OTC Markets Group Q2 2025 Earnings Report

OTC Markets Group EPS Results

• Actual EPS: $0.60
• Consensus EPS: $0.62
• Beat/Miss: Missed by -$0.02
• One Year Ago EPS: N/A

OTC Markets Group Revenue Results

• Actual Revenue: $29.51 million
• Expected Revenue: $29.78 million
• Beat/Miss: Missed by -$271.00 thousand
• YoY Revenue Growth: N/A

OTC Markets Group Announcement Details

• Quarter: Q2 2025
• Date: 8/6/2025
• Time: After Market Closes
• Conference Call Date: Thursday, August 7, 2025
• Conference Call Time: 8:30AM ET

OTC Markets Group (OTCMKTS:OTCM) operates regulated markets for trading 12,000 U.S. and international securities. Its data-driven disclosure standards form the foundation of its three public markets: OTCQX Best Market, OTCQB Venture Market, and Pink Open Market. The company's OTC Link Alternative Trading Systems (ATSs) provide critical market infrastructure that broker-dealers rely on to facilitate trading. Its innovative model offers companies efficient access to the U.S. financial markets. The company through its wholly owned subsidiary, OTC Link LLC, operates OTC Link ATS, OTC Link ECN, and OTC Link NQB, which are Securities and Exchange Commission (SEC) regulated ATS. The company operates in three business lines: OTC Link, Market Data Licensing, and Corporate Services. The OTC Link business operates three ATSs, such as OTC Link ATS, OTC Link ECN, and OTC Link NQB that provide trading services to FINRA member broker-dealer subscribers. The Market Data Licensing business provides market data and compliance data, including SEC filings for a spectrum of securities and issuers. It provides broker-dealers, investors, traders, institutions, companies, accountants, regulators, and others with a suite of enterprise and user market data licenses, offering via direct or extranet connectivity through third-party market data redistributors or order management systems. The Corporate Services business operates the OTCQX Best Market and the OTCQB Venture Market and offers companies access to a suite of services that are designed to facilitate public disclosure and communication with investors, promote transparency, and allow companies to demonstrate regulatory compliance and mitigate market risk. Its services include the OTC Disclosure and News Service, RealTime Level 2 Quote Display, Blue Sky Monitoring Service for issuers, and Virtual Investor Conferences product. OTC Markets Group Inc. was founded in 1904 and is headquartered in New York, New York.

OTC Markets Group Q2 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Gross revenues rose 11% and net revenues increased 10% year-over-year in Q2, with double-digit growth across OTC Link (19%), Market Data (14%), and Corporate Services (3%).
• Positive Sentiment: OTC Markets launched the OTCID basic market on July 1, expanding its platform to issuers seeking baseline disclosure and driving additional subscriber interest.
• Positive Sentiment: The new OTC Overnight and Moon ATS offerings enable 24-hour access to exchange-listed and OTC securities during Asian and U.S. overnight hours, aligning with clients’ demand for extended trading.
• Negative Sentiment: Operating expenses climbed 8% in Q2—driven by higher compensation, consulting fees, and IT costs—causing operating margins to contract to 29.9% from 30.4%.
• Positive Sentiment: The Board declared a quarterly dividend of $0.18 per share, underscoring management’s commitment to returning capital to shareholders.

Presentation

[Operator]

Ladies and gentlemen, thank you for standing by. Welcome to OTC Markets Group Second Quarter twenty twenty five Earnings Conference Call and Webcast. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session. To ask a question during the session, you will need to press 11 on your telephone.

[Operator]

You will then hear an automated message advising your hand is raised. And to withdraw your question, please press 11 again. Please be advised that today's conference is being recorded. I would like now to turn the conference over to Dan Zinn, General Counsel and Chief of Staff. Please go ahead.

[Daniel Zinn, General Counsel & Chief of Staff at OTC Markets Group]

Thank you, operator. Good morning, and welcome to the OTC Markets Group Second Quarter twenty twenty five Earnings Conference Call. With me today are Kromwell Coulson, our President and Chief Executive Officer and Antonia Georgieva, our Chief Financial Officer. Today's call will be accompanied by a slide presentation. Our earnings press release and the presentation are each available on our website.

