Auction Technology Group plc

Good morning, and thank you for joining us for ATG's first annual earnings release. At a very quick summary, it's been a great year ahead of expectations, and we'll share with you some of these results. And even more importantly, we exited the year with momentum. when we IPO-ed and when we gave results in our mid-year results. So as we click through here, we'll cover a few things today, do the results, financial review, a strategic outlook, and then we'll take some Q&A at the end. So on this first slide, what you'll see, we had very strong operational and financial results. And the key thing is that we exited Q4 21 ahead of expectations. The reason why that was so important for us is that that was lapping the COVID first very strong quarter. And therefore we really were focused on whether we could exit that with momentum. And why were we able to do that? So what we saw, as you know, we're a two sided marketplace. And what we were really excited by is that we saw volume sustained on the supply side and demand sustained on the bidder side. And the reason why that's so key is that. of the questions we had at the IPO and at the mid-year results were, as COVID wound down, would the auctioneers continue to list all the assets that they had online, or would they pull some off? Similarly, with the bidders, once they have the opportunity to buy or bid in person and not be online, would they move offline? The key thing that we saw is that the shift online has really been sustained. really supporting our point previously that there's a structural shift online that's been accelerated by the pandemic and that was a really exciting result for us to achieve this year. The third point is that we successfully managed historically high levels of activity across all our marketplaces while continuing to support the auctioneers with challenges of the pandemic so we further strengthened our relationship with them throughout this period. even more important for them and amidst managing those high volumes we were able to also acquire two new businesses so auction mobility is the best white label for the art and antique space globally and the acquisition of live auctioneers on october 1st is opening up the big north american art and antiques marketplace and we bought the number one player in curated online auctions Throughout the year, we also strengthened our team and our technology and expanded the product and service offering partly through those acquisitions and partly through simply additional hires that we were bringing in. And then lastly, we really feel very good now about the IPO. We really feel it's enhanced our ability to grow and lead the evolution of the industry. And if you say, why is that? The key reason is really, we feel that at a point when the auction industry is moving online and where there's been a bunch of fragmented service providers out there, Doing the IPO and becoming a PLC really has allowed us to establish ourselves more clearly to auctioneers as a company that has public strategy that we're willing to commit to, public levels of financials that we're willing to have scrutinized. And then the other part is that because they can see our financials, they can know that we're a company that's going to be here for the long term and that they can bank on us as they build their online futures. Moving on to the slide that I'm sure everybody's most interested in. So financial and operational metrics. So again, as I said, a great first year ahead of the analyst consensus. All our marketplaces did well, reflecting our growing importance to the auctioneers. So 34% growth year over year in revenues. And a key thing here is that that's growth in all six marketplace All these numbers exclude anything connected to live auctioneers. But Tom will give you some insight into live auctioneers a little bit later. Aggregate EBITDA up 43%, demonstrating the operating leverage in our business, the ability to grow as fast as we did, but to grow operating margins even faster. And we were able to grow the bidder side as well by 14%. And that's at a time when we're competing with all the other businesses that are out there for online attention to grow 14% year over year. We thought it was a fantastic result. And then you come to the bottom statistics, which are just because I know this is our first time and there may be some people on the call who are not as familiar with our KPIs. So total hammer value is the value of all the items sold by the auctioneers who list with us. So we see that as our immediately addressable market and that grew 37% year over year. So just a huge year showing that people were trusting ATG and were willing to commit assets onto our marketplaces. The second KPI here is the online share. And that it grew by two points to 35%. And the reason why that's so key is because typically in a year when you grow hammer value by a large amount, you may see online share even go down a little bit because the new volume you take on we'll have a little bit of a lag effect in terms of the bidders shifting online. And so it may not retain the same online share that we have in our traditional verticals. But in this year, what was so spectacular is what we grew their total hammer value at a monster pace, kind of typical year would have been three to 4%. This last year grew 37%. And we were able to add online share, which I think really reinforces that idea that the online shift is here to stay. And then that translates into our gross merchandise value, which is the amount that we actually sold. And so that number went up by 47% year over year. And with that, I will turn it over to Tom for the next session.

