Forge Global Holdings - Earnings Call - Q1 2025

Executive Summary

• Forge delivered its best revenue quarter as a public company: Total revenues less transaction-based expenses rose to $25.1M, +30% y/y and +37% q/q, driven by marketplace volume and several institutional block trades; adjusted EBITDA loss improved to $8.9M from $10.9M q/q.
• Versus consensus, revenue modestly beat while EPS missed: Q1 2025 revenue $25.10M vs $24.99M consensus*; EPS $(1.29) vs $(1.09)*. Mix shift to SPVs and large blocks lowered net take rate to 2.3% (from 2.8% q/q).
• Custody revenues softened as expected amid 2024 rate cuts: custodial administration fees fell to $9.3M (−6% q/q), with custodial client cash at $459.7M (−5% q/q).
• Strategic catalysts: data distribution partnerships (ICE for Forge Price™, Yahoo Finance private market hub) and a non-binding LOI to acquire Accuidity to add recurring asset-management revenue; buyback initiated (~315K shares at ~$13.15) and 1-for-15 reverse split restored NYSE compliance.

What Went Well and What Went Wrong

What Went Well

• Record revenue quarter on strong marketplace activity: “Revenue for the quarter totaled $25.1 million while marketplace revenue contributed $15.8 million on trading volume of nearly $700 million” (CEO).
• Strategic data partnerships expanding distribution and funnel: Agreement with ICE to distribute Forge Price™ and Yahoo Finance hub to surface private pricing to millions of investors.
• Improving operating leverage: Operating loss narrowed to $(16.5)M from $(18.7)M q/q; adjusted EBITDA loss improved to $(8.9)M from $(10.9)M q/q (ex-CFO transition cash costs, $(7.5)M).

What Went Wrong

• EPS miss and net take rate compression: Net take rate fell to 2.3% (from 2.8%) due to large SPV blocks at lower commission rates; EPS of $(1.29) missed consensus*.
• Custody fee headwinds from rate cuts: Custodial administration fees declined to $9.3M (−6% q/q), reflecting full impact of late-2024 rate reductions on cash administration.
• Higher opex tied to revenue generation and transition: Q1 operating expenses rose to $41.6M including ~$2.3M CFO transition costs and ~$2.9M variable expenses linked to revenue growth.

Transcript

Operator (participant)

Good morning. My name is Carly, and I will be your conference operator today. At this time, I would like to welcome everyone to the Forge first quarter fiscal 2025 financial results conference call. On today's Forge Global call will be Kelly Rodrigues, CEO; James Nevin, CFO; Lindsay Riddell, Executive Vice President of Corporate Marketing and Communications; and Dominic Paschel, SVP of Finance and Investor Relations. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. I would like to turn the call over to Lindsay Riddell. Ms. Riddell, you may begin.

Lindsay Riddell (EVP of Corporate Marketing and Communications)

Thank you, Carly. Thank you all for joining us today for Forge's First Quarter 2025 Earnings Call. Earlier this morning, we issued a press release announcing Forge's First Quarter 2025 financial results. A discussion of our results today complements the press release, which is available on our Investor Relations page. This conference call is being webcast, and we will show slides during this presentation. The replay of the webcast, as well as the slides, will be available via the IR page of our website shortly after the conclusion of this call. We will also post to that page our prepared remarks and investor supplemental document, which consolidates some relevant metrics. During this conference call, we may make forward-looking statements based on current expectations, forecasts, and projections as of today's date.

Any forward-looking statements that we make are subject to various risks and uncertainties, and there are important factors that could cause these actual outcomes to materially differ from those included in these statements. We discussed these factors in our SEC filings, including our quarterly report on Form 10-Q, which will be found on the IR page of our website after it's filed. As a reminder, we are not required to update our forward-looking statements. In our presentation today, unless otherwise noted, we will be discussing adjusted financial measures, which are non-GAAP measures that we believe are meaningful when evaluating the company's performance. For detailed disclosures on these measures and the GAAP reconciliations, you should refer to the financial data contained within our press release, which is also posted to the IR page. Today's discussion will focus on the first quarter 2025 results.

As always, we encourage you to evaluate both annual and quarterly results for a full picture of Forge's performance, which can be affected by unexpected events that are outside of our control. With that, I'll turn it over to Kelly, our CEO.

