Welcome, and thank you for joining ATG's Interim Results for Fiscal Year 2025. I will be covering some highlights to start out, then our Director of IR, Becky Edelman, will cover the financials, and then I'll conclude looking at some of the strategic things that we've been working on and our outlook. We're also joined today by Sarah Highfield, who's our new CFO, but as this is literally day one for her, she'll be more in observation mode for today. If you want to go to the highlights page, please. I'm going to go through the highlights, but first, at an overarching level, a few things to call out. First of all, our key top-line numbers are up when companies that we benchmark ourselves against have actually been down.
While 3.4%, is not a phenomenal top-line number, you look at that and you compare on our ANA side, where we were up 5%, and that compares to Etsy, being down 9%. Or you look at our INC Group, where we're up 5%, and Ritchie Bros, was down 6-7%. Relative to the market, we feel very good about where we've been performing. The other thing to call out is that the measures we use to judge our competitiveness are also up. Whether it be Excel adoption, and the impact that we're having for our customers or shipping, ATG Ship, and again, the impact that we're having for our customers there. Finally, at an overarching level, I think what we feel very good about in the current environment is that we executed against everything we said that we would do back in November.
That really gives us confidence for the ambition that we have still for ATG, and what we're trying to execute going forward. Clearly, this is a tough time to be making strong predictions, but based on how we performed to date, based on how we've executed and how we've set ourselves up, we feel good about the execution that we've done, and we think that we've set ourselves up for a solid second half, of fiscal year 2025. With that, just quickly looking at some of these metrics. What did we do? We stabilized GMV, GMV, up 1%, which is in line with our expectations for the year. We were able to also expand our take rate by 0.1%, but that was driven off of very strong value-added services growth, of 14%. As I said, we executed against all our strategic initiatives.
One of the big ones that people focus on right now is ATG Excel, and the thing that we're really pleased by is, again, more than 10%, uplift to our customers when they run ATG Excel, and then that translates into incremental GMV, for us. We've also executed on the AMP packages, the ATG Excel, single upload, and search and discovery, all of which I'll cover in more detail later. We were able to allocate our capital effectively, so we successfully refinanced our debt, and we launched our share buyback program. Finally, we feel that we strengthened our team yet again, adding our new CFO, who's joining now in May. We added a new CTO, in April, and we'll talk more about their backgrounds.
We also added two non-exec directors, one with deep technology experience and in two-sided marketplaces, and the other with deep finance experience and also in two-sided marketplaces. For us, we feel like the first part of the year went to plan, and we feel good as we enter the second half of the year. With that, I will turn it over to Becky, for now, and then I will come back in a little bit.
Thank you, John-Paul, and good morning, everybody. Here's the headline financials. Revenue, in the first half was $89 million. That's up 3.4%, year over year or 3.2%, on a constant currency basis, with a small tailwind to reported results from the weakening of the dollar. EBITDA, was $38.5 million, and that's up 8%, giving a margin of 43%, which is up 1 percentage point. Adjusted value to EPS, was $0.19, which is up 14%. We generated free cash flow, of $32.5 million. That's an 84%, conversion rate. This results in adjusted net debt, of $106.5 million, at the end of the period, giving a leverage ratio of 1.3 times, which is down from 1.4 times at year-end. We'll now go into each of those in a bit more detail.
If we start off with revenue, at the segmental level, headline here is that revenue growth was 3.4%, driven by robust 4%, growth in marketplace revenue, and offset as expected by auction services. As you can see from the table on the left-hand side, revenue includes $46.2 million, from arts and antiques, which is up 4%. This includes a full six-month contribution from ESN, in this period and the last, and therefore is like for like, with ESN, continuing to perform well and contribute to ANA's growth, alongside value-added services, which I'll touch on in a moment. Industrial and commercial revenue was $37 million. That's up 5%, year on year. This was driven by the expansion of the take rate as well as an improvement in GMV, so a continuation of the trends that we spoke about at FY2024. Together, this gives 4%, marketplace revenue growth.
John-Paul , will touch on this later, but revenue growth, was stronger in the first five months of FY2025, with some deceleration of activity in March, but stabilization through April. Auction service revenue, was $4 million, which was down 9%. This was expected following our strategic decision last year to focus on our white label product, which is integrated with our marketplaces and away from smaller standalone white label customers. There is an impact on revenue, but as we explained at the full year, the impact on the bottom line is relatively muted. Overall, this division performed slightly ahead of our updated expectations. In terms of our KPIs, at the bottom of the page, I'll go through these in more detail when we talk through each of the segments. As you may have seen from the R&S, we are transitioning our KPIs, to exclude real estate.
The reason is one we have discussed with you before. Real estate auctions, are lumpy and volatile, and they have a low take rate. They can significantly distort headline KPIs, making it much harder to understand what is happening to the vast majority of our business. However, on this slide, we are showing GMV, and take rate with and without real estate, and there is a full reconciliation in the appendix. GMV, excluding real estate, was $1.7 billion, up 1%, continuing the improvement from last year, while the take rate, also excluding real estate, was 4.6%, up 0.1 percentage points, driven by growth in value-added services. This slide shows a revenue bridge broken down by product area. If you remember, our guidance was for VAS or value-added services, to continue to be the key contributor to revenue growth, with a small contribution from commission and fixed fees.
