Auction Technology – look out this Thursday for a positive AGM Trading Update from this auction world leading technology group, shares now 600p, analysts TP is 870p

27.01.2025

Now could well be the time to take a view on the auction market correcting its downturn of last year.

Despite having cut back profit estimates in 2024, the Auction Technology Group (LON:ATG) still managed to show a revenue and profits advance in the year to end-September 2024.

Analysts are looking for further growth this year and next, making it shares a very attractive proposition.

Time to bid for some right now before this week’s AGM Trading Update on Thursday 30th January.

The Business

Capitalised at £734m, the Auction Technology Group has been supporting the auction industry since 1971.

Today, with the majority of its business is transacted in the US, this group is the operator of world-leading marketplaces and auction services for curated online auctions, seamlessly connecting bidders from around the world to around 4,000 trusted auction houses across two major sectors: Industrial & Commercial and Arts & Antiques. 

Over the past eight years, it has built and acquired technology platforms that have enabled the growth of its extensive auctioneer and bidder base, while driving volume through its marketplaces.

In the last two years, it has begun to further monetise each online auction transaction by offering premium solutions for both auctioneers and bidders including value-added services, such as atgAMP (marketing), atgPay (payments) and atgShip (shipping).

The group powers eight online marketplaces and listing sites using its proprietary auction platform technology, hosting just around 88,000 live and timed auctions each year and facilitating the sale of some 24m secondary goods items. 

It has offices in the UK, US, Germany and Mexico.

ATG’s connect bidders from 170 countries with 4,000 auctioneers, facilitating the sales of over $13bn of curated used items.

Management Comment

When delivering the 2024 results CEO John-Paul Savant stated that:

"ATG continued to deliver growth, generate strong cash flow and execute against investments that improve the user experience and capture more of the auction value chain, despite some continued headwinds in our end-markets.

Having connected our $13bn of supply with 390m sessions of demand enhanced by atgXL, and having raised the standard of buying online at auction via atgShip and atgPay for participating auctioneers, we are now accelerating the introduction of enhanced buyer search and recommendation algorithms across our 24m items.

Beyond connecting supply and demand, atgXL differentiates our proposition as auctioneers can now run their white label and an ATG marketplace via timed auction at the same time.

Our strong cash generation positions us to migrate our acquired technology platforms as well as to invest to raise e-Commerce standards for improved customer experience.

We expect that our program of continuous improvements will result in extending the addressable base of buyers and sellers and contribute to ATG's outperformance of the underlying market we serve, with underlying conversion rate improvements as well as incremental transaction revenue from value-added solutions."

Current trading and outlook

The group reported that trading in the first eight weeks of FY25 had continued to show positive momentum from the second half of FY24, with the company remaining confident in its ability to sustain that growth through the delivery of its strategic initiatives.

For FY25 it stated that it expected to see revenue growth in the range of 4-6%, supported by the continued growth of value-added services and positive gross merchandise value growth, while also reflecting uncertain end-markets.

It is looking for an adjusted EBITDA margin of 45% to 46%, reflecting operational leverage from revenue growth offset by ongoing investment into the business.

The Equity

There are some 122.33m shares in issue.

The larger Holders include FitzWalter Capital (13.10%), T Rowe Price International (6.22%), Abrdn Investment Management (4.98%), BlackRock Investment Management (4.97%), Jupiter Asset Management (4.74%), ECI Partners (2.95%), and Chelverton Asset Management (1.72%).

CEO John-Paul Savant holds 2.11% of the equity.

Analyst’s Views

There are seven analysts following the company, with three declaring the shares as a Buy, with an average consensus Target Price of 650p, the Highest being 870p, while the lowest is just 380p.

Ian McInally at Cavendish Capital Markets has current estimates out for the group to show end-September 2025 revenues of $181.9m ($174.2m), with adjusted pre-tax profits of $65.1m ($58.0m), generating earnings of 39.6c (38.6c) per share.

For the coming year he goes for $194.9m revenues, $73.1m profits and 43.6c earnings.

The year to end-September 2027 he considers could show $206.7m in revenue and $78.8m profit, with 46.6c earnings.

He sees ATG as having growing strength in its platform, enabling further embedding in auctioneer operations, while also expanding its addressable market.

Over at Peel Hunt, Damindu Jayaweera has a Buy out on the stock with a 730p Target Price.

He concludes that:

“Results for full-year 2024 were in line with guidance and there was clear progress on improving take-rate and conversion rates, which helped offset demand weakness.

Currently, we believe management is rightly cautious in its full-year 2025 guidance and we believe the chances of short-term upside are far higher than the downside risks over the next 12 months.”

He sees no change to structural drivers behind the digitalisation of auctions, and therefore, anticipates a turnaround in Auction Technology’s fortunes as the market recovers.

In My View

Just look at its revenue and profits growth over the last few years – this group is highly profitable and displays good cash generation.

It has a resilient and diversified business model which includes high recurring revenues, which are driven by its strong and differentiated value proposition that it offers to auctioneers.

Its shares, which hit 1545p in late August 2021, they hit 638p at its 2024 High last April, then were down to as low as 365p last September, since when they have recovered quite strongly and now show some appealing upside at the current 600p, especially before this Thursday’s AGM Trading Update.