Good morning, everybody. I will take you to the financials, but a very quick word before I do that on the prior comparators shown in here. So ATG and proxy bid came together in February 2020, so partway through FY20. But all the comparatives you will see for FY20 in here are based on a full year of both proxy bid and ATG, just to ensure comparability with the FY21 numbers. And that's why you see this odd phrase of aggregates everywhere, which is basically aggregate of those two businesses in FY20. 70.1 million, 34% growth versus 52.3 million in the prior year. Two things worth pulling out from there. We bought Auction Mobility in October 2020. So there's almost a four years contribution FY21. Clearly, no contribution in FY20. So that's inflating the headline growth rate, but also FX. So 68% of our revenues last year were in dollars. The pound has strengthened against the dollar. The average rate last year was 137. The rate in FY20 was 128. So that's been a drag on revenue. If you remove the impact of the acquisition and restate everything at constant currency, you see our organic growth is very healthy, 29% year over year. You look halfway down the page, you can see our aggregate adjusted EBITDA number of 31.8. That's up 43% per year, 45% EBITDA margin, adjusted EBITDA margin, or three percentage points higher than prior year. That increase from prior year, again, reflects the natural operating leverage that we have in the business. Two things worth mentioning on the cost base. Clearly, we've had the extra revenue from auction mobility. We've also had extra costs from auction mobility. So if you look at our cost base, I have five or six million extra just through bringing in auction mobility into the business. And then also because becoming a PLC in February 21 this year, that incurred in extra costs which will be ongoing costs within the business we said at the time of the ipo that those would be about two million a year there's one million of those in fy21 we've had half a year of being a plc roughly and next year there will be a further increase of one million in that to take us to the full two-year running costs If you remove both of those items from our cost base that you might impute from taking revenue from adjusted EBITDA, the underlying growth in costs has been about 6%-ish, 6-7% a year, which, as you can say, is significantly lower than the revenue growth, which reflects the operating leverage. Free cash flow of £30.4 million. So a 96% flow through from EBITDA free cash flow defined here as less working capital, trading working capital and capex. Talk a bit more about that later. And then finally, net cash debts on hand reported net cash of 25 million at the end of the year. And that excludes 225 million of what's termed restricted cash that we had that was in an escrow account. So the total cash holding was was a net of just under 250 million. And the reason why we had so much cash was because the day after this balance sheet, on the 1st of October, we acquired live auctioneers and spent the money. Again, I'll talk a little bit more about that later on. If we move to the next slide, see a little bit more detail on what's on the revenue path I just talked about. That fourth column across, that's the aggregate number for both proxy bid and ATG for FY20. For a full 12 months, 52.3, you have the organic revenue growth of 15 million, so 29% year over year. You then see that FX drag that I talked about, such as 3 million, so six percentage points hit to our growth from FX down to 64.3. And then you bring in auction mobility, 5.8 million revenue contribution, taking you to the 70.1 or the reported growth of 34% year over year. Now, a little bit more detail about the makeup of revenue. On the left-hand side, top left-hand, you can see a table which splits it by segment. See our total revenue of 70.1 million. So marketplace revenue, The lion's share of that 85% of the total is 59.9. That grew 31% year over year on an organic constant currency basis. And you can see both industrial and commercial and arts and antiques did very well. So industrial and commercial growing 34, arts and antiques growing 23. Industrial and commercial, as you'll be aware, has been doing particularly well, particularly with the adoption of timed auctions, which is not quite such a phenomena in arts and antiques. Then auction services, which is where auction mobility is, you get a very odd growth rate of 373% in FY21, clearly heavily influenced by the acquisition. Actually, the organic growth rate is a little bit misleading. That relates to a legacy back office product, which we put in that segment was very small. To make that a pro forma number, so put auction mobility in both years, the growth of auction services, 35% year over year. So not dissimilar to the wider group's growth rate. And then last but not least, you've got content, 3 million of revenue actually grew last year, 11% year over year. You may remember in FY20, in common with lots of other sort of magazine publications, advertising revenue basically stopped for a period. And so the growth you're seeing there is affected with the normalization of that this year as things have gone back to normal. The underlying long-term trends of a sort of mild decline in content are no, are unchanged. We look at by type of revenue, the bar chart in the top corner, top right-hand corner, you can see commission revenue, 67%, roughly the same as it was, or 66% roughly the same as it was last year. The reason it hasn't grown as a proportion, despite the fact that that revenue in absolute terms has grown very strongly, is due to the introduction of auction services, which you can see there is now 10% versus 3% in prior year. And then you've got the final bit of marketplace revenue, which is other marketplace, which comprises event fees and marketing, which is actually reduced as a proportion because of the growth from the other lines, but in absolute terms is still growing in its own right by 7% year over year. And then finally, you see the aggregate revenue by geography. You see last year, the bias towards North America, 68% in the US, 27% in the UK. Worth noting with live auctioneers, the shape of these numbers will change. So we bought them on the 1st of October. We will get a four years contribution in the FY22 P&L. That US contribution will grow from 78, just under 80% of revenue coming from the US. And if you look at the segment split, whereby at the moment, industrial and commercial is the largest segment, just over 70% of the total. With live auctioneers, it will go more 50-50. So some of the marketplace KPIs, what's driving that marketplace revenue number. GMV, clear the key number, your actual growth reported growth of 39%. But once you adjust the constant currency, you get 47% growth from 1.6 billion to 2.2 million. So huge growth in GMV last year. Look at the two charts on the right hand side. So the drivers of that, as John Paul's already said, THV is the total value of items sold at auctions where we take part irrespective of whether we sell it. And then the online share is the percentage that we sell and you multiply those two together and you get the GMV, the amount by value that we would provide the winning bidder for. You see in FY21 constant currency, we had huge growth of 37% year over year. That was on top of FY20, which we already thought was a very good year of 11%. If you sort of extended this chart back, you see growth typically in the sort of mid single digits. So FY20 was well above average and FY21 has been really exceptional. If you look at where that's come from, frankly, it's across the board. So industrial and commercial has grown 39%. ANA has grown 30%. You can see these numbers in the back of the chart. Timed auctions within their online only timed auctions which has been an important driver for us has grown 60% year over year but also live auction THV that hasn't gone down that's grown nearly 30% year over year so it's across the board but also a feature of that as John Paul's pulled out is this contribution from relatively new verticals or verticals where traditionally we might have played but have not been that strong equine real estate classic cars or examples and also arguably some higher end arts and antiques as traditionally we've been strong in mid-tier arts and antiques but with the addition of bonhams and others we've got more thv coming from uh from the top end those new uh those that new thv tends to have a below average online share so you can see the online share numbers of 33 to 35 so a very healthy growth by two percentage points but if you get underneath that and look at it on a like-for-like basis, but like-for-like cohorts of auctioneers, like-for-like verticals, like-for-like maturity of activity. The underlying increase is bigger than that, but the big increase in THV is suppressing the headline growth in online share. All positive, all for the good, and that all feeds through to the GMV growth, but it does make the reading of the individual KPIs a little bit more difficult than normal. That's the level of THV growth we've had. Then if you look in the bottom left-hand corner, you can see the take rate, 3% down to 2.7%. This is a phenomenon that we've discussed before. Two drivers for that. I mean, firstly, just the mathematical way the calculation works. Take rate is total revenue divided by GMV. Total revenue has got commission in it, event fees and marketing. So as GMV grows, a commission grows, but event fees and marketing don't necessarily grow in upstep. And in a year when you've had some exceptional growth in GMV like that, Just the denominator will naturally grow more than the numerator, which drags down the overall percentage. Similarly, we've also had tended to have both on a between segments, ANA and INC, higher growth in lower take rate segments. So INC in particular has grown more stronger than ANA. which has dragged down the average. And then even within INC, if you look at the individual verticals that are in there, like construction, agriculture, have had the ones that have tended to have above average growth have got a below average take rate. So underlying pricing, underlying take rates on a like-for-like cohort, a bit similar to online share, hasn't really