Great. Thank you, Andrew.

Good morning and thank you for joining us today. With me on this call are Tad Smith, Sotheby's President and Chief Executive Officer; and Mike Goss, Chief Financial Officer.

GAAP refers to Generally Accepted Accounting Principles in the United States of America. In this earnings call, financial measures are presented in accordance with GAAP and also on an adjusted non-GAAP basis.

An explanation of the non-GAAP financial measures used in this earnings call as well as reconciliations to the comparable GAAP amount is provided in the company's Form 10-Q for the period ended September 30, 2017. Also, during the course of this call, the company may make projections or other forward-looking statements regarding future events or the future financial performance of the company.

We wish to caution you that such projections and statements are only predictions and involve risks and uncertainties resulting in a possibility that the actual events or performance will differ materially from such predictions. We refer you to the documents the company files periodically with the Securities and Exchange Commission, specifically the company's most recently filed Form 10-K and Form 10-Q.

These documents identify important factors that could cause the actual results to differ materially from those contained in our projections or forward-looking statement. Also, please see our Investor web page for a transcript of our prepared remarks.

Now I'll turn the call over to Tad.

Thank you, Jennifer. Thank you all for joining us this morning.

Today we're reporting a third quarter loss per share of $0.45 compared to $0.99 in the prior period, which is a 55% improvement. After excluding certain charges in the prior period, adjusted diluted loss per share improved 42% from $0.78 to $0.45.

For the nine month period, diluted earnings per share is $0.78 compared to $0.14 in the prior period. After excluding certain charges in both periods, adjusted diluted earnings per share improved 84% from $0.43 to $0.79.

Two factors favourably affected these results; a change in our Hong Kong sales schedule that added $82 million in net auction sales to the quarter; and an unusual $7.4 million tax benefit, both of which Mike will touch on later in the call. The third quarter is a seasonally quiet one for us, so we're going to be relatively brief this morning.

I'll start with an update on the market overall as well as look ahead to our important fourth quarter sales. And Mike will then take us through the financials.

Overall, the business in the market feel good, and recent auctions and events reflect that view. At the tail end of September and the first week of October, we held our semi-annual sales in Hong Kong.

The five day series of 18 auctions and 10 categories totaled $404.1 million, which is a 42% increase year-over-year and a 20% lift over our spring sales held in April. The sales achieved a combined sell-through rate of 86% and were led by an extremely rare 900-year old vessel from the Northern Song Dynasty that sold for $37.7 million, which is a new auction record for any Chinese ceramic.

A few days after the conclusion of the Hong Kong auctions, we staged a group of Contemporary Art sales in London to coincide with the annual Frieze Art Fair. The results were solid: $114.1 million, which is a 10% increase year-over-year.

We held auctions of a similar size in London this past June. And all together, our global Contemporary Art auctions are up more than 30% year-to-date.

About two weeks ago, as collectors gathered in Paris for FIAC, the French International Contemporary Art Fair, we held three auctions devoted to the leading artists of the 20th century, and they performed well, totaling $22.8 million and with a collective sell-through rate of 87%. The results are encouraging, given that we still have notable sales of modern and contemporary art and design coming up in Paris, including the Collection of Jacques Grange, the celebrated interior designer, which will be offered at the end of November and is estimated to bring in the region of $10 million.

Before I turn to our upcoming sales, I'd like to pause for a moment to say a few words about the health of our auction business and take a look at a few positive indicators that bode well for Sotheby's and the market overall. Excluding the $82 million in net sales from our September 29th and 30th Hong Kong sales, so we have an apples-to-apples comparison to last year, the statistics are very positive.

Compared to the nine month year-to-date period in 2016, we sold a similar number of lots and held 8% more auctions for an 8% increase in net auction sales. As a further indicator of health, when you look at that period on a constant-currency basis, our consolidated sales, which as a reminder, are a combination of our aggregate auction sales, private sales and sales from our inventory, are up 13%.

Client acquisition continues to trend upward. The number of first-time bidders was up 26%, contributing to a 15% increase in all transacting clients for the nine month year-to-date period.

And particularly important for consignors and auction prices, we saw a 12% increase in the average number of bidders per lot. Turning now to our important November auctions, we are optimistic.

The low estimate for our Impressionist sales of $245 million is up 40% compared to much smaller sales held last fall. The upcoming sales are led by two beautiful paintings by Claude Monet.

One is a lush summer scene of the artist's beloved garden in Giverny, and the other is a modern and minimalist winter scene. Both paintings are estimated at $18 million to $24 million each.

