otc markets

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OTC Markets Group

High yield with net cash and growth prospects

Update | Financials | 13 May 2016

OTC Markets Group (OTCM) continued to record a high level of revenue in Q116 with gross revenues rising 11% y-o-y and net income 25%. Seasonal factors resulted in a q-o-q decline of 2% in revenue and 21% in net income. The quarterly dividend was maintained at $0.14 per share, the same as in Q415 and its prospective yield of c 7% remains attractive for a profitable company with cash of $22.6m, no debt and exposure to the growth of online capital raising. The shares are trading below our DCF valuation of $19.2 per share (previously $23.7) and at a discount to other market data providers on both FY16e and FY17e P/Es.

OTC Markets Group

Growing revenues and investing for the future

Update | Financials | 16 Nov 2017

OTC Markets Group’s (OTCM) third quarter results showed further progress with pre-tax profits up by 4% versus Q316 despite a 10% increase in operating expenses to support IT systems and new services. OTCQX and OTCQB received Blue Sky recognition from a further two states taking the total to 27 for OTCQX. Strategic alliances have been established that should help extend OTCM’s geographical reach and broaden the services offered to corporate clients.

OTC Markets Group

Positive revenue and profit trends

Update | Financials | 15 Aug 2017

OTC Markets Group’s (OTCM) Q2 results were ahead of our expectations, with a 3% revenue beat translating into operating profits nearly 10% above our estimate: evidence of the potential operational gearing present in the business. We have increased our pre-tax profit estimates by 6% and 8% for this year and next while, on a longer view, the continued increase in the number of states that grant OTCM markets Blue Sky recognition should increase the appeal of these cost-effective trading venues to corporates.

OTC Markets Group

Acceleration in corporate client signings

Outlook | Financials | 26 May 2017

OTC Markets Group's (OTCM) first quarter results showed progress with revenues up 5% and pre-tax profits 12% ahead of Q116. While the corporate client count was down, there are encouraging signs of an improvement in the rate of new additions. OTCM continues to refine the rules for its premium markets to enhance their reputation while minimising the burden on corporates. The drive to increase the number of states that grant OTCM markets Blue Sky recognition continues as a further means to increase their appeal to corporates. OTCM is also taking a measured approach in its response to the competitive threat from the Global OTC ATS.

OTC Markets Group

Growing market recognition

Update | Financials | 10 Mar 2017

Against a soft trading background OTC Markets Group (OTCM) delivered FY16 numbers slightly ahead of our expectation and the prior year. While the number of companies on its premium exchanges fell during the year there has been encouraging pick-up in new joiners in Q4 and early 2017. On a medium-term view the increased number of states, now 20, that grant OTCM markets Blue Sky recognition is important in helping draw in additional, good quality, corporate clients.

OTC Markets Group

Subscription base provides stability

Update | Financials | 21 Nov 2016

Q3 results for OTC Markets Group (OTCM) provided further evidence of the benefits of its primarily subscription-based revenue model. The trading environment this year has been lacklustre but Q3 revenue and operating margin were only slightly lower. While costs were contained, IT spending increased, boding well for service enhancements and further quarters of 100% uptime. Since the half-year end an additional seven states have given Blue Sky recognition to OTCM's premium markets, a promising trend for longer-term development of the corporate customer base.

OTC Markets Group

Increasing recognition, 100% uptime

Update | Financials | 06 Sep 2016

OTC Markets Group's second-quarter results showed progress against a relatively subdued market background, underlining the benefits of its mainly subscription-based business model. Investment in the IT platform continues to pay off in the shape of 100% uptime. The achievement of Blue Sky recognition from five states is a promising early indicator of the group's ability to broaden its appeal to a wider range of corporate clients.

OTC Markets Group

Corporate Services revenues surge

Outlook | Financials | 19 Apr 2016

OTC Markets Group (OTCM) operates financial markets for 10,000 US and global securities and organises them into markets to better inform investors. It provides companies with a cost-effective way to access US capital markets. In 2014 it designated its OTCQB Venture Market as a premium market designed to meet the needs of early-stage and venture companies. In 2015, this resulted in a 77% surge in revenue from Corporate Services and a 30% rise in net income. Most of OTCM's revenues (we estimate c 80%) are earned from subscriptions so are relatively stable. It believes US regulatory changes to permit online capital-raising have the potential to be truly disruptive and that it is well positioned to benefit. It has net cash of $24m (end FY15) and has followed a progressive dividend policy that has included special dividends in the last two years.

OTC Markets Group

Growth and a special dividend

Update | Financials | 20 Nov 2015

OTC Markets Group (OTCQX: OTCM) continues to benefit from its initiative to create a US venture market to rival AIM in the UK and TSX Venture in Canada. Revenues continued to rise in Q315 and operational gearing led to a higher operating margin. OTCM has net cash on its balance sheet and is generating considerable cash from its business. It has announced a special dividend for 2015, having also paid one in 2014. OTCM is trading on a yield of 7.4% for 2015 and 3.7% excluding the special dividend. It is also trading below our DCF valuation.

OTC Markets Group

Continued progress in OTCQB Venture Market

Update | Financials | 26 Aug 2015

In Q215 OTC Markets Group (OTCQX: OTCM) reaped the rewards from its development of OTCQB Venture Market. Subscriptions surged in the quarter and were mainly responsible for a 21% rise in gross revenue y-o-y and 8% q-o-q. With Q215 expenses unchanged on the previous quarter, Q215 net income rose 29% q-o-q and 48% y-o-y. The Q215 dividend was increased to $0.14 per share from $0.1 in the previous quarter. The company has cash in its balance sheet, an increasing dividend, yields 3.5% and is trading below our DCF valuation.

OTC Markets Group

Record quarterly revenues

Update | Financials | 15 May 2015

OTC Markets Group (OTCQX: OTCM) continued to perform well in Q115 with revenue rising as a result of its Corporate services initiative increasing new subscribers to OTCQB, its venture marketplace. Expenses have increased significantly to prepare the company for future growth and to upgrade the IT infrastructure to better meet client requirements and regulatory expectations. The Q115 dividend was unchanged at $0.1 per share.

OTC Markets Group

2014 net income increases 40%

Outlook | Financials | 13 Apr 2015

OTC Markets Group (OTCQX: OTCM) provides regulated marketplaces offering a cost-effective solution for targeting US investors. Using OTCM's three marketplaces, corporates wanting an informed and efficient US market face less regulatory complexity, and so incur lower costs. 2014 was a record year, with each of its three business lines contributing to overall gross revenue growth of 19% and net income growth of 40%. Particularly strong revenue growth was achieved in Market Data Licensing (38% y-o-y) following a re-pricing initiative and an increase in subscriber numbers. OTCM has net cash, no debt and pursues shareholder-friendly policies.