Q4 2023 Forge Global Holdings Inc Earnings Call
Operator: The Ultimate Parody Site! Good afternoon. My name is Krista, and I will be your conference operator today. At this time, I'd like to welcome everyone to the FORGE Global fourth quarter and full year 2023 financial results conference call. On today's FORGE Global call, will be Kelly Rodriques, Chief Executive Officer, Mark Lee, Chief Financial Officer, and Lindsay Riddle, Executive Vice President of Corporate Marketing and Communication, and Dominic Paschel, Senior Vice President of Finance and Investor Relations. All lines have been placed on mute to prevent any background noise.
Good afternoon. My name is Krista and I will be your conference operator today at this time I'd like to welcome everyone to the forge a global fourth quarter and full year once you're twenty-three financial results conference call.
Krista: Today's a forge global's call well be Kelly Rodriguez, Chief Executive Officer, Mark Li Chief financial or I'm, sorry, Yes, Chief Financial Officer, and Lindsay Riddle Executive Vice President of corporate marketing and communications.
Speaker Change: And Dominic <unk> Senior Vice President of Finance and Investor Relations all lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you'd like to ask a question during that time simply press star followed by the number one on your telephone keypad.
Lindsay Riddle: After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question during that time, simply press the star followed by the number one on your telephone keypad. And if you'd like to withdraw that question, again, press star one. Thank you. And I will now turn the conference over to Lindsay Riddle. Ms. Riddle, you may begin your presentation. Thank you, Krista, and thank you all for joining us today for Ford's fourth quarter and full year 2023 earnings call. This call will be a bit longer as we recap the full year. Joining me today are Kelly Rodriques, Forges CEO, and Mark Lee, Forges CFO. They will share prepared remarks regarding the financial results and then take your questions at the end. Just after the market closed today, we issued a press release announcing Ford's fourth quarter and full year 2023 financial results.
Speaker Change: And if you liked withdraw that question again press star one.
Speaker Change: You.
Speaker Change: And I will now turn the conference over to Lindsey Riddle miserable you may begin your conference.
Lindsey Riddle: Thank you Christa and thank you all for joining us today for for the fourth quarter and full year 2023 earnings call. This call will be a bit longer as we recap the full year.
Lindsey Riddle: Joining me today are Kelly Rodriguez, <unk>, CEO and Mark Lee <unk> CFO, they will share prepared remarks regarding our financial results and then take your questions at the end.
Lindsey Riddle: Just after market close today, we issued a press release announcing <unk> fourth quarter and full year 2023 financial results.
Lindsay Riddle: A discussion of our results is complementary to the press release, which is available on the IR page of our website. This conference call is being webcast and will be available for replay. There is also a company investor supplemental page on our IR site.
Lindsey Riddle: <unk> of our results is complementary to the press release, which is available on the IR page of our website. This.
This conference call is being webcast and will be available for replay.
Lindsey Riddle: Theres also a company investor supplemental page on our IR site.
Lindsay Riddle: During this conference call, we may make forward-looking statements based on current expectations, forecasts, and projections as of today's date. However, any forward-looking statements that we make are subject to various risks and uncertainties, and there are important factors that could cause actual outcomes to materially differ from those included in these statements.
Lindsey Riddle: During this conference call. We may make forward looking statements based on current expectations forecasts and projections as of today's date.
Lindsey Riddle: Any forward looking statements that we make are subject to various risks and uncertainties and there are important factors that could cause these actual outcomes to materially differ from those included in these statements.
Lindsay Riddle: We discuss these factors in our SEC filings, including our annual report on Form 10-K, which can be found on the IR page of our website. 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 measures that we believe are meaningful when evaluating the company's performance. For detailed disclosures on these measures and the gap reconciliations, you should refer to the financial data contained within our press release, which is also posted on the IR page. Today's discussion will focus on the fourth quarter and full year 2023 results. As always, we encourage you to evaluate both annual and quarterly results for a full picture of FORGE's performance, which can be affected by unexpected events that are outside of our control. With that, I'll turn it over to Kelly, our CEO. Thank you, Lindsay and Dom.
Lindsey Riddle: We discuss these factors in our SEC filings, including our annual report on Form 10-K.
Lindsey Riddle: Which can be found on the IR page of our website.
As a reminder, we are not required to update our forward looking statements.
Lindsey Riddle: In our presentation today, unless otherwise noted we will be discussing adjusted financial measures, which are non-GAAP measures that we believe are meaningful when evaluating the company's performance.
Lindsey Riddle: For detailed disclosures on these measures and the GAAP reconciliations you should refer to the financial data contained within our press release, which is also posted to the IR page.
Lindsey Riddle: Today's discussion will focus on the fourth quarter and full year 2023 results as always we encourage you to evaluate both annual and quarterly results for a full picture afforded performance, which can be affected by unexpected events that are outside of our control.
Lindsey Riddle: With that I'll turn it over to Kelly our CEO.
Kelly A. Rodriques: Thank you Lindsay.
Kelly A. Rodriques: And thank you all for joining us. I'll first share some of our 2023 successes, followed by brief highlights of our Q4 results before turning it over to Mark for a deeper dive on our Q4 and annual financials. And I'll finish with some insight on the business and what we're seeing in the market. I'm proud to say that in 2023, we made important moves to invest in Forge's future vision and our path to profitability. Forge focused on three things.
Kelly A. Rodriques: And thanks, all for joining us.
Kelly A. Rodriques: I'll first share some of our 2023 successes.
Kelly A. Rodriques: Followed by brief highlights of our Q4 results before turning it over to Mark for a deeper dive on our Q4 and annual financials.
Mark: And I'll finish with some insight on the business and what we're seeing in the market.
Mark: I am proud to say that in 2023, we made important moves to invest in <unk> future vision and our path to profitability.
Mark: Forged focused on three things.
Kelly A. Rodriques: Accelerating Technology Development, Winning with Data, and Expanding our Category Leadership. We invested in 2023 in the Forge Next Generation platform, a flexible and scalable technology platform on which we are building next-generation institutional trading and data tools. We developed and tested Forge Pro with key clients.
Mark: Accelerating technology development, winning with data and expanding our category leadership.
Mark: We invested in 2023 in the forged next generation platform.
Mark: Flexible and scalable technology platform on which we are building next generation institutional trading and data tools.
Mark: We developed and tested with key clients <unk> pro our first product combining our automated trading capabilities.
Kelly A. Rodriques: Our first product, combining our automated trading capabilities and our proprietary data and marking the first availability of our global order book for institutional trading customers, all in one powerful platform. We announced our first two indexes, the Forge Private Market Index, a benchmark for private market performance, and a first-of-its-kind investable index, the Forge Equity Private Market Index, and we deliver proprietary and meaningful market data through our products, reports, and experts to the tens of thousands who turned to FORGE for perspective as the market bounced around the bottom throughout the year. Amid the volatility that persisted last year, we ran our business with a focus on lean growth and operational efficiency, meeting our targets for lowering cash burn and keeping head count flat, even as we strategically invested for the future, hiring key positions to advance our business. So, I'll now turn to financial highlights for Q4 and for the year. In the fourth quarter, the slow market recovery continued, and we grew revenue for the third consecutive period. Forge's total revenue, less transaction-based expenses, rose to $18.9 million, up 3% from $18.4 million last quarter and up 22% from Q1 2023's trough of $15.5 million.
Mark: Our proprietary data and marking the first availability of our global order book for institutional trading customers all in one powerful platform.
Mark: Yes.
Mark: We announced our first two indexes the Forbes private market index, a benchmark for private market performance and a first of its kind Investable index the force liquidity private market index.
Mark: And we delivered proprietary and meaningful market data through our products reports and experts to the tens of thousands who turned to forge for perspective as the market bounced around the bottom throughout the year.
Mark: Amid the volatility that persisted last year, we ran our business with a focus on lean growth and operational efficiency.
Mark: Meeting our targets for lowering cash burn and keeping headcount flat, even as we strategically invested for the future hiring key positions to advance our business.
Speaker Change: So I'll now turn to financial highlights for Q4 and for the year.
Speaker Change: In the fourth quarter, the slow market recovery continued and we grew revenue for the third consecutive period.
Speaker Change: <unk> total revenue less transaction based expenses rose to $18 $9 million up 3% from $18 4 million last quarter and up 22% from Q1 2023 trough of $15 5 million.
Kelly A. Rodriques: For 2023, Forge's total revenue, less transaction-based expenses, was $69.4 million, marginally up from $68.9 million a year ago. And although the macroeconomic environment dragged trading volumes in the first half of the year, we are optimistic that the worst is behind us. Ahead of a meaningful recovery on the market side, total custodial administration fees in 2023 made up the difference and grew 53% to $44 million. Meanwhile, assets under custody were up 5% in the year to $15.6 billion.
For 2023 for just total revenue less transaction based expenses was $69 4 million marginally up from $68 9 million a year ago.
Speaker Change: And although the macroeconomic environment drag trading volumes in the first half of the year. We are optimistic that the worst is behind us.
Speaker Change: Ahead of a meaningful recovery on the market side total custodial administration fees in 2023 made up the difference and.
Speaker Change: <unk> grew 53% to $44 million. Meanwhile.
Speaker Change: Assets under custody were up 5% in the year to $15 6 billion.
Kelly A. Rodriques: Our modest improvements in the year reflect the strength of our diversified business model, which includes cyclical and counter-cyclical revenue streams from our trading business and our custody business, respectively. We anticipate that as the market continues to improve, we'll see the trend reverse again, and marketplace revenue will eventually outpace custody revenue. Now, I'll turn it over to Mark to talk about the fourth quarter and annual financials in more detail, and then I'll return with some notable business highlights and Forges Market. Thanks, Kelly.
Speaker Change: Our modest improvements in the year reflect the strength of our diversified business model, which includes cyclical and countercyclical revenue streams from our trading business and our custody business respectively.
Speaker Change: We anticipate that as the market continues to improve we will see the trend reverse again and marketplace revenue will eventually outpace custody revenue.
Speaker Change: Now I'll turn it over to Mark to talk about the fourth quarter and annual financials in more detail and then I'll return with some notable business highlights and forges market outlook.
Mark: Thanks Kelly.
Mark P. Lee: Before I start, I would note that we have renamed a category of our revenue, which was previously called Placement Fee Revenue, as Marketplace Revenue in order to align with the types of revenue included in this category. Marketplace revenue includes placement fees, subscription fees earned from our data products, and private company solutions revenue. We believe this name better describes the revenue included therein and therefore is more useful to investors by better characterizing the underlying types of revenue included. We have not adjusted methodology, assumptions, or otherwise changed any aspects of placement fee revenue in making this name change to marketplace revenue. And this category of revenue remains comparable to the prior period presentation. And so with that...
