Executive Summary / Key Takeaways

• Transformative Growth & Path to Profitability: Forge Global is executing a strategic pivot, leveraging its next-generation platform and recent Accuidity acquisition to drive record marketplace revenue growth and narrow its adjusted EBITDA losses, targeting breakeven in 2026.
• Technological & Data-Driven Moat: The company's API-first Next-Generation Platform, proprietary Forge Price, and Forge Pro institutional trading capabilities are creating a significant competitive advantage, enhancing market efficiency, transparency, and client engagement.
• Expanding Access & Recurring Revenue: Strategic initiatives, including the Accuidity acquisition and the development of registered funds through Forge Global Advisors, aim to democratize private market access for a broader investor base and shift revenue towards more predictable, recurring streams.
• Resilient Amidst Macro Headwinds: Despite an unpredictable macroeconomic environment and IPO market uncertainty, Forge's diversified liquidity sources, strong pipeline, and disciplined cost management position it for continued growth, with H2 2025 organic growth rates expected to align with H1 performance.
• Undervalued Opportunity with Risks: Management believes the stock is undervalued, evidenced by a share repurchase program, but investors should monitor the remediation of a material weakness in internal controls and ongoing macroeconomic volatility.

The Private Market's Evolution and Forge's Central Role

The private market is undergoing a profound transformation. Private companies are choosing to remain private for extended periods, fueling a surging demand for sophisticated capital and liquidity solutions. Simultaneously, institutional and individual investors are increasingly allocating capital to alternative assets, fundamentally reshaping modern investment portfolios. This confluence of factors creates a massive opportunity for modern private market infrastructure—technology that can streamline transactions, enhance transparency, and scale across diverse investor types. This is the fertile ground where Forge Global Holdings, Inc. (NYSE:FRGE), founded in 2014, has cultivated its expertise, evolving from a niche trading platform to a technology-driven ecosystem committed to democratizing access to this burgeoning asset class.

Forge's journey began by facilitating trading in high-profile private companies like Uber and Airbnb (ABNB), a focus that broadened as the market matured. Its public listing, a strategic move, was intended to instill confidence and reinforce its leadership in the evolving private market. Over the years, Forge has strategically invested in a comprehensive suite of solutions, including its marketplace, private company solutions (PCS), asset management, and data offerings. This integrated approach is designed to support client engagement from inception to completion, fostering powerful network effects that fuel participation and growth.

Technological Edge: The Next-Generation Platform and Data Moat

At the heart of Forge's competitive strategy lies its proprietary technology. The company has invested heavily in its API-first Next-Generation Platform, launched in Q2 2025, which integrates trading infrastructure, proprietary data, asset management, and custody into a seamless client experience. This platform is designed to reduce friction and enable investors to transact with greater confidence and autonomy. Its extensible architecture allows for integration with various external platforms, amplifying its reach.

A key technological differentiator is Forge Price, established as the industry's most trusted pricing standard. This proprietary model provides daily pricing for nearly 200 of the most sought-after private companies, offering unparalleled transparency in a traditionally opaque market. Forge Price underpins the company's 66 indices, including the Forge Private Market Index and the Forge Accuidity Private Market Index. The tangible benefits are clear: in June 2025, the median bid-ask spread on the platform compressed to a low of 3% (the lowest since February 2021), and the median discount to the last funding round narrowed sharply to 9% from 21% in May. These metrics directly reflect rising price confidence and active engagement, enabled by Forge's pricing transparency.

Further enhancing its technological moat, Forge introduced Forge Pro, an advanced institutional trading platform. This platform delivers sophisticated order management and data capabilities to 400 of Forge's most sophisticated investor clients, who collectively represented over 16% of the company's revenue through the first ten months of 2024. The company is also developing an automated negotiation process as part of its rolling release of new features, aiming to further streamline transactions. These innovations contribute directly to Forge's competitive advantage by improving operational efficiency, attracting a broader range of participants, and strengthening its pricing power. The strategic intent is to lead the market in efficiency, naturally reducing the cost of participation over time.

