Pink OTC Markets Announces Fourth Quarter and Full Year 2009 Results
NEW YORK, March 31 /PRNewswire-FirstCall/ -- Pink OTC Markets Inc. (OTCQX: PINK) today reported net income for the fourth quarter of 2009 was $1.279 million, or $.12 per weighted basic share and $.12 per weighted average fully diluted share, compared to $963,346, or $.09 per weighted basic share and $.09 per weighted average fully diluted share, in the third quarter of 2009 and net income of $334,036, or $.03 per weighted basic share and $.03 per weighted average fully diluted share in the fourth quarter of 2008.
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Net Income for the full year 2009 was $3.5 million, or $.34 per weighted basic share and $.34 per weighted average fully diluted share, compared to pro-forma $1.8 million, or $.18 per weighted basic share and $.18 per weighted average fully diluted share for the full year 2008.
"Despite a tough, albeit seemingly stabilizing market environment, our continued investment in our information technology platforms delivered growth and Pink OTC Markets had a strong fourth quarter, posting record results in both total revenues and net income," noted R. Cromwell Coulson, President and Chief Executive Officer. "The capstone event, though, for the Company and our shareholders," continued Mr. Coulson, "occurred in the third quarter of the year, when our Class A common stock began to be publicly traded in the Current Information category in the Pink Sheets marketplace – with the symbol 'PINK'. Then, in mid-March 2010, we upgraded our Class A common stock on the OTCQX U.S. Premier™ tier to provide a higher level of transparency to our customers, business partners, and investors."
Highlights
- On September 16, 2009, public trading commenced in the shares of Pink OTC's Class A Common Stock, under the symbol "PINK", in the Pink Sheets Current Information tier.
- Our Class A Common Stock was included on the OTCQX U.S. Premier marketplace on March 11, 2010, with Merriman Curhan Ford & Co. as our Designated Advisor for Disclosure.
- During 2009, broker-dealers traded more than 1.3 trillion shares of OTCQX® and Pink Sheets® securities having a combined market value of over $92 billion. Pink OTC Markets' electronic interdealer quotation and trading system has become the leading platform for market makers, agency brokers and ECNs in the U.S. OTC market. More broker-dealers are choosing the superior performance and functionality of Pink Quote™ over FINRA's OTCBB™ for publishing two-sided priced quotes in OTC securities. There were a total of 81,786 (78% of total OTC market quotations) priced and un-priced quotations on Pink Quote compared to 23,129 (22% of total OTC market quotations) on the FINRA OTCBB in December 2009.
- The number of securities quoted for trading in the OTC market totaled 9,347 at December 31, 2009, representing an increase of 213, or 2.3%, from 9,134 at year-end 2008. Of the 9,347 securities that were quoted for trading on the OTC market at December 31, 2009, nearly 64% were quoted exclusively on Pink Quote and approximately 0.7% were quoted exclusively on the OTCBB, with the remainder being dually-quoted on both interdealer quotation systems.
- The OTCQX marketplace, which was introduced in 2007, grew to represent 12.5% of the dollar volume traded in 2009. During 2009, OTCQX listings grew by 63%, as we welcomed 38 new U.S. and international companies to OTCQX, including Allianz SE, Craftmade International, Inc., Gazprom Neft, Home Retail Group plc, K + S AG, Peugeot S.A., and San Gold Corp. The OTCQX tier reached $550 billion in market capitalization in 2009 as more investor-focused companies chose the quality-controlled OTCQX listing platform to offer investors transparent trading, superior information and easy access through their regulated U.S. broker-dealers. Issuers of OTCQX, OTCBB, and Pink Sheets securities that provided current disclosure to the public markets during the full year of 2009, either through a regulator or directly to Pink OTC, represented 92% of the total dollar volume of securities traded in the OTC market during 2009.
- Increased Pink Sheets issuer subscribers to our various Issuer Services products and services by 15% from the third to the fourth quarter and by 28% for the full-year of 2009. This increase was attributable to both growth in new clients and strong retention rates with current subscribers.
- As of January 2009, we also introduced six new market data licenses and modified several existing licenses to better reflect the needs of automated trading and distributor needs.