Mark: Before I start I would note that we have renamed the category of our revenue, which was previously called placement fee revenue.
Mark: Marketplace revenue in order to align with the types of revenue included in this category.
Mark: Marketplace revenue includes placement fees.
Mark: Descriptions fees earned from our data products and private company solutions revenue.
Mark: We believe this name better describes the revenue included therein, and therefore is more useful to investors by better characterizing the underlying types of revenue included.
We have not adjusted methodology assumptions or otherwise changed any aspects of placement fee revenue and making this name change to marketplace revenue in this category of revenue remains comparable to prior period presentation.
Speaker Change: And so with that.
Mark P. Lee: In the fourth quarter of 2023, for just total revenue less transaction-based expense, rose to $18.9 million, up 3% from $18.4 million last quarter. Total Marketplace revenues less transaction-based expenses reached $8 million, up 12% from $7.1 million last year. Transaction volume increased 7% from $234 million last quarter to $250 million in Q4, while our overall net take rate increased from 3% last quarter to 3.2% in Q4. As a reminder, net take rates fluctuate due to many factors such as the type of trades, order size, and issuer-specific supply and demand dynamics. In the long run, we believe declines in net take rates will be offset by higher volumes as standardization, automation, and efficiency lower costs and increase trading turnover. Total custodial administration fees were down 3% in Q4 to $10.9 million from $11.3 million last quarter.
Speaker Change: In the fourth quarter of 2023, or just total revenue less transaction based expenses rose to $18 9 million up 3% from $18 4 million last quarter.
Speaker Change: Total marketplace revenues less transaction based expenses reached $8 million up 12% from $7 1 million last quarter.
Speaker Change: Transaction volume increased 7% from $234 million last quarter to $250 million in Q4.
Speaker Change: Our overall net take rate increased from 3% last quarter to three 2% in Q4.
Speaker Change: As a reminder, net take rate fluctuates due to many factors such as the type of trades order size and issuer specific supply and demand dynamics in the long run we believe declines in that take rate will be offset by higher volumes as standardization automation and efficiency.
Speaker Change: Lower cost and increased trading turnover.
Speaker Change: Total custodial and administration fees were down 3% in Q4 to $10 9 million from $11 3 million last quarter.
Mark P. Lee: As we noted on our last call, we fully expect lower interest rates in 2024 to impact total custodial revenue. Forge's custodial cash balances totaled $505 million in Q4, down from $518 million at the end of last quarter. The decrease in cash balances during Q4 was largely due to cash sorting, which has slowed from the pace in previous quarters.
Speaker Change: As we noted on our last call, we fully expect lower interest rates in 2024 to impact total custodial revenues.
Speaker Change: Forward. This custodial cash balances totaled $505 million in Q4 down from $518 million at the end of last quarter.
Speaker Change: The decrease in cash balances during Q4 was largely due to cash sorting, which has slowed from the pace in previous quarters.
Mark P. Lee: While this is an encouraging sign, we continue to monitor this closely as rate cuts have yet to occur and rates are still at high levels. Total custody accounts increased approximately 3% quarter over quarter to $2.1 million in Q4, up from $2 million last quarter. Assets under custody increased to $15.6 billion at the end of Q4 from $15.1 billion last year, as a reminder. These are what we call CAS accounts or custody as a service. But the main driver of our custody revenue, both cash administration and accounts derived from our core self-directed. The fourth quarter net loss was $26.2 million, compared to $19 million in the third quarter.
Speaker Change: While this is an encouraging sign and we continue to monitor this closely as rate cuts have yet to occur and rates are still at high levels.
Speaker Change: Okay.
Speaker Change: Total custody accounts increased approximately 3% quarter over quarter to $2 1 million in Q4 up from $2 million last quarter.
Speaker Change: Assets under custody increased to $15 6 billion at the end of Q4 from $15 1 billion last quarter.
Speaker Change: As a reminder.
Speaker Change: The vast majority of our total accounts in custody.
Speaker Change: What we call cast accounts or custody as a service.
Speaker Change: But the main driver of our custody revenues, both cash administration and account fees derived from our core self directed accounts.
Speaker Change: Fourth quarter net loss was $26 2 million compared to $19 million net loss in the third quarter.
Mark P. Lee: This difference is largely explained by a $7.6 million non-cash loss in Q4 from the change in fair value of warrant liabilities and costs incurred in connection with legal matters. Adjusted EBITDA is a key measure of our operating performance. In the fourth quarter, adjusted EBITDA loss was greater at $13.6 million, compared to a loss of $10.4 million last year. This change was largely driven by $2.9 million of costs in connection Net cash used in operating activities increased to $6.6 million in the quarter, compared to net cash used in operating activities of $3.5 million last quarter. As a reminder, both Q2 and Q4 of 2023 had an extra payroll given our bi-weekly pay cycle. And this drove the majority of the...
Speaker Change: This difference is largely explained by a $7 6 million noncash loss in Q4 from the change in fair value of warrant liabilities and costs incurred in connection with legal matters.
Speaker Change: Adjusted EBITDA as a key measure of our operating results in the fourth quarter adjusted EBITDA loss was greater at $13 6 million.
Speaker Change: Compared to a loss of 10 4 million last quarter.
Speaker Change: This change was largely driven by $2 9 million of costs in connection with legal matters.
Speaker Change: Net cash used in operating activities increased to $6 6 million in the quarter.
Compared to net cash used in operating activities of $3 5 million last quarter.
Speaker Change: As a reminder, both Q2 and Q4 of 2023 had an extra payroll given our biweekly pay cycle and this drove the majority of the increase.
Mark P. Lee: The remainder was driven by net disbursements for other working capital settlements, partially offset by the impact of severance payments made. Cash, Cash Equivalents, and Restricted Cash ended the quarter at approximately $145.8 million, compared to $156.4 million last quarter, highlighting the continued strength of our balance. This excludes $7.6 million in term deposits classified as other current assets as of the end of the year, which stood at $3.2 million in the third quarter.
Speaker Change: The remainder was driven by net disbursements for other working capital settlements.
Speaker Change: Partially offset by the impact of severance payments made in Q3.
Cash cash equivalents and restricted cash ended the quarter at approximately $145 8 million.
Speaker Change: Compared to a $156 4 million last quarter high.
Highlighting the continued strength of our balance sheet.
Speaker Change: This excludes $7 6 million in term deposits classified as other current assets as of the end of the year, which stood at $3 2 million in the third quarter.
Mark P. Lee: Including these term deposits as cash, our total cash stands at $153.4 million. Now to recap the full year of 2020, in fiscal year 2020, for just total revenue, less transaction-based expenses, was $69.4 million, slightly up from $68.9 million a year ago. There was a significant change in the mix of our revenue portfolio between Marketplace Revenues and Custodial Administration. Total Marketplace Revenues, Last Transaction Basis, totaled $25.4 million, down from $40.2 million last year.
Speaker Change: Including these term deposits as cash our total cash stands at $1 $53 4 million.
Speaker Change: Not a recap the full year of 2023.
Speaker Change: In fiscal year, 2023, or just total revenue less transaction basics based expenses was $69 4 million slightly up from $68 $9 million a year ago.
Speaker Change: There was a significant change in the mix of our revenue portfolio between marketplace revenues and custodial administration fees.
Speaker Change: Total marketplace revenues last transaction based expenses totaled $25 $4 million down from $40 2 million last year.
Mark P. Lee: 2023 trading volume was down 37%, $766 million compared to $1.2 billion in 2022. The average net take rate for 2023 stayed constant with 2022 at 3.3%. While year-over-year results reflected difficult market conditions during 2023, which included additional rate increases, a banking crisis, and continued geopolitical unrest, we are nonetheless encouraged by the steady and consistent improvement seen in our marketplace business since Q1 of 2020. Total custodial administration fees were up 53% in 2023 to $44 million from $28.7 million.
Speaker Change: 2023 trading volume was down 37% to $766 million compared to $1 2 billion in 2022.
Speaker Change: The average net take rate for 2023 stayed constant with 2022 at three 3%.
Speaker Change: While year over year results reflected the difficult market conditions during 2023, which included additional rate increases a banking crisis and continued geopolitical unrest.
Speaker Change: We are nonetheless encouraged by the steady and consistent improvement seen in our marketplace business since Q1 of 2023.
Speaker Change: Total custodial administration fees were up 53% in 2000 $23 million to $44 million from $28 7 million in 2022.
Mark P. Lee: Total custody accounts increased year over year to $2.1 million from $1.9 million. The growth in accounts came from our CAS, or Custody as a Service, business. Forgest's custodial cash balances totaled $505 million at the end of 2023, down from $635 million at the end of 2022. This was largely driven by cash sorting. Assets under custody ended 2023 up 5% year over year to $15.6 billion from $14.9 billion at the end of 2022. As we've explained throughout 2022 and 2023, higher interest rates resulted in higher cash administration.
Speaker Change: Total custody accounts increased year over year to $2 1 million from $1 9 million.
Speaker Change: The growth in accounts came from our Cas or custody as a service business.
Speaker Change: For just custodial cash balances totaled $505 million at the end of 2023.
Speaker Change: Down from $635 million at the end of 2022.
This was largely driven by cash sorting.
Speaker Change: Assets under custody ended 2023 up 5% year over year to $15 6 billion from $14 9 billion at the end of 2022.
Speaker Change: As we've explained throughout 2022 and 2023.
Speaker Change: Higher interest rates resulted in higher cash administration fees.
Mark P. Lee: These fees have been the main driver of the growth in total custody. As we head into 2024, we expect to generate lower cash administration, based on lower cash balances and lower interest rates, resulting in lower total custody revenue.
Speaker Change: These fees have been the main driver to the growth in total capacity revenues.
Speaker Change: As we head into 2024, we expect to generate lower cash administration fees based on lower cash balances and lower interest rates, resulting in lower total <unk> revenue.
Mark P. Lee: The full-year net loss was $91.5 million in 2023, an improvement of $20.4 million from the net loss of $111.9 million last year. Please note that 2022 included significant one-time transaction costs related to going public, as disclosed in our Investor Supplemental and in the 10-K. Fiscal year 2023 adjusted EBITDA loss was $48.8 million, compared to an adjusted EBITDA loss of $46.9 million in 2022, and forged capitalized software in the amount of $6.7 million in 2020. 2023 included a $2.2 million charge in connection with the previously mentioned legal matters. During 2023, FORGE will continue to make key hires to drive our strategic initiatives, as described earlier by Kelly, while maintaining tight cost discipline, keeping total headcount flat, and bringing down our total spend. Net cash used in operating activities was $41.5 million during the year.
Full year net loss was $91 5 million in 2023, an improvement of $20 4 million from the net loss of 111 9 million last year.
