had been elevated for quite a while we you know we are expecting some degree of recovery were just not gonna.
Going to expect it to come to come charging back.
But but we're gonna manage with with modesty and I'd say one of the things that we're looking at is our pipeline. It really gives us a pretty good view it as a sort of the next six weeks.
And those are those are improving.
And that's part of the reason why we made the comment about two three because we can see that the pipeline is steadily improved.
From the beginning of the year until now so I guess I would say and all that Mark comment further.
Expectation is that the pipeline will continue to improve at the rate that it has been improving which is encouraging but that would indicate that the.
The recovery will take awhile.
Mark.
I I think I would I would add that I <unk> I mean, I think you are spot on from a macro standpoint <unk>.
Seen ipos come back in the markets seen successful.
You know public company access for private it will be an important factor I think as Kelly mentioned, the great reset has seen more private companies.
Next Sunday Brown and reset the the primary valuation that will be another kind of validating of the the new normal and the new evaluations for private companies.
Micro level.
We we continue to see record levels of sellers, both in terms of number of Southside allies as well as represented by the number of issuers, which have selling interest on our platform and they're.
There's still a relatively steady.
A steady balance, but we do see some slight improvement.
In terms of the mix by side versus outside Idolize, we had been talking.
That last part or about a roughly two thirds to one third ratio between sell side by side Ili's coming in and that ratio now is more closer to 60 40. So saw some improvement I mean, we wouldn't want to see that start to get back towards.
Normal is 50 50 ratio between buy and sell side idolized, but but we are seeing some incremental improvement and then kinda last point. If you have to have the chance to read the M. S. Manila Unplugging again, we do point out that in terms of the number of companies, which have exercise their real quick.
That increased in two to 225 per cent of all issues that we traded.
Exercise at least one Rover and that's you know that's.
That's an increase from prior quarters and is the highest level in terms of number of issuers, which had a rover in the order.
Highest.
Percentage in over two years, so I think that when you combine that with the disparity we talked about between public performance in 2023, and private markets I think that valuation.
As as supported by the increased percentage of issuers exercising their vote for right.
It was you that we're getting to the point where the.
The opportunity to invest in the private companies, that's that's awfully attractive.
Okay. Thank you both really helpful. And then there's some somewhat related but I think the the framework here or is that 2021 was kind of a special environment is for risk appetite some valuations and that we may not be in that type of environment for some period of time. However.
Yeah, there's a secular broke aspect to the market to you're in a in a maturation of the market. So we don't necessarily need to be the 2021 market for volumes to be much higher for it to be more successful what I think that's part of our thesis. So I'd love to just maybe hit on if you can some of the anecdotes around just progress that you're having.
Just.
Further developing the market standardizing the market with with companies that are turning on for it so that when we get into maybe a more quote unquote normal environment. There's just a lot more activity on four G. In your market share. There's also just trying to think about that.
Some of things you guys are still doing behind the scenes maybe isn't.
Becoming evident yeah, just because we're in this kind of trough of the private markets.
But first of all there are more companies than ever.
That are coming to the same conclusion that the <unk>.
<unk> built the company was based upon which is.
<unk> private longer to build.
World changing business.
Had different capital and liquidity needs.
What was previously the case when companies are going public.
Five to seven years I'd.
I'd say there is an anecdotal sentiment that runs through a lot of the newer unicorns.
That liquidity.
Secondary access is part of the natural life.
Of a private company.
So we continue to see support.
Much greater than we saw when mark and I.
We're part of this five years ago from companies excepting that.
And so what what I guess.
If I look back at 2021, a lot of that volume was driven by the big Ipos. It happened in 2021, so in a world, where we get back to sort of normalize IPO.
Then, yes, we will benefit from that as well as a broadening level of participation by companies not just in the U S.
Globally.
And I guess to my some of my comments I made today and part of the reason why we got this index.
Because we believe there are new products that will come to market that.
That will allow a much broader group of people that are just.
<unk> for a flip or buying for you know a.
A hard access company to have a more mainstream physician in people's portfolios and so we see a whole set of other factors.
That are driving the future that are now starting to present themselves now it's one of the reasons why data and the indexer such a significant part of our strategy.
Another way, we don't need another 2021.
