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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

Progress continues

Update | Financials | 24 Aug 2018

OTC Markets Group’s (OTCM) second-quarter result was ahead of our expectation, in part because of favourable market trading volumes. While these volumes may not be sustained, underlying progress in terms of further regulatory recognition, successful launch of the ECN platform, encouraging sales of enhanced data products and a lengthening record of 100% uptime in core systems all point to a strengthening of the business over time. Given this and modest estimate increases, we have raised our fair value to c $31.

OTC Markets Group

Building the base for long-term growth

Update | Financials | 29 May 2018

OTC Markets Group (OTCM) continues to gain regulatory recognition for its premium markets, working with state regulators and their national association, while encouraging corporate transparency and facilitating data availability. Management believes that these initiatives will assist it in attracting issuers to its service offerings while enhancing the reputation of the market as a whole.  Market Data Licensing is expanding the reach of its diverse range of products, including compliance analytics products.  OTC Link ECN continues to add to broker dealer subscribers.

OTC Markets Group

Clear focus on longer-term aims

Update | Financials | 21 Mar 2018

OTCM Markets Group (OTCM) reported FY17 results in line with our expectations, with 7% revenue growth and a lower tax charge driving earnings growth of over 17%. OTCM remains consistent in its focus on positioning itself as a cost-effective, transparent and less onerous way of accessing capital markets. To this end, it has introduced new products, invested in IT, made strategic alliances and continued to work towards further Blue Sky recognitions.

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.