Auction Technology Group plc (ATG) Earnings Call Transcript & Summary

Good morning and thank you for joining us for ATG's first annual earnings release and its 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, which is one of the key things that we are focused on when we IPO-ed and when we gave results at our midyear 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 2-sided marketplace. And what we were really excited by is that we saw volumes sustained on the supply side and demand sustained on the bidder side. And the reason why that's so key is that one of the questions we had, had at the IPO and at the midyear 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? And similarly, with the bidders, once they have the opportunity to buy or bid in person and not be online would they move offline. And 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. 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, became even more important for them. And amidst managing those high volumes, we were able to also acquire 2 new businesses. So Auction Mobility is the best white label for the Art and Antique space globally, and the acquisition of LiveAuctioneers on October 1 is opening up the big North American Art and Antiques marketplace, and we bought the #1 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 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, the slide that I'm sure everybody is 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 the key thing here is that that's growth in all 6 marketplaces, and that number excludes -- all these numbers exclude anything connected to LiveAuctioneers, but Tom will give you some insight into LiveAuctioneers 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 again 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 2 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 will 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 that we grew their Total Hammer Value at a monster pace, kind of typical year would have been 3% to 4%. This last year, it 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 section.

Good morning, everybody. I will take you through the financials, but very quickly, before I do that on the prior year comparators shown in here. So ATG and Proxibid came together in February 2020, so partway through FY '20. But all the comparatives you will see for FY '20 in here are based on a full year of both Proxibid and ATG just to ensure comparability with the FY '21 numbers. And that's why you see this odd phrase of aggregate everywhere, which is basically aggregate of those 2 businesses in FY '20. So headlines, John-Paul's already given you the key one, revenue of GBP 70.1 million, 34% growth versus GBP 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 full year's contribution in FY '21. Clearly, no contribution in FY '20, 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 [ 1 37], the rate in FY '20 was [1 28]. So that's been a drag on revenue. If you sort of remove the impact of the acquisition and restate everything at constant currency, you see our organic growth is very healthy, 29% year-over-year. If you look halfway down the page, you can see our aggregate adjusted EBITDA number of GBP 31.8 million. That's up 43% prior year 45% EBITDA margin. Adjusted EBITDA margin was 3 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 we look at our cost base, around GBP 5 million to GBP 6 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 the extra costs, which will be ongoing costs within the business. We said at the time of the IPO that those would be about GBP 2 million a year. There's GBP 1 million of those in FY '21, about half a year of being a plc roughly. And next year, there will be a further increase of GBP 1 million in that, that's take us to the full GBP 2 million 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 cost has been about 6%-ish, 6% to a 7% a year, which as you can say, is significantly lower than the revenue growth, which reflects the operating leverage. Free cash flow of GBP 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 debt on hand, reported net cash of GBP 25 million at the end of the year. That excludes GBP 225 million (sic) [ GBP 224 million ] of what's termed restricted cash that we had that was in an escrow account, so the total cash holding was a net of -- just under GBP 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 LiveAuctioneers and spent the money. Again, I'll talk about it, little bit more about that later on. If we move to the next slide, we 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 Proxibid and ATG for FY '20 for the full 12 months, GBP 52.3 million, has the organic revenue growth of GBP 15 million, so 29% year-over-year. You then see that FX drag that I talked about, that's a GBP 3 million, so 6 percentage points hit to our growth from FX, down to GBP 64.3 million and then you bring in Auction Mobility, GBP 5.8 million revenue contribution, taking it to the GBP 70.1 million 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 the table which splits it by segments, you can see our total revenue of GBP 70.1 million. So marketplace revenue, the lion's share of that 85% of the total is GBP 59.9 million. That grew 31% year-over-year on an organic constant currency basis. You can see both Industrial and Commercial and Arts and Antiques did very well. 