Auction Technology reports significant first-half growth

Auction Technology Group (ATG) reported significant first-half growth on Wednesday, with revenue rising 17% to £67.3m.

The FTSE 250 company put that growth down to robust gross merchandise value (GMV), and a 5% organic revenue increase.

ATG said it experienced accelerated organic revenue growth as it concluded the annualisation of a strong performance from the prior year, which was impacted by the Covid-19 pandemic.

Reported revenue growth was further boosted by the acquisition of EstateSales.Net (ESN), as well as a favourable movement in the foreign exchange rate.

ATG achieved adjusted EBITDA of £31.5m, making for an 18% increase compared to the same period in the previous year.

The board said the adjusted EBITDA margin improved to 47% from 46%, with the growth driven by an increase in high-margin commission and fixed fee revenue.

ATG said its operating profit came in at £9.8m, surpassing the £9.2m recorded during the same period last year.

The operating profit figure took into account exceptional items related to the ESN acquisition, share-based payments, and intangible asset amortisation.

Adjusted diluted earnings per share for the first half stood at 16p, up from 13.4p in the same period year-on-year.

The board said the growth in adjusted EBITDA partially offset higher net finance costs.

Basic earnings per share reached 9.9p, a significant improvement compared to the prior year comparative of 1.8p, primarily driven by a deferred tax credit.

ATG said its adjusted net debt remained stable at £132.4m, consistent with the end of the 2022 financial year.

While strong cash generation offset some of the financing required for the ESN acquisition, the adjusted net debt-to-adjusted last 12 months EBITDA ratio stood at 2.3x.

“ATG has delivered another robust set of results with solid revenue growth, margin expansion and strong cash generation, against an uncertain macroeconomic environment and exceptional growth in the prior year,” said chief executive officer John-Paul Savant.

“We have made great progress against each of our six strategic growth drivers including the strong adoption of value-added services, expansion of our addressable market, bidder base and potential network effects with the acquisition of ESN, and the creation of unique timed auction format opportunities for auctioneers with the launch of our integrated bidding service.

“As expected, organic revenue growth accelerated across the half and this rate of growth has continued into the start of the second half.”

Savant said that momentum, combined with strong traction against the firm’s key strategic initiatives, left the board confident that ATG would deliver a higher rate of organic revenue growth in the second half, and into the 2024 financial year.

“ATG has an exciting future ahead, with unparalleled scale in the curated auction space, plus the reach, product offering, and impact to truly make a difference for our customers, whether they be auctioneers ensuring they achieve the highest asset sale price for their consignors, or bidders seeking unique or specialised secondary goods.

“Many growth opportunities exist as we lead the transformation of the auction industry and follow the well-trodden path of online marketplace development.”

At 1001 BST, shares in Auction Technology Group were up 7.16% at 718p.

Reporting by Josh White for Sharecast.com.