FRGE - NYSE

Hello. My name is Mallory, and I will be your conference operator today. At this time, I would like to welcome everyone to the Forge Global First Quarter Financial Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions]. Thank you. I would now like to turn the conference over to Dominic Paschel, Head of Investor Relations. Please go ahead.

Awesome. Thank you, Marie, and thank you, all for joining us today for Forge's first quarter 2023 earnings call. Joining me today are Kelly Rodrigues, Forge's CEO; and Mark Lee, Forge's CFO. They will share prepared remarks regarding the quarter's results and then take questions at the end. Just after the market closed today, we issued a press release announcing Forge's first quarter fiscal year 2023 financial results. A discussion of our results today is complementary to the press release, which is available on the Investor Relations page of our website. This conference call is being webcast live and will be available for replay. There is also an accompanying investor presentation on our IR page. 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 differ materially from those included in the statements. We discuss these factors in our SEC filings, including our quarterly report on Form 10-Q, which we also published recently. 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 on the IR page. Additionally, we have posted our first quarter supplemental information which we believe is helpful to understand the business. Today's discussion will focus on the first quarter 2023 results. As always, we encourage you to value both annual and quarterly results for a full picture of Forge's performance, which can be affected by unexpected events that are outside our control. With that, let me turn it over to Kelly.

Thanks, Tom. I'll start with some brief news and highlights before turning it over to Mark for the detailed financial overview for the first quarter. And then I'll come back and close some of the market insights that we are seeing from our data. Despite continued challenges posed by the markets in the first few months of 2023, we remain confident that Forbes is well-positioned for an eventual market rebound. On the Forge's platform, sell-side interest remains strong, and buy-side interest is improving. Buy-side indications of interest jump 37% in Q1, and sell-side indications of interest grew 12% from Q4. We also observed buy interest in a broader number of companies, a 20% increase in Q1 over Q4. While there is improving interest on both the buy and sell side. Q1 volumes reflected the continued uncertainty of market participants about the economic outlook and the health of the banking industry, which affected volumes in the quarter and impacted total revenue. We did see the take rate normalized compared to Q4 reaching 3.6%, up 29% quarter over quarter, and total custodial administration fee revenue grew to $10.8 million, up 9% quarter over quarter. In addition, our total custodial accounts increased from $1.87 million to $1.94 million, a 4% quarter-over-quarter increase. We're encouraged by the fact that while investors have remained cautious throughout the downturn, they are turning to us for proprietary data and unique insights to help them navigate this moment. Investors are watching unique signals in Forge’s private market data, including trade price discounts compared to last funding round, the bid, ask spread, and the rate at which companies exercise their right of first refusal or ROFR to time their entry or reentry into this market. We are also excited about the launch of our first index, the Forge Private Market Index, which we have designed to be the preeminent benchmark for actively traded private companies. We launched the Forge Private Market Index on May 4. Now, while other benchmarks that target this asset class often rely on stale funding data or fund level performance marks, the Ford's private market index reflects the recent performance and pricing activity, a venture-backed late stage companies that are actively traded in the secondary market. It's a tool that we believe, just like in public markets and other established asset classes, can be used to measure or attribute portfolio returns or track private market performance against other asset classes. The first index speaks to the opportunity we see in front of us to drive the solutions that investors need to fully participate in this asset class. We view this as a foundational stepping stone to a future where passively managed index solutions and other derived financial products drive increased liquidity and open access to a completely new market settlement. And we believe it marks a pivotal leap forward and a necessary leap forward in the development of an efficient, transparent, and liquid private market accessible to all types of investors. I'll now hand it over to Mark for a more detailed review of our Q1 financials.

