Third Quarter 2024 Highlights:
- Gross revenues of $27.4 million for the quarter, up 1% versus the prior year period
- Operating income of $8.6 million for the quarter, up 1% versus the prior year period
- Operating profit margin of 32.4%, versus 32.7% for the prior year period
- Net income of $7.4 million, up 1% versus the prior year period, and quarterly diluted GAAP EPS of $0.61, unchanged from the prior year period
- Total cash returned to shareholders during the quarter of $2.2 million in the form of dividends
- Announcing special dividend of $1.50 per share and fourth quarter 2024 dividend of $0.18 per share
- 566 OTCQX® and 1,062 OTCQB® companies at quarter end
- 7 graduates to a national securities exchange during the quarter
- 114 subscribers to OTC Link ECN as of September 30, 2024, up 6 versus September 30, 2023
- Approximately 35,000 average daily trades during the quarter versus approximately 28,000 during the prior year period
- OTC Markets Group announced that in July 2025, Pink Current will become OTCID - a Basic Reporting Market for companies that meet a minimal current information standard and provide management certification
- In September 2024, OTC Markets Group launched OTC Overnight, a new offering for overnight trading in OTC equity securities
- In July 2024, OTC Markets Group's wholly-owned subsidiary, OTC Link LLC, submitted its initial filing to create a new ATS for overnight trading of NMS securities, pending regulatory approval
NEW YORK, Nov. 06, 2024 (GLOBE NEWSWIRE) -- OTC Markets Group Inc. (OTCQX: OTCM), operator of regulated markets for trading 12,000 U.S. and international securities, today announced its financial results for the third quarter of 2024.
"In September, we announced OTC Overnight, which in concert with our plans to launch the new MOON ATS for overnight trading of NMS securities will allow our broker-dealer subscribers to offer investors access to thousands of exchange-traded and OTC global equity securities during Asian market hours, at European market open, and overnight in the U.S. market," said R. Cromwell Coulson, President and Chief Executive Officer. "In October, we announced an important initiative to transform the Pink Current market into OTCID - a basic reporting market for companies that actively engage with U.S. investors through ongoing disclosure, management certifications, and timely share data. Increased issuer engagement will drive market quality, price efficiency, and trading volume by improving information availability, data integrity, and compliance."
"Our business delivered stable results with modest increases in our gross revenues as well as operating and net income in the third quarter of 2024," said Antonia Georgieva, Chief Financial Officer. "OTC Link revenues increased as a result of higher trading volumes, while Market Data Licensing saw a slight decrease in revenues as declines in certain products offset growth in others. Corporate Services also experienced lower revenues due to a decrease in the number of customers. We remain committed to developing our products and solutions, supporting our subscribers, and growing our business to create sustainable, long-term value per share."
Third Quarter 2024 compared to Third Quarter 2023
Financial Highlights
| Three Months Ended September 30, | ||||||||||||||
| (in thousands, except shares and per share data) | 2024 | 2023 | % change | $ change | ||||||||||
| OTC Link | $ | 5,240 | $ | 4,532 | 16 | % | 708 | |||||||
| Market data licensing | 10,862 | 11,002 | (1 | %) | (140 | ) | ||||||||
| Corporate services | 11,292 | 11,503 | (2 | %) | (211 | ) | ||||||||
| Gross revenues | 27,394 | 27,037 | 1 | % | 357 | |||||||||
| Net revenues | 26,634 | 26,232 | 2 | % | 402 | |||||||||
| Revenues less transaction-based expenses | 25,199 | 25,078 | - | 121 | ||||||||||
| Operating expenses | 16,575 | 16,505 | - | 70 | ||||||||||
| Income from operations | 8,624 | 8,573 | 1 | % | 51 | |||||||||
| Operating profit margin | 32.4 | % | 32.7 | % | ||||||||||
| Income before provision for income taxes | 8,894 | 8,806 | 1 | % | 88 | |||||||||
| Net income | $ | 7,428 | $ | 7,381 | 1 | % | 47 | |||||||
| Diluted earnings per share | $ | 0.61 | $ | 0.61 | - | |||||||||
| Adjusted diluted earnings per share | $ | 0.89 | $ | 0.87 | 2 | % | ||||||||
| Weighted-average shares outstanding, diluted | 11,833,215 | 11,865,856 | - | |||||||||||
- Gross revenues of $27.4 million, up 1% over the prior year quarter. Revenues less transaction-based expenses remained flat to the prior year quarter.