shifted, but you're just getting a very big mix effect that's driving that reduction in headline take rate. And all of that's fed through to an increase in revenue of 31% marketplace revenue year over year, 31%. So we thought we'd provide a bit more detail as to how the world is moving, how we're playing out as we start lapping COVID. Now, just a reminder of how, how COVID worked for us. So we're a September year end in the first half of FY20. So that's the six months ended March 2020. That was kind of a pre-COVID period. You then had the second half of FY20. So April to September was where we saw the benefits of COVID really kicking in. Half year one, FY21, clearly another post-COVID half year. And so that second half of FY21, half year two that we're reporting now, is the first time where we're lapping a set of numbers that saw the benefits of COVID in them. And COVID did two things. Clearly, it increased the overall level of activity, but it's also shifted the timing of some activity, particularly in the second half of FY20. And if you're on the second half of FY20, we don't show it here. We don't get to that level of detail. But in Q3, overall, which is really the nadir of COVID, overall levels of auction activity were relatively muted, particularly in the UK, but it also applied to North America. And then in Q4, the second half of that half year, things got back to normal, but also we probably benefited from the deferment of activity from Q3. So you had a super quarter in Q4, a good quarter in Q3, And overall, the drug, the performance that you can see in that chart. So in the first half of the year, FY20 in GMV, which is the key number, you see growth of 22%. So kind of normal-ish level of pre-COVID growth. You then got that big step up with the benefit of COVID. So volumes more than doubled to 160 by 116% year over year at constant currency. That growth continued in half year one, 102%, which again, compared to a pre-COVID half year. And then I guess the, the, David Olusoga, Ph.D.: : The you know we would sort of talked about all sorts of different scenarios, but there was a there was a thought process that maybe there will be some retrenchment to volume. David Olusoga, Ph.D.: : As the world returned to normal in the second half of this year, but, as you can see there in the second half of this year, on top of the already elevated volumes from half year to fyi 20. David Olusoga, Ph.D.: : we've seen 16% growth in GM visa, the that clear the level of growth is now lower as we're lapping as we're lapping covert numbers. but the overall level of volumes haven't gone away. And as at today, they still haven't gone away, and they continue to grow, which John Paul will come to in a minute. If we look at, again, what's driving that, on the right-hand side, you'll see CHV. CHV, half-year one, 20. You see 5% constant currency growth, kind of normal growth. And then you started to see the pickup in half-year two to 17%. And within that half-year, Q3 was low, and Q4 was very strong. And then you get to half-year one, where we started seeing these really exceptional results coming through, 31%. And then I think the thing that's been really pleasing for us is the level of growth you've seen there in half year two. So we are not seeing any slowdown in THV growth, 42% in half year two, year over year. Again, across the board, everything's growing. It's fair to say in the second half of the year with the world opening up more, the bias of growth while timed auctions has grown very strongly, 20% up year over year in that half year. Live auctions have also started to come back. We have not had a single auctioneer who adopted timed auctions move back to live, but those auctioneers who stuck with live are now getting more active and increasing their volumes. And you can see that effect when you come through in the online shares. You can see there we had 24% in the first half of 2020, Then a big step up in half year two when a lot of live activity just shut down, particularly in the UK arts and antiques. Then sort of it stepped down a little bit as we've gone through, but largely a function of that growing THV. It's already explained as THV grows, it tends to suppress online share. If you look on an underlying basis, it's hard to discern any particular change in behaviour on like for like cohorts. of auctioneers doing like-for-like sorts of activity. And in particular, as I said, the big driver of that GMV growth is timed and online-only auction activity, of which we have seen no change in behaviour, and just a continued growth in THV going through that type of auction. If we look at take rates, the bottom left, Again, you'll just see the phenomenon that I described earlier on as the volume increase between half year one and half year two. You saw that step down in take rate. But as I said before, as we've gone through COVID the last half years, there has been no real change in underlying prices. So at those new elevated volumes, the take rate's been relatively stable. In fact, it's edged up a little bit in the last half year. All of which translates to the revenue number. You can see there again, a very strong growth in half year two, 2044. Similar growth in half year one, FY20. And I say the number that's most pleasing for us, as you see in half year two, FY21, which is lapping and inflated or a COVID half year with all the benefits of that for our financials that you can see, we still achieved 19% growth year over year. Moving down the slide, so live auctioneers. So as we've said, live auctioneers is not in any of these numbers, but we did acquire them on the 1st of October and clearly it's going to have a big, big impact in our financials. So we thought we'd give you a bit of an insight into how they've been doing. Live auctioneers historically have had the December year end first three columns on all of these charts are to 12 months the year to at the end of december they're all the numbers that were disclosed at the time of the acquisition but just to help create a pro forma set of numbers for the group going forward we've included unaudited numbers for the 12 months ended september 21 which are like for like with our numbers that we've just talked through and actually the shape of those numbers perhaps unsurprisingly is very similar to our own You can see that their GMV of $504 million grew 53% year over year, that compared to our 47% growth year over year in GMV, so very strong performance. also when you look at the shape of that you see that online share which has been steadily growing and then you've had in the last 12 months actually online share was stable 15 and the reason why that was stable wasn't because underlying it wasn't growing but you see that big step up that's in in those bubbles if you can work it out they too have seen a big growth in thv so if you go from 18 to 19 it went from 1.82.1 300 million another 300 million between 19 and 20 but then over the last 12 months 900 million increase in THV. So exactly the same phenomenon, this big increase in THV they're seeing, which is feeding through to GMV. But the headline aggregates online share you're seeing is held back despite an underlying growth. And then revenue, see 56% year over year growth to 43.1 million. So extremely strong performance. And I guess the one area where they do deviate from us, if you look at that take rate again, little bubbles, you can see between 2020 and 2021, 8.4 to 8.6. It didn't go down in the same way ours did. And the main reason it didn't go down is because in January 2021, they launched payments, a new revenue stream they didn't have before. So there's nine month contribution been building up through those nine months but that's increased their their overall take rate which has meant that it's offset the volume effect um in that calculation i was explaining before and then finally as with us operate higher levels of operating leverage they make 23 million dollars of profit in that 1200 period 53 percent a bit time margin final slide from me just balance sheets and cash flow So the dominant thing on the balance sheet actually to pull out is the impact of the live auctioneers acquisition. So clearly on the 30th of September, we were getting ready for paying the money on the 1st of October. So you can see partway down, we actually had on hand, including the restricted cash in escrow, 397 million sterling of cash. But we also had loans and borrowings of 148 million. So basically we drew down the acquisition facility just before year end. with a view to paying the cash over to live auctioneers vendors on the 1st of October, which we subsequently did. If you were to pro forma our leverage once we made the payment on the 1st of October, our leverage was just under two and a half. We said at the time of the acquisition it would stay under three, so it's just under two and a half at the moment, but it will increase when we make the final contingent consideration payment sometime towards the end of Q2. which is 25 up to 25 million dollars so we're still saying now that it's going to peak at just below three somewhere whether it gets to uh quite that high will depend on operating cash generation um but but broadly everything's happening in line with what we said at the time of the acquisition and then finally if you look at our cash flow our just a little bit there are 31.8 on the right hand side normally we have a small outflow working capital because of the growth in debtors for some one-off timing things we actually had a positive working capital inflow this time and don't expect that to continue but at future outflows will not be significant and then you had capex of 2 million um so that's kind of a normal level of capex for the business in its old state it's worth noting that going forward in fact starting this year and probably going to go on for a couple of years the project to integrate the platforms is going to start that will involve spend and so we will see an elevated level of capex for at least the next two years all in line with the guidance that we gave at the time of um at the time of the acquisition of live auctioneers, but it does mean the numbers will start getting a reason about higher than 2 million per annum. So with that, I will hand back over to John-Paul.