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 phenomenon in Arts and Antiques. Then Auction Services, which is where Auction Mobility is, you have very odd growth rate of 373% in FY '21, 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. If you were to make that a pro forma number, sort of for Auction Mobility in both years, the growth of Auction Services is 35% year-over-year. So a not dissimilar to the wider group's growth rate. And then last but not least, you got Content, GBP 3 million of revenue, actually grew last year, 11% year-over-year. You may remember in FY '20 ad income, we lost all of it, sort of magazine publications, advertising revenue basically stopped for a period. And so the growth you're seeing there is effectively the normalization of that this year as things have gone back to normal. The underlying long-term trends of sort of mild decline in content had no -- had not changed. If you 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, 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 that 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 has 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 can see last year, the bias towards North America, 68% in the U.S.; 27% in the U.K. It's worth noting with LiveAuctioneers, the shape of these numbers will change. So we bought them on the 1st of October. We will get a full year's contribution in the FY '22 P&L. That U.S. contribution will grow from 78% to just under 80% of revenue coming from the U.S. 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 LiveAuctioneers, that will go more 50-50. So some of the marketplace KPIs, what's driving that marketplace revenue number. GMV, clearly the key number. Actual growth -- reported growth of 39%, but once you adjust the constant currency, you get 47% growth from GBP 1.6 billion to GBP 2.2 billion, so huge growth in GMV last year. Look at the 2 charts on the right-hand side, so the drivers of that, as John-Paul already said, THV is the total value of items sold at auctions where we take part irrespective whether we sell it. And then the online share is the percentage that we sell and [indiscernible] you get the GMV, you get the amount that -- by value that we would provide the winning bidder for. You see in FY '21 at constant currency, we had huge growth of 37% year-over-year. And that was on top of FY '20, which we already thought was a very good year of 11%. If you sort of extend this chart back, you see growth typically in the sort of mid-single digits. So FY '20 was well above average, and FY '21 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%. A&A has grown 30%. You can see these numbers in the back of the chart. Timed auctions, within that online-only timed auctions, which is 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-Paves called out is this contribution from relatively new verticals or verticals where traditionally we might have played but have not been that strong. Acquiring real estate, classic cars, for example. 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 [indiscernible] and others, we've got more coming from the top end. Those new -- that new THV tends to have a below average online share. So you can see the online share numbers is 33% to 35%, so it had very healthy growth by 2 percentage points. But if you get underneath that and look at it on a like-for-like basis, the 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 now, all feeds through to the GMV growth, but it does make the reading of the individual KPIs a little bit more difficult and the normalized level of THV growth we've had. And if you look in the bottom left-hand corner, you can see the take rate, 3% down to 2.7%. This is a phenomenon we've discussed before, 2 drivers for that. I mean, firstly, just the mathematical way the calculation works, take rate is total revenue divided by GMV. Total revenues got commission in there, event fees and marketing. So as GMV grows, commission grows, but event fees and marketing don't necessarily grow in lockstep 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 -- we tended to have both on -- between segments, A&A and I&C, higher growth in lower take rate segments. So I&C, in particular, has grown more stronger than A&A, which has dragged down the average. And then even within I&C, if you look at the individual verticals that are in there, like construction, agriculture, have had, the ones they've tended to have above average growth, they've got a low 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 a 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 COVID worked for us. So we're a September year-end in the first half of FY '20. So that's the 6 months ended March 2020. That was kind of a pre-COVID period. You then had the second half of FY '20, so April to September was where we saw the benefit of COVID really kicking in half year 1 FY '21, clearly, another post COVID half year. And so the second half of FY '21, half year 2 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 2 things, clearly it increased the overall level of activity, but has also shifted the timing of some activity, particularly in the second half of FY '20, within the second half of FY '20, we don't show it here. We don't get into that kind of detail. But in Q3 overall, which is really the nadir of COVID, overall levels of auction activity were relatively muted, particularly in the U.K., but it also applied to North America. And then in half year, in Q4, the second half of that half year, there was -- things got back to normal, but also we probably benefited from the deferment of activity from Q3. So we had a super quarter in Q4, a good quarter in Q3. And overall, that drove the performance that you can see in that chart. So in the first half of the year, FY '20 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 -- by 116% year-over-year at constant currency. That growth continued in half year 1, 102%, which again compared to a pre-COVID half year. And then I guess we've sort of talked about all sorts of different scenarios, but there was a full process that maybe there will be some retrenchment to volume 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 FY '20, we've seen 16% growth in GMV. So clearly, the level of growth is now lower as we're lapping COVID numbers, but the overall level of volumes haven't gone away. And as of today, they still haven't gone away, and they continue to grow, as 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 THV. THV half year 1 '20, you see 5% constant currency growth, kind of normal growth and then you started to see the pickup in half year 2 to 17%. And within that half year, Q3 was low and Q4 was very strong. And then you get to half year 1 