Thanks, Kelly. We will continue to benchmark our discussion and Forge’s business performance in the first quarter compared to last quarter, as we believe it's more meaningful to focus our remarks on a comparison to the prior quarter, given the unique economic environment in play at this time. In the first quarter of 2023, Forge’s total revenue, last transaction-based expenses totaled $15.5 million from $16.7 million last quarter due to the continuing volatility we witnessed in the quarter. Total placement fee revenues less transaction-based expenses reached $4.6 million from $6.8 million last quarter. Due to the market conditions that Kelly touched upon, transaction volume for the quarter decreased to $128.2 million in Q1, while our overall take rate increased from 2.8% last quarter to 3.6% in Q1, which is more on par with our historical norms. Forge custodial cash balances, totaled $574 million in Q1, down from $635 million at the end of last quarter. The decline was largely driven by a spike of cash transfers. However, there are early indications in this quarter that following the Q1 spike, cash transfers have slowed significantly. While Ford's custody cash balances did dropped, the decrease was more than offset by the continued increase in the Fed funds rate, resulting in total custodial administration fees rising 9% in Q1 to $10.8 million up from $9.9 million last quarter. Total custody accounts totaled $1.9 million in Q1, flat from last quarter, assets under custody were $14.8 billion at the end of Q1 versus $14.9 billion last quarter, essentially flat. Total headcount decreased to 339 at the end of March. First quarter net loss was $21.3 million compared to $26.2 million last quarter. This improvement was largely driven by a reduction stop in compensation expense, along with other proactive cost saves. In the first quarter, adjusted EBITDA loss improved to $13 million compared to a loss of $14.3 million last quarter, as the expense savings in the quarter more than offset the slight decline in revenues. Net cash used in operating activities was $17.7 million in the quarter, compared to net cash used by operating activities of $9 million last quarter. This increase was for the most part due to the payment of roughly $8 million in annual bonuses after year-end, as we had previewed in our last call. Cash and cash equivalents ended the quarter at approximately $175.3 million compared to a $193.1 million last quarter. From a housekeeping perspective, our weighted average basic number of shares used to compute net loss was 172 million shares, and our fully diluted outstanding share count as of March 31 was 187 million shares. For the second quarter of 2023, we estimate 173 million weighted average basic common shares for EPS modeling purposes. In summary, we are continuing to monitor the state of the markets and manage our cost structure. Forge is committed to lowering our overall burn in 2023, and to being good stewards of our capital. I'll hand it back to Kelly for a brief market overview before we turn it over for questions.

Thanks, Mark. Before moving to market insights, I wanted to know the strategic initiatives of the Ford Board. Debra’s body Chief Technology Officer of Toast recently joined our goal. Debra's extensive leadership experience across world-class financial services, technology, and consumer companies makes for a valuable addition to our Board. We look forward to working with Deborah and leveraging her expertise as we continue to execute our long-term strategic plan and further scale the private market asset class for the future. Now moving on to market insights. As published in our April private market update, we noted that despite concerns over possible ripple effects from the Silicon Valley Bank and other bank collapses, as well as ongoing interest rate increases and recessionary fears, both public and private markets closed the first quarter showing some signs of resilience. The banking issues cascaded by the collapse of SVB did cause a temporary disruption in trading activities as many companies, investors scrambled to understand their exposure. But swift action by the government and regulators to stem the fallout seems to have avoided some of the worst-case scenarios. The banking crisis was an additional distraction and price dislocation continued in Q1 as investors remained cautious. As Forge has noted since we started publishing the private market update. Private markets generally lag public markets. We're monitoring the unique signals in forges private market data that we believe could be added to market participants' ability to identify the bottom and may also give indications of any signs of a rebound. As we published in our April private market update, we observed after several quarters of steep valuation declines through 2022 prices on closed trades held steady from Q4 to Q1, averaging about a 51% discount the last primary round in both quarters. We noted a slight narrowing of the bid-ask spread down to 21% from ‘23 at the end of Q4, and down from a peak of 28% in August of last year. And in Q1, we saw the rate at which companies are exercising the right of first refusal to buy back shares reach its highest level in the last two years, as I noted at the top of the call, we witnessed IOI activity on the Forge platform in Q1 compared to Q2 and a 20% increase in the breadth of issuers in which investors place bids. So, we feel encouraged about the interest and activity on the platform based on what we can see so far in the quarter. We expect second quarter market results to exceed those of Q1. We can sum up the sentiment in the market like this. Just like with public market investors, private market investors don't want to catch the following night, but they do want to be the first to pick it up. We're helping investors prepare for what comes next with actionable private market data and insights that investors need to find their reentry into this market. And we've said this before, but we're optimistic about our position when the market inevitably returns. At Forge, we continue to leverage our strongest assets, our team, our technology, and our prudent management of capital to build momentum and manage through this cycle. While there are many macro-economic factors out of our control, we have taken measured steps to support our business and come out of this period ahead, and we continue to make progress to deliver solutions, data insights, and trading capabilities that institutional investors will increasingly recognize as a competitive advantage and that all market participants can leverage to access and navigate the private market. Thank you. Valerie, can we please open to questions?

