OTC Markets Group

US: OTCM

Market Cap$589m

Last Close $50.05

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 71% in Q221.

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Investment summary

In August OTCM reported a strong second quarter with gross revenues of $25.5m, up 49% compared with Q220. Segmentally this was led by OTC Link (+110%), which benefited from elevated US equity trading levels, but Market Data Licensing (+25%) and Corporate Services (+40%) were also strong. Expenses, including redistribution and transaction-based costs, were up 33%. This left pre-tax profit up 90% and, after a higher tax charge, diluted EPS increased by 64%.

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 40.1 25.4
2020A 71.2 23.2 21.4 153.4 32.6 19.8
2021E 92.5 34.8 33.1 216.0 23.2 14.9
2022E 84.1 32.3 30.5 205.6 24.3 15.6
Industry outlook

Following Q221, 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 has accelerated, which bodes well despite a likely normalisation of trading activity. We raised our EPS forecast by 12% for 2021 and 19% for 2022. Management’s confidence in the business has prompted it to increase the quarterly dividend to $0.18 from $0.15 and we expect the group to pay a special dividend of 65c in 2021 and 75c in 2022.

Last updated on 20/10/2021
Content on OTC Markets Group
OTC Markets Group – Focus remains on long-term value
Financials | Update | 24 March 2021
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Share price graph
Balance sheet
Forecast net cash (US$m) 48
Forecast gearing ratio (%) N/A
Price performance
%
1m
3m
12m
Actual 10.0 7.2 66.0
Relative* 5.7 2.1 26.0
52-week high/low US$52.7/US$29.6
*% relative to local index
Key management
Cromwell Coulson CEO
Antonia Georgieva CFO

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