- OTC Link revenues up 16%, relative to the prior year quarter. Transaction-based revenues from OTC Link ECN and OTC Link NQB up 24% due to higher volume of shares traded on those platforms. Contributing to the overall increase in OTC Link revenues was a 160% increase in certain connectivity revenue and a 20% increase in revenue from OTC Link ATS messages, with fee increases and a slightly higher number of messages contributing.
- Market Data Licensing revenues down 1% quarter over quarter. A 6% and a 7% decline in revenues from professional and non-professional users, respectively, combined with a 15% decrease in revenues from EDGAR Online, served to offset a 13% increase in revenues from internal system licenses, delayed data licenses, and certain other data services and a 19% increase in revenues from our Blue Sky data products, in each case due to a higher number of subscriptions to our data products and price increases for certain licenses.
- Corporate Services revenues down 2% quarter over quarter, driven by a 3% decrease in revenues from the OTCQB market and an 8% decrease in revenues from our Disclosure & News Service® (DNS) product, in each case reflecting a lower number of companies subscribing, which more than offset the impact of pricing increases. OTCQX revenues increased 3%, with pricing increases balancing out a lower number of companies on the OTCQX market.
- Operating expenses remained relatively unchanged from the prior year quarter. An 18% increase in depreciation and amortization due to timing of amortization charges for software placed in service in 2023 related to EDGAR Online, a 1% increase in compensation and benefits costs, and a 3% increase in IT infrastructure and information services expenses were essentially offset by a 9% reduction in professional and consulting costs, primarily due to the elimination of certain one-time integration costs related to EDGAR Online in the prior year quarter, and a 10% reduction in general, administrative and other expenses due to lower bad debt.
- Operating income and net income each increased 1% to $8.6 million and $7.4 million, respectively.
- Adjusted EBITDA, which excludes non-cash, stock-based compensation expense, increased 2% to $10.8 million, or $0.89 per adjusted diluted share.
Dividend Declaration - Quarterly 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 5, 2024 to stockholders of record on November 21, 2024. The ex-dividend date is November 20, 2024. The quarterly dividend is payable on December 19, 2024 to stockholders of record on December 5, 2024. The ex-dividend date is December 4, 2024.
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 2024.
On March 4, 2024, 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.
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 2024 Conference Call
The Company will host a conference call and webcast on Thursday, November 7, 2024, at 8:30 a.m. Eastern Time, during which management will discuss the financial results in further detail. The call and webcast may be accessed as follows:
Webcast:
The conference webcast and management presentation can be accessed at the following link (replay available until November 6, 2025): https://edge.media-server.com/mmc/p/duevohp9
Live Call:
Participants intending to ask a question during the live call and Q&A session should also register in advance at: https://register.vevent.com/register/BI89e2ac4d7ecb4eee934e4857b442fc24
Upon registration, participants will receive a dial-in number along with a unique PIN number that can be used to access the live call. Live call participants may also select a "Call Me" option.
The Quarterly Report, earnings release, transcript of the earnings call, and management presentation will also be available in the Investor Relations section of the corporate website at: www.otcmarkets.com/investor-relations/overview
About OTC Markets Group Inc.
OTC Markets Group Inc. (OTCQX: OTCM) operates regulated markets for trading 12,000 U.S. and international securities. Our data-driven disclosure standards form the foundation of our three public markets: OTCQX® Best Market, OTCQB® Venture Market and Pink® Open Market.
Our OTC Link®?Alternative Trading Systems (ATSs) provide critical market infrastructure that broker-dealers rely on to facilitate trading. Our innovative model offers companies more efficient access to the U.S. financial markets.
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 markets, visit www.otcmarkets.com.
Investor Contact:
Antonia Georgieva
Chief Financial Officer
Phone: (212) 220-2215
Email: ir@otcmarkets.com
Media Contact:
OTC Markets Group Inc.
