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

Good day, ladies and gentlemen, and welcome to the Auction Technology Group's Half Year Results 2023. [Operator Instructions] I would like to remind all participants that this call is being recorded. I will now hand over to John-Paul Savant, CEO, to open the presentation. Please go ahead, sir.

Hello, and welcome to ATG's half results. We're very happy to be able to speak to you today about these results, and we feel really good about them. Becky, if you can go to Slide 5. So just kind of setting it up a little bit. I think before diving into this slide, One of the things we feel best about as we come to these results is just as we exited December, there were 3 big questions out there, we felt about ATG that all the investors were posing us. And 1 was on the Art and Antique side, how pro-cyclical would you be? Would you be able to grow off the really incredible growth that you saw during COVID? Or would you see a reversal in your volume? Or people moving back off-line once they were able to go attend auction houses. The second big question was around the industrial and commercial group and people saying, okay, well, are you going to see the volume that will compensate for the fact that asset price inflation may be a little bit less? And then the third point that people were looking at was would the atgPay, which was being launched onto Proxibid receive a good response and would there be good adoption or not. And I think 1 of the things that we're most happy about as we come to these results is the fact that we think we've addressed all 3 of those questions while strengthening the business and increasing the competitive moat around what we do. So we'll cover that in a little bit more detail between Tom and me coming up. But for now, just on this slide, this is for the people who are less familiar, maybe for the first time on this call, what does ATG do? Well, we are unlocking the value of the curated secondary goods market and accelerating the growth of the circular economy. And the key thing -- a key way that we do that is we connect bidders from around the world to auction houses around the world. We work with several thousand, about 4,000 auction houses, connecting to bidders in 160 countries around the world. Those auction houses are listing $10 billion to $12 billion per year that we helped facilitate the sale of for over 20 million items per year and we connect them to bidders who are generating now with our acquisition of EstateSales.NET, over 270 million web sessions per year for those auction houses. The key reason bidders come to us is because we offer the best selection of specialized and unique inventory. They come to us for the convenience because they can bid on dozens of auctions at any given time, and they come to us because of trust because everything that we sell on our site is listed by an expert auctioneer and in a curated format. And auctioneers come to us because of the technology that we provide for the cost savings and operational efficiencies, but more than anything, they come for the bidders because those bidders help generate higher asset sale prices for the consignors. So that's kind of the essence of what we do. To the next slide. So these are 1 of those happy slides which shows everything up into the right. But the key reason that we wanted to do this was because the big questions about ATG way back where could we grow during COVID, people wondered. Then when we grew, people said, "Could you grow on top of that exceptional growth?" And then they were saying, "Well, now that COVID's over, could you grow again?" And I think what we'd like to show is that whether you look at an organic basis or through the acquisitions we've made, it means that we are, in fact, growing. And you can see that, that GMV is going up. In terms of the revenue growth, you can see that, again, it's not just translating into volume of what's being sold, but that we're actually growing revenues as well and we're growing organically. But again, with our seventh acquisition, which is a core part of our story, that's accelerating that growth even further. And then finally, we were able to do that despite this uncertain economic macroeconomic backdrop while improving our financial profile. Next slide. So I mentioned before a little bit about the 3 big questions that we felt that were out there about us. But this slide gives a few more of the highlights. So again, we're able to grow GMV by 5% to GBP 1.9 billion, and that compares to last year at a total of GBP 3.3 billion. As expected, we saw acceleration in our GMV and as a result, revenue in the back half of the first half of the year, so in the second quarter, and that has continued into these early months of the second half. Our take rate, as you see, was flat, and that was because we were able to see the higher listing fees offset the growth of I&C. And for people unfamiliar, I&C has a slightly lower take rate but then the Art and Antiques division, but with the listing fee increases that we passed through successfully that kept that impact on the overall take rate minimal. We also saw very strong growth in marketing and demand for payments. So if you look at again, we referenced Etsy quite a few times, Etsy has 3.8% of its revenue or it monetizes its GMV at a rate of 3.8% through the digital marketing it sells to people who sell on their site. And today, ATG is at 0.6%. We saw a really good increase in the demand there. We also saw progress in live auctioneers with our other value-added service, which is payments. So it's now at 83% adoption. And then the comment that we made in the press release this morning and then which I referred to at the beginning, is that we're very pleased with the fact that we have 21% of the Proxibid auctioneers now having signed up to our payments product. So the fifth point here is around integrated bidding. So 1 of the things that we've been investing in beyond value-added services and the take rate is just improving the ability for auctioneers to cross-list on different marketplaces. We've made significant progress there as well. And then lastly, we were able to do this while making, as I said, our seventh acquisition, and this business is performing ahead of expectations, and I'll talk a little bit more about that later. To the next slide, over to Tom.