[Operator Instructions]. Your first question comes from Devin Ryan with JMP Securities.

Hi. This is Michael Falco on for Devin. Good afternoon. Wanted to start on the custody business. Obviously, custodial fees took another nice step-up in the quarter and the number of custodial accounts was also up. But Mark, I believe you mentioned a spike in cash transfers. Can you just provide maybe a little bit of insight on what drove that spike in transfers and maybe how we should be thinking about cash sorting dynamics from this point forward?

Hey, Devin. This is Kelly. I'm going to let Mark answer that question about cash, but I wanted to clarify one point that I made in the prepared comments. What I said is, we witnessed IOI activity on the Forge's platform in Q1 compared to Q2. I meant to say, compared to Q4. So, for those of you who heard that, the reference was comparing Q1 to Q4, not Q1 to Q2. And so that was a 20% increase in the breadth of issuers in Q1 over Q4 just to make that crystal clear. And so, I'm sorry, was this Mike or Devin?

This is Mike. But, yes, go ahead.

Okay. All right. Go ahead, Mike.

Mike, so your question was just looking for further detail in terms of the movements of cash at the press company, correct?

That's correct.

So, Mike, we specifically I was specifically referred to it as cash transfers, as opposed to I didn't specifically call out cash sorting, because from our perspective, our visibility, what we literally see is looking at the cash-in flows and the cash-out flows, in and out of the trust company. And as we see those transfers increase during Q1, going to other financial institutions, I think we would speculate that cash-burning is a major component, but we simply don't see the end destination. We don't know if that cash is going to be investing in higher-yielding securities and equities. We don't actually know kind of ultimately where the customers are moving their cash. So that's why we are kind of limiting our description to a cash transfer, right? And so, this is a number that I think, we have started to see, some movement toward the end of the year, and we saw we did see an increase in Q1. But as I noted earlier, there is a significant drop off in net transfers out as we have completed the month of April.

Sure. That's helpful. And then maybe just to shift gears a little bit on the operating backdrop. Kelly, I believe you mentioned some of the banking industry turmoil that impacted volumes during the quarter. And it sounds like there is maybe several positive factors that are indicating that the environment maybe stabilizing a little bit heading into 2Q. We are about halfway through the quarter. Is there any kind of quantitative insights that you can provide on how things would progress 2Q to date? And I guess what are the key indicators that we should be watching that may underlie a broader rebound in activity on the platform from here, trading activity that is?

Yes. So, we are not providing specific KPIs or metrics here. As I said, towards the end, we do have a view based on what we see right now that Q2 will do a little bit than Q1. Now, I did reference three different signals and we've talked about these before. And so, the combination of them just to reiterate or the bid-ask spread narrowing and really for the last six months, seeing that discounted closed pricing being consistent from the beginning of Q4 through the end of Q1. So that does indicate a flattening of discounting in the market. And then finally, those, those roper numbers, we had mentioned these last year at one point, cause they popped, but the roper numbers coming in at 11% is the highest. We've seen it in two years. I think in 2022 it was somewhere averaging around 6%. So, the fact that companies and insiders are buying back at this rate is another interesting signal for us. But those are the ones that I'd say our clients are looking at and we're tracking them closely too. But we're sort of letting the customers a forge make calls on where we are relative to the market, but we do look at those three signals optimistically.

Your next question comes from Rich Repetto with Piper Sandler.

Good morning, Kelly and Mark. And I guess the first question is on the take rate Kelly or Mark, it rebounded this quarter from the fourth quarter, and last quarter you talked about having to I guess seek liquidity on with third parties. Is that the reason why it rebounded that you didn't have to do that in the first quarter and what changed? Because certainly, we've seen how difficult a volume it was, but what changed was, I guess where liquidity was, I guess is the question to get that take right up.

Hi, Rich. This is Mark. So, yes, you kind of hit it on the head. What we called out in Q4 was a large increase in the number of transactions where we were working with external third parties and basically splitting the revenues on those transactions. And what happened in Q1 was that norm nor that number normalized to, I mean, we're always out there looking to complete trades and normally we can cross traits internally between buyers and sellers on the Forge network. And from time to time, we'll partner with outside third parties to complete a trade for the benefit of our customers. And we saw an unusual increase in activity in Q4 and Q1 kind of was a return to more normalized levels of the use of outside third parties in our trades.