[Daniel Zinn, General Counsel & Chief of Staff at OTC Markets Group]

Certain statements during this call and in our presentation may relate to future events or expectations and as such may constitute forward looking statements. Actual results may differ materially from these forward looking statements. Information concerning risks and uncertainties that may impact our actual results is contained in the Risk Factors section of our 2024 Annual Report, which is also available on our website. For more information, please refer to the Safe Harbor statement on Slide three of the earnings presentation. With that, I'd like to turn the call over to Cromwell Coulson.

[R. Cromwell Coulson, President, CEO & Director at OTC Markets Group]

Thank you, Dan. Good morning, everyone. Thank you for joining us today. I will discuss our second quarter twenty twenty five results at a high level and will review the status of our key priorities for the year. Gross revenues grew 11% and net revenues by 10% during the second quarter.

[R. Cromwell Coulson, President, CEO & Director at OTC Markets Group]

Each metric was up 10% for the first six months of the year. I want to recognize the whole team at OTC Markets Group, as each of our business lines contributed to the strong double digit revenue growth during the quarter. 19% in OTC Link, 14% in Market Data and 3% in Corporate Services. These results highlight the value of our business model, with each business line supporting the others in driving value for our clients and our shareholders. Antonio will review our financial results in greater detail in a few minutes.

[R. Cromwell Coulson, President, CEO & Director at OTC Markets Group]

OTC Link's strong revenue has largely been due to increased trading volumes across each of our markets, continuing the positive trend from 2024. We cannot control overall market volumes or predict economic events. Instead, we build on our success by consistently improving the value we offer as a vendor while being open every day, earning client business by reliably serving their needs in times of increased market volatility. Market data price increases have been the primary driver of revenue growth over the first six months. Both the market data team and our OTC Link Group continue to build out the foundation of our overnight trading business, working with current and prospective subscribers around the globe.

[R. Cromwell Coulson, President, CEO & Director at OTC Markets Group]

I am also pleased to report a return to revenue growth. In our corporate services business during the quarter, the team spent substantial time this year preparing companies for the launch of the OTCID basic market. We are putting a strategic focus on strengthening issuer engagement to improve market quality and better managing retention over the long term. Throughout the first half of the year, we have also focused on our overnight trading initiative. The combination of OTC Overnight and Moon ATS enables our broker dealer subscribers to access thousands of exchange listed and OTC securities during Asian market hours at European market open and overnight in The U.

[R. Cromwell Coulson, President, CEO & Director at OTC Markets Group]

S. Overnight trading in NMS securities is a competitive market, and we expect more entrants into this space over time, including the national securities exchanges. We launched Moon in response to broker dealer demand, and we have onboarded a number of active broker dealer subscribers. Market data users have also taken note, with firms already connecting to our data feeds in preparation for increased activity on Moon ATS over time. As with our existing daytime markets, building a critical mass of connected subscribers is paramount.

[R. Cromwell Coulson, President, CEO & Director at OTC Markets Group]

The availability of moon data to interested market participants around the world is integral to the success of this endeavor. Securities markets are shifting to twenty four hour trading, and we will be there to serve our subscribers. Our approach is consistent. We will deliver elegant, reliable and cost effective solutions that help meet the needs of our broker dealer subscribers and serve investors. Our second high priority initiative, the OTCID Basic Market, came to fruition on July 1.

[R. Cromwell Coulson, President, CEO & Director at OTC Markets Group]

OTCID companies need a symbol and a subscription to publish a baseline of ongoing information rather than meeting the qualitative and quantitative standards of our premium OTCQX and OTCQB markets. Investors are better informed when OTC ID companies provide ongoing financial disclosure, publish a management certification and verify their company profile. Our OTCQX and OTCQB premium markets are recognized brands, ingrained in trading, regulatory, and compliance processes across the industry. OTCID now expands our offering to a wider range of companies, and its introduction has created increased interest in all of our markets. I want to be clear, engaged public companies committed to ongoing transparency and good governance are critical to improving market quality, which benefits broker dealers and investors.