Kelly Rodriques (CEO)

Thank you, Lindsay and Dom, and thank you for joining us today. We're pleased to report our full Q1 financial results following a preliminary release of earnings on April 10th. Forge has been building momentum. Long-term strategic investments we've made in our technology, in the breadth of clients we serve, and in the diversity of investment opportunities we offer are gaining traction. We'll review some of the announcements we've made over the last month shortly. First, so as not to bury the lead, financial highlights for Q1 included achieving our best revenue quarter as a public company, driven largely by an improvement in our marketplace revenue. Revenue for the quarter totaled $25.1 million, while marketplace revenue contributed $15.8 million on trading volume of nearly $700 million.

The increase in revenue and volume was fueled by improved post-election market dynamics that drove a diversity of new and re-engaged interest in our platform, as well as several large institutional block trades that closed in the quarter. We're encouraged by the continued momentum of the private market, even amid macroeconomic volatility affecting the public market and exit environment. With the volatility and an unclear IPO outlook, the importance of the private market in providing liquidity for the expanding pool of long-time private companies and in providing access to a broad set of investors is only growing. In his annual letter to shareholders, BlackRock CEO Larry Fink said more Americans need access to private assets and that he envisions a future where private assets, including shares of private companies, make up 20% of every portfolio. We're building the ecosystem that enables that future.

We have announced several new initiatives in the last few weeks that we believe reinforce our leadership position in that future. In the last month, we launched a long-in-the-works Yahoo Finance partnership to deliver private market pricing information to tens of millions of monthly Yahoo visitors. Yahoo Finance now displays Forge Price performance charts on more than 100 companies and features the Forge Private Market Index as the benchmark for private market performance. We additionally announced an agreement with Intercontinental Exchange, or ICE, through which Forge Price, our novel proprietary pricing data set for private companies, will be distributed with ICE's suite of data offerings to its institutional client base. Both the ICE agreement and the Yahoo Finance partnership are validation of the integrity of our data and its relevancy to opening access to the full spectrum of participants in this market, from retail investors to large complex institutions.

We expect both to deliver more clients into the platform, whether as purchasers of our data or as participants in private market transactions, large and small. As our RIA grows beyond $1 billion in AUM, we are actively expanding our wealth management capabilities, both organically and through M&A, while laying the groundwork to deliver new financial innovations, including multi-asset funds and passive investing opportunities to this market. With that in mind, we also announced our intent to acquire Equity Capital Management, a specialized asset management firm focused on private investing, which would accelerate our expansion into asset management. Equity manages the Megacorn Fund, the first institutionally managed index fund that seeks to provide exposure to private late-stage companies by seeking to replicate the performance of the Forge Private Market Index.

The Megacorn Fund has recently filed an application with the SEC to register as an interval fund that would allow access to a diversified fund of private stocks by a broader investor set. We're already working with Equity as a partner and believe the ability of their business to contribute recurring revenue to complement what we're already building is compelling. We believe the role we are playing is critical to the private market's evolution and to expanding broad participation globally. Given our momentum, we're optimistic about the path ahead. Now I'll turn it over to James to dive deeper into our financial performance for the quarter.

James Nevin (CFO)

Thanks, Kelly. As we noted in our pre-release, improving market dynamics post-election further that carried into the start of the year, and several large institutional block trades contributed to our best revenue quarter as a public company. Strong marketplace revenue more than offset the expected decline in custodial administration fees, demonstrating the benefits of our diverse revenue model. As we noted on our last call, we experienced the full impact of the fourth quarter 2024 rate cuts in the first quarter, contributing to the expected decline in custodial administration fees. Focus on our costs remains a key priority for 2025, whilst balancing selective investment into our key strategic initiatives, including continuing to roll out enhancements to the Forge Next Generation platform.

We'll go into more detail about the higher quarter-over-quarter operating expenses in a moment, but after taking into account higher variable expenses directly linked to revenue growth and CFO transition costs, our core operating expenses declined compared to the last quarter. We are encouraged to see a continuing uptick in Forge-managed SPV volume during the quarter, reinforcing the value of our RIA business and supporting the strategic rationale behind the potential equity acquisition. As well as being strategically compelling, if completed, we believe the acquisition will be accretive to EPS and transformational to Forge's revenue streams by adding new recurring revenue. After the end of the quarter close, we also completed the planned 15-for-1 reverse stock split and have commenced our share buyback program.