Okay. And I guess I'm assuming that will likely -- could maintain itself going forward, if you could address that --

Yeah. Rich, I would say that when you looked at the prior year and you looked at the kind of various quarters, it was pretty common that one quarter out of a year we would see kind of a blip. And it's relatively random, it's situational based on the names that we're trading and the buying and selling interest in any particular given name. We had a blended rate of 3.3% for 2021 and 2022, so pretty consistent right year over year, and we are not suggesting any overall change in take rates going up or down broadly speaking, we are not raising prices. We are not dropping prices. And as we said before, the actual take rate in any given quarter will be a blend of the mix of business we're doing, whether that be institutional and more block oriented, more retail oriented, and or the use of third parties. So, there is multiple variables that can drive the take rate in any given quarter, but I think we are trying to share that our view in terms of overall limit take rates is relatively stable.

Okay. Thank you. And one last follow-up is sort of on the volumes, Kelly. And I'm just trying to see whether how things progressed maybe through the quarter. Was the banking -- did the banking crisis even though it's you sort of imply that it's healed now, but did that have an impact in the quarter? And then sort of tied to that is, the metrics that you are talking about, how long does it take when you see some improvements like you are fighting industry-wide headwind in sort of capital markets activity. And, like, how soon did these metrics, how correlated are they, I guess, with the turn, how quick do they predict the turn?

So, let me start with the first question, which was, we came into Q1 watching the pipeline and we continue to do that. The banking impact really happened in the second half of the quarter, and it's hard to quantify just based on the way things emerge in pipeline and ultimately close. But we know they disrupted, installed-trades, and that it delayed activity for some period of time. We didn't and don't prepare an exact number for how much it affected. But there were certainly a period there or where everybody was checking the brakes and looking at what was going to be the state of money that had to move, whether they could move it. So, there were a number of factors there that we were watching like everybody else day-to-day. We feel pretty good about where it is right now. But like everybody else, we are watching the broader bank, kind of regional bank sector right now as well. Now in terms of how long it takes for some of these metrics to deliver. We are a little bit in uncharted waters right now, because it's been, probably a few years since we have seen the market get disrupted. And given all the factors that are going on right now, it's really tough to predict it. I will say this, seeing the price and discounts sustained for close to six months is a positive indication that the discounts have reached kind of a correlation to the public market. And so, I'd say, we said for a while that, the private markets will react similarly to the public markets. It just takes them some time. I'd say, we believe we fully caught up now. And so, we are like everybody else watching other macroeconomic factors, which would indicate that, people should come back in. But the other interesting data point here that I just want to double-click on a little bit is the roper numbers. Because that's the one that says that, people who really know the performance of the company, because look, the ultimate trigger for more liquidity is more information and more volume. And I'd say in the Roper numbers, you see indications of buyers who have more detailed performance data on companies than anybody else. And the fact that they're buying at elevated levels to those buybacks that 12% is encouraging. We need to keep watching that one and we'll be sure to come back rich and report on that coming out of Q2. But we haven't seen company buybacks like this since 2020. So, we're watching it carefully.

Hey, Rich. I would add also, I mean, if you look at public markets in 2023 thus far the perhaps somewhat volatile or choppy public markets have kind of come off their lows from towards the end of the year. And as we talk about the private markets, it takes longer, right? That process of integrating information and price discovery is it's just more difficult in alternative assets and less liquid markets. But hopefully, the sign that the public markets have started to come off their bottoms and the stabilization of the valuations that we're seeing trade in the private markets hopefully that provides an indication that perhaps things will improve.

Got it. Thanks, very much. Very helpful, thank you.

Your next question comes from Owen Lau with Oppenheimer.

Good afternoon, and thank you for taking my question. Could you please talk about or give us an update on the headcount expectation this year? Do you still expect this to be kind of flat from, I think 339 employees? Any more color would be helpful. Thanks.

Hi, Owen. Thanks, for the question. Look, we are still operating under a headcount freeze. Obviously, there's attrition, there's backfilling, but overall, we're still operating with a goal to maintain our overall headcount flat. Obviously, we're going to continue to monitor kind of how the year evolves and what we see happening in terms of our credit volume and revenues. But at this point, we're still maintaining that flathead count posture.

