OTC Markets Group Reports First Quarter 2021 Results

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 YORK – May 5, 2021 – OTC 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 17^th 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

• 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.

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Investor Contact:

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

SOURCE OTC Markets Group Inc.