Q1 2024 Forge Global Holdings Inc Earnings Call
Good afternoon, My name is Jessica and I'll be your conference operator today at.
Jessica: At this time I would like to welcome everyone to the forge first quarter 'twenty four financial results conference call.
On today's sports Global School will.
Jessica: It'll be Kenny Rodriguez CEO Whiteley CFO.
Jessica: <unk> <unk> executive Vice President of corporate marketing and communications.
And Dominic Michelle SVP of finance and Investor Relations.
Jessica: All lines as we've placed on mute to prevent any background noise. After the speakers' remarks, there'll be a question and answer session.
I'd like to ask a question. During this time simply press star followed by the number one on your telephone keypad.
Jessica: If you'd like to withdraw your question again press Star one.
Thank you and I will now turn the call over to Lindsay right, though that's right Bill.
Lindsay: You may begin your conference.
Lindsay: Thank you operator, and thank you all for joining us today for <unk> first quarter 2024 earnings call.
Lindsay: Joining me today are <unk>, CEO, Kelly Rodriguez and forge CFO Mark Lee.
Lindsay: Will share prepared remarks regarding the quarter's results and then take your questions at the end.
Lindsay: Just after market close today, we issued a press release announcing toward its first quarter 2024 financial results.
Lindsay: It's got some of our results today is complementary to the press release, which is available on the Investor Relations page of our website.
Lindsay: Conference call is being webcast live and will be available as a replay for 30 days beginning about one hour. After the conclusion of this call.
Lindsay: Also an accompanying company investor presentation on our IR page.
Lindsay: During this conference call. We may make forward looking statements based on current expectations forecasts and projections as of today's date.
Lindsay: 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 differ materially from those included in the statements.
Lindsay: We discuss these factors in our SEC filings, including our quarterly report on Form 10-Q, which can soon be found on the IR page of our website and the SEC filings website.
Lindsay: As a reminder, we are not required to update our forward looking statements.
Lindsay: In our presentation today, unless otherwise noted we will be discussing.
Lindsay: 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 GAAP reconciliations you should refer to the financial data contained within our press release, which is also posted to the IR page of our website.
Lindsay: Additionally, we have posted our first quarter supplemental information on the same page.
Lindsay: Today's discussion will focus on the first quarter 2024 results as always we encourage you to evaluate both annual and quarterly results for a full picture afford this performance, which can be affected by unexpected events that are outside of our control.
Lindsay: With that I'll turn it over to Kelly.
Kelly A. Rodriques: Thanks Lindsay.
Kelly A. Rodriques: Thanks to all for joining us today.
Kelly A. Rodriques: I know, we reported earnings only five weeks ago and our outlook is largely the same today.
Kelly A. Rodriques: We believe momentum continues to progressively build in the private market after a long cold winter as.
Kelly A. Rodriques: We consistently signaled throughout the last few years, we stayed focused on emerging from the downturn as a market leader.
Kelly A. Rodriques: A stronger company with a more robust technology and data portfolio.
Kelly A. Rodriques: We made significant strides over the past two years in our technology development.
Kelly A. Rodriques: And forge pro the first major milestone in our next generation platform was released at the end of March we've seen demonstrable traction in the first week since launch, including interest and forge pro from existing and new clients.
Kelly A. Rodriques: And we are encouraged that forge pro is already validating our hypothesis.
Kelly A. Rodriques: More exposure to our proprietary data and trading tools in one place may lead to more engagement and participation in trading from institutional and professional investors.
Kelly A. Rodriques: We're also seeing positive market signals, which I'll address later in this call even while the interest rate environment remains murky.
Kelly A. Rodriques: In terms of business highlights from the first quarter I am pleased to share that in Q1, we delivered our fourth consecutive quarter of revenue improvement with marketplace revenue up 5% as the market continues its recovery.
Kelly A. Rodriques: As of April one our first Investable index of <unk> liquidity private market index is now being tracked by the liquidity Mega Corn fund.
Kelly A. Rodriques: We're also beginning to build momentum in Europe.
