COURTESY SOTHEBY’S
In a conference call this morning from New York, Sotheby’s released its fourth-quarter results, reporting that its net income for 2017 was $118.8 million, an increase of 60 percent over the $74.1 million it earned in 2016. The solid results came as its total sales climbed 12 percent and private sales jumped 28 percent. That figure comes out to $2.20 per share for 2017; its per-share earnings were $1.27 in 2016.
The auction house also revealed that, during its fourth quarter, it brought in a net income of $76.7 million, or about $1.43 per share. This is a 17 percent improvement over last year’s $65.5 million profit for the same quarter.
“We had a very good year in 2017, and we are planning to have an even better one in 2018,” Tad Smith, Sotheby’s CEO, said in a statement released before the call.
Smith was hired in March of 2015, then CEO of Madison Square Garden, to run the auction house, and he has moved to expand its range of offerings. In 2016, he engineered the acquisition of the high-powered advisory firm Art Agency, Partners, for $50 million in cash, which has likely helped to grow the house’s work in private sales, once the province of dealers and now an increasingly important source of revenue for auction companies.
During the call, Smith continued discussing the work Art Agency, Partners has done for Sotheby’s. The firm now works with 13 estates, including those of the artists Robert Graham and Vito Acconci, and more are in contract. (Just last week, it was revealed that, in an unusual arrangement, the Acconci estate would be represented together by Pace Gallery and Art Agency, Partners.) “We’ve seen increased activity by many of advisory clients,” Smith said.
Sotheby’s also reported that its board has approved the purchase buy-back of $100 million of shares, a move aimed at strengthening the price of its stock ($BID), which remains up only modestly since Smith was named CEO in March of 2015. (Its price began a steady decline in mid-2015, losing more than half of its value in six months, but has recovered since then.) The earnings news boosted the Sotheby’s stock; it was up 13 percent by 11 a.m.
Sotheby’s touted some of its successes for past year, like the sale of a $110.5 million Basquiat painting to the collector Yusaku Maezawa in May in New York, and its efforts to expand its reach globally—in November, it opened an auction house in Dubai. “China, in particular, has been an area of significant focus,” Smith said during the call.
Looking forward, Smith outlined four areas that Sotheby’s plans to focus on in the coming year: physical growth, its technology initiatives, “allocating capital wisely,” and continuing to assemble what he called a “winning team.” Of these areas, the technological realm was explored most extensively. In January, Sotheby’s acquired the artificial intelligence firm Thread Genius, which helps identify collectors’ interests, and the auction house plans to continue expanding its digital reach. Online sales were strong in 2017, Smith said—23 percent of lots were sold to online buyers last year—and he hopes to continue that trend in 2018.
Smith delivered sports metaphors throughout the call, with mention of basketball, baseball, and running. “It sounds like a Madison Square Garden conference call,” he said at one point, adding, “We’re really on mile 7 on the marathon, but the good news is, we’re picking up speed.”