Whilst announced tariffs and escalating trade tensions do not have a direct impact on us, the volatility in the public markets and heightened concerns about a potential recession are contributing to an unpredictable economic landscape, making business forecasting and decision-making difficult. However, our strong deal pipeline persists as we progress through the second quarter, and we continue to perform in line with our expectations. Now moving to our performance for the first quarter. This was our best revenue quarter as a public company, with total revenue reaching $25.3 million, up 36% from the last quarter. Q1 marketplace revenues were $16 million, up 85% from the last quarter. Trading volume increased 132% from $299 million to $692 million quarter-over-quarter, with an increased proportion of SPV volume, including several large block trades.

SPV trades generally close quicker, increase liquidity in the markets, and have the potential to produce stickier revenue for Forge as investors trade in and out of those fund vehicles. Net take rates declined from 2.8% to 2.3% in the quarter. The decline is primarily attributable to the rate achieved on the several large SPV block trades during the quarter. The impact of these factors on the quarter-over-quarter marketplace revenues are shown in the waterfall graph on the top right of the slide. Custodial administration fees totaled $9.3 million, a 7% decline from the last quarter. As expected, we experienced the full impact of the 2024 rate cuts in the quarter. Custodial client cash balances totaled $460 million at the end of the first quarter, down from the $483 million at year-end.

The impact of these factors on the quarter-over-quarter custodial revenues are shown in the waterfall graph on the bottom right of the slide. Our first quarter operating expenses increased to $41.6 million from $37 million. Looking at the waterfall chart on the bottom of the slide, you'll see the quarter-over-quarter changes in operating expenses, including a $2.9 million increase related to revenue generation, a $2.3 million cost for CFO transition, and an increase of $0.5 million related to our continued investment in our technology. Core operating expenses after these items declined $1.1 million, with quarter-over-quarter savings from our disciplined approach to spending and realization of the full impact of the cost actions we took in the second half of last year.

With regard to technology spend, as we have previously noted, we started to utilize offshore locations with some temporary increases in cost as we run parallel across locations to ensure operational stability. Savings in this area are expected to start towards the end of this year as we progress towards profitability in 2026. Our $16.2 million first quarter net loss was basically flat on the $16 million net loss in the previous quarter. Higher revenue net of transaction-based expenses were offset by higher operating expenses. In the first quarter of 2025, adjusted EBITDA loss was $8.9 million compared to a loss of $10.9 million in the prior quarter. Excluding the cash component of CFO transition costs, adjusted EBITDA would have been $7.5 million in the first quarter. Net cash used in operating activities was $12.8 million in the current quarter compared to $7.9 million last quarter.

The increase was primarily attributable to changes in working capital, the largest of which is the change in accrued compensation. During the first quarter, we initiated an investment program with $21.5 million invested in a portfolio of government, agency, and corporate securities at the quarter end. Our investment program is focused on maximizing return in line with the preservation of capital and support for our liquidity environments. We invest in highly rated debt securities with an average credit rating of AA. At quarter end, the average duration in the portfolio was less than three months, and the maximum maturity was six months. Combined liquidity, including the short-term investments we have made, was $93.1 million at March 31 compared to $106.3 million at December 31. Cash, cash equivalents, and restricted cash ended the quarter at $71.6 million. We have commenced repurchases under our previously announced share repurchase program.

As the market closed on May 6th, we have repurchased approximately 315,000 shares at an average price of $13.15 per share. This strategic action reflects our belief that Forge stock continues to be significantly undervalued, and opportunistically buying back stock represents a compelling opportunity for the company to increase shareholder value while maintaining the strength of balance sheets, positioning Forge for future growth. Finally, we are pleased to announce the completion of our previously approved reverse stock split, returning Forge to compliance with NYSE listing standards. You can see the before and after effect of the reverse split on our reported EPS and weighted average shares outstanding on the slide. We have also provided estimated second quarter and full year 2025 weighted average basic common shares for EPS modeling purposes. I'll hand it back to Kelly before we go to questions.

Kelly Rodriques (CEO)

Thanks, James. As James noted, and as many companies have reported, it's difficult to predict how the impact of tariffs will shape the economy going forward. What we know today is that Forge's pipeline remains strong. However, we are remaining cautious until we have more certainty about the impact of tariffs. In terms of market outlook, we're observing mixed signals since the start of the quarter. A number of companies reportedly paused plans for IPOs in the past several weeks, including Klarna, StubHub, and Chime. We've seen some softening in terms of buy-side demand and valuations, with the Forge Private Market Index down 1.9% in April. However, we've noted the less liquid nature of private markets tends to smooth the volatility, and you don't see the huge day-to-day swings of the public markets. That certainly remained true over the past five weeks.