Kelly A. Rodriques: And while it's still early days, we announced our official launch into the market in April and are pleased to report that our team has now executed trades in Europe.
Kelly A. Rodriques: I've said this to all of you and I say this to the forge team often.
Kelly A. Rodriques: Through the technology data and index milestones, we've achieved over the past year and culminated in the first quarter and through our global expansion into Europe. We believe we are in a strong position as this market continues its steady recovery.
Kelly A. Rodriques: I'll turn it over to Mark <unk> for a deep dive on our financials.
Mark P. Lee: Thanks Kelly.
Mark P. Lee: In the first quarter of 2024 gorgeous auto revenue less transaction based expenses of $19 2 million up 10% from last quarter.
Mark P. Lee: Based on our current pipeline and visibility.
Mark P. Lee: Weeks into the quarter, we expect the second quarter will be equal to or greater than the first quarter of 2020 for continuing this encouraging upward trend.
Mark P. Lee: Total marketplace revenues last transaction based expenses.
Mark P. Lee: <unk> $8 $5 million up modestly from $8 million last quarter, reflecting the continued improvement from the trough recorded in Q1 of 2023.
Mark P. Lee: As a quick reminder, we have renamed the categories of our revenue, which was previously called placement fee revenue as marketplace revenue as we believe this name better describes the revenue included therein.
Mark P. Lee: Therefore, it's more useful to investors marketplace revenues include placement fees subscription fees earned from our data products and private company solutions revenue.
Mark P. Lee: Have not adjusted methodology and assumptions or otherwise changed any aspects of placement fee revenue and making this name change to marketplace revenue and this category of revenue remains comparable prior period presentations.
Mark P. Lee: Transaction volume for the quarter increased 5% from 250 to 263 million.
Mark P. Lee: Our Q1 net take rate remained stable at three 2%.
Mark P. Lee: As a reminder, the net take rate can vary quarter to quarter based on a number of factors such as institutional and individual mix.
Mark P. Lee: Our custodial cash balances totaled $481 million at the end of Q1 down from $505 million at year end, resulting in a 2% decline in total custodial administration fees.
Mark P. Lee: <unk> dropped from $10 7 million from $10 9 million in Q4.
Mark P. Lee: Total custody accounts increased to $2 2 million in Q1 from $2 1 million in Q4.
Mark P. Lee: Last quarter, we discussed the distinction between core accounts versus cash or <unk> as a service accounts.
Mark P. Lee: Our accounts generate the vast majority of our custodial administration revenue, while the increase in custody accounts during the quarter was attributable to growth in cash accounts.
Mark P. Lee: Assets under custody were $16 5 billion at the end of Q1 versus $15 6 billion last quarter.
Mark P. Lee: First quarter net loss declined from $26 2 million to $19 million quarter over quarter. This.
Mark P. Lee: This included an $8 2 million favorable noncash change in the fair value of warrant liabilities. As a reminder, the fair value of warrant liabilities is heavily impacted by our share price and our share price variability.
Mark P. Lee: Both the first quarter and prior quarter included nonrecurring charges in connection with resolution of legacy legal matters G&A expenses of $2 8 million and $2 5 million were recorded in the respective periods related to these matters.
Mark P. Lee: Following the resolution of these legacy matters that do not currently expect any material impacts to our financial condition from other legal matters arising in the ordinary course of business.
Mark P. Lee: In the first quarter adjusted EBITDA loss was $13 5 million compared to a loss of $13 6 million last quarter as a modest revenue increase in our ongoing expense management continued to drive quarter over quarter improvement.
Mark P. Lee: As noted earlier adjusted EBITDA in each of the respective periods includes nonrecurring charges in connection with the resolution of certain legacy legal matters.
Mark P. Lee: Net cash used in operating activities was $12 4 million in the quarter compared to net cash used in operating activities of $6 6 million last quarter.
Mark P. Lee: Excluding the payment of annual bonuses net cash used in operating activities would have been less than the prior quarter.
Mark P. Lee: Cash cash equivalents and restricted cash ended the quarter at approximately $130 7 million compared to $145 8 million last quarter.
