OTC Markets Group Inc.

Good day and thank you for standing by. Welcome to the OTC Markets Group fourth quarter and full year 2025 earnings conference call and webcast. 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 the session, you'll need to press star 1 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1 1 again. Please be advised that today's conference is being recorded. I'd now like to hand the conference over to your speaker today, Dan Zinn, General Counsel and Chief of Staff. Please go ahead.

Thank you, operator. Good morning, and welcome to the OTC Markets Group fourth quarter and year-end 2025 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 2025 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 would like to turn the call over to Cromwell Coulson.

Thank you, Dan. Good morning, everyone, and thank you for joining us. I will begin by reviewing our year-end 2025 results at a high level, and will then turn to our priorities for 2026. For the full year 2025, gross revenues grew 13%, bringing us to over $125 million for the first time in our history, while our net revenues grew by 12%. The company achieved double-digit gains across all four quarters last year, with each business line contributing to our strong results. For the year, OTC Link was up 17%. market data increased 15% and corporate services was up 8%. OTC Link's performance primarily resulted from increased trading volume across our markets. In times of increased market activity, we focus on providing reliable service trusted by our broker-dealer subscribers, meeting that standard across all of our ATSs is a direct result of the hard work and dedication of our business, infrastructure, and technology teams. Market data benefited primarily from price increases that took effect at the start of 2025, supported by new sales in certain product areas. While pricing power is a critical part of long-term competitiveness, especially in inflationary environments, we prioritize consistently adding value to our subscribers, expanding our distribution networks, signing new clients, and growing unit counts. While not materially impactful to our revenue during 2025, our OTC link and market data teams established the foundation of our overnight trading business. MoonATS, which facilitates overnight trading in exchange-listed securities gained traction in the fourth quarter as a result of our teams onboarding subscribers and educating the global trading community. The momentum in NMS Securities on Moon and the lessons learned will serve us well as securities markets move to 24-5 and longer. Our corporate services business not only delivered solid revenue growth for the year, but also ended the year with 17% revenue growth in the fourth quarter. These increases resulted from the success of our OTCID basic market, launched in July, as well as price increases and strong new sales in our OTCQX and OTCQB markets. Over the long term, our corporate services business remained strategically focused on client success and retention. helping connected companies close the investor and broker information experience gap with exchange listed securities. Our operating expenses also increased last year, up 7%. Compensation and benefits remain the largest components of our expense base as we continue to invest in our people. I'm grateful for the hard work and dedication of our colleagues and thrilled that our trajectory last year reflects each person's contributions. With revenue growing faster than expenses last year, our operating margin also rose back above 31% for the year. We remain committed to achieving sustainable growth over the long term. Overnight trading and the OTCID basic market were our primary strategic initiatives during 2025. Although our work on each is far from over, I am pleased with our progress thus far. On overnight trading, Moon ATS saw a substantial increase in volume traded during the fourth quarter as our broker-dealer subscribers used the system to trade thousands of exchange-listed securities between 8 p.m. and 4 a.m. We faced significant competition in this space. with one established player already controlling a majority of the market share and a listing exchange is planning to enter the space as early as this year. In this increasingly competitive landscape, we believe that MoonATS offers an elegant, reliable, and cost-effective solution for our current subscribers and an opportunity to expand and scale our network. Our overnight trading initiative is also focused on educating and onboarding subscribers to our OTC overnight market. Although we have not yet had trading take place in this market, the OTC space is where we can offer a unique value proposition. Over 12,000 OTC securities trade on our daytime markets, and more than 9,000 of those are non-US. Providing global investors access to these securities during hours more convenient for non-U.S. time zones remains a key part of our vision for overnight trading. Our second priority initiative last year was the OTCID basic market. Following its launch, OTCID experienced a rapid uptake. as qualifying companies chose our services to publish a baseline of ongoing information. It is well aligned with our strategy of connecting more companies to their U.S. trade and market to improve market quality one security at a time. OTC ID enhances our offerings for corporate clients, filling a gap below the premium OTCQX and OTCQB markets. With a disclosure and management certification driven service, OTC ID allows more companies to connect without the price, float, or financial requirements of our higher level markets. It is a simple entry point for companies to start to stream information, gain a foothold of liquidity, or test the waters. We have designed our premium markets to provide the functionality for connected companies to supply data that will improve the quality of the market for their securities. In comparison with Pink Limited Securities, our objective is to clearly flag risks. Investor-focused companies need to be actively connected to the market, consistently updating investors with management teams willing to certify compliance with regulations. Otherwise, Gaps in communication can lead to information asymmetries, disruptive corporate actions, and discounted valuations that diminish their market quality. The connected companies are OTCQX, OTCQB, and OTCID markets represented approximately 25% of all securities traded on our platforms at the end of 2025. and contributed roughly 31% of the dollar volume traded on our markets during the fourth quarter. A primary focus is to increase the percentage of connected companies and related dollar volume on our markets. When we empower public companies to connect to our corporate services, actively publish ongoing information, and demonstrate global governance standards our markets become better informed and more efficient. These are the core activities that improve the quality of each company's individual trading market, open up more investor accounts, and expand overall investor interest. As we move these metrics higher, we will improve overall market quality and further separate companies on our premium markets from the imperfections and inefficiencies of securities orphaned on our pink limited market. Preparing for the introduction of tokenized and digital asset securities into our markets is another strategic priority for 2026. As the SEC and Congress continue their work to provide regulatory clarity in these areas, it is vital that we prepare to support our FINRA member broker dealer market data customers and other market participants as they innovate around these new technologies. We also continue to advocate for modernizing digital asset regulation without undermining market integrity. We believe a technology-neutral approach rooted in existing regulatory principles will foster responsible growth, prevent regulatory arbitrage, and reinforce confidence in U.S. market structure. Our regulatory priorities extend further with a particular focus on capital formation, state blue sky laws, and disclosure-based initiatives that will improve the often overlooked market functionality that provides the backbone of our capital markets. Being public should not be painful and we need to both lower the burdens on public companies and increase the benefits. We have achieved 50 state blue sky compliance for our own shares. So we will use that knowledge to efficiently map the path to national compliance for our corporate clients. International companies on our markets and the dollar volume traded in these companies has trended higher in recent years. This is due to a number of factors, including our premium markets for issuers, improved broker-dealer trading functionality across our ATSs, increased access to our market data, and targeted outreach by our corporate services team.