Release Date: May 15, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Auction Technology Group PLC (FRA:684) reported a revenue increase of 3.4% year over year, outperforming competitors like Etsy and Ritchie Brothers.

• The company successfully executed strategic initiatives, including the launch of ATG Excel, which resulted in a 10-20% increase in estimated asset prices for auctioneers.

• Value-added services grew by 14%, driven by strong performance in shipping, marketing, and payments.

• The company refinanced its debt and launched a share buyback program, enhancing financial flexibility.

• New executive hires, including a CFO and CTO with extensive experience, are expected to drive further strategic growth and innovation.

Negative Points

• Auction service revenue declined by 9% due to a strategic shift away from smaller standalone white label customers.

• The gross profit margin decreased by 2 percentage points, impacted by higher amortization and payroll costs.

• The conversion rate for both ANA and INC segments was down by 1%, attributed to asset mix dilution.

• Real estate auctions, which are lumpy and volatile, continue to distort headline KPIs, making it harder to assess overall business performance.

• The company faces challenges in rapidly increasing adoption of new services like ATG Ship due to industry inertia and buyer misconceptions about shipping costs.

Q & A Highlights

• Warning! GuruFocus has detected 4 Warning Sign with FRA:684.

Q: Could you elaborate on the Q2 exit rate and the marked weakness observed? How did this affect GMV and organic growth, particularly in ANA and INC? Also, how is May trending post-stabilization in April? A: Revenue growth was strong until February, within the 4-6% guidance range. March was weaker, but not materially so, with a flattish number. Both ANA and INC experienced similar dynamics. April showed stabilization, better than March, though not quite at earlier rates. May is trending better, but it's early to call. Conversion rates are expected to stabilize and gradually improve as search and discovery investments take effect.

Q: What are the next important changes to focus on for raising the auction experience to e-commerce levels, and how will new C-suite and board hires contribute? A: Key changes include leveraging AI for lot descriptions, enhancing search and recommendation engines, and improving onboarding and bidding flows. New hires, like the CTO from eBay, bring expertise in conversion rate optimization and e-commerce, which will help implement these changes effectively.