Where we've got you know a nosebleed valuations that are unsustainable in order to have.
Have the success and the expansion of the overall market and so we're we're really excited about the overall maturity of the market we'd been in a tough macro economic times, it seemingly calming down, but we got a little ways to go but there is a lot. We're still so early in the market that I'm really excited about Tam potential and others are coming to.
To see the same things we are but.
But I'll, let Marc speak on any of the specific data points like to setup.
Oh look I think I think I would just reiterate Devon.
Slash, obviously 18 months, it's been kind of a very different and challenging market environment that at the same time you seen for 12 out of data products right. Let me capability open up International operations and then we'll have an index. So we're continuing to try to find that balance between.
Managing our class carefully with using a burn but also investing for the future. So uhm.
You think that it's companion, where we are now in terms of our products and services and our footprint.
Capabilities to where we were back in 2021.
You can make good progress, we're just doing it in a very difficult market environment.
Hey, I'd add one more thing and that is it.
Well this is while this cycle's been tough.
We've had we've continued to have.
A significant part of organization focused on building.
You know scalable highly automated and sort of you know the market infrastructure. This core to the next phase of the market.
While we're not ready to talk about some of the specifics there you can bet that we've used this last 18 months.
In the background, while the market's been dislocated to continue to make those investments.
We think when they do surface can we do bring them out.
The benefit of that the overall market in terms of scalability and efficiency will be will be obvious so stay tuned.
Yup.
All gray color if I could squeeze one quick one in here just as a follow up to an earlier question just on the borrowing portrayed trends and I. Appreciate someone color. There and then also kind of the the quarter to date, what you're seeing you know just kind.
Higher level should we expect that that that.
That you should see kind of a recovery just along with greater boelens in kind of a normalization in the market valuations over time or like just just I don't know if there's more of a mix shift dynamic here that that may make that hard to predict for us on the outside just any any kind of salt on like what volume portrayed probably looks like normalizing.
You know in in a normal activity market.
Is there more uplift from here or is it really just simply the mix of types of transactions.
Yeah, you know <unk>.
My General thought on that is that what we've seen in the last.
Six quarters.
Then.
You're really a huge expansion of the number of sellers, which typically tend to be kind of the employees the founders.
Of the company some more individual sellers and Wes, let's let's been lacking is obviously a deficit.
You shall buyers.
So I do think that as things normalize overtime that you would see the institutional buyers come back in you know.
And that as a buyer comes back in the average trade size is starting to fill up again.
I think in general.
Let's see it playing out over time.
Markets recovered now now one one contrast to that is as we continue to automate N N improved the efficient overall efficiency of the process. Our goal is to expand and a vanilla.
Training, so that we can accommodate to bring down our minimum you know from 100000 to 50020 $5000. So people can <unk> and small size. So that we kind of comedy, but the institutional investors, who wants to trade in size as well as the individual investor who wants to buy a smaller lot. So I think those those would be the two offsetting.
Doctors institutions coming back into it you know <unk>.
<unk>, our trade size, but expanding and improving our techs create more efficiency shouldn't lower our average trade sizes. Besides the tray, even smaller sized market cap.
Companies.
Got it very clear Okay checkmark appreciate it goes.
Seven.
Okay reminder.
No. Thank you I'm I think we're.
R Q.
<unk>. So I think we're good to go.
Thank you.
Yeah, I do have one last call.
Oh, Okay, Alright, <unk> this afternoon.
My apologies. Your last question comes from the line of Ken Washington, with J P. Morgan. Your line is open <unk> hi, Thanks for signing me. Thanks for squeezing me in Uhm.
Maybe first on head count I think headcount was up six per cent. This quarter from the March quarter I think he said in the prepared remarks. It was down maybe 3%. So far this quarter. So can you talk a little bit about you know what positions are being sold here where are you finding the opportunities for the head kind of fishing.
See and how does this all sort of fit into.
The good number of initiatives you have building a Europe building up data building out index is.
And trying to kind of keep keep head count cats.
Yeah, Let me add a few comments and then Kelley Kelley can chime in.
Two.
The right points here I mean, it's a balance for us right.
Trying to maintain focus on her a key strategic priority is about the same time trying to manage our overall expense with print.