We're also recognizing a growing acceptance among private market stakeholders that as IPOs get pushed farther and farther out, the private market can offer liquidity to bridge the gap for companies and their investors and shareholders. As demand for liquidity intensifies and even as volatility persists, we're preparing in coming months to launch key parts of our fully automated experience, which will drive more efficiency into this market to give private companies more visibility into and control of primary capital and liquidity options as they navigate an uncertain macro environment. With that, thank you for joining us, and we'll open it up to questions.

Operator (participant)

At this time, I would like to remind everyone, in order to ask a question, press star, then the number one on your telephone keypad. We'll pause for just a moment to compile the Q&A roster. Your first question comes from Owen Lau, the Oppenheimer.

Owen Lau (Executive Director and Senior Analyst)

Hi, this is Guru On for Owen, and thanks a lot for taking our question. I want to start with the Equity acquisition. Can you maybe just walk us through the rationale there, what opportunities you're seeing, and what the long-term playbook looks like with Equity? Specifically, can you maybe just touch on the role in driving recurring revenue? Thanks.

Kelly Rodriques (CEO)

Yeah, Guru, I'll start, and James, you can add if you'd like. As we've been reporting, we've recognized for the last couple of years that a bigger piece of the market was trading with less friction through our SPV fund structures. We started reporting the expansion of that AUM last year, and as we've reported most recently, we're at about $1 billion of AUM. In the background, we've been looking at the relationship between interest in a broader set of participants looking at buying into the market through a basket of either active or passive fund structures. We've been working with Equity Capital Management over the last, I guess, year to 18 months in supporting the rolling out of their Megacorn Fund and using our index to track it.

Our conclusion was that accelerating access through passive data-driven funds was going to be a big part of how the market evolved. Forge believes there's a unique opportunity, given our background, our history, the fact that we've got a custodial asset to start to bring an innovative set of products to market that could be packaged with custody and distributed through to wealth complexes around the world.

This is incredibly strategic because the underlying expansion of the AUM of single-name SPVs, as well as the scalability of a passive fund led by the leadership of Equity Capital Management, really looked like a strategic opportunity for us to not just build and expand our AUM dramatically, but have a bigger relationship with companies that make up the Forge Private Market Index and drive the underlying asset and data aspects of our business by acquiring more of the underlying shares required to feed that fund. We believe, not unlike the public markets, where you see ETFs and passive indexes really being the majority of what trades now, we saw that as a really important strategic part of our future. When you look at the revenue composition and the model itself, you're looking at very attractive, high-margin and recurring revenue lines for us. There's more to come.

We haven't fully announced the impact of this because we haven't closed the deal yet, but we just believe that the relationship between that and the platform and data itself is a really natural and strategic relationship. We're really excited about it.

James Nevin (CFO)

Yeah, and I think just to add that on the revenue side, Guru, thanks for the question. I think there are two elements. First, owning a suite of fund structures, whether they're single-name SPVs, baskets, or funds like the Megacorn Fund, produces a stickier flow of revenue into the platform as people need to trade in and out of those vehicles, but also the flow that comes from people having to invest in that and the fund getting those underlying liquidity. I think the second element is that part of the business will start to look more like a traditional asset manager. As you know, kind of those fees are recurring management fees in nature. As the AUMs continue to grow, we'll continue to get a benefit of that kind of growing recurring revenue stream.

Owen Lau (Executive Director and Senior Analyst)

Got it. Thanks a lot.

Operator (participant)

Your next question comes from Devin Ryan with Citizens.

Devin Ryan (Head of Financial Technology Research)

Great. Good morning, everyone. How are you?

Kelly Rodriques (CEO)

Great.

James Nevin (CFO)

Head on.

Devin Ryan (Head of Financial Technology Research)

Good. Good. Want to come back just on the SPVs and maybe approach it from a slightly different angle. Love to maybe just talk about the considerations of setting one up for a specific company. What are the considerations, and how many more single-name SPVs can you imagine over the next couple of years that are being traded on the platform relative to what you're seeing today? Interrelated, how are you feeling about distribution right now? What steps are you taking to expand relationships and provide access and drive more liquidity, whether that be partnerships with brokerages or RIAs or even institutional platforms? Kind of where are you from a distribution perspective for these? Thanks.