The low estimate for our Contemporary sales is $323 million, up slightly about 7% compared to last November's results, which you may recall included the collection of Steven and Ann Ames that added nearly $115 million in net sales last year. This year, the top lot of the evening sale, Francis Bacon's Three Studies of George Dyer, is estimated at $35 million to $45 million and is closely followed by Andy Warhol's Mao, which carries an estimate of $30 million to $40 million.

We are delighted also to have been entrusted with works from several notable collections this season. Among them are masterworks on paper from the Diamonstein-Spielvogel Collection.

It is a particular honor to partner with Barbaralee Diamonstein-Spielvogel and Ambassador Carl Spielvogel, whose remarkable careers and civic and cultural engagement have had tremendous impact on this country and beyond. They are generously contributing their proceeds to a charitable foundation in their name, which was established to support causes that they've actively championed throughout their lives, including medical research, educational innovation and cultural projects, with a focus on those relating to American history, diplomacy and public policy.

Featuring works by artists ranging from Edgar Degas, Henri Matisse and Joan Miró to Jackson Pollock, Mark Rothko and Lucian Freud, their collection is estimated to bring $40 million to $60 million. We're also honored to offer property from the Jerome and Ellen Stern Collection across a number of auctions beginning in November 2017 and continuing through spring of 2018.

Assembled over 60 years, the unique collection comprises over 250 lots of modern, surrealist, contemporary, Israeli and African Art and 20th Century design and carries an overall estimate of more than $20 million. Our Contemporary Art evening sale will feature a number of works from the collection, including a monumental sculpture by David Smith estimated at $6 million to $8 million and a striking painting by Marlene Dumas, which is estimated at $3 million to $4 million.

We also have our major sales of jewelry in Geneva and New York coming up in November and December, respectively. The Geneva sale of Magnificent Jewels and Noble Jewels carries a low estimate of $102 million, which is slightly smaller than the total achieved at last year's comparable and very successful sale.

There are number of standout pieces, including The Raj Pink, the world's largest known Fancy Intense Pink diamond weighing 37.3 carats, which is estimated at $20 million to $30 million. That sale will also include The Donnersmarck Diamonds, a pair of Fancy Intense Yellow diamonds with impeccable aristocratic provenance that's estimated to bring $9 million to $14 million.

The New York sale of Magnificent Jewels in early December has a low estimate of $43.9 million, which is roughly double the size of the same sale last year. Among the highlights is a Fancy Vivid Blue diamond that is estimated to sell for $12 million to $15 million.

So in short, we feel good and are looking forward to our upcoming auctions. We open our exhibitions in New York in about an hour and encourage any of you in the area to stop by.

In fact, you should definitely check out Michael Schumacher's Ferrari on the way in. So I'll turn it over to Mike for a review of the results before we open up the call to questions.

Thank you, Tad. Well, Tad and I share the view that we are seeing a relatively healthy market and are encouraged by the prospects for our upcoming sales in New York and Geneva.

But at the same time, we think it is prudent to wait and see how these huge sales actually perform over the next few weeks before we raise our expectations for the year. So why do we think this way in the face of a pretty strong third quarter report?

Bear in mind two important pieces of context. The first piece of context is that the third quarter benefited from 2 financially significant, but unique events that can initially be misleading without further consideration.

The first of event impacting this quarter is the $82 million of net sales from our fall auctions in Hong Kong that fell into this year's third quarter when last year none of the Hong Kong auctions occurred in the third quarter. While yes, we were pleased with the overall performance of these sales, when viewing 2017 as a whole, it is important to recognize that the occurrence of these sales in the third quarter means that the fourth quarter will be negatively impacted to the extent that we all originally expected these sales to occur in Q4.

The second favorable financial event impacting this quarter is a $7.4 million income tax benefit we recorded by reversing a reserve that was established in 2013 to provide for our potential tax liability that is now beyond the statute of limitations for being challenged. The reversal of this reserve provided a $0.14 per share benefit to our loss per share in this quarter.

Because this is a discrete item unrelated to our ongoing effective tax rate, it will have no impact on our fourth quarter tax provision, but it will once again impact our full year provision by the same $0.14 per share benefit. The second piece of context impacting the analysis of this quarter has already been touched on by Tad, but it bears repeating.

The third quarter is always our smallest quarter in terms of auction activity. It was only 4.5% of sales volume last year for example, and therefore, it is usually the least telling of our four quarters.

Furthermore, when we have timing issues, such as the Hong Kong pull forward in an otherwise small quarter, our reported sales numbers for the quarter can be extremely confusing and somewhat misleading. To understand the state of our business, we think it's wise to look at our trailing six month data or even the trailing nine month year-to-date data, which provides a more meaningful view.