- We opened the OTCQX Market Center, a modern business center with board rooms, conference rooms, a fifty person presentation room, video conference capabilities and more. The Center is available to OTCQX listed companies and other market professionals for use in investor relations outreach and market education events.
- Expanded industry adoption of the OTC Market Tiers in 2009. Licensed distributors of Pink OTC's Level 1 and Level 2 quotation data, including preeminent market data redistributors, major online broker-dealers, and high-traffic investor sites, began providing the OTCQX, Pink Sheets Current Information, Pink Sheets Limited Information, and Pink Sheets No Information security descriptors to OTC investors.
Financial Results
Despite an environment of continuing, but stabilizing, macroeconomic uncertainty, decreasing market volatility, and emerging regulatory initiatives, Pink OTC Markets posted strong, upwardly trending quarterly revenue and net income growth throughout 2009. "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 double digit quarterly and full year revenue growth, while our Trading Services business posted modest quarterly and full year revenue growth within the context of continuing economic uncertainty in the capital markets sector and the OTC market in general. We continue to devote significant resources to our technology platform, where greater than 99% of all OTC securities are quoted, with nearly 64% quoted exclusively on Pink Quote."
Revenues
Total revenues for the fourth quarter of 2009 increased $645,458, or 10.4%, to $6.858 million, compared to $6.213 million for the third quarter of 2009, and increased $1.6450 million, or 31.4%, compared to $5.218 million for the fourth quarter of 2008. Total revenues for 2009 increased $2.862 million, or 13.5%, to $24.032 million, compared to 2008 results of $21.169 million.
Revenues after redistribution fees and rebates for the fourth quarter of 2009 increased $569,737, or 10%, to $6.265 million, compared to $5.695 million for the third quarter of 2009, and increased $1.451 million, or 30.1%, compared to $4.813 million for the fourth quarter of 2008. Net revenues after redistribution fees and rebates increased by $2.568 million, or 13.2%, to $22.088 million, compared to 2008 results of $19.520 million.
Trading Services
Total revenues for the fourth quarter of 2009 increased $127,524, or 4.5%, to $2.938 million, compared to $2.811 million for the third quarter of 2009, and increased $344,461, or 13.3%, compared to the of fourth quarter 2008. Total revenues for our Trading Services business increased modestly compared to 2008, increasing by $222,636, or 2.1%, to $10.911 million in 2009, compared to $10.688 million in 2008.
Revenues attributable to our Trading Services business remained our predominant source of revenues in 2009. However, due to continuing global economic uncertainty, a lower subscriber base among broker-dealers and traders at these broker-dealers, and strong results in our Market Data Licensing and Issuer Services businesses, the Trading Services business continued to decline as a percentage of total Company revenues. For the fourth quarter of 2009, Trading Services contributed approximately 42% of total revenues, or a decrease from approximately 45% in the third quarter of 2009 and a decrease from approximately 50% in the fourth quarter 2008.
We experienced mixed results in Trading Services during 2009:
- Revenues attributable to Pink Quote grew by approximately 19% during the fourth quarter 2009 compared to the third quarter 2009 and by approximately 30% compared to the fourth quarter of 2008. For 2009, revenue attributable to Pink Quote increased by approximately 20%. Throughout 2009, we maintained an aggressive campaign with broker-dealers to move their priced quotes to Pink Quote from the OTCBB and for the year priced quotes on Pink Quote grew by 14%, while priced quotes on the OTCBB declined by 40%.
- Broker-dealers subscribing to Trading Services products declined by 13% from the fourth quarter 2008 to the fourth quarter 2009, however the decline was in the first half of the year, and the number of broker-dealers utilizing our platform stabilized in the second half of the year, while the number of traders modestly increased by 3% from the third quarter 2009 to the fourth quarter 2009.
- Average daily quotation and messaging revenues for the fourth quarter were approximately equal to the third quarter 2009, however increased by approximately 22% compared to the fourth quarter 2008.