[R. Cromwell Coulson, President, CEO & Director at OTC Markets Group]

From a client perspective, our premium markets allow investor aligned public companies to take ownership of their US symbols, support informed and efficient trading, and importantly, separate themselves and their brands from Pink Limited securities. The Pink Limited market is for broker dealers to publicly quote securities with limited to no issuer involvement. It plays an important role, allowing broker dealers to provide best execution in a range of securities. These companies do not certify their compliance with established reporting standards, have limited availability of disclosure or financial information, and may not support their US market. The securities are identified with a yield sign to warn investors to proceed with caution.

[R. Cromwell Coulson, President, CEO & Director at OTC Markets Group]

Our OTCQX, OTCQB, and OTC ID markets provide an efficient, cost effective digital platform for public companies to perform the same IR disclosure and governance activities as listed companies. This helps ensure the informational, operational, and compliance experience for brokers and investors is comparable to exchange listed securities. And most importantly, these digitalized, more complete, and consistent issuer information streams improve the market pricing process. Our drive for sustainable growth and continuous improvement also requires that we maintain focus on our regulatory priorities. The regulatory and legislative environment is extraordinarily active.

[R. Cromwell Coulson, President, CEO & Director at OTC Markets Group]

The SEC, FINRA, and lawmakers on Capitol Hill are soliciting ideas and taking action on issues ranging from capital formation to market structure to digital assets. Each of these areas can impact our markets and are engaged at every level. Key discussions have included how best to modernize rules and regulations, how to optimize small company capital formation, and forward looking discussions regarding how the financial markets will utilize innovations in digital assets and tokenization. While we focus on developments that will improve our future, we also prioritize our internal operations as well. Operational integrity, compliance, and risk management go hand in hand with incremental improvements, new product development, and identifying growth opportunities.

[R. Cromwell Coulson, President, CEO & Director at OTC Markets Group]

In closing, I'm pleased to announce that on August 5, our Board of Directors declared a quarterly dividend of $0.18 per share, payable on December on September 18. This September dividend reflects our ongoing commitment to providing superior shareholder returns. With that, I will turn the call over to Antonia.

[Antonia Georgieva, CFO at OTC Markets Group]

Thank you, Gremel, and thank you all for joining our call today. I would like to start by congratulating our entire OTC Markets team on the successful launch of OTC ID and by thanking them for continuing to execute on our strategic priorities and for their unwavering commitment to delivering reliable service and support to our subscribers. As I discuss our results for the quarter ended 06/30/2025, any reference made to prior period comparatives will refer to the 2024. Turning to page seven for a review of our second quarter revenues. We generated $30,500,000 in gross revenues, up 11% compared to the prior year period.

[Antonia Georgieva, CFO at OTC Markets Group]

Revenues less transaction based expenses were up 8%. OTC Link's gross revenues increased 19%, driven by a 40% increase in transaction based revenues from OTC Link ECN and OTC Link AQB, as we benefited from a higher number of shares traded on those platforms. As an offset, transaction based expenses increased 48%. Additionally, OTC Link saw an increase in revenues from OTC Link ATS messages due to a higher number of messages, in certain connectivity revenue due to growth in the number of connection licenses, and in quote access payment service revenue due to the increased volume of trading activity. OTC Link finished the second quarter with 113 subscribers on OTC Link ECM and 78 subscribers on OTC Link ATS and have 137 unique subscribers across our ATSs.

[Antonia Georgieva, CFO at OTC Markets Group]

At the end of the prior year period, OTC Link had one hundred and fourteen and eighty subscribers on OTC Link ECN and OTC Link ATS, respectively, and 140 unique subscribers. Trading volumes remain highly unpredictable and could decline in the future. Revenues from our market data licensing business increased 14% quarter over quarter, reflecting a 20% increase in redistributor based revenues and 16% increase in revenues from direct salt licenses. Revenues from data and compliance solutions were essentially flat to the prior year period. Within redistributor based revenues, professional user revenues increased 28%, primarily due to price increases from the 2025 and a slight 1% increase in professional user count.