Mark P. Lee: This excludes $7 6 million in term deposits.
Mark P. Lee: Defined as other current assets, including these term deposits as cash our total cash stands at 138 3 million.
Mark P. Lee: Total head count decreased to 337 at the end of March.
Mark P. Lee: We remain committed to maintaining expense discipline and keeping our headcount flat.
Mark P. Lee: That said, we do see variability in our ending head count from period to period as replacement hiring.
Mark P. Lee: Lang turnover.
Mark P. Lee: As stewards of shareholder capital.
Mark P. Lee: We remain committed to lowering our overall cash burn in 2024 as we did in 2023.
Mark P. Lee: We continue to focus on managing our expenses, while still investing in our top strategic priorities.
Mark P. Lee: Can you build an improved forge is platform products and services.
Mark P. Lee: From a housekeeping perspective, our weighted average basic number of shares used to compute net loss was 180 million shares and our fully diluted outstanding share count as of March 31.
Mark P. Lee: 198 million shares.
Mark P. Lee: The second quarter of 2024, we estimate 183 million weighted average basic common shares for EPS modeling purposes in a loss position.
Mark P. Lee: As we look ahead for the remainder of 2024, we.
Mark P. Lee: We are strongly encouraged by the uptick in several of our leading indicators such as the narrowing of bid ask spreads the ratio of buyers versus sellers and the overall increase in indications of interest in Q1.
Mark P. Lee: Yeah.
Mark P. Lee: However, we believe that significant increases and forge is trading volumes this year will require.
Mark P. Lee: And continued improvement in investor sentiment.
Mark P. Lee: Driven by an improvement in the outlook on interest rates and is sustained and meaningful recovery on the IPO market.
Mark P. Lee: I'll hand, the Bath Kelly for a brief market overview before we turn it over for questions.
Kelly A. Rodriques: Thank you Mark.
Kelly A. Rodriques: I'll quickly touch on the market indicators that we're watching closely one month into Q2.
Kelly A. Rodriques: And forges latest private market update in April we reported that the forge private market index, which tracks for 75, most liquid names in the private market was up four 5% for the quarter.
Kelly A. Rodriques: Buy side interest on the forge platform continued to rise and made up 61% of our new indications of interest in March.
Kelly A. Rodriques: In total.
Mark P. Lee: Indications of interest submitted on our platform rose 45% in Q1.
Mark P. Lee: Another sign that buyers have re engaged in the market after a long risk off period.
Mark P. Lee: The bid ask spread fell to nine 5% at the end of the quarter, which is below the four year medium as a reminder, we adjusted our methodologies starting in January 2024 for calculating bid ask spreads to use the medium rather than the average spreads of individual.
Mark P. Lee: Issuer <unk>.
Mark P. Lee: We noted this change in our January 2024 forge private market update and have continued to use this methodology.
Mark P. Lee: Ipos are also starting to happen again.
Mark P. Lee: Certainly not in droves, but positive performing ipos tends to beget more ipos and that has in years past served as a beacon for private market investment activity.
Mark P. Lee: And <unk> business are markets pipeline headed into Q2 was stronger than it's been since the second quarter of 2022.
Mark P. Lee: And it's our view at this point in the quarter that we are likely to meet or beat Q1.
Mark P. Lee: We believe the market is certainly improving.
Mark P. Lee: And now it's just a question of velocity.
Mark P. Lee: While we cant control all of the macro variables in play we feel that through our technology development, our data and expertise, we're right, where we wanted to be as the market begins a new cycle.
Speaker Change: Thank you.
Speaker Change: With that Jericho can you remind our participants how to ask questions.
Jericho: You can go to the first one.
Jericho: Yes, so the floor will be now open for your questions. So I'll get to ask a question. This time. Please press Star then the number one on your telephone keypad.
Speaker Change: We've got a pause for just a moment to compile the Q&A roster.
Speaker Change: So the first question comes from the line of Devin Ryan.
Devin Patrick Ryan: Citizens JMP. Please go ahead.
