OTC Markets Group Reports Third Quarter 2021 Results

NEW YORK, Nov. 10, 2021 /PRNewswire/ --

Third Quarter 2021 Highlights:

• Gross revenues of $25.2 million for the quarter, up 42% versus the prior year quarter
• Operating income of $9.7 million for the quarter, up 77% versus the prior year quarter
• Operating profit margin of 39.5% versus 32.1% during the prior year quarter
• Net income of $7.5 million, up 68% versus the prior year quarter, driving a 68% increase in the quarterly diluted GAAP EPS of $0.62
• Announcing special dividend of $1.50 per share, and fourth quarter dividend of $0.18 per share
• Total cash returned to shareholders during the quarter of $2.1 million in the form of dividends
• 45 graduates to a national securities exchange during the quarter
• Significant growth in issuers subscribing to our OTCQX and OTCQB markets as well as Disclosure & News Service^®, with 561 and 1,067 companies on OTCQX and OTCQB, respectively at the end of the quarter
• Launch of our third Alternative Trading System, OTC Link^® NQB, offering a fully attributable matching engine model
• 90 subscribers to OTC Link ECN at September 30, 2021, up 21 versus September 30, 2020; approximately 39,000 average daily trades during the quarter, compared to approximately 10,000 during the same prior year quarter
• Virtual Investor Conferences^® business hosted 6 events during the quarter, with 118 companies participating 
• Implemented amendments to Rule 15c2-11, enabling our OTC Link ATS to act as a qualified interdealer quotation system

OTC Markets Group Inc. (OTCQX: OTCM), operator of the OTCQX^® Best Market, the OTCQB^® Venture Market and the Pink^® Open Market for over 11,000 U.S. and global securities, today announced its financial results for the third quarter of 2021.

"On September 28, the SEC's amendments to Rule 15c2-11 went into effect and marked the beginning of our role as a Qualified Interdealer Quotation System," said R. Cromwell Coulson, President and Chief Executive Officer.  "With a modernized regulatory framework, we are better able to serve our customers while enhancing regulatory compliance and increasing the availability of information for investors.  The technology foundation we have established around Rule 15c2-11 improves the value of our regulated markets for public companies, brings efficiencies to broker-dealer trading processes, and digitizes useful data for investors."

"We are pleased that our customers continue to see the distinct value proposition of our regulated markets and our suite of corporate services and market data products," said Antonia Georgieva, Chief Financial Officer.  "As a result of the strong customer engagement across our business lines, we delivered robust growth in revenues and income from operations. We were also pleased with our operating margin expansion and earnings per share growth as well as our continued ability to generate strong free cash flows and return value to our shareholders in the form of dividends."

• Gross revenues increased $7.5 million, or 42%, to $25.2 million.
• OTC Link revenues increased 60%, benefiting from elevated trading volumes on our OTC Link ECN and message volumes on our OTC Link ATS as well as growth in our QAP One Statement fees.
• Market Data Licensing revenues grew 18%, with growth in professional and non-professional subscribers driving a 12% and 39% increase in related revenues, respectively. The number of non-professional users of our market data increased 45%, reflecting the increased retail participation in the U.S. equities markets. Also contributing to the growth were revenues from internal system licenses, which increased 48%.
• Corporate Services delivered 57% growth in revenues, primarily driven by strong sales and a high number of issuers using our services to comply with current public disclosure requirements under Rule 15c2-11 in advance of the Rule's September compliance date. Our OTCQX market saw 55 new companies joining and revenues increasing 54%. Our OTCQB market welcomed 115 new issuers and delivered a 48% increase in revenues. We also saw a substantial increase in the number of companies subscribing to our Disclosure & News Service^®, driving related revenues up 101%.
• Operating expenses increased $2.2 million, or 20%, to $13.1 million, primarily as a result of a 20% increase in compensation costs, reflecting incremental headcount and higher incentive compensation as well as higher sales commissions. Contributing to the increase in operating expenses was also a 72% increase in professional and consulting fees, primarily driven by higher ECN related clearing and regulatory costs, and a 26% increase in IT infrastructure and information services, partially offset by lower occupancy costs.
• Operating income and net income increased 77% and 68%, respectively.
• Adjusted EBITDA, which excludes non-cash, stock-based compensation expense, increased 65% to $10.9 million, or $0.90 per adjusted diluted share.

Dividend Declaration – Quarterly and Special Cash Dividend

OTC Markets Group announced today that its Board of Directors authorized and approved a special cash dividend of $1.50 per share of Class A Common Stock and a quarterly cash dividend of $0.18 per share of Class A Common Stock.  The special dividend is payable on December 9, 2021 to stockholders of record on November 24, 2021. The ex-dividend date is November 23, 2021.  The quarterly dividend is payable on December 23, 2021 to stockholders of record on December 9, 2021.  The ex-dividend date is December 8, 2021.

Stock Buyback Program

The Company is authorized to purchase shares from time to time on the open market, from employees and through block trades, in compliance with applicable law.  The Company did not repurchase any shares during the third quarter of 2021.

On March 12, 2021, the Board of Directors refreshed the Company's stock repurchase program, giving the Company authorization to repurchase up to 300,000 shares of the Company's Class A Common Stock.  As of September 30, 2021, there are 300,000 shares remaining to be purchased under the Company's plan.

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 2021 Conference Call and Webcast

The Company will host a conference call and webcast on Thursday, November 11, 2021, at 8:30 a.m. Eastern Time, during which management will discuss the financial results in further detail.  The call and a replay of the conference call and webcast may be accessed as follows:

Dial-in Numbers: 1-877-665-5564 (Domestic); 1-470-495-9522 (International); Conference ID: 3375993

Call Replay Dial-in Numbers (available until November 25, 2021): 1-855-859-2056 (Domestic); 1-404-537-3406 (International); Replay ID Number: 3375993

Participants can access the conference via webcast at the following link (replay available until November 10, 2022):

https://edge.media-server.com/mmc/p/fuwtdp2a

OTC Markets Group's Quarterly Report for the quarter ended September 30, 2021, the earnings release, transcript of the earnings call and presentation will also be available in the Investor Relations section of our corporate website at www.otcmarkets.com/investor-relations/overview.  

About OTC Markets Group Inc.

OTC Markets Group Inc. (OTCQX: OTCM) operates the OTCQX^® Best Market, the OTCQB^® Venture Market and the Pink^® Open Market for over 11,000 U.S. and global securities.  Through our regulated OTC Link^® Alternative Trading Systems, the Company connects a diverse network of broker-dealers that provide liquidity and execution services.  We enable investors to easily trade through the broker of their choice and empower companies to improve the quality of information available for their investors.

OTC Link ATS, OTC Link ECN and OTC Link NQB are each an SEC regulated ATS, operated by OTC Link LLC, a FINRA and SEC registered broker-dealer, member SIPC.

To learn more about how we create better informed and more efficient financial markets, visit www.otcmarkets.com.

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Investor Contact:

Antonia Georgieva
Chief Financial Officer
Phone: 212-220-2215
Email: [email protected]

SOURCE OTC Markets Group Inc.

Related Links

http://www.otcmarkets.com