Good morning, everybody. I will take you through the financials, starting with the highlights that you can see on this slide, the revenue of GBP 67.3 million. That's up 17% year-over-year on a reported basis and 5% on an organic basis. Adjusted EBITDA of GBP 31.5 million, up 18% year-over-year. Our adjusted EBITDA margin was 47%. That's 1 percentage point higher than prior year. Adjusted diluted EPS of 16p, up 19% year-over-year. Free cash flow of GBP 21.8 million, that's a 69% conversion, and we ended the period with GBP 132.4 million in adjusted net debt. We move over the page. Talk a little bit more in detail about revenue here. On the left-hand side, you can see revenue by segment. Now as John-Paul has already mentioned, the first half of last year, so the half year 1 of '22 was really the last period that we had that was impacted by COVID. That impact was actually concentrated in the first 4 months of that period, October to January '22. By the time that we got to February, basically the world had reopened and we saw that normalization of activity levels across all parts of our business. So for February and March, relatively clean non-COVID comparatives. So for the first half of this year, we're going against sort of easier comps as we get through the half year. So if you look at our total revenue number already said GBP 67.3 million. The growth rate for the period was 5%. But as you went through the period, as the comps got easier, the rate of growth accelerated if you looked at the exit rate, so for February and March and also April, where we were going against clean non-COVID months the rate of growth was 9% overall. Just moving up to total marketplace revenue of GBP 61.6 million, so organic growth of 6% year-over-year with A&A growing up 4% and Industrial and Commercial 7%. We'll talk about that in more detail on the next 2 slides. Auction Services revenue of GBP 4.2 million, growth of 2% year-over-year. Organic decline of 7%. So Auction Services is largely our white label business. The white label business saw exactly that, the same COVID normalization or post-COVID normalization as the other -- as the marketplace is, in fact, a little bit stronger we saw there. But as we continue to move further away from COVID, that rate of decline will improve on a month-to-month basis, quarter-on-quarter basis, the business is stable. Content, a small part of this GBP 1.5 million revenue, 6% decline, consistent with historic movements in that business. If you look at the mix of revenue by product on the right-hand side, you can see that I&C commission comprises 37% of our revenue in the first half year and A&A commission 21% of revenue. So in aggregate commission was 58% of our total revenue. So it's still the largest stream, but you see, interestingly, the growth and importance of value-added services are now 17% of the mix versus 15% last year. Payments and marketing are growing within there, but marketing in particular, in the first half, gave a strong performance, 20% growth on an organic basis year-over-year. That's across all marketplaces something that we expect to continue into the second half of the year. Payments in I&C didn't materially contribute to that growth. But again, that will be a feature of the second half of the year with the launch of payments on Proxibid. And then if you move up to the next box, other marketplace revenue -- or the marketplace revenue largely represents the fees that we charge for hosting auctions, prior to COVID we used to increase those fees every year. For the last 3 years, during COVID, we didn't do that because all the other things that were going on and the growth in GMV. But now with post-COVID, we introduced -- we sort of reintroduced increases in our fee charges. So that, combined with increasing volumes of auctions being hosted has contributed to very strong growth in our fixed fee revenue of 25% year-over-year, which has driven that increase in share from 15% to 17% that you can see here. If we move over talk in a little bit more detail about I&C. So you see on the top left hand the chart of GMV. So last year, it was GBP 1.3 billion. it's worth saying that last year's number was exceptional. So that 35% growth that we saw last year was really the standout number in the numbers we reported a year ago. A lot going on in last year, you had the benefit of COVID, we're we talked about was still in those numbers. We also had very high asset price inflation. Many of our categories where prices were going up double digit last year, but that was offset by volumes, lower volumes last year, and it was really those lower volumes that were driving the higher prices. As we've got into this year, those volumes have come back. You see there the 14% growth in the volume of lots, which has more than offset the impact of moderating prices. So asset prices have been coming down. The reason to be coming down is because volumes have been going up. And so that's exactly the dynamic that we talked about last time, and that's exactly what's played out in this half year. So despite the fact we had that exceptional performance last year, we still managed to grow GMV and I&C by 7% on an organic basis year-over-year. Take rate, broadly flat. Within there, you've got some impact from the mix of assets being sold, being offset by improving value-added sales and particularly marketing. As I've just said, there wasn't really a material contribution from payments in I&C in the first half. That's something that we'll speak to in the second half. And also whilst we did change the pricing structure in I&C principally in Proxibid in the first half. That happened towards the end of the half. So again, there isn't a big contribution to that in the take rate that we're reporting there for our first half of '23. That will feed through in the second half. You take that GMV growth of 7% with a broadly flat take rate you get overall marketplace. Our I&C revenue growing by 7% year-over-year. If we move over to A&A. So A&A last year, GMV growth of 1% now, A&A was really where the impact of COVID was most transparent what you can see. And so that 1% growth that you can see last year was really a function of decent growth in the first 4 months of that period, sort of October to January. But then when the world reopened, the