All right, our next section is with Forge Global. First of all, thank you everyone for joining our sections today. For those of you who don't know me, my name is Owen Lau. I cover information services, exchange, and digital assets at Oppenheimer. Forge is a marketplace for private companies. It provides trading, data, custody, and other services to investors, companies, and shareholders. Today, we are pleased to have CEO Kelly Rodriques joining us. Thank you for your time today, Kelly. Thank you, Owen. It's a pleasure to be here. For the people who are listening to the webcast, please feel free to submit your questions online, and we'll do our best to address your questions. Without further delay, Kelly, I think Forge Global, it's still a relatively new story for many investors. Maybe as a starting point, could you please talk about the value proposition of Forge and the competitive landscape, in this industry? Sure. We think it's an incredibly interesting time for the private markets, and though we've been through a difficult last year, year and a half, we firmly believe there's an opportunity for a set of investors and participants in the private market to get access to the most interesting and exciting private companies in the world. We believe that the world needs infrastructure, it needs data, and it needs a trading venue, and Forge went public with the promise of delivering that as part of our North Star for the next three to five years. Got it. maybe longer term, what would Forge look like in maybe three to five years? What is your vision of Forge? Yeah, look, I think that the whole space up until now, up until recently, was populated by very opaque brokerages, and did not... the space did not have what we believe it needs to open up access and provide standardization. I think in the next three to five years, we see Forge being much more of a data-driven business, and a utility and infrastructure that helps institutions and individuals around the world trade in the space. We've already made announcements, which include the launch of Forge Intelligence, which is our private market data business, and we announced just a month ago, the Forge Private Market Index, which tracks the 75 most liquid private names. We're obviously investing heavily in infrastructure that standardizes trading, particularly for institutions as they move into the space. Got it. Another, I think, key questions from investor, it's your competitive landscape. Do you see more, like a more intense competition in pricing over the past 18 months or so, or not that much? Well, it's, it's been a space with a lot of fragmentation over the last few years. Interestingly, in 2021, which was a pretty big year for the stock market, you had a lot of new entrants declaring that they were coming into the space. The market kind of shut down, and I think there's been a difficult time for a lot of folks in the private markets raising capital. Today, we see our competition primarily in the U.S., but much smaller marketplace providers, those who are focusing on either very small trades and have revenues in the, you know, high single-digit millions, low double-digits, so much, much smaller than Forge, and less diverse. There really isn't anybody else doing a combination of data, custody, and the marketplace, including the most recently announced index. We do see some data providers emerging. They're small, and then there have been some large players, such as Nasdaq, who have been trying to make strides into the market for years, largely administering buybacks for companies in the form of tender offers. In terms of market-based pricing, we view ourselves as a, a significant category leader. So what, what are some of the key factors or any major factors that could impact, your, your take rate? Well, it's interesting because the take rate's been going up in recent quarters, I think largely because liquidity has been difficult. Price discovery is one of the biggest problems to solve, and we've been in this period we call the Great Reset because valuations have been coming down, pretty, pretty steadily from 2021. I'd say, as take rate, as liquidity has been difficult to find, take rate's actually gone up. Certainly, overall, in, in broad-based terms, the biggest factor to take rate is size of order. As institutions have come in, you'll see take rate move down, as you see these large block trades emerge in the private market. We saw a lot of this in 2021, and then I'd say a lot of, a lot of institutions pulled back in 2022. We're now starting to see them come back in. Got it. Kelly, you just reported, your earnings result yesterday. As you mentioned, take rate go up. A lots of key metrics we track, like revenue, trading volume, and also adjusted EBITDA, also go up sequentially. Maybe could you please summarize for us, what you're seeing so far in terms of, like, all these supply-demand imbalances you have been talking about over the past, like, 12 months or so? Yeah. Generally speaking, the conditions in the data would suggest that the market's improving. We put together an 8% -... quarter-over-quarter revenue expansion. We did 20% more volume, and our transactional revenue went up about 22%. I'd say that in terms of key metrics, in terms of the market, we are starting to see a narrowing of the