where we've started seeing these really exceptional results coming through at 31%. And then I think that the thing that's been really pleasing for us is the level of growth you've seen there in half year 2, so we are not seeing any slowdown in THV growth 42% in half year 2 year-over-year. Again, across the board, everything is 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% year-over-year in the 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. It's the -- there we had 24% in 2020 -- in the first half of 2020, then a big step up in half year 2, when a lot of live activity just shut down, particularly in the U.K. Arts and Antiques, then sort of it stepped down a little bit, 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 behavior on like-for-like cohorts of auctioneers did like-for-like sort of activity. And in particular, as I said, the big driver of that GMV growth is timed, not only the auction activity in which we have seen no change in behavior and just a continued growth in THV going through that type of auction. If we look at take rates on the bottom left, again, you just see the phenomenon that I described earlier on as the volume increased between half year 1 and half year 2, you saw that step down in take rates. As I said before, as we've gone through COVID in the last half year, there has been no real change in underlying prices. So at those new elevated volumes, the take rates being relatively stable. That has 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 2, '20, 44% similar growth in half year 1 FY '20. And as I said the number that's most pleasing for us, as you see in half year 2 FY '21, which is lapping an 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, LiveAuctioneers. So as we've said, LiveAuctioneers 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 impact in our financials. So we thought we'd give you a bit -- an insight into how they've been doing. LiveAuctioneers historically have had the December year-end. The first 3 columns on all of these charts are up to 12 months of the year to the end of December. They were 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 see that the GMV of $504 million grew 53% year-over-year compared to our 47% growth year-over-year in GMV. It's a very strong performance. But 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 at 15%. And the reason why that was stable, it wasn't because underlying wasn't growing, but you see that big step-up that's 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, they went from $1.8 billion to $2.1 billion, $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. There's big increase in THV, as you can see, 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, you can 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 against little bubbles, you can see between 2020 and 2021, 8.4% to 8.6%. It didn't go down in the same way we did. And the main reason it didn't go down is because in January 2021, they launched payments, payment -- a new revenue stream they didn't have before. So there's a 9-month contribution being building up through those 9 months, but that's increased their overall take rate, which has meant that it's offset the volume effect in that calculation as I was explaining before. And then finally, as we do this, operate higher levels of operating leverage gaining $23 million of profit in that 12-month period, 53% EBITDA margin. Final slide for me, just balance sheet and cash flow. So the dominant thing on the balance sheet actually, it's pulled out of the impacts of the LiveAuctioneers acquisition. So clearly on the 30th September, we're getting ready for paying the money on the 1st of October. So you can see part way down, we actually had on hand, including the restricted cash in escrow, GBP 397 million of cash, but we also had loans and borrowings of GBP 148 million. So basically, we drew down the acquisition facility just before year-end with a view to paying the cash over to LiveAuctioneers' 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 2.5x. We said at the time of the acquisition, it would stay under 3x, so it's just around 2.5x at the moment, but it will increase when we make the final contingent consideration payment sometime towards the end which is $25 million -- up to $25 million. So we're still saying that, that it's going to peak at just below 3x somewhere, whether it gets to quite that high will depend on operating cash generation. But broadly, everything is happening in line with what we said at the time of the acquisition. And then finally, if you look at our cash flow, our adjusted EBITDA of GBP 31.8 million on the right-hand side. Normally, we have a small outflow of working capital because of the growth [indiscernible] is for some one-off timing things. We actually had a positive working capital inflow this time and I don't expect that to continue, but our future outflows will not be significant. And then you had CapEx of GBP 2 million. 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 projects to integrate the platforms that is going to start. That will involve spend. And so we will see an elevated level of CapEx for at least the next 2 years, all in line with the guidance that we gave at the time of the acquisition of LiveAuctioneers. But it doesn't mean the numbers will be -- start getting reasonably higher than GBP 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 want 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. And ATG runs 7 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 million 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 LiveAuctioneers, it's going to be more like 160 million, 170 million. 