Fiscal Year 2023 Financial Highlights
-- Gross revenues of $109.9 million, up 5%. Revenues less transaction-based
expenses up 5%.
-- OTC Link revenues down 6%, primarily as a result of a reduction in
revenues from OTC Link ATS messages of 18% and from OTC Link ECN and OTC
Link NQB, which in aggregate declined 5%. Contributing to the overall
decline in OTC Link revenues were also QAP One Statement fees, down 31%.
The decline in OTC Link revenues is consistent with a year over year
decline in trading activity on our markets.
-- Market Data Licensing revenues up 19%, inclusive of the full year impact
of the acquisitions of Blue Sky Data Corp and EDGAR Online. Excluding the
impact of the acquisitions, Market Data Licensing revenues grew
approximately 7%, due to 5% growth in revenues from professional user
licenses, 67% growth in revenues from market data connectivity fees, and
9% growth in internal system licenses, delayed data licenses and certain
other data services, offsetting a 27% decline in revenues from
non-professional users.
-- Corporate Services revenues down 2%. OTCQX revenues up 3% due to price
increases and a relatively unchanged average number of companies on the
OTCQX market. OTCQB and DNS revenues down 3% and 7%, respectively, due to
a lower number of companies subscribing to OTCQB and DNS, more than
offsetting the impact of pricing adjustments. Lower revenues from VIC,
due to fewer events held during 2023, also contributed to the overall
decline in Corporate Services revenues, but were partially offset by
growth in revenues from OTCIQ Basic.
-- Operating expenses were up $9.2 million, or 15%, reflecting a 13%
increase in compensation and benefits as a result of higher average
headcount, a 27% increase in IT infrastructure and information services
costs, primarily as a result of our acquisitions, and a 25% increase in
professional and consulting fees, primarily as a result of regulatory and
legal costs related to an SEC matter. Operating expenses include
approximately $1.1 million in one-time, non-recurring costs related to
EDGAR Online, and approximately $1.4 million in costs related to the SEC
matter.
-- Operating income decreased 11% to $32.6 million and net income decreased
10% to $27.7 million.
-- Adjusted EBITDA declined 5% to $40.9 million, or $3.37 per adjusted
diluted share.
Dividend Declaration -- Quarterly Cash Dividend
OTC Markets Group announced today that its Board of Directors authorized and approved a quarterly cash dividend of $0.18 per share of Class A Common Stock. The quarterly cash dividend is payable on March 29, 2024, to stockholders of record on March 22, 2024. The ex-dividend date is March 21, 2024.
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.
On March 4, 2024, 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.
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.
Fourth Quarter and Full Year 2023 Conference Call
The Company will host a conference call and webcast on Thursday, March 7, 2024, at 8:30 a.m. Eastern Time, during which management will discuss the financial results in further detail. The call and webcast may be accessed as follows:
Webcast:
The conference webcast and management presentation can be accessed at the following link (replay available until March 6, 2025):
https://edge.media-server.com/mmc/p/rhwuud87
Live Call:
Participants intending to ask a question during the live call and Q&A session should also register in advance at:
https://register.vevent.com/register/BI142d90b57b7545e7bf967bd2ba364a54
Upon registration, participants will receive a dial-in number along with a unique PIN number that can be used to access the live call. Live call participants may also select a "Call Me" option.
OTC Markets Group's Annual Report, earnings release, transcript of the earnings call, and management presentation will also be available in the Investor Relations section of our corporate website at www.otcmarkets.com/investor-relations/overview.
About OTC Markets Group Inc.
OTC Markets Group Inc. (OTCQX: OTCM) operates regulated markets for trading 12,000 U.S. and international securities. Our data-driven disclosure standards form the foundation of our three public markets: OTCQX$(R)$ Best Market, OTCQB(R) Venture Market, and Pink(R) Open Market.
Our OTC Link(R) Alternative Trading Systems (ATSs) provide critical market infrastructure that broker-dealers rely on to facilitate trading. Our innovative model offers companies more efficient access to the U.S. financial markets.
OTC Link ATS, OTC Link ECN, and OTC Link NQB are each an SEC regulated ATS, operated by OTC Link LLC, a FINRA and SEC registered broker-dealer, member SIPC.
To learn more about how we create better informed and more efficient markets, visit www.otcmarkets.com.
Investor Contact:
Antonia Georgieva
Chief Financial Officer
Phone: (212) 220-2215
Email: ir@otcmarkets.com
Media Contact:
OTC Markets Group Inc.
Phone: (212) 896-4428
Email: media@otcmarkets.com
OTC MARKETS GROUP INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except share and per share information)
Three Months Ended December
31, Year Ended December 31,
----------------------------- ----------------------------
2023 2022 2023 2022
--------------- ------------ ------------ --------------
OTC Link $ 4,802 $ 5,346 $ 19,599 $ 20,937
Market data licensing 10,881 9,895 43,368 36,407
Corporate services 11,922 12,054 46,928 47,805
---------- ---------- ---------- ----------
Gross revenues 27,605 27,295 109,895 105,149
Redistribution fees
and rebates (833) (758) (3,237) (3,101)
---------- ---------- ---------- ----------
Net revenues 26,772 26,537 106,658 102,048
Transaction-based
expenses (1,330) (1,670) (5,524) (5,847)
Revenues less
transaction-based
expenses 25,442 24,867 101,134 96,201
---------- ---------- ---------- ----------
Operating expenses
Compensation and
benefits 9,460 8,887 42,467 37,585
IT Infrastructure
and information
services 2,298 2,323 10,311 8,091
Professional and
consulting fees 3,077 1,817 8,048 6,464
Marketing and
advertising 315 351 1,194 1,303
Occupancy costs 591 481 2,360 2,257
Depreciation and
amortization 554 600 2,398 2,092
General,
administrative and
other 356 531 1,762 1,588
---------- ---------- ---------- ----------
Total operating
expenses 16,651 14,990 68,540 59,380
Income from
operations 8,791 9,877 32,594 36,821
Other income
Other income 274 154 903 145
---------- ---------- ---------- ----------
Income before
provision for
income taxes 9,065 10,031 33,497 36,966
Provision for income
taxes 2,064 1,401 5,836 6,152
Net Income $ 7,001 $ 8,630 $ 27,661 $ 30,814
========== ========== ========== ==========
Earnings per share
Basic $ 0.59 $ 0.73 $ 2.32 $ 2.60
Diluted $ 0.58 $ 0.70 $ 2.28 $ 2.53
Basic weighted average
shares outstanding 11,669,376 11,609,318 11,658,694 11,600,122
Diluted weighted
average shares
outstanding 11,874,331 11,895,058 11,863,180 11,887,868
Non-GAAP
Reconciliation
Three Months Ended December
31, Year Ended December 31,
(MORE TO FOLLOW) Dow Jones Newswires
March 06, 2024 17:07 ET (22:07 GMT)
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