step back in activity that came in from February onwards gave an overall growth rate 1%. So you can't see on here, but the number we reported last time for second half growth in GMV, actually decline in GMV was 11% in the second half of last year. But as we've moved further away from COVID, that rate of decline has improved. You can see in the first half of '23. Overall, it was 3% decline. But again, when you look within how that's performed across the half by the time we've got to fully lapping COVID when you get to February, March and also into April, GMV is now back into growth in A&A, about 5 percentage points growth we've seen across the last 3 months to the end of April. And that really affects the wider robustness of the A&A market. Again, last time, a lot of questions about how would A&A hold up in a sort of softer economic environment and a weaker macroeconomic environment to date, and we expect going forward, there hasn't really been any impact of that and while the end markets continue to perform well. If we look at the take rate, that's grown from 7.6% to 8.3%. So the same dynamic as last year. GMV performance has been more than offset by take rate take. That rate is a function of continuing penetration of value-added services with marketing being a particular call out this time and also the benefit of some of the changes in fixed fees that I've just talked about. So you multiply that GMV by the take rate improvement, you get organic revenue growth in A&A of 4%. When you look at the reported revenue growth of 18%, that also includes 2 months contribution from EstateSales. So EstateSales are going to be reported in Arts & Antiques. Still early days, but to date performing ahead of our expectations. Moving over you can see here the full P&L. So on the right-hand side, you see our headline reported revenue growth revenue of GBP 67.3 million, that's reported growth of 17% year-over-year with organic growth of 5%. The difference between the reported and organic. You've got that 2-month contribution from the state sales we talked about with about 2 percentage points. And the balance is FX. So over 80% of our revenue is now in dollars. The pound has weakened relative to the dollar compared to last year, the average rate in the first half of last year in $1.34, this year, the average rate $1.2 equals a pound. So that has boosted our revenue by about 9 percentage points. That geographic split of revenue is limited in our cost base once when you look at the movements in our costs, can also see the impact of FX in that even our cost of sales have increased 15% year-over-year, not a million miles away from the revenue growth. So our gross margin has stayed constant at 68% year-over-year. Got our admin expenses, GBP 36.7 million, up 22% year-over-year. So you've got FX in there. You've got EstateSales in there. You've also got GBP 1.7 million of exceptional costs related to the acquisition of EstateSales all the fees that we paid in relation to that largely. And then you've got a GBP 1.4 million increase in our share-based payments charge. So our share-based payments charge for accounting amortize that cost over the life of the scheme. Our schemes were introduced at the point of IPO 2 years ago. The average life of one of our scheme is 3 years. So it will take 3 years for that chart to normalize, we're 2 years in now, so still stepping up. By the time we get to this point next year, it should have plateaued sort of an ongoing level. If you sort of remove all those effects and remove FX and try and create a sort of organic growth rate or rate of change in our cost base, our costs are up 4% year-over-year. Below the rate of growth in revenue, which you can see in our adjusted EBITDA margin penultimate line at the bottom of 47%, up 1 percentage point on prior year. We don't really anticipate any big changes in our cost base in the second half of the year relative to the first. So that 47% we achieved in the first half is broadly consistent where we expect the full year outturn to be. Just moving back up the P&L a little bit to net finance costs, you can see GBP 9.1 million. That includes GBP 3.7 million of a noncash FX movement on our intercompany balances. If you strip that out to get to the underlying cost, our rate of interest that we paid in the period is GBP 5.4 million. This is the first period we've had sort of new elevated interest rates. We pay our debt is in dollars. We pay interest rates based on U.S. SOFR or U.S. LIBOR. And that charge will come down as debt comes down, also come down as and when or, if and when the interest rates are reduced. All of that translates right to the bottom to adjusted diluted EPS at 16p, up 19% year-over-year, largely in line with adjusted EBITDA. And then finally, I've mentioned FX a couple of times here, as I said, over 80% of our revenue is in dollars. That's up from 60% of the time of the IPO, given the dominance of dollar in our P&L, we think it's appropriate now to remove to start reporting in dollars and move to a presentation on currency dollars. We plan to do that from FY '24 onwards. So, not this year, but next year, in the second half of this year you will sort of republish all our numbers on a dollar basis but that should remove quite a lot of the noise that we currently experience in our reported numbers from our FX. If we move over the page, and our adjusted net debt, so we opened the period with GBP 131.4 million of adjusted net debt. We had adjusted free cash flow of GBP 21.8 million in the period. That's a 69% conversion from EBITDA, slightly lower than we've had before. A couple of things going on there. So on working capital, we did have a very strong March for revenue. Some of that is stuck in working capital at the period and no change in the rec people paying us all that money is now in the bank. But at period end, that did result in a step-up in our debtors. And also with regard to bonuses, FY '22 was the first sort of new annual bonus scheme post becoming a public company. Prior to that, we had a sort of pay as you go bonus scheme. In -- as with any bonus scheme, it tends to pay post year-end. So in FY '22, we have the year of no cash payments for bonuses. We had the accrual for that. The cash bonus was paid in the first half of FY '23, which results in a working