OTC Markets Group Announces Third Quarter 2015 Financial Results

NEW YORK, Nov. 11, 2015 /PRNewswire/ --

Third Quarter 2015 Highlights:

• Unaudited third quarter 2015 GAAP diluted EPS of $0.26 and adjusted diluted EPS of $0.46
• Revenues grew 19% to $12.9 million from the prior year quarter
• Operating profit margin of 37%
• Special dividend of $0.60 per share
• Quarterly dividend of $0.14 per share
• 20 graduates to a national securities exchange

OTC Markets Group Inc. (OTCQX: OTCM), operator of Open, Transparent and Connected financial markets for 10,000 U.S. and global securities, today announced its financial results for the third quarter 2015.

"During the third quarter, we continued to execute our strategy of delivering elegant, reliable and cost-effective public trading markets and information services that provide unique value for broker-dealers, market data users and corporate clients," said R. Cromwell Coulson, President and Chief Executive Officer.  "The OTCQB Venture Market has completed the initial phase of its transformation into a better regulated, more transparent, world-leading venture market for developing companies. We also recently proposed amended OTCQX Rules that will strengthen financial standards, enhance our current rules that prohibit penny stocks from qualifying for OTCQX by adding a continuing penny stock prohibition, and introduce corporate governance standards for U.S. companies based on common sense, best practices that we believe are already followed by the majority of OTCQX U.S. companies.  These amendments will allow investors, regulators and market participants to more easily identify our strongest and most investor focused companies and further differentiate the OTCQX Best Market." 

"Our OTCQX Best Market and OTCQB Venture Market now provide public trading, transparency and trust to a critical mass of U.S. and global companies, without the cost and complexity of a national securities exchange listing," Mr. Coulson continued.  "We are building America's venture market by giving companies the public market they need today so they can grow for tomorrow."

Third Quarter 2015 compared to Third Quarter 2014

Revenues

Gross revenues increased $2.1 million, or 19%, to $12.9 million.  This increase was primarily driven by the growth in verified companies on the OTCQB Venture Market, which contributed $2.2 million of the increase in gross revenues.  OTCQX subscription revenue increased $0.2 million, or 15%, primarily due to an increase in new OTCQX companies and an improvement in the 2015 annual OTCQX subscription renewal retention rate over 2014.  OTC Link ATS revenues decreased $0.2 million, or 7%, to $2.9 million, primarily related to a 23% decrease in fees from subscribers using FIX connections and a 12% decrease in license fees to quote and message due to the continued decline in active market participants.  Market Data Licensing revenues were flat at $5.1 million, as increases in sales of compliance data files were offset by a decrease in advertising revenue and reported non-professional user licenses.

Operating Expenses

Operating expenses increased $0.9 million, or 14%, to $7.7 million, primarily related to increases in compensation and benefits costs.  Compensation and benefits costs increased $0.8 million, or 20%, primarily due to annual compensation increases, higher salaries of new employees, a higher bonus accrual based on anticipated revenue growth, and an increase in other employee benefits related to severance payments.

Income from Operations and Net Income

Income from operations increased $1.1 million, or 33%, to $4.6 million, and operating profit margin expanded to 37% from 34% during the same prior year period. The increase in Corporate Services revenue was the primary driver of the increase in operating income and margin.

Net income increased $1.1 million, or 59%, to $3.1 million, primarily due to the increase in operating income and a decrease in the effective tax rate.  The effective tax rate decreased due to favorable provision-to-return adjustments for the federal and state tax returns filed in the quarter, which resulted from changes in estimates related to state and local apportionment rates.  Net income per diluted share increased 53%, to $0.26, as compared to $0.17 during the same prior year period.

Adjusted EBITDA

Adjusted EBITDA, which excludes non-cash stock-based compensation expense, increased $1.2 million, or 29%, to $5.4 million, or $0.46 per adjusted diluted share, during the third quarter of 2015, as compared to $4.2 million, or $0.36 per adjusted diluted share, during the same prior year period, primarily due to the increase in income from operations.

Dividend Declarations – Quarterly Cash Dividend, Special Dividend

OTC Markets Group also announced today that its Board of Directors authorized two dividends on its Class A Common Stock: a special cash dividend of $0.60 per share and a quarterly cash dividend of $0.14 per share.  The special dividend is payable on December 7, 2015 to stockholders of record on November 23, 2015.  The ex-dividend date is November 19, 2015.  The quarterly cash dividend is payable on December 22, 2015 to stockholders of record on December 8, 2015. The ex-dividend date is December 4, 2015.

Non-GAAP Financial Measures

In addition to disclosing results prepared in accordance with GAAP, the Company also discloses certain non-GAAP results of operations, including adjusted EBITDA and adjusted diluted earnings per share that either exclude or include amounts that are described in the reconciliation table of GAAP to non-GAAP information provided at the end of this release.  Non-GAAP financial measures do not replace and are not superior to the presentation of GAAP financial results, but are provided to improve overall understanding of the Company's current financial performance.  Management believes that this non-GAAP information is useful to both management and investors regarding certain additional financial and business trends related to the operating results.  Management uses this non-GAAP information, along with GAAP information, in evaluating its historical operating performance.

Third Quarter 2015 Conference Call

The Company will host a conference call on Thursday, November 12, 2015 at 8:00 a.m. Eastern Time, during which management will discuss the financial results in further detail.  The conference call and replay of the conference call may be accessed as follows:

Dial-in Numbers: 1-877-407-0789 (Domestic); 1-201-689-8562 (International)

Replay Dial-in Numbers (Available until November 26, 2015): 1-877-870-5176 (Domestic); 1-858-384-5517 (International); Replay PIN Number: 13624184

The earnings release and transcript to the earnings call will also be available in the Investor Relations section of the corporate website at www.otcmarkets.com/investor-relations/overview.

OTC Markets Group's Third Quarter Report is available publicly at www.otcmarkets.com.

About OTC Markets Group Inc.

OTC Markets Group Inc. (OTCQX: OTCM) operates Open, Transparent and Connected financial markets for 10,000 U.S. and global securities.  Through our OTC Link® ATS, we directly link a diverse network of broker-dealers that provide liquidity and execution services for a wide spectrum of securities.  We organize these securities into markets to inform investors of opportunities and risks: the OTCQX® Best Market; the OTCQB® Venture Market; and the OTC Pink® Open Market.  Our data-driven platform enables investors to easily trade through the broker of their choice at the best possible price and empowers a broad range of companies to improve the quality and availability of information for their investors.  To learn more about how we create better informed and more efficient financial markets, visit www.otcmarkets.com.

OTC Link ATS is operated by OTC Link LLC, member FINRA/SIPC and SEC regulated ATS.

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Investor Contact: 
Daniel Zinn
General Counsel
Phone: 212-896-4400
Email: [email protected]

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SOURCE OTC Markets Group

Related Links

http://www.otcmarkets.com