OTC Markets Group Announces Results for the Three and Six Months Ended June 30, 2011

NEW YORK, Aug. 15, 2011 /PRNewswire/ -- OTC Markets Group Inc. (OTCQX: OTCM) today announced its financial results for the three and six months ended June 30, 2011, noting record revenue growth.

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For the three months ended June 30, 2011, revenues from services totaled $8.2 million, an increase of $1.3 million, or 19%, as compared to second quarter 2010 results of $6.9 million.  Net income for the second quarter of 2011 totaled $1.2 million, an increase of $556,000, or 81% as compared to net income for the second quarter of 2010 of $686,000.

"Our record revenues and net income in the second quarter are primarily due to the continued outstanding growth of our Issuer Services business line, which now represents nearly one-quarter of our total revenues, and the consistent performance of our Market Data Licensing and Subscriber Services business lines," stated R. Cromwell Coulson, President and Chief Executive Officer.  "The increasing momentum of our OTCQX market tier, which recently added its 250th company, was a key factor driving our positive revenue growth.  More and more companies are using the quality-controlled OTCQX platform to create the information-rich marketplace that intelligent investors require to research, analyze and trade securities."  

"We continue to focus on investing in our people and core technology platforms," continued Coulson.  "The strength of our organization lies in the quality of our people and our primary technology.  Our emphasis on investing in these areas throughout 2011 underscores our commitment to providing outstanding service to our subscribers that increases the trading efficiency and information availability in the unlisted markets.  We have dedicated ourselves to building up our internal capabilities, and our record revenues indicate that we are adding increased value to our subscribers across business lines."

Second Quarter Results

Net revenues, after redistribution fees and rebates, for the second quarter of 2011 increased approximately 21%, to $7.6 million compared to $6.3 million for the second quarter of 2010.  The $1.3 million increase in net revenues was primarily the result of an $898,000 increase in revenues in our Issuer Services and a $275,000 increase in revenues in our Market Data Licensing lines of business as compared to the second quarter of 2010.  The growth in Issuer Services revenues was attributable to the addition of 123 OTCQX® companies during the twelve months ended June 30, 2011, as well as significant additional revenue from advertising on our website.  The increase in Market Data Licensing revenue was related to the growth in sales of professional user licenses.

Operating expenses increased approximately 13% during the second quarter of 2011, to $5.8 million from $5.1 million in the second quarter of 2010, primarily due to increased compensation and benefits costs attributable to considerable growth in employee headcount and increases in commissions earned by Issuer Services sales representatives as well as an increase in marketing and advertising expenses.  

Six Month Results

Revenues for the six months ended June 30, 2011 totaled $15.9 million, an increase of $2.4 million, or 18%, compared to $13.5 million in the first six months of 2010.  Net revenues, after redistribution fees and rebates, increased $2.3 million, or 19%, to $14.7 million as compared to $12.4 million in the first six months of 2010.  Issuer Services revenue increased dramatically, up 76% to $3.7 million from $2.1 million during the first six months of 2010, primarily driven by the increase in OTCQX companies.  Market Data Licensing also experienced positive growth, posting year over year revenue growth of approximately $500,000, to $6.3 million from $5.8 million in the first six months of 2010, primarily due to an increase in the number of professional user licenses.  

Operating expenses for the first six months of 2011 totaled $11.3 million, an increase of $1.7 million, or 18%, from $9.6 million in the first half of 2010.  This increase was primarily due to increased compensation and benefits costs related to the hiring of several high level employees and 19% growth in overall employee headcount from June 30, 2010 to June 30, 2011.

Net income for the first six months of 2011 totaled $2.2 million, an increase of approximately $600,000, or 35%, compared to $1.6 million in the first six months of 2010.  Net income per weighted average fully diluted share for the first six months of 2011 increased 35%, to $0.21 as compared to $0.16 in the first six months of 2010.

OTC Markets Group's Quarterly Report for the period ended June 30, 2011 is available publicly at: www.otcqx.com and www.otcmarkets.com.

Dividend Declaration – Quarterly Cash Dividend

Contemporaneous with the announcement of earnings for the quarter ended June 30, 2011, OTC Markets Group announced today that its Board of Directors authorized a quarterly cash dividend on its Class A Common Stock of $0.04 per share.  The dividend is payable on October 6, 2011 to stockholders of record on September 20, 2011.  The ex-dividend date is September 16, 2011.  The dividend payment is unchanged from the Company's seven previous quarterly cash dividends.

"The Board and I believe that it is in the best interest of our shareholders to pay an attractive dividend," stated Coulson.  "In recognition of the strong cash flow produced by our operations, our substantial cash position and debt-free balance sheet, we are pleased to share these results with our stockholders by continuing our quarterly dividend at $0.04 per share."

Stock Buyback Program

On August 9, 2011, the Board of Directors authorized a stock repurchase of up to 300,000 shares of the Company's Class A Common Stock during the subsequent 12 month period.  The Company is authorized to purchase shares from time to time on the open market and through block trades, in compliance with applicable law.  The number of shares ultimately repurchased, and the timing of the purchases, will depend upon market conditions, share price and other factors.  As of July 31, 2011, the Company had 10,467,922 shares outstanding.

"The stock repurchase authorization demonstrates the confidence of our Board and our management in the growth of our company.  Over the past year we have repaid all of our bank debt while issuing dividends to our shareholders and growing our net income.  Given our strong balance sheet and cash flows from operations, the repurchase should not affect our ability to continue to invest in all aspects of our business," said Coulson.

About OTC Markets Group Inc.

OTC Markets Group Inc. (OTCQX: OTCM) operates the world's largest electronic marketplace for broker-dealers to trade unlisted stocks.  Our OTC Link™ platform supports an open network of competing broker-dealers that provide investors with the best prices in over 10,000 OTC securities. We categorize the wide spectrum of OTC-traded companies into three tiers – OTCQX (the quality-controlled marketplace for investor friendly companies), OTCQB® (the U.S. reporting company marketplace for development stage companies) and OTC Pink™ (the speculative trading marketplace) – so investors can identify the level and quality of information companies provide.  To learn more about how OTC Markets Group makes the unlisted markets more transparent, informed, and efficient, visit www.otcmarkets.com.  

Forward-Looking Statements

Information set forth in this news release contains forward-looking statements, which involve a number of risks and uncertainties that could cause our actual results to differ materially from those reflected in the forward-looking statements.  Forward-looking statements can be identified by use of the words "expect," "project," "may," "might," "potential," and similar terms.  OTC Markets Group Inc. ("OTC Markets Group", "we" or the "Company") cautions readers that any forward-looking information is not a guarantee of future performance and that actual results could differ materially from those contained in the forward-looking information.  Forward-looking statements involve a number of risks, uncertainties or other factors beyond OTC Markets Group's control.  These factors include, but are not limited to, our ability to implement our strategic initiatives, economic, political and market conditions and price fluctuations, government and industry regulation, U.S. and global competition and other factors.  We undertake no obligation to update any forward-looking statement, whether as a result of new information, future events or otherwise.  Factors that could cause or contribute to such differences include, but are not limited to, those discussed under the heading "Risk Factors" in our Annual Report for the year ended December 31, 2010.  We undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements.  Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.

SOURCE OTC Markets Group Inc.