Okay, so now we'll take a look at ATG's strategy and outlook. The key thing I just wanted to show here, especially because we may have some people who are new to ATG, is again looking at what we're trying to do as a business. ATG runs seven digital marketplaces, and the key focus that we have is unlocking the value of the secondary goods market through a curated auction environment format. And the way that we do that, just to remind you, is that we connect bidders to auctioneers, roughly 4,000 auctioneers who list about 14 to 15 million items per year. And we connect auctioneers, roughly 4,000, to bidders from 150 countries around the world who generate 120 million web sessions just on those core marketplaces. Now with live auctioneers, it's going to be more like 160, 170. So the way that we provide this value is we're giving the bidders access to the best inventory of specialized and unique items that they can find anywhere in the world for secondary market items. And for auctioneers, we're taking regional businesses and basically massively expanding their reach, giving them access to technology that they couldn't afford to develop on their own. And we do that through our own branded marketplaces, not through just the technology. And as a result, we've created this virtuous circle where more bidders come because we have the best inventory, more auctioneers come because we have the best bidders, and that's been mutually reinforcing. And so when we now start to look at what ATG's strategy has been, though, we'll take a look at how we've executed against our strategy this past year, how it's shifted our competitive position, and then what you can expect from us in the year ahead. So, as I said, we are a business that's unlocking the value of the secondary goods market. And the key thing to keep in mind is that historically the role that ATG played was one of connector, where we aggregated the supply for the bidders and we aggregated the demand for the auctioneers and we connected them via our various marketplaces. We served as an augmentation to Auctioneer's existing marketing channels. We're providing a new way buying channel, and we were essentially replicating the offline auction environment online. But what's really different is that ATG's role is steadily expanding in the auction industry. particularly with the pandemic having accelerated that structural shift from offline to online. We are now very much becoming the sales and buying channel for many auctioneers, particularly in the industrial space. We're providing an end-to-end integrated suite of services. So expanding the roles that we play in that auction value chain. We're creating real cost efficiencies for auctioneers as they move to timed auctions in particular, because there's huge amounts of logistics and operational savings for them when they do that. As a result, as we become more than 10 or 20% of the volume and moving towards 40 or 50, we're becoming their primary marketing channel spend for their marketing. We also are creating new tools that help them list their items and make it more attractive for bidders to engage. And as a result, what we're now beginning to do is, as opposed to providing a replication of the offline world online, we're now starting to use all the different e-commerce tools to enhance end-to-end buying experience, making it easier for somebody to buy. And therefore, we believe accelerating the pace at which people will begin buying. And on the next slide, I think this is something that we really want to call out is that as you unlock the value of the secondary goods market, you're also unlocking the potential of the circular economy that all our governments and society is really looking for. And ATG is really a critical enabler of that. And so why is that the case? So first of all, the industry itself is much more relevant to sustainable commerce. By doing everything we do within ATG, we're promoting the circular economy because we're making people more aware of the fact that you can buy secondhand. The curation element provided by the expert auctioneers that work with ATG through the platform enhances trust and second use. The global reach we give unlocks value, which means there are more items that are available to sell. And then finally, that better end-to-end UX increases accessibility for more types of buyers than historically bought at auction. And so all these things essentially accelerate that circular economy and make it more attractive to buy and sell secondhand items. And so the pandemic has simply further heightened the awareness of the benefits we bring, but just to repeat those, for auctioneers, what ATG really does is provide reach, help them achieve maximum asset values, It provides them with cost efficiencies and allows them to provide an integrated suite of services. And for the bidders, they have the breadth of items, access to the best inventory of curated, specialized, and unique items in the world, convenience, transparency, and finally, the environment that we provide gives them trust. And the fact that they're working with expert auctioneers is the other factor. Moving on to the next slide. Oops. When I talk about the impact that we have on the circular economy, it's important to think about how we do that. It's not something I'm just saying, it's actually factual. Buying a secondhand items has a massive impact on our global CO2 footprint versus buying the same item new. One of the things we did is we had a third party which specializes in measuring CO2 emissions and the relative cost of different items. in terms of CO2 emissions. And we had them look at just 15 of the top items sold on ATG. And this accounted for about 600,000 items of the 9.5 million lots that were sold. But what you see in that bottom right area is that we saved just from these 15 items sold on our site, over a million tons of carbon emissions. So this is relative to someone buying the exact same items brand new. And just to give you a feel for that, 1 million tons of carbon emissions is the equivalent to the capture of 50 million mature trees. So this is not the case of saying we planted 50 million small little trees that will take years to capture it. We're saying 50 million mature trees. And so in terms of the role that the secondary market can play in our circular economy and our contribution to reducing CO2 emissions, it really is a material one and one that I'm excited by and I think everybody in the company is very much motivated by. So move to the next slide. In terms of where we stand coming out of the pandemic, ATG emerges unequivocally much stronger with even more capabilities to lead the evolution of the auction industry. So first of all, we have industry leading positions in all marketplaces by geography and vertical, and by adding live auctioneers and auction mobility, what we're able to do is establish ourselves both in the white label space and critically in the North American space. The structural tailwinds, you've heard me say it. You've also heard Tom say it. They've been sustained, which means we've got a new foundation from which to grow the rest of our business. We've taken advantage of the network effect, which I'll talk to you about on the next slide. The shared success model, I think, has really been also key to our success. So ATG has had a great year, but the auctioneers we work with have also had great years. And I think that was important to us to show that we're aligned with the industry. We're all pulling in the same direction. We also now, particularly with the acquisition of live auctioneers, have a much more diversified and attractive and resilient financial model, which again, we've proven out time and again now. And we have an experienced, motivated team. And again, there's so much opportunity in this space, whether it be through the M&A side or organically. And I think our entire team is very motivated by that. And what is exciting to me is that the auction industry, as you've heard me say before, is massive. But a company needs to achieve a certain scale before you can start to establish standards for an industry that's this big. But once you begin to achieve that scale, you can start to set selling standards and buying standards, which then increase the familiarity and ease for the different peoples in these markets. And something I saw in my time at PayPal is that the more you standardize something, the velocity of trading increases. And so this is something I believe we're getting to the point of being able to do at ATG is set standards. which will then increase the velocity of trading in the secondary goods market. Next slide. So at the IPO and at the mid-year, we talked about the fact that ATG has six different growth levers. We can grow our existing market. We can grow our online penetration. We can enhance the way that the network effect comes into play. We can expand our operating leverage. We can pursue accretive M&A. or we can grow the take rate via evaluated services. And so on this next slide, what we were really proud of this year is that even amidst becoming a PLC and acquiring the different businesses that we did, we were able to execute on all six of our growth levers in this year. We first of all extended the total addressable market adding about 4 billion to our existing immediately addressable market. Live auctioneers and more came from the oil and gas and classic car verticals. We were able to grow our online penetration. So we grew our online share from 33 to 35% while growing that THV from 4.8 billion to 6.3 billion. So a huge, huge accomplishment for the team to be able to grow the share at the same time that we were taking that THV up by such a big number. And the way that we did that was really a focus on timed and live online only auctions, which grew 45% year over year. We also expanded our network effect. So the key thing here is how are we able to leverage our unique assets to do things other people can't do for the auctioneers we work with? And in this particular case, what we were able to do was allow proxy bid auctioneers to cross list on BidSpotter in North America and allow BidSpotter auctioneers