Speaker Change: Please note that 2022 included significant one time transaction costs related to going public as disclosed in our investor supplemental and in the 10-K.
Speaker Change: Fiscal year 2023, adjusted EBITDA loss was $48 8 million.
Speaker Change: Compared to an adjusted EBITDA loss of $46 9 million in 2022.
Speaker Change: Forged capitalized software in the amount of $6 7 million in 2022.
Speaker Change: 2023 included a $2 2 million charge in connection with the previously mentioned legal matters.
Speaker Change: During 2023, <unk> continuing to make key hires to drive our strategic initiatives as described earlier by Kelly.
Speaker Change: While maintaining tight cost discipline, keeping total head count flat and bringing down our total spend.
Speaker Change: Net cash used in operating activities was $41 5 million in the year of.
Mark P. Lee: A $27.4 million improvement compared to net cash used in operating activities of $68.8 million in 2022, excluding $14 million in 2022 costs related to going public. Significant class A's were made across the board, including Incentive Compensation, and Company Liability Insurance. Marketing Spend, Professional Fees, and Real Estate Consolidation. Keep in mind for the timing of cash flows that Forge pays out annual corporate bonuses in the first quarter. Our total headcount, including for GRF, stayed relatively flat at 345 at the end of the year from 349 in 2022.
Speaker Change: <unk> 27, 4 million improvement compared to net cash used in operating activities of $68 8 million in 2022.
Speaker Change: Excluding $14 million in 2022 costs related to going public.
Speaker Change: Significant cost saves were made across the board, including incentive compensation company liability insurance marketing span professional fees and real estate consolidation.
Speaker Change: Keep in mind for the timing of cash flows that forge pays out annual corporate bonuses in the first quarter.
Speaker Change: Our total head count, including Ford Europe stay.
Speaker Change: Stayed relatively flat at 345 at the end of the year from 349 in 2022.
Mark P. Lee: Forge Europe continues to staff up with eight people at year end. We continue to be very disciplined about managing costs and have maintained our overall hiring. From a housekeeping perspective, our weighted average basic number of shares used to compute net loss was 173 million shares, and our fully diluted outstanding share count as of December 31st, 2023 was 199 million shares. For the first quarter of 2024, we estimate 180 million weighted average basic common shares for EPS modeling purposes while in a lost position. We continue to focus on managing our expenses while still investing in our top strategic priority, to continue to build and improve FORGE's platform, products, and services. The launch of Forge Pro, Forge Europe, and the Forge Private Market Index are just the most recent examples of our traction. As the stewards of our shareholders' capital, we are committed to continuing to lower our overall cash burden in 2024, as we did in 2020.
Speaker Change: Ford Europe continues to staff up with eight people at year end.
Speaker Change: We continue to be very disciplined about managing costs and have maintained our overall hiring freeze.
Speaker Change: From a housekeeping perspective, our weighted average basic number of shares used to compute net loss was 173 million shares and our fully diluted outstanding share count as of December 31, 2023 was 199 million shares.
Speaker Change: For the first quarter of 2024, we estimate 180 million weighted average basic common shares for EPS modeling purposes, while in a loss position.
Speaker Change: We continue to focus on managing our expenses, while still investing in our top strategic priorities to continue to build and improve <unk> platform products and services and the launch of <unk> pro towards Europe, and the forged private market index.
Speaker Change: Or just the most recent examples of our traction.
Speaker Change: As the stewards of our shareholders' capital we are committed to continue to lower our overall cash burn in 2024 as we did in 2023.
Kelly A. Rodriques: Entering 2024, we see early signs that the private markets are starting to regain their footing, and we're feeling optimistic about our prospects for the year ahead. I'll hand it over to Kelly to further explain.
Speaker Change: Entering 2024, we see early signs that the private markets are starting to regain their footing.
Speaker Change: And we're feeling optimistic about our prospects for the year ahead.
Speaker Change: I'll hand, it over to Kelly to further expand on this.
Kelly A. Rodriques: Thanks Mark. At the beginning of 2023, we talked about how to put ourselves in a position to win in this market. Importantly, we focused on continuing to build the Forge Next Generation private market platform, drive the market's evolution, and expose more participants to the high-quality data that will tie them to FORGEĀ® and more deeply engage them in this asset class. We believe that Forge Pro, which we announced to the public last week, represents a step change toward that goal, and it also forges a definitive stake in the ground. We intend to win the institutional market and believe that with our tech, our data, and our expertise, we are best positioned to do so. We have also made strategic moves to win on data, and I've identified data quality as a key differentiator for us because of our commitment. Building Long-Term Company Relief
Kelly A. Rodriques: Thanks Mark.
Kelly A. Rodriques: At the beginning of 2023, we've talked about how to put ourselves in a position to win in this market.
Kelly A. Rodriques: Importantly, we focused on continuing to build the forge next generation private market platform to drive the market's evolution.
Kelly A. Rodriques: To expose more participants to the high quality data that will tie them to forge and more deeply engage them in this asset class.
We believe the <unk> pro which we announced to the public last week represents a step change towards that goal.
Kelly A. Rodriques: It is also forges definitive stake in the ground that we intend to win the institutional market.
Kelly A. Rodriques: And believe that with our tech our data and our expertise we are best positioned to do so.
We also made strategic moves to win on data.
Kelly A. Rodriques: Identified data quality.
Kelly A. Rodriques: As a key differentiator for us.
Kelly A. Rodriques: Because of our commitment to.
Kelly A. Rodriques: To building long term company relationships.
Kelly A. Rodriques: We match trades at a high rate, but we also closed more than 90% of matched trades in 2023. The scale and quality of our data is a key to this execution. And what became clear over the last year is that the more access people have to Forge's data, the more likely they are to engage meaningfully in this emerging asset class. Ciao.
Kelly A. Rodriques: We matched trades at a high rate, but we also closed more than 90% of matched trades in 2023.
Kelly A. Rodriques: The scale and quality of our data is a key to this execution.
Kelly A. Rodriques: And when it became clear over the last year is that the more access people have to forge is data.
Kelly A. Rodriques: More likely they are to engage meaningfully in this emerging asset class.
Kelly A. Rodriques: So in.
Kelly A. Rodriques: In 2023, we made changes to our data strategy, aimed at maximizing adoption of and exposure to our data across our products and platforms. These changes mean we are prioritizing data adoption over near-term data revenue and creating stickier relationships with our customers that we believe will drive higher lifetime value. Reflecting this Transition. Total bookings in 2023 were $1.3 million, up slightly from $1.2 million in 2022, and we've seen positive start to the year in terms of an increased number of IOIs from investors exposed to our pricing. We made significant steps to invest in the right talent in 2020. Through this acquisition of talent.
Kelly A. Rodriques: In 2023, we made changes to our data strategy aimed at maximizing adoption of an exposure to our data through our products and platform.
Kelly A. Rodriques: These changes mean, we are prioritizing data adoption.
Kelly A. Rodriques: Over near term data revenue and creating stickier relationships with our customers that we believe will drive higher lifetime value.
Kelly A. Rodriques: Reflecting this transition total bookings in 2023 were $1 3 million.
Kelly A. Rodriques: Up slightly from $1 2 million in 2022.
Kelly A. Rodriques: And we've seen positive signals to start the year in terms of an increased number of iOS <unk> from.
Kelly A. Rodriques: From investors exposed to our pricing data.
To continue to expand our leadership position in the category.
Kelly A. Rodriques: We made significant steps to invest in the right talent in 2023.
Kelly A. Rodriques: Through this acquisition of talent.
Kelly A. Rodriques: We made scaled improvements to many functions, including How We Engage Issues and Institutional and how quickly and effectively we bring new product innovations to market, and we continue to build out our Forge Europe, as we pursue the Botham license in Germany. However, we had hoped for a more meaningful market recovery in 2020. We believe we have emerged stronger and more efficient and that the progress we made on technology, data, and category leadership will pay dividends this year. Today, we're also nearly one quarter through 2024, and I can tell you with confidence that things are looking up. There are a few signals that we are monitoring closely. Buy-side indications of interest on our platform outweighed sell-side indications of interest for the first time in two years in February. The bid-ask spread has jumped around month-to-month as new issuers emerge and buyers re-engage, but it settled down to under 11% in February, and the Forge Private Market Index turned positive year-to-date, with a growing number of outperformers amongst our index names.
Kelly A. Rodriques: We made scaled improvements to many functions, including how we engage issuers and institutional customers and how quickly and effectively we bring new product innovations to market.
And we continue to build out our <unk> team as we pursue the BOP and license in Germany.
Kelly A. Rodriques: While we had hoped for a more meaningful market recover in 2023.
Kelly A. Rodriques: We believe we emerged a stronger more efficient company.
Kelly A. Rodriques: And that the progress we made on technology data and category leadership will pay dividends this year.
Kelly A. Rodriques: Today, we're also nearly one quarter through 2024 and I can tell you with confidence things are looking up.
Kelly A. Rodriques: There are few signals that we are monitoring closely.
Kelly A. Rodriques: Buy side indications of interest on our platform.
Kelly A. Rodriques: Outweighed sell side indications of interest for the first time in two years in February.
Kelly A. Rodriques: The bid ask spread has jumped around month to month, as new issuers emerge and buyers reengage, but it settled down to under 11% in February.
Kelly A. Rodriques: And the forge private market index turned positive year to date.
Kelly A. Rodriques: With a growing number of outperformers amongst our index names.
Kelly A. Rodriques: Reading the headlines, there's growing optimism for a returning IPO market. But whether or not the IPO pipeline opens up, in our view, there's an energy in this market that we haven't felt for a long time. Given what we're seeing in the market now, momentum is building, and we're seeing increased buy-side activity and a growing pipeline. But, I've warned that the recovery may not be linear or up and to the right every quarter as the market comes out of this long winter. We're feeling optimistic about spring. Thank you for joining us, and we'll open it up for questions. Thank you. As a reminder, if you would like to ask a question, please press star followed by the number 1 on your telephone keypad. Your first question comes from the line of Devin Ryan from Citizens JMP. Please go ahead. Hey, thanks. Good afternoon, everyone.
Kelly A. Rodriques: Reading the headlines there is growing optimism for our returning IPO market this year.
Kelly A. Rodriques: But whether or not the IPO pipeline opens up meaningfully.
Kelly A. Rodriques: From our view there is an energy in this market that we havent felt for a long time.
Kelly A. Rodriques: Given what we're seeing in the market now momentum is building.
Kelly A. Rodriques: And we're seeing increased buy side activity and a growing pipeline.
Kelly A. Rodriques: While I've warned that the recovery may not be linear.
Kelly A. Rodriques: We're up into the right every quarter as the market comes out of this long winter.
Kelly A. Rodriques: We're feeling optimistic about the spring.
Speaker Change: Thank you for joining us.