Phone: (212) 896-4428
Email: media@otcmarkets.com
| OTC MARKETS GROUP INC. | ||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF INCOME | ||||||||
| (in thousands, except share and per share information) | ||||||||
| Three Months Ended September 30, | ||||||||
| 2024 | 2023 | |||||||
| OTC Link | $ | 5,240 | $ | 4,532 | ||||
| Market data licensing | 10,862 | 11,002 | ||||||
| Corporate services | 11,292 | 11,503 | ||||||
| Gross revenues | 27,394 | 27,037 | ||||||
| Redistribution fees and rebates | (760 | ) | (805 | ) | ||||
| Net revenues | 26,634 | 26,232 | ||||||
| Transaction-based expenses | (1,435 | ) | (1,154 | ) | ||||
| Revenues less transaction-based expenses | 25,199 | 25,078 | ||||||
| Operating expenses | ||||||||
| Compensation and benefits | 10,506 | 10,436 | ||||||
| IT Infrastructure and information services | 2,657 | 2,592 | ||||||
| Professional and consulting fees | 1,525 | 1,678 | ||||||
| Marketing and advertising | 320 | 292 | ||||||
| Occupancy costs | 589 | 599 | ||||||
| Depreciation and amortization | 677 | 572 | ||||||
| General, administrative and other | 301 | 336 | ||||||
| Total operating expenses | 16,575 | 16,505 | ||||||
| Income from operations | 8,624 | 8,573 | ||||||
| Other income | ||||||||
| Interest income | 270 | 233 | ||||||
| Income before provision for income taxes | 8,894 | 8,806 | ||||||
| Provision for income taxes | 1,466 | 1,425 | ||||||
| Net income | $ | 7,428 | $ | 7,381 | ||||
| Net income per share | ||||||||
| Basic | $ | 0.62 | $ | 0.62 | ||||
| Diluted | $ | 0.61 | $ | 0.61 | ||||
| Basic weighted average shares outstanding | 11,726,025 | 11,664,344 | ||||||
| Diluted weighted average shares outstanding | 11,833,215 | 11,865,856 | ||||||
| Non-GAAP Reconciliation | ||||||||
| Three Months Ended September 30, | ||||||||
| 2024 | 2023 | |||||||
| Net Income | $ | 7,428 | $ | 7,381 | ||||
| Excluding: | ||||||||
| Interest Income | (270 | ) | (233 | ) | ||||
| Provision for income taxes | 1,466 | 1,425 | ||||||
| Depreciation and amortization | 677 | 572 | ||||||
| Stock-based compensation expense | 1,474 | 1,397 | ||||||
| Adjusted EBITDA | $ | 10,775 | $ | 10,542 | ||||
| Adjusted diluted earnings per share | $ | 0.89 | $ | 0.87 | ||||
| Note: We use non-GAAP financial measures of operating performance. Non-GAAP measures do not replace and are not superior to the presentation of our GAAP financial results, but are provided to improve overall understanding of the Company's current financial performance. | ||||||||
| OTC MARKETS GROUP INC. | ||||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
| (in thousands, except share information) | ||||||||
| September 30, | December 31, | |||||||
| 2024 | 2023 | |||||||
| Assets | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | 33,405 | $ | 34,101 | ||||
| Short-term investments | 4,508 | 3,622 | ||||||
| Accounts receivable, net of allowance for credit losses of $314 and $451 | 7,950 | 7,680 | ||||||
| Prepaid income taxes | 1,369 | 1,324 | ||||||
| Prepaid expenses and other current assets | 2,184 | 1,865 | ||||||
| Total current assets | 49,416 | 48,592 | ||||||
| Property and equipment, net | 7,573 | 8,429 | ||||||
| Operating lease right-of-use assets | 11,301 | 12,324 | ||||||
| Deferred tax assets, net | 9,225 | 7,691 | ||||||
| Goodwill | 3,984 | 3,984 | ||||||
| Intangible assets, net | 6,975 | 7,411 | ||||||
| Long-term restricted cash | 1,602 | 1,586 | ||||||
| Other assets | 693 | 508 | ||||||
| Total Assets | $ | 90,769 | $ | 90,525 | ||||
| Liabilities and stockholders' equity | ||||||||
| Current liabilities | ||||||||
| Accounts payable | $ | 634 | $ | 2,152 | ||||
| Accrued expenses and other current liabilities | 11,841 | 14,065 | ||||||
| Income taxes payable | 3 | 141 | ||||||
| Deferred revenue | 19,379 | 29,267 | ||||||
| Total current liabilities | 31,857 | 45,625 | ||||||
| Income tax reserve | 880 | 778 | ||||||
| Operating lease liabilities | 10,751 | 11,895 | ||||||
| Total Liabilities | 43,488 | 58,298 | ||||||
| Commitments and contingencies | ||||||||
| Stockholders' equity | ||||||||
| Common stock - par value $0.01 per share Class A - 17,000,000 authorized, 12,811,032 issued, 11,975,122 outstanding at September 30, 2024; 12,716,135 issued, 11,931,366 outstanding at December 31, 2023 | 128 | 127 | ||||||
| Additional paid-in capital | 33,784 | 29,469 | ||||||
| Retained earnings | 36,107 | 22,425 | ||||||
| Treasury stock - 835,910 shares at September 30, 2024 and 784,769 shares at December 31, 2023 | (22,738 | ) | (19,794 | ) | ||||
| Total Stockholders' Equity | 47,281 | 32,227 | ||||||
| Total Liabilities and Stockholders' Equity | $ | 90,769 | $ | 90,525 | ||||