to cross list on proxy bid. And what we saw, keep in mind that BidSpotter is about one eighth the size of proxy bid, but what we were able to do was achieve an average increase in the bidder count of five to 10% for a proxy bid auctioneer listing on the bid spotter side. And for the bid spotter auctioneers listing on the much bigger proxy bid marketplace, we're able to grow that number by 40 to 60%. And that in turn contributed to the way that we were able to grow our online share this past year. And then on top of that, not just growing the THV and growing the online share, we were able to do that while expanding our margins from 42 to 45%. And that was by adding at the same time, 8.2 million of additional spend to come to 38.3 million. And we were able to do those things as well while pursuing two big acquisitions. So live auctioneers and auction mobility, leveraging our statuses as a PLC to do that, allowed us to further differentiate ATG services and open up a new geography, which creates also future network benefits in the art and antique side. And then lastly, what we were able to do was begin to grow our take rate via value-added services. So a key reason that we acquired live auctioneers, as we mentioned previously, was for the fact that they have a payments module. And while it's still the very early days, in the 12 months since they've launched that payments module, they've been able to achieve about 30% penetration of their auctioneer base, which adds 3% additional take rate to their existing take rate without it costing the auctioneers anything more because the auctioneers would have been paying for a payment service anyway to somebody else. And this is really exciting for ATG because, well, we don't expect that we will roll out the payment service to our marketplaces in North America, likely until September, October of this coming year, because we'll take some modification. The core services there is a really good service. It's being adopted by the A&A auctioneers in North America at a good pace. And while we don't know the rate at which the INC auctioneers will adopt it, we believe that there's a really strong value proposition there for them as well. And so when you look at the GMV that Tom talked about, even getting a percentage of that with payments would be an incredibly good boost to our revenue and an exciting development in the services we provide the auctioneers. Key to keep in mind, though, is that those revenues will be at a lower margin, so typically around a 25% margin as opposed to the marketplace revenues that we have today. So with that, moving on to the next slide. While doing those different things, we didn't want you to think that we also didn't continue to innovate on the core product and experience. So these are just four improvements that we made this year. The first one to our timed bidding enhancements, what we put is eligible bid amount. In the past, if someone bid an amount and it wasn't on an increment, that an auctioneer was willing to accept, it would just have a rejection of the bid and said, inappropriate amount or this amount is not accepted. Now what we do is simply suggest back to the bidder two different increments that the auctioneer would accept, and that's having an impact on the revenue. But again, early days on that. introduction of QuickBid. So historically, you had to go through seven different clicks in order to finally get to a bid within ATG. This year, we introduced in the core marketplace, the QuickBid, which reduces the number of clicks to bid from seven to two. We also completed this year, early in the year, the replatforming of Lattissimo, which is the business that we bought back in 2019, and we brought it onto the core stack. And that also includes now one-click registration. And then the final improvement is that the expired lot page enhancement. So in the past, if you went through Google and searched for a lot that happened to be sold by ATG, and if we'd already sold it, you just have a picture of an item that said, lot no longer available, or this lot has been sold. Now, with the expired lot enhancements, we're able to provide a little thicker at the top that shows related items that you may be interested in, and that's showing a 10% increase in the auction registrations from those expired lot pages. So now... A lot of what we talked about were auctioneer-focused metrics, but the impact is also playing out in a very powerful bidder dynamic. So specifically, our site sessions grew 14% year-over-year to $120 million. Our auction registrations grew by even more, showing the greater engagement that the bidders are having with our site at a faster pace than the site sessions, so up by 27%. We had 700,000 unique bidders, which is a 20% improvement year over year. The bids placed online grew 37%, showing even greater engagement with the items that we're selling, which enabled us to bring over 100 million bids to the auctioneers. And then lastly, we grew the total number of items sold on the site to 6 million, which is a 33% increase year over year. And so... The next slide is just what can you look at from us going forward. Our goal in fiscal year 22 is to pull on all six growth levers again. So we can extend that total addressable market by adding new auction houses in the same verticals that we operate in, or more inventory from those existing auction houses, or by moving into new verticals. We can grow our online penetration by continuing to enhance our time bidding capabilities by adding new product features and by enhancing our CRM. We can add to that network effect by allowing cross-listing between live auctioneers, the sale room, Lattissimo, and Auction Mobility, which provides a real differentiated value for auctioneers and also differentiated value for bidders because they can come to one place and see all the different inventory. We can also continue to expand our operating leverage. We believe we can continue to expand margins even as we grow and invest more. And the key part there is, while we are leaving live auctioneers intact, as they would normally grow at the pace of growing, they would need to be investing in new technologies, services, people. And because we're able to centralize a lot of those key functions, they will be able to grow without adding those additional costs. And then we're also centralizing services like our purchase of Salesforce Marketing Cloud across the different marketplaces. We will continue to pursue a creative M&A following the same disciplined approach that we followed before, and we'll continue to look into key verticals and new geographies. And then lastly, we believe we can continue to grow that take rate through the rollout of payments at the end of the year, which will add 3% to whatever percent of the North American INC base that we're able to penetrate with that. And just again, to give you the idea for live auctioneers, they achieved 30% penetration in year one, roughly, generating an additional 90 million of gross transaction value. And then they're taking their payment on top of that, their 3% on that. So with that, we come to the guidance and I'm just gonna read this out and then we'll be taking some questions. So ATG has delivered annual growth of 34% in fiscal year 21, which includes three quarters of very strong growth supported by the shift online accelerated by COVID-19. fiscal Q1 to fiscal Q3, and one quarter where we lapped a COVID-19 impact quarter, i.e. fiscal Q4-21 onto fiscal Q4-20. In that quarter, on a pro forma basis, including live auctioneers, we saw very encouraging growth rates in the low double digits. The new financial year has started well with positive trends continuing across all our core marketplaces. We are anticipating fiscal year 22 revenue growth of high single-digit to low double-digit growth, which represents revenue growth ahead of IPO guidance and current analyst consensus. We remain very confident of achieving our medium-term growth target of mid-teens revenue growth pro forma from fiscal year 19. In terms of adjusted EBITDA, so we delivered standalone ATG adjusted EBITDA margin ahead of expectations as well and ahead of guidance given at the time of the IPO, proving out the inherent operating leverage in our business model. For fiscal year 22, we expect a continued improvement in our underlying operating margin, but this will be offset by a combination of full-year PLC costs, the impact of lower margin payments revenue, and an incremental 2 million pounds of investments. The investment will be made in increasing the depth of the senior management team, along with adding to our marketing and technology teams in order to fully exploit the significant opportunities in front of us and drive sustained future revenue growth. We remain confident in achieving adjusted EBITDA margins in the mid to high 40s over the medium term. And so with that, I just kind of wanted to wrap up and say again, I'm very proud of the ATG team this past year. While COVID was winding down, people were still working from home, adjusting to lots of different things in their lives. And the fact that we're able to deliver for the auctioneers, continue to grow the business and perform as we did while also making these acquisitions and doing all that in the first year that we IPO'd. was I think a great achievement. And I think really when you look at our numbers and when you look at what's kind of gone on in terms of that momentum, I think the key thing that Tom and I really would like to get across is just the structural shift that we believe was happening and was accelerated by COVID has stuck. It's provided a new platform on which ATG can grow. We have a lot of growth levers at our disposal to continue to grow it. And we pulled all six last year. We're attempting to pull all six again in the coming year. And we're very excited by this. And the combination of that plus the role that we play in accelerating the growth of the circular economy just, I think, gives a lot of momentum and enthusiasm to our team. So we're excited by the coming year. So with that, I think we are going to be taking any questions you may have. Thank you again.

