Art Sales Boost Auction Technology Profits

The business model aids increase in profits. Revenue decreases due to late release of atgPay.

Auction market is good for counter-cyclical growth. Check out Auction Technology Group (ATG). It links 4,000 auction houses to bidders using seven online platforms.

The company shared its interim results. Revenue guidance was confirmed for the full financial year. They also bragged about an 11% increase in the total hammer value of sales on their platforms.

In the six months leading up to March, Adjusted Ebitda was £31.5mn, which is 18% higher compared to last year. Related margins also increased by one percentage point to 47%. This was due to higher listing fees in various platforms and the efficient business model with low capital requirements.

The A&A business took in 4% more money in the first half of the year. People thought the market might slow down because of the economy, but it didn't. The industrial and commercial part of the company also did well. They made 7% more sales compared to 2022's first half.

The atgPay system launch has been delayed by Auction Technology Group. The delay is to make sure the system has all the necessary functions. There could be a small negative impact on revenue. However, auctions on the marketplaces have increased by 8% year on year. So, the delay will not have a significant effect on the momentum.

Peel Hunt broker states that the group's full-year price/earnings multiple is 22. This is a fair price for growth. Therefore, we recommend buying.

IC's latest recommendation: Purchase at 760p on December 1, 2022.