In HY24, revenue, was $86 million. In HY25, commission revenue increased $0.3 million, with a positive impact from higher GMV volume, slightly offset by commission mix. More lower commission rate items sold on average, but overall commission revenue, up 1%, year on year. Moving along, you can see the contribution from value-added services, at $2.7 million or adding 3 percentage points of growth, with revenue growth, from each of the three product lines: shipping, marketing, and payments. These offset the drag from real estate, which is largely a fixed fee revenue business, which, as I said already, is lumpy and hard to predict. Like the second half of last year, we did expect real estate to be somewhat of a drag in FY25.
Next, you can see the increase in events and other fee revenue, up $0.8 million, which is mainly driven by the number of auctions listed on our marketplaces as well as subscription revenue at ESN. I have already touched on auction services, so overall, you enter the half with $89 million, of revenue. Along the bottom, as usual, we show the percentage point, contribution to growth. We grew 3.4%, with value-added services, being the key driver, as expected, and a contribution from both commission and fixed fees. Moving on to ANA, in a bit more detail, ANA, performed well in what continues to be a difficult environment.
Clearly, the strong performer here is still the take rate of 9.8%, which increased 0.3 percentage points, driven by strong value-added services, and in particular, ATG Ship, although ATG Pay, has continued to grow and marketing revenue has also grown in ANA. The challenging ANA environment, is reflected in GMV, which was down 1%, although this is an improvement from the trend that we saw last year. Similar to what we spoke about before, there is a mixed impact for some of our headline KPIs. Whilst THV, in ANA, was up 3%, this was predominantly due to THV growth, from both newer auctioneers and regions, all of which typically have lower conversion rates, resulting in our conversion rate being broadly flat in the half. The core ANA market, then remains somewhat sluggish, although again, our ANA business, is holding up much better than the broader market.
Moving on to INC, which generated $37 million, of revenue, up 5%. In fact, if you were to exclude real estate, then INC, is up 7%. Generally, there was a more stable market backdrop for most of the half, with THV, up 3%, benefited from a stabilization of used asset prices and steady auction volumes in the half. The conversion rate was down slightly by less than 1 percentage point, but if you look by asset category, it remains a similar story to what we spoke about for the second half of last year. While today we are not showing all the detail by asset type, to give you some color here, yellow iron or construction equipment, continued to see strong growth in GMV, and conversion rate improvement.
It was also another strong half for gray iron or general industrial, and commercial equipment, where the end market was strong, and again, GMV, grew very well. Green iron or agricultural equipment, THV, also grew at a strong rate. This is our largest THV category, but as a reminder, it tends to have a lower conversion rate, than both gray iron, which is largely timed auctions, as well as yellow. Here is the negative mixed impact on conversion rates. Finally, as mentioned already, real estate was a drag to INC revenue. Similar to ANA, value-added services, was strong for INC, and this is predominantly marketing revenue, which showed good growth across all INC marketplaces. Overall, with VAS growth, we saw a 0.1 percentage point, increase in the take rate to 2.9%, to give overall 5%, revenue growth, for INC.
Moving on to the next slide for profit and loss. I've already talked about our 3%, revenue growth. Gross profit, was flat, with the gross profit margin down 2 percentage points, as the growth of high-margin marketing and commission revenue, was offset by higher amortization costs, which relate to higher CapEx, spend in the last few years, as well as higher payroll costs. Admin expenses, were down 9%. To break this down a little further, share-based payments were $1.8 million, lower than last year, partly related to changes in senior management and performance options. The bad debt charge, was $1.2 million lower, with the charge last year largely related to our updated auction services strategy. We had no operating exceptional cost, in the half, compared to $0.8 million, last year.
At the bottom of the table, you can see our adjusted EBITDA margin, of 43%, which is in line with our expectations and our guidance for the full year of 45%-46%, with some phasing of costs, and also the revenue shape impacting the margin split, between H1 and H2. Below admin expenses, you can see operating profits. That was up 43% to $15 million. For net finance costs, the $6.1 million, charge you can see here includes $1.4 million, of exceptional costs, related to our refinancing and FX. If you exclude these, net finance costs, were down $2 million, benefiting from a lower debt balance, as well as a lower average interest rate, of 7%. The tax expense was $1.9 million, which includes the prior year tax credit adjustment.
With our effective adjusted tax rate flat, higher EBITDA, and lower net finance costs, you can see a 14%, increase in EPS, to $0.19. A quick overview of two other strategic financial updates from the half. In February, we successfully refinanced our debt, and entered a new $200 million, RCF. In doing so, we extended the maturity of our debt, and now increased financial flexibility, with the RCF, also priced at a lower rate than the old loan at a margin, of 200 basis points, over SOFR. Following the refi, we commenced a share repurchase program in March. As a reminder for our capital allocation priorities, organic investment will always be a priority where it makes sense with the support of ROIs, particularly with regards to product and technology developments. For M&A, there is no change to our disciplined approach here.
We are always on the lookout for very selective and, of course, accretive acquisitions. We also have a GBP 40 million, discretionary share repurchase program, and we've repurchased 1.5 million shares,, to date at an average price of GBP 5.83. Moving on to the final page to look at the movement of net debt. As you can see from the chart, we reduced leverage, even as we continue to invest in the business as well as buying back shares. We opened the year with GBP 115 million, of net debt, had adjusted EBITDA, of GBP 39 million, and CapEx, was GBP 6 million. This is in line with our guidance for GBP 12-13 million, CapEx, for the full year. The bulk of this CapEx, has been focused on product and technology developments, including new features on our cross-listing product.