bid-ask spread. We've been tracking this for several quarters, and it's been as high as 30%, and we reported most recently that's, that's contracted to about 15%. We saw significant buy-sell imbalances coming out of the end of 2021, where it was, like, 2/3 to 1/3 seller to buyer. That has improved and is improving in the last several weeks. It still hasn't reached a balance. We did report yesterday on the earnings call that according to the Forge Private Market Index, in the last, you know, short period of time, we've seen the decrease in valuations stop. This is the first time we've seen valuations not decline, you know, in a three-month window since the beginning of 2022. We're also seeing valuation decreases, now sort of substantially hitting. The discount from the last private rounds the companies are now trading at is going in the other direction for the first time. All signs are pointing to a recovering market, and I think everybody's wondering: How quickly will this, will this happen? We're watching that. Got it. Go back to the valuation point you just make for private companies. Do you think it still track, closely to public markets, or there's a lag? I mean, I think people think that it may have a lag, but what are you seeing so far? Is it a lag or it track pretty closely along with public market? There, there's certainly a lag. Now, it, it's taken this market period to test what that lag looks like. What we're seeing is this, up until last quarter, we reported an over 60% decrease in valuation from the last private primary funding round. Part of the difficulty in the private markets right now is when you're in a period that, like we're in coming out of 2021, a lot of companies delayed raising any additional capital. In fact, you know, the average period from the last primary capital raise is about 20 months. When you look back at many of these companies that were valued in 2021, they haven't raised any money, and so that makes it difficult to really get pricing right. We're relying heavily on secondary trading, and if you look at that data, it would suggest that you've got overall, about a 51% decrease in valuations from what you saw as the peaks in 2021. In fact, most of the funding rounds that were done in 2020 are closer to the valuations that you're seeing now. Think of it as companies are back to being valued at the round previous to their last round in 2021. Back then, companies were raising money about every 12 months. Now, you're seeing companies extend to not raising money for 20+ months, and so you do have a significant lag. I suspect that as companies start to either publicly state a new valuation or go out into the market for capital, then you're gonna see those discounts probably start to get narrower and narrower, and then you'll start to see liquidity come back and an, a, an adjustment to more of a correlation to where the public markets are now. Got it. Maybe a little bit follow-up here. Maybe we can put some numbers into the perspective. I think private companies right now are trading at a valuation, like, roughly in line with the, with the second-to-last, fundraising round, but it's still 50% below the last fundraising round. You, you talked about that already, Kelly Rodriques, what does it take, right, to get the full valuation back, or we are not gonna see the valuation back in 2021? What's your view on that? My view is that a lot of these companies are performing tremendously. They just haven't gone back into the market to raise capital. If you think about it, if a company's growth rate, even through this difficult market time, has been attractive, let's say 30%-50%+, a company that was valued at a tremendous multiple in 2021 has probably got about a two-year window to grow themselves back into that same valuation, if you assume their multiple got cut in half. A lot of the market is still waiting for, you know, data and disclosure on how these companies are performing in 2023. In fact, about 19%, 20% of the Forge 75, you know, index, private market index, have raised money in the last 12 months, and those discounts are less because of the, the disclosure, and I'd say, the performance of many of these companies actually doing quite well during this period of time. I think it's just about when companies start, you know, coming out with their disclosures of how they've performed proximate to a fundraising, and we track some of this. In fact, many companies disclose some of that information on Forge's platform. I, I suspect that in the coming weeks and months, you're gonna see a narrowing of this. Got it. The high evaluation, it's good for seller, I understand that. How about the appetite from buyers? I mean, does high valuation negatively impact buyers, or buyer will be more enthusiastic to get back into the market because the economy, it's getting better? How do we think about the buyers', you know, mentality here? ... We're seeing, you know, significant buy-side interest that wasn't there three months ago. We're seeing that. I'd say that right now, a lot of people are looking at our data to try and figure out whether or not we've hit bottom, and it's time for re-entry. There's a lot of FOMO about whether or not we've hit the bottom. I'd say one of the news headlines that I commented on about a month ago on CNBC was that, you