- Revenues attributable to Pink Link® message volumes increased by approximately 14% from the third quarter 2009 to the fourth quarter 2009, however fourth quarter 2009 results were equal to fourth quarter 2008 results; for 2009, these revenues declined by approximately 18%, with the decline occurring predominately in the first half of the year.
Market Data Licensing
Total revenues in the fourth quarter of 2009 attributable to our Market Data Licensing business increased $360,300, or 14%, to $2.936 million, compared to $2.811 million in the third quarter of 2009, and increased by $952,442, or 48%, compared to $1.983 million for the fourth quarter 2008. Total revenues for our Market Data Licensing business grew significantly in 2009, increasing $1.923 million, or 24%, to $9.894 million, compared to $7.972 million for 2008.
This business continues to post strong growth rates, as demand for OTC securities data grows among institutions, investors, issuers and the large and smaller market data redistributors. Quarterly and full year 2009 revenue growth is attributable to:
- The introduction of six new market data licenses at the beginning of 2009;
- Heightened demand for OTC securities data, as evidenced by an increase in the number of and demand by subscribers and an increase in the number of market data redistributors utilizing our comprehensive sets of OTC securities data;
- Advances in technology providing investors with greater access to the OTC market through automated interfaces; and,
- Increases in the total number of securities quoted in the OTC market.
Revenues attributable to Market Data Licensing products comprised approximately 43% of total revenues for the fourth quarter of 2009, a slight increase from 41% in the third quarter 2009, and a strong increase from 38% of total revenues in the fourth quarter of 2008. For 2009, Market Data Licensing revenues comprised approximately 41% of total revenues, compared to approximately 38% of total revenues in 2008.
Issuer Services
Total revenues in the fourth quarter of 2009 attributable to our Issuer Services business increased $152,134, or 21%, to $881,828, compared to $729,694 in the third quarter of 2009, and increased by $360,509, or 69%, compared to $521,319 in the fourth quarter 2008. Total revenues for our Issuer Services business were up significantly in 2009, growing $894,737, or 46%, to $2.840 million, compared to $1.945 million for 2008.
During 2009:
- The number of new listings on the OTCQX marketplace increased by a net of 30 issuers, or 63%, to 78 domestic and international issuers, compared to 48 in 2008. The U.S. and international OTCQX tiers each posted strong new listings, growing 42% and 70%, respectively; and,
- Growth in subscribers to each of the disclosure and transparency services offered to all OTC issuers. During 2009, subscription growth among non-OTCQX issuers in our products was as follows:
- OTCIQ Market Intelligence Service™ – approximately 30%;
- OTC Disclosure and News Service™ – approximately 42%;
- Real-Time Level 2 Quote Display Service™ – approximately 23%; and,
- Blue Sky Monitoring Service – approximately 217%.
Operating Expenses
Operating expenses for the fourth quarter of 2009 increased by $228,769, or 5.6%, to $4.293 million, compared to $4.064 million in the third quarter of 2009, and increased by $92,893, or 2.2%, compared to $4.200 million in the fourth quarter of 2008. The increase in expenses compared to the third quarter of 2009 is attributable to higher levels of spending in marketing and advertising and computer operations and data communications expenses. The increase in expenses compared to the fourth quarter of 2008 is primarily driven by higher compensation expense and increased depreciation and amortization expenses associated with the OTCQX Market Center.
For 2009, operating expenses increased by $13,720, or 0.1%, to $16.355 million, compared to $16.341 million in 2008. Increases in compensation expenses, depreciation and amortization, and computer operations and data communications were offset by decreases in full year marketing and advertising expenses and professional fees.
Operating Income
Operating income for the fourth quarter increased by $416,689, or 19.4%, to $2.566 million, compared to $2.149 million in the third quarter of 2009, and increased by $1.547 million, or 152%, compared to $1.018 million in the fourth quarter of 2008. Operating income increased by $2.555 million, or 80.4%, to $5.733 million in 2009, compared to $3.179 million in 2008. These results are in line with our expectations, as the $2.568 million increase in year-to-year net revenues after redistribution fees and rebates was reinvested in business operations, continuing the marketing and branding expenditure levels, building the Issuer Services franchise, enhancing existing and introducing new products and services in each of Trading Services, Issuer Services, and Market Data Licensing, and completing the OTCQX Market Center.