Devin Patrick Ryan: Hi, This is Alex Jenkins filling in for Devin Ryan. Thank you guys for taking my question I Hope Youre doing well I guess just to start I wanted to touch on the index. It seem that the board index in partnerships with firms like acuity could become an important gateway to open up access to the market for a much broader group of retail investors.
Devin Patrick Ryan: I guess, how do you see this playing out what are the implications for forge and how should we think about a timeline where this could become material to your results.
Devin Patrick Ryan: Okay.
Devin Patrick Ryan: I'll start and I'll turn it over to Mark.
Mark P. Lee: Glad to get the question we're really.
Devin Patrick Ryan: Excited about this part of our business.
Mark P. Lee: Part of our mandate two years ago was we felt that.
Mark P. Lee: But the private market access problem.
Mark P. Lee: It needed to be solved for investors that.
Mark P. Lee: Previously didn't have access to the asset class.
Mark P. Lee: And we.
Mark P. Lee: View this inner.
Mark P. Lee: Innovation in the private market as part of our thesis for the tipping point.
Mark P. Lee: For where the private market asset class becomes a mainstream asset class. So this is part of an evolutionary trend that we intend to lead.
Mark P. Lee: And so.
Mark P. Lee: This first one is an indication that we are now at a point in the market where forge is proprietary data can actually be used by asset managers to build a fund I'll, let mark talk specifically to this group because it's a very impressive group the liquidity team.
Mark P. Lee: But you should consider this to be getting.
Mark P. Lee: An effort that will span. The next few years for opening up access to those who previously couldn't.
Mark P. Lee: Invest and thus create not only more access but more.
Mark P. Lee: Revenue.
Mark P. Lee: Revenue flows across our platform.
Mark P. Lee: And more data so mark I'll, let you talk directly about liquidity, yes.
Mark P. Lee: Thanks for the question.
Mark P. Lee: I think the direct question in terms.
Mark P. Lee: The timing I do think that adoption and building AUM.
Mark P. Lee: In vehicles and products at Pratt index will take some time, but.
Mark P. Lee: But on a couple of comments I mean number one we think it just brings massive tam new Tam to our business that opens up our business.
Mark P. Lee: From a business focused on individual buyers and sellers.
Mark P. Lee: Private companies now to the universe.
Mark P. Lee: Affluent investors, who are looking to get exposure to alternative assets to their portfolio and this is really one of the best most efficient.
Mark P. Lee: And.
Mark P. Lee: That low fee, I guess and a cost efficient way to get this kind of exposure I mean, as Kelly said partnering with equity.
Mark P. Lee: Yes.
Mark P. Lee: At a firm that has a top team a lot of experience working with quantitative and index products in this space and so we're really proud of the partnership with liquidity.
Mark P. Lee: I also want to remind you that in addition to the opportunity we see for earning licensing revenue on our data and drive products.
Mark P. Lee: This also will bring by bringing new investors too.
Mark P. Lee: And to the private markets and we will also expand trading activity right. All of this expanded AUM will need to find a home and forge has tended to lead in place where these asset managers using indexed products.
Mark P. Lee: Come to fill out their exposure and as they rebalance their portfolios.
Mark P. Lee: Time.
Mark P. Lee: The services.
Mark P. Lee: Forge and so I think there is opportunities.
Mark P. Lee: Many of our revenue streams.
Speaker Change: Thank you guys for that color.
Mark P. Lee: I guess just to switch gears, a little bit you spoke about M&A a couple of times in the last year earnings calls and about there being potentially opportunities for the industry to consolidate would you do deals that are maybe not how financially accretive but might add a new capability or is M&A really a way to add scale, but also acts.
Mark P. Lee: Tolerate the recovery to EBITDA profitability.
Speaker Change: Thank you guys appreciate it.
Speaker Change: I'll start.
Mark P. Lee: And Martin can wrap it.
Speaker Change: We think.
Speaker Change: Primarily.
Mark P. Lee: Under the under the heading of what are our priority.
Mark P. Lee: <unk> in the market.
Mark P. Lee: I think last call I talked about.