Speaker Change: We will open it up for questions.
Speaker Change: Thank you.
Speaker Change: Sure.
Speaker Change: As a reminder, if you would like to ask a question. Please press star followed by the number one on your telephone keypad.
Speaker Change: First question comes from the line of Devin Ryan from citizens JMP. Please go ahead.
Speaker Change: Sure.
Devin Patrick Ryan: Hey, Thanks, good afternoon, everyone. Thanks for taking the questions here.
Devin Patrick Ryan: Thanks for taking the questions here. For the first one, I just want to talk about bid-ask spreads. And Kelly, you just hit on the improvement you've seen there in kind of, you know, sub 11 percent in February. And that's coming down from, I think, 15 percent at the end of the third quarter. And going back to some of the data you guys have provided, the median was, I think, 11.6 percent from 2020. And then, you know, in some really strong periods in 2021, you were sub 5 percent. So, I just want to think about, like, what the 10.8 percent means and indicates.
Devin Patrick Ryan: First one just wanted to talk about the bid ask spreads and Kelly you just hit on.
Devin Patrick Ryan: The improvement you've seen there and kind of just sub 11% February thats coming down from I think 15% at the end of the third quarter and going back to some of the data you guys provided the mediums and 11, 6% from 2020 and then.
Devin Patrick Ryan: Some really strong periods in 2021, you were sub 5%. So just want to think about like what you need 10 eight.
Devin Patrick Ryan: Percent needs an indication like do.
Devin Patrick Ryan: And, like, do we need to see further improvement to really see, you know, people re-engage? Do we need to get back down into that mid-single-digit range? And then, that's kind of part one of the question. And part two is, you know, it does take time to kind of rev the engine back up here, particularly given that it's been slow for the last, you know, two years.
Devin Patrick Ryan: Do we need to see further improvement to really see.
Devin Patrick Ryan: People engaged we need to get back down into that mid single digit range and then that's kind of part one of the questions on part two is it does take time to kind of wrap the engine back up here, particularly given that its been slow for the last two years and so what is that lag look like in your guys' mind in terms of people re engaging and then from that peer.
Devin Patrick Ryan: And so, what does that lag look like in your guys' minds in terms of people re-engaging? And then, from that period, to actually get to a point where deals are closing, and you know, revenues are coming in, or maybe, say, in a different way, speeding up? Thanks.
Devin Patrick Ryan: To actually get to a point where deals are closing and your revenues are coming in or maybe.
Devin Patrick Ryan: A different way accelerating thanks.
Kelly A. Rodriques: Yeah, so I'll start with part one and I'll let Mark take, [inaudible] We've been talking about bid-ass spreads for two years, and I think it's interesting your question refers to what the spreads looked like in 2021, which was, which is really an extraordinary kind of moment in the market when I look back on the data. I'd say in the sort of zone of 9 to 11, the market starts to feel normal again.
Devin Patrick Ryan: Yes.
Speaker Change: I'll start with part one and I'll, let mark take.
Speaker Change: And part two.
Mark: We've been talking about bid ask spreads for <unk>.
Mark: For two years and I think it's interesting your question refers to.
Mark: What the spreads look like in 2021, which was which.
Mark: It was really an extraordinary.
Mark: At a moment in the market.
Mark: When I look back on the data.
Mark: I'd say in the sort of zone of nine to 11, the market starts to feel normal again.
Kelly A. Rodriques: And when I say normal, I mean you've got a reasonable range where trading can happen, and buyers and sellers can meet. And this is true by looking back at the 2020 bid-ask spread. So I'd say the second question is probably... more of a forward-looking view about how quickly revenue will accelerate. And I'll let Mark take it.
Mark: And when I say normal that you have got a reasonable range we're trading.
Mark: It can happen and buyers and sellers can meet and this is true by looking back at the 2020 bid ask spreads.
So I'd say the second question is probably.
Mark: More of a forward looking view about how quickly revenue will accelerate.
Speaker Change: And I'll, let I'll, let mark take it I just I just want to point out that.
Kelly A. Rodriques: I just want to point out that, you know, in the zone that we're in right now, this is what we feel is starting to look like a more healthy market than what we've seen in the last two years. So we're pretty excited about that. Yeah, Devin, thanks for the question.
Mark: In the zone that we're in right now.
Mark: This is what we feel starts to look like a more healthy market than we've seen in the last two years. So we're pretty we're pretty excited about that.
Mark: Yes Devin.
Mark: Thanks for the question. So let me give you a little bit of a.
Mark P. Lee: So let me give you a little bit of a kind of lengthy response. I mean, as you point out, we have seen the spreads fluctuating between five and 10%, even going back to 2020. And so I think it's fair to say, obviously, the tighter the spreads, the better, but I think we feel pretty good about kind of where the spreads are now and our ability to increase volume and flow with spreads kind of where they are today in the direction that they're heading. I mean, the way I would broaden the answer is...
Devin Patrick Ryan: Kind of a lengthy response I mean as you point out we had seen kind of the spreads fluctuating between 5% and 10% even going back to 2020, and so I think it's fair to say, obviously, the tighter spreads the better but I think we feel pretty good about kind of where the spreads are now and our ability to.
Increase volume and flow with with spreads kind of where they are today and the direction that they are heading in.
Devin Patrick Ryan: The way I would broaden the answer is yes.
Mark P. Lee: I mean, we share with you two leading indicators, you know, bids and offers. And, as Kelly indicated, we saw the bids outnumber the offers, you know, in the more recent period. 52% of our IOIs, you know, are now bids versus offers, and that's a big change, kind of, from where we were. You remember, two-thirds of sellers and one-third of buyers, you know, during the last two years?
Devin Patrick Ryan: We share with you two leading indicators.
Devin Patrick Ryan: Bid bids and offers and as Kelly indicated we saw the bids outnumber the offers and the more recent period at 52% of our I O I's are now bids.
Devin Patrick Ryan: Versus offers and that's a big change kind of from where we were a youll remember two thirds sellers and one third buyers.
Devin Patrick Ryan: The last two years I think the other.
Mark P. Lee: I think the other, the two leading indicators, therefore, are kind of bid offers and spread, but we also provide lagging indicators, the valuation of these private companies, and we're seeing improvement there, right? And so, you know, these come from our PMU and our Forge Investment Outlook, but we're seeing the median valuation of the companies that we're trading trade at a 50% discount, you know, to their last round. But on the high end, these numbers are getting better. The top decile is trading at a 75% premium to the last round, whereas the bottom decile is trading at a 77% discount to the last round.
Devin Patrick Ryan: The two leading indicators therefore, our bid offers and spread but we also provide you guys lagging indicators the valuation.
Devin Patrick Ryan: Of these private companies and we're seeing improvement there right and so.
Devin Patrick Ryan: These come from our <unk> and our forge investment outlook, but we're seeing the median.
Devin Patrick Ryan: The valuation of the companies that were trading.
Devin Patrick Ryan: To trade at a 50% discount.
Devin Patrick Ryan: To their last round, but on the high end. These numbers are getting better the top decile are trading at a 75% premium to the last round, whereas the bottom decile are trading at a 77% disc.
Devin Patrick Ryan: A discount to the last round, but all of those numbers on our iron improvement over what we've seen before and then if you.
Mark P. Lee: But all those numbers are an improvement over what we've seen before. And then, if you kind of go online and look at forge.com, and you track the Forge Private Market Index performance, You can see, as Kelly mentioned, our index turned positive in 2024. So our index is now up 4% year-to-date through 2024, and that's a big change, right? If you recall, in 2023, the Forged Private Market Index was down 20% in contrast to how well the public markets performed.
Devin Patrick Ryan: You kind of go online and look at <unk> Dot Com and you track the forged private market index performance.
Devin Patrick Ryan: You can see as Kelly referred our index turn positive.
Devin Patrick Ryan: In 2024, so our index is now up 4% year to date through 2024, and that's a big change right. If you recall in 2023, the <unk> private American index was down 20% in contrast to how well the public markets performed so we still think this gap between private company valuations and <unk>.
Mark P. Lee: So we still think this gap between private company valuations and public company valuations is another reason to feel good that, perhaps, in fact, this could turn out to be a very strong vintage year from an investing in private companies perspective. And we think all of that together kind of forms the foundation for how we're feeling, you know, about the market going forward.
Devin Patrick Ryan: <unk> company evaluations is another reason to feel good that perhaps in fact, this could turn out to be a very strong vintage year from investing in private companies in our perspective.
Devin Patrick Ryan: And we think all of that together kind of forms the foundation for how we're feeling about the market going forward.
Devin Patrick Ryan: Okay. Thank you guys so much for the detailed answer there. Great color, too.
Speaker Change: Got it okay. Thank you guys. So much for the detailed answer there great color just a quick follow up I guess hopefully quick.
Devin Patrick Ryan: Just a quick follow-up, I guess, hopefully quick. So, you know, great to see the continued rollout of some of these new offerings and, you know, the recent announcement about Forge Pro. You know, I'd love to just drill down a little bit into that specifically and just kind of think about how that's going to be marketed and, you know, is that something that's going to come with the data subscription or is it intertwined with that? So, there's kind of cross opportunities there.
Great to see the continued rollout of some of these new offerings.
Speaker Change: The recent announcement around <unk> pro luxury you drill down into that specifically and just kind of think about how thats going to be marketed.
Speaker Change: Is that something thats going to come with the data subscription or it's intertwined with that so those kind of cross opportunities there.
Devin Patrick Ryan: And then, you know, is this something that's going to be a direct monetization opportunity, or is this more about growing the pie, you know, the differentiation of the platform, and creating a better experience to drive more growth and activity? Just trying to kind of think about what this means for you guys. Thanks.
Speaker Change: Is this something thats going to be a direct monetization opportunities or is this more just around growing the pie the differentiation of the platform and creating a better experience to drive more growth in activity just trying to think about what this means for you guys. Thanks.
Kelly A. Rodriques: Yeah, look, it's a pretty big deal for us. And, you know, clearly, we have been working on it for a while. Mark will give a little bit of color on the sort of traction so far.
Speaker Change: Yes look it's a pretty big deal for us.
Speaker Change: Clearly.
Speaker Change: We have been working on it for a while.
Speaker Change: Mark will give a little bit of color on on sort of traction so far I guess, when we look at our business model.
Kelly A. Rodriques: I guess when we look at our business model, and I've been talking about subscription-based or data-driven revenues for a few years now, this really represents a combination of two really powerful things. First of all, we talked about the quality of data and the fact that we run a platform where we can verify the quality of IOIs and, obviously, substantiate pricing through the platform, but when you combine that data with some of the automated trading capabilities and access to our global interest book, which we've not opened up for anyone else up to this point, this is a pretty major moment. Now we see this continuing along the path of a subscription-based model. So think of it as another dimension of how we sell a recurring revenue data product, but it's really targeting institutions that trade. So the combination of the Global Order Book and that data quality, we think, is a game changer for us. It's still early days.
