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OTC Markets Group Reports First Quarter 2021 Results

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Delivering Strong Q1 Revenue and Earnings Growth

NEW YORK, May 5, 2021 /PRNewswire/ --

First Quarter 2021 Highlights:

  • Gross revenues of $26.1 million for the quarter, up 57% versus the prior year period

  • Operating income of $8.4 million for the quarter, up 88% versus the prior year period

  • Operating profit margin of 33.2% versus 28.2%

  • Net income of $6.8 million, up 77% versus the prior year period, and quarterly diluted GAAP EPS of $0.57, up 78%

  • Total cash returned to shareholders during the quarter of $3.3 million, comprised of dividends of $1.8 million and repurchases of common stock of $1.5 million

  • Announcing second quarter 2021 dividend of $0.15 per share

  • 29 graduates to a national securities exchange during the quarter

  • Strong growth of companies joining OTCQX and OTXQB reaching 482 and 962 at quarter end, respectively

  • 82 subscribers to OTC Link ECN at March 31, 2021, up 21 versus March 31, 2020; over 70,000 average daily trades during the quarter, a ten-fold increase from less than 7,000 during the same prior year period

  • Virtual Investor Conferences® business hosted 7 events during the quarter, with 143 companies participating and reaching more than 21,000 investors

  • Ongoing implementation of Amended Rule 15c2-11, enabling our OTC Link ATS to act as a qualified interdealer quotation system (QIDQS)

NEW YORKMay 5, 2021OTC Markets Group Inc. (OTCQX: OTCM), operator of the OTCQX® Best Market, the OTCQB® Venture Market and the Pink® Open Market for 11,000 U.S. and global securities, today announced its financial results for the first quarter of 2021.

"As we move into 2021, we are enthusiastic about our opportunity to scale our platform, serve our clients and create value for shareholders," said R. Cromwell Coulson, President and Chief Executive Officer. "Our colleagues rose to the challenge and handled record breaking volumes in our OTC Link business during the first quarter, while building momentum in our Market Data Licensing and Corporate Services businesses. We remain keenly focused on our strategic initiatives, including successful implementation of amended Rule 15c2-11, delivering improved trading solutions such as our new ATS, OTC Link NQB, and increasing the value of our public markets for issuers."

"We are pleased to report our 17th consecutive quarter of revenue growth," said Antonia Georgieva, Chief Financial Officer. "All three of our businesses saw a continuation of the trends from the latter part of 2020 and delivered strong revenue growth contributing to a higher operating margin, increased free cash flow and robust earnings per share growth."

First Quarter 2021 compared to First Quarter 2020

Financial Highlights



Three Months Ended March 31,





(in thousands, except shares and per share data)


2021


2020


% change


$ change

OTC Link


$ 10,282


$ 3,320


210%


6,962

Market data licensing


7,899


6,745


17%


1,154

Corporate services


7,895


6,539


21%


1,356

Gross revenues


26,076


16,604


57%


9,472

Net revenues


25,335


15,903


59%


9,432

Revenues less transaction-based expenses


21,796


15,465


41%


6,331

Operating expenses


13,377


10,982


22%


2,395

Income from operations


8,419


4,483


88%


3,936

Operating profit margin


33.2%


28.2%





Income before provision for income taxes


8,424


4,499


87%


3,925

Net income


$ 6,838


$ 3,855


77%


2,983










Diluted earnings per share


$ 0.57


$ 0.32


78%



Adjusted diluted earnings per share


$ 0.82


$ 0.49


67%



Weighted-average shares outstanding, diluted


11,710,262


11,672,767


-



  • Gross revenues increased $9.5 million, or 57%, to $26.1 million.

  • OTC Link revenues increased 210%, with increased trading volumes across the U.S. equity markets driving record trading volumes on our OTC Link ECN and message volumes on our OTC Link ATS.

  • Market Data Licensing revenues grew 17%, with 9% growth in professional subscribers driving a 6% increase in related revenues. The number of non-professional users of our market data increased 138%, reflective of the increased retail participation in the U.S. equities markets and helped drive a 138% increase in related revenues.

  • Corporate Services delivered 21% growth, with revenues from our OTCQX market up 26% and revenues from our OTCQB market up 13%. The strong sales during the quarter resulted in 52 new companies joining our OTCQX market and 83 new companies joining our OTCQB market. Furthermore, we achieved a 94% retention rate on our OTCQX market for the 2021 annual subscription period.

  • Operating expenses increased $2.4 million, or 22%, to $13.4 million, primarily as a result of the 19% increase in compensation costs, reflecting higher annual base salary and incentive compensation as well as higher sales commissions, in addition to a 153% increase in professional and consulting fees, driven by higher ECN related clearing and regulatory costs.

  • Operating income and net income increased 88% and 77%, respectively, when compared to the prior year period.

  • Adjusted EBITDA, which excludes non-cash, stock-based compensation expense, increased 70% to $9.9 million, or $0.82 per adjusted diluted share.