Mark P. Lee: Our institutional efforts with forge pro launching.
Mark P. Lee: I talked about our data adoption strategy.
Mark P. Lee: And I've talked about our effort to.
Mark P. Lee: To build more capabilities services and relationships with companies themselves.
Mark P. Lee: So as we look at the opportunity and we do believe that the market.
Mark P. Lee: As well, it's well it's turning.
Mark P. Lee: There is still we think of a pending consolidation.
Mark P. Lee: It will happen as this market evolves, we're looking at companies that are in those areas of service.
Mark P. Lee: Our segment participation so.
Speaker Change: Im not crazy about doing deals that aren't accretive.
Speaker Change: I'll, let I'll, let mark add any further color to the financial <unk>.
Mark P. Lee: Side of it but.
Mark P. Lee: We're really looking at this through the lens of strategic strategy first scale segment.
Mark P. Lee: And not too much to add Alex I think we have mentioned in the past that one of the primary reasons to go public in the first place was to be able to continue to grow through and our organic growth and acquisition.
Mark P. Lee: Had acquired two companies and our app to become.
Mark P. Lee: Our company and so we've done that as a private company and.
Mark P. Lee: And we expect to continue to do that as a public company.
Speaker Change: The other question, we often get asked on this.
Speaker Change: With this question is.
Speaker Change: Our path to breakeven and profitability and while.
Speaker Change: We stand ready to grow organically to get back to breakeven.
Speaker Change: We had which we hadn't been back in 2021.
Speaker Change: And profitable back in 2021, we also see the opportunity to consolidate the industry and add new businesses and companies to our platform as a way to scale quick Mark.
Speaker Change: Quickly and get to that breakeven and profitability point, so theres a lot of opportunities out there and we continue to monitor the opportunities that are available to us.
Speaker Change: Great. Thank you guys very much for taking my questions I appreciate it.
Speaker Change: Next question comes from the line of Ken Worthington with JP Morgan. Please go ahead hi.
Kenneth Brooks Worthington: Good afternoon, thanks for taking the question.
Kenneth Brooks Worthington: I believe over the past couple of years.
Kenneth Brooks Worthington: Just hit the marketplace has been closer.
Kenneth Brooks Worthington: Closer to two thirds sellers and one third buyers and the buyers were sort of the piece of.
Kenneth Brooks Worthington: The equation that was missing.
Kenneth Brooks Worthington: The presentation sort of indicated and I think you mentioned on the call.
Kenneth Brooks Worthington: That IRR is made up by our allies made up more than 60% of all <unk> and <unk> 24.
Kenneth Brooks Worthington: Are you seeing a transition so I guess are you truly seeing a transition from more sellers to buyers.
Kenneth Brooks Worthington: And then are the conclusions that we should come to with regard to the health of the business and the recovery in the market.
Kenneth Brooks Worthington: From this information and then maybe I'll just conclude by asking it seems intuitive that a 50 50 split between buyers and sellers is optimal but it seems like forge has been at its best when there were more buyers and sellers. So are we really argue even though the IPO market is not back are you sort of operating now at.
Kenneth Brooks Worthington: That optimal mix.
Kenneth Brooks Worthington: I think the optimal mix is probably a range.
Kenneth Brooks Worthington: We haven't seen.
Kenneth Brooks Worthington: Two thirds buyers.
Kenneth Brooks Worthington: And to.
Kenneth Brooks Worthington: Sellers since 2021.
Kenneth Brooks Worthington: If you look back over the data.
Kenneth Brooks Worthington: Anything thats between $50 $50 60 40.
Kenneth Brooks Worthington: Demand in the 60 has been a good time.
Kenneth Brooks Worthington: But we are coming off.
Kenneth Brooks Worthington: Quite a different period and you remember from these calls that we had in.
Kenneth Brooks Worthington: In 'twenty two late 'twenty two in early 'twenty three in particular.
Kenneth Brooks Worthington: It was completely inverted.
Kenneth Brooks Worthington: In fact, there were times, where we were down.
Kenneth Brooks Worthington: With less than.
