OTC Markets Group


$349.1m market cap

$30.04 last close

OTC Markets Group operates the OTCQX, OTCQB and Pink financial markets for over 10,000 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. Over 80% of revenues are of a subscription-based recurring nature.

Investment summary

OTCM had a good second quarter delivering gross revenue growth of 9%, ahead of our expectation. This largely reflected continued high levels of transactions for the OTC Link business which reported revenue up 26% versus Q219 as equity market volatility remained high. Market Data Licensing revenue increased by 13% while Corporate Services revenue was down 2% as a result of lower numbers of OTCQB corporate clients. Operating costs were up 5% leaving PBT up by 8%. The tax rate was unexpectedly low at 12% as there was a reversal of earlier provisions. This meant diluted EPS (of $0.36) increased by 20% . A maintained $0.15 quarterly dividend was announced. Following the results we raised our EPS estimates by 9% and 2% for FY20 and FY21 respectively.

Y/E Dec
Revenue (US$m)
PBT (US$m)
EPS (c)
P/E (x)
P/CF (x)
2018A 59.3 20.7 19.8 140.8 21.3 14.3
2019A 62.8 19.4 18.0 128.4 23.4 15.3
2020E 66.9 20.2 18.6 134.2 22.4 17.7
2021E 67.2 20.0 18.4 128.2 23.4 15.5
Industry outlook

So far COVID-19 has not had a material impact on OTCM’s revenues but the group remains wary of the potential for its macroeconomic effects to impact results in future. Positively, corporate client signings are showing tentative signs of improved momentum, while trading may benefit longer term from the increased number of ECN subscribers. Over 80% of revenues are of a subscription-based nature. On a longer view, the group keeps its focus on delivering better informed and more efficient markets.

Last updated on 17/09/2020
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Share price graph
Balance sheet
Forecast net cash (US$m) 26.5
Forecast gearing ratio (%) N/A
Price performance
Actual (6.1) (8.4) (10.8)
Relative* (6.5) (15.5) (21.0)
52-week high/low US$37.0/US$23.0
*% relative to local index
Key management
Cromwell Coulson CEO
Bea Ordonez CFO

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