Forge Global Holdings, Inc.

activity and late stage investment activity.

Got it. And then going back to the expansion reduction plan, could you please maybe add more color on how much savings you expect to capture for the second half of this year? I mean, should we expect just half of the $11.3 million this year and then the full $11.3 million in 2025 and then will there be any like other reinvestments so that the total expense saving would be lower than that? Any more color would be helpful, thanks.

Yeah, thanks for the question, Owen. For, as you kind of look at your models, what I would say, specifically I broke out the $11.3 million. The $11.3 million is against our budgeted expenses and we kind of said it's primarily headcount related with some other expense saves as well. Now, if you look at kind of the saves relative to kind of run rate, I think you can take that $11.3 million and assume that roughly speaking, two-thirds of it is against our current run rate and one-third is kind of future cost avoidance. So I think that the bulk of it should be achieved in Q3 and in Q4, but there's probably some straggling timing related issues, but the vast majority should be released. We should benefit as us on a go-forward basis. We are also very specific to say that excludes severance, Owen, and obviously severance would be a one-time expense.

All right, go ahead. There was

a question too about any more new investments in there too. Is that right, Owen?

Yeah, exactly. Would you invest some of the save into the business maybe this year or next year, like excluding the severance?

The short answer is no. We are fully in the investment levels in the next-gen platform with this taken into account. So we expect to, as Mark said, realize the full amount in 2025 and still continue to make investments in ongoing margin expansion and efficiency with the people that we've got here now.

Yeah, Owen, as we've said in prior calls, even though we've had a hiring freeze for the past seven quarters, we've worked really hard to try to make sure we're focusing our resources on the top priorities and opportunities. And as we've discussed before, even during those seven quarters of hiring freezes, we've been able to initiate our efforts in Forge Europe, roll out our data product, Forge Pro, put out our Forge Index, our option-based lending program. So even in a constrained cost control environment, obviously, we always seek to prioritize our resources towards the opportunities that have the biggest payback. Yeah, just

a reminder to everybody on the call, we did talk last quarter about the rollout of our global order book, the extensible capability for us to now expose Forge on a global level. This is, as Mark referenced earlier, part of how our revenue contribution from Europe has started to emerge. And we are seeing now that relationships in Europe, having access to counterparties through that extensible global order book, are now starting to drive revenue for the business. We'll talk more about that in future quarters.

Thanks a lot.

Your next question comes from the line of Jeff Smith with William Blair. Lise, go ahead.

Hi, thank you. So how is your data business doing in this environment with transaction activity up nicely in the quarter? And what are you doing to increase adoption there? I think you'd mentioned that last quarter versus kind of focusing on growth, but just curious what you're doing there and how that has been performing.

So I think one of the things that we referenced previously is a focus on data adoption. And we have really employed a strategy this year to get Forge data everywhere. I think we wanted to keep the focus of our statements today on our performance, our optimism, and essentially the cost savings decisions that we've made. I will say this. We are seeing very good uptake on Forge Pro and on the use of Forge data. And I look forward to reporting on some specifics of this in our next earnings call. But I'll let Mark reference any of the specifics that we've got.

Yeah, you know, the only thing else that I would add, Jeff, is just as a reminder to, you know, the entire group. But, you know, we think about... You can think about our data offerings kind of in three buckets. Our Forge Pro product targeted at institutional trading clients. Our subscription-based Forge Intelligence product, you know, that's targeted really at clients that are not specifically looking to trade, but find the data very helpful, you know, to their business. A good example we've put in the past are like Venture, you know, businesses. And then the third, you know, and what, as you know, Jeff, I'm personally really excited about, but our whole drive data business, and that's, you know, Forge price and the Forge indices, right? And there's, you know, two indices are Forge private market index as well as the investible Forge liquidity private market index. So, you know, we think about our data business kind of in those three different buckets. And, you know, plugging away and have a lot of optimism for the future opportunity.

Great. And then, you know, what does the competitive landscape look like actually for private market indexes? I mean, is there many out there today, or I guess do you foresee many kind of emerging in the market? And, you know, what do you see as your kind of advantage if they do?

Yeah, this is a really interesting question because there's been a fair amount of news actually coming out of some larger places. I'm sure everyone has seen the commitment that BlackRock just made in their recent acquisition about emerging passive strategies and products relating to the private market. We see this as an incredibly powerful sign of what's coming next in the market. We believe part of our excitement around derived and indexed data is that having funds that are built on passive strategies and passive opportunities is going to open up this market for a whole set of participants that aren't here now. And so, we've believed in this strategy for a couple of years. And as we've reported previously, we now have our first index, investible index powered by Forge, by Forge's private market index. We see more of that coming, but I'd say as it relates to competitive, most of what's out there today that have been cited as indexes aren't using the depth of clean data that Forge has as the market volume leader. We're seeing indexes announced that are using fund marks, which we believe are a less reliable and more stale source of data by which to build a product off from. And so, we are really excited about our position in the market here. As far as competition, this is still a business from a revenue generating standpoint that's pretty small. And there's a number of small players out there that are aggregating data from third-party sources. We believe that we've got a competitive advantage given the depth of our global order book. We talked about some of these metrics earlier in the call. And we expect that at some point, that part of the market is going to consolidate. There are just too many small players out there to raise capital with very little and meaningful revenue to support additional investments. So, we're watching and we're continuing to lead from the front. But we think this is a really exciting part of our future. And we're considering when and if to start breaking this out and start reporting on some of the KPIs separately. But we'll consider that in the future. For now, we believe 2024 will largely be a year focused on continuing to build the highest source of high-quality data in the space and getting our name and brand out there associated with a singular source of truth for pricing. So, we're excited about where this is going. But we'll look for the future to start reporting on it.

Hey, Jeff. I would add just a few comments on top of Kelly's. Obviously, as Kelly referenced, the BlackRock acquisition of Prequin, MSCI, you know, with their...they completed their acquisition of Burgess and rolled out 130, I think, with number indices. I mean, those are both, as Kelly mentioned in reference, those are both situations where they have fund-level information, which we think is very different from secondary market pricing at an individual company level. And then you see a lot of articles out about people. I mean, Larry, think, talk about indices. You hear discussions around ETFs. You know, there's a closed-end fund out there that has been in the press. There is a lot of attention and desire for people to get access to the private markets, and we do think that investing is going to be part of that answer. And it's different having an index composed of exposure in the individual names versus creating indices based on, you know, fund interest and fund information. So, I would just kind of add that to Kelly's comments.

OK, very helpful. Thank you.

Again, if you would like to ask a question, press star, then the number one in your telephone keypad. There are no further questions at this time. I will now turn the call over back to the presenters for any closing remarks.

Yeah, thank you all for dialing in today. We will be in New York at the Barquise and UBS Financial Tech conferences post-Labor Day. If you have any other questions, feel free to email IR at ForgeGlobal.com. Otherwise, thank you for the time.

That concludes today's conference call. Thank you all for joining. You may now disconnect.