For those of you who have been on our previous calls, you've heard this advice before. But in this particular quarter, it's more important than ever.

So let's look at that trailing 6- and 9-month data and see what it tells us starting with sales. Our consolidated sales across all of our categories, which includes aggregate auction sales, private sales and sales from our own inventory and is, therefore, the most comprehensive measure of sales activity, were up 8% in dollar terms over the comparable period a year ago for the trailing six months and were up 9% in dollar terms for the trailing nine months.

We believe this range of 8% to 9% year-over-year growth in consolidated sales activity best represents the state of our collective businesses across the full spectrum of our selling categories and our markets at this point in the cycle. In terms of auction commission margin, we are roughly flat for the trailing six month period, and we are up by 70 basis points for the trailing nine month period.

We are pleased with this performance, particularly given our greater mix of high-end objects, which can drive down our auction commission margin on a percentage basis. To put into perspective how mix provides headwind on auction commission margins, consider this.

In last year's nine month period, the items with the hammer price of greater than $3 million, which you recall is a threshold at which our buyer's premium steps down to its lowest level, constituted 40% of our sales. But in this year's first nine months, such items constituted 48% of our sales.

Importantly, we should also point out the marked improvement in other agency commissions and fees for that year-to-date period, the majority of which is the result of significantly better performance from our book of guarantees and more astute deal making. With respect to adjusted operating expenses, which -- and what I'm talking about is inclusive of direct agency cost but excluding the cost of inventory sold or the cost of borrowings to finance our loan book at SFS, it is always very important to look at rolling six month periods in order to take into account the fact that we accrue for our annual cash incentive compensation in the second and fourth quarters.

With this in mind, our trailing six month expense level has been running at approximately $300 million per six month period, which as you know from our previous calls this year, is running higher than the rate of a year ago, but it is entirely consistent with our planned investment spending against initiatives intended to drive future growth and the restoration of our incentive compensation expense to normal levels. Finally, let me point out one significant balance sheet item before turning the mic over to you for your questions, and that's our new inventory level of $63 million following the receipt of the cash from the sale of the Pink Diamond.

We've now brought our inventory down from $215 million at December 31, 2015 to this new more economically rational level. This initiative has been part of -- a vital part of our overall goal to better allocate our capital away from low-yielding uses toward business building activities as our first priority and to stock buybacks after all such business building activities have been adequately funded.

So Tad and I are now available for your questions.

Hi guys, thanks for taking my call. I guess just wondering, to look at that auction commission margin, I know it's up 70 basis points on the first nine months of the year despite the mix being more towards the high end.

So when you look at sort of the overall state, I know you said you have a positive yield, but how are you feeling about sort of, is there a difference out there between sort of, I guess, the ultra high net worth buyer and maybe the buyers in the $300,000 to $3 million range?

Well, let me point out two things Greg, and thanks for your call and for your interest. The first fact is that a good part of our economics are reflected in this line called other agency commissions and fees, and that's up dramatically -- or has dramatically improved for the same period that our auction commission margins are up 70 basis points.

So to really kind of understand what's going on from a deal making point-of-view, you should kind of factor that in as well. The second thing I would note relative to your question is that last November, we had increase in the buyer's premium schedule, and we did it again this year.

And in both cases, we were very careful to craft that BP increase to primarily lead to benefit at the higher price points. So we were sensitive to your question.

We don't want to shield the market in any respect at the lower price point, so we were very careful in how we crafted that. One of the great things about doing the November call, which also happens in the May call, but November particularly, is we're very busy here with all the sales.

And what that means is we generally have an all-star cast of people that gets to show up at the earnings call. And we do that today, so we actually -- we can get some color commentary from others like Adam Chinn, our Chief Operating Officer.

Adam, do you have anything to add to that on deal making generally, margins, generally?

Yes. I mean, look, I think I would just sort of echo what Mike said.

The way that we think about it is margin is really a combination of two things. It's both the net -- it's the auction net commission margin on auction but also how we're performing at our guarantee book, which is under other agency commissions.

So I think if you add those two things together, gains and losses in the guarantee book plus improvements in auction commission margin, that's sort of the full picture because that's sort of the way that we look at it going into the sales.

Okay, that’s helpful. Thanks a lot.

This is Dave Novak on for David Schick. Can you talk about some of the enhancements that you're making to process and technology in your operations and how that can drive efficiencies in your business in the future?

Yes. I'm happy to do that.

The way we -- let me sort of start with a framework and then I'll fill it out for you a little bit. We think about three different categories of innovation here.

The first one is innovation that affects efficiencies. And this generally has a positive impact on cost, but also it could improve speed or client services something like that.