Kenneth Brooks Worthington: A third buyers. So this definitely is one indicator.
Kenneth Brooks Worthington: And so we needed to continue.
Kenneth Brooks Worthington: If it drops to $50 50 were great there too, but I think the other factor that mark pointed out relating to activity in the IPO market.
Kenneth Brooks Worthington: In particular.
Kenneth Brooks Worthington: With the interest rates still high.
Kenneth Brooks Worthington: Our what we remain.
Kenneth Brooks Worthington: <unk>, we don't.
Kenneth Brooks Worthington: Obviously control that but I'd say that the that the over 60 is the first time, we've seen that.
Kenneth Brooks Worthington: Since since the decline really started to happen in the second half of 'twenty, one and early into 'twenty two.
Kenneth Brooks Worthington: Hey.
Speaker Change: And let me add a few more comments.
Kenneth Brooks Worthington: Please.
Kenneth Brooks Worthington: I think as we're all generally aware of out there in the fund space bench or in late stage private I mean, there is a huge demand for liquidity right now from Lps. So there is still.
Kenneth Brooks Worthington: Very strong demand on the sell side, we still have record levels.
Kenneth Brooks Worthington: Sell side and transfer across a record level of issuers.
Kenneth Brooks Worthington: And so so I still think there is.
Kenneth Brooks Worthington: I still think pad and an increase in the number of buy in buy side interest is very welcome.
Kenneth Brooks Worthington: Hasnt catalysts I wouldn't want to caution that.
Kenneth Brooks Worthington: There is not a one to one relationship between kind of <unk> activity.
Kenneth Brooks Worthington: And culminating in trade system side would want to be a little careful there, but the increase that we talked about in terms of about 45% increase in <unk> quarter over quarter really came from the buy side really a doubling of the buy side interest.
Kenneth Brooks Worthington: As opposed to very steady and strong sell side interest and it was the highest level.
Kenneth Brooks Worthington: <unk> interest that we've seen since Q4 of 2021.
Kenneth Brooks Worthington: So I think it's.
Kenneth Brooks Worthington: It's really encouraging.
Kenneth Brooks Worthington: <unk>.
Kenneth Brooks Worthington: Yes.
Kenneth Brooks Worthington: Alright, let me go back is the highest level of buyer interest since Q3 of 2021.
Kenneth Brooks Worthington: The overall number of <unk> is the highest since we've seen a Q4 of 2021 and so all of these metrics going back to being compared to levels. We saw back in 2021, whether it's <unk> or buy side <unk> I mean, it's extremely encouraging for us, but we don't want to get out too far over our skis in terms of.
Kenneth Brooks Worthington: Assuming that this will translate into.
Kenneth Brooks Worthington: The number of trades that we're going to see next quarter for example, right and Thats not what were meeting indicating.
Kenneth Brooks Worthington: Hmm mm.
Speaker Change: And thank you for that and then I wanted to follow up on your comments on sort of.
Speaker Change: Inorganic growth it seems to me like the industry.
Speaker Change: You and your competitors, it's probably ripe for some degree of consolidation.
Speaker Change: I guess, what would it take to actually see that consolidation do you feel you are in a good position to actually be a consolidator.
Speaker Change: With the public currency.
Speaker Change: So I don't know just take me through your thoughts here and why haven't we seen this level of consolidation given we've come through a pretty a pretty challenging period over the last couple of years.
Speaker Change: Yes, well first of all this is Kelly I first of all I think if you look at valuations.
Kelly A. Rodriques: In the public versus private market, we're the only <unk>.
Kelly A. Rodriques: Player in the space.
Kelly A. Rodriques: And I think as many of you on this call know.
Kelly A. Rodriques: We've been coming to these earnings calls now for two years.
Kelly A. Rodriques: And from early 'twenty two through the first end of the first quarter and 23, we have been reporting steadily decreasing revenues.
Kelly A. Rodriques: And starting in Q2 of 'twenty three we started decline back out of this and I think we are now.
Speaker Change: Four quarters in.
