Fourth Quarter and Full Year 2023 Highlights:
NEW YORK, March 06, 2024 (GLOBE NEWSWIRE) -- OTC Markets Group Inc. (OTCQX: OTCM), operator of regulated markets for trading 12,000 U.S. and international securities, today announced its financial results for the fourth quarter and full year 2023.
"Following a year of acquisitions, we spent 2023 coming together as one team, on one platform, to build the value of one share," said R. Cromwell Coulson, President and Chief Executive Officer. "As we turn to 2024, we remain committed to integrating our expanded data offerings and distribution capabilities to provide greater client value. By thoughtfully investing in our processes and platform, we can better empower broker-dealers and public companies to serve investors, and expand our markets."
"During 2023, OTC Markets Group reached nearly $110 million in gross revenues and exceeded $100 million in revenues less transaction-based expenses for the first time," said Antonia Georgieva, Chief Financial Officer. "Organic growth in our Market Data Licensing business and the contribution of full year revenue from our 2022 acquisitions drove the increase. However, our overall expenses also grew and outpaced the increase in revenues, thus impacting our operating margin and net income. We remain focused on driving top line growth and operational efficiencies, and increasing the value of one share in the long-term."
Fourth Quarter 2023 compared to Fourth Quarter 2022
Quarter Ended December 31, | ||||||||||||||
(in thousands, except shares and per share data) | 2023 | 2022 | % change | $ change | ||||||||||
OTC Link | $ | 4,802 | $ | 5,346 | (10 | %) | ( 544 | ) | ||||||
Market data licensing | 10,881 | 9,895 | 10 | % | 986 | |||||||||
Corporate services | 11,922 | 12,054 | (1 | %) | ( 132 | ) | ||||||||
Gross Revenues | 27,605 | 27,295 | 1 | % | 310 | |||||||||
Net revenues | 26,772 | 26,537 | 1 | % | 235 | |||||||||
Revenues less transaction-based expenses | 25,442 | 24,867 | 2 | % | 575 | |||||||||
Operating expenses | 16,651 | 14,990 | 11 | % | 1,661 | |||||||||
Income from operations | 8,791 | 9,877 | (11 | %) | ( 1,086 | ) | ||||||||
Operating profit margin | 32.8 | % | 37.2 | % | ||||||||||
Income before provision for income taxes | 9,065 | 10,031 | (10 | %) | ( 966 | ) | ||||||||
Net income | $ | 7,001 | $ | 8,630 | (19 | %) | ( 1,629 | ) | ||||||
Diluted earnings per share | $ | 0.58 | $ | 0.70 | (18 | %) | ||||||||
Adjusted diluted earnings per share | $ | 0.89 | $ | 0.95 | (7 | %) | ||||||||
Weighted-average shares outstanding, diluted | 11,874,331 | 11,895,058 | (0 | %) | ||||||||||
Fourth Quarter 2023 Financial Highlights
Fiscal Year 2023 Results compared to Fiscal Year 2022
Year Ended December 31, | ||||||||||||||
(in thousands, except shares and per share data) | 2023 | 2022 | % change | $ change | ||||||||||
OTC Link | $ | 19,599 | $ | 20,937 | (6 | %) | ( 1,338 | ) | ||||||
Market data licensing | 43,368 | 36,407 | 19 | % | 6,961 | |||||||||
Corporate services | 46,928 | 47,805 | (2 | %) | ( 877 | ) | ||||||||
Gross Revenues | 109,895 | 105,149 | 5 | % | 4,746 | |||||||||
Net revenues | 106,658 | 102,048 | 5 | % | 4,610 | |||||||||
Revenues less transaction-based expenses | 101,134 | 96,201 | 5 | % | 4,933 | |||||||||
Operating expenses | 68,540 | 59,380 | 15 | % | 9,160 | |||||||||
Income from operations | 32,594 | 36,821 | (11 | %) | ( 4,227 | ) | ||||||||
Operating profit margin | 30.6 | % | 36.1 | % | ||||||||||
Income before provision for income taxes | 33,497 | 36,966 | (9 | %) | ( 3,469 | ) | ||||||||
Net income | $ | 27,661 | $ | 30,814 | (10 | %) | ( 3,153 | ) | ||||||
Diluted earnings per share | $ | 2.28 | $ | 2.53 | (10 | %) | ||||||||
Adjusted diluted earnings per share | $ | 3.37 | $ | 3.56 | (5 | %) | ||||||||
Weighted-average shares outstanding, diluted | 11,863,180 | 11,887,868 | (0 | %) | ||||||||||
Fiscal Year 2023 Financial Highlights
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® Best Market, OTCQB® Venture Market, and Pink® Open Market.