Speaker Change: I have been talking about subscription based or data driven revenues for a few years. This really represents a combination of two really powerful things first of all we talked about the <unk>.
Speaker Change: Quality of data and the fact that we run a platform, where we can verify the quality of <unk> and obviously substantiate pricing through the platform, but when you combine that data.
Speaker Change: With some of the automated trading capabilities and access to our global interest book, which we have not.
Speaker Change: Opened up for anyone else.
Speaker Change: Up to this point this is a pretty major moment now we see this continuing along the path of a subscription based model. So think of it as another dimension of how we sell our recurring revenue data product, but it's really targeting institutions that trade. So the combination of the global.
Speaker Change: The order book.
Speaker Change: And that data quality, we think is the game changer for US. It is still early days I'll, let mark speak to the sort of where we are but we're pretty we're pretty excited about this and obviously my points earlier about the relationship between data and trading.
Kelly A. Rodriques: I'll let Mark speak to sort of where we are, but we're pretty excited about this. And obviously, my points earlier about the relationship between data and trading, we see and have a belief that that benefits Forge in that sort of network effect. But Mark, I'll let you take it from there.
Speaker Change: We see it have a belief that.
Speaker Change: That benefits.
Speaker Change: <unk> and that sort of network effect, but mark I'll, let you take it from there yes, let me, let me expand a little bit Devin on that so I mean, we all know when we rolled out four and forge intelligence.
Mark P. Lee: Yeah, let me expand a little bit, Devin, on that. So, I mean, we all know when we rolled out Forge Intelligence, people could see trading data, our order book, VWAP, waterfall models, mutual fund data, and firmographic information. So that was kind of version 1.0.
Mark: People could see trading data our order book V. Wap waterfall models mutual fund data Afirma graphic information. So that was kind of version one <unk> now to talk about <unk> pro.
Mark P. Lee: Now, if you talk about Forge Pro, really, we really think this is important because it's our first step towards order and execution management technology and capabilities for our institutional trading customers. It specifically gives our customers the ability to input their IOI, with full visibility to live, real-time visibility to our global order book. And so they can put in their orders, they can track the order status, you know, it gives them full depth of market and institutional style view. So we really think that this is kind of the first step to really improving the customer experience and the automation of the entire process. We really break it down into kind of three distinct segments where you have our institutional trading clients where we are looking to bundle our trading and data services so that they can take advantage of kind of the full basket of information and the services that we can provide. Number two.
Mark: We really think this is important because thats, our first step towards order and execution management.
Speaker Change: <unk> technology and capabilities for our institutional trading customers. It specifically gives our customers the ability to input their <unk> with full visibility to live real time.
Speaker Change: Visibility to our global order book and so they can put in their orders they can track the order status.
Speaker Change: It gives them full depth of market and an institutional style view. So we really think that this is kind of the first step of really improving the.
Speaker Change: Customer experience and the automation of the entire process I think we've also talked about this that that as we see the evolution for our data business.
Speaker Change: We really break it down into kind of three distinct.
Speaker Change: <unk>, where you have our institutional trading clients, where we are looking to bundle our trading and data services.
Speaker Change: So so that they can take advantage of kind of the full basket of.
Speaker Change: Of.
Speaker Change: The information in the services that we can provide number two.
Mark P. Lee: Those that are not trading clients, we see a business where we're getting subscriptions to Ford Intelligent. And then number three, you've heard us talk about this a lot, derived data, right? And referring specifically to our index products and forged prices, you know, and that, of course, we think there's a lot of opportunity. We've talked about the forged private market index, now the investable index. So we think about our data world in those three different categories. That's great.
Speaker Change: Those that are not trading clients, we see a business, where we're getting subscriptions to Forbes intelligence and then number three you've heard us talk about this a lot.
Drive data right and referring specifically to our index products and <unk> price.
Speaker Change: And that of course, we think there's a lot of opportunity we've talked about the <unk> private market index now the Investable index. So we think about our data world in those three different categories.
Speaker Change: That's great. Okay I'll leave it there thank you guys.
Devin Patrick Ryan: Okay, I'll leave it there. Thank you guys. Your next question comes from the line of Patrick Moley from Piper Sandler. Please go ahead.
Speaker Change: Your next question comes from the line of Patrick <unk> from Piper Sandler. Please go ahead.
Patrick: Yes, hi, guys good evening.
Patrick Moley: Yeah, guys, good evening. Looking back a few years now, when you went public, I think one of the things that you had identified was that the TAM, I think, in 2021 was around $3 billion. You thought that could grow to around $8 billion by 2026. So, I mean, obviously, we've hit a little bit of a cyclical downturn this year, but just wondering if you still think that if we do get an uptick in the market, do you still think $8 billion is kind of a reasonable TAM for 2026? And if so, what are maybe some of the things that we've seen since 2021 that would kind of indicate that we could see that kind of spring-loaded acceleration?
Patrick: Hey, Patrick so yes.
Patrick: Yes.
Patrick: Looking back a few years now when you went public.
Patrick: One of the things that you had identified was that the Tam I think in 2021 was around $3 billion, you thought that could grow to around $8 billion by by 2026.
Patrick: I mean, obviously, we've hit a little bit of a of a cyclical downturn here, but just wondering if you still.
Patrick: I think that if we do get an up tick in the market.
Patrick: Do you still think $8 billion is kind of a reasonable Tam for 2026, and if so what are maybe some of the things that we've seen.
Patrick: 2021 that would kind of indicate that we could see that kind of spring loaded acceleration.
Patrick: Yeah.
Mark: Patrick This is mark.
Mark P. Lee: Yeah. Hey, Patrick, this is Mark. Yeah, so I think that we'll probably have to come back and refresh our TAM with you more directly. But here's how I think we think about it, right? You know, back in 2021, we looked at roughly 1200 private companies across kind of across the world with maybe a $4 trillion market cap. I think at this point, now you look at kind of what's happened since 2021. There's still roughly, you know, that number of unicorns. Obviously, the market cap of these unicorns, you know, has hit a snag in the last two years. But we still fundamentally believe that, in the long run, that these are, again, I mean, our whole thesis, right? These are the most innovative companies in the world. We continue to see new unicorns emerge globally, right?
Mark: Yes, so I think that will have to probably come back and refresh kind of our Tam with you more directly but here's how I think we think about it right.
Mark: Back in 2021, we looked at roughly 200 private companies.
Mark: Cross.
Mark: Kind of across the world with May be it for Ford.
Mark: <unk> trillion market cap.
Mark: I think at this point now you look at kind of what's happened since 2021.
There is.
Mark: You are still roughly that number of unicorns, obviously the market cap of these unicorns.
Have hit a snag in the last two years and.
Mark: But we still fundamentally believe that in the long run.
Mark: These are again I mean, our whole thesis right. These are the most innovative companies in the world. We continue to see new unicorns emerge globally right. We're in a lot of activity in Ford Europe.
Mark P. Lee: We're seeing a lot of activity in Forge Europe and in Asia. And so I think our thesis remains the same. Our TAM, we have an updated number that we've dropped that $8 billion down to $7 billion, I think, based on kind of the most recent information. But I think our fundamental thesis remains the same, you know, as we talked about back in 2021. Anything you want to add?
Mark: And in Asia, and so I think I think our thesis remains the same.
Mark: Our Tam.
Speaker Change: We have an updated number that we've dropped that.
Speaker Change: The alien down to $7 billion I think based on kind of the most recent information, but I think our fundamental thesis remains the same.
Speaker Change: As we talked about back in 2021.
Speaker Change: Anything you want to add to that Kelly.
Kelly A. Rodriques: No no I think theres still some very large macro trends that will continue to.
Mark P. Lee: No, no, I think there are still some very large macro trends that are working to make it attractive for companies around the world to stay private for a long time. We see that emerging with Navy, for a five-year lag, in Europe, but we see this trend remaining. Obviously, we're in a bit of a cycle turn now. We believed for a while that the longer-term opportunity was there, and we felt making the investments while others couldn't made this a pretty important time, so we're really proud looking back on what we've built in 22 and 23 to come out of this, with the right kind of tech and the right kind of reputation and data. So, you know, we're excited. You know, Patrick, the one thing I think I would add is I think the difficulty of the last two years, which has affected really everybody in this space, and I think disproportionately affected our competitors.
Kelly A. Rodriques: To make it attractive for companies around the world to stay private longer.
Kelly A. Rodriques: We see that emerging with media.
Kelly A. Rodriques: For a five year lag in Europe.
Kelly A. Rodriques: We see this trend remaining obviously, we're in a bit of a cycle turn now.
Kelly A. Rodriques: We have believed for a while the longer term opportunities there and we felt making the investments while others Couldnt makes us a pretty important time. So we're really proud of looking back.
Kelly A. Rodriques: What we've built in 'twenty two 'twenty three to come out of this.
Kelly A. Rodriques: With the right kind of attack and the right kind of reputation and data so.
Kelly A. Rodriques: We're excited.
Kelly A. Rodriques: Patrick the one thing I think I would add is I think the difficulty of the last two years, which are affected really everybody in this space.
Patrick: I think disproportionately affected our competitors sell oddly enough I actually think that we come out going into 2024, and almost a stronger competitive position realm.
Patrick: Relative to the other players in this space, we still believe fundamentally there is going to be consolidation in especially after loved the experience of the last two years.
Mark P. Lee: So odd enough, I actually think that we've come out going into 2024 in almost a stronger competitive position, you know, relative to the other players in this space. We still believe fundamentally there's going to be consolidation, and especially after the experience of the last two years, we're convinced that will happen, and you'll start to see that. And you'll start to see, you know, we've always believed that this is a business for which you'll eventually see, you know, a few major players. And I think the last two years have kind of increased our conviction in that. All right, great, great color.
Patrick: We're convinced that will happen and you'll start to see that and.
Patrick: And Youll start to see we've always believed that this is a business for which you will eventually see.
Patrick: A few major players.
Patrick: And I think I think the last two years has kind of increased our conviction in that belief.
Speaker Change: Alright, great great color.
Speaker Change: And maybe just a follow up if we think about expenses you did.
Speaker Change: Good job keeping the head count flat in 2023, I think I heard Mark say that you were expecting to kind of keep keep that.
Speaker Change: <unk> freeze in effect, but you maybe indicated that you could look to hire more people in Europe. So can you just maybe talk about what you expect head count growth to look like in 2024, and then maybe what that looks like and in Europe versus versus the U S business.