Speaker Change: And our expectation would be that as we recover our stock price recovers that public currency.
Speaker Change: It gives us the ability to be an attractive acquirer for those who are still private.
Speaker Change: We are.
Speaker Change: Patients.
Speaker Change: One answer to the question is our share price recovery is one of the most important.
Speaker Change: Tools, we have.
Speaker Change: Providing a compelling.
Speaker Change: <unk> offered to consolidate really interesting.
Speaker Change: Competitors I also believe that the general state of capital raising in the private market is still pretty impaired and so the combination of our stock recovery.
Speaker Change: At the same time that you have got impairment and capital raising particularly in earlier to mid stage private companies.
Speaker Change: <unk> that just kind of a matter of time until we get back convergent point, where we're starting to see a recovery in our stock.
Speaker Change: And the private company that we're interested in become.
Speaker Change: More meaningfully lined up with the strategy that I mentioned earlier, so it's a timing answer I think.
Speaker Change: <unk>.
Speaker Change: We are watching and just waiting for that moment to lineup for us.
Speaker Change: Okay. Okay, great. Thank you very much.
Speaker Change: Yeah.
Speaker Change: Our next question comes from the line of Owen Lau with Oppenheimer. Please go ahead.
Owen Lau: Good afternoon, and thank you for taking my question. So last month, you launch forge in Euro and higher for executives in London in Germany could you. Please talk about your next steps what is the hiring plan, there and how to grow the business further.
Speaker Change: Yes so.
Speaker Change: Hello, and thanks for the question I think.
Speaker Change: In the short term at least for the next two quarters.
Speaker Change: We're focused on two things there.
Speaker Change: Getting our Bath and application.
Speaker Change: Fully approved so we could expand.
Speaker Change: And and also apply for our European passports. So we've got a regulatory track.
Speaker Change: That we're on.
Speaker Change: And until then.
Speaker Change: We're really revenue focused right now so any significant staffing that we're going to do is going to be trailing the success of starting to print revenues sequentially from now through Q4.
Speaker Change: So we're being very cautious.
Speaker Change: Let's not forget the comments Marc made about head count which includes Europe now so at the same time we've committed.
Speaker Change: To keep our head count flat and to keep our burn decreases.
Speaker Change: We apply that same discipline.
Speaker Change: So the way staffing will expand in our European operation.
Speaker Change: So for us to keep the overall forge.
Speaker Change: The plan for head count flat to down we need to be very cautious about the velocity of staffing against the European revenue model. So what we're going to be focused on I can tell you is printing trades.
Speaker Change: Expanding the global order book that we've built over the last decade.
Speaker Change: To provide access to European investors, who haven't had access to this before so theres a whole bunch of little competitors running around Europe trying to.
Speaker Change: It will be a second.
Speaker Change: Competitor or being a participant in the private markets there isn't another competitor in the region. That's got the strength of access to the integrated Global order book that was API connected this last quarter to Europe. So we think we're in a unique position to go out there start printing trades, so we're going to be totally read.
Speaker Change: Who focus between now and Q4 with very modest hiring the tracks against revenue.
Speaker Change: Traction as we move through the year.
Speaker Change: Hey.
Speaker Change: Also mentioned how now there's a live real time order books have as Kelly mentioned and that's in Europe.
Speaker Change: Two the forge global order book now you're a customer in Europe in Europe.
Speaker Change: Dania and your Ili is now you can see real time.
Speaker Change: Youre Ili reflected and you can kind of see how.
Speaker Change: As Brett and offers are changing.
Speaker Change: Got it and then just a broader question about the transaction volume going forward.
Speaker Change: There are some positive data points in the first quarter or do you talk about number of companies with Ili went up.
Speaker Change: A bit I think 12% sequentially.
Speaker Change: Ask spread remained below historical average level and even the IPO markets were improving in the first quarter I mean, it looks like the next rate movement, it's going down not up I guess my question is.
Speaker Change: What else do you think investors and issuers need to see to support more transaction do you think there is still some some kind of psychological barrier on valuation extending to.
Speaker Change: Come down because the barge funding Ron was so high.
