Otc Markets Group ((OTCM)) has held its Q4 earnings call. Read on for the main highlights of the call.
In a recent earnings call, OTC Markets Group presented a mixed sentiment with notable achievements and challenges. The company celebrated a record revenue milestone and introduced promising initiatives like overnight trading. However, it also faced hurdles such as declining corporate services revenue and increased operating expenses. While there is optimism in the growth of OTC Link and regulatory engagement, concerns about subscriber decline and flat market data revenue temper the overall sentiment.
Record Revenue Achievement
OTC Markets Group achieved a significant milestone by surpassing $111 million in annual revenues for the first time. This marks a 1% increase compared to the previous year, showcasing the company’s ability to generate consistent growth despite market challenges.
Growth in OTC Link Business
The OTC Link business experienced robust growth, with revenues increasing by 14% year-over-year. This was driven by a 21% increase in revenues from OTC Link ECN and NQB, as well as a 16% rise in revenues from ATS messages, highlighting the strength of this segment.
Overnight Trading Initiative
OTC Markets is set to launch OTC Overnight and Moon ATS, which will allow trading in OTC and exchange-listed securities during Asian market hours and European market open. This initiative aims to provide greater access and flexibility for investors.
Dividend Declaration
Reflecting its commitment to shareholder returns, the Board of Directors declared a quarterly dividend of $0.18 per share. This decision underscores the company’s focus on rewarding its investors.
Positive Retention Rates
The company reported a 96% retention rate for the OTCQX subscription period beginning January 1, 2025, an improvement from the previous year’s 93%. This indicates strong customer loyalty and satisfaction.
Decrease in Corporate Services Revenue
Corporate services revenues saw a 4% decrease for the year, with flat revenue from OTCQX and declines of 5% and 7% in OTCQB and DNS revenues, respectively. This decline poses a challenge for the company moving forward.
Subscriber Decline in Corporate Services
There was a decline in the number of companies subscribing to OTCQX and OTCQB, with decreases of 6% and 8% respectively by the end of the quarter. This trend could impact future revenue streams.
Flat Market Data Licensing Revenue
The market data licensing business experienced only a modest 1% growth year-over-year, with a notable 10% decline in non-pro user revenue, indicating potential areas for improvement.
Increased Operating Expenses
Operating expenses rose by 1% for the year, driven by a 7% increase in compensation and benefits and a 16% increase in IT infrastructure costs, reflecting the company’s investment in its workforce and technology.
Forward-Looking Guidance
Looking ahead, OTC Markets Group plans to focus on two major projects in 2025: the launch of OTC Overnight, enabling trading from 8 pm to 4 am Eastern Time, and the development of the OTCID basic reporting market, set to launch on July 1, 2025. The company also aims to maintain its commitment to shareholder returns with a quarterly dividend of $0.18 per share.
In summary, OTC Markets Group’s earnings call presented a balanced view of achievements and challenges. The record revenue and growth in OTC Link are promising, while the decline in corporate services revenue and subscriber numbers pose challenges. The company’s forward-looking initiatives and commitment to shareholder returns offer a hopeful outlook for the future.