Competitive Landscape: Specialization vs. Scale

Forge operates in a competitive landscape alongside larger, more diversified financial infrastructure players like Nasdaq, Inc. , Intercontinental Exchange, Inc. , and CBOE Global Markets, Inc. . While these competitors have established brands and extensive networks in public markets, Forge distinguishes itself through its specialized focus on private equity and venture capital secondary markets.

Forge's competitive advantage stems from its deep network, built over a decade, encompassing 20,000 institutions and hundreds of thousands of accredited investors. This scale and reputation are difficult for new entrants or broader market players to replicate. While Nasdaq offers its Private Market platform, Forge's investor-centric approach and agile innovation in private asset tools provide a more tailored and efficient experience for its target audience. Similarly, against ICE's extensive data networks and institutional focus, Forge's platform emphasizes accessibility and data-driven insights, particularly for the retail-accredited segment. CBOE , primarily focused on options and futures, presents less direct competition, but its efforts in data analytics and private market tools highlight the broader industry trend towards private asset exposure.

Financially, Forge's growth trajectory can be more dynamic in private market segments during bullish periods, potentially outpacing the broader market. However, it lags in overall financial stability and scale compared to its larger rivals, which benefit from diversified revenue streams and robust profitability margins. For instance, Forge's TTM Gross Profit Margin of -36.24% and Net Profit Margin of -73.62% contrast sharply with Nasdaq's (NDAQ) 40% Gross Profit Margin and 15% Net Profit Margin, ICE's (ICE) 55% Gross Profit Margin and 23% Net Profit Margin, and CBOE's (CBOE) 39% Gross Profit Margin and 19% Net Profit Margin. This highlights Forge's current investment phase and the higher operational costs associated with building its specialized ecosystem. Forge's ability to maintain its competitive edge hinges on leveraging its niche expertise and continued technological innovation to drive efficiency and scale.

Financial Performance: Momentum and Strategic Investment

Forge's recent financial performance reflects a company in a significant growth and investment phase, demonstrating strong momentum in its core marketplace business while strategically managing costs.

In the second quarter of 2025, Forge achieved its second consecutive record-beating quarter of revenue, reaching $27.7 million, a 10% increase quarter-over-quarter. This was primarily driven by its Marketplace Solutions, which saw revenue climb 16% quarter-over-quarter to $18.6 million. Trading volume surged 9% quarter-over-quarter to $756 million, attributed to improved market dynamics, diverse interest, and larger average trade sizes. The net take rate for marketplace transactions also saw a modest improvement to 2.4% from 2.3% in Q1 2025, benefiting from a more evenly distributed volume mix with fewer large block trades. For the first half of 2025, marketplace revenue increased by a substantial 71% year-over-year to $34.6 million, with trading volume more than doubling to $1.45 billion.

Conversely, Custody Solutions revenue, primarily from custodial administration fees, saw a slight decrease of 2% quarter-over-quarter to $9.1 million in Q2 2025, and a 14% year-over-year decline for the first half to $18.4 million. This was largely due to lower cash administration fees, a direct consequence of declining custodial client cash balances (down 4% QoQ to $440.3 million) and the full impact of 2024 federal interest rate cuts. Despite this, total custodial accounts grew to 2.6 million (up 4% QoQ), and assets under custody reached $18.13 billion (up 3% QoQ), indicating continued client engagement and a successful "cash optimization program" yielding higher returns.

Operationally, Forge is demonstrating improved efficiency. Its adjusted EBITDA loss narrowed significantly to $5.4 million in Q2 2025, marking its narrowest quarterly loss as a public company. For the first half of 2025, the adjusted EBITDA loss improved by 33% year-over-year to $14.3 million.