Thank you. Thank you. If you wish to ask a question at this time, please press star 1 on your telephone keypad. Please ensure the mute function on your telephone is switched off to allow your signal to reach our equipment. Again, please press star 1 to ask a question. We will now take our first question from Marcus Deboe from JP Morgan. Please go ahead.

Yeah, hi, everyone. I have three questions. The first one would be on the loyalty of customers that you obviously described much better over summer. Could you maybe help us understand kind of like the renewal rates where they are currently tracking in percentage terms to get an idea? The second question. would be on the strategy. I mean, you highlighted as before geographical expansion, also potentially other verticals. Could you give us maybe a little bit more of an idea how you think about it? Is that something you want to prioritize acquisitions or can you also envisage just rolling out your technology sort of from scratch, starting from scratch in other markets, or is geographical expansion more a function of M&A? And then maybe thirdly, also on the take rates. I understand the mechanism why take rates overall are coming down, but if you could maybe give us some guidance, ideally by vertical, maybe for next year, that would be great, where you think take rates would track. Thank you.

Okay, so I'll take the strategy one and then I'll let Tom talk about the renewal rates on customers and the take rate. And where we see that going, particularly in light of payments. But in terms of the strategy perspective, so first of all, the fundamental focus of our business is not on the new vertical expansion or the geographic expansion. we have so much opportunity in our existing business. When you look at that number of 6.3 billion of THV, that's our immediately addressable opportunity. And as you see, we only have 2.2 billion of that in terms of GMV today, so 35%. So the opportunity for us just to focus on that and continue to grow is phenomenal. That's a huge amount of THV to go after. And so our primary focus is developing the right timed auction capability to make that easier, make it easier for auctioneers to list with us so that we continue to retain and grow that volume. And then similarly, it's focused more and more around the conversion side. So using our CRM more effectively to engage bidders, we've begun to do that better and better. But just that alone within our team, that's a huge focus of it because growing that online share within our existing THV creates the best opportunity for us to grow that top line. And then keep in mind that even within the THV we have without adding any new auctioneers and new verticals, there's always opportunities to get auctioneers that we already work with to put more and more assets onto the system. And we've seen that happening throughout COVID. In terms of the move into additional verticals or M&A, so what we see is because in a marketplace environment, cracking a vertical after there's a truly established market leader can be quite difficult. And that's one of the nice things for us in terms of relatively strong barriers to entry for a new entrant. Gareth J. On the downside is, it means an organic entry can be difficult if there's an established player, so the way that we approach it is that if there's not an established player we move in organically. Gareth J. that's what happened this past year, for instance in classic cars in the UK or an oil and gas in North America, where there was no established marketplace. Gareth J. We entered that space with the auctioneers we've been working with we'd already done some business in each of those verticals before. but we just grew them massively in this past year with a real focus. And so in those cases, we can move in organically. But if we were looking to move into new geography where there was an established player, that's where we would look to buy. But that's where we, again, would look for businesses where we'd have operating synergies, revenue synergies, and eventual technical synergies. In terms of that M&A, as I mentioned earlier, we will continue to look. We won't be focused just on the core business, but we will do that selectively and carefully. So I'll turn the loyalty question over to Tom and the take rate.

