Forge Global Holdings, Inc.

to grow through inorganic growth and acquisition. You know, we had acquired two companies in our path to become a public company. And so we've done that as a private company and we expect to continue to do that as a public company. I think the other question we often get asked in this, you know, connection with this question is, you know, our path to breakeven and profitability. And while, you know, we stand ready to grow organically, you know, to get back to breakeven, which we had been back in 2021, we had been 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 more quickly and get to that breakeven and profitability point. So there's a lot of opportunities out there and we can continue to monitor the opportunities that are available to us.

Great, thank you guys very much for taking my question. Appreciate it. Next question comes from the line of Ken Mortington for JP Morgan, please. Go ahead.

Hi, good afternoon. Thanks for taking the question. I believe over the past couple of years, Ford just said the marketplace has been closer to two-thirds sellers and one-third buyers and the buyers were sort of the piece of the equation that was missing. The presentation sort of indicated, and I think you mentioned on the call, that ILYs made up, buyer ILYs made up more than 60% of all ILYs in 1Q24. Are you seeing a transition? So I guess, are you truly seeing a transition from more sellers to buyers? And then are there conclusions that we should come to with regard to the health of the business and the recovery in the market 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 Ford has been at its best when there were more buyers and sellers. So are we really, are you, even though the IPO market's not back, are you sort of operating now at that optimal mix?

I think the optimal mix is probably a range. We haven't seen two-thirds buyers to sellers since 2021. If you look back over the data, anything that's between 50-50 and 60-40, demand in the 60 has been a good time, but we are coming off really quite a different period. And you remember from these calls that we had in 22, late 22 and early 23 in particular, it was completely inverted. And in fact, there were times where we were down with less than a third buyer. So this definitely is one indicator. And so we needed to continue. And if it drops to 50-50, we're great there too. But I think the other factors that Mark pointed out relating to activity in the IPO market, in particular with the interest rates still high are what we remain watchful of. We don't obviously control that. But I'd say that the over 60 is the first time we've seen that since the decline really started to happen at the second half of 21 and early into 22.

Hey, and let me add a few more comments to Kelly's. I mean, I think as we're all generally aware kind of out there in the fund space, venture and late stage private equity, there's a huge demand for liquidity right now from LPs. So there is still kind of very strong demand on the sell side. We still have record levels of sell side interest across a record level of issuers. And so I still think there's, I still think that an increase in the number of buy and buy side interest is very welcome and will act as a catalyst. I would wanna caution that, there's not a -to-one relationship between kind of IOI activity and culminating in trades. So I would wanna be a little careful there. But the increase that we talked about in terms of a 45% increase in IOI quarter over quarter really came from the buy side, really a doubling of the buy side interest as opposed to very steady and strong sell side interest. And it was the highest level of buy side interest that we've seen since Q4 of 2021. So I think it's really encouraging. So sorry, let me go back. It's the highest level of buy side interest since Q3 of 2021. The overall number of IOIs is the highest since we've seen a Q4 of 2021. So all of these metrics going back to being compared to levels we saw back in 2021, whether it's total IOIs or buy side IOIs, I mean, it's extremely encouraging for us, but we don't wanna get up too far over our skis in terms of assuming that this will translate into doubling up the number of trades that we're gonna see next quarter, for example. That's not what we're meaning to indicate.

And thank you for that. And then I wanted to follow up on your comments on sort of inorganic growth. It seems to me like the industry, you and your competitors, it's probably ripe for some degree of consolidation. I guess, what would it take to actually see that consolidation? Do you feel you're in a good position to actually be a consolidator with the public currency? 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 challenging period over the last couple of years?

Yeah, well, first of all, this is Kelly. First of all, I think if you look at valuations in the public versus private market, we're the only public player in the space. And I think as many of you on this call know, we've been coming to these earnings calls now for two years. And from early 22 through the end of the first quarter in 23, we have been reporting steadily decreasing revenues. And starting in Q2 of 23, we started to climb back out of this. And I think we are now four quarters in and our expectation would be that as we recover, our stock price recovers, that public currency gives us the ability to be an attractive acquirer for those who are still private. I think we're patient. And I think one answer to the question is our share price recovery is one of the most important tools we have in providing a compelling offer to consolidate really interesting 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 recovering at the same time that you've got impairment in capital raising, particularly in earlier to mid-stage private companies means that it's just kind of a matter of time until we get that convergent point where we're starting to see recovery in our stock and the private companies that we're interested in become more meaningfully lined up with the strategy that I mentioned earlier. So it's a timing answer, I think. And we're watching and just waiting for that moment to light up for us. Okay, great. Thank you

very much. Our next question comes from the line of Owen Lau with Oppenheimer. Please go ahead. Good afternoon and thank you for taking my question. So last month you launched Ford Europe and hired four executives in London and Germany. Could you please talk about your next step? What is your hiring plan there and how to grow the business further? Thanks.