Our OTC Link®?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: [email protected]
Media Contact:
OTC Markets Group Inc.
Phone: (212) 896-4428
Email: [email protected]
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, | ||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||
Net Income | $ | 7,001 | $ | 8,630 | $ | 27,661 | $ | 30,814 | |||||||
Excluding: | |||||||||||||||
Interest Income | (312 | ) | (154 | ) | (844 | ) | (155 | ) | |||||||
Provision for income taxes | 2,064 | 1,401 | 5,836 | 6,152 | |||||||||||
Depreciation and amortization | 554 | 600 | 2,398 | 2,092 | |||||||||||
Stock-based compensation expense | 1,493 | 1,106 | 5,858 | 4,345 | |||||||||||
Adjusted EBITDA | $ | 10,800 | $ | 11,583 | $ | 40,909 | $ | 43,248 | |||||||
Adjusted diluted earnings per share | $ | 0.89 | $ | 0.95 | $ | 3.37 | $ | 3.56 | |||||||
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. | |||||||
CONSOLIDATED BALANCE SHEETS | |||||||
(in thousands, except share information) | |||||||
December 31, | |||||||
2023 | 2022 | ||||||
Assets | |||||||
Current assets | |||||||
Cash and cash equivalents | $ | 34,101 | $ | 37,368 | |||
Short-term investments | 3,622 | - | |||||
Accounts receivable, net of allowance for credit losses of $451 and $638 | 7,680 | 9,485 | |||||
Prepaid income taxes | 1,324 | 59 | |||||
Prepaid expenses and other current assets | 1,865 | 1,469 | |||||
Total current assets | 48,592 | 48,381 | |||||
Property and equipment, net | 8,429 | 8,637 | |||||
Operating lease right-of-use assets | 12,324 | 13,635 | |||||
Deferred tax assets, net | 7,691 | 4,853 | |||||
Goodwill | 3,984 | 3,984 | |||||
Intangible assets, net | 7,411 | 7,993 | |||||
Long-term restricted cash | 1,586 | 1,568 | |||||
Other assets | 508 | 567 | |||||
Total Assets | $ | 90,525 | $ | 89,618 | |||
Liabilities and stockholders' equity | |||||||
Current liabilities | |||||||
Accounts payable | $ | 2,152 | $ | 1,684 | |||
Income taxes payable | 141 | 567 | |||||
Accrued expenses and other current liabilities | 14,065 | 13,141 | |||||
Deferred revenue | 29,267 | 30,456 | |||||
Total current liabilities | 45,625 | 45,848 | |||||
Income tax reserve | 778 | 657 | |||||
Operating lease liabilities | 11,895 | 13,309 | |||||
Total Liabilities | 58,298 | 59,814 | |||||
Commitments and contingencies | |||||||
Stockholders' equity | |||||||
Common stock - par value $0.01 per share | |||||||
Class A - 17,000,000 authorized, 12,716,135 issued, 11,931,366 outstanding at December 31, 2023; 12,601,270 issued, 11,874,763 outstanding at December 31, 2022 | 127 | 126 | |||||
Additional paid-in capital | 29,469 | 24,847 | |||||
Retained earnings | 22,425 | 21,246 | |||||
Treasury stock - 784,769 shares at December 31, 2023 and 726,507 shares at December 31, 2022 | (19,794 | ) | (16,415 | ) | |||
Total Stockholders' Equity | 32,227 | 29,804 | |||||
Total Liabilities and Stockholders' Equity | $ | 90,525 | $ | 89,618 | |||
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