The second level of innovation, I would call incremental, and this is generally stuff that will extend market share either through new products or new services or enhanced pricing. The third area of innovation, which is the one that tends to get a lot of heat and light in the press, not just here but everywhere in the marketplace, is disruptive innovation, things that are or going to be game changing, where they dramatically improve access to a product, dramatically lower costs or change materially parts of the value chain.

So let's go through each one of those and see what we have. With respect to efficiency-enhancing innovations, it's actually -- we not only have a substantial amount of things in progress.

We have a lot of things that are future focus areas. In terms of the things that are already underway, it is a range of things, such as we are consolidating catalog data entry.

We are piloting sales force and multiple things and beginning to roll it out. Why is that important?

Because our client information systems are antiquated and not readily usable. We have new e-mail policies that will dramatically improve the reach and performance of the e-mails at lower costs.

We have, and I mentioned this five quarters ago or maybe four quarters ago, an object database. Just for those who don't remember, it was a question in relation to private sales.

What the object database does is someone comes back and says, "Hey, I'm looking for a Rodin." The object database will be a rapidly searchable area where we can find it.

Imagine how costly it is that when we come back and we say we're looking forward for Rodin for private sale, we actually have to get on the phone. It's a very manual and complicated process.

Another thing that is already underway, we have currently, when people register on the website, a time delay while we authenticate them and also manage compliance. All of that is being automated.

We've got a publishing system now where the reason things cannot go online before a catalog is actually published even if we chose to do it is because we actually have a system where the publishing is the gating factor before the digital. So we don't even have the business choice to do the option.

Now interestingly, in May, we piloted the reverse, and that has been the sort of thing that the technology has improved and it's dramatically improved the market. Obviously, one of the things we're working on is the paperless auction room.

We're looking at that by the end of next year, which could be incredibly powerful. It takes an enormous amount of paper and manual processes and completely turns them over into automated.

We're streamlining registration. We're looking at digitally signing contracts.

And then as you turn to the future, and this is still on just the efficiencies, we're definitely poring over how to think about a more secure set of systems that can rapidly enhance our turnaround time on finding queries on information. And that's just the beginning on those.

On incremental, we've got significantly new CRM tools. And by the way, we can now actually estimate the amount of buyer's premium that is correlated, not necessarily call, but correlated with the actual interaction that our clients have with our products.

We also have things in the pipeline, such as a new e-commerce site that will allow us to sell, for example, wine in a retail format, which I think is a very interesting thing. We are developing for robust recommendation engines that will say if you like this, then you'll like that.

And then as you look to the future, we see enhanced prospecting efforts, further development of our CRM capabilities and even more. I'm sort of being -- dancing around a little bit because a lot of this is competitively sensitive.

When you turn to disruptive innovation, on this, to a great extent the classics on this are you have to carve out a unique and terrific empowered team with a set of earmarked capital to do things that are disruptive and transformative. We actually started doing that a year ago, and they have made great progress.

In fact, we just spent two days with the board going through all the things that are happening. And one of the other exciting things about approaching disruptive innovation is not only you have a separate group, which has been doing a phenomenal job on it, you also open up the possibility of having partnerships to accelerate what you're doing there, and we're definitely open to that as well.

So when I look at the panoply -- by the way, I left completely off the table, which I easily could have come to, is we've just hired a new person who will take leadership in the data analytics area. The possibility of using very strong data and analytics to accelerate not only the performance of our pricing but also the performance of how we manage clients is huge.

We think it is both a cost reduction opportunity and a revenue enhancement opportunity. And that's just, in my view, getting started.

So, we're very excited about the future. There's vastly more than what I just said that we can't really talk about, but the kinds of things we're talking about with initiatives that are investment but also initiatives and priorities for the company are the kinds of things that Mike and I and the rest of the management team, all of us are shareholders, we think are really good for the long term, and actually, in some of them, really good for the near term.

Great. That’s very help.

Thank you.

Hi. Thank you.

Good morning. Our question is about first-time bidders and client acquisition.

It looks like you made some really great progress there. So could you speak to what you're seeing with demographics or some of the underlying factors driving that?

And I'd love your thoughts on what you're seeing with sell-through rates and how those may bode well for some of your optimism in terms of what we should think going forward as well? Thank you.

So Oliver, we don't really want to share more than we did in terms of the underlying stats than we did. And we don't really want to say much more about the sell-through rates than we did.

However, I'd love to use the opportunity to give you a perspective. We've got Amy Cappellazzo here on the marketplace and how she sees major trends in the buyers at a high level and what she's seeing and how the market is changing.

And that – and I don't think her anecdotal answers will be materially different from the statistics you otherwise asked for and we probably aren't going to give you. So, Amy?