Got it. That’s helpful. And then on private market index, how is it different, from other to competing private market index out there? Do you have any plan to monetize this index, like licensing to, as a manager of creating an exchange rate product down the role or it's still too early to say thanks?

Well, let me start and I'll let -- this is Kelly. I'm going to start and I'll let Mark jump in. He and I have been both very close to this, launches a strategic priority for us here at Forge. And I'll start by saying that the most significant differentiator as we sat back and watched for the last couple of years, others announced these private market indexes, which are largely based on last funding rounds. We fundamentally have believed those are stale data points, particularly as the market does what it does and goes down and demonstrates the kind of volatility that it's demonstrated. And both Mark and I have backgrounds in asset management ourselves and have seen fund marks that are put out by participants funds particularly have a lag effect in terms of reflecting the true value of what these companies trade at, particularly the ones that are most traded in this space. So, we really are excited about filling the gap around data and marks that represent the most actively-traded companies in the U.S. So, we feel really good about, how we stack up competitively. As it relates to the future, Mark, you might want to jump in here about our views and options going forward.

Owen, thanks for the question. As Kelly said, this is an area that we are both just super excited about. I think Forge is in a really unique position to lead the market, with this product. And just some really quick background, numbers for context, I think people are very familiar with indices in the public markets. There is over 5000 public market indices that are being used. There is about $12 trillion of money being managed in domestic equity funds, 54% of which employ a passive strategy. So, I think we all know and we are so familiar with major indices like the S&P 500 and Russell, NASDAQ, FTSE and we know how important they are to the markets on the public side. As Kelly said, I mean, there are some indices that are out there. I mean, you mentioned how the ones that are based on -- there are indices that are based on last funding round. And if you look at our index, supported by the market index, and you look at 75 names that compose them. If you look at all the underlying information that we are using to construct the index and calculate the returns, 90% of the names are based on information, that is three months or less, in terms of how relevant the information is versus longer dated and a 100% of our data is 12 months or less based on information 12 months or less. If you look at those same 75 names and you move or to base it on funding round data, then almost 90% of the names have a funding round and excess of one year. And when you looked at some of the other indices that are using funding round, they showed positive returns in 2022. And you just know that wasn't the case in 2022. So, the most important point and takeaway I think we are trying to stress is just how different and relevant the Forge private market index is. And to the second part of your question, I mean, we think it's a massive opportunity, right? I mean, the intellectual property the value of putting out index products. I think you guys are more familiar very familiar with kind of the profitability of some of these very large index companies. So, it's a high-margin, highly scalable business. We think there is tremendous opportunity. I think Kelly made a point of talking about how we think this opens the door to passively managed funds in the private market space, and I think we are well-positioned to take advantage of that. And so, we don't have any more details to provide at this point in time, Owen. But we are really excited and we think we are in the right place at the right time.

Your next question comes from Ken Worthington with JP Morgan.

Good afternoon. This is Michael Cho and for Ken. I guess I just wanted to, touch, on competition as well, just kind of Kelly, Mark, just giving your comments on ongoing volatility and press transaction volumes. I guess, one, are you kind of seeing, and given that it's been going on for some time now? Are you seeing any changes from a, from a competitive perspective? And then two, if we are in fact passing a trough in terms of volumes into Q2 and maybe beyond? I mean, is there an area that Forge would look to be more aggressive in terms of investments or rollouts or products and would you also be, at which point would you be uncomfortable unfreezing hiring as well? Thanks.