Working capital movement, was minimal, and with cash interest, of $7 million, which includes the cash costs, of the refi and tax, of $11 million, with some timing impact here on cash tax payments. Overall, on the refi and the balance sheet movement, overall, there was $123 million, repayment on the old facility. We've so far drawn down $119.6 million, on the new RCF, which includes having cash available for the share repurchase program, on which in the half, we made a cash outlay, of $7.6 million. Therefore, we ended with $106.5 million, of net debt and leverage, of 1.3 times, which, as I already said, was a nudge down from 1.4 times, at the start of the year. With that, I'm delighted to hand over and introduce our new CFO, Sarah Highfield, who has joined ATG today, who will say a few words. Over to you, Sarah.
Thanks, Becky. Lovely to meet you all. Good morning. I'm delighted to be joining such a fantastic business. I'm really excited about the opportunities that ATG, has for the future. As John-Paul said, this is day one for me, so you won't be hearing lots from me today, but I will look forward to meeting many of you over the coming weeks, and I will be getting stuck in very quickly into the business going forward. Thank you very much, and I'll hand over to John-Paul to take you through the strategic updates.
Thank you. Next slide. Normally here, we have a slide that talks about the three investment horizons for ATG. This time, the only thing that I'm going to talk about is number two.
To remind you of what number two is, it is raising the standard of buying and selling, at auction to e-commerce levels. Some of the things that we are executing against are things you have seen in other models for many years, but for the auction industry, this is revolutionary. For us, it is really exciting to see the progress we are making there because when you look against most of the things that we said we would do back in November, we have executed against every single one of those. I think in an environment where there is a lot that is out of your control, such as tariffs and other things, for me as CEO, I felt very good that what was in our control, the team executed against well. What did we say we would do back in November?
We said that we would get the single upload ready for cross-listing, which we thought would help accelerate timed adoption. We said we would deliver the e-label, and then we would use that to execute a shipping mandate. We said that we would deliver AMP packages, so auctioneer marketing program packages, which would allow us to capture more of the auctioneer spend. We said we would ramp up our search and discovery team to help us drive that conversion rate in the future. We said that we would execute against systems consolidation. In this case, we unified four instances of Salesforce, and put the majority of our finance operations into Sage Finance. We could also add to that the capital allocation efficiency where we refinanced our RCF, and we were able to execute the share buyback that we indicated we were leaning into back in November.
Finally, we were able to do this while strengthening our team and replacing executives, so adding a new CFO, a new CTO, and two new non-exec directors. From the perspective of what was in our control and continuing to move and make progress against that second investment horizon for ATG, which was raising the standard of buying and selling at auction to e-commerce levels, we feel that we did well. If you go to the next slide, I'll go into a bit more detail on some of these. For the people who are new, what is ATG Excel? It's the ability to cross-list from one of our marketplaces onto the other marketplaces. The reason why this is so important is because what auctioneers care about most are really a couple of things.
They care about higher asset prices, and they care about running their auctions efficiently. When they obviously deliver higher asset prices, it makes their consignors happier, they make more money, and it helps them win more consignments. What ATG Excel, does is help them reach a broader audience and therefore drive more visits to their auctions and therefore ideally drive higher asset prices, for those auctions so that their consignors are happier. The key was to enable them to do it while making it efficient for them as well because ATG, has eight marketplaces. In theory, the auctioneer could have uploaded onto all the eight, but as you can imagine, that's a lot of work.
The real differentiator that we're now offering is that we launched the single upload feature for timed auctions, which means an auctioneer can upload once and then have access to multiple ATG marketplaces. That is the efficiency side. From the impact side, I think this is what we're most pleased with. I think it's easy to talk about the impact for ATG, and the average uplift, which is good to see. Ultimately, what gives us real confidence that this is a product that is going to continue to see steady adoption is the impact it has for the auctioneers themselves and for their consignors. Because having run hundreds and hundreds of these now, we're seeing between a 10-20%, uptick on the estimated asset price, that the auctioneer receives when they cross-list.
Auctioneers, often provide an estimated value for the collection of their auction, and what we're seeing is, again, 10-20%, more than what they expected to get when they cross-list. For us, this is a great sign of a good product that works for the auctioneers, works for their consignors, and therefore we feel good about steady adoption. The reason I say steady adoption and not rapid adoption, is simply that this is a slow-moving industry and nothing changes fast. The direction of travel is good, and the key headline metrics on this product are there. As I said before, we were really pleased that the product and engineering team, delivered this on time and allowed us to go live with it in March. Next slide. The second area is ATG Ship.
Any of you who've ever bought online at auction or bought at auction, period, will recognize that probably the biggest pain point after you get through the other elements of the unfamiliar experience is trying to arrange for shipping. For us, we've been focused on shipping. As you know, we launched it last year on LiveAuctioneers. The key thing that we executed on in the last six months is we delivered the e-label solution. Just to give you, again, a reminder of what that was, our initial solution was very good for high-touch items. It was kind of a white-glove treatment, with insurance. We were not as good for lower-value items.
With the e-label solution, which allows an auctioneer, to input their own data, charge what they want for shipping, and then print that label out and put it on the box or whatever they're shipping, it allows us to address lower-cost items as well. Based on having the high-value items covered and the low-value items covered, and knowing that when we offer shipping, it's better for the buyer experience, and it actually is better for the seller as well, we mandated that our shipping product is available on all of LiveAuctioneers' auctions for U.S. domestic sales, meaning there are certain international auctioneers who can't use the shipping. For all domestic U.S. sales, that is now mandated. What it means is that our shipping product is available as an option. It doesn't mean that every buyer has to use it, but the auctioneer needs to offer it.