Thank you, Oliver. I would just say to that, that we certainly see the high end of the market increasing in momentum and velocity.

It's always a call to quality. Quality is king and that's what everybody wants.

At the same time, we're seeing new buyers coming in the market at lower price points, who are really interested in collecting, very interested in this both intellectual and somewhat financial exercise in their lives, and there's no stemming the tide of people coming in. So the trick is getting everything priced exactly right to appeal to every single buyer group and placing things in the right sales and hitting them right to get that kind of new buyer action and sell-through rates.

Thank you. And we do wanted to ask a related question, zooming out on the middle market opportunity and your share there.

Could you just update us on how you're feeling about that and what kind of changes you may be making just to ensure that you have a very embracing brand as you think about access and maintaining prestige, yet reaping the opportunities of middle-market? That would be interesting to hear about.

Sure. Well, a couple of things.

One is we believe at one level we have been increasing our share recently in middle-market, but we're not sanguine about it because we believe also that the number of players in the middle market is expanding and changing, and over time, that business, we've got some more -- we've got some people that are being a bit more aggressive there. So I think the middle market has really two areas to talk about, and one is the digital area and the other is what we're doing in the analog side.

And I'll pass that analog portion back over to Amy in just a moment to talk about that about how we're thinking about sales and how we're positioning things and proceeding there. On the digital side, the point I'll make is that a significant portion of the middle market can be served and some portion of that is being served by robust, better digital technologies.

And many of the ones I mentioned just a minute ago, recommendation engines, things that allow us to target better, things that provide a much more rapid turnaround time, things that are, when you identify a prospect, how you manage the prospect well, how you follow up, how do you all those things. That's all about enhancing middle market share in a way that is pretty exciting.

And so we feel that we're well positioned there. Now on the Sotheby's brand side, Sotheby's brand conveys elegance, confidence, trust, integrity.

It's global and it's extraordinarily high awareness and recognition. And it is something that we think extends very nicely and robustly in the middle market space.

And so when we look at it, we say this is an area where we already, and I think we do roughly half of our business in that space, we're already a huge player in it and we think it is a robust area to grow.

So just to speak a little bit more about the middle market and what we're doing, I would say that it's very easy to get distracted with the high-end because it's so seductive and consuming. And while that has a good portion of our focus, we really are extremely focused at all levels of the business on the middle market.

You probably would see one of the biggest growth sales in the contemporary sales, the contemporary curative sales, which is a sale that happens in September and March here in New York. There's also corresponding sales in London in April and September.

And those sales are really the place of entry for many new collectors, and it's where people feel confident coming in and trying out bidding and buying things. We also see a tremendous amount of actions starting to ramp up in the contemporary online sales.

So, I would say that we have particular strength in these areas and particular expertise in knowing exactly where the sweet spot is in the market on pricing and how to encourage depth of market at bidding.

And it's probably worth mentioning, in the Americas, we have two very talented new executives. One is John Auerbach, who oversees the Art & Objects group.

And the other -- and he's not here at the earnings call today. But the other, of course, is Val Carlotti.

Among Val's many responsibilities is the Art & Objects group. Val joined us from Goldman Sachs, and actually, this is day four for him.

So I probably won't call Val in here in this earnings call. He's thanking me for that.

But maybe we'll get him on the next call on middle market.

Okay. Thank you.

And a modeling question. The Sotheby's financing segment, the year-to-date income trends and interest margin, I would love your thoughts on how we should think about that going forward and maybe zooming out about the larger purpose of that division.

And also on how you're feeling about the loans on the book in the LTV ratios.

Yes. Well, we're down this year versus last year, but that's largely because last year we had some one-time collateral release fees associated with the loan that we ended up having to liquidate.

We still very much like the SFS business. We've never characterized it as something that's a huge growth engine.

It is largely a cash cow kind of business that enables us to establish a really sticky relationship with some of our most important clients, and that's likely to be the role that it plays going forward. It is hugely profitable when you combine the fact that it has a generous interest spread, that we're able to leverage 85% of each loan by borrowing at low cost what we lend on to our clients.

And then we experience very little in the way of loan losses because we are good at valuing paintings and know when we land 50% of value that there's lots of margin for error there. And then if by chance we do need to liquidate the collateral, we have the capability to sell it most efficiently compared to other competitors of ours who lend money against art.

For the loan-to-value ratio that we're reporting both for the healthy loans and the one or two loans that are not terribly healthy at the moment, we feel very comfortable that our valuations are secure. And that by selling the collateral, which we are scheduled to do between the proceeds we expect from the auction of the items plus the buyer's premium that we generate in selling that that we are comfortably above what we need to be in order to be repaid on our loans.

