My name is Guru Siddharth, and I work with analyst Owen Lau in covering the information services, exchanges, and digital asset space here at Oppenheimer. You know, as an introduction, Forge is a marketplace for private companies. It provides trading, data, custody, and other services to investors, companies, and shareholders. Today, we're pleased to have with us CEO Kelly Rodriques and CFO Mark Lee. Thank you for spending time with us today. Good to be here, Guru. 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. As a starting point, could you please briefly talk to us about what, what Forge does and what its value proposition is? Sure thing. So Forge is a global marketplace for private securities, and we believe that our value proposition is about three things fundamentally: one, providing access to a really exciting asset class that's emerging now in various forms but is a global phenomenon. Just about every financial institution in the world is looking at the private markets now. So we've got a marketplace that provides access. We have an ancillary product focus that also is integrated into our marketplace around derived data and data around pricing for private companies. This is something that we've believed in for quite a while. It really underlies the question of: How do people know what to pay? What's the informed information that you need to price it and to come into the market with confidence? This is also turning into an opportunity for asset managers to create passive products with our recently announced index. And then finally, we've got a custodial asset which holds private security. So that combination of access and data and custody is a value proposition that all is about access, and providing better insight into what you're investing in. Perfect. And as of today, Forge still generates most of its revenue from transactions, right? So how should investors think about Forge in the next three to five years? Well, we've seen, boy, a couple of years of pretty big disruption in the space. So the transactional volumes coming out of the end of 2021 and through the first part of 2023 actually declined pretty dramatically. And so if you look back over the last 12 months, we've seen a recovery, a steady recovery. We've now talked publicly about our 5th consecutive quarter of being up. So the transactional revenue is now just becoming the majority of our revenues again, as they were in the timeframe between 2018 and 2021. But I'd say over the next handful of years, as we lead the expansion globally and we see volumes return, we believe that in addition to transactional revenue, you will see the emergence of a material part of our revenue coming from a combination of derived data and data-enabled capabilities and services. So, we haven't made public statements recently about where that is now, but we do believe that in the future, Forge will be a business that is about high-margin transactional revenue and, and high-margin data, related revenue. I will say, though, that on the subject of take rate, we expect that with the investments we're making now in the next-generation platform, which we can talk about later, we believe that will expand the scalability of this platform, pretty dramatically. And with that, as in every electronic market, you will see take rates decline as volumes increase. We think that, we're best positioned to manage and drive that going forward. Got it. And also, Forge, you know, reported earnings last week and announced an aspirational goal to achieve breakeven adjusted EBITDA in 2026. You know, can you maybe walk us through your revenue, take rate, and expense assumptions over there? And I also know that it's not guidance, and, you know, it's just more of a target. So how confident is the management team in achieving this target? So let me start off with a statement, then I'll let Mark Lee, our CFO, chime in and give a little more detail. What we've been looking at, Guru, is we've been looking at the progress towards the market opening back up and essentially all the underlying data that supports that. We've talked, and are gonna talk later in this fireside about the IPO market and its relationship with the market recovery and the private markets. But what we've essentially looked at and said is, if you extrapolate what we've seen in the last year, six months to a year, and you start to plan that as the trajectory for recovery looking forward, that combined with our cost controls... We made a pretty significant announcement about reducing a little over $11 million out of our cost structure. You could come to the conclusion that sometime in 2026, we'll be positive on an adjusted EBITDA basis. We thought that the market really was asking this of us, and in looking at it and listening to the market for the last two quarters, we decided that it was time for us to commit and disclose that as a target, and so I'll let Mark follow up with any additional commentary he would like to add. Yeah, I think Kelly covered it pretty well, Guru, but I'll just add that during the call, we talked about extrapolating our revenue growth that we've experienced in 2024 over 2023, and in our markets business, that was about 32%. So if you extrapolate that 32% growth forward for annual growth in our markets business, that's kind of how we get to a break even sometime in 2026. I would add that we think that 32% is doable. It was not a guidance when we talked about it specifically at the earnings call, but we do think that 32% is very possible. And we, you know, you go back to the fact that we're creating 10%-20% of all unicorns. There's a lot of upside in terms of getting more and more companies trading in the secondary market to give access to liquidity to their shareholders and allow other outside investors to invest in these, in these names. Got it. And, you know, as part of the same, break-even Adjusted EBITDA aspiration, you know, Kelly, you just previously alluded to the $11.3 million cost savings plan. So where or which facet is Forge really focused on to achieve this reduction by $11.3 million? Yeah. So let me start off by saying that, during this