capital outflow, about GBP 2 million, which is impacting that number. That comes back in the second half of the year and there will be no bonus payment. And then finally, CapEx of GBP 4.1 million higher than prior year, but that reflects the previously talked about investment that we're making in a single -- in the single tech platform, which John-Paul talk about in a bit. Interest and tax cost, GBP 9.3 million, acquisition of ESN, GBP 24.9 million cash outflow. And then you get this FX another GBP 11.4 million. That's mainly FX. As I said, we have dollar debt across this period, the pound has actually strengthened, which has given you an accounting gain in the books. This is a very good example of the sort of FX movement that won't occur once we move to report in dollars and that's left at the end of the period with GBP 132.4 million of net debt, about the same as we've opened the period, perhaps leverage ratio of 2.3x, slightly inflated by the timing of the acquisition of the EstateSales. So the net debt number includes the cost we're paying for EstateSales, but we've only got 2 months worth of EBITDA from that. If you created a pro forma leverage number, it's 2.1x. And by the time we get to the end of the year, that should be safely below 2x. And with that, I will hand back to John-Paul.

If you can go to Slide 16. So as it says, we continue to execute against each of our 6 strategic growth drivers, and for those of you familiar with us, you'll know that the reason we always put this slide up is that it's the simplest way to see that symbiotic mutually reinforcing nature of the growth levers that we have because it's not that they operate independently. They're all mutually reinforcing. And if we grow TAM and conversion rate, there's a compound benefit that flows through, and that's something we benefited from repeatedly over these years. The other thing I wanted to do before going to the next slide is just to say that while we -- it's easy to focus on some of the things that we talked about, like looking at the numbers, and of course, that's all important and put into your models and everything else. I also think it's really important as we look at this next section at the strategic piece, to think about what ATG is doing. Because what I'm particularly excited by as you look at some of these things that we'll share with you is that we're investing in the things that create real value for our customers. It's not just about raising prices. That's not the only way we're making money. It's not about just rolling out a new product because we can. It's the fact that we're doing things that we know our customers really value. So for instance, on the auctioneer side, what do they care about most? They care about getting the highest asset value possible on the assets that they're selling and they care about increasing operational efficiency, and they basically want to ensure that they are future-proofed, meaning as the world moves online, can they have a partner that they can rely on. And I think what we are really pleased with in this last period is we've invested in some really core things that they value. So whether it be the cross listing that we -- that I'll talk about, or you look at payments, which takes away a big pain point for them and speeds up their collection cycles or you look at the fact that we've invested in the EstateSales.NET, which brings a lot more bidders that we can then cross list and offer their goods to. So lots of things that auctioneers care about. And for bidders, similarly, what do they care about. They care about selection, convenience and trust. And I think what we've done again is continue to invest in things. Payments are proven to be a way that increases confidence in a business when it has an integrated payment solution. We've invested in our SEO to enable people to find what's on our sites easier. And then again, that cross listing gives them an exposure to an ever wider pool of specialized and unique items. So all of these things are really key. And on top of that, the great thing is that yes, it's great for our customers. Yes, we make more money off of it. But all of these things also make it that much harder for someone to come in and compete with us. So we've raised that competitive wall higher, deepen the competitive moat. And that's something we're really pleased with. So if you go to the next slide. What were some of the things we said. So we said that we addressed those 3 key questions and 1 of them is this. So yes, we are a resilient business even against the backdrop of macroeconomic uncertainty. And basically, we talked about it, Tom already referred to that. Looking at the I&C side. The big question was, will we volume offset lower asset prices, and that is something that we see very much coming through. So looking at our total hammer value, showing again that it's up 11% on a year-on-year basis. We think really addresses that. And as Tom alluded to earlier, we saw the number of auctions increase and the number of lots listed increase. So again, we feel that the business is really responding and showing that we are very resilient. If you go to the next slide, THV is important. And part of the reason that we see that volume increasing is because our customers still see value in what we're doing. So these are the auctioneers and the bidders. And so bidders are coming to us to find those assets and auctioneers come to us because we continue to bring more bidders. But as you can see, we continue to grow the number of accounts created, the number of bidder sessions and the number of auction registrations. And I should say the bidding sessions excludes anything associated with EstateSales.NET. And then the chart that we showed over on the right is just to give you a sense for -- the number of lots where we are bringing an ever-increasing number of bidders because it's not that we're just bringing 1 bidder, we're often bringing 5 or more than 5 bidders. And the reason why we just say 5 is because often in the auction industry, people will say, each bidder represents 20% of the target asset price that the auctioneer has. So if an auctioneer is bringing 5 bidders, they're very confident they're going to get the estimated value of that item. And so the more that we do that, the better. Clearly, we're