NEW YORK, Aug. 7, 2019 /PRNewswire/ --
Second Quarter 2019 Highlights:
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 second quarter of 2019.
"The first half of 2019 was a period of investment ? in our facilities, in our technology platform and in our people. We are making these investments in order to increase the value of our products for our clients," said R. Cromwell Coulson, President and Chief Executive Officer. "We continue to focus on creating cost-effective public markets and on efficiently delivering data and technology solutions that solve the challenges faced by brokers, banks and companies."
"We were pleased to report our 10th consecutive quarter of top line revenue growth, with all three of our business lines contributing. With our OTC Link ECN, we continued to drive growth in our trading business. In our Market Data business we saw a nice uptick in the number of professional users of our data as well as continued industry adoption of our suite of compliance analytics products. Finally, in our Corporate Services business, strong sales and improved customer retention on our OTCQX Best Market contributed to the quarter over quarter revenue gains," said Bea Ordonez, Chief Financial Officer. "While we saw contraction in our operating income and margin, this reflects the impact of our continued investment in the people, technology and facilities that we believe will drive sustainable, long-term earnings growth. We believe we are well positioned to deliver that growth."
Second Quarter 2019 compared to Second Quarter 2018 | ||||||||
Three Months Ended June 30, | ||||||||
(in thousands, except shares and per share data) | 2019 | 2018 | % change | $ change | ||||
OTC Link | $ 2,898 | $ 2,799 | 4% | 99 | ||||
Market data licensing | 6,077 | 5,830 | 4% | 247 | ||||
Corporate services | 6,695 | 6,137 | 9% | 558 | ||||
Gross revenues | 15,670 | 14,766 | 6% | 904 | ||||
Net revenues | 15,033 | 14,142 | 6% | 891 | ||||
Revenues less transaction-based expenses | 14,861 | 14,056 | 6% | 805 | ||||
Operating expenses | 10,434 | 9,060 | 15% | 1,374 | ||||
Income from operations | 4,427 | 4,996 | (11%) | (569) | ||||
Operating profit margin | 29.4% | 35.3% | ||||||
Income before provision for income taxes | 4,450 | 5,007 | (11%) | (557) | ||||
Net income | $ 3,567 | $ 3,987 | (11%) | (420) | ||||
Diluted earnings per share | $ 0.30 | $ 0.34 | (12%) | |||||
Adjusted diluted earnings per share | $ 0.46 | $ 0.49 | (6%) | |||||
Weighted-average shares outstanding, diluted | 11,678,560 | 11,600,830 | 1% |
Financial Highlights
Business Developments and News
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 September 26, 2019, to stockholders of record on September 12, 2019. The ex-dividend date is September 11, 2019.
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. The Company did not repurchase any shares during the second quarter of 2019.
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 of June 30, 2019, there are 300,000 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.
Second Quarter 2019 Conference Call
The Company will host a conference call on Thursday, August 8, 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: 877-407-9124 (Domestic); 201-689-8584 (International)
Replay Dial-in Numbers (available until September 8, 2019): 877-481-4010 (Domestic); 919-882-2331 (International); Replay PIN Number: 50550
Participants can access the conference via Internet webcast at the following link:
https://www.investornetwork.com/event/presentation/50550
The earnings release, transcript to 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.
