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Investing.com -- Auction Technology Group (LON:ATG) saw its shares plummet more than 21% on Monday after the company issued a profit warning and announced the acquisition of U.S.-based Chairish, a vintage furniture and art marketplace.
The company now expects its adjusted EBITDA margin for the fiscal year to come in between 42–43%, below prior guidance of 45–46%. While Q3 revenue growth modestly improved from the first half, the mix has pressured profitability—particularly as shipping volumes rose but carried lower margins.
In parallel, ATG announced it would acquire Chairish for $85 million in a cash-and-debt deal, lifting group leverage to 2.3x.
Chairish posted full-year 2024 (FY24) revenue of $51.2 million and a slight adjusted EBITDA loss, but is expected to deliver double-digit top-line growth and adjusted EBITDA of 30% going forward. The deal is expected to be accretive to earnings by FY27 and deliver returns above the cost of capital by FY28.
Commenting on the announcements, RBC Capital Markets analyst Ross Broadfoot flagged the difficult optics of combining weaker guidance with an acquisition.
“A profit warning and a deal are a difficult combination,” he wrote, adding that Chairish’s higher average price points—around $800–900 per item compared to the $350–400 A&A average—may be less aligned with the current macro environment.
However, Broadfoot acknowledged the strategic rationale in expanding into complementary categories and reaching new consumer segments.
Synergies of around $8 million are anticipated on the cost side, with revenue benefits also expected.
RBC reiterated its Sector Perform rating on ATG.