Earnings Per Share
For the fourth quarter of 2009, basic earnings per share were $0.12, compared to $0.09 in the third quarter of 2009 and $0.03 in the fourth quarter of 2008. For the same period of time, fully-diluted earnings per share were $0.12, compared to $0.09 and $0.03.
Weighted average basic shares outstanding used to calculate basic earnings per share for the fourth quarter of 2009 totaled 10,399,854, compared to 10,320,950 for the third quarter of 2009, and 10,080,947 for the fourth quarter of 2008. Weighted average fully-diluted shares outstanding used to calculate fully-diluted earnings per share for the fourth quarter of 2009 totaled 10,774,541, compared to 10,525,176 for the third quarter of 2009, and 10,194,372 for the fourth quarter of 2008.
Pink OTC Markets' 2009 Annual Report is available publicly at: http://www.pinksheets.com/pink/quote/quote.jsp?symbol=PINK&tabValue=4#getFilings.
About Pink OTC Markets Inc.
Pink OTC Markets Inc. (OTCQX: PINK) is a financial information and technology services company that operates the leading electronic quotation and trading system in the OTC securities market. The OTCQX and Pink Sheets marketplaces that we operate constitute, by dollar volume, the third largest U.S. liquidity pool for trading public company shares, after The NASDAQ Stock Market, Inc. and The New York Stock Exchange. Our technology platform provides a comprehensive suite of information products and trading services for OTC market participants. Our products and services promote market transparency, improve price discovery, facilitate regulatory compliance, and increase the quality of issuer disclosure, to the benefit of all OTC market participants. To learn more about how Pink OTC Markets' products and services make OTC markets more transparent, informed, and efficient, please visit our websites at www.pinkotc.com, www.otcmarkets.com and www.otcqx.com or contact us at [email protected].
Pink OTC Markets is headquartered in New York City.
About OTCQX
The OTCQX marketplace is the premier tier of the U.S. OTC market. Investor-focused companies use the quality controlled OTCQX listing platform to offer investors transparent trading, superior information, and easy access through their regulated U.S. broker-dealers. The innovative OTCQX platform offers companies and their shareholders a level of marketplace services formerly available only on a U.S. exchange. For more about OTCQX, visit www.otcqx.com.
Cautionary Statement:
This document 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. Pink OTC Markets Inc. ("Pink OTC", "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 Pink OTC'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.
PINK OTC MARKETS INC. and PINK SHEETS LLC
CONDENSED STATEMENTS OF INCOME
(in thousands, except per share data)
Three Months Ended Year Ended
------------------ ----------
Pro- forma
December September December December December
31, 30, 31, 31, 31,
2009(1) 2009(1) 2008(1) 2009(2) 2008(3)
------- ------- ------- ------- -------
REVENUES FROM
SERVICES
Trading Services $2,938 $2,811 $2,594 $10,911 $10,688
Market Data
Licensing 2,936 2,576 1,983 9,894 7,972
Issuer Services 882 730 521 2,840 1,945
Website
Advertising 103 97 120 387 565
COST OF REVENUES
Redistribution
fees and rebates (594) (518) (405) (1,944) (1,650)
---- ---- ---- ------ ------
REVENUES LESS
REDISTRIBUTION
FEES AND REBATES 6,265 5,695 4,813 22,088 19,520
----- ----- ----- ------ ------
OPERATING
EXPENSES
Compensation and
benefits 2,202 2,213 1,889 8,724 7,740
Marketing and
advertising 248 141 578 714 2,456
Computer
operations and
