OTC Markets Group Inc (OTCQX: OTCM) posted fourth-quarter results late Wednesday that saw revenue rise to $16.1 million, up 4% over the same quarter a year earlier.
"We were pleased to report continued revenue growth across our business lines, delivering period over period increases in top-line revenue for the 12th consecutive quarter," said Bea Ordonez, chief financial officer at OTC Markets Group.
She said the company was “well-positioned” to leverage the investments made in 2019.
“We see opportunities to expand our franchise — to grow the number of international issuers on our markets, to increase the number of private and public banks that we serve, to add subscribers to our ECN and to broaden the scope and reach of our suite of compliance products," said Ordonez.
The company has gained traction from the April 2019 launch of its web-based compliance tool, Canari, and enhancements to its suite of compliance products.
OTC Markets Group broadened the scope of its market data products with the February 2019 acquisition of Qaravan Inc, a provider of software and analytics to the US banking sector, and added to its suite of investor engagement tools through its acquisition of the Virtual Investor Conferences business, an online investor conference platform. During 2019, the company hosted 18 events, with 213 companies participating, reaching more than 14,000 investors.
4Q 2019 financial highlights
• Corporate services delivered 6% growth in revenue versus the prior period, driven primarily by an increase in the number of companies on its OTCQX market
• Market data licensing revenue saw a 4% increase, with increased usage of its suite of data license products, including its compliance analytics products, and quarter-over-quarter increases in the number of professional users driving much of that increase
• OTC Link revenue was up 1%, a result of a 26% increase in revenue from its OTC Link ECN and a 9% increase in revenue from quotes on its OTC Link ATS, partially offset by a decrease in revenues from messages on its OTC Link ATS.
• Net income decreased 8% to $3.8 million for the quarter, reflecting the decrease in operating income and a quarter-over-quarter increase in its effective tax rate from 15% to 19.4%, primarily due to the recognition in the prior-year quarter of the full 2018 benefit derived from the Foreign Derived Intangible Income deduction.
• Adjusted EBITDA, which excludes non-cash stock-based compensation expense, increased 3% to $5.8 million, or $0.48 per adjusted diluted share.
Meanwhile, the company posted fiscal year 2019 gross revenue of $62.8 million up 6%, compared to $59.2 million in 2018.
Corporate Services revenue rises
Corporate Services revenue was up 8% for 2019, primarily driven by an increase in the number of companies on its OTCQX market, as well as the full-year impact of price increases for renewing subscribers on the OTCQB market, which offset a decline in the number of companies on the market.
Through OTC Link ATS and OTC Link ECN, the company’s SEC-regulated Alternative Trading Systems, the OTC Markets Group connects a network of US broker-dealers to provide liquidity and execution services for securities on its markets.
Launched in late 2017, OTC Markets had 53 subscribers to its OTC Link ECN at the end of 2019, which contributed to a 71% increase in year-over-year ECN revenue, said the company.
"We achieved a great deal in 2019 — moving our corporate headquarters to new state-of-the-art facilities in downtown New York City, undertaking a complete refresh of the infrastructure at our data centers, and expanding our product offerings both organically and through acquisition," said OTC Markets Group CEO R Cromwell Coulson.
"In the coming year, we look forward to working alongside market participants and the SEC to help advance modernizations to Exchange Act Rule 15c2-11 that will drive increased market efficiency while properly balancing the needs of "main street" investors and delivering transparent trading and competitive executions to professional investors," he added.
The New York-headquartered OTC Markets Group is the operator of the OTCQX Best Market, the OTCQB Venture Market, and the Pink Open Market for 10,000 US and global securities.
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