Speaker Change: What things people have to see to support high transaction Chunkier things.
Speaker Change: Mark why don't you take this yes so.
Mark P. Lee: I think it's a great question.
Mark P. Lee: And by the way before I answer that question, let me point out that when we talk about an improvement in Q1 over Q4. Historically Q4 is always the strongest quarter of the year and that typically when we go into Q1 of the next year.
Speaker Change: Following Q1 is a little bit lower than Q4, because some of the investors are trying to squeeze in their trades and to their calendar year and that's pretty common in the public market as well. So I mean, if you look historically, that's always been the case for us that and keep our strongest quarter and Q1 is a little bit weaker the only exception was 2021.
Speaker Change: But 2021 of course was the name.
Speaker Change: <unk> all year with zero interest rates, an all time high Ipos breakfast.
Speaker Change: <unk>.
Speaker Change: In Q1 of 2021, so that's something else that I would add that we're really proud of our performance in Q1, particularly given that typical seasonality that you see quarter over quarter, but as far as continued growth.
Speaker Change: In our volume throughout the year.
Speaker Change: I think we're feeling very good as Kelly talked about coming out of the winter right.
Speaker Change: All believe me indicators are trending positive spreads coming down now one thing about the spreads we talk about nine 5% versus the 11 six is the four year average the average spread in 2021, which was a unique year was five 5%. So I think we feel very good about a nine 5% spread.
Speaker Change: But as the market improves we could see improvement on the spreads as well.
Speaker Change: As far as <unk> talked about that earlier.
Speaker Change: We are seeing.
Speaker Change: Encouraging signs on the <unk> side, the IPL side of the business as we all know I mean, there was good improvement in Q1, and our <unk>, we talked about 49 Ipos in Q1, 24, compared to 33 year over year or 48% improvement and theirs.
Speaker Change: The recent ipos that we all know and upcoming Ipos fanatics flat stripe.
Speaker Change: Stripe client on a liquid that being being talked about right, but we still need to see that play out right. We saw some encouraging signs in ipos in 'twenty, three and it kind of fizzled.
Speaker Change: So we're continuing to watch the IPO market and then.
Speaker Change: Finally, he talked about valuations and performance we're encouraged by <unk>.
Speaker Change: <unk> at the forge private market and that is turning positive one 5% in Q1, but when you look at our valuation data in the PM and <unk>. The valuations that are trading right. Now there is still in line with the discounts we've seen in the past right at 51% discount the last round.
Speaker Change: Median.
Speaker Change: And so I still think that.
Speaker Change: <unk> be helpful. On the Ipos will help this in terms of People's expectation that valuations in the private market are are improving and recovering it kind of relates to the great reset.
Speaker Change: Right now, we're saying that if you look at companies that have raised capital.
Speaker Change: That out of our universe at 62% of.
Speaker Change: The companies that we track the last time they raised capital was mid 2022 earlier. So there's still a lot of companies that haven't raised capital and a little bit of time and I think the great reset will also help right. It will help to right size. The valuations of companies. It's an important part of price discovery and I think thats.
Speaker Change: One of the components that will also help to drive.
Speaker Change: Greater confidence and trading volume going forward so to sum up this very lengthy answer.
Speaker Change: There's a lot of factors we are encouraged by a lot of science.
Speaker Change: Still think there is there is room and opportunity in order to kind of drive significant order of magnitude increases in our trading volumes.
Speaker Change: Got it thanks a lot.
Speaker Change: Yeah.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: There are no further questions at this time I will turn the call back over to Mr. Dominic potential.
Dominic Paschel: Thank you Erika and thank you everyone for joining the porch first quarter 2024 financial conference call.
Dominic Paschel: Look forward to engaging with analysts and investors throughout the second quarter and will be attending equity conferences throughout that time.
Speaker Change: As always feel free to reach out to myself and the team.
Dominic Paschel: He'll then enjoy the coming summer.
Speaker Change: We can close the call Jericho.
Jericho: This concludes today's conference call you may now disconnect.
Jericho: Goodbye.