downturn, and we've been talking most of 2022 and the first part of 2023 about the broadening of the bid-ask spread and essentially a freezing of the market for a while. Most of our competitors that we looked at dropped about 75% of their revenue during that timeframe, and we dropped about 38%. Part of the reason for that was that, we had the most liquid global order book, that we know of in the world, and so there were still trading happening. It had just slowed pretty dramatically. But most importantly to this question, we made a decision to continue to invest heavily in the next generation platform of technology, and we're gonna talk about that in a second. What we decided coming into the middle of 2024 was that we had made this sustained investment for a few couple years, and we had another couple years to go, but that it was time to reduce our overall burn. We had been reducing our burn year-over-year, and we made the decision to cut in every part of Forge and in every level of management. Now, the one thing that we did preserve is a continued investment in our tech platform and all of the revenue-generating capabilities that are required for us to fully exploit this recovery and competitively actually gain an edge during this recovery. Those technology bets and those bets on continuing to focus on revenue opportunities such as derived data and index and the global expansion of Forge will continue even with this $11.3 million dollar annualized reduction. We're pretty excited about this, and we're hoping that the market sees this as an inflection point. Forge came out with a lot of people loving our story, and I think our story is as true and interesting today, if not more, than it was two years ago. But this is that inflection point that investors have been asking me about. We reported a big and exciting Q2 at the same time that we took significant annualized cost saves. Got it. Now, before, you know, before we start talking about the tech platform, can we maybe just discuss the IPO and the private market space in general? So, what are your views, and what's your take on the current IPO market outlook? So the outlook hasn't changed. I think we're watching very carefully the data, and some of the correlations that we reported on reference the fact that just capital raised for high-growth tech in 2023 IPOs has already exceeded all of 2022. And so we believe that that is a positive indicator that the market's recovering and that valuations are recovering. We've also seen a compression and a decrease of the last funding round discounts that are happening in the private secondary markets. That was at 60% a year and a half ago, and now it's cut in half at 30-32%. So what's happening is, it's taken a couple years for the private market to settle on valuations that are repricing companies. Many companies have continued to perform during this downturn and were able to raise capital at pretty attractive valuations. But a massive number of companies was were bogged down in what we call the Great Reset, which was an unwillingness for them to take additional investment capital at reset valuation multiples. This is now clearing out, and so we think as that discount to the last round funding narrows further and further, and as IPOs continue to pick up steam, we will benefit from this. And our outlook has been positive on this since the beginning of 2024. Got it. Got Got it, yeah. Now, you know, you talk about the discount to previous funding round reducing by 32%, and then, you know, there are certain other indicators that Forge also closely follows, right? You know, the buy side IOIs came in at roughly 55%, which is still a marked decrease from the 61% in Q1, right? Was this surprising, given, you know, the positive sign in other indicators? Like, you know, the bid-ask spread kind of narrowed down all the way to 6.4% in June. So what are the primary drivers behind this decline, and how should we read this? I think you should just read it as a stabilization of, of the buy and sell side. What I'll say is this: we had a record-breaking quarter on, on names, on brand-new names. Mark, remind me what that stat was, if you have it in front of you. Yeah, we have reported that on our platform in terms of IOIs, Guru, we are at record levels of the number of companies where we have an IOI represented, you know, in our books. So 473 companies on the sell side, 551 total between kind of buyers and sellers. So buyers are still higher than sellers. I'd say you will see some fluctuation as you move through quarters. That's not unusual. I think the key trend here is the overall number of names and that bid-ask spread at 6.4. We haven't seen a bid-ask spread at 6.4 since the peak of 2021. So that means that pricing reality for both buyers and sellers has set in. And so now, you know, we're just really excited about exploiting the opportunity for the next couple of years as we see this recovery. But the only other thing I'd add is one of the other things that we saw a pretty decent correlation when we look backward on was VC fundraising, and that's up 61% year-over-year. You saw a real freeze in VCs being able to raise capital last year, and now that's getting a lot better. Got it. Now we can maybe move on to, you know, Forge's new tech platform, Forge Pro. Could you maybe just, you know, introduce us to the platform one more time and give us a little more color on what the platform is actually intended to achieve? And when can we expect revenue from this platform to become a little more material? So let me first start off by explaining what Forge Pro is. We have a business that has a range of customer segments. On the marketplace, we've got individuals who buy and sell, and these are a combination of accredited investors, global high-net-worth players. We've talked previously about having buyers or sellers in 89 countries. And we've got employee sellers who are looking to find liquidity after working and helping to build these companies over 6 to 10 to 15 years. But a big piece of our business right now, probably the biggest, are institutions. These are family offices, capital markets desks, asset