Yeah, so Owen, thanks for the question. I think in the short term, at least for the next two quarters we're focused on two things there. One, getting our BAPIN application fully approved so we could expand and also apply for our European passports. So we've got a regulatory track that we're on. And until then, we're really revenue focused right now. So any significant staffing that we're gonna do is gonna be trailing the success of starting to print revenues sequentially from now through Q4. So we're being very cautious. Let's not forget the comments Mark made about headcount which includes Europe now. So at the same time we've committed to keep our headcount flat and to keep our burn decreasing, we apply that same discipline to the way staffing will expand in our European operation. So for us to keep the overall forge plan for headcount flat to down, we need to be very cautious about the velocity of staffing against the European revenue model. So what we're gonna be focused on, I can tell you is printing trades, expanding the global order book that we've built over the last decade to provide access to European investors who haven't had access to this before. So there's a whole bunch of little competitors running around Europe trying to be a second 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 and start printing trades. So we're gonna be totally revenue focused between now and Q4 with very modest hiring that tracks against revenue traction as

we move through the year. Hey, and oh, and recall that when we announced Forge Pro, we also mentioned how now there's a live real-time order book. So as Kelly mentioned, connecting Europe to the Forge global order book. Now you're a customer in Europe and you're putting in your IOIs. Now you can see real-time kind of your IOI reflected and you can kind of see how the spread and business offers are changing.

Got it. And then just a broader question about the transaction volume going forward. So there were some positive data points in the first quarter. You talk about number of companies with IOI went up quite a bit. I think 12% sequentially bid-ask spread we mean below historical average level. And even 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 what else you think investors and issuers need to see to support more transaction? Do you think there's still some kind of psychological barrier on valuation? It's still need to come down because the last funding round was so high. I mean, what things people have to see to support higher transactions from here.

Mark,

why don't you

take this? Yeah, look, so, oh, and I think it's a great question. And by the way, before I answer that question let me point out that when we talk about improvement in Q1 over Q4, historically Q4 is always the strongest quarter of a year. And that typically when we go into Q1 of the next year typically the following Q1 is a little bit lower than Q4 because some of the investors are trying to squeeze in their trades into 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 Q4 is strong quarter and Q1 is a little bit weaker. The only exception was 2021, but 2021 of course was an exceptional year with zero interest rates and all time high IPOs, you know, thread listings and SPACs, you know, in Q1 of 2021. So that's something else I would add that, you know 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, you know in our volume throughout the year I think we're feeling very good as Kelly's talked about coming out of the winter, right? All believe me, indicators are trending positive that the spread coming down. Now, one thing about the spreads, we talk about .5% versus the 11.6 is the four year average. The average spread in 2021, which was a unique year was 5.5%. So I think we feel very good about a .5% spread but you know, as the market improves we could see improvement on the spreads as well. As far as, you know, IOIs we talked about that earlier. We are seeing, you know, very encouraging signs on the IOI side. The IPO side of the business, as we all know, I mean, there was good improvement in Q1. In RFIO we talked about 49 IPOs in Q1 of 24 compared to 33 year over year, a 48% improvement. And there's, you know, the recent IPOs that we all know and upcoming IPOs, fanatics, plaid, stripe, carna, liquid death being talked about, right? But we still need to see that play out, right? We saw some encouraging signs in IPOs in 23 and it kind of fizzled, you know? So we're continuing to watch the IPO market. And then, you know, finally, you talked about valuations and performance. I mean, we're encouraged by the performance of the Forge private market index turning positive. .5% in Q1. But when you look at our evaluation data in the PMU, the valuations that are trading right now, they're still in line with the discounts we've seen in the past, right? A 51% discount for the last round, you know, at the median. And so I still would think that, you know, it would be helpful and the IPOs will help this in terms of people's expectations that valuations in the private market are improving and recovering. It kind of relates to the great reset. Right now, we're saying that if you look at companies that have raised capital, then out of our universe, that 62% of the companies that we track, the last time they raised capital was mid-2022 or earlier. So there's still a lot of companies that haven't raised capital, you know, in a little bit of time. And I think the great reset, you know, will also help, right? It will help to right-size the valuations of companies. You know, it's an important part of price discovery. And I think that's one of the components that will also help to drive, you know, greater confidence and trading volume going forward. So to sum up this very lengthy answer, there's a lot of factors. We're encouraged by a lot of the signs. You know, we still think there's room and opportunity in order to kind of drive significant order of magnitude increases in our trading volumes.

Got it, thanks a lot. There are no further questions

at this time. I'll turn the call back over to Mr. Dominic Cashel.

Thank you, Jericho, and thank you everyone for joining the Forge First Quarter 2024 Financial Conference Call. We look forward to engaging with analysts and investors throughout the second quarter, and we'll be attending equity conferences throughout that time. As always, feel free to reach out to myself and the team. Until then, enjoy the coming summer. We can close the call, Jericho.

Yes, and this concludes today's

call. As always, feel free to reach out to myself and the team. Until then, enjoy the coming summer.