Okay. Well, let me start with the competition. We're clearly monitoring our competition as we've talked previously about our own strategy. We've clearly viewed the market as a global market and we think part of this moment in terms of difficulty in raising capital for anybody, I'd say our competitors are challenged to raise the kind of capital required that we think is important to invest at this stage of the private market. So, we're looking at our infrastructure investments and looking around at our competitors. And while we have seen a few announcements recently, we haven't seen anything that concerns us overly. We believe that the investments we're making in our current market data and custody infrastructure for institutions and the broader participants will help us come out of this time and prevail. We do expect some consolidation in the space. It's just natural because during difficult market times scale and capital balance sheet capital matter. So, we feel like we're in a really good place there. In terms of future investments, we're really focused on data and the announcement around the index is just one other facet of data. We think that the market needs data. We think that the market would benefit and liquidity would expand. In fact, when 2021 was full bore, people were asking me about what the next three to five years looked like and I said then we thought that transparency and information and standardization of tech were the key to creating more liquidity in the market. Had we gotten more of that investment underway, you would see a more liquid market in down times that we're seeing right now. So, you're still seeing the effect of an illiquid market right now and a need for more information. I think what that translates into for us is a continued investment in infrastructure around data and standardization of tech to allow more participants globally to participate in the private markets. And with that, we're looking at our own revenue composition. The recurring component of data and data subscriptions are really important to us. So, we're going to continue to stay focused on that and on the institutions that are lining up to enter the space for the very first time. I mentioned this on the roadshow, a year and a half ago, institutional investors that previously weren't in the private market are coming into it now. We've seen some disruption here where everyone's wanting to see where prices end up. And so, I'd say, going back to the data point and signals on the platform, we are really excited about where we sit right now. But I'd say, looking forward, probably being more aggressive in standardizing technology for institutions and for building out our data infrastructure and continued distribution of our data globally.

Okay, great. Thank you for the color. That's great. And then just want to quickly switch gears just on expenses. I guess, one is, is there anything to quit we saw at [indiscernible] .com? And I guess just outside of that, is anything to call out in terms of one first quarter comp? And then is that a kind of normalized number we should have in our head in terms of comp and maybe total adjusted expenses as well. Thanks.

Hold on. I think your first the first part of your question didn't come through if you could repeat it. It had to do with expenses, but I think it was not comp part. What did you say before the comp part of the question?

So, I was just asking about normalized comp, and I had referenced normalized stock comp as well. So normalized comp in 1Q is a normalized kind of number we should have same with stock comp and then kind of total adjusted expense as well. Thanks.

Okay. So, I'm going to I'm gonna let Mark address the Q1 comp number. I know he'd mentioned that we had our annual bonus number in that Q1. So, I'll let him get to that. But I just want to make one point before I turn it over. And that was you asked at the end of the previous question what would cause our headcount to go in the other direction? And clearly, it would be signals from the market that show the sustained improvement in our pipeline, and a recovery that was translating into volumes on the platform. I'd say, that's what we are watching if we were going to make any change in our direction around headcount and staffing. There is a ton we can do here, and we have had to really practice discipline around being focused on the things that we really need to build with the headcount and burn that we seek to achieve in 2023. So, we are not going to come off in that position unless we see real, sustained indications that our pipeline is improving. So, I want to make sure that gets heard by everybody on the call and I'll turn over the question relating to Q1 comp to Mark.

Hey, Michael. So Q1 comp represents a fairly normalized number. I mean, if you exclude incentive compensation, if you exclude stock compensation and you look at baseline salaries and wages and benefits, it is a good baseline. As you recall in Q4, we announced that we took a small reserve for some strategic reductions that we were making at the end of the year. And so, we realized those benefits in Q1. And in that sense, Q1 is a good baseline. Now the one thing I would caution though is that, particularly in our technology area, we employ a mix of employees and consultants and contractors, and our technology consultant contractors show up in the tech and communications line, separate from our wages and salaries. So, there is at times interplay between those two different rows of the income statement, right? If we were to add more employees and have less contractors or consultants, you might see an increase in wages offset by a decrease in the tech and comps line, or vice versa, right? If we were to add more consultants and contractors than at the expense of --or of employees then you might see some flip back and forth across those two rows. But yes, I think that, people related to costs are probably including stock comp about 70% of our total operating expenses. And I think Q1 is a good baseline for you. Now, the second part of your question was about stock compensation. And the answer is that yes, Q1 represents, a more normalized run rate. If you recall in 2022, we had explained, and in fact had provided forward guidance about stock compensation because we had this back of retention RSU related to the go-public transaction that had accelerated amortization. That started to amortize one month in Q2, three months in Q3, and one month in Q4. So, that portion of the retention orders used that accelerated has now all the first two tranches of that have all now been fully amortized. And so now what you're left with in Q1 is really a normalized runway rate for stock compensation, absent any changes that would approve from either new grant new stock grants or recapture our stock grants from people who are terminated or leave the company.

Okay. Great. Thank you, so much.

There are no further questions at this time.

Thank you, Mallory. We appreciate all of your time and we look forward to the coming conversations over the next couple of months on the road.

Thank you, Mallory. You can end the call.