OTC Markets Group Announces Fourth Quarter and Full Year 2010 Financial Results

NEW YORK, March 31, 2011 /PRNewswire/ -- OTC Markets Group Inc. (OTCQX: OTCM) today announced its financial results for the fourth quarter and full year ended December 31, 2010, noting strong revenue growth in both periods.

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For the year ended December 31, 2010, revenues from services totaled $28.0 million, an increase of $4.0 million, or 17%, as compared to the year ended December 31, 2009.  2010 fourth quarter revenues from services totaled $7.5 million, an increase of $0.6 million, or 9%, compared to $6.9 million in the fourth quarter of 2009.  Net income for 2010 was $2.9 million, a decrease of $0.6 million, or 16%, as compared to 2009, primarily as a result of the Company's previously reported $1.4 million write-down of uncollectable receivables during the third quarter of 2010.  Net income per weighted average diluted shares outstanding decreased by $0.06 from $0.34 for the year ended 2009 to $0.28 for the year ended 2010.  Net income for the fourth quarter of 2010 was $1.1 million, a decrease of $0.2 million, or 13%, as compared to $1.3 million for the fourth quarter of 2009.

"We are pleased to report another year of record revenues, driven by continued investment in our core information technology platforms and our constant focus on providing outstanding service to subscribers," said R. Cromwell Coulson, President and Chief Executive Officer.  "While 2010 net income suffered due to the $1.4 million write-down in the third quarter, we are happy to have identified and addressed that issue, and continue to be enthusiastic about the growth of all aspects of our business," continued Coulson.

"The number of companies on our OTCQX market tier more than doubled during 2010, and we have already added more than 30 companies during the first quarter of 2011," said Coulson.  "The rapid growth of OTCQX and the recent influx of companies quoted exclusively on our OTCQB market tier are encouraging signs for OTC Markets Group."

Annual Highlights

• In November 2010, the Company's stockholders approved changing the Company's name from Pink OTC Markets Inc. to OTC Markets Group Inc.  The name change became effective on January 18, 2011.  On January 19, 2011, the Company's Class A Common Stock trading on OTCQX began trading under the symbol "OTCM".
• The OTCQX® market tier grew by 104% in 2010 and added 93 new companies, including global leaders such as AXA, BNP Paribas, Deutsche Telekom AG, and Zurich Financial Services Ltd.
• We introduced OTCQB®, the middle tier of the OTC market, in April 2010 to help investors identify OTC-traded companies that report to the SEC or a U.S. banking or insurance regulator.  OTCQB was created in response to the increasing number of U.S. reporting companies quoted solely on the OTC Link™ platform.  As of December 31, 2010, broker-dealers published 93% of all OTC priced quotes on OTC Link.

Fourth Quarter

Fourth quarter 2010 revenues from services of $7.5 million increased by $0.6 million, or 9% compared to revenues from services of $6.9 million in 2009 primarily as a result of strong growth in our OTCQX market tier as well as growth in OTC equity market activity leading to an increase in Subscriber Services revenues.  Fourth quarter 2010 total operating expenses increased by $0.4 million, or 10%, to $4.8 million as compared to the similar period in 2009, primarily as a result of increased compensation and benefit costs as our headcount increased from 53 employees at year-end 2009 to 68 employees at year-end 2010.  Fourth quarter net income of $1.1 million decreased by $0.2 million as compared to 2009, despite an increase in pre-tax income, due to a $465,000 increase in the provision for income taxes primarily as a result of a reserve booked pursuant to FASB Accounting Standards Codification™ Topic 740, "Income Taxes."

Full Year

Revenues From Services

Total revenues from services for the year ended 2010 increased $4.0 million, or 17%, to $28.0 million, compared to $24.0 million for the full year of 2009.  Net revenues for the year ended 2010 increased $3.8 million, or 17%, to $25.9 million, compared to $22.1 million for the full year of 2009.  The 17% increase in total revenues from services was primarily attributable to the following:

• Market Data Licensing revenues increased by $1.9 million, or 19% due to increased demand for our Level 2 market data and end-of-day pricing products;
• Issuer Services revenues increased by $1.6 million or 49% primarily due to the increase in companies on our OTCQX platform from 78 at year-end 2009 to 159 at year-end 2010 as well as increased demand for our Disclosure and News Service product; and
• Subscriber Services revenues increased by $0.5 million, or 5% due to an increase in overall OTC equity activity and increased quotes on our interdealer platform.

During a year of uncertain recovery in the macroeconomic environment, OTC Markets Group posted strong, upwardly trending revenues for 2010.  "We achieved many of the financial and business goals that we set for ourselves at the beginning of the year," said Mr. Coulson. "Our Issuer Services and Market Data Licensing businesses posted strong quarterly and full year revenue growth, while our Subscriber Services business continued its growth within the context of continuing economic uncertainty in the capital markets sector and the OTC market in general."

Operating Expenses

Operating expenses for full-year 2010 increased by $4.4 million, or 27%, to $20.7 million, compared to $16.4 million for 2009 primarily due to the following:

• Compensation and benefits increased by $1.4 million, or 16% due to the growth in headcount from 53 employees at year-end 2009 to 68 employees at year-end 2010;
• Provision for bad debts increased by $1.3 million, or 472% due to the write-down of uncollectable receivables in the amount of $1.4 million; and
• Professional and consulting services increased by $0.8 million, or 55% due to legal and regulatory fees related to FINRA's QCF proposal and the establishment of our OTC Link subsidiary.

Net Income Per Share

Net income for 2010 decreased by $0.6 million, or 16%, to $2.9 million, compared to $3.5 million for 2009.  Net income per weighted average diluted shares outstanding decreased by $0.06 from $0.34 for the year ended 2009 to $0.28 for the year ended 2010.

OTC Markets Group's 2010 Annual Report is available publicly at www.otcmarkets.com.

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.  In 2010, securities on OTC Link traded over $144 billion in dollar volume, making it the third largest U.S. equity trading venue after NASDAQ and the New York Stock Exchange.  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.

SOURCE OTC Markets Group Inc.