OTC Markets Group Announces Fourth Quarter and Full Year 2011 Financial Results

NEW YORK, March 26, 2012 /PRNewswire/ -- OTC Markets Group Inc. (OTCQX: OTCM) today announced its financial results for the fourth quarter and full year ended December 31, 2011, noting strong revenue and net income growth in both periods.

For the year ended December 31, 2011, gross revenues totaled $32.9 million, an increase of $4.9 million, or 18%, as compared to the year ended December 31, 2010.  Net income for 2011 equaled $4.9 million, an increase of $2.0 million, or 69%, as compared to $2.9 million in 2010.  Diluted earnings per share for the year 2011 was $0.45, an increase of $0.17, or 64%, as compared to $0.28 in 2010.  

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"We are pleased to report consistent revenue growth, driven by continued investment in our core information technology platforms and our employee infrastructure," said R. Cromwell Coulson, President and Chief Executive Officer.  "Continued development of our open, transparent and connected marketplace platform allowed us to add to the strength of our broker-dealer dealer network, increase the scope of our market data distribution, and improve the availability of information for investors."  

Gross revenues for the fourth quarter of 2011 totaled $8.8 million, an increase of $1.3 million, or 17%, as compared to $7.5 million in the fourth quarter of 2010.  Net income for the fourth quarter of 2011 was $1.3 million, an increase of $0.2 million, or 18%, from $1.1 million in the fourth quarter of 2010.

"The number of companies on our OTCQX marketplace nearly doubled during 2011, and we have seen continuing growth during the first quarter of 2012," continued Coulson.  "The rapid growth of OTCQX and the expansion of our market data distribution network are positive signs for OTC Markets Group as we near the end of the first quarter of 2012.  Our positive momentum and strong underlying cash position were reflected in the Board's recently announced decision to increase our quarterly dividend to $0.05 per share," continued Coulson.  

Annual Highlights

• The OTCQX^® marketplace grew by 97% in 2011, adding 155 new companies including global leaders such as Danone, E.ON AG, Publicis, Repsol and Swiss Re Ltd.
• During the fourth quarter of 2011, OTC Markets Group entered into agreements to have its market data distributed through the NYSE Technologies' SuperFeed and NASDAQ UltraFeed data feeds, which we expect will ensure continued growth of our market data distribution network.  
• The volume of quotes and messages on our OTC Link^® trading system continued to increase steadily.

Fourth Quarter

Fourth quarter 2011 gross revenues of $8.8 million increased by $1.3 million, or 17% compared to revenues from services of $7.5 million in the fourth quarter of 2010, primarily as a result of continued strong growth in our OTCQX marketplace as well as an increase in subscriptions to our professional market data licenses.  Fourth quarter 2011 total operating expenses increased by $1.9 million, or 40%, to $6.7 million as compared to $4.8 million during the similar period in 2010, primarily as a result of accrued professional and consulting fees and increased compensation and benefit costs related to commissions and bonus accruals.  Fourth quarter net income of $1.3 million increased $0.2 million, as compared to $1.1 million during the similar period in 2010.

Full Year

Revenues

Gross revenues for 2011 increased $4.9 million, or 18%, to $32.9 million, compared to $28.0 million for 2010.  Net revenues for 2011 increased $4.9 million, or 19%, to $30.8 million, compared to $25.9 million for 2010.  The increase in gross revenues was primarily attributable to the following:

• Issuer Services revenues increased $3.2 million or 68%, primarily due to the 97% increase in companies on the OTCQX marketplace, from 159 at year-end 2010 to 314 at year-end 2011; and
• Market Data Licensing revenues increased $1.3 million, or 11%, primarily due to increased professional license subscriptions;
• Trading Services revenues increased $0.4 million, or 3%, primarily due to increased usage of our OTC Link trading system.

"This year we laid the foundation to execute on our short-term and long-term strategies," said Coulson. "Our Issuer Services and Market Data Licensing businesses posted strong quarterly and full year revenue growth, which supported our ability to provide efficient, cost-effective services to our broker-dealer subscribers."

Operating Expenses

Operating expenses for the year 2011 increased by $2.9 million, or 14%, to $23.6 million, compared to $20.7 million in 2010, primarily due to the following:

• Compensation and benefits expenses increased $2.0 million, or 20%, primarily due to the costs of providing competitive compensation plans to qualified employees, including sales commission and discretionary bonus payments; and
• Marketing and advertising expenses increased $0.8 million, or 73%, primarily due to our name change and increased marketing to OTC traded companies, as well as increased attendance at and sponsorship of industry events and the effects of our corporate name change in January 2011.

Net Income and Income from Operations

Net income for 2011 increased $2.0 million, or 69%, to $4.9 million, as compared to $2.9 million in 2010.  The year over year increase in net income was due in part to the impact of a $1.4 million one-time write-down of uncollectible receivables during the third quarter of 2010, which was reflected in the Company's 2010 net income.  Net income per weighted average diluted shares outstanding increased by $0.18 to $0.46 for the year 2011 from $0.28 for the year 2010.

Income from operations increased $2.0 million, or 39%, to $7.1 million from $5.1 million in 2010, and operating profit margin improved to 23%, from 20% in 2010.

OTC Markets Group's 2011 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 Open, Transparent and Connected marketplace platform, delivering price transparency in over 10,000 OTC securities. Our OTC Link trading system directly links broker-dealers that provide liquidity and execution services. We organize the wide spectrum of OTC-traded securities into three marketplaces to inform investors of opportunities and risks – OTCQX^® - The Intelligent Marketplace for the Best OTC Companies; OTCQB^® - The Venture Marketplace; and OTC Pink^® - The Open Marketplace. Our information-driven platform provides the information to intelligently trade through any broker at the best possible price, and empowers companies to build the best markets for their investors. To learn more about our Open, Transparent and Connected marketplaces, visit www.otcmarkets.com.

SOURCE OTC Markets Group Inc.