OTC Markets Group Inc.

Thank you for standing by. Welcome to the OTC Markets Group second quarter 2023 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising you that your hand is raised. To withdraw your question, you can press star 1-1 again. Please be advised, today's conference is being recorded. I would now like to hand the conference over to your speaker today, Dan Vinh, General Counsel. Please go ahead.

Thank you, Operator. Good morning, and welcome to the OTC Markets Group's second quarter 2023 earnings conference call. With me today are Cromwell 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. 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 2022 Annual Report, which is also available on our website. For more information, please refer to the Safe Harbor Statement on slide 3 of the earnings presentation. With that, I'd like to turn the call over to Cromwell Coulson.

Thank you, Dan. Good morning, everyone. Thank you for joining us today. I will discuss at a high level our financial results for the first half of 2023 and review our progress on our strategic initiatives. I will also highlight our areas of focus for the remainder of this year. Overall, gross and net revenues continued to increase this quarter, with each up 5%. Expenses remained elevated, leading to decreases in net income, earnings per share, and operating margin during the second quarter and the first six months of the year. Our acquisitions of Blue Sky Data Corp. and Edgar Online last year continue to be the greatest drivers of change in our financial and operating results. We gained revenue from each business and incurred expenses to acquire and operate that. The Blue Sky products and team are fully integrated into our platform and we continue to expand coverage and increase the client value proposition. Edgar Online, which closed last November, is still in the early stages of our stewardship. Robust data platform building or turnarounds are always multi-year projects. Onboarding the team, technology and subscriber base to operate within our ownership is a key milestone. This work will put us in a strong position to reconnect with customers, optimize the operations and commercialize future opportunities. The acquisition added several non-recurring transitional expenses that will decline as the year progresses. as well as ongoing operating costs. Over the next few years, we will thoughtfully integrate and carefully invest in the platform based on customer demand, operational efficiency, and competitive opportunities. In the first six months, financial markets saw a risk-off environment with lower overall market activity and trading volumes across the industry these dynamics highlight the strength of our diversified business model there are over 12 000 securities quoted across our otcqx otcqb and pink markets a key metric that many find surprising is that 75 of these securities are adrs and foreign ordinaries of international issuers generating almost 85% of the overall dollar volume on our markets in the first six months. We have become the market that connects the world's leading global companies with U.S. investors. Our expense drivers remain consistent, led by increased headcount, technology operating costs, and the edge or online technology transitions. Blue Sky Data Corp and Edgar Online are each part of our market data licensing business. As a result, market data led our business lines with 20% revenue growth in the second quarter and 23% growth for the first half of the year. Revenue from OTC Link and corporate services each declined for the quarter and six-month periods. Corporate services revenues were impacted by decreases in the number of companies on the OTCQX and OTCQB markets, as well as a reduction in companies using our disclosure and news service, or DNS. Voluntary renewal rates for the OTCQX and OTCQB markets remained similar to prior years. The decrease largely stems from a combination of slower new sales and a subset of companies no longer able to maintain compliance with each market's rules and standards, each in line with broader economic trends. OTC link revenue decreased during the second quarter and the first half of the year, primarily due to lower message and trading volumes across our ATSs. While we do not control trading volume, we continue to prioritize subscriber growth to expand our networks. The reliability and uptime of our core trading platform remains a top priority. We take our regulatory obligations seriously, including those under SEC regulation SCI, and we value the trust our subscribers place in us to operate our mission-critical systems efficiently and effectively. Based on the shifting trends across our business lines, For the second quarter, corporate services represented approximately 43% of our overall revenue, market data licensing accounted for 39%, and OTC Link accounted for 18%. Antonia will cover our financial results in more detail in a few moments. Throughout the year, I have discussed our five strategic initiatives for 2023. First, coming together as one team on one platform to build the value of one share. Earlier this year, our technology infrastructure and market data teams successfully completed the time-constricted move of Edgar Online's applications from a legacy physical data center to a cloud environment. As I've said, our daily work is on retaining enterprise clients and transitioning the current technology to a robust cloud environment. Once the team has addressed some pressing technical debts and done basic cloud optimizations, we will be able to shift our attention to the future. With the Edgar Online team meshing into the fabric of OTC markets, we are able to begin cross-training, providing support, and identifying what new levers to pull to improve the technology, enhance the products, and exploit commercial and competitive opportunities for our expanded data set across our business lines. Second, commercializing our role as a regulated market operator and delivering visible client value. Our investment in our regulatory efforts this year has led to our approval to conduct digital asset securities business and achieving blue sky recognition for our markets in north carolina the 40th u.s jurisdiction on our blue sky map third prioritizing client-facing application development and improving our data all of our work integrating the blue sky and edgar online data is setting the stage for new products to fuel our clients businesses and compliance engines In combination with our existing OTC equity data, we can expand the depth of services we offer, cover more securities, more companies, digitalize disclosure, and further distribute useful financial information. Fourth, improving OTC link functionality and reducing operational exposure and business risk. In early May, We received FINRA approval to permit digital asset security to be traded by broker-dealers on OTC Link ATS. While not an immediate revenue generator, we see a long-term opportunity as more digital assets move into entities regulated by the SEC and FINRA. Over the past several months, that approval has allowed us to begin discussions with firms across the industry, from broker-dealers to custodians to exchanges and ATSs. As lawmakers and regulators deepen their engagement in the digital asset space, we remain focused on providing value to brokers seeking to trade a wide spectrum of securities and to issuers wishing to demonstrate compliance and provide disclosure to the market. More regulatory and industry-wide work remains to be done, and we will continue to provide updates on our progress. Finally, because we operate as owners and capitalists, our last strategic initiative is creating strong net revenue growth and delivering sustainable profitability that increases long-term per share earnings. Our results in the second quarter and for the first six months of the year continue to show good top line growth. We are conscious of the impact of rising expenses on the value of each OTC markets group share. Our investments in recent acquisitions, as well as in our existing products and services, provide the fuel in the form of data. Our focus is to commercialize the data and add new capabilities that drive sustainable revenue growth that translates into greater operating profits and long-term earnings per share. I look forward to reviewing these initiatives and our strategic direction throughout the remainder of the year. In closing, I'm pleased to announce that on July 31st, our Board of Directors declared a quarterly dividend of 18 cents per share, payable in September. This dividend reflects our ongoing commitment to providing superior shareholder returns. With that, I will turn the call over to Antonia.