OTC Markets Group

US: OTCM

Market Cap$729.7m

Last Close $61.95

OTC Markets Group operates the OTCQX, OTCQB and Pink financial markets for over 11,000 US and global securities. OTC Link LLC, a member of FINRA, operates OTC Link ATS and OTC Link ECN, both SEC-registered Alternative Trading Systems. In FY20 c 82% of revenues were of a subscription-based recurring nature and 78% in Q321.

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Investment summary

In November OTCM reported a strong third quarter with gross revenues of $25.2m, up 42% compared with Q320. Segmentally this was led by OTC Link (+60%), which benefited from elevated US equity trading levels, but Market Data Licensing (+18%) and Corporate Services (+57%) were also strong. Expenses, including redistribution and transaction-based costs, were up 27%. This left pre-tax profit up 78% and, after a higher tax charge, diluted EPS increased by 68%.

Y/E Dec
Revenue (US$m)
EBITDA (US$m)
PBT (US$m)
EPS (fd) (c)
P/E (x)
P/CF (x)
2019A 62.8 19.4 18.0 124.7 49.7 33.8
2020A 71.2 23.2 21.4 153.4 40.4 27.6
2021E 97.9 37.4 35.6 232.9 26.6 20.1
2022E 88.5 36.6 34.8 234.6 26.4 20.6
Industry outlook

Following Q321, there are further signs that US equity trading activity continues to normalise, and we have assumed this in our forecasts while acknowledging that it is not possible to estimate with any degree of confidence. Net acquisition of corporate clients remains impressive, which bodes well despite a likely normalisation of trading activity. We raised our EPS forecast by 8% for 2021 and 14% for 2022. Management’s confidence prompted it to maintain the quarterly dividend at $0.18/share and to announce a special dividend of $1.50, and we expect the group to pay a similar special dividend in 2022.

Last updated on 21/01/2022
Content on OTC Markets Group
OTC Markets Group – Hitting it out of the ballpark
Financials | Update | 24 November 2021
stock-1863880
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Share price graph
Balance sheet
Forecast net debt (US$m) 41.2
Forecast gearing ratio (%) 176
Price performance
%
1m
3m
12m
Actual 7.6 23.9 78.3
Relative* 13.8 28.2 56.2
52-week high/low US$62.0/US$34.0
*% relative to local index
Key management
Cromwell Coulson CEO
Antonia Georgieva CFO

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