The reason we felt comfortable doing that is because, again, it's good for the auctioneers, and it's good for ATG, and it's therefore good for the buyers. Because why? When they offer shipping, they typically get a 40%, increase in auction registrations, they get 27%, more bids per lot, and they get typically 30%, higher hammer prices, than they would for comparable items that do not offer an integrated shipping option. Again, for the audience that we are targeting, which is more and more a new audience that has not potentially bought at auction, this is increasingly important because it brings that buying experience ever closer to e-commerce. We have launched this, and it launched in April. If you want to go to the next slide. The third area is AMP.
To remind people who are not familiar with ATG, what it is, AMP stands for Auctioneer Marketing Program. This is the money that auctioneers pay us in order to reach the bidder base, either through targeted emails, on-site ads, or in our newsletters. This has, again, been growing strongly for us. AMP Packages, is an effort by us to put together packages which allow us to capture a higher percentage of the auctioneer spend. These, again, were put together in February, and are launching now, launched in March. The reason why this is important to have is that as we do everything else on our site around shipping, cross-listing, improving the seller experience as well, by now doing those things, it actually reinforces an auctioneer's willingness to spend on AMP.
That is one of the things that you have seen reflected in our 14%, growth in value-added services. As we do other things, it encourages them to spend more with us. What we are doing here is putting together packages that we think will then further encourage them to spend with us when they are spending to attract bidders. If you go to the next slide. This last one is generating no material revenue, right now, but it is what we executed on that we said we would do. Back in November, we said we were going to start up a conversion rate optimization team, that was going to focus on everything from testing and learning, experimenting, working on the search and discovery elements of our site, onboarding, the search, and then the recommendation engine.
As I said, this is something that's not generating material revenue today, but for me, this is probably the most exciting thing that we're actually doing right now that we haven't been doing before. I think it's odd maybe to say, "Why is a CEO, excited about something that generates no revenue?" I think the key reason for that is because this is one of the key areas that we're investing in that is going to allow us to drive that conversion rate higher. The key reason for that is because we're targeting the areas that are barriers to buying for people who haven't bought at auction before. The real key for ATG, is we're getting people to reuse our site, and we attract people who are familiar with auctions to come to ours.
The real opportunity is to attract an audience that has not bought at auction today historically, or the millions of people who come to our site who browse and do not register because the buying experience is too complicated, or they register and they do not bid. This is a huge opportunity. What I am very pleased with is that the team was staffed up, it began running tests, and we are already seeing some really promising results. Just three of them here. Just by increasing the ability for someone to save a search, this is something that we are trying to test to see how we can get more people to do this because typically, 30%, uplift in likeliness to bid when someone saves their search. The other part is that we are improving our recommendation engine.
Here we have 60%, more clicks from expired lot pages to other relevant listings. Having a more clean path from an expired lot where you have looked at something that we have already sold or which has already been sold by somebody else, and then redirecting you to something that is available for you to bid on. The last part is really improving our onboarding experience where we are seeing in the early tests a 26%, increase in the auction registration rate, amongst people who are joining live auctioneers with the different changes that we are making. These are just a handful of many tests that we are running in which in and of themselves, each one may be several millions or low tens of millions, of GMV potentially.
When you add them up collectively, that's where you start to see that real difference and differentiation in the experience relative to our competitors. For me, this is probably one of the most exciting areas that we're working on and finally making some real progress on and setting up the right infrastructure so that we can execute on it effectively going forward. You go to the next slide. In terms of people, ATG's, ambition doesn't stop with just adding a gradually better buying experience. The curated secondary goods market, is a massive underserved market, whether it be for auctioneers, dealers, consignors, buyers. Everyone in this value chain is underserved today.
As we think about how we want to transform this industry, we've wanted to bring in people within the executive team, and in our non-executive director group, who can help us make good decisions about the best way forward to lead the transformation of the industry. Sarah, again, we've given her background before, formerly at Tesco and CFO, of one of the Tesco countries, and then was the CFO at Costa, as well, among other roles, and currently the audit chair of Coates. We welcome Sarah, who's joining us as of today. The second person that we brought in just in April, is Lakshmi Dervenkatesh, as our new CTO. This is, again, a really exciting hire for us because Lakshmi, was managing a team of 450 engineers, at eBay. Her focus was on conversion rate optimization.
Basically, for the last 17 years, she's been working on exactly the things that we need to work on now and at one of the bigger e-commerce companies in the world. She's seen what good looks like, she's operated at scale, and she's done what we need to do. We're really excited to bring her on board. We also brought on board Andrew Miller, who was the CFO of Autotrader, and who's currently the CEO of Motability Operations. Again, his deep experience in two-sided marketplaces at Autotrader, and the deep finance experience there with pricing models and other, we think, is a great add to our team.
Lastly, something that I really pushed very hard for was when Morgan Seagler, left with TA, we had an opening in our board, and I really wanted to get someone—Scott, Forbes, and I spoke about this at length—who had deep technology experience because it is one of those things where all board members can look around the table and they can do pretty much everybody else's job. The one thing that we cannot do is code. To have someone around the table who really understands what it takes to set up the architecture, the engineering, and can make those challenging questions within the board meetings, we wanted to get someone with deep technology, not just product experience. Sajal Amin, is the in-post CTO of Priceline, which runs Booking.com, OpenTable, Kayak, and other businesses.