know, some of these large private hedge funds that focus on private stock have gone online and said, "Hey, we're, we're, we're selling part of our portfolio off." One of the things that we've seen is some of these, these buyers that may be selling some of their positions from 2021 are also looking at buying low in 2023. I believe this is now a moment where institutions are looking at the IPO market. You're seeing a few little indications that that could be warming up. They're looking at pricing now, starting to go the other direction. I do think that we're at a moment where institutions are timing their re-entry. Some believe we've hit bottom. Kelly, just follow up to that your answer about IPO. What's your view about the IPO market? I think many people are thinking about, would that come back in the second half of this year, or we have to wait until 2024? What, what are you seeing from the, you know, public market standpoint and from all these entrepreneurs? For those who wanna go out, the indications are the reception is, is good. I mean, there's been favorable reception to those that have gone out. I think that there's some apprehension, and that, you know, nobody wants to be the first to go out there, and so there are some companies that are performing quite well that are talking about it. I don't think we're gonna get back to the kind of market that we saw in 2021, certainly in the second half of 2023. I would be surprised if we didn't see a little more activity in the second half. I'd say people are still watching and, and being careful. When it, when it comes back, I think it'll be an indication, and it'll also mark probably the re-entry back into the private market because those exits really get people excited about getting in early. Got it. Another metric, a metric we have been tracking, or you have been tracking as well, it's the right of first refusal. I think you start to see companies have increasingly exercised this right in 2023. I think first quarter was around 8% or so. I mean, I think the question here is: Why is this an important signal for you guys, and what does it, like, actually tell us? Yeah, it's, it's, it's really important because when Forge is working with companies to clear secondary trades, there is, in many cases, an opportunity for the company or one of their shareholders to step in and exercise the right to take that position. It's really important because it's an indication that investors who know more about that company, who are already on that cap table, have decided that the price that a seller is willing to take is attractive to them. When we see elevated ROFRs, like we saw in Q1 and like we reported in Q2, these continue to be very strong, it says that a significant percentage of trades that are settling on Forge are gonna be taken out by an existing investor, and that tells you that the price is satisfying probably the most informed investor that could buy that stock because they already own it. Got it. They have more information than other people. That's right. Other growth initiatives. We, we, we talk a lot about trading volume and stuff like that, and you're confident that it will come back. Your takeaway has gone up. One of the key in growth initiative is international expansion. I think you talk about that in the past. Could you please give us an update on the progress on, like, expanding in Europe, expanding in Germany? What are you most excited about this expansion? Yeah, we've had buyers and sellers from outside the U.S. for, for, for years. It's been a part of our business. As we've gotten bigger and looked at the real potential outside the U.S., we see Europe as an incredibly interesting market, obviously Asia, too. Now, we set up in Germany, you know, earlier this year, later last year, we just got our BaFin, you know, our, our, our BaFin applications into to officially be regulated in Germany. We do have people now there. We have a team on the ground. We've got representatives in U.K., we're hoping that by the end of this year, we're actually able to cross trades. We're working on it. We've got some very talented people over there. We sent some people from our U.S. operation, our tech operation over there, so they can get a clear look at what regulators need for us to trade in those markets. We're really excited about this. We probably won't see material revenue until 2024, but we got a great team over there, and I'd say we're focused right now in Germany and the U.K. Then you also touched on Asia. I think longer term, you see this may be a, a good market. Any, any update or any thoughts about by expanding beyond, like, U.S. and also Europe and even going into Asia, or it's still? We've got great investors. Yeah, we've got great investors over there, and we knew we were gonna be there at some point. You know, some of the geopolitical moves and shifts that have happened in Hong Kong, we were there a few years ago and had a pretty active business there. We've now shifted some of our interests to Singapore. That seems to be an area that we both have investor support with Temasek being there. We're looking at it. We probably won't make any big moves in 2023, but we're considering when we get there, how we're gonna deploy on the ground. We'll likely do something similar with a small group of