managers that buy their underlying assets here or that buy on behalf of a client. And what we believed was that we, in our next-generation platform build, we've got sort of two pieces of it. One piece is the automation and the operational side, which you do not see as a customer, but you feel it in your ability to transact faster and to see data and to essentially submit your indication of interest. The other side of it is the customer-facing side, which includes the onboarding and the way that you explore and prepare to purchase something. What Forge Pro does is it combines an IOI submission, think of it as an order management system, with the data component integrated into it so that you can research and look at pricing and see where things traded before you and look at IOIs and spreads and see what fund marks and valuations look like. The combination of putting that data at your fingertips, where you can also submit an order, we believed wouldn't necessarily be a revenue driver for the first year or two, but would enhance market engagement and generate more trading activity because the time and the cycles to make a decision would be narrowed. So what we've been doing is essentially distributing this as aggressively as we can to market participants and really using that as our first step to integrating data into trading. Forge Pro came out in Q1. We're sitting here now in Q3, and I don't believe we've disclosed yet the numbers of participants on it, but we will soon. We wanted to have at least a year of in-market feedback because we wanted to start demonstrating a little bit more exposure and feedback before we start talking about some of the KPIs. But we're really excited about Forge Pro. It's the first big piece that the market will see of the next generation platform. But I will say this: we've also rolled out our global order book with our fixed API, which allows institutions anywhere in the world to integrate into our order book. We first launched it earlier this year in our European entity. But this will allow probably, you know, one of the greatest assets that people don't understand about Forge is that we've spent, you know, 12 years building a global network of buyers and sellers. So competitively, this is an enormous asset, because this is the place where liquidity is most relevant and the buyer and seller pool is most deep, and this is meant to enhance the access to that buyer and seller pool that we've built. Got it. I know KPIs are coming soon, but can you maybe just remind us of the pricing strategy here? I mean, I believe in previous calls it was mentioned that at the moment, it's being, you know, offered at no additional cost to existing users, with the Forge Data being, you know, sold as a separate standalone piece on its own. Yeah. So here, here's how you should think about it. You can still buy, and there are certain kinds of customer segments that would just want to buy the data and use the data to build their models that aren't necessarily trading. They may be an asset manager, they may be a lender, and they will pay a subscription, an annual subscription of between $6,000 and $12,000. The integration of data into Pro was really meant for our biggest clients who trade with us, and so there's revenue generation there that's integrated into that model. And then, when we announced the Forge Private Market Index, and we announced the very first investable fund with our partner, Accuidity, which is a highly credible group of investors out of Fidelity, we started to derive revenue by taking a percentage of the AUM of these passive products. We believe this is gonna be a huge market, and we've seen already that the MSCI's of the world have made announcements here. BlackRock has made announcements. So you're gonna see index products coming to market, and our belief is that Forge will be one of the data providers, if not the prevalent data provider, because we have something that Preqin and Burgiss don't have. We've got fresh, live pricing and valuation data that's happening in a secondary market that trades, and IOIs that are trying to trade, and those other index providers are using stale fund marks. And if there's any question about this, you can ask any private investor of whether or not they believe that the mark held in a private equity fund or a venture fund represents the true value of that stock. You just saw a 32% discount number in Forge, so that should tell you something about where fund marks are, because most all of them are at the last funding price. So we have a lot of conviction over this, Guru. And so those are the areas of revenue that you'll see us expand. I'd say in the future, we'll talk about, as Forge opens up our platform, and we've been, in various ways, opening up our platform, whether or not we will shift to some form of access fee for Pro. But for right now, we're really trying to own the distribution channel and get it out there to as many institutional investors in the world that we can, that we can credibly rely on. Got it. You've kind of touched upon the richness of the data that Forge holds. Apart from just, you know, just the data that's backing all of this, where does Forge Pro stand in the larger competitive landscape for, you know, for such a product? And how does it measure against certain other popular products like, you know, Nasdaq Private Market? Yeah. So let me, let me be really clear. The competitive landscape is trying to build markets, a marketplace, but very few of them, including Nasdaq Private Markets, have any sort of investor network at all. This is one of the reasons why Carta failed after five years of talking about building a marketplace. They built it. It was, you know, it was called Carta X, and nobody showed up. Most of our competitors are either very small broker shops with five to 20 people, or, in the case of Nasdaq Private Markets, they're in other businesses. MPM is doing a very good job of providing administration for tender offers. So they'll conduct a tender that's run by a company who already has all their investors figured out, so there's only one buyer and one price, and that's the