Strong technologists, with deep two-sided marketplace experience, and she is based out of New York. Great additions to our team that we think will help us make even better decisions as we go forward. If you go to the next slide. Our fiscal year 2025, guidance was really predicated on two big buckets, if you recall. What we really said was in our range was that we would deliver a portion of our growth through value-added services, and then we would deliver the other portion by driving our GMV, somewhere between 1% and 3%. The first part of the year performed as we expected, as Becky alluded to, moving towards the lower end on the GMV side, and right where we thought we would be on the value-added services front. The key thing was that we were actually ahead through February.
March was soft, as Becky said. I think the key thing there is people will be wondering, "If it was soft in March, does it mean it's going to be carrying on into April?" While it was soft in March, it then came back some in April. While it's early days in May, we're seeing yet again improvements on that. The reason why I feel confident in where ATG, is and I'll touch on that a little bit later, is just that this is not dissimilar to what we saw when COVID hit, where there was a little bit of a breathtaking by auctioneers and by buyers. Once they understand the new norm, they get back to business. We feel in a strong position regardless of what happens in the future. I'll talk to that in a couple of slides.
What we are focused on in the meantime is executing on what is in our control to execute against. What you are seeing here is more of the same from what we did in the first six months. Now that we have ATG Excel, it is really promoting it across auctioneers, launching it for live auctions, and using it to drive white-label adoption so that we can get more timed auctioneers. The product is ready, it is out, and now the goal is to just steadily increase Excel adoption, and move more and more auctioneers onto timed. The second thing we are doing is really pushing shipping. We are implementing our mandate, and we are continuing to test and evolve pricing to try and improve the uptake of our shipping solution.
We're expanding our partner network as well, which the auctioneers love because it allows them to reach buyers who are not within the ATG network, and who they typically would have had to spend money on to reach in the past, but which now through ATG Excel, we actually connect with partners as well, and the auctioneer can upload once and reach them. We added two new partners in the last six months. One is called Worthpoint, and they add about 3 million visitor sessions per month. Yet to be determined what the impact of that will be. That is for the art and antique side. We added on the IMC side, a company called DotMed, which adds what looks to be much, much less, which is 300,000 visitor sessions per month, but they are very targeted on medical equipment.
Those 300,000, could well be worth more than the 3 million, from the ANA side. We are excited by those two new additions for the impact we can drive for the auctioneers. The fourth part, that we are focused on is continuing to work on testing and learning with our search and discovery team. One of the big things that they are trying to get done is automating lot descriptions, leveraging AI models. This, again, will help auctioneers provide richer, better descriptions, and that in turn helps with bidding and confidence in bidding more. Finally, we are going to continue to explore our fixed fee incentives, to try and drive timed adoption and to explore how we can bring in even new segments of auctioneers potentially on the lower end to bring even more inventory in.
For the things that are in our control, this is what we're focused on. The things that are outside of our control that I would say people need to be focused on, I'll just reference here. For us, the things that are outside of our control are ANA pricing and IMC pricing. Right now, what we believe is happening is that if these tariffs hold, then IMC pricing, should go up. I think Ritchie Bros, has already communicated that they're starting to see pricing on IMC, go up. During COVID, as you know, pricing went up anywhere from 20%-40%. It reached back to normal in the last kind of 6-12 months. There is room for it to go back up again if, in fact, there are supply constraints in the U.S., and we would stand to benefit significantly from that.
Similarly, the other area that we're looking at is whether there's going to be softness on the art and antique side. Keep in mind, we're not Sotheby's and Christie's. We're not selling GBP 20,000 or GBP 50,000 items, every day. We're more in the hundreds and low thousands. Therefore, we will not be as affected as the big companies selling those high-ticket items. There will be potentially some softness if the U.S. economy is soft, however. For us, that's really what we need to be tracking that's outside of our control is simply where are IMC prices, going and whether there's general softness in the U.S. general economy and whether that plays into softer ANA prices, in North America. If you move to the next slide.
You can see our headline here, and it says, again, "While the backdrop is volatile and uncertain," and even as we wrote this headline, there is a certain part where you scratch your head and you say, "How many times can you say that? Because we have been saying this for the last five years." You had COVID, then you had the Russian invasion, then you had post-COVID, then you had a new president, then you have tariffs. The thing is, those may well be the norm for all businesses in the future where the world is a lot less predictable than maybe many of us saw in the first 20 years of our career. With that in mind for ATG, why do I still think ATG, is a very strong place to put your money, but also why is ATG, well-positioned for the future?
I think the first part is because we are executing against what we say we're going to do. The market that we're trying to serve is underserved. Therefore, as we execute, I'm a strong believer that we will continue to grow and we will continue gradually to improve our conversion rate as we execute on the things that I've talked about, improving that level of buying and selling at auction. That's the first one, that we're executing well, and there's a clear path on what we need to execute against that's not reinventing the wheel. It's things other businesses have done. As we do it, it will make an impact in this industry as well.
The second thing is resilience is that, as I said, we have performed above the market meaningfully in the first six months of the year, with Ritchie Bros, going backwards by 6%, with Etsy, going backwards by 9%, to deliver 4%, in ANA, and 5% ,in IMC. As Becky, talked about, really 7%,, in the core markets of IMC, for us of yellow, green, and gray iron, we feel that our model is proving that it's resilient. The third part is that we are investing in levers that will make us less dependent on the external market factors. ATG Ship, ATG AMP, ATG Excel, and the search and discovery teams, these are all things that will enable us to continue to drive growth regardless of what is happening in the outside market. The fourth thing that I think makes us attractive is the optionality that we have.
