OTC Markets Group announces 1Q17 results


The below release was provided by OTC Markets Group.

First Quarter 2017 Highlights:

  • Revenues of $13.4 million for the quarter versus $12.8 million for prior year quarter, up 5%
  • Operating income of $4.2 million for the quarter versus $3.8 million for the prior year quarter, up 12%
  • Operating profit margin of 33% for the quarter, up from 31% for the prior year quarter
  • Net income increased $0.7 million, or 32%, to $3.1 million, primarily due to the increase in operating income, as well as a decrease in the company’s effective tax rate for the quarter related to the adoption of new accounting guidance
  • Announcing second quarter 2017 dividend of $0.14 per share
  • 11 graduates to a national securities exchange during the quarter
  • OTCQX and OTCQB Markets receive State Blue Sky recognition from one additional state, bringing the total to 21 that recognize OTCQX and 18 that recognize OTCQB
  • 10 transfer agents participating in the Transfer Agent Verified Shares Program, an initiative launched in October 2016 designed to improve the timeliness and reliability of OTC company share information


OTC Markets Group Inc. (OTCQX: OTCM), operator of the OTCQX® Best Market, the OTCQB® Venture Market and the Pink® Open Market for 10,000 U.S. and global securities, announced its financial results for the first quarter of 2017.

“Strong results in our Corporate Services business demonstrate that the OTCQX and OTCQB markets with data-driven standards help make being public less painful,” president and CEO R. Cromwell Coulson said.  “Recent enhancements to our OTC Link ATS that allow our subscribers to succeed in a changing market environment, along with our commitment to reliability, demonstrate our continued focus on delivering a better informational and trading experience to broker-dealers and investors.”

R. Cromwell Coulson

R. Cromwell Coulson

“The first quarter of 2017 saw 5 per cent quarter over quarter revenue growth and a 200 basis point increase in our operating profit margin, contributing to strong growth in our operating income, which was up 12 per cent versus the prior year period,” CFO Bea Ordonez said. “We continue to generate strong operating cashflows, remain focused on building on our track record of delivering impressive returns for our shareholders and are pleased to announce our 34th consecutive quarterly dividend.”

1Q17 vs. 1Q16

 Financial highlights

  • Gross revenues increased $0.6 million, or 5%, to $13.4 million.
  • Corporate Services revenues were up $0.6 million or 14% versus the prior year quarter, largely driven by price increases for existing subscribers, an uptick in new companies joining our premium markets and improved annual renewal rates.
  • Revenues from OTC Link® ATS declined $0.1 million, or 5%, to $2.6 million, largely a result of a decrease in the number of OTC Dealer® users at our broker-dealer subscribers and reduced quote volumes.
  • Market Data Licensing revenues were up $0.1 million, or 2%, over the prior year quarter.
  • Operating expenses increased $0.2 million, or 2%, to $8.5 million, primarily due to increases in compensation costs and information technology costs.
  • Income from operations increased $0.4 million, or 12%, to $4.2 million.
  • Net income increased $0.7 million, or 32%, to $3.1 million, primarily due to the increase in operating income, as well as a decrease in the company’s effective tax rate for the quarter from 39% to 28%, a result of the adoption of Accounting Standards Update No. 2016-09 related to Stock Compensation.  Under the new guidance, excess tax benefits from share-based compensation are reflected in the Consolidated Statements of Income as a component of the provision for income taxes, whereas they were previously recognized under Additional paid-in capital.
  • Adjusted EBITDA, which excludes non-cash stock-based compensation expense, increased $0.5 million, or 11%, to $5.2 million, or $0.44 per adjusted diluted share, as compared to $4.7 million, or $0.40 per adjusted diluted share, during the same prior year period.

Business developments and news

  • Effective May 1, 2017, the Company began offering new consolidated data services containing Global OTC ATS top of book quotes and providing connectivity, allowing electing OTC Link ATS subscribers to access Global OTC ATS top of book quotes. (See the Company’s Quarterly Report for additional information.)
  • As of May 3, 2017, 2017, one additional state recognized the OTCQX and OTCQB markets as securities manuals for purposes of the ‘Blue Sky Manual Exemption,’ bringing the total to 21.
  • The Transfer Agent Verified Shares Program, launched in October 2016, provides investors with current and reliable share data on OTCQX, OTCQB and Pink securities.  As of May 3, 2017, 10 transfer agents have joined the program, providing timely data that improves the availability and accuracy of share information for companies on the OTCQX, OTCQB and Pink markets.
  • Broadened the market data distribution network via a new relationship with Silexx Financial Systems.
  • On April 17, 2017, OTC Markets Group published proposed amendments to the OTCQB Standards. The new standards would allow companies that follow the Alternative Reporting Standard to qualify for OTCQB. These companies would be required to make public disclosure available pursuant to the OTCQX and OTCQB Disclosure Guidelines and meet certain Corporate Governance requirements.  The proposed amendments to the OTCQX Standards are published for comment for 30 days, and are scheduled to become effective on May 18, 2017.

Dividend declaration – quarterly cash dividend

OTC Markets Group announced today that its Board of Directors authorized a quarterly cash dividend of $0.14 on its Class A common stock.  The quarterly cash dividend is payable on June 29, 2017, to stockholders of record on June 15, 2017.  The ex-dividend date is June 13, 2017.

Stock buyback program

The Company is authorized to purchase shares from time to time on the open market and through block trades, in compliance with applicable law.  During the first quarter of 2017, the Company purchased 67,165 shares at an average price of $20.97 per share.

On February 28, 2017, 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, 2017, there are 292,080 shares remaining to be purchased under our 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.

1Q17 conference call

The Company will host a conference call on Thursday, May 4, 2017, at 8:00 a.m. Eastern Time, during which management will discuss the financial results in further detail.  The conference call and replay of the conference call may be accessed as follows:

Replay Dial-in Numbers (Available until May 18, 2017): 1-877-481-4010 (Domestic); 1-919-882-2331 (International); Replay PIN Number: 10345

The earnings release and a transcript of the earnings call will also be available in the Investor Relations section of the corporate website at www.otcmarkets.com/investor-relations/overview.

OTC Markets Group’s Quarterly Report for the period ended March 31, 2017, is available publicly atwww.otcmarkets.com.