Okay. Thanks.

That's really helpful. Mike, the last question we had is, as you speak to your optimism, what are your thoughts on cautions?

The geopolitical environment has been very volatile in many different ways, but it seems like the customer still is very conditioned by these shocks at this point. But what would you say is your assessment of different uncontrollable risk factors that you're monitoring as you think about a momentum heading into the back half of the year?

Yes, it's a very, very good question. I'm going to answer it and then I'm actually going to pass it over to Allan Schwartzman for a little insight on the psychology of the collectors at the moment and how they're feeling out there.

I think as I look at it, we have a base case, which is as follows: we've got GDP in the United States doing fine. In fact, job reports today look pretty good, just as the headline numbers I was walking in.

We've got OECD countries doing reasonably well. We're encouraged by not only the Hong Kong sales, by the way, but now we're sort of 30-plus days away since the Hong Kong sales, and the payments are tracking pretty much where we'd like to see them, so we're not seeing any worries there.

We see an interesting set of tax items working its way through Washington, some of the business side of which we think could be quite healthy for our business. And at the same time, when you look around, there are potential events that as you described in geopolitically, could be a bit interesting.

Whether they are on the Korean Peninsula or whether they are in Spain, or whether they are in the United States, there are just -- there are some uncertainties. But interestingly, if you think back over the past sort of five to seven, 10 years, I mean, we've been in a period where I think what you said is exactly right.

We've become conditioned to a certain degree of uncertainty, and it's almost dropping into white noise at some level. Those things, big ones would likely break out at some point, but the base case for us is really, really interesting.

And one of the things, Amy I think it was you that made the point about some aspects of uncertainty are actually healthy for our business, which you can think about and I'll come back to you in just a minute. Allan, what's the psyche of our clientele in your opinion?

Collectors have an increased confidence in what it is that they're doing. I see an increase in demand for great material and a broadening of the range of artworks that collectors are looking at and increasingly becoming interested in moving into at any time, whether in a good market or a weak market or in between market, there are changes of taste.

And so changes of the taste will naturally shift where it is that people value work. So what we have now is a greater number of people looking for work in areas that's been undervalued and underappreciated than areas that are dropping off the board.

So, all in, both in terms of the amount of collecting activity that we're seeing and in terms of the number and range of artist that collectors are enthusiastically pursuing, we see an increase.

Amy, say one word about that, that same point you made the other day about how uncertainty can actually be helpful to our business.

Well, this is sort of an alternative asset class, right, so any uncertainty in larger markets gives people pause about those larger markets. And looking closely at the art market and how it's performed over time, it looks pretty darn good compared to other indexes and other asset classes.

So, not to mention, the pleasure factor, the fact that you can [Indiscernible] works of art and participate in building a collection and be intellectually and culturally stimulated, all of that is valuable to people, maybe even a pleasant distraction from other things. So I think uncertainty in other sectors and asset classes actually is being beneficial to the art market by and large.

Thank you. Thank you for that update.

Sounds very encouraging. Best regards.

Thank you, Oliver.

Good morning. Thanks for taking the questions.

Good morning.

Tad, you gave a lot of great examples and color about works coming to market, and we talked quite a bit about the buyers. Maybe just shift gears to compare and contrast conversations you're having today with collectors and consignors versus the tenor of those dialogues a year ago.

Very interesting question. Well, I'll give you my observation, and then I think we'll pass it over again to Allan and Amy and give you their perspective as well because they are closer to the market than I.

And I would say a year ago, the conversations were fraught with significantly more uncertainty. And the sense was when you think about it that we either had just had Trump elected or he was just about to be elected and we thought he would not be elected.

And so depending on which date -- the answer is going to slightly change by and which date were you exactly one year ago. I don't -- I just don't remember what 1 year was, but let's...

We'll go with Q4 generally.

Okay, Q4 generally. Yes, there was a lot of uncertainty about Trump's election, but at the same time, one of the things that was interesting was there was a breath of fresh air that the business environment might be more favorable for growth policies at the time.

And by the way, you saw that in the marketplace and the equity markets began to rally. So there was a discomfort with the President per se but a general level of comfort with his policies -- or sorry, the prospect of some of his economic policies.

Let me be clear. I don't say general level of comfort with his policies.

I don't mean to say that. I retract that completely, a general -- a very specific level of some comfort with his pro-growth policies.

And that actually I think boded well for sort of the corporate suites, it boded well for the market, it boded well for some of those things. Today, we're a year in and the situation, interestingly enough, is probably a bit more cautious on the political front because I think there is a point of view that a lot of those policies, other than things that can be done by executive order, haven't come to -- haven't really made progress yet.