not the only people bringing bidders. They have people in the room and sometimes the white label. But from our perspective, just us, we like to see the number of times we're bringing 5 or more bidders because it gives us confidence that even for the auctioneers to rely entirely on us, we are helping them achieve that estimated value on critical lots. If you go to the next slide. So the second big question that we had post to us was can the Art & Antiques division, how pro-cyclical is it, and will people return to the room or will they -- once COVID was over, will they stay online. And I think what we think this chart shows is the gains in COVID and on the left-hand side, you can see that there is that small drop, but that's again due to the mix that we have with greater THV coming on board, new auction houses. So there's a lot of muddle in that number on the left that makes it hard for you to really see whether we're actually growing post COVID. So when you look at same-store sales, we actually unequivocally are growing that conversion rate again. And so we picked a vision that people had many questions about, which was live auctioneers, just to show the exact dynamic for how that's happening. So as you can see, 2019, 17%, huge growth throughout COVID then a bit of a drop at the -- in '22 as we saw some people again move back offline. But the key thing that we're seeing now is, again, growth in the first half, in the conversion rate on the same-store sales within live auctioneers, and that's a really encouraging sign because that's a reflection of all the investments we're making. It's a reflection also the continuation of the curve that we saw pre-COVID because pre-COVID, we're adding 1 to 2 percentage points of conversion per year on the different marketplaces. And what we feel this is showing is that we're now getting back to that pattern demonstrating that we've retained the vast, vast majority of those COVID gains and now we're back on the growth path, and Tom repeated a bit of that earlier. So if you go to the next slide, this is just a quick one. We drove our conversion rate and partly grew those numbers through the improvements that we're making. So if you recall, our 3 investment horizons, Wave 1 was the foundation of an aggregator marketplace, which we are. Wave 2, which we're focused on, is creating a true e-commerce standard level end-to-end buying experience in the auction industry. And for people less familiar with it, in the auction industry today, when you're buying online, everything is functional. It works, but it can be a lot of effort. What we're trying to do is really raise that standard to something that people are familiar with, maybe not Amazon level, but significantly above where it is today. And so whether it be SMS, which where we're seeing positive early signs, or the 12% increase in e-mail alerts, which is presenting people with more relevant items. One of the things that we began doing just several months ago, we've always -- for 2 years now, we've been doing browser-based retargeting, but was for people who registered for the auction. What we hadn't been targeting previously were people who browse but didn't register. Now we're retargeting people who browse but didn't register and we're seeing engagement from that as well. And then finally, a big part of what people look for is just can I find what I'm looking for. And while we have a long way to go on that still, a big part of the investment we've been making in the last few months, has been in SEO around categories, subcategories, looking at the event schema. And basically, the way it was worked, it was set up differently than we would have liked in the past. We had it set up based on an auctioneers event versus the product. And so we're moving towards much more of a product level schema instead of event level schema. All of these things, again, should drive more visits and make it easier for people to find what they're looking for. If you go to the next slide. So again, growing the conversion rate. One of the big things that we benefit from is the fact that we can focus on the bidder, which is that traditional way of driving engagement with an e-commerce experience, but we can also, at ATG, focus on the seller and really drive that in a meaningful way. And the biggest way that we can do that is by getting auctioneers to adopt time adoptions where they go all in with ATG. And 1 of the things that we saw was that auctioneers really wanted to -- well, I guess with this, first of all, with the price incentive that we gave them, this is the first part, and I'll cover a cross-listing a little bit later. But with this price incentive, the big thing that we did is we said, okay, live auctions you can keep running live auctions, but it's going to cost you more if you want to do that. And Tom talked about the price rises we put through. But then we said, if you run timed auctions, then your fees stay the same or even get a little bit lower. And that's because we get 100% of the auction. We don't have to share it with anybody else. We make a lot more money. We can share better at that with the auctioneer. And then the third gold standard that you see over on the right there that we pushed was we said, and if you take our payments product, then we will eliminate your fixed fees. And therefore, we were making the money off payments and off the volume, and it's increasing that competitive moat and making us even more important to the auctioneers. So we were really pleased with that. And the reason why we can feel good about moving auctioneers to timed to not just feeling we're doing it for our own self-interest is because there is a higher registered bidder conversion on timed. And as you can imagine, if there are many more bidders who are out there, whether it be on an Art & Antique auction or an Industrial one, where if you know that you're going to have to show up and compete against somebody in the room as a bidder you may say, you know what, I'm not going to be able to attend that lot number of 475 on Tuesday at 4:00 p.m. So I'm not going to bother bidding on this. But if you know it's timed and you're only competing against other people online and that you're going to be notified in that eBay like style when you've been outbid and be able to