To our revenues.
In each corner and so to recap I mean, you started the year with 349.
Please write it dropped down and took actions in Q1, the broader headcount down to 339, turning to you to our head count expand it back up to 359 is a combination of some key strategic hires.
Pills, and you know continual filled out our technology team and our number as well.
Ordered a quarter right at the amount of turnover and critical hires and Backfills mobile always very but but but but generally speaking it cause we discussed before right.
Highland.
Working to maintain our head count and so the numbers went from 349 down to 339 back up to 358 at the end of two two and as I said during the call but actions taken in July the head count now is back down to the 333 39, So we're still below where we started.
And we are trying to actively manage.
Competing priorities in N R Street T J.
Brian .
<unk>.
To figure out where to where we can add and and where we can surprise.
Okay. Thank you that makes sense.
Yeah, I would add that the.
That the composition focus.
As either been <unk>.
In specific areas of engineering that underlie.
Institutional in our data focus.
Or in specific areas or go to market, where we need institutional or segment expertise that really line up.
With those with those services that we're focusing on so it's really it's really a game and.
Bringing in very specific kinds of talent and making sure we're mindful about where we're reducing so as to not sacrifice those priority. That's really the the fine tuning on the instrument panel that we're trying to.
Operate here in this environment. So I appreciate the question I think it's something that should be known by by our investors and prospective investors that we really are trying to line up the precious resources underneath.
The strategic priority that we've set for ourselves. So I appreciate your question.
And then just one last one.
I think this goes to.
Prior question about.
Reengagement and pent up demand, but you mentioned that you know private company valuations are probably 50 per cent below the latest investment round.
Which makes sense right you know does this reality.
Change has it changed the conversations that you've been having with trying to get.
New Ya unicorns in new private companies.
To you know I'm using Bunny ears like list on for it for the first time.
And to the same extent is is having an impact on those that are already participating in the forge platform, but you know this new reality is something that it's like ostrich in the head in the sand they don't really want that public Mark Mark out there so they're really reluctant to purchase.
Pay on the platform like is this is this reality sort of impeding your business as <unk>.
Certain or maybe even many of.
You know your target audience tried to hide from this reality and therefore as they go to their next public rounds, and the reality becomes public they are more willing to.
Returned to your platform maybe that was what you were trying to say in the first first place, but anyway, what is it might it might sort of barking up the right tree here or no you're you're you're making sense <unk> couple of a couple of months ago.
Actually in Q1, we started reporting.
To the press that the emergence of newer unicorns.
We're starting to populate a lot of the activity and mind share of participants that we were seeing and I think part of the reason for that.
With a lot of a new emerging unicorns may not have had the.
The baggage of their valuations being highly visible.
In 2021, and so therefore, it's almost like the great reset that we're talking about might not apply to them because they weren't around in 2020 at least not as unicorns. So I'd say, there's almost two classes of.
The company that we're dealing with here with respect to your question companies that are having to handle and deal with the.
The resetting of evaluation that was incredibly high and 21 and some of those names you know because we talked about them previously going out whether it be instacart, whether it be stripe, whether it be Clara nowadays are companies that massive numbers in 21 that they are having to publicly deal with now there's a bunch of other.
<unk> that may have you know.
Not done a fund raising round and so yes in that area, that's what I would call.
The sort of category Unicorn that would have to face the music at some point in the question is what is your performance look now relative to two years ago, but this other class a brand new unicorns aren't facing that reality at all there still is valuation pressure and there is still.
A question about why should things be priced at but that starting to clear itself up so I'd say.
As far as forges concern.
If a company comes with the conclusion that they want to allow trading or they want to in fact manage a program and I'd say in all cases, the reality of the current valuation environment is front and center, we will not be hampered by that are deterred by that as long as companies recognize the moment that ran and that's part of the <unk>.
Reason why we're trying to acknowledge this great reset so but yeah I think a lot of companies still haven't come to the reality yet.
And and they'll get there when they have to raise money for sure.
Okay, great. Thank you very much.
Awesome. Thank you can do that.
Those questions and I think we're gonna conclude today's call. We appreciate you all being there.
Look forward to seeing you on the road and two three.
This concludes today's conference call you may now disconnect.
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