Mark P. Lee: And maybe just to follow up, if we think about expenses, you did a good job keeping the headcount flat in 2023. I think I heard Mark say that you were expecting to kind of keep that hiring freeze in effect, but you maybe indicated that you could look to hire more people in Europe. So can you just maybe talk about what you expect headcount growth to look like in 2024, and then maybe what that looks like in Europe versus the U.S. business? Yeah, Patrick, we, as I said, I mean, we're still maintaining a flat headcount. And in fact, you know, in the numbers that I shared, we basically funded our headcount growth in Europe, which went from two people at the end of 23 to eight people at the end of, sorry, two people at the end of 22 to eight people at the end of 23 and continuing to grow and invest in Europe. We've basically managed to keep our total headcount flat while continuing to invest in Europe.
Speaker Change: Yes, Patrick.
Patrick: As I said I mean, we're still maintaining flat head count and in fact, the numbers that I shared we basically funded our head count growth in Europe, which went from two people at the end of 2003 to eight people at the end of <unk>.
Patrick: Sorry, two people at the end of 'twenty two to eight people at the end of 'twenty, three and continuing to grow and invest in Europe, we basically manage to keep our total head count flat, while continuing to invest in Europe, and so that's our view still right.
Patrick: You can tell from a lot of the commentary we do think that 2024 is a very different year as we start off the year. We no rate cuts are coming right. We can see the glimmer of Ipos.
Patrick: Starting to come back to the market.
Patrick: Obviously, the kind of recent experience with <unk> and read it.
Patrick: Were very positive for the market other big names being talked about rubric stripe Plaid fanatics way star.
Mark P. Lee: And so that's our view still, right? I mean, as you can tell from a lot of the commentary, we do think that 2024 is, you know, a very different year as we start off the year. We know rate cuts are coming, right? We can see the glimmer of IPOs, you know, starting to come back to the market. Obviously, the recent experiences with Estera and Reddit have been very positive for the market. Other big names, you know, being talked about are Rubrik, Stripe, Plaid, Fanatics, Waystar.
Patrick: It sounds like people are starting to feel good about ipos, maybe in the second half of 2024.
Patrick: So I do think that I do think that kind of ipos coming back the great reset private companies raising capital even when they are having to take.
Patrick: Take a down round I think that pace is expanding and I think all of those things will help.
Patrick: Our focus is on continuing to manage that balance.
Patrick: Between investing in our business as we've been doing rolling out new products, while keeping our cost very lean.
Mark P. Lee: I mean, it sounds like people are starting to feel good about IPOs, you know, maybe in the second half of 2024. So I do think that the kind of IPOs coming back, the great reset of private companies, you know, raising capital, even when they're having to, you know, take a down round, I think that pace is expanding. And I think all of those things will help, you know, so our focus is on continuing to manage that balance, you know, between investing in our business as we've been doing, rolling out new products while keeping our costs very lean, and to, you know, reduce our burn through top-line growth. All right, thanks so much, guys. Your next question comes from the line of Alex Kramm from UBS Financial. Please go ahead. Yes. Hey, good evening, everyone.
Patrick: And two.
Patrick: We use our burn through topline growth.
Speaker Change: Alright, thanks, so much guys.
Speaker Change: Yes.
Speaker Change: Your next question comes from the line of Alex Kramm from UBS financial. Please go ahead.
Alexander Kramm: Yes, hi, good evening everyone.
Alexander Kramm: Maybe following up on a couple of things have already discussed just hoping that we can be a little bit more specific on the on the trading side. I mean, you gave a lot of good color on what you're seeing in terms of <unk> and spreads et cetera, but look we're like two more days in the quarter. So hope.
Alexander Kramm: <unk>, maybe you can be a little bit more specific in terms of the volumes that you're seeing if you don't want to give exact numbers, maybe at least directionally or directionally with some magnitude of how were trending so far in the first quarter I mean again the quarter is almost over thank you.
Alexander Kramm: Maybe following up on a couple of the things I've already discussed, just hoping that we can be a little bit more specific. I mean, on the trading side, you gave a lot of good color on what you're seeing in terms of IOIs and spreads, etc. But look, we're only two more days in the quarter, so I'm hoping maybe you can be a little bit more specific in terms of the volumes that you're seeing. If you don't want to give exact numbers, maybe at least directionally or directionally with some magnitude of how we're trending so far in the first quarter. I mean, again, the quarter is almost over.
Speaker Change: Yes so.
Alex It's Kelly I think.
Speaker Change: We've.
Kelly A. Rodriques: We've made the decision to stay away from from.
Kelly A. Rodriques: From providing detailed color and I was pretty.
Kelly A. Rodriques: Deliberate in some of the <unk>.
Kelly A. Rodriques: Terms that I use there which is.
We are seeing.
Kelly A. Rodriques: The market improve.
Kelly A. Rodriques: And we are seeing.
Kelly A. Rodriques: An indication that while we've benefited in some ways from the interest rate environment around our custody business, we're starting to see a shift you could see it in the Q4 numbers regarding the growth in volume that we saw in Q4.
Kelly A. Rodriques: Yeah, so, Alex, it's Kelly. I think we made the decision to stay away from providing detailed color, and I was pretty deliberate in some of the terms that I use there, which is We are seeing the market improve. And we are seeing an indication that while we've benefited in some ways from the interest rate environment around our custody business, we're starting to see a shift. You can see it in the Q4 numbers regarding the growth in volume that we saw in Q4. And we see that trend continuing in 2024 around what Mark described as the marketplace business. I'd say the only caution that I want to reiterate is that...
Kelly A. Rodriques: And we see that trend continuing in 2024 around what Mark described as the marketplace business.
Speaker Change: I'd say, the only caution that that I want to reiterate.
Speaker Change: Is that.
There is a certain level of quarter over quarter variability in terms of how the market works.
Speaker Change: Between the end of the year and the first part of next year.
Speaker Change: Say, we're very confident in the pipeline.
And the pipeline has improved.
Speaker Change: Yes.
Speaker Change: And I think.
Speaker Change: We'd rather not.
Speaker Change: Talking about where we're going to be in Q1.
Speaker Change: In the past quarters talked about being at or above.
In the successive quarters as we move through time, and I would say I'll leave it at we are optimistic in the pipeline and continued recovery.
Kelly A. Rodriques: There is a certain level of quarter-over-quarter variability in terms of how the market works. Between the end of the year and the first part of the next year, I'd say we're very confident in the pipeline, and the pipeline has improved. And I think, you know, we'd rather not talk about where we're going to be in Q1.
Speaker Change: It's clear to us that it's it continues to recover at a point, where we can't.
Speaker Change: Commit to every quarter being up into the right from the previous one.
Speaker Change: Alex and I would add that.
Speaker Change: As you are tracking a lot of these other leading indicators in the <unk> and the <unk> that as you know from our prior conversations there is improvement in sentiment and then these indicators, but theres always a lag between the time that people start to.
Kelly A. Rodriques: I have in the past quarters talked about being at or above in the successive quarters as we move through time and I'd say I'll leave it at we're optimistic in the pipeline and continued recovery but it's it's clear to us that it's it continues to recover at a point where we can't commit to every quarter being up into the right, Hey, Alex, and I would add that, you know, as you're tracking a lot of these other leading indicators in the PMU and the FIO, that, as you know, from our prior conversations, you know, there's improvement in sentiment and in these indicators, but there's always a lag between the time that, you know, people start to, you know, regain their confidence to invest and the time it takes to settle and close transactions, right, the 30 to 45 day window typically in the private markets, and so, and there's always generally a big push at year end, a lot of institutions want to kind of get certain trades in before the end of the year, so that always happens every year, where Q4, there's a big push, and then you start off the year fresh, so I think that's, yeah, I think I would leave it at that, basically revenue minus adjusted EBITDA, which I think was 118 in 2023, and was basically flat for the last three years. So look, there's an inflationary environment, there's other costs that you have. So do you think, in dollar terms, you want to try to keep the expenses flat as well? Or is there actually a scenario where things improve that overall expenses start ramping up a little bit?
Speaker Change: Regain their confidence to invest in the time it takes to settle and close transactions right Thats. The 30 to 45 day window typically in the private markets and so.
Speaker Change: And Theres always generally a big push at year end, a lot of institutions want to kind of get certain trades in before the end of the year.
Speaker Change: So that always happens every year, where Q4, there's a big push and then you start off the year fresh. So I think that's yes, I think I think I would leave it at that.
Speaker Change: No very clear thanks, Thanks for that color and then again, sorry to be numbers focus here, but.
Speaker Change: A quick question around expenses.
Speaker Change: Maybe you can be a little bit more specific as well I mean, I hear you head count flat and that's great when I look at.
I mean, it's great from expense control, hopefully, you're still investing enough, but in terms of the expense growth.
Speaker Change: Total I mean, its been basically flat the way I look at it as basically revenue minus adjusted EBITDA, which I think was 118% in 2023 and was basically flat for the last three years. So look where there is an inflationary environment. There's other costs that you have so do you think in dollar terms you you want to try to keep the expenses flat as well or is there.
Speaker Change: Actually a scenario, where if things improve that.
Speaker Change: Overall expenses start ramping up a little bit. So just just in terms of the expectations, we should be having initially here. Thanks.
Alexander Kramm: So just in terms of the expectations we should be having initially. Yeah, Alex, look, I think I think what's important is what I'll make very clear. Well, let me back up.
Speaker Change: Yeah, Alex look I think I think the.
Speaker Change: I will make very clear well, let me back up when we talk about adjusted EBITDA year to year, we were very specific too.
Mark P. Lee: When we talked about adjusted EBITDA year to year, we were very specific in identifying that when you look and compare our adjusted EBITDA year to year, just please consider that we did capitalize software in 2022, and we have had legal expenses associated with 2023. And so we called those out specifically so you can kind of get a better idea of how to engage us, you know, on an apples to apples basis. But the way we think about it, we're very clear that we are committed to our investors, to our shareholders, to our board, that we are going to be reducing burn year over year. Right. And we look at it as trying to manage our costs while growing the top line. Right. And taking that revenue growth while continuing to invest but reducing burn. So that's how we're thinking about the world right now.
Alexander Kramm: Identify that when you look and compare our adjusted EBITDA year to year.
Speaker Change: Just please consider that we did capitalize software in 2022, and we have have had legal expenses associated with 2023, and so we called those out specifically so you can kind of get a better idea of how to look engage us on an apples to apples basis, but the way the way we think about it.
Speaker Change: We're very clear that we have growth.
Speaker Change: We're committed to.
Speaker Change: Our investors to our shareholders to our board.
Speaker Change: We are going to be reducing burn year over year, right and we look at it as trying to manage our costs, while while growing the top line right and taking that revenue growth, while continuing to invest but reducing burn so.
Speaker Change: That's how we're thinking about the world right now.