put a max bid in, well, then that's something that you can do that increases the number of bidders to registrants. So that's a big one. And then the other thing that we're able to show auctioneers is that, again, a huge amount of the activity that takes place in an auction is happening after the original end time with the timed auction, which means those auto extensions that we have, drive incremental value. So unlike eBay, where people can snipe and come in at the last second and try and get an item that they hope nobody saw. For us, auctioneers are allowed to have auto extensions, which means if you're bidding and there's another bid, well, then they can extend it for another 2 minutes or another 30 minutes if they want because there's no reason for the auction to end as long as people are ready to keep bidding. So if you move to the next slide, this looks at what we've done to make it easier for auctioneers beyond the price incentives. So from a product perspective, as auctioneers move increasingly online, many of them, especially the larger ones, like to retain their own brand, but they also want to list on the marketplace. But historically, there is nobody out there that enabled an auctioneer to run on their white label and on a marketplace, a timed auction at the same time. And so now that we're offering this first between Auction Mobility and LiveAuctioneers, this is something that's going and live now. And in the early days, what's been exciting for us to see is that for auctioneers who historically we're listing only on their white label with action mobility when they now cross-list on LiveAuctioneers, they're seeing an average of 26% higher hammer value. And that's a really meaningful number and therefore, even if it's early days, we're very encouraged, and we think this is going to encourage lots of the Auction Mobility, auctioneers who don't use LiveAuctioneers to take it. Okay. You can move to the next slide. We've also driven operational leverage. As you saw, our margins grew to 47% in the period. that's partly through the fixed fee increases, but it's also through additional self-serve features that we've introduced, whether it be on digital marketing. We've also improved overall site stability and then raised to global security standards. So all of these things and that progress against the common platform, which has us sharing more and more resources enables us to deliver all the value for each of our marketplaces without the same level of incremental costs you'd expect if we were doing it individually for every single marketplace. Next slide. And payments is the next big one. So payments was the third big question mark around ATG back in December, and we feel that we've really addressed that. So First of all, if you look at LiveAuctioneers, which is where we launched it previously, as you can see, adoption has grown to 83%. And the key thing that we are demonstrating with the chart on the right is that the adoption and interest on Proxibid is very, very strong. So 21% as of the end of March. And the key thing to keep in mind when we think about payments is that there are 3 phases to it. There's an onboarding phase, so getting them set up in [indiscernible], ready to go then there's an activation phase, which is where you get them to actually set up their auction and use it. And then there's a reuse phase, which is making sure they want to reuse it, making sure buyers want to reuse it. And for us, 1 of the things we realized in the beta was that there were a couple of things that we needed to build to ensure that, that first-time user experience was really good. So what we have built, we actually delivered exactly what we thought we were going to build, which was exactly what LiveAuctioneers launched with. In that beta, we found that the I&C customers needed a few more things. And so our team is delivering those, and therefore, we're going to be activating more of those customers in the third quarter, meaning in the quarter that we're in right now as opposed to activating them in the March period that we had expected to do. So -- that is a 3-month delay, but it's a 3-month delay in a product that we think is a 5- to 10-year runway and a huge impact for ATG. And so to ensure that we provided the best user experience from the get-go and created a real desire for reuse. That was the decision that we made. But as we'll talk about a little bit, it will not affect fiscal year '24. So beyond payments, we also saw really strong adoption in digital marketing, which is our other value-added service. And so as you can see on the left here, we saw increased number of auctioneers using it and an increase in the number of actions on which our digital market was being used. And 1 of the biggest reasons that we're doing that is that we created more assets that auctioneers could buy, particularly in high-performing areas. And then we enhanced the reporting and analytics to help them see the ROI that they're getting on the investment that they place with us. And so we think, again, there's a long way to go on this, but we're pleased with the adoption that we've seen today. Next slide. EstateSales.NET. So again, we spoke about this back in February. It's a really attractive bolt-on acquisition. And the thing that we really like about it is that it's really attractive as a stand-alone business. So if you look at the fact that they've delivered huge value, but they haven't ever really pushed the marketing that they sell nor have they really looked at optimizing the pricing. In fact, they hadn't raised pricing in 6 years. Therefore, we think those are some easy wins for that business. And as Tom said, even without this, it's already performing ahead of our expectations. And so we're really pleased with that. But beyond its value as an independent business, what we're even more excited by are the synergies that it creates with the rest of ATG. So 1 of the things that I talked about before is how much sellers value us for the buyers we bring. Well, on the legacy ATG sites, we generate 180 million web sessions for the auctioneers per year. EstateSales.Net brings 96 million additional web sessions and there's only 13% overlap of unique visitors between the ATG base and theirs. So that's a really exciting group. And as we build out