Fourth Quarter and Full Year 2023 Highlights:
Gross revenues of $109.9 million for the year, up 5% versus 2022
Operating income of $32.6 million for the year, down 11% versus 2022
Operating profit margin of 30.6% for the year, versus 36.1% for 2022
Net income of $27.7 million for 2023, down 10% versus 2022, and GAAP diluted EPS of $2.28 versus $2.53 for 2022
Total cash returned to shareholders during 2023 of $29.9 million, comprised of dividends of $26.5 million and repurchases of common shares of $3.4 million, up 3% versus 2022
Announcing first quarter 2024 dividend of $0.18 per share
600 OTCQX® and 1,140 OTCQB® companies at year end
38 graduates to a national securities exchange during 2023
108 subscribers to OTC Link ECN as of year-end 2023, up 6 versus 2022
136 unique OTC Link subscribers, up 3 versus 2022
Approximately 32,000 average daily trades during 2023 versus approximately 36,000 during 2022
Fourth quarter gross revenues of $27.6 million, up 1% versus the prior year quarter
Fourth quarter operating income of $8.8 million, down 11% versus the prior year quarter
Fourth quarter operating profit margin of 32.8%, as compared to 37.2% in the prior year quarter
Continued progress in achieving state Blue Sky recognition for our OTCQX and OTCQB markets, with exemptions in 39 states and one U.S. territory as of March 1, 2024
OTC market data feeds available on Nasdaq’s Data Link platform
Julia Sears appointed to OTC Markets Group Board of Directors
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
Gross revenues of $27.6 million, up 1% over the prior year quarter. Revenues less transaction-based expenses up 2%.
OTC Link revenues down 10%. Transaction-based revenues from OTC Link ECN and OTC Link NQB down 16%, reflecting the impact of lower trading volumes on these platforms, which more than offset the effect of increases in certain fees. Reduced trading activity on OTC Link ATS resulted in messages revenue declining 11% and QAP One Statement fees declining 19%, which further contributed to the overall decline in OTC Link revenues.
Market Data Licensing revenues up 10%, due to a full quarter contribution of the November 2022 acquisition of EDGAR Online as well as subscriber growth and price increases for certain licenses. Pro-user revenues were up 7%, in line with a 6% increase in the number of professional users quarter over quarter. Revenues from non-pro users were down 22%, driven by a 20% decrease in the number of non-pro users of our market data. Revenues from market data connectivity fees increased 68% and revenues from internal system licenses, delayed data licenses, and certain other data services increased 5%, in each case due to growth in subscribers and price increases for certain licenses.
Corporate Services revenues down 1% quarter over quarter, with a 4% increase in revenues from our OTCQX market, offset by a 5% decrease each in revenues from the OTCQB market and the Disclosure & News Service® (“DNS”) product. A lower average number of companies on our OTCQB market as well as of companies subscribing to DNS during the quarter impacted the revenues for these products, offsetting the annual, incremental price increases effective at the beginning of 2023. Partially offsetting the decline in Corporate Services revenues was higher revenue from our Virtual Investor Conferences® (“VIC”) product due to a greater number of events held during the quarter, and higher revenue from the OTCIQ Basic product.
Operating expenses increased 11% over the prior year quarter. The increase was primarily driven by a 69% increase in professional and consulting costs, largely as a result of an accrual related to an SEC matter. Further contributing to the growth in operating expenses was a 6% increase in compensation and benefits costs, reflecting a higher average headcount during the quarter.
Operating income and net income decreased 11% to $8.8 million and 19% to $7.0 million, respectively.
Adjusted EBITDA, which excludes non-cash stock-based compensation expense, decreased 7% to $10.8 million, or $0.89 per adjusted diluted share.
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