Kelly Rodriques (CEO)

Hey. As usual, great questions, Devin. Thank you. On the first one, the SPV structure itself and the considerations around it are pretty straightforward. We believe that any company that becomes interesting and big enough and mature enough to draw either liquidity interest or interest from investors should have an SPV on their cap structure. We've got about 100 of them now, and we envision there to be several hundreds in the coming years. Part of the consideration is that given the way company bylaws and private companies operate in terms of getting in and off from a cap table, it's just way more efficient for these structures to exist to allow investors or existing shareholders to come in and out of the company with less friction. The requirements to the board of directors, to the C-suite, just makes it more efficient.

Part of our technology consideration is to build sort of a multi-structure approach to how liquidity, including primary capital, comes in and out of a company. We believe that these SPV structures are really meant to provide a more efficient way to get in and out. Now, that's on the single-name side. When you start getting into large investment instruments that have multiple names, then you start addressing some of the issues of, I think, distribution. We already have RIAs and institutional investors trading in and out of our SPV structures. As James' comments indicated, in addition to having large block trades in Q1, many of those were in SPV structures. Institutions are participating in these at fairly high transaction sort of numbers here.

When you look at this concept of this SEC fund that Equity has announced, now that could allow a broader set of American investors to participate in the private markets through a passive instrument. The implication there for distribution is quite significant. The track record of the guys at Equity, given their history at Fidelity and their understanding of broad-based distribution, gets us really excited about the scalability factor of what that could mean. There is a really interesting dynamic relationship between having to run a large multi-company basket fund and its ability to get in and out of positions through SPVs that sit in single-name companies that are also part of the index. That is what makes this really interesting and strategic for us. I'll let James, you add anything if you'd like.

James Nevin (CFO)

No, I think you covered it, Kelly.

Devin Ryan (Head of Financial Technology Research)

Okay. That's great color, Kelly. Thank you. Just another follow-up that's also kind of multi-part here. We appreciate we're in an uncertain environment right now, but it would be great to just get a little bit more characterization around what you saw kind of through the first quarter and customers kind of re-engaging prior to maybe the tariff noise. Just curious whether it's broad-based or are there certain sectors or types of investors that are re-engaging the pipeline that you're talking about. Is that more sellers showing up or buying appetite? I'd love to kind of just dig in a little bit around that characterization. The large institutional block trades that you guys cited, I'm curious if that was just episodic or if that's also a condition of just the markets improving.

As the markets hopefully get better from here, that will just be a condition that probably we see moving forward here that could be some chunky revenues moving forward. Thank you.

Kelly Rodriques (CEO)

I think Q1, as everyone observed, was a moment where I think there was a tremendous amount of optimism that we were finally going to see macroeconomic conditions turn to a more open IPO market. I guess I would anecdotally characterize it as everybody was coming back into market. We saw institutions, individuals, and company-based programs kind of across the board. I'd say that AI is still a driving theme and probably the biggest sector in the market right now, and that trend will continue as far as we can see forward. I'd say really the only significant change in observation is around uncertainty around tariffs. I think that came at a point where people were optimistic. There were IPOs planning, and others were talking about it.

We track not only publicly filed intentions to go public or go IPO, as well as we just sort of listen to the market. I think we're really in a period of uncertainty. As James pointed out, the pipeline continues to be really favorable. We're sitting here in a moment trying to communicate a combination of optimism and the fact that there's a lot of good news happening at Forge and in the private market. At the same time, the backdrop is pretty unpredictable. We really can't give any further response than that. I think we're all just waiting to see what happens, but we continue to hold firm in terms of our optimism towards achieving what our view of Q2 is going to look like and what the guidance, or at least the consensus that's out there, would say. We'll wait and see.

James Nevin (CFO)

Yeah. I think on your second question, Devin, around large block trades, I mean, I think that is, we've had those in history. We've had a number of them through last year and prior periods. I think those will continue to be a factor. Now, whether they happen every quarter or happen two or three quarters a year, I think that's a little unpredictable. I think as our market grows and continues to see more volumes coming through our platform business, we will envisage a mix of trades from very large institutional blocks through to much smaller trades. As we talked about in terms of the various funds that will be coming onto the platform with the Equity Capital Management acquisition, those will potentially have much smaller check sizes. I think the range of trades you're going to see on the platform is only going to increase.