Dividend Declaration – Quarterly Cash Dividend

OTC Markets Group announced today that its Board of Directors authorized a quarterly cash dividend of $0.15 on its Class A Common Stock. The quarterly cash dividend is payable on June 24, 2021, to stockholders of record on June 11, 2021. The ex-dividend date is June 10, 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. During the first quarter of 2021, the Company purchased 44,733 shares at an average price of $34.01 per share.

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 at March 31, 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.

First Quarter 2021 Conference Call

The Company will host a conference call and webcast on Thursday, May 6, 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); Pin: 4292918

Call Replay Dial-in Numbers (available until May 20, 2021): 1-855-859-2056 (Domestic);1-404-537-3406 (International); Replay PIN Number: 4292918

Participants can access the conference via webcast at the following link (available until May 5, 2022):

https://edge.media-server.com/mmc/p/kz9vmc6h

OTC Markets Group's Quarterly Report for the quarter ended March 31, 2021, the earnings release, transcript to the earnings call and 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 the OTCQX® Best Market, the OTCQB® Venture Market and the Pink® Open Market for 11,000 U.S. and global securities. Through OTC Link® ATS and OTC Link ECN, we connect 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 investors.

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

OTC Link ATS and OTC Link ECN are SEC regulated ATSs, operated by OTC Link LLC, member FINRA/SIPC.

Subscribe to the OTC Markets RSS Feed

Investor Contact:

Antonia Georgieva
Chief Financial Officer
Phone: 212-220-2215
Email: ir@otcmarkets.com

OTC MARKETS GROUP INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except share and per share information)

(Unaudited)






Three Months Ended March 31,


2021


2020

OTC Link

$ 10,282


$ 3,320

Market data licensing

7,899


6,745

Corporate services

7,895


6,539

Gross revenues

26,076


16,604

Redistribution fees and rebates

(741)


(701)

Net revenues

25,335


15,903

Transaction-based expenses

(3,539)


(438)

Revenues less transaction-based expenses

21,796


15,465

Operating expenses




Compensation and benefits

8,946


7,487

IT Infrastructure and information services

1,638


1,533

Professional and consulting fees

1,242


490

Marketing and advertising

205


242

Occupancy costs

613


557

Depreciation and amortization

444


414

General, administrative and other

289


259

Total operating expenses

13,377


10,982

Income from operations

8,419


4,483

Other income




Interest income

-


16

Other income, net

5


-

Income before provision for income taxes

8,424


4,499

Provision for income taxes

1,586


644

Net income

$ 6,838


$ 3,855





Net income per share




Basic

$ 0.58


$ 0.33

Diluted

$ 0.57


$ 0.32





Basic weighted average shares outstanding

11,506,875


11,415,322

Diluted weighted average shares outstanding

11,710,262


11,672,767





Non-GAAP Reconciliation





Three Months Ended March 31,


2021


2020

Net Income

$ 6,838


$ 3,855

Excluding:




Interest Income

-


(16)

Provision for income taxes

1,586


644

Depreciation and amortization

444


414

Stock-based compensation expense

1,002


910

Adjusted EBITDA

$ 9,870


$ 5,807





Adjusted diluted earnings per share

$ 0.82


$ 0.49


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)

(Unaudited)






March 31,


December 31,


2021


2020

Assets




Current assets




Cash

$ 33,512


$ 33,733

Short-term restricted cash

-


32

Accounts receivable, net of allowance for credit losses of $228 and $194

9,500


6,609

Prepaid income taxes

-


356

Prepaid expenses and other current assets

1,478


1,375

Total current assets

44,490


42,105

Property and equipment, net

5,083


5,367

Operating lease right-of-use assets

14,542


14,844

Deferred tax assets, net

437


343

Goodwill

251


251

Intangible assets, net

40


40

Long-term restricted cash

1,564


1,532

Other assets

336


328

Total Assets

$ 66,743


$ 64,810





Liabilities and stockholders' equity




Current liabilities




Accounts payable

$ 1,125


$ 1,251

Accrued expenses and other current liabilities

6,109


9,965

Income taxes payable

1,102


16

Deferred revenue

19,569


18,765

Total current liabilities

27,905


29,997

Income tax reserve

839


801

Operating lease liabilities

14,220


14,466

Total Liabilities

42,964


45,264

Commitments and contingencies




Stockholders' equity




Common stock - par value $0.01 per share




Class A - 14,000,000 authorized, 12,448,578 issued, 11,767,211 outstanding at




March 31, 2021; 12,346,491 issued, 11,709,857 outstanding at December 31, 2020

124


123

Additional paid-in capital

20,451


19,770

Retained earnings

16,843


11,770

Treasury stock - 681,367 shares at March 31, 2021 and 636,634 shares at December 31, 2020

(13,639)


(12,117)

Total Stockholders' Equity

23,779


19,546

Total Liabilities and Stockholders' Equity

$ 66,743


$ 64,810

(PRNewsfoto/OTC Markets Group Inc.)
(PRNewsfoto/OTC Markets Group Inc.)
Cision
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SOURCE OTC Markets Group Inc.