people, partly from the team we have in the US, because we've got some great international employees. We've got employees that have come from those markets, so we're really excited about it. probably 2024. Got it. Got it. Another growth driver, could be Forge Intelligence or your data and analytics product. Could you please add more color on, on this segment? When should, when should we expect your data revenue to be more material? Can you also please remind us your long-term target of revenue contribution from, from this segment, from the data segment? Yeah, sure. When we went out on the road, to go public in 2021 and early 2022, I talked about our long-term view of 15%-20% of our revenue coming from data. you know, as I've thought about it, I'm completely convinced that this is the most strategic piece of what opens up the private market: information, disclosure, price discovery, data-enabled services. I'd say what we're weighing right now is how much of this do we give away, how much of this do we charge for, and how do we move our business from a business that's so heavily concentrated on transactional to having a composition shift into data? We're looking at this now. I'd consider the last year and a half to be our product market fit phase of Forge Intelligence. What we're gonna be looking at at the end of 2023 and beginning of 2024 is how we really turn it on, and that's from the standpoint of staffing, marketing, and really pushing data heavily. I suspect that 2024 will see an accelerated focus on data and hopefully accelerated return in terms of revenue composition. It's still pretty nascent, and we're looking at staffing and leadership positions around this now as we have our eye towards 2024 planning. Got it. So back in October 2020, you, I think you launched the loan product. Can you give us an update on that loan product? Do you see an uptick of demand? Anything, any feedback you got so far? We, we've, we've done a small number of loans, but we've primarily done them opportunistically through individuals who needed it. My view of that product is, for it to get scale and success, we need to present it to companies, because we think it's a real value for companies to be able to offer this to their employees, so they can borrow against their stock to own their stock. Many companies, as you know, issue stock options, and the truth is that we think stock ownership is more valuable to an employee and to their employer than stock option, you know, opportunities. Our view is, we'll probably accelerate our efforts there through the lens of our company segment, which we've been strategizing. We recently hired someone in that position. I don't think we've publicly announced it yet. We will soon. I'd say through the lens of, of company focus segment effort later on this year and next year, we will accelerate the offering of lending. I think it just. It's a natural place to accelerate it because we just believe that, you know, companies will see it as a value for their employees. Got it. Then what is your long-term strategy there? I think right now you're still, like, when you started this product, you used your own balance sheet. Are you going to use banking partners or other lenders to provide capital so that you may be able to free up your own capital a little bit? Yeah, certainly at scale, it's not our game. I mean, we, we are a data and infrastructure play. We are not here to be a lender. We, we did it, and we're now really focused on trying to figure out how to scale it. When we do that, we're gonna have to have capital partners to provide that, because just the loan exposure to a single company could be more significant than we're certainly willing to take. Got it. Another new product, it's your Private Market Index. Can you please talk about the opportunity there, and how would you potentially monetize that index? Yeah, look, we think this is really exciting because we believe that the existence of an investable index could do a lot for the private market. I wanna make this clear: I think it, it could do a lot for private companies. If you think about the capital that could flow into primary capital for the growth of these great companies over 10 or 20 years of their private life, the idea that you could bring a product to market that could allow non-accredited investors to get access to an investable, tradable index is really exciting. We would be working with partners to do that. We haven't made that announcement, and yet, the launch of our Private Market Index sets the stage for us to start looking at investable products in 2024 and beyond. As we look at that and start talking to potential partners, you know, we'll, we'll, we'll make sure we go out and talk about it in public, but, but at this point, right now, our index is not investable. It does track the 75 most liquid names, and we think just the data that goes into it makes it really valuable for understanding what the share price, based on our derived, you know, algorithms and our, and our index, is setting for these companies, and we've gotten tremendous feedback on that already. I just say, stay tuned. We think it's really exciting for the market. I know it's, it's, it's part of a, a group of nascent businesses, but in 2024 and beyond, we're really excited about expanding and starting