Speaker Change: I mean, we've pointed out historically that this has always been a company that we've operated.
Mark P. Lee: I mean, we've pointed out historically that this has always been a company that we've operated, you know, to be roughly break even. Right. Kind of operating for the last two years at a deficit is not kind of in our DNA in terms of how we think about managing this company.
Speaker Change: The roughly breakeven right kind of operating in the last two years at a deficit is not kind of in our DNA in terms of how we think about managing this company.
Speaker Change: So one of our top priority is really is to get that number down to kind of where we've been in the past.
Mark P. Lee: You know, so one of our top priorities really is to get that number down to kind of where we've been in the past. But, at the same time, continuing to do, to gain traction, all the announcements that we've talked about in the last several years. Right. It's been that delicate balance.
Speaker Change: But at the same time continuing to do to gain traction all the announcements that we've talked about in the last several years right. It's been that delicate balancing act.
Speaker Change: Yes look we make Linda I, just wanted to ask but I wanted to make sure Alex you hear this though.
Speaker Change: We are we are looking at.
Kelly A. Rodriques: Yeah, look, I just want to make sure Alex, you hear this, though. We are looking at our path to profitability. Now we understand that as a public company, there's an expectation that we're not gonna burn forever. And our commitment two years ago was to systematically reduce our burn each year.
Speaker Change: Our path to profitability now we understand that as a public company.
That there is an expectation that we're not going to we're not going to burn forever and our commitment two years ago was to systematically reduce burn each year and I'd say as we get through.
Speaker Change: Part of 2024, we're going to look at this and we're going to obviously be looking at what are the other scale drivers beyond just our organic growth and cost controls.
Kelly A. Rodriques: And I'd say as we get through part of 2024, we're gonna look at this, and we're gonna obviously be looking at what are the other scale drivers beyond just our organic growth and cost control. One of the reasons we went public was to use our currency to consolidate other interesting players in the market. We view 2024 and the continued improvement as an opportunity for us to look at other inorganic ways to get additional scale. And that's part of the calculus for how we see our path to profitability, including our organic growth and these cost controls. Under all circumstances, we're reducing burn in 2024. I want to make that really clear with Mark. Super clear.
Speaker Change: One of the reasons, we went public was to use our currency to.
Speaker Change: To consolidate other interesting.
Speaker Change: Players in the market, we view 2024.
Speaker Change: And the continued improvement.
Speaker Change: An opportunity for us to look at.
Speaker Change: Other inorganic ways to get additional scale.
And Thats part of the calculus for how we see our path to profitability, including our organic growth in these cost controls, but under all circumstances, we're reducing burn in 2024, I want to make that really clear with mark on this.
So quickly on thanks, guys.
Speaker Change: Your next question comes from the line of Owen Lau from Oppenheimer. Please go ahead.
Alexander Kramm: Thanks, guys. Your next question comes from the line of Owen Lau from Oppenheimer. Please go ahead. Good evening.
Owen Lau: Good evening. Thank you for taking my question. So a follow up question related to the outlook and new products.
Owen Lau: Thank you for taking my question. So, a follow-up question related to the outlook and new products. How should investors think about or even model out the revenue impact from some of the initiatives like Forge Pro, Forge Europe, and Forge Intelligence in 2024? And is there any way you can help us get our arms around these numbers? Thanks a lot.
Owen Lau: How should investors think about or even model out the revenue impact from some of your initiatives like <unk> Pro thoughts you rope and forge in Tyler Jones in 2024, and you say any way you can help us get our arms around these numbers. Thanks a lot.
Speaker Change: Yeah, Let me, let me start with just a couple of broad base points.
Kelly A. Rodriques: Yeah, let me start with just a couple of broad-based points; we just started our initial trades in Europe. Mark will talk a little bit more about some of the specific modeling, Guidance. Owen, I'd say you should think of Forge Pro, as I said earlier, as a subscription product that's meant to be driving revenue that would be in our marketplace revenue line as Subscription revenue, but also as a bundling component with Transactional Revenue. And we think that it's an evolution of the market as we see it. And then I'd say, you know, Mark, you can jump in and talk a little bit more about Yeah. Hey, Owen.
Speaker Change: We just started.
Speaker Change: Our initial trades in Europe.
Speaker Change: Mark will talk a little bit more about.
Speaker Change: Some of the some of the specific modeling guiding.
Speaker Change: Guidance.
And I'd say, you should think of forge pro.
Speaker Change: As I said earlier as a subscription product.
Speaker Change: So that's meant to be.
Speaker Change: Driving revenue.
Speaker Change: It would be in our marketplace revenue line as subscription.
Speaker Change: Subscription revenue, but also as a bundling component.
Speaker Change: With transactional revenue.
Speaker Change: And we think that it's an evolution of the market as we see it.
Speaker Change: And then I would say.
Speaker Change: You can you can jump in and talk a little bit more about any of the other new products ranging from the index and the Investable index as we see it and how its contribution should be considered as well, yeah, Hey, Alan.
Mark P. Lee: So, look, on Forge Pro, as Kyle Kelly has described and I mentioned earlier, I mean, we see it as a product where the trading capability, state-of-the-art trading capability combined with data, you know, kind of completes and creates this experience for our customers, which would be superior to anything else kind of out there in the market, and that the way we'll roll out the product, the way we'll price the product, it One of the things we've mentioned in the past is that when we first rolled out Forge Intelligence, And we measured this some time ago, we saw an uptick, yes, in our customers' engagement with Forge from a trading perspective, right?
Alan: So silicon porch pro as Kelly has described and I mentioned earlier I mean, we.
Alan: We see it as a product where the trading capability.
State of the art trading capability combined with data.
Alan: <unk>.
Alan: Kind of completes and creates this this experience for our customers, which will be superior to anything else kind of out there in the market and.
Alan: That the way, we will rollout the product the way, we will price a product that will be done.
Alan: As a as a bundled product and one of the things we've mentioned in the past is that when we first rolled out <unk> intelligence.
Alan: And we measure this some time ago.
Alan: That we saw an uptick in our customers' engagement with forged from a trading perspective, right and so I actually think that beyond the subscription revenue that we're talking about for the data product itself a lot of the upside right is in creating that stickier relationship that that fat.
Mark P. Lee: And so I actually think that beyond the subscription revenue that we're talking about, you know, for the data product itself, a lot of the upside, right, is in creating that stickier relationship with our institutional customers, and that will result in higher revenues, not just through subscription revenues, but higher trading revenues as well. So with Forge Europe, I mean, we're really excited about the opportunity there. The team is growing.
Alan: With with our institutional customers.
Alan: And that will result in an higher revenues.
Alan: Not just through subscription revenues by higher trading revenues as well so with Ford Europe I mean, we're really excited about about the opportunity there I mean the team is growing.
Mark P. Lee: As Kelly said, we've started to do some trades. We have the ability to trade as a tight agent through registered entities in each jurisdiction as we await approval by Boffin. But the team is out there talking to private companies; they're talking to institutional investors, right?
Alan: As Kelly said, we've started to do some trades, we have the ability to trade as a tight agent through registered entities in each jurisdiction as we await approval by Boston, but the team is out there talking to private companies. They are talking to institutional investors right, we're getting indications of interest and.
Mark P. Lee: We're getting indications of interest, and we just think it's an incredible opportunity where we don't really have enough competitors to speak of on the ground. But it will take time, right?
Alan: And we just think it is.
Alan: Incredible opportunity, where there is we don't really have kind of competitors to speak of on the ground, but it will take time right.
Mark P. Lee: I think that as you model it, you have to kind of build it out over time. I think ultimately, right, we talked about cross-border flows across Europe, Asia, and the U.S., but it's going to take time to mature and evolve. I think the other thing we wanted to mention is the Forge Private Market Index.
Alan: That as you model. It you have to kind of build it out over time I think ultimately right. We've talked about cross border flows across Europe, Asia, and the U S, but but it's going to take time to mature and evolve I think the other thing we wanted to mention is.
Alan: The forge private market index. So as we had announced we've created a partnership with liquidity and the liquidity Mega corn fun.
Mark P. Lee: So, as we announced, we've created a partnership with Aquidity, and the Aquidity Megacorn Fund will start to track the Forge Equity Private Market Index on April 1st. So, as we said earlier, this will be an investable index. We're really excited about it.
Alan: We will start to track the forge liquidity private market index on April the <unk>.
Alan: So as we said earlier this will be an investable index, we're really excited about it again, it's something that we think will take time.
Mark P. Lee: Again, it's something that we think will take time, but to have given investors the opportunity to invest in private markets in a passive manner, right, complementary to active investing in private markets, I think we think it's a game changer in the long run. But again, it will take time to mature, build, and build scale. But but but that's something that we feel very excited about as, Okay. And then just a quick follow-up housekeeping question.
Alan: But to have.
Alan: But to have give investors the opportunity to invest in the private markets and a passive manner right complementary to active investing in private markets. I think we think it's a game changer in the long run, but again will take will take time to mature.
Alan: And build and build scale, but but but thats something that we feel.
Alan: Very excited about as well.
Speaker Change: Got it and then just a quick follow up housekeeping question.
Owen Lau: Could you please add more color on the $2.5 million increase in accrual legal expenses related to your settlement? And also, I also saw another $3.8 million loss related to the change in fair value of your warrant liabilities. I just want to make sure I understand these numbers correctly. So, I assume they are non-recurring in nature.
Speaker Change: Could you please add more color on the $2 5 million inquiries.
Speaker Change: The accrual of legal expenses related to a settlement.
Also I also saw another $3 8 million dollar loss related to a change in fair value.
Speaker Change: Your board Warren liabilities.
Speaker Change: I just wanted to make sure I understand these numbers correctly, so I assume they are.
Speaker Change: Our non recurring in nature is there anything we should be aware of thanks.
Mark P. Lee: Is there anything we should be aware of? Thanks. Yeah, Owen, I think there's a fair amount of information about this in the 10-K. We have talked about, and we have provided information. We did have warrants, private warrants, kind of as we went public; we did have legacy warrants, and the lawsuits revolve around those private warrants. We've mentioned in prior calls that a lot of this is non-cash, and yet it's an expense as a legal settlement. It's a cost you have to include in G&A in your adjusted EBITDA.
Speaker Change: Yes, I think.
Theres a fair amount of information about this.
Speaker Change: And in the 10-K.
Speaker Change: We have talked about.
Speaker Change: Have provided information.
Speaker Change: We did have we did have warrants private warrants kind of as we went public we did have legacy warrants and the lawsuits.
Speaker Change: Revolve around around those those private warrants.
Speaker Change: We've mentioned in prior calls that a lot of this is noncash.
Speaker Change: And yet it's an expense as a legal settlement and so of course you have to include in G&A in your adjusted EBITDA.