[Antonia Georgieva, CFO at OTC Markets Group]

Nonprofessional user revenues declined 31%. Due to an internal policy change at one of our retail focused broker dealer subscribers, we saw a 21% reduction in reported nonprofessional users, which more than offset the impact of the price increases. Historically and in the normal course of business, we have seen significant changes in the number of non professional users as market volumes and retail participation on our markets fluctuate, and we may experience a decline in the future. Broker dealer enterprise licenses and internal system licenses drove the growth in direct sold licenses. BD enterprise license revenues increased due to the combined effect of price increases and subscriber growth, while internal system license revenues increased due to subscriber growth.

[Antonia Georgieva, CFO at OTC Markets Group]

Data and Compliance Solutions revenue remained relatively unchanged with a decreased revenue from Edgar Online, counterbalanced by increased revenues from data services and the Blue Sky data product. Corporate services revenues increased 3% in the second quarter. The impact of annual incremental pricing adjustments effective 01/01/2025 served to offset a lower number of OTCQX and OTCQB companies, resulting in a 2% increase in OTCQX revenues and a 4% increase in OTCQB revenues. During the second quarter, we saw a lower number of companies on the OTCQX and OTCQB market due to a lower starting number of companies at the beginning of the year, partially offset by improved sales compared to the prior year quarter. We saw a higher number of D and S subscribers compared to the prior year period, which combined with the price increases resulted in a 13% increase in D and S revenue.

[Antonia Georgieva, CFO at OTC Markets Group]

In the second quarter, we added 39 OPC correct companies compared to 22 in the prior year quarter and finished the period with five fifty six OPC correct companies, down 2%. On OTCQB, we added 85 new companies in the second quarter compared to 47 in the prior year period and had ten seventy three OTCQB companies at the end of the quarter, down 1%. During the second quarter and leading up to the July 1 launch of OTC ID, we saw an increase in the number of subscriptions as DNS is the primary tool companies use to qualify for OTC ID. At the same time, we completed the process of phasing out our OTC IQ basic product with a portion of its subscribers upgrading to other services. The net result was a five percent reduction in the number of unique PIN companies subscribing to the entire range of corporate services products at the end of the second quarter to thirteen sixty two companies.

[Antonia Georgieva, CFO at OTC Markets Group]

These engaged BIN companies, which have a relationship with our C Markets Group through our corporate services offerings, represented approximately 13% of all BIN securities traded on our platforms at the June 2025, compared to approximately 14% at the end of the prior year period. As of 07/01/2025, there were ten thirty five companies and twelve thirty seven secondurities quoted on the OTCIG basic market. Month to month variability in our corporate services subscribers is driven by new sales offset by non renewals, corporate events, and compliance downgrades. Turning now to expenses on page eight. On a quarter over quarter basis, operating expenses increased 8% to 18,400,000 A 6% increase in compensation and benefits expenses, 21% increase in professional and consulting fees, and 12% increase in IT infrastructure and information services costs were the primary contributors.

[Antonia Georgieva, CFO at OTC Markets Group]

The increase in compensation and benefits reflects higher base salaries and cash based incentive compensation, as well as higher commissions related to increased sales and the updated commission plan in effect from 01/01/2025. Compensation and benefits comprised 63% of our total operating expenses during the second quarter compared to 64% in the prior year period. Professional and consulting fees increased due to increased use of third party consulting services related to our compliance efforts. Additionally, we saw higher regulatory and clearing costs related to OTC Link ECM and OTC Link AQB due to the increased trading activity. IT infrastructure and information services costs increased due to higher spending on information services and software licenses, as well as higher data center costs due to increased cloud services usage.

[Antonia Georgieva, CFO at OTC Markets Group]

Turning to page nine. In the second quarter, income from operations and net income each increased 8%. Operating profit margin contracted slightly to 29.9% compared 30.4% in the prior year quarter. Our diluted earnings per share increased to $0.60 per share compared to $0.56 per share or 7%. In addition to certain GAAP and other measures, management utilizes adjusted EBITDA, a non GAAP measure which excludes non cash stock based compensation expense.

[Antonia Georgieva, CFO at OTC Markets Group]

Our adjusted EBITDA was $11,100,000 in the 2025, and our adjusted diluted earnings per share were $0.92 each up 8%. Cash provided by operating activities amounted to $11,200,000 compared to $6,200,000 in the prior year quarter. Free cash flows for the quarter were also $11,200,000 compared to $5,500,000 in the prior year quarter. Turning to page 10. During the 2025, we returned a total of $2,200,000 to investors in the form of dividends, unchanged from the prior year quarter.

