• Gross Revenue: $27.4 million, up 1% year-over-year.

• Net Revenue: Increased 2% compared to Q3 2023.

• OTC Link Revenue: Grew 16%, representing 19% of gross revenues.

• Market Data Licensing Revenue: Decreased 1%, contributing 40% of gross revenues.

• Corporate Services Revenue: Decreased 2%, comprising 41% of gross revenues.

• Operating Expenses: Flat for the quarter, with a 1% increase over the first nine months of the year.

• Operating Profit Margin: 32.4%, slightly down from 32.7% in the prior-year quarter.

• Adjusted EBITDA: $10.8 million, up 2% year-over-year.

• Adjusted Diluted Earnings Per Share: $0.89, up 2% year-over-year.

• Cash Provided by Operating Activities: $5.9 million, down from $7.9 million in the prior quarter.

• Free Cash Flow: $5.8 million, compared to $7.9 million in the prior quarter.

• Dividends Returned to Investors: $2.2 million, compared to $2.1 million in the prior-year quarter.

• Warning! GuruFocus has detected 2 Warning Sign with OTCM.

Release Date: November 07, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Gross revenues grew by 1% and net revenue by 2% compared to the third quarter of 2023.

• OTC Link experienced significant growth, with a 16% increase in the third quarter.

• The company announced the launch of OTC Overnight, expanding trading hours and accessibility.

• A special dividend of $1.50 and a quarterly dividend of $0.18 per share were declared, reflecting strong shareholder returns.

• The company is focusing on integrating teams and consolidating technology platforms to drive operational efficiencies.

Negative Points

• Market data revenue licensing decreased by 1%, and corporate services revenue decreased by 2%.

• The corporate services business was impacted by a reduced number of subscribers, particularly in the OTCQB market.

• Revenues from EDGAR Online decreased by 15% due to subscriber cancellations.

• Pro user and non-pro user revenues in the market data licensing business decreased by 6% and 7%, respectively.

• Operating expenses grew by approximately 1% during the first nine months of the year, with compensation and benefits being a significant cost.

Q & A Highlights

Q: Can you provide more details on the timing and infrastructure needs for the launch of OTCID in July 2025? A: R. Cromwell Coulson, President and CEO, explained that the launch requires numerous small changes across various systems. The goal is to streamline processes for issuers to engage with the market, ensuring data-driven standards are met across all market tiers.

Q: How will the pricing for OTCID compare to the traditional Pink market and OTCQB? A: Daniel Zinn, General Counsel and Chief of Staff, indicated that the pricing will reflect the market's position between the Pink market and OTCQB, considering the value of being on a regulated market and the resources devoted to market integrity.