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 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 aggregate the supply for the bidders, and we aggregate the demand for the auctioneers, and we connect to them via our various marketplaces. We served as an augmentation to auctioneers' existing marketing channels. We're providing a new way, buying channel. And we were essentially replicating the off-line 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 off-line to online. We are now very much becoming the sales and buying channel for many auctioneers, particularly in the industrial space. We are 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 it 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. They provide 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. When I talked about the impact that we have on the circular economy, it's important to think about how we do that. So it's not something I'm just saying, it's actually factual. So buying a secondhand items has a massive impact on our global CO2 footprint versus buying the same item new. So one of the things we did is we had a third party which specializes in measuring CO2 emissions and relative -- 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 1 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 if we 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 LiveAuctioneers and Auction Mobility, what were able to do was establish ourselves, both in the white label space and critically in the North American space. The structural tailwinds, you've heard me say, 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 LiveAuctioneers, 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 people 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 are 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 midyear, we talked about the fact that ATG has 6 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 value-added 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 6 of our growth levers in this year. So we, first of all, extended the total addressable market, adding about GBP 4 billion to our existing immediately addressable market. LiveAuctioneers and more came from the oil and gas and classic car verticals. We're able to grow our online penetration, so we grew our online share from 33% to 35%, while growing that THV from GBP 4.8 billion to GBP 6.3 billion. So a huge, huge accomplishment for the team to be able to grow the share at the same time that we are 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 Proxibid auctioneers to cross list on BidSpotter in North America and allow BidSpotter auctioneers to cross-list on Proxibid. And what we saw, keep in mind that BidSpotter is about 1/8 the size of Proxibid. But what we were able to do was achieve an average increase in the bidder count of 5% to 10% for Proxibid auctioneer listing on the BidSpotter side. And for the BidSpotter auctioneers listing on the much bigger Proxibid marketplace, we were 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, GBP 8.2 million of additional spend to come to GBP 38.3 million. And we were able to do those things as well while pursuing 2 big acquisitions, so LiveAuctioneers and Auction Mobility, leveraging our status 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 LiveAuctioneers, 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 while 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 it'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 way -- the rate at which the I&C 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 4 improvements that we made this year. The first 1 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 2 different increments that the auctioneer would accept, and that's having an impact on the revenue. But again, early days on that. Introduction of Quick Bid. So historically, you had to go through 7 different clicks in order to finally get to a bid within ATG. This year, we introduced in the core marketplace the Quick Bid, which reduces the number of clicks to bid from 7 to 2. We also completed this year, early in the year, the replatforming of Lot-tissimo, which is the business that we bought back in 2019, and we brought it on to the core stock, and that also includes now 1 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'd just have a picture of an item that said lot no longer available or this lot has been sold. Now with the lot -- the expired lot enhancements, we're able to provide a little ticker 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 dynamics. 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 faster pace than the site session, 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 6 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 timed bidding capabilities, providing new product features and by enhancing our CRM. We can add to that network effect by allowing cross-listing between LiveAuctioneers, thesaleroom, Lot-tissimo and Auction Mobility, which provides a real differentiated value for auctioneers and also differentiated value for bidders because they can come to 1 place and see all the different inventory. And 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 LiveAuctioneers intact, as they would normally grow at the pace they're growing, they would need to be investing in new technology, 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 accretive 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 I&C base that we're able to penetrate with that. And just, again, to give you the idea for LiveAuctioneers, they achieved 30% penetration in year 1 roughly, generating an additional GBP 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 going to 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 3 quarters of very strong growth, supported by the shift online, accelerated by COVID-19, fiscal Q1 to fiscal Q3, and 1 quarter where we lapped a COVID-19 impact quarter, i.e., fiscal Q4 '21 on to fiscal Q4 '20. In that quarter, on a pro forma basis, including LiveAuctioneers, 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 stand-alone 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 GBP 2 million of investment. 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-ed 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 going 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 6 last year. We're attempting to pull all 6 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.