that cross-listing capability, it means those buyers will see more assets and the auctioneers will have millions more sessions coming in that we think, again, not only helps them drive higher asset values, but it facilitates the rest of our strategy as well, which is to move people towards time because they realize they can go all in with ATG and achieve the right number of bidders to get the right asset value. And as you can see on the far right side, it's a sizable market and 1 that we understand because like the auction industry, it's in the early days of moving from offline to online, and we know how to facilitate that transition. So you go to the next slide. So what we focus on here is just 3 places where we are getting more involved in social and pushing our green credentials. And I think it's something that is really important to recognize because it's not just window dressing for us. We know that people want unique and specialized items. We know that people are more and more conscious about buying sustainably. And there are more and more items in fact, that are being required to be built so that they can be reused. So we know that there will be more inventory coming to us, more THV, more GMV. But that rising consciousness, we think is going to play into the people's demand for more and more of these used and secondary items. And so it's going to be a core part of our value proposition and a core part of our brand going forward, and it's something that we're excited by. So I just want to share a bit more about where you can see some of the things we're doing. The next slide is about our employee engagement. And I think a big part of ATG is we are trying to build a very engaged and collaborative culture, and it's a critical enabler of our success. And every company talks about how important its people are. But I think this is something that we take really seriously. We put a lot of time into it, whether it be employee engagement programs internally or how we're developing our people, how we talk. And a big part also though is just about the culture that we're trying to create. And the reason for that is, I think, in this post-COVID world, where people can work anywhere, that culture is going to be even more important as a way to retain employees and attract them because the pool that you're shopping from is bigger, but at the same time, their pool of options is also bigger. So I think culture is going to be playing an ever bigger role. And it's also an important part to look at when you're thinking about the fact that people are either remote, they're in a hybrid environment or they may never or rarely be seeing their colleagues. So what we've been putting a lot of time into is looking at ways that you can build connection between employees even when they never come into the office. And I think that's why we highlighted these results because we're really pleased with how that's been panning out from our employee survey. And again, we use not just a personal survey with tailored questions that would favor us. We use a global company that asked the same question to something like 20,000 different businesses. And so these results are being benchmarked against those, and we know that we're faring very well. So people I work with treat me with respect, 93%. People on my team, collaborate and help each other at 93%. And I enjoy working with the people on my team, 95%. And the reason that we're really pleased with this is also 1 of the old adages that I've heard is that they say that people stay at a company because they like their colleagues, and they leave because they don't like their manager. And so at least on 1 of these, we feel like we're doing really well. And I think we're doing pretty well on the other two. And so now on to the key slide of guidance. So I'm just going to read this out for you. But as expected, we have an improving rate of growth across the first half as well as at the start of the second half, and Tom took you through that. Auction markets have remained robust despite an uncertain macroeconomic backdrop. The Art & Antique marketplaces, which were a big question mark, have seen positive GMV growth for the 3 months to the end of April. And therefore, we are reaffirming our guidance for organic revenue growth, although at the lower to mid end of the range, reflecting the timing of auction activations within atgPay for Proxibid. Given the strong demand from Proxibid auctioneers on ATG so far, we do not expect there to be any negative impact to the revenue in fiscal year '24. We're confident in delivering our full year fiscal year '23 adjusted EBITDA and adjusted EPS in line with current market expectations and we're confident in achieving our medium-term targets of mid-teens plus organic revenue growth and mid- to high 40s adjusted EBITDA margin. And so -- that's kind of the last slide. And just as we wrap up here, I guess what I wanted to reiterate is that we feel really good about these first half results. As I said, we feel we've addressed those 3 big questions and that we're seeing that very positive momentum that's accelerating as we begin Q3 now. We feel like we've lapped those tough COVID comparators that make forecasting difficult. And so the core business is very strong. We're able to augment that growth now with our payments product, which is rolling out and which we feel very good about based on that early response. And as I mentioned during the strategic section, we feel like we're doing this while really creating value for the auctioneers who work with us and the consignors who depend on them as well as for the bidders who are coming to us for unique and specialized items or for practical items for whatever it may be. And so -- while all of this is going on, the fact that we are also able to improve our financial profile, it is a great result. And I think for me, we talked about the people we've been hiring and the results of that. And I think as I look out, I'm very happy with the way that our team has performed in this period and how the new executives have performed in each of their roles. And as we look out to the next 6 months and year for ATG. I'm excited, and I think the whole team is about how we can continue to transform the auction industry. So with that, we will stop and take Q&A.