company. So many of our competitors have threatened to get into this space. There isn't another product like Forge Pro in the market, 'cause nobody else has combined data with a trading venue.... there are some small players that have done data, and there's some small brokers that have done brokerage, but nobody's brought it together. MPM does have a tender business, and they've made some announcements about getting into the secondary space, but we still don't see them at all in the marketplace, in the institutional side of the game. But look, I'd say over time, if any of our competitors spend 10 years plus building a network, then we will see them competitively. But I also think it's a real high bar to try and build global technology. The next-generation platform investment we're making is probably 10 times the revenue of our competitors. So to build this on a scalable level that's compliant and that can extend globally and integrate globally is a massive investment. So we continue to believe that the long-term bet here is Forge, and I will make one comment here to anyone who's listening, and that is that this market is gonna consolidate. There are dozens of small broker shops all around the world, and there's dozens of small data providers. You're gonna see consolidation in this space in the next 2 years. Got it. You know, we just briefly touched on Accuidity and the Forge Private Market Index space. You know, like you'd also just said, you know, there's a whole lot that's going on, right? BlackRock, Preqin acquisition, MSCI, Burgiss, and even recently, MSCI Burgiss came out with 130 private market indices. So how does this really, you know, how does this move the competitive market around, and where does Forge see itself in all of this? You know, let me, let me start, and then I'll let Mark jump in because he's really also been a huge advocate of this space. First of all, let me say that the announcements made by MSCI and BlackRock are a validation of the vision that Forge put down, you know, 3, 4 years ago around the expansion of the private markets into investable funds. And while it may not be known, Forge runs a number of SPV funds today, and we saw this market coming a couple of years ago. So we're really excited that big players are starting to say, "You know what? This is a real market." It validates the private market as something that now the largest asset manager in the world and one of the largest index providers in the world are now getting into the space. So our view is that this creates the next really exciting inning for expansion for Forge. Because we believe that as the owner of proprietary data on pricing, that for a fund or an index provider to enable asset management in this passive space, Forge is going to be in this market in a big way. So we look at those opportunities as opportunities for Forge to work with the BlackRocks, the MSCIs, the S&Ps. And so we think that we're really excited about that opportunity going forward. And so we're... You know, we, we've got some plans that we can't talk about yet, but we think Accuidity being the first investable fund out there, I think you're gonna start to see the emergence of 40 Act funds now, with a passive strategy, and Forge hopefully will be involved in those. But Mark, I'll let you talk a little bit more about how you see the market. Yeah. Thanks, Kelly. And Guru, some of this is informed by my prior experience working on the LP side of things at a major endowment. But I think it's really important to draw a distinction. I mean, it's exciting to see MSCI with access to Burgiss data and BlackRock with their acquisition of Preqin, kind of declare the importance of private equity and their build-out of indices. But what they're building and what they're providing are indices and information based on fund-level data, right? So they talk about this being very helpful for institutional investors for both benchmarking and asset allocation purposes. To be able to understand kind of the index of returns for fund managers across private equity or venture or real estate or oil and gas, right? That's very helpful to institutional investors that are accessing private markets through funds. Now, whether those turn out to eventually be investable index is another question. Will there be enough secondary liquidity in all of those funds to build an investable index on those 130 MSCI indices? We'll see. But they initially talk about this as being very, very helpful for benchmarking and asset allocation thinking. Whereas think about Forge. Forge is building an index based on the underlying names, the companies in the index. What we're building is more comparable to an S&P 500, right? An index composed of the actual underlying companies. Ours is an investable index. Think if in the public markets, if you had an index based on active funds, based on mutual funds, that's the comparable of what the MSCI and BlackRock data is. It's an index of fund-level data.... Whereas we're building an index, we have an index of the actual underlying companies. So we think that over time, and in the future, this is a true passive index that will be investable and allow institutions to get access to the private markets through a passive fund, right? Whereas the, again, the MSCI, the BlackRock, from what I know of it, this is, these are all indices based on the valuations and performance of active funds. You're getting an index of active fund management and private equity, which is very different than, and very distinct from what we will offer through our passive product and passive- Right. And look, we believe that what Mark just said is foundational to actually building a product that relies on the underlying and the secondary valuations that we track. So we think that we were first, and I'd say we believe that our impact in this and the ability to access the underlying is a critically valuable component to our strategy. I'll add one last point, Guru, is that when you take this fund-level data, the returns that are appropriate and relevant for investors is the return to them after fees and carry. So you're talking about returns for