We continue to generate strong cash, and we have a strong balance sheet. This provides us with flexibility. We can continue with share buybacks. We can invest in business, and we can continue to look opportunistically at inorganic opportunities that other companies could not consider based on their tighter financial constraints. The optionality that ATG, I think, has in front of it is something that should not be underestimated. Finally, as I said, our budget was based on two big things. One was delivering strong value-added services growth, which we think we did, and we feel very confident we are going to continue to do. The other bucket was on driving GMV, and then commission. We, again, performed within the range of what we expected for the year.
We think that the signs are there that give us confidence that we'll deliver on our guidance in the back half of the year. The key reason for that is overall, we see the tailwinds being greater than the potential headwinds, particularly with the idea that IMC pricing, if the tariffs stick, should go up. We think that whatever impact that has on ANA, will be less severe than the uplift we get on IMC. Similarly, let's say next week all these tariffs are reversed. We go back to how we were performing through February, when everything was actually ahead of plan. For us, we feel that we're in a good place.
It's far too bold to say that we're going to make a prediction or a 100%, confident prediction, based on how uncertain the markets are, but we think that we put ourselves in a good position for the back half of the year. If you go to the next slide. With that, as you read earlier today, we maintain our full year guidance, and we will monitor and adapt to the external situation as these uncertainties in the macro picture are resolved. We feel good about our ability to do that in the next six months. With that, I will let you read the rest of this, and we are open for questions.
We will now begin the webinar question and answer session.
If you're participating in verbal questions, please use the raise hand feature in the Zoom webinar at the bottom of your screen to ask a question. If you have dialed in by phone, please press star nine to raise your hand and star six to unmute. If you would like to submit a written question and are watching via Spark Live, please use the ask a question button. We will pause for a moment to allow the queue to form. The first question is from Lara Simpson, at J.P. Morgan. Please unmute yourself and begin with your question.
Morning all. Lara Simpson, from J.P. Morgan. Thank you. Thank you for taking my question. I was wondering if we could talk a bit more around, I suppose, the Q2, exit rate, and marked weakness that you saw.
Just interested in any trends you can talk to in terms of sort of the extent of the GMV pressure, and how that looked against organic growth. I suppose the differences you saw in ANA and IMC. I suppose my question is really, this was one of the months where the resiliency of the portfolio was tested. Interested on any insights in those dynamics. I suppose you spoke about May, trending a bit better post-stabilization in April. Is that across both IMC and ANA? My second question I wanted to come back to was the conversion rate. Obviously, it was down one percentage point, both on ANA and IMC. I know you've spoken about the dilution on asset mix, but we should also hopefully start to see the benefits of sort of search and discovery investments.
My question is really how we should be thinking about conversion rates going forward. Is the portfolio sort of structurally shifting in a certain direction, and we could see these rates trend lower for a little bit longer, or could we in sort of the short term get to a floor and then start to build on those? Thank you.
Becky, you want to do the first one.
Yeah, sure. As we said in the statement, revenue growth, was strong up until the end of February. Strong being comfortably within that kind of 4-6%, guidance range that we spoke about. March, was weaker, but by weaker, we're sort of more talking a flattish number, so not materially weaker. Similar on ANA, versus IMC. A similar kind of pause in behavior on both. That's kind of more the dynamics that we're speaking about.
April stabilization, which is showing better than where we were in March, albeit not quite returning to the rate that we saw earlier in the year. I'm not sure, John-Paul, if you want to add anything to that.
Yeah. The thing that I'm kind of focusing on there is that this is not dissimilar to what we saw during COVID. There is no fundamental reason for IMC, to not see strong results based on everything that's going on in the U.S. Similarly, ANA, while there could be some softness on pricing, the items are still going to be sold because keep in mind the things that are different in our world is that they're house clearances and things like that. Therefore, the items are going to come up, and we have a 92%, clearance rate, on the items.
The question is just how much those prices will move. Right now, we believe, again, that even if there is some softness on the ANA side, the IMC side, should see increased pricing and make up for that. Similarly, if the tariffs reverse, then we believe that we go back to performing how we were back for the first five months, of the year when we would have been well on track for the guidance that we set out for the commission rates. It is hard for us to give you any more than that right now because we are only 10 days into the results for May. Again, it is better again than April, and actually pretty good. It is only 10 days in, and auctions move all over the place, so I do not want to call that yet.
In terms of conversion rate, these are things that we believe are gradually going to be improving. The reason why it's always tricky is that some of the things we're looking at are designed to possibly bring in new auctioneers. If new auctioneers come and they bring the new THV, there is usually lower conversion rate associated with new auctioneers joining the system. The things that we're investing in on search and discovery, though, should gradually make a difference because these are the things that we know are barriers to bidding today. When you say the direction of travel, I would believe that our conversion rate would stabilize roughly where we are, and that gradually, but slowly, that number should begin to ease up, to move up.
Perfect. Thank you so much.
The next question is from James Lockyer, at Peel Hunt.
Please unmute yourself and begin with your question.
Hi, Felius. Thank you for taking my questions. Three from me, please. I think you just talked about this towards the end, but I just want to ask it again. You have spoken about raising the experience towards an e-commerce experience from the Altman experience. Other than the ones you have spoken about today, you used the phrase not wanting to reinvent the wheel. What are the next things that you think are important changes to be focused on, and how might your new C-suite, and board hires play their part within that? Secondly, you used phrases such as steadily and gradually, and you covered it briefly just a second ago, but can you talk about your approach to that in terms of things like educational case studies and how you might get the traditional industry to move a little bit quicker?
Finally, just a question on competition. You touched in terms of white label and whether you are starting to see the internet, I think it was 20-25%, roughly share you spoke about last time that come from third-party white labels, and how your direct marketplace peers appear to be doing in the current market. Thank you.