[Antonia Georgieva, CFO at OTC Markets Group]

We remain focused on growing our business, operating as prudent stewards of shareholder capital and delivering long term value to our stockholders. With that, I would like to thank everyone for your time and pass it back to the operator for questions.

[Operator]

Thank you. As a reminder, to ask a question, please press 11 on your telephone And the first question comes from Steve Silver with Argos Research. Your line is open.

[Steve Silver, Senior Equity Research Analyst at Argus Research]

Thank you, operator and thanks for taking my questions. My first question, I noticed the strong uptick in international issuers joining OTCQX and OTCQB in the quarter. Looks like it was about 60% year over year growth there. Just curious as to what some of those factors might have been driving that result whether it was just a result of the realignment of the sales team or just anything in terms of timing between just the market dynamics?

[R. Cromwell Coulson, President, CEO & Director at OTC Markets Group]

Thank you, Steve. I would say the primary driver was OTC ID. And really making clear to investors, companies are connected into the market, and which ones are not. A secondary driver is we remove the sponsor requirement for companies to join. And that really recognizes post 15 C two eleven, our team on the compliance side was really the most efficient processor of applications.

[R. Cromwell Coulson, President, CEO & Director at OTC Markets Group]

And, you know, the regulatory change that took place in the background of 15 C two eleven of creating what is a qualified interdealer quotation system that operates as an ATS with FINRA oversight, made it so we can be much more effective in onboarding companies to our premium markets, while still keeping the qualitative requirements that are needed.

[Steve Silver, Senior Equity Research Analyst at Argus Research]

Okay, great. And one more if I may. It looks like the subscription base for EDGAR continues to drift a little lower. And I know you've spoken in the past repeatedly about this being a multiyear process just in terms of the integration into the licensing and data platform. Just curious if there was any update there as to maybe any expectations for finding that baseline to use as a springboard for future growth there.

[R. Cromwell Coulson, President, CEO & Director at OTC Markets Group]

So for what I would put in our bucket of non real time data products. And there we've been working on two parts of product development. One part was pulling in SEDAR filings. So for Canadian issuers who are on OTCQX, OTCQB and OTCID, their corporate disclosure is automatically fed into our systems. And that's a great time saver and improver of the timeliness of information for these issuers.

[R. Cromwell Coulson, President, CEO & Director at OTC Markets Group]

And we then use the EDGAR online stack to create structured data that can feed into our compliance processes, and importantly broker dealer compliance processes. So that's one part where we've been using them to improve our other business line compliance experiences. The second part is, we've been going through looking for products to create from our combined dataset. And there we've been creating some products, and we're now in the fall going to add some sales and client support resources to start going out to that customer base and pushing new ideas and cross selling. So I think we're in a much better spot.

[R. Cromwell Coulson, President, CEO & Director at OTC Markets Group]

Our teams across the business, you know, one of my goals has been, you know, the one team, one platform. And it takes a while. And but now, different groups are interacting with both the Edgar online that data stacks and Edgar online is interacting with our data stacks. And we're meshing that together. So we will see what data opportunity sets show up.

[Steve Silver, Senior Equity Research Analyst at Argus Research]

Great. Thanks for the color. Appreciate it.

[Operator]

Thank you. And the next question will come from Brendan McCarthy with Sidoti and Company. Your line is open.

[Alex Hantman, Equity Research Analyst at Sidoti & Company]

Good morning. This is Alex on for Brendan. Thanks for taking questions. Maybe we could come back Good morning. To just going back to OTC ID, could you talk a little bit about the customer reception and how some of that initial customer feedback has been?

[R. Cromwell Coulson, President, CEO & Director at OTC Markets Group]

I look at OTC ID as there's one part is we didn't have just a basic product. We'd focused so much on trying to provide a product for the companies that wanted to distinguish themselves. We didn't have that First Floor, I have a symbol, I wanna make sure there's information available, that's all I'm gonna do. There's no requirement that there be market maker proprietary quotes. And that change is also important for when companies no longer qualify for a higher market, but they just want to provide disclosure.