The trade situation continues to be a little bit unclear, which is when you actually listen to the conversation about trade, people who believe that trade -- the current trade order is basically right can be a little bit more alarmed. Those who believe in his reform can be a little bit more encouraged by that.

And all of this -- and then, by the way, there's been a sort of cycle of noise. And the noise, again, goes to how people sort of become inured to it over time.

So those are the things I would say that are big changes. But actually, here again, if you compare this fourth quarter to a fourth quarter a year ago, Allan, Amy, what do you think about how you think about that?

Well, I would say it's definitely a bit more fluid right now in getting deals done. So the bid-ask spread has tightened, the coaxing is lessened.

People are more resolute and more eager to transact and have a better sense of more confidence in what they want and how to execute that. And generally speaking, the market is getting smarter and more efficient about finding its own level for different things.

So there's a sort of certain knowability or range of what particular work of art or markets are worth. And that's helpful.

It's speeding up deals and probably increasing the flow of capital in the market because it's smarter and more efficient.

I would also add to that, that last year, there was less clarity about which artists had, had markets that were topped out, which ones had opportunities for growth and where it is that collectors had confidence, particularly in the works of younger artists, artworks coming from fresh areas to the market and artists who have been priced in the middle range, or let's say, living artists in the mature points in their career. And I think, especially over the last couple of months, I've seen a great increase of confidence about which artists, long-term collector believe strongly in as well as an increase in the number of new collectors entering into the marketplace.

I think it's interesting to note that since the art market crash of 2000, every time there's been a moment of uncertainty, whether it's about art or about the global economy in general, the moment in which that hesitation has been expressed by the behavior of buyers has been relatively short. And so the art market, even in moments of doubt over the last several decades or a decade and half, certainly, seems to gain increasing confidence each time in art and in the ability to find value in art.

Very helpful. And one more, Tad, you’ve alluded to it.

But your thoughts on the proposed -- the President's proposed changes in tax policy, we’ll see where what’s ends up being enacted. But if it were enacted as it stands, the implications for your business and the art market in general?

Well, as you might imagine, I'll make one quick political comment about the political process on it. And then actually, we rather thought this question might come up, and so we had a little chat about how we would deal with that.

I think I'll hand it over to Mike to talk about the corporate aspects of it, and then Adam Chinn, who has been living and breathing these kinds of questions for 30 years of his career, talk a little bit more about some of what some of the proposals are and how they might affect the art market. And so we'll actually hit all three.

In terms of the process, yesterday, the pundits and the people looking at it looked like it -- the current plan might get through the house. I know there's a lot of chewing and throwing.

And then when it gets over the Senate, it's all about getting the votes. And there are four or five Senators there who are going to have a lot of questions.

And we'll see. So we don't know how it's going to play.

It certainly has all the hallmarks of a bonfire case three vanities, if ever there were one. And we'll see how that plays out.

You want to talk about just the corporate aspects, Mike, and turn it over to Adam?

Sure, sure. A lot of detail still needs to be hammered out and the Senate has to do its thing, and then they have to reconcile and all that.

But I think thematically, we will be a net beneficiary from what's being discussed in two respects. First, if the corporate rate in the United States goes from 35 to 20, it is factually correct that the corporate tax rate on U.S.

earnings is higher than all of the other geographies in which we generate earnings. And remember, we're a global company, so we generate a lot of money in Hong Kong, in Switzerland, in the U.K., all of which have high -- lower marginal rates than the United States.

So 20% will benefit us in our tax rate for sure. And then the second place where we will benefit is in the one-time repatriation of cash that we have decided to keep offshore.

And it looks like there's going to be some holiday, if you will, where we would be able to bring that back at an even lower rate, something like 12%, as what's being discussed. So in both of those respects, I think as a corporate entity, we're in a pretty good shape.

Adam, let's talk about the clients?

Yes, sure. So I think it's something of a mixed bag.

The thing that in the short term would likely have the greatest impact would be the repeal of 1031, the ability to do like-kind exchanges for art, which in the long term is a mild negative for the market. In the short term, it's likely to create a velocity of transacting.

Because as I understand the way that it's written, there is a transitional rule that says if you sell your property this year, you don't have to close out the other side of the exchange until, in effect, under the regular rules; which give you 180 days to do it. So if people think that this 1031 provision will be repealed, you might see a lot of transactions between now and the year end to try and get things done sort of while the bar is still open.

Long term, there is material activity at the high end of the market using 1031. I think it will have an accelerating effect in the short term, then it will have the opposite effect for some period after that, and then the market will get used to the fact that you have to pay taxes on the sale of art.