Okay. First, I'll talk about conversion, then the education, and we'll touch on the competitors. In terms of the conversion, the way that we're raising the standard of buying and selling at auction, first of all, for the sellers, it's a case of leveraging AI, looking to help them write those lot descriptions, leveraging ATG Excel, so that they can get access to more bidders more easily. Those two things alone are going to make a big difference.
The other part is where we look at search. There are so many different things that we're learning that we can be doing better on search, and that benefits the sellers as well as benefiting the buyers because from the seller's perspective, if you're a good seller and you offer shipping and you have quality descriptions and good images, you want to be able to be surfaced more effectively than someone who does not have those things. The search engine that we're putting in place will allow us to gradually shift more and more focus towards sellers who provide the best experience for buyers, which we believe is then going to encourage buyers to come back and be more likely to bid yet again because keep in mind, we have 23 million items, that are on the site, and nobody's parsing through all of those each and every time.
The better we can get at helping them find what they're looking for, make good recommendations, those are two fundamental things, that we're doing that we believe drives that conversion rate and drives a better end-to-end e-commerce experience. There's the search engine. There's the recommendation engine, that then will be off of that. There's leveraging AI, to write the descriptions, which will then allow us to have better data to then make those recommendations. You have the things I talked about that Lakshmi, is bringing from her work at eBay. This is just all the little things that you do around how do you design the onboarding flow? How many clicks do you have? How can you redesign the way that you ask for information at different phases?
How can you pre-approve an experienced bidder so that they do not have to go through the auctioneer acceptance program, but we vouch for that bidder, in the process and therefore speed them to their bid more quickly and increase their propensity to bid? There is not any one thing, but there are dozens of little things, whether it be in the onboarding flow, in the registration flow, in the bidding flow that we are able to improve. Further, within the search and recommendation engine, all of these things are what we are looking at right now. In terms of education, we have someone that we brought in as well in product marketing. A big part of the thing that we have learned that we were doing that probably was not best practice is we talked a lot to the sellers in terms of features.
When you're talking to sellers who are relatively unsophisticated in e-commerce about features, for many of them, it just kind of goes over their head. What we're talking more about to them is educating them about the experience or what it does for their business and trying to put it in more vernacular language, that the auctioneers are going to understand rather than e-commerce digital marketplace language. There is a whole series of basically myth-busting and other actions that the team is taking to try and get out there and share what we're doing with our sellers. Similarly, those same things are going into the onboarding flow to try and educate buyers on how the experience will be different than e-commerce, but why it can still deliver something exciting and even more differentiated than what they would get through a normal e-commerce experience.
And then in terms of the competitors, and I think you were asking specifically about the white label, can you repeat the question that you had there? I was not quite following what you asked.
Yeah. I think in the previous presentation, you split THV, by the different buckets of where it was going if you were not winning it. One of those buckets was the independent third-party white label. I am just wondering whether you could touch on competition within the white label space and whether you are making headway into that. Sure. Into that. Thank you.
Yeah. I think with the white label space, one of the interesting parts about it is that it's one of those areas that in any industry, it's where lots of small competitors think they can make a headway, and they think, "Well, there are only five of us, and if we get a few clients, we can make some money and have a decent lifestyle." You will have competition around the edges. What we are seeing and what we believe that we're going to continue to see is that with the Excel option, that we now have in front of auctioneers, with some of the biggest auctioneers adopting timed auctions, with us because they can run on their white label and on our marketplaces, and get access to more bidders, and therefore get higher asset prices, for their consignors.
We believe still that our white label is gradually winning ground and getting off sales calls that I was on yesterday. We continue to see the pipeline of clients that the team feels excited that they can win over to it. As I also said earlier, it's a slow and gradual process. Nobody moves fast in this industry. You do have all the independent white labels chirping in the ears of auctioneers saying, "Don't put all your eggs in the basket with ATG." You have ATG saying, "You know what? We've been around 20 years. You can put all your eggs in the basket, and there are a lot of bidders in this basket.
If somebody else does it and you do not, you are going to miss out. We believe our message, particularly when we now see the data coming back on Excel, gives us confidence that we are steadily going to eat into the competitor white label shares. As I have said, it is going to be slow.
Thank you.
The next question is from Gareth Davies, at Deutsche Numis. Please unmute yourself and begin with your question.
Hi, morning, guys. Two quick ones for me. The first one, you mentioned the sort of broader use of fixed fee incentives. I just wondered if you could expand a little bit on that comment and the areas of THV, that could be quite interesting to you that you are not in at the moment.
Secondly, ATG Ship, given how widely that's been rolled out now, what do you think the hindrances are to the kind of uptake not being greater than it is? What are the alternatives that people are using, and why do you think they're not adopting it maybe a little quicker? Thank you.
In terms of the incentive, this is more where we typically target medium-sized and larger auctioneers. There are auctioneers who come in and out of business or have a couple of sales a year. We're just looking at different pricing models based on volume that can attract some of that business in. Basically stealing some of the high-bid business or businesses like that where they're not sometimes even full-scale auctioneers, but they come, but they're smaller level than who we typically deal with. Our pricing may dissuade some of them.
We're experimenting with models that could attract some of the smaller auctioneers in as well. That's the basics of it right now.
Is that, sorry, is that cross-categories? Because I know, I think from memory, when you did the tweaks to the pricing model, it was the sort of agricultural segment that you saw this most in historically.
