Forge Global Holdings Inc. ((FRGE)) has held its Q4 earnings call. Read on for the main highlights of the call.
Forge Global Holdings Inc. recently held its earnings call, presenting a balanced view of its current financial standing and future prospects. The company reported significant growth in marketplace revenue and an expanding IPO pipeline, though it faced challenges with declining quarterly revenues and impacts from federal rate cuts. Despite these hurdles, Forge remains optimistic about 2025, backed by a strong pipeline and strategic initiatives, while maintaining caution due to economic uncertainties.
Year-over-Year Revenue Growth
Forge closed out 2024 with a commendable 13% year-over-year revenue growth. A standout highlight was the 46% increase in marketplace revenue, which reached $37 million, showcasing the company’s robust performance in this segment.
Strong Start to 2025
The company has observed improving market dynamics and growing deal activity as it steps into 2025. The Forge Private Market Index surged by 33% over the prior three months, indicating a positive trend in market conditions.
IPO Pipeline Expanding
January marked a significant milestone with 13 IPO filings, each planning to raise $100 million or more. This represents the highest monthly total of such filings in three years, signaling a robust pipeline for future growth.
Cost Savings Exceeded Goals
Forge achieved total cost savings of $11.9 million, surpassing its original targets. Operating expenses decreased by $3 million from Q3 to Q4 2024, reflecting the company’s effective cost management strategies.
Record Quarterly Marketplace Revenue
Looking ahead, Forge expects its marketplace revenue for Q1 2025 to meet or exceed the best quarter in 2024, driven by a strong and growing pipeline.
Stock Buyback Program Announced
In a move that underscores confidence in its valuation, Forge’s Board authorized a stock buyback program of up to $10 million, highlighting the company’s belief in its strategic direction.
Quarterly Revenue Decline
Despite positive growth in some areas, Forge experienced a decline in total revenue less transaction-based expenses, which fell to $18.3 million in Q4 from $19.1 million in Q3.
Impact of Federal Rate Cuts
The company faced challenges from federal rate cuts, which affected custodial cash administration fees in 2024, with full impacts anticipated in Q1 2025.
Net Loss Despite Improvements
Forge reported a net loss of $16 million in Q4, an improvement from the $18.8 million net loss in Q3, yet still a significant financial challenge.
Decline in Average Net Take Rates
The average net take rate for 2024 was 2.8%, down from 3.3% in 2023. This decline was attributed to larger trade sizes and other market dynamics.
Forward-Looking Guidance
Forge’s forward-looking guidance reflects a cautious optimism. The company anticipates continued growth in marketplace revenue, expecting Q1 2025 to potentially surpass the best quarter of 2024. With a focus on achieving profitability by 2026, Forge is also implementing a $10 million stock buyback program, signaling confidence in its undervaluation and strategic initiatives.
In summary, Forge Global Holdings Inc.’s earnings call painted a picture of cautious optimism. While the company faces challenges such as declining quarterly revenues and impacts from federal rate cuts, it is buoyed by significant marketplace revenue growth and an expanding IPO pipeline. With strategic initiatives in place and a focus on future profitability, Forge is poised to navigate the economic uncertainties ahead.