investing in funds after, generally speaking, taking out 2 and 20, right? And that's very different from our fund. When you invest passively, just like it happens in the public markets, the cost to invest is very low, right, into passive funds. So you're not paying that 20% carry typically. And so that's another big distinction between kind of an index of active private equity funds versus a pure passive fund. Got it. That's super helpful. I mean, that's a lot of nice color. Maybe shifting gears a little bit, you know, we just in a couple questions ago, we talked about how there's a lot of consolidation going on in the space, and over the next two years, we could see the number of companies out there decrease considerably. So is Forge actively considering M&A prospects, and what's its immediate strategy like? Well, interestingly, part of the thought behind our announcement was to send a message to the markets, and that message is that we came public as the largest player in our space, and we wanted the credibility that being public lent us. And that was because we wanted the trust of institutional partners and banks and companies themselves to know that when we say we're gonna do something, and we represent our numbers and our capabilities as a public company, they can rely on that. And the investment community, essentially, in current market conditions, and I know we're all waiting for interest rates to improve, has basically said to us, "Hey, Forge, we like your story, but we really want to have visibility and line of sight into when you're gonna be profitable." Now, why am I answering this question with a question about M&A? Because we believed our currency was going to help us consolidate as this market consolidated. Valuations have been down for everybody, including Forge, and so our message is: we're committed to being a profitable business in a reasonable timeframe, and we would like the private—we would like the public markets to reward us with a share price which allows us to use our currency to engage in M&A. Yes, we are looking. We have a whole team and bank partners that are looking in the U.S. and abroad for M&A opportunities, and we just need to see some recovery in our stock. We've posted five straight quarters of positive results and just announced, you know, this decrease in our cost structure. And so, we are very interested in M&A, but we also wanna have a currency in our stock price that can stabilize and move in the other direction, as we've seen with other parts of the market recover in the public space. So yes, and I'll just go to the next question, which is: What am I looking for? I'm looking for companies that have additional interesting data, and I'm looking for companies that have great relationships with issuers, the companies themselves, and with institutions. I'm looking at that on a global, on a global level, not just in the Europe, in the Europe markets. Got it, and maybe just, you know, in the last few minutes, can you maybe please talk to us about the progress that Forge has made in Europe? You know, Forge Europe successfully completed its first trade in the second quarter and generated a little bit of revenue. So what's the progress over there been like, and when can we expect revenue from Europe to become a little more material? Yeah. So let me make a clarifying point because I think there's been some writing about this that was a little inaccurate. So we have not yet achieved our BaFin license. We're still operating under an umbrella license. We did apply for BaFin. It's quite involved and quite expensive, but we're still operating both in the U.K. and in Germany under an umbrella license. Revenues started in Q2 and are picking up. I'd say over the next couple of years we expect revenue in Europe and the U.K. combined to become material. But the European market is between, you know, two and four years behind the U.S. market. Here's what's really exciting about it, though. In just about all of the trades we've done so far, it is matching a European, or U.K. counterparty to a U.S. buyer or seller, and this is an important competitive point to make. Our ability to scale globally is based partly on our ability to have an extensible network that can serve as a strong counterparty to interested buyers and sellers in European and other foreign markets. If you stand up a business in the U.K. or anywhere in Europe or in Asia to try and compete, you're going to have a very difficult time unless you have a counterparty that's in the robust U.S. market. And so we believe we're uniquely positioned right now, and virtually all of our trades are happening because we're matching U.S. buyers to a European seller or a European buyer to a U.S. seller. So, we're excited about this. The revenue, internal forecasts that we've made for Europe, so far and into 2025, as we can see it, are in a place that we're satisfied with. And so look for 2025 and 2026 to be the years that we start seeing revenues in the $ millions. Got it. I think we're just about time. Kelly and Mark, any, any closing remarks for us? Anything you'd want to highlight? You know, I just wanna say that, you know, this is a really interesting point. I made the point at the beginning that this is an inflection point. We're still building this next-generation platform. I think it's important for everybody listening to understand that in the next 12-24 months, we're gonna get additional efficiency gains that will contribute to our gross margins in 2025 and 2026. So beyond the actions that we've taken now, a high amount of broker and operations efficiencies will start to drop to our bottom line. And if you look at that, combined with the recovery of the market, I really believe this is the moment, and a really interesting moment, as investors look at Forge as an opportunity for the future. We're happy to take, and we do have some investor meetings scheduled, but happy to take additional investor meetings beyond this conference. And thank you, Guru and Owen, for having us. Thanks a lot, Kelly, and thanks a lot, Mark. I think we're past time. Thank you once again for joining us today. Thanks.