Devin Ryan (Head of Financial Technology Research)

Yep. Okay. That's great. Thank you all. Appreciate it.

Kelly Rodriques (CEO)

Thanks, Devin.

James Nevin (CFO)

Thanks, Devin.

Operator (participant)

Your next question comes from Ken Worthington with JPMorgan.

Michael Cho (VP and Equity Research Analyst)

Hi. Good morning, guys. This is Michael Cho for Ken. I just wanted to touch on the couple of other announcements you made during the quarter. It was nice to see the Yahoo Finance and Intercontinental Exchange announcements for Forge pricing data. I realize there's a number of priorities around index and private market data that you've been initiating, but I was hoping you could provide an update on the broader Forge data business just in terms of how things have been trending in terms of signing new clients and maybe the trajectory of revenues just given the various efforts around building up this business.

Kelly Rodriques (CEO)

Yeah, sure. I think part of what we see in 2025 is an evolution and maturing of our business model. I think I'll just make the commitment now. James and I have been working together now for four or five months, and we really want to start to deliver a clearer and deeper understanding of all of the things that contribute to Forge's revenue, including the data. What I believe these announcements most recently reflect is a strategy that we started last year, and that was really about having Forge and Forge's branded data be everywhere. The Yahoo deal and the fact that CNBC now uses us as a core part of their editorial on the private markets and the Intercontinental Exchange distribution arrangement really underlies the phase one of our strategy, which is get Forge's data everywhere and brand reliability and price discovery around Forge.

There's a bunch of little companies trying to spin up data offerings, and we think that Forge needs to bring the integrity and reliability across a range of participants. We care more about that right now and dominating that than we care about the quarter-over-quarter revenue contribution from data on a subscription basis. That having been said, we believe that the ICE deal, which is being sold by a salesforce that's bigger and bolder than just about anybody out there, is really targeting more institutions and more revenue generation on a going-forward basis. Like a lot of other people, we started selling direct into the market, and we've got a number of our existing clients using either Forge Price or Forge Pro. Until we get a steady and predictable stream of revenue from data, we will likely not report on data revenue separately.

Believe me, our view of the future of our marketplace, the platform with data, and the revenue generation that's highly technology-enabled and with higher margin, we look forward to talking about in future earnings calls. Today, we want Forge Price to be everywhere because that's what leads people to say, "Okay, if I want to sell it, if I want to buy it, I'm going to go there." If you click on that icon on Yahoo Finance, you're going to get dropped right into a qualifying page, and you're going to be able to drop right into a company that you want to get information on to see whether or not you want to buy it or sell it. Right now, that's where our focus is. I don't know if you'd like to add anything to that, James.

James Nevin (CFO)

No, I think that's good.

Michael Cho (VP and Equity Research Analyst)

Great. No, thanks for all the color. If I could just add the follow-up on just ticket volumes and take rates. I mean, as you call that, $700 million of volume, I mean, I do not think that is something we have seen since maybe 2021. If I compare today versus then, take rates are considerably different. I was hoping maybe you could talk through maybe the differences in that volume mix you have seen in Forge over the years that is impacting that take rate. Maybe given the increasing usage of SPVs and maybe more institutional mix from here, how do you think take rates kind of trend going forward?

James Nevin (CFO)

Yeah, thanks, Mike. I mean, I think over time, if you're comparing back to several years ago, I think there has been a shift in the mix of liquidity to be increasingly within SPVs and fund structures. And those structures, whether they're ours or third-party structures, do have fees embedded in them. So they traditionally charge a lower rate on those for trading. That mix is pushing down the rate a bit, as well as, as I said, the significantly large trades. Those do tend to come at a lower rate. In the quarters where we have kind of those big blocks like we had in Q1, that does affect it too.

I think over time, with a maturing of the markets and an increase in liquidity generally, I think the trend we've seen over the last few years, I would anticipate that trend kind of slowly continues in that right direction. I would also refer back to kind of the comment I made to Devin's question. I think we're going to see an increasing diversity in the types of liquidity through the platform from large to very small. Within that mix, we'll have a big diversity in the commission rates that we charge those different participants. I think this will continue to be a mixed question, quarter to quarter and month to month. Overall, as the market matures and liquidity continues to grow, I think we'll see a small decline over time.

