ATG Reports First Quarter 2008 Results

Business Wire, April 24, 2008

Year-Over-Year, Revenue Increased 25%, Product License Bookings Increased 28%, and Non-GAAP Net Income Increased 156%

CAMBRIDGE, Mass. -- Art Technology Group, Inc. (NASDAQ: ARTG), the leading e-commerce solutions provider, today reported financial results for the first quarter ended March 31, 2008.

Revenue for the first quarter of 2008 grew to $36.5 million, a 25% increase over first quarter 2007 revenue of $29.2 million.

"ATG is off to a great start in 2008 with revenue growth of 25% and product license bookings growth of 28%," stated Bob Burke, ATG's president and CEO. "As evidenced by our first quarter results, the market for our solutions continues to be robust. Companies are increasing their investments in online channels as accelerating growth in e-commerce sales continues to outpace offline channels."

Product license revenue recognized in accordance with United States Generally Accepted Accounting Principles (GAAP) during the first quarter of 2008 was $9.3 million, compared to $6.6 million in the year ago quarter. Product license bookings, a non-GAAP measure which the Company defines as product license revenue recognized plus net change in deferred product license revenue, grew 28% year-over-year to $11.4 million for the first quarter from $8.9 million in the year ago quarter. Approximately 50% of product license bookings in the first quarter were deferred and will be recognized ratably.

Short and long term deferred revenue grew to $48.3 million at March 31, 2008, a 59% increase over March 31, 2007.

New and repeat business was generated from customers including American Eagle Outfitters, Hyatt, Kingfisher, Philips, Quebecor, SAP and Sony.

Net loss in accordance with GAAP for the first quarter of 2008 was $842 thousand, or $(0.01) per share. This compares with a net loss of $1.5 million, or $(0.01) per share, in the first quarter of 2007.

Non-GAAP net income increased 156% to $2.0 million for the first quarter of 2008, or $0.02 per diluted share compared with non-GAAP net income of $781 thousand, or $0.01 per diluted share for the first quarter of 2007.

During the quarter, ATG completed its acquisition of CleverSet, a technology leader in automated personalization, in an all cash transaction valued at $9.1 million.

At March 31, 2008, ATG had $46.9 million in cash, cash equivalents, and short-term and long-term marketable securities. Cash flow from operations for the first quarter of 2008 was $7.1 million.

"We are very pleased with our results," Julie Bradley, ATG's senior vice president and CFO stated. "Last year at this time, we embarked on a business model transition, migrating from primarily a license business to a solution provider with increasing amounts of recurring and ratable revenue streams. As a result of this change, our customers are leveraging more ATG solutions. Based on accelerating growth in e-commerce, our current pipeline, and our successful implementation of the business model transition, our guidance and outlook for the full-year remains very positive."

Financial Guidance and Business Outlook

Revenue for 2008 is expected to be in the range of $159.0 million to $165.0 million. GAAP net income (loss) for the year ending December 31, 2008 is expected to be in the range of $(4.0) million to $1.0 million. GAAP net income (loss) guidance includes an estimated $8.5 - $9.0 million of non-cash equity-related compensation expense and amortization of acquired intangibles of $4.5 - $5.0 million. Non-GAAP net income for the year ending December 31, 2008 is expected to be in the range of $9.0 million to $15.0 million. Cash flow from operations for 2008 is expected to be in the range of $28.0 million to $32.0 million.

Quarterly Conference Call

ATG management will discuss the company's first quarter 2008 financial results, recent highlights, and business outlook for the remainder of 2008 on its quarterly conference call for investors at 10:00 a.m. ET today. The conference call will be broadcast live over the Internet. Investors interested in listening to the webcast should log on to the "For Investors" section of the ATG website, www.atg.com. The live conference call also can be accessed by dialing (866) 723-3575 (or (706) 634-8872 for international calls) and using conference ID No. 42241246. A replay of the call will be available on the company's website later in the day.

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About ATG

ATG (Art Technology Group, Inc., NASDAQ: ARTG) makes the software and delivers the on demand solutions that the world's most customer-conscious companies use to power their e-commerce web sites, attract prospects, convert them to buyers and ensure their satisfaction so they become loyal, repeat, profitable customers. Our e-commerce suite is ranked the #1 current offering and #1 in strategy by the industry's most influential analyst firms, and powers more of the top 300 internet retailers than any other vendor. Our eStara brand provides customer interaction solutions to enhance conversions and customer support, and delivers the world's most widely used click-to-call service. ATG's solutions are used by over 900 major brands, including Amazon, American Eagle Outfitters, AOL, AT&T, Best Buy, B&Q, Cabela's, Carrefour, Cingular, Coca Cola, Continental Airlines, CVS, Dell, DirecTV, El Corte Ingles