Net cash used in operating activities also decreased from $12.8 million in Q1 2025 to $7.8 million in Q2 2025, primarily due to seasonal working capital movements related to annual bonus payments in Q1. As of June 30, 2025, Forge maintained a solid liquidity position with $54.3 million in cash and cash equivalents and $26.4 million in investments, totaling $81.8 million. Management believes this liquidity is sufficient for the next twelve months and the foreseeable future.

Strategic Initiatives and Outlook

Forge's strategic roadmap is designed to capitalize on the evolving private market landscape and drive towards its profitability target. A pivotal move was the completion of the Accuidity Capital Management acquisition on July 1, 2025, for $10 million cash and 1.2 million shares. This acquisition is expected to be EPS accretive and transformational, adding new recurring revenue streams and contributing a small positive adjusted EBITDA in its first six months of ownership. Accuidity manages the Megacorn fund, a 1940 Act fund that replicates the Forge Accuidity Private Market Index, poised to broaden access for retail and non-accredited investors.

The company is also aggressively expanding its data and wealth management capabilities. Partnerships with Yahoo Finance, ICE Data Services, and Fortune Media for distributing Forge Price data are validating the integrity of its data and expanding its reach to new clients. Forge Global Advisors, the company's RIA, continues to develop a range of investment vehicles, including index-based strategies and diversified exposure funds, further broadening access. Management is also closely monitoring regulatory momentum towards allowing private market access through 401(k) plans, viewing this as a significant extension of its access strategy. The company is even exploring tokenization of private market securities, seeking partnerships that align with its principles of issuer support and tight security connection.

Looking ahead, Forge remains steadfast in its commitment to achieving adjusted EBITDA breakeven in 2026. Management expects second-half 2025 year-over-year organic revenue and adjusted EBITDA growth rates to continue in line with the first half, acknowledging typical Q3 seasonality (lower revenues than Q2 and Q4). Cost discipline remains a core focus, with anticipated savings from offshoring technology development expected to materialize towards the end of 2025 and into 2026. The board's authorization of a $10 million share repurchase program, with 314,701 shares already bought back at an average price of $13.15, underscores management's belief that Forge stock is currently undervalued.

Risks and Challenges

While Forge's trajectory appears promising, investors must consider several risks. The company identified a material weakness in internal control over the calculation of fair value of warrant liabilities, specifically in capturing changes in outstanding warrants and identifying errors in fluctuation analysis. While a remediation plan is underway, its effective implementation is crucial.

The macroeconomic environment remains unpredictable, with ongoing volatility in public markets, concerns about a potential recession, and the impact of tariffs contributing to an uncertain landscape for business forecasting. Although the IPO market showed renewed strength in H1 2025, with over 174 companies going public and raising $31 billion, management remains cautiously optimistic, not expecting a "coiled spring snapback" but rather a "steady reasonable stream" of activity. Seasonality, particularly the quieter Q3, also presents a recurring challenge to revenue consistency.

Conclusion

Forge Global stands at a pivotal juncture, transforming from a specialized private market platform into a comprehensive, technology-driven ecosystem. Its strategic investments in the Next-Generation Platform, proprietary Forge Price, and the Accuidity acquisition are not merely incremental improvements but foundational shifts designed to democratize private market access and establish Forge as the "central nervous system" of this evolving asset class. The company's ability to drive record marketplace revenue growth, narrow adjusted EBITDA losses, and attract a diverse range of participants, even amidst macroeconomic uncertainty, underscores the strength of its strategic execution and technological leadership.

While challenges such as internal control remediation and market volatility persist, Forge's clear path to adjusted EBITDA breakeven in 2026, supported by disciplined cost management and the promise of recurring revenue streams from its expanded asset management capabilities, presents a compelling investment thesis. The company's unique blend of network effects, data transparency, and an integrated platform positions it to capture significant value as private markets continue their structural growth. Investors should closely monitor the successful integration of Accuidity, the continued adoption of its next-generation platform, and the realization of anticipated cost efficiencies, all of which are critical indicators of Forge's potential to deliver durable, compounding growth.