OTC Markets Group Reports First Quarter 2019 Results

NEW YORK, May 8, 2019 /PRNewswire/ --

First Quarter 2019 Highlights:

• Gross revenues of $15.4 million for the quarter, up 7% versus the prior year period
• Operating income of $4.0 million for the quarter, down 12%, or $0.5M, over the prior year period with $0.5M of non-recurring expenses related to the move to new office space
• Net income of $3.5 million, a decline of 5% from the prior year period, and quarterly diluted GAAP EPS of $0.30, down 3%
• Total cash returned to shareholders during the quarter of $3.1 million, an increase of 18%, comprised of dividends of $1.7 million and repurchases of common shares of $1.4 million
• Announcing second quarter 2019 dividend of $0.15 per share
• 12 graduates to a national securities exchange during the quarter
• Launched Canari^SM, a web-based tool designed to provide a comprehensive view of quantitative compliance data points for OTC securities 
• Completed acquisition from PR Newswire of assets related to the Virtual Investor Conferences^SM business, with 4 events hosted since acquisition and 13 events already confirmed for 2019
• Completed acquisition and integration of Qaravan^SM Inc., enhancing suite of Market Data services
• Completed move to new corporate headquarters at 300 Vesey Street, part of the premier Brookfield Place complex in downtown New York City

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, today announced its financial results for the first quarter of 2019.

"Against the backdrop of a slower trading environment, the first quarter of 2019 marked the 9th consecutive quarter for which we have reported top line revenue growth," said R. Cromwell Coulson, President and Chief Executive Officer.  "While remaining focused on our core business, we also moved to new state-of-the-art-facilities in downtown New York and did so on schedule and without seeing any business interruption.  We integrated our recent acquisitions, and have continued to make investments that will move our business forward and deliver on our mission." 

"We were pleased to report another quarter of revenue growth, with strong sales and increased uptake across our business lines, and improved retention all contributing.  We also saw the impact of our continued investment in the people, technologies and facilities that we believe will continue to drive sustainable, long term earnings growth.  We remain focused on building upon our track record of providing superior returns to our shareholders," said Bea Ordonez, Chief Financial Officer.

 First Quarter 2019 compared to First Quarter 2018

Financial Highlights

• Gross revenues increased $1.0 million, or 7%, to $15.4 million.
• Corporate Services delivered 10% growth, with strong sales on both premium markets, an improved retention rate on the OTCQX market and the full quarterly impact of 2018 price increases on the OTCQB market all contributing.
• Market Data Licensing revenues grew 4%, with an increase in the number of professional users as well as increased usage of data file products, including compliance data file products, driving that increase.
• OTC Link revenues increased 7% over the prior year quarter, with revenues from OTC Link ECN offsetting a 9% decrease in message revenue when compared to the very active market environment in the first quarter of 2018.
• Operating expenses, inclusive of one time costs related to the move to new office, increased $1.4 million, or 15%, to $10.6 million.
• Compensation costs increased 13%, primarily a result of annual salary raises and increased headcount, reflecting continued investment in overseas sales and in product development and sales efforts related to the Virtual Investor Conferences and Qaravan offerings.
• Non-recurring costs related to the move to new office space of $0.5M, comprised of occupancy costs for legacy space prior to surrender, and one time project management and other costs related to the move.
• Net income decreased $0.2M, or 5%, to $3.5 million, reflecting the impact of one-time costs as well as a higher operating expense base, partially offset by higher revenues and a decrease in the company's effective tax rate for the quarter from 18% to 13%.
• Adjusted EBITDA, which excludes non-cash stock-based compensation expense, decreased 7%, to $5.1 million, or $0.42 per adjusted diluted share.

Business Developments and News

• In April 2019, launched Canari, a premium, web-based tool designed to provide subscribers with a comprehensive view of quantitative compliance data points and analytics tools for OTCQX, OTCQB, Pink and Grey Market securities.
• In March 2019, completed move to state-of-the-art new corporate headquarters at 300 Vesey Street in downtown New York City. On a normalized basis, additional operating expenses related to this new space will be approximately $150 thousand to $180 thousand per quarter.
• Largely based on the company's 2016 petition for rulemaking with the Securities and Exchange Commission (SEC), and subsequent legislation, on January 31, 2019 the SEC adopted rules amending Regulation A+ to allow SEC reporting companies to use this capital raising tool.
• Following our acquisition of assets related to the Virtual Investor Conferences business, during the first quarter, completed our integration efforts and, through the reporting date, hosted 4 events, with 13 events already confirmed for the remainder of 2019, including partner events with Deutsche Bank and KCSA.
• Completed integration of the February 2019 acquisition of Qaravan Inc., allowing the company to offer a suite of additional tools and data services to support the public and private banking industry.
• As of May 1, 2019, the OTCQX market is exempt from state Blue Sky laws regarding secondary trading in thirty-four states and the OTCQB market is exempt in thirty-one states.
• As of May 1, 2019, there are thirty-nine transfer agents participating in the Transfer Agent Verified Shares Program, making current share information publicly available for approximately 99% of the U.S. companies on the OTCQX and OTCQB markets. The continued expansion of the program further enhances the availability and reliability of company share information.
• As of May 1, 2019, 31 subscribers use the company's compliance data products to enhance and automate their compliance processes in the OTC and the small-cap exchange listed space. Subscribers include many of the largest custodians, banks and broker-dealers in the US equities markets.
• OTC Link ECN continued to gain traction with 43 subscribers connected to the ECN as at May 1, 2019.

Dividend Declaration – Quarterly Cash Dividend

OTC Markets Group announced today that its Board of Directors authorized a quarterly cash dividend of $0.15 on its Class A common stock.  The quarterly cash dividend is payable on June 27, 2019, to stockholders of record on June 13, 2019.  The ex-dividend date is June 12, 2019.

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.  During the first quarter of 2019, the Company purchased 46,711 shares at an average price of $29.75 per share.

On March 7, 2019, 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, 2019, there are 300,000 shares remaining to be purchased under the Company's 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.

First Quarter 2019 Conference Call

The Company will host a conference call on Thursday, May 9, 2019, at 8:30 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:

Dial-in Numbers: 1-877-407-9124 (Domestic); 1-201-689-8584 (International);

Replay Dial-in Numbers (Available until June 9, 2019): 1-877-481-4010 (Domestic); 1-919-882-2331 (International); Replay PIN Number: 47714

Participants can access the conference via Internet webcast at the following link:

https://www.investornetwork.com/event/presentation/47714

The earnings release, transcript of the earnings call and presentation 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, 2019, is available publicly at www.otcmarkets.com.

About OTC Markets Group Inc.

OTC Markets Group Inc. (OTCQX: OTCM) operates the OTCQX® Best Market, the OTCQB® Venture Market and the Pink® Open Market for 10,000 U.S. and global securities.  Through OTC Link® ATS and OTC Link ECN, we connect a diverse network of broker-dealers that provide liquidity and execution services.  We enable investors to easily trade through the broker of their choice and empower companies to improve the quality of information available for investors.

To learn more about how we create better informed and more efficient financial markets, visit www.otcmarkets.com.

OTC Link ATS and OTC Link ECN are operated by OTC Link LLC, member FINRA/SIPC and SEC regulated ATS.

Subscribe to the OTC Markets RSS Feed

Investor Contact:

Bea Ordonez
Chief Financial Officer
Phone: 212-220-2215
Email: ir@otcmarkets.com

View original content to download multimedia:http://www.prnewswire.com/news-releases/otc-markets-group-reports-first-quarter-2019-results-300846683.html

SOURCE OTC Markets Group Inc.