Kelly Rodriques (CEO)

Look, I just add one comment to this. That is, I think beyond the diversity of participants, and I would say the quarter-over-quarter shifts in take rate in the recent year or two have really been indicative of in what quarter do we have relatively more institutional block trades versus less. A lot of what you see quarter to quarter is explained by that. I think longer term, the vision of Forge is to bring an incredible level of technical efficiency to this marketplace. In any marketplace prior to Forge, if you look at the fixed income marketplace, you'll see what's happened there to fee structures. You're going to see that over the long haul here.

If you watch the trend in take rates over time, particularly as we roll out some of the things that are coming, it's just natural that as we start auto matching, as we start really getting into making it more efficient, you're going to see the impact of that on take rate. As this market grows and gains momentum, and as you see products like the one we're talking about with liquidity come to market, you're going to see a natural reduction in the cost to participate in this market. We expect to lead that and drive that and not be the people impacted by it, but be the people causing it. That, to me, is part of what the leadership position is going to look like in this market over the next two to three years.

Michael Cho (VP and Equity Research Analyst)

Great. Thanks, guys. Appreciate all the color.

Operator (participant)

Again, if you would like to ask a question, please press star followed by the number one on your telephone keypad. Your final question comes from Patrick Moley with Piper Sandler.

Patrick Moley (Senior Research Analyst)

Yeah, good morning, guys. I just had one on regulation. There's been a big regulatory push recently to try to make it easier for retail to access private markets. I'd love to just get kind of your thoughts on the regulatory backdrop, what it means for you guys, and any kind of expectations or milestones that you expect to see here on the regulatory front in the coming months. Thanks.

Kelly Rodriques (CEO)

Yeah. Patrick, how are you? Great question. I just published an op-ed this week on the subject. We see this, and I've seen this for a decade as an issue. Our visits to Capitol Hill and to the SEC, there's a lot of interest within the regulators about how to balance the protections of individual investors and retail investors while also giving them access to a really exciting and high-performing asset class. We believe that there's a lot of attention right now on rewriting some of the rules around accredited investors. That's going to take whatever path it takes through the political and policymakers' offices in Washington. We really felt like, and this is teeing up the whole liquidity rationale, we wanted to get in the market with products that people could access now.

Our view is Yahoo's got something like 80 million Yahoo Finance visitors. When they show up to Forge, many of them do not understand that as a non-accredited investor, they cannot buy a single-name stock. Our view is, let's continue to support the market efforts to rewrite some of these rules to give access to a broader set of investors. We are working with policymakers on this now. We think it is really important. There are a number of people in that coalition that believe the same thing, including BlackRock and some of the people that we have mentioned in this announcement. Between now and then, our view is, let's give the market products that allow them to participate before those changes happen.

I think you're seeing that come from a lot of different sources, including many of the people in Washington across the aisle are looking at this and saying, "Those private companies are such a big part of our economy, and the growth of those private companies and the ability to invest in them should be accessible by a broader set of Americans." We continue to be super supportive of policies that do that. That is one of the reasons why we put that op-ed out most recently. Thank you for the question.

Patrick Moley (Senior Research Analyst)

Okay. Great color. Thanks. We are balancing a couple of earnings this morning, so I apologize if I missed it in your prepared remarks. Could you give any color just on your expectations around cash burn for the rest of this year and going forward? Thanks.

James Nevin (CFO)

Yeah, Patrick, we haven't given out any specific guidance around cash burn and won't, but we remain on track to hit our break-even points in 2026. We're expecting a cash burn in 2025 that'll be less than previous years. As a reminder, Q1 is our highest cash burn quarter, mainly as the result of paying out annual bonuses and the like, which is why you've seen the change in accrued compensation being the biggest driver of kind of cash change quarter over quarter. We continue to be confident on track to that kind of adjusted EBITDA break-even in 2026, which kind of basically is kind of cash-neutral kind of position.

Patrick Moley (Senior Research Analyst)

All right. Great. That's it for me. Thanks.

James Nevin (CFO)

Thanks, Patrick.

Kelly Rodriques (CEO)

Thanks, Patrick. Carly, unless we have any other questions, I think we'll conclude today's conference call.

Operator (participant)

Ladies and gentlemen, this concludes today's conference call. Thank you all for joining. You may now disconnect. Good bye.