OTC Markets Group

US: OTCM

Market Cap$661m

Last Close -55.78

OTC Markets operates regulated markets for trading 12,000 US and global securities. Data-driven disclosure standards form the foundation of its three public markets: OTCQX Best Market, OTCQB Venture Market and Pink Open Market. Its three SEC-regulated alternative trading systems (ATSs) are OTC Link ATS, OTC Link ECN and OTC Link NQB.

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Investment summary

OTCM’s Q122 EPS and PBT rose by 9% and 3% y-o-y respectively, despite a 47% decline in OTC Link revenue due to weak trading volumes in financial markets. The Corporate Services and Market Data Licensing divisions confirmed their resilience, resulting in OTCM’s total gross revenue to be flat year-on-year. Operating expenses were higher than expected at 12% y-o-y driven by staff costs and IT investments. OTCM acquired Blue Sky Data for $12m in May to boost its Market Data business. We are currently revising our figures.

Y/E Dec
Revenue (US$m)
EBITDA (US$m)
PBT (US$m)
EPS (fd) (c)
P/E (x)
P/CF (x)
2020A 71.2 23.2 21.4 153.4 36.4 22.1
2021A 102.9 39.8 38.0 252.0 22.1 12.3
2022E 96.9 29.4 28.0 185.6 30.1 27.3
2023E 102.3 31.7 31.0 195.2 28.6 19.0
Industry outlook

We expect markets to remain choppy in 2022 due to concerns about inflation and rising interest rates. The Corporate Services (46% of revenue in Q122 versus 30% in Q121) and Market Data Licensing (33% of Q122 revenue) businesses are mostly subscription-based recurring revenue. We estimate that only c 15% of OTCM’s Q122 revenue was directly linked to trading volumes, providing some resilience in OTCM’s financial performance in the event trading volumes drop significantly this year.

Last updated on 29/06/2022
Content on OTC Markets Group
OTC Markets Group – Q421 was another beat, 2022 is more uncertain
Financials | research Outlook | 23 March 2022
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OTC Markets Group – Hitting it out of the ballpark
Financials | research Update | 24 November 2021
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View more
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Share price graph
Balance sheet
Forecast net debt (US$m) 33.2
Forecast gearing ratio (%) 125
Price performance
%
1m
3m
12m
Actual (1.8) (14.2) 13.8
Relative* 6.9 2.7 27.8
52-week high/low US$65.9/US$42.4
*% relative to local index
Key management
Cromwell Coulson CEO
Antonia Georgieva CFO

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