[R. Cromwell Coulson, President, CEO & Director at OTC Markets Group]

It's also important because there may be a company with a really small float. They've got shares that are becoming publicly tradable and they want to start acting like a public company, putting out those consistent information streams. There is, introduced OTCID, you know, we have some very large companies who are using OTCID because they want to keep, they want to put their information in so investors have it, so our compliance engines have it, so the broker dealer compliance engines have it. But they want to keep the focus back on home market listing. Our goal with those companies is actually to get them to move up to the highest market they qualify for.

[R. Cromwell Coulson, President, CEO & Director at OTC Markets Group]

Because there's substantial blue sky benefits, there's other recognitions for companies that go on OTCQX. But the reception is always, at first people are a little dismissive, and then they start to see who's in the market. And who are their peers there? And our goal is really to drive companies to provide the highest level of information that they can for their situation in a manner that is efficient, and shows up on investor screens and in broker dealer machines.

[Alex Hantman, Equity Research Analyst at Sidoti & Company]

Thank you for the context. And one follow-up there. Can you just talk a little bit about the OTC ID revenue contribution to the corporate services segment and how that might trend?

[Antonia Georgieva, CFO at OTC Markets Group]

Certainly, Alex. It would be helpful to understand the dynamics of the new product launch and how customers have opted into it. Subscribers that have had in the past existing relationship with us, about two thirds of them chose to subscribe to DNS during the six months in anticipation of the July 1 deadline, and begin preparing to become OPCID issuers on July 1. Another subset of customers, about a third, a little over a third, also chose to subscribe to OTC ID but decided to elect a July 1 effective date for service period. So the first category of customers were onboarded during the six months, and the revenue generated from those subscriptions began to be recognized during the first six months, while the second group of customers with the July 1 deadline will begin revenue recognition commensurate with their service period from July 1 onward.

[Antonia Georgieva, CFO at OTC Markets Group]

And their numbers in terms of the subscription, the number of companies on the OTC ID basic market will reflect that second group from July 1 onward. We plan on adding those metrics to our key metrics statistics that we have been publishing consistently, and you will see those numbers at the end of the third quarter, the complete number of OPC ID. What you do see at the end of the second quarter is the uptick in DNS subscription reflecting that first group about two thirds of the new sales that came in and became active customers in the first half.

[Alex Hantman, Equity Research Analyst at Sidoti & Company]

Great context, thank you. And just one more from us, and sorry if I missed this, but do you have data on the conversion rate from PINK and sort of the sun setting of that after the OTC ID launch?

[Daniel Zinn, General Counsel & Chief of Staff at OTC Markets Group]

Alex, this is Dan. I mean, you'll see it track in the numbers that we report, how many current companies there were versus OTC ID, and then the number of those that went to Pink Limited. So it's not a straight conversion rate, don't think would tell the appropriate story because there are companies at different stages that used to be classified pink current or pink limited. So it's going to be easier to track from an initial standpoint, just look at current versus OTC ID and then look at the growth in limited. And then over time, it'll be much easier to see how companies are trending on to OTC ID.

[R. Cromwell Coulson, President, CEO & Director at OTC Markets Group]

And Alex, I think it's important that our goal is to have more engaged companies, which should show up in engaged securities, and which should show up in engaged dollar volume, the dollar volume of those securities. Those are metrics as we get past this, will be publishing out for people. It does not mean that we want to abandon the pink limited market. The pink limited market has a glorious history, which I was part of, where every Ben Grahamsian investor would find orphan securities, you know, the cigar butts, the neglectful management teams. And that is a really important part of capital markets.

[R. Cromwell Coulson, President, CEO & Director at OTC Markets Group]

However, those securities should and mostly would always trade at a discount. Because management is not supporting the public market. And however, I look at what we're doing on our premium markets is really opening the steps into capital markets, for smaller US public companies and global companies. As they're on their journey as a public company, they can work their way up our markets. And that is an incredibly important tool.

[R. Cromwell Coulson, President, CEO & Director at OTC Markets Group]

And it is because engaged companies improve market quality, close the investor and broker informational and operational and compliance experience with companies listed on exchanges, and that will drive market quality.