to put more emphasis there. Right now, the index, is led by some really talented people, one individual we brought over from BlackRock, and we've, we've, we've seen some really positive feedback on it. Got it. That's very helpful. In terms of your expense base, in terms of employee headcount, do you feel comfortable where you are right now? Do you expect to increase your headcount in specific area, given that we see some recovery in the market? What are you thinking about increasing or reducing or maintaining the headcount going into the... Yeah back half of 2023? The big answer is not yet. We, we've reduced down to about 319, I think was our last number. I think we were somewhere around 348 at the beginning of the year. While we're optimistic and we're excited about what we're seeing, we're not gonna do any kind of dramatic headcount expansion right now. We're gonna continue to watch it, and we're gonna move really slow in terms of any new, any new heads. Candidly, even if we see some improvement, we're still gonna take it slow. We're gonna, we're gonna definitely, be careful and cautious. This whole lean growth thing, we talk about it as an industry thing for unicorns, but it affects us too. you know, lean growth is the big sort of, term du jour to refer to the way the operations of private companies are trying to, to align with, to preserve cash. Well, we're, you know, we're in lean growth mode, too. Got it. Then in terms of adjusted EBITDA, I think many people or many investors are curious about when do you expect to generate positive adjusted EBITDA? Would that be in 2024, 2025 or beyond? How should investors think about your cash burn and your ability to kind of make it to the other side of the world? Yeah. Well, we've made a commitment, and I'll double down on it now, that we are materially lowering, lowering our cash burn in 2023 over 2022, and we're gonna do it again in 2024 over 2023. I'd say we still have a ways to go in terms of investing, so we will have a cash burn in 2024. We're just looking to decrease it and really preserve our balance sheet. As our performance and our stock price, you know, responds accordingly, then we'll readdress it, but we're really gonna be careful. We know that the market wants to see profitable, growing companies, and our view is that we're gonna incrementally, you know, decrease our cash burn and increase over time, obviously, our adjusted EBITDA. Right now, we're threading the needle, and as long as we reduce our burn, we're confident that when this market turns, we're gonna be in a phenomenal opportunity and position to exploit it. It's still pretty early, but we're really focused on Mark Lee, our CFO, who's on this call, and he and I have, have run this company when it was private, in a very careful manner in terms of cash consumption. We intend to continue to do that. Got it. We got an interesting question from online. I, I think the question is, are SPACs in the rearview mirror at this point? I think it's related to the structure of Forge going public. Any, any comment on that? Yeah, you know, hindsight being 20/20 and all, what I recognize just personally is getting public through a SPAC was difficult. That time of the market may have passed, no matter how you got public, once you get there, you know, you've got to continue to tell your story and almost re-IPO yourself through ongoing roadshows. I'd say that we're not gonna see SPACs come back if we're not seeing an IPO market back. When we see the IPO market coming back, I'm probably a bigger bet kind of guy on the direct listing format and variations on a conventional IPO. I, I think the SPAC market may still be around, and there's probably always a reason that that exists for certain kinds of structured deals, but I don't see it being as broadly utilized as you saw it in 2020 and 2021, at least not anytime soon. Got it. I think we only have a, a few minutes left. Maybe my final question is, what is the key kind of, like, message you want to tell investors? Or maybe, like, put it in another word, could you please talk about what you are focused on, for Forge in the second half of this year, and what should investors, you know, focus on on Forge as well? I think, besides execution and making sure that we're optimizing performance for Q3 and Q4, we've given some indication. We've given some indication that we think our Q3 will be at or better than the current quarter we just reported on. We're heavily focused right now on building the next generation of technology for the space, with particular focus on institutions and on data. I'd say that's the area that we believe coming out of this period will continue to give us a competitive advantage and put greater distance between us and the other, competitors that are either still private or large public companies that are looking to move into the space. This is a complex space in terms of what's required around the infrastructure to standardize the technology, but you can see and hear that we will be making announcements going forward that support our focus on institutional and on data and on the core standardization of infrastructure. Got it. I think we're about time. Thank you, Kelly, for your time, spending time with us and make this fireside chat. Thank you all for joining us today. Thank you, Owen.