So Mark, in terms of loyalty, I guess It could mean auctioneers or it could mean bidders. Certainly, if we look at auctioneers, our churn, certainly on a value basis, has historically been very low, sort of 3%, 4% per annum. I'd say at the moment it's lower than that. I mean, there's always some people going in and out of business or for one reason or another that auctioneers are choosing to leave the platform, but it's generally very low. We have added new auctioneers through COVID, but I think, sure, as you know, is... The growth we've had in THV hasn't predominantly been driven by adding volumes of auctioneers. It's by adding what one auctioneer can be worth 100 of another auctioneer. So it tends to be quite value biased. We haven't lost any auctioneer of any significance for quite some time now, which perhaps not unexpected given the wider environment. In terms of bidders, it's harder to say. A bidder profile, a lot of them will buy one item and then won't buy another item for a few months. And clearly, there's also a significant portion that it's a one-off purchase and won't buy anything for another two or three years. So it'd be hard to give you a proper answer on how that profile is changing over the last few months as we've lacked COVID just because we haven't got enough time yet. But generally... it's very highly related to GMV. So bidders do move quite in lockstep with GMV and the fact that GMV's held up and grown would be consistent with the idea that the new bidders we've attracted are staying in the same way that bidder profiles from pre-COVID happened. With regard to take rate, The big shift in volume that we saw through COVID, and it'd be great to think that's going to carry on, but realistically probably isn't at the same levels. So that step down intake rate that we saw with those volume increase isn't going to happen. I'd expect over the next 12 months, actually, it's going to be relatively stable at an underlying level in both INC and ANA. Clearly in ANA, live auctioneers is going to have a big impact on the numbers that you see because they have an above average take rate and will become an important part of the mix. So in the numbers we report, it will distort things a little bit. And also in live auctioneers, they've got the benefit of payments, which will continue to feed through in FY22. But at an underlying level, we're not really expecting any huge changes in prices given volumes are going to be, volume growth will be more normal. You won't get that drag. And so I'd say in the next 12 months, relatively stable.