I think a lot of these smaller auctioneers, are often more general sale people where they may have one time it may be yellow iron, a little bit of yellow iron, other time it may be some agriculture, and other times it may be house sales. They're usually more broad-based, and just more opportunistic rather than being known for doing one thing. I'd say right now, I don't have enough data to give you information on it, and it's more experimental what we're doing.
In terms of ATG Ship, though, I'd say it's going really well. When you say that it hasn't had as much take-up, if you look at some of the data, we're almost at twice the level we were at last year. We're on a similar pace to LiveAuctioneers' adoption of payments, when they launched that. Now with the shipping mandate, we believe that we will see an even greater adoption of that. The thing that has held up, so that's in terms of usage of it.
In terms of buyer usage of it, I think this is the thing that we're trying to partly myth-bust around, is that I think people will often think they're comparing shipping prices on our site to what they may pay buying through Wayfair, or some other e-commerce site, where they're saying, "Oh, well, it's really relatively inexpensive for me to ship an item through a normal e-commerce site. This shipping quote feels too expensive." We are educating them in the fact that it may be more than a typical item, but that's because it's a unique item. It's not one of a thousand or ten thousand, that we're selling, and that the value, that they got on that item still means that even with the shipping, it's worthwhile to have bought it and then to come back and buy again.
That is one thing that we are trying to do, just make sure people understand why the shipping is more expensive, but it is still less expensive, than any other option that they had. As we get more volume on, our goal is to continue to negotiate with the shipping providers to get a steeper discount that we can then pass on to the customers so that the shipping quote is steadily less. Those are the two big things that we are doing.
Just to say, the shipping mandate, I am sure you saw, was from April. The numbers that we shared at the end of the half, whereas the rolling out has just happened. We will obviously update on progress in due course.
All right. Thank you.
The next question is from Josephine Cheung, at Fitz Walter Capital. Please unmute yourself and begin with your question.
Hi. I wanted to ask about the breakdown of the value-added services, in particular around marketing versus pay and ship, like you said, and how that's evolved over time. I think specifically leading on from that is the impact of those two on the overall margins, of the A&A and I&C segment, and how you see that developing over time.
Clear-throat buzz grew a great 14%. We're not providing specific breakdowns, but just to give you a bit of color within that, shipping was the fastest growing part of that, understandably given you're growing from a lower base rate, followed by marketing and then payments. All of them were positive. Marketing, is still the largest part of value-added services. Roughly it's just under 50%, of that with shipping being a growing percentage.
Shipping's obviously, as you say, a lower margin service, as is payments, and some of that was sort of reflected somewhat in the gross margin movement.
Yeah. Just to comment on that a little bit further, the reason that we do not break those numbers out specifically is because when you look at the real value of a marketplace like ours, the value of having value-added services, you can look at them as individual product lines, but often what they can be used to do is to drive the metrics that you really care about, which would be GMV, and the commission rate.
For instance, when you think about the margin evolution for our value-added services, I think it is better to think about it in terms of the margin evolution of ATG, as a business and why we believe we can retain kind of mid-40s, on our margin, even as we grow these different value-added services. It is because, let's just say with shipping, we have a certain level of discount today negotiated with shippers. As we do more volume, we should be able to get a much bigger discount. I think Vinted, for instance, is able to negotiate about a 40% discount, with their shippers. We are not close to that yet. As we do more volume, we should be able to get better discounts. We may not have that translate into a 40% margin, shipping product.
We may choose to discount our shipping to drive more bidding activity, so that we can grow our share and grow GMV. That GMV, has very high margins that would flow through for the overall business, even if the shipping product itself looked like an ongoing low-margin product. That being said, overall, the shape of our value-added services, has been that because digital marketing is such a high-margin product for us, 90%+, it offsets the shipping and payments variation. Therefore, we believe that we're going to be able to grow shipping and continue to potentially expand the margin or capture more margin through driving GMV. As we do all of these things collectively, it's going to help us continue to sell the digital marketing.
To me, another way you could look at it is either the overall margin for ATG, we believe, can remain steady because of the mix of all those factors, or if you were just trying to look at value-added services, you'd have to look and say, "How much headroom do you think we have on digital marketing along with the headroom that we have on, let's say, shipping and payments?" Because the lower margin products could be offset by whatever you believe is possible on the digital marketing side. The reason we believe there's a lot of headroom on the digital marketing side is, again, we're working with auctioneers that are selling items worth $13 billion-$14 billion, per year.
The idea that at some point, there's an opportunity for us of at least $100 million, in digital marketing, spend to capture there, we think is very credible against the type of assets that they're going for. We're nowhere near $100 million, of digital marketing revenue, today but we believe that there is a reasonable path by which you could believe that ATG, has that ceiling. I know that's a pretty long and convoluted answer, but hopefully you see that there's not kind of a straightforward way, I'd say, to answer the question.
Got it. Thank you. That's helpful.
Okay.
There are no further questions. I will now hand over to John-Paul Savant, for closing remarks.
Thank you again for taking the time to listen to us today.
As I said a few times on the call, 3.4%, is not a number that you're jumping from the rooftops to say, "Great." In the environment that we're in relative to our competition and relative to the guidance we set, we feel good about where we are. We feel that we executed against what we needed to in the first half of the year to give us levers that we can pull in the second half of the year so that we still are in that range of guidance that we set for the year. When you look at the external factors, there are tailwinds and potential headwinds, but we think on balance, the tailwinds are going to be stronger than the headwinds.
With that and the other things that we've done this year, we feel really good about the first half and very optimistic as we head into the second half. Thank you very much.