[Operator Instructions] We will now take our first question from Marcus Diebel from JPMorgan.

I have 3 questions. The first one would be, yes, 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 in 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, yes, 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 that take rates would track.

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. So -- and where we see that going, particularly in light of payments. But in terms of the strategy perspective, so first of all, the way that we -- 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 GBP 6.3 billion of THV, that's our immediately addressable opportunity. And as you see, we only have GBP 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 option 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 bringing -- 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 any -- 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. 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 inorganically. That's what happened this past year, for instance, in classic cars in the U.K. or in oil and gas in North America, where there was no established marketplace. We entered that space with the auctioneers who we've been working with. We've 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 inorganically. 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 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 Marcus, 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 auctioneer is 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 -- 1 auctioneer can be worth 100 of another auctioneers. 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 one expects, given the wider environment. In terms of bidders, it's harder to say a bidders profile. They -- a lot of them will buy 1 item and then won't buy another item for a few months. And clearly, there's also a significant portion of that, it's a one-off approach, so won't buy anything for another 2 or 3 years. So it would be hard to give you a proper answer on how that profile is changing over the last few months as we lapped 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 lockset with GMV and then the fact that GMV has held up and grown would be consistent with the idea that the new bidders that are 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, I mean it'd be a great thing if that's going to carry on, but realistically, probably isn't at the same levels. So that step-down in take rate that we saw with those volume increases 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 I&C and A&A. Clearly, in A&A, LiveAuctioneers 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 LiveAuctioneers, they've got the benefit of payments, which will continue to feed through in FY '22. But at an underlying level, we're not really expecting any huge change 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.

[Operator Instructions] We will now take our next question from Gareth Davies from Numis.

A couple from me. The first one, the integrated A&A offer that you referred to, whereby you'd kind of, I suppose, putting stuff onto thesaleroom on to LiveAuctioneers, and Lot-tissimo, and to LiveAuctioneers et cetera. 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 on to the LiveAuctioneers platform? Just how you're thinking and when we should start thinking timing more as about the benefits coming through? And then the second one on THV. There's the [ GBP 800 million ] increment from sort of H2 '20 to H2 '21. I just wondered if you could talk a little bit around the shape of that [ GBP 800 million ] in terms of the kind of biggest pockets there. I know you've sort of touched on oil and classic cars as 2 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, you can do the second. But in terms of the integrated A&A offer, this is one of those things that we're still developing how we want to go to market with that. So -- 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 Lot-tissimo, where we allowed -- let the German auctioneers to cross list on thesaleroom in the U.K. and the U.K. auctioneers to cross list on thesaleroom 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 to encourage them to do that. So this is something we're exploring now. And in terms of benefits flowing through, I'd say don't expect anything initially because we don't know how that will pan out yet. We don't know what buying patterns will be, call it transatlantic. But again, I would expect something to come from that. But I would say maybe midyear, there will 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 LiveAuctioneers team, and we're figuring out how we exactly want to be running it. We have a very strong executive running Art and Antiques in Phil Michaelson, who is the CEO of LiveAuctioneers, 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 stages of figuring out how we want to make it work. Tom?

So in terms of sort of a bit more depth into the THV growth in the second half of the year, I mean it's, we refer to oil and gas as a new area, and that has been there 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 at particular growth as we've added a handful of particularly significant auctioneers there. But I think if you were to try and sort of summarize the whole movement and there's a lot of moving parts, our sort of Heartland verticals there. Construction will be a great example. Agriculture will be another one, as I mentioned, sort of mid-tier. Arts and Antiques auctioneers in the U.K. would be another example. I'd say their growth rate has been more like mid-teens. And then the difference between that and the headline you've got is, newer stuff that's coming on board. And it's that mid-teens growth in the core THV base that's really the powerhouse behind the overall GMV growth because it's on that THV that you're getting a good sell-through rate, where the sell-through rate on that THV is now at -- clearly lots of opportunity for the future, but in the immediate term, some impact, some good impact on GMV, but the lion's share of it would come from the more traditional verticals where as I said, 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 2 compared to half year 1 growth rates, whereas timed auctions, online-only auctions had provided almost all the growth in half year 1 and live auctions, not a huge amount of growth. In half year 2, 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, they both in terms of total THV, the pie grew. But the share of growth that came from live auctions in the second half of FY '22 increased, again, which is part of the reason why you get a reduced online share in half year '22.

As 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 is -- will be the question. And -- 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 LiveAuctioneers, we really feel good about the coming year and about continuing to strengthen our position for transforming the auction industry. So thank you again and take care.