Perfect. That's very clear. Thank you.

As a reminder, to ask a question, please press star one. We will now take our next question from Gareth Davis from Numus. Please go ahead.

Morning, guys. A couple from me. The first one, the integrated ANA offer that you referred to, whereby you're kind of, I suppose, putting stuff from sale room onto live auctioneers and lotissimo onto live auctioneers, etc. Can you just expand a little bit on that in terms of timing, in terms of how the management structure is going to look? Is it all going to ultimately move onto the live auctioneers platform? Just how you're thinking and when we should start thinking timing-wise about the benefits coming through? And then the second one on THV, there's the 800 million increment from sort of H220 to H221. I just wondered if you could talk a little bit around the shape of that 800 million in terms of the kind of biggest pockets there. I know you sort of touched on oil and classic cars as two examples of things that have been helpful, but just put a bit of context on core verticals versus the new stuff.

Okay, so maybe I'll take the first one again and Tom can do the second. But in terms of the integrated ANA offer, this is one of those things that we're still developing how we want to go to market with that. And even once we do it, the initial way that we offer it to auctioneers will be similar to what we did when we bought Lattissimo, where we allowed the German auctioneers to cross-list on the sale room in the UK and the UK auctioneers to cross-list on the sale room in Germany, but they needed to do it manually. There was no kind of automatic feed, so it does require additional work for auctioneers. Similarly, with Proxibid and Bidspotter, we allowed them to do it, but it basically created a pricing opportunity for them where it was discounted. um to encourage them to do that so this is something we're exploring now and in terms of benefits flowing through i'd say you know don't expect anything initially because we don't know how that will plan out yet we don't know what buying patterns will be cross transatlantic But, you know, again, I would expect something to come from that, but I would say maybe mid-year there'll be more of an opportunity for the auctioneers to be doing something there on a more formal basis. But at this point in time, it's still something under development because we're still meeting with the live auctioneers team and we're figuring out how we exactly want to be running it. We have a very strong executive running Art and Antiques and Phil Michelson, who was the CEO of Live Auctioneers, who's staying. He has a very strong CTO as well. And so we feel that we have the depth of team to run that Art and Antiques side globally. But right now we're in the very early stage of figuring out how we want to make it work.

So in terms of a bit more depth into the THV growth in the second half of the year, we refer to oil and gas as a new area, and that has been an area of particular success for us. We've had oil and gas historically, and so it's not something that's not been there, but it's just been a particular growth as we've added a handful of particularly significant auctioneers there. But I think if you were to try and sort of summarise the whole movement, and there's a lot of moving parts, our sort of heartland vertical state, construction would be a great example, agriculture would be another one, as I mentioned, sort of mid-tier arts and antiques auctioneers in the UK would be another example. I'd say their growth rate has been more like mid-teens, um and then the difference between that and the headline you've got is is newer stuff that's coming on board and it's that mid-teens growth in the core uh core thv base that's really the powerhouse behind the overall gm group v growth because it's on that thv that you're getting a good sell-through rate where the sell-through rate on other thv is lower clearly lots of opportunity for future but the the um in the immediate term some impact some good impact on gmv but the The lion's share of it would come from the more traditional verticals, where I say it's more like mid-teens, the growth. The other thing I'll say is timed auctions and live auctions, and particularly in that half year two, compared to half year one growth rates, whereas timed auctions, online-only auctions, had provided almost all the growth in half year one. and live auctions, not a huge amount of growth. In half year two, timed auctions continued to grow, so grew 20% year over year, but live auctions started to grow as well. And so both grew, it wasn't one at the expense of the other, there was no switching, but both in terms of total THV, the pie grew, but the share of growth that came from live auctions in the second half of FY22 increased, again, which is part of the reason why you get a reduced online share in half year 22.

Perfect, thank you.

If there are no further questions at this time, I would like to turn the call back to your speakers for any additional or closing remarks.

I think just final remarks. I think, like I said, very proud of the ATG team, really happy with how we've done this first year. And when you look to the future, I think we get really excited by the scope of what we're able to do for the auction industry. The pace at which that happens will be the question. But we really believe the combination of that structural shift online, really strong competitive positioning, multiple growth levers we can pull, and then a team that's proven that it can pull each of those levers. plus the augmented team we now have with auction mobility and live auctioneers, we really feel good about the coming year and about continuing to strengthen our position for transforming the auction industry. So thank you again.