The estate tax is another interesting issue, and I think that's likely to have sort of a mixed effect. Because the way that I understand the proposals are, is there's going to be a significant increase in the exclusion to the estate tax until 2024, and then estate tax is going to be repealed.

In the period during which the exclusion goes up, it may delay transactions because I think it’s depending on what the value of the art is, that people can get the best of both worlds, which is a step up on debt plus no estate tax, that's the Holy Trinity or duopoly. And however, after that, when if there is no estate tax anymore, and therefore I assume no step-up, people will sell property when they want to rather than waiting for that when they get the step-up.

So if you're 75-year-old person with a large art collection and would like to buy a new home, now you can just take a picture off the wall and sell it because it has no different tax impact than it would if it's in your estate. So I think those are the two major things.

Obviously, if you're an individual living in a high-tax estate, you’re going to have less disposable income. But I'm not sure that the people who, at least at the high-end, who are buying art probably have their personal affairs better managed than it's unlikely to have a material impact.

Great color. Thank you.

Thank you all.

Thanks, Dan.

Thanks, Dan.

Good morning. Thanks for taking my question guys.

Hi, Omar. Good morning.

Two questions. So the first one I wanted to ask about private sales business.

Can you help us maybe get a little bit more insight to the strong start of the year? It was down this quarter.

Is there a seasonality effect going on? I know it's a big push for you guys.

Maybe just kind of cement that and how that's developing and how you're thinking about that piece of the business? And I have a follow-up.

Yes. well, of course, it's important to see that with private sales, they ebb and flow, depending on the size of the transaction in a particular quarter.

It's also important to see that, and we said this three or four quarters ago, that a critical component to strong secular growth on that is the object database, and we don't anticipate that coming online until the first quarter of 2018, which I think is consistent largely with what I said the last time we talked about it. So from our perspective, what you're seeing now is enhanced energy, focus, some terrific new talents.

It's been there and making some good progress, but it's still in my mind early days on the private sale opportunity. Adam and Amy, maybe want to add anything?

It's certainly a huge focus and you will see increasingly it's something we're focused on. I mean, just in this building for the November auction week, we have around $200 million or so in the building of private sale material that have been consigned to us for that purpose, and that's really a step up in potential quantity of transactions but also in concept and methodology because we're really using the fact that the best collectors in the world are coming to the building and there might be other things or other opportunities to seize.

Yes, and the one thing I would say is that – to add Amy, is that I think that this is something where it's very nascent. There is a tremendous opportunity, and one of the things that we're trying to do is build up more of an independent private sales, sales force, so that the seasonality of the auction business is not the seasonality of the private sales business.

And I think on a 12-month period, you'll probably see that private sales hopefully are up across the board, but I think there's more work to do which presents a tremendous opportunity for the business.

That said, Q3, if it's the art world, the summer will always be slow. And that's just -- we're all hoping it slightly stays that way because it's a long tradition in the art world that summer is a little quieter.

Got you. That's great.

That's really helpful. And then I also wanted to ask about social media.

We're seeing a lot of different enterprises and consumer from high-end to low-end really engaged with their consumers and the networks of consumers in those channels. What are you guys doing there?

It feels like it's a potential lever that's really -- could be really useful for the industry and for your business. Are you investing there?

How are you thinking about it? Are you in the early stages?

Any insight there would be really helpful.

Well, the truth is we have done an enormous amount of investment in social media, and one of the interesting aspects of this earnings call is that for the first time, instead of five or six earnings calls, we didn't spend about 10 minutes talking about online social media, content development, the connection between content and commerce. But we could easily have done that.

We've just been doing that for the last five calls. So this was sort of an unusual one in that respect.

We have -- when you look at our social media stats, we have an enormous level of social media reach far more than the traditional competitors. We have an enormous amount of social media reach.

We're using it more and better than we ever have. We put enormous investment into the content aspect of this, and the content is overwhelmingly video and social media for sure at all levels in multiple languages and multiple places.

And the situation there for us, we think, looks very, very bright. And it is a major, in fact, probably primary focus of our ongoing investment.

Okay. And that's really helpful.

And are you seeing a different type of consumer engaged in the product and then in the art world as a result of the network effect? Is there some of [Indiscernible] what's going on in the market place?

Clearly, we have a significant growth in different countries and also different age groups. We're seeing a really interesting and robust area among millennials and the online side, and we feel very good about it.

Got you. Thanks for all the color.

Great job guys. Thanks.

We feel very excited about the future. We feel good about the fourth quarter, and we'll know a lot more shortly.

So thank you all very much.