data
communications 801 685 729 2,833 2,389
Occupancy 303 313 350 1,192 1,217
Depreciation and
amortization 243 188 122 835 483
General,
administrative
and other 221 170 135 670 472
Professional and
consulting
services 312 354 397 1,387 1,584
--- --- --- ----- -----
TOTAL OPERATING
EXPENSES 4,331 4,064 4,200 16,355 16,341
----- ----- ----- ------ ------
INCOME FROM
OPERATIONS 1,934 1,631 613 5,733 3,179
Interest income/
(expense) (17) (22) (16) (90) (32)
INCOME BEFORE
PROVISION FOR
INCOME TAXES 1,917 1,609 597 5,643 3,146
PROVISION FOR
INCOME TAXES
LLC
Unincorporated
Business Tax - - - - 49
Corporate income
tax 638 645 263 2,138 922
--- --- --- ----- ---
TOTAL PROVISION
FOR INCOME TAXES 638 645 263 2,138 971
--- --- --- ----- ---
NET INCOME
(HISTORICAL) 1,279 963 334 3,506 2,176
----- --- --- ----- -----
Historical income
before provision
for income taxes
as reported above 1,917 1,609 597 5,643 3,146
Pro-forma
adjustments to
reflect
corporate income
taxes*
Corporate Income
taxes:
Historical 638 645 263 2,138 922
--- --- --- ----- ---
Pro-forma for
LLC periods* - - - - 376
--- --- --- --- ---
Total provision
for corporate
income taxes
(pro-forma)* 638 645 263 2,138 1,298
--- --- --- ----- -----
Net income (pro-
forma)* 1,279 963 334 3,506 1,849
===== === === ===== =====
Net income per
share (pro-
forma)*
Basic* $0.123 $0.093 $0.033 $0.342 $0.184
====== ====== ====== ====== ======
Fully-diluted* $0.119 $0.092 $0.033 $0.335 $0.182
====== ====== ====== ====== ======
Weighted average
shares
outstanding
(pro-forma)*
Basic* 10,400 10,321 10,081 10,253 10,050
Fully-diluted* 10,775 10,525 10,194 10,455 10,186
(1) Unaudited
(2) Audited
(3) Combines the actual, audited historical results of operations of
Pink Sheets LLC for the three months ended March 31, 2008 and the
actual, audited results of operations of Pink OTC Markets Inc. for
the nine months ended December 31, 2008
PINK OTC MARKETS INC. and PINK SHEETS LLC
CONDENSED BALANCE SHEETS
(in thousands, except per share data)
December 31, December 31,
2009 2008
---- ----
(audited)
---------
ASSETS
CURRENT ASSETS
Cash and cash
equivalents $5,385 $2,827
Accounts
receivable 5,861 4,263
Prepaid income
taxes 215 -
Prepaid expenses 652 557
Deferred tax asset 102 18
--- --
TOTAL CURRENT
ASSETS 12,215 7,665
------ -----
PROPERTY AND EQUIPMENT
Property and
equipment, net of
accumulated
depreciation 4,021 3,113
OTHER ASSETS
Goodwill 251 251
Other intangible
assets 139 184
Cash-restricted 89 87
Deferred tax
assets - 133
--- ---
TOTAL OTHER ASSETS 479 654
--- ---
TOTAL ASSETS $16,715 $11,433
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $791 $581
Current portion of
bank loan 786 749
Accrued expenses
and other 2,180 2,238
Dividend payable 336 -
Income taxes
payable - 68
Deferred revenue 2,731 707
----- ---
TOTAL CURRENT
LIABILITIES 6,823 4,344
----- -----
LONG-TERM LIABILITIES
Bank loan 1,246 2,035
Deferred rent
payable 757 673
Deferred tax
liabilities 176 -
--- ---
TOTAL OTHER
LIABILITIES 2,179 2,708
----- -----
TOTAL LIABILITIES $9,002 $7,051
------ ------
STOCKHOLDERS' EQUITY
Common stock -par value
$0.01 per share
Class A 103 81
Class B (1) - 19
Class C 1 1
Additional paid-
in capital 3,785 2,967
Retained earnings 3,824 1,314
----- -----
TOTAL
STOCKHOLDERS'
EQUITY $7,713 $4,381
------ ------
TOTAL LIABILITIES
AND STOCKHOLDERS'
EQUITY $16,715 $11,433
======= =======
(1) Reflecting the effect of conversion to Class A shares
subsequent to December 31, 2009; issued and outstanding
1,869,162 as of December 31, 2008
SOURCE Pink OTC Markets Inc.
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