Mark P. Lee: So I think there's a, it is a one-time related to, that particular matter is a one-time kind of related to the acquisition of Shares Post back in 2020. I mean, the warranted market in general, which was a pretty significant number this quarter. It's related to the increased value of these warrants, you know, based on the stock price.
Speaker Change: So I think there is.
Speaker Change: It is a one time related to that particular matter as a one time kind of related to.
Speaker Change: The acquisition of <unk> back in 2020.
Speaker Change: The warrant Mark to market in general, obviously, which was a pretty significant number this quarter I mean, it's related to.
Speaker Change: The increased value of these warrants based on the stock price and as you recall I mean, the stock price.
Mark P. Lee: And as you recall, the stock price, you know, got up into the threes and even approached $4 at the end of the year. And so a lot of that stock market is driven by the increase in the stock price back at the end of the year. Golly, thanks a lot.
Speaker Change: Got up into the threes and even approached $4 at the end of the year and so a lot of that mark to market is driven by the increase in the stock price back at the end of the year.
Speaker Change: Got it thanks a lot.
Dominic Paschel: Your next question comes from the line of Ken Worthington from JP Morgan. Please go ahead. Hi, good afternoon, Kelly and Mark. This is Michael Cho, and on behalf of Ken, thanks for taking the question. I just had a couple of quick follow-ups on the discussion we've been having. I guess just one on the data business. I think, Kelly, and you've certainly announced a number of good and forward-leaning initiatives around this business, and it seems like a good path forward here with the launch of Forge Pro as well, supported by that data. But I guess, Kelly, I think I heard a comment, a shift in the data business strategy, and you talked about prioritizing adoption over near-term revenues. I guess, one, is that a short-term strategy that you've taken in terms of positioning the data business? And two, is there a point at which you will start to prioritize revenue again in the data business? And again, just trying to gauge if there's a tipping point at all or if this is a clear shift in strategy that's being implemented for the medium.
Speaker Change: Your next question comes from the line of Ken Worthington from Jpmorgan. Please go ahead.
Speaker Change: Hi, Good afternoon, Kelly and Marc This is Michael Cho in for in for Ken. Thanks for Thanks for taking the question I just had a couple of quick follow ups on the discussion we've been having I guess just one on the <unk>.
Michael Cho: On the data business I think Kelly.
Michael Cho: Certainly announced a number of.
Michael Cho: Good and forward leaning initiatives around this business and it seems like.
Michael Cho: Good path forward here with the launch of <unk> is well supported by that data, but I guess, Kelly I think I heard the comment.
Michael Cho: A shift in the data business strategy, and you talked about kind of prioritizing.
Michael Cho: Adoption, all grow kind of near term revenues I guess, one is that is that a kind of a.
Michael Cho: Our term strategy that you've taken in terms of.
Michael Cho: Positioning the data business and two is there.
Michael Cho: Is there a point in which you will start to prioritize revenue again in the data business and again just trying to gauge if there's a tipping point at all or if this is a clear shift in strategy.
Michael Cho: <unk> implemented for the medium term.
Kelly A. Rodriques: I guess you should, Mike, read into it as... A Strategy for 2024. I'd say we're at a point right now where we see an advantage in the quality of our data. We think it's unique in the market. We've got a bunch of competitors out there that are aggregating third-party data that they don't own and that you could question the validity and quality of. We think that not only is it time for us to dimensionalize data from just a subscription product but into a trading product like Pro, but we've got an opportunity to make a pretty significant grab for market share right now, and we think 2024 is the right time to do that.
Speaker Change: I guess, you should Mike Mike read into it as.
Speaker Change: Our strategy for 2024.
Mike: They were at a point right now where we see an advantage.
Mike: In the quality of our data we think it's unique in the market.
Mike: Got a bunch of competitors out there that are aggregating third party data that they don't own.
Mike: And that you good question.
Mike: The validity and quality of it.
Mike: We think that not only is it time for us.
Mike: To Dimensionalize data from just a subscription product that into a trading product like pro and we've got an opportunity to make a pretty significant ramp for market share right now.
Mike: And we think 2024 is the right time to do that and we will do that through a combination of bundling.
Kelly A. Rodriques: And we'll do that through a combination of bundling, pricing strategies, and essentially being really aggressive in getting our data out to as many customers and prospective customers as we can. I'd say you and the other folks on the call should continue to watch for where you see FORGE data appear, because beyond FORGE Pro, this strategy for adoption and exposure will extend beyond just what we're going to market with and into a range of other activities that will play out over the course of the year. But this is, at the very least, a 2024 strategy.
Mike: Pricing strategies, and essentially being really aggressive in getting our data out.
Mike: Two as many customers and prospective customers as we can I say.
Mike: You and the other folks on the call should continue to watch for where you see <unk> data appear because beyond towards pro.
Mike: Our strategy for adoption and exposure will extend beyond just what we're going to market wear and into a range of other activities that will play out over the course of the year, but this is at very least a 2024 strategy.
Kelly A. Rodriques: We believe, given the quality of it, it's really valuable to the relationship between those who trade and those that we do business with on the institutional side. So that doesn't mean revenue is always going to be a priority, Mike, and we certainly want to see it translate into revenue. We just happen to believe this strategy here will translate particularly positively for Forge given the scale of our marketplace business. So consider it a 2024 strategy, and if we come back and decide to shift it and be more... focused on revenue in follow-on quarters this year. We'll come back and let that be known to the investor community as we see fit. Mark, thanks for all the color. Go ahead, Mark.
Mike: We believe given the quality of it it's really valuable to the relationship between those who trade.
Mike: And those that we do business with on the institutional side.
Mike: That doesn't mean revenue is always going to be a priority Mike.
Mike: And we certainly want to see it translate into revenue, we just happen to believe this strategy here.
Mike: Will translate particularly.
Mike: Positively for forge given the scale of our marketplace business. So considered a 2024 strategy and if we come back and decided to shifted and be more.
Mike: Focused on revenue and follow on quarters. This year, we will come back and let that be known to the to the investor community as we see fit.
Speaker Change: Mark Thanks for all the color.
Mark P. Lee: Oh, Michael, I was just going to say, I mean, when you think about institutional customers who, you know, are getting increasingly reactive in the private markets, and you think about the kind of size of trades, and you think about the take rates, you know, that we charge, you can understand that we also have to be thoughtful about, you know, how we want to price the bundling of data and trading, because obviously, there's just a huge And so it's considering both. And that's why we kind of talk about, you know, having a strategy to bundle the two together. I think the combination of trading plus data is just kind of a winning combo in terms of positioning ourselves with our customers relative to competitors. Yep, no, that makes sense, and I appreciate all the color there.
Speaker Change: Go ahead Mark.
Michael I was just going to say.
Speaker Change: When you think about institutional customers who.
Speaker Change: Now are getting increasingly reactive in the private markets.
Speaker Change: And you think about.
Speaker Change: The size of trades and you think about the take rates that.
Speaker Change: We charge you can understand that we also have to be thoughtful about.
How we want to price the bundling of data and trading because obviously, there's just huge upside to be able to.
Speaker Change: Get dominant market share.
Speaker Change: <unk> trading activity right and so as I said, it's considering considering both and Thats why we kind of talk about having the strategy to bundle bundle the two together.
Speaker Change: I think I think the key.
Speaker Change: Combination of trading plus data is just kind of the winning combo as you know in terms of positioning ourselves with our customers relative to competitors.
Speaker Change: Yes, no that makes sense and I appreciate all the color there.
Kelly A. Rodriques: Just a quick follow-up on M&A. I think, Kelly, I heard you say or discuss kind of maybe areas for potentially more accelerated scale in the business, and maybe that can get plugged with M&A or considerations of M&A. My question is, you know, are there some areas or segments of the business or of the market that seem of higher interest to you today?
Speaker Change: Just a quick follow up.
Speaker Change: On M&A I think Kelly I heard you say.
Our discuss kind of maybe area for potentially more accelerated scale.
Speaker Change: And maybe that can get plugged with M&A or considerations of M&A.
Speaker Change: I guess my question is are there some areas or segments of the business of the market that seem up higher interest to you today.
Speaker Change: Thanks.
Kelly A. Rodriques: Yeah, I don't think we're ready yet to talk about it, but I think what you could do is, the priorities that we've laid out, around institutional, you know, what we call data domination, and issuer-centric. [inaudible] We're looking at any differentiated player that's got scale that has an aligned focus in the areas of our priority. And so when we talked about the launch of Pro, that really lines up with our institutional focus. So anybody that's out in the business, that operates with a high level of integrity, and is focused on institutions, is interesting to us. Anybody that's out in the business that's got scale, that is focused on issuers, and reputationally is in a good position with issuers, that's interesting to us. And clearly, high-quality sources of data, where the data is proprietary and owned by a potential competitor, are areas that all line up with our priorities.
Kelly A. Rodriques: Yes, I don't think we're ready yet to talk about it but I think what you could.
Speaker Change: <unk> from <unk>.
Speaker Change: The priorities that we've laid out.
Speaker Change: Around institutional.
Speaker Change: What we call data domination.
Speaker Change: Issuer centric.
Speaker Change: Relationships.
Speaker Change: We're looking at any differentiated player Thats got scale to have an aligned focus in the areas of our priorities.
And so when we talked about.
Speaker Change: The launch of pro that really lines up under our institutional focus so anybody that's out in the business that operates with a high level of integrity focused on institutions is interesting to us anybody that's out in the business that Scott scale that are focused on issuers and reputation Ali.
Speaker Change: In a good position with issuers, that's interesting to us and clearly high quality sources of data, where the data is proprietary and owned by a potential competitor or areas that all lineup to our priorities for 2024, but we don't have anything or anybody specifically that we're ready to.
Kelly A. Rodriques: But we don't have anything specific for anybody specifically that we're ready to talk about yet. Okay, great. Thank you. And we have no further questions in our queue at this time. I will now turn the call back over to Dominic Paschel for closing remarks. Great. Thank you guys for joining us for this year-end call. It's a bit longer.
Speaker Change: Talk about yet.
Speaker Change: Okay, great. Thank you.
Speaker Change: And we have no further questions in our queue. At this time I will now turn the call back over to Dominic Michel for closing remarks.
Dominic Paschel: Great. Thank you guys for joining us for this year and cause a bit longer.
Dominic Paschel: We are available for questions Justin IR at <unk> Dot Com and we will definitely engage thank you.
Dominic Paschel: Thanks, everybody.
Dominic Paschel: We are available for questions. Just ping IR at forgeglobal.com, and we will definitely engage. Thank you. This concludes today's conference call. Thank you for your participation, and you may now disconnect.
Speaker Change: This concludes today's conference call. Thank you for your participation and you may now disconnect.
Speaker Change: Yeah.
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Speaker Change: Yes.
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