[Alex Hantman, Equity Research Analyst at Sidoti & Company]

Very helpful. Thank you very much. That's all from us.

[Operator]

And the next question comes from Walter Hopkins with eighteenth Square. Your line is open.

[Walter Hopkins, Managing Director at 18th Square]

Good morning. This is Walter Hopkins with eighteenth Square. I've got more of a high level question. Looking back about ten years, OTC Markets had a 35% operating margin in each year during 2015 to 2018. It's been a great journey since then, with revenues more than doubling.

[Walter Hopkins, Managing Director at 18th Square]

But the operating margin has been around 32 in recent years. As long term shareholder, I love that OTC Markets is playing the long game, investing for the future, much of which runs through the income statement and perhaps has depressed the operating margin, relatively speaking. Let's say that revenues double again over some time frame. Following this period of investment, how should we think about the incremental margins of, say, the second $100,000,000 of revenue versus the margins on the first $100,000,000 Would you say that the pieces are in place for OTC Markets margins to drift upwards towards exchange like operating margins, maybe in the 45% plus range?

[R. Cromwell Coulson, President, CEO & Director at OTC Markets Group]

Walter, thanks for calling in. Why not go for 90%? Actually the exchanges have a model, which I think is probably best exemplified by Larry Ellison at Oracle. And whenever Oracle buys a technology we use, we plan on how are we getting rid of it in the next three years. Then you've got other businesses like Costco.

[R. Cromwell Coulson, President, CEO & Director at OTC Markets Group]

And they provide consistently competitive prices. We need a margin because we need to be open every day. We need to be growing, we need to be able to survive through thick and thin markets. We're mission critical infrastructure, we have an obligation to the markets. We also want to be a vendor to the broker dealer community, that they look and says provides compelling value, and we can go find other problems to solve for them.

[R. Cromwell Coulson, President, CEO & Director at OTC Markets Group]

I am not margin obsessed. I am margin of safety obsessed. So when things have generally gone up, our margins gone up, it's because we've had a good run, and then we have to grind back in. And the other part was, we've had a run of regulatory obligations being thrown at broker dealers. So some of those years you looked at, we were catching up because regulators were putting obligations, whether it is Reg SCI or where there are customer driven obligations.

[R. Cromwell Coulson, President, CEO & Director at OTC Markets Group]

So our goal is to be the kind of company that Charlie Munger would want to own. It creates consistent cash flow, invests in the franchise, and gives its customers a fair deal. So they want to use us as a vendor tomorrow and next year. And while still being aligned with, because I'm the biggest shareholder, long term growth of value. Does that answer your question?

[Walter Hopkins, Managing Director at 18th Square]

Yeah, think so. Yeah, certainly. Thank you.

[R. Cromwell Coulson, President, CEO & Director at OTC Markets Group]

We would like to have our clients come to us with ideas. They're not always going to work. Some of them it's going to be early. But we want to be when they look at us and they go, and I know there's a very toxic relationship that Oracle has with their clients. And we would like to have a real partnership going forward.

[R. Cromwell Coulson, President, CEO & Director at OTC Markets Group]

Thank you. While still being capitalists. Thanks for the question though. Good.

[Operator]

I am showing no further questions at this time. I would now like to turn the call back over to Cromwell for closing remarks.

[R. Cromwell Coulson, President, CEO & Director at OTC Markets Group]

Thank you, operator. I want to thank each of you for joining us today. I would encourage you to read our full quarterly report for the 2025 and the earnings press release for more information. Links to both are available on the Investor Relations page of our website. On behalf of the entire team, we look forward to updating you on our key initiatives that will continue to shape the integrity and competitiveness of the public markets.

[Operator]

This concludes today's conference call. Thank you for participating. You may now disconnect.

Participants

Executives

• Daniel Zinn, General Counsel & Chief of Staff
• R. Cromwell Coulson, President, CEO & Director
• Antonia Georgieva, CFO

Analysts

• Steve Silver, Senior Equity Research Analyst at Argus Research
• Alex Hantman, Equity Research Analyst at Sidoti & Company
• Walter Hopkins, Managing Director at 18th Square