[Operator Instructions] The first question we have is from Lara Simpson from JPMorgan.

Yes. And my first question is just on take rates. I think you've called out an improved rate for I&C in the second half of the year on with pricing and payments. And it looks like there's quite good momentum on the A&A side. How do you see group take rates trending in the second half of the year, obviously, taking into account mix effects, which I think should ease? And then interested more generally on how you're looking to drive these forward in 2024, and particularly at a time when payments are becoming a bit more relevant? And then I just wanted to come back to ESN, if I may. And you've obviously said integration is on track and performance is ahead of expectations? And how is the business growing from an organic growth perspective or sort of stand-alone? And maybe sort of for the last 3 months. I think you said previously it was growing around 9% pre-acquisition. So interested to hear how that's going. And any insight on demand trends, I think, would be helpful. And then just to pick up on pricing. That's clearly been a focus for you in that business. Have you put through any headline price increases yet? And if so, interested to hear if there's been any pushback on that, and those clearly prices have not really moved in a long time.

Sure. So Tom, I think all of those are for you.

Yes. So on take rate in the second half of the year, I mean, you're quite right, first half of the year take rate at an overall level hasn't been a driver of growth. It's really about GMV a bit when you look at the segment level, slightly different story, but we would expect it to be a start to be an important contributor to growth in the second half of the year. When you -- implicit within our guidance, the second half of the year growth is a step up where we were in the first half of the year. I would assume that a significant part of that is due to improved take rates. We don't guide specifically on take rate versus GMV, but I'd say there should be a step change in the contribution of take rate in the second half of the year. With regard to ESN growth, as you say, it was growing about sort of high single digit. It's been above that in the last couple of months. So it's now growing in the teens. I wouldn't read too much into that because like all of our businesses, if you look at narrow periods, you get movements in the growth rate. But ultimately said before, it's performing well ahead of our expectations. Price increases that you talked about, they are very much prior to our plan on EstateSales that will happen in the last part of the year not really assuming a big contribution of that in this year will be more a feature of next year, but still nothing we've seen to date has changed our view on that opportunity. And I think there was a question in the middle there that I might have missed.

Yes, I mean I think it was just around the demand trends on ESN, but I think you've just said -- yes, [ teams ] grow. So that's fine. That's helpful.

[Operator Instructions] The next question we have is from Gareth Davies from Numis.

A couple from me as well. The first one, in terms of the additional functionality on payments that I&C customers have asked for, I wonder if you can elaborate a little bit on what that was what you've developed there? And is that going to be relevant also on the LiveAuctioneers side? Is it something you will kind of roll out there? And then sort of relating to that, in terms of activation of Proxibid customers, is it a sort of big bang event end of June into early July? Or is there a sort of steady time line of putting people on to activation? And then the second question, again, related to payments is on estate sales. is payments a relevant product there? It sort of feels at face value. If it is, you can do it relatively efficiently and quickly given that you've now got the LiveAuctioneers product band, the Proxibid product, but interested in your thoughts around how relevant payments is for EstateSales?

Sure. So I'll take those. And so first of all, in terms of the additional functionality, it was things like tax exemption. So in the industrial and commercial space, you have more B2B buyers. And as a result, they have a tax-exempt status. And in the current setup, they would have to submit that every single time that they bought an item, which would be burdensome for the auctioneer and for the buyer. And therefore, what we're doing is creating -- again, it's done an automated way where when the person uploads it once, they don't have to repeat it. So that's just creating a better buying experience. There are different categories that we had to create certain codes around for the payment provider that we needed to address. And the last 1 was just enhanced reporting on certain features. So those were really the 3 big things we looked at. And as I said, the team is delivering on that. In terms of your second question about the rollout, whether it's a big bang, it's ready. And then it's a case of getting the auctioneers, we feel good about that just based on what we've seen in the LiveAuctioneers and the interest from the auctioneers are turning it on. So there will be a bit of a bump, I imagine, say, in June, as we go forward. But then it will be a gradual build after that as -- because it's 1 getting the auctioneers and then it's gradually getting buyers more and more familiar with the fact that this is the method by which auctioneers want them to pay. And so there will be a build, there will be a bump then a build. And then as we continue to add auction houses, we'd expect to see that to continue to build. And then for payments on ESN, absolutely, the way that we talk about it in terms of that single platform is we built payments as a shared service, which means it whether it be LiveAuctioneers initially and then bid spotter and then our European marketplaces as well clearly as EstateSales we'd hope that we can roll that out. But again, right now, we are focused on Proxibid. It's a massive opportunity just on Proxibid, and I wouldn't say you should expect the next 6, 8 months to see anything on EstateSales, but absolutely is something that we will be able to integrate there and that will be another big opportunity.