artnet’s nine-month figures show revenues stable in US$, with the uplift in the € numbers reflecting currency movements. Good progress is being made in the reach of artnet News, driving traffic to all parts of the artnet website and increasing advertising revenues. The upcoming mobile app launch and Amazon co-operation should help continue momentum, lifting the top line and starting to deliver more meaningful returns, allowing the rating to move closer to online B2B and B2C operators and art businesses.
artnet News has established a strong market presence as an authoritative and entertaining source of content on the global art market. It has helped drive visitor numbers to artnet sites by 38% ytd over the prior year, providing an increasingly attractive platform for luxury goods advertisers. Revenue from advertising has also bolstered the performance of the Galleries segment, which continues to suffer from lower memberships, although partnerships with Auction Houses are growing well. The art Price Database continues to enjoy a strong market position, with the reports business gaining ground. Growth in Auctions remains less than had been hoped, but an increased marketing effort should help lift revenues for the year.
Art markets tend to reflect underlying economic confidence, with the presence or absence of the Chinese in part driving volume and pricing. Q315 was tough in both the US and UK, after a generally good H115, with emerging markets also suffering. Set against this, the continuing evolution of the online market continues to build its share strongly, with initial resistance from both professionals and collectors fading. The latest Hiscox Online Art Trade Report shows it growing from an estimated $1.6bn in 2013 to $2.6bn in 2014, with its projections showing the online segment reaching $6.3bn in 2019.
Online ecommerce and web content businesses are currently valued at 1.8x trailing 12-month (TTM) EV/Revenues and 22x TTM EV/EBITDA. Quoted stocks in the art segment trade on a higher revenue multiple, but a lower EBITDA multiple, reflecting the market’s view on the quality of their earnings. This was reinforced by the initial excitement of Etsy’s flotation back in April quickly ebbing away. With artnet’s return to profitability, albeit at a lower rate than had been hoped, its market valuation is looking more firmly underpinned.