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: [email protected]
OTC MARKETS GROUP INC. | |||
CONDENSED CONSOLIDATED STATEMENTS OF INCOME | |||
(in thousands, except share and per share information) | |||
(Unaudited) | |||
Three Months Ended June 30, | |||
2019 | 2018 | ||
OTC Link | $ 2,898 | $ 2,799 | |
Market data licensing | 6,077 | 5,830 | |
Corporate services | 6,695 | 6,137 | |
Gross revenues | 15,670 | 14,766 | |
Redistribution fees and rebates | (637) | (624) | |
Net revenues | 15,033 | 14,142 | |
Transaction-based expenses | (172) | (86) | |
Revenues less transaction-based expenses | 14,861 | 14,056 | |
Operating expenses | |||
Compensation and benefits | 6,754 | 5,879 | |
IT Infrastructure and information services | 1,614 | 1,353 | |
Professional and consulting fees | 546 | 595 | |
Marketing and advertising | 242 | 269 | |
Occupancy costs | 605 | 452 | |
Depreciation and amortization | 380 | 271 | |
General, administrative and other | 293 | 241 | |
Total operating expenses | 10,434 | 9,060 | |
Income from operations | 4,427 | 4,996 | |
Other income | |||
Interest income | 19 | 10 | |
Other income, net | 4 | 1 | |
Income before provision for income taxes | 4,450 | 5,007 | |
Provision for income taxes | 883 | 1,020 | |
Net income | $ 3,567 | $ 3,987 | |
Net income per share | |||
Basic | $ 0.31 | $ 0.35 | |
Diluted | $ 0.30 | $ 0.34 | |
Basic weighted average shares outstanding | 11,353,189 | 11,240,863 | |
Diluted weighted average shares outstanding | 11,678,560 | 11,600,830 | |
Non-GAAP Reconciliation | |||
Three Months Ended June 30, | |||
2019 | 2018 | ||
Net Income | $ 3,567 | $ 3,987 | |
Excluding: | |||
Interest Income | (19) | (10) | |
Provision for income taxes | 883 | 1,020 | |
Depreciation and amortization | 380 | 271 | |
Stock-based compensation expense | 660 | 552 | |
Adjusted EBITDA | $ 5,471 | $ 5,820 | |
Adjusted diluted earnings per share | $ 0.46 | $ 0.49 | |
Note: We use non-GAAP financial measures of operating performance. Non-GAAP measures do not replace and are not superior to the presentation of our GAAP financial results, but are provided to improve overall understanding of the Company's current financial performance. | |||
OTC MARKETS GROUP INC. | |||
CONDENSED CONSOLIDATED BALANCE SHEETS | |||
(in thousands, except share information) | |||
(Unaudited) | |||
June 30, | December 31, | ||
2019 | 2018 | ||
Assets | |||
Current assets | |||
Cash | $ 24,127 | $ 28,813 | |
Short-term restricted cash | - | 160 | |
Accounts receivable, net of allowance for doubtful accounts of $176 and $169 | 5,111 | 4,942 | |
Prepaid income taxes | 931 | 478 | |
Prepaid expenses and other current assets | 1,535 | 2,360 | |
Total current assets | 31,704 | 36,753 | |
Property and equipment, net | 6,134 | 1,980 | |
Operating lease right-of-use assets | 16,585 | - | |
Deferred tax assets, net | 964 | 1,043 | |
Goodwill | 251 | 251 | |
Intangible assets, net | 40 | 61 | |
Long-term restricted cash | 1,560 | 1,561 | |
Total Assets | $ 57,238 | $ 41,649 | |
Liabilities and stockholders' equity | |||
Current liabilities | |||
Accounts payable | $ 707 | $ 693 | |
Accrued expenses and other current liabilities | 5,778 | 6,018 | |
Income taxes payable | 1 | - | |
Deferred revenue | 13,102 | 16,070 | |
Total current liabilities | 19,588 | 22,781 | |
Deferred rent | - | 1,001 | |
Income tax reserve | 1,641 | 1,458 | |
Operating lease liabilities | 16,097 | - | |
Total Liabilities | 37,326 | 25,240 | |
Commitments and contingencies | |||
Stockholders' equity | |||
Common stock - par value $0.01 per share | |||
Class A - 14,000,000 authorized, 12,169,142 issued, 11,635,446 outstanding at | |||
June 30, 2019; 12,035,941 issued, 11,548,956 outstanding at December 31, 2018 | 122 | 120 | |
Additional paid-in capital | 17,038 | 15,772 | |
Retained earnings | 11,349 | 7,724 | |
Treasury stock - 533,696 shares at June 30, 2019 and 486,985 shares at December 31, 2018 | (8,597) | (7,207) | |
Total Stockholders' Equity | 19,912 | 16,409 | |
Total Liabilities and Stockholders' Equity | $ 57,238 | $ 41,649 | |
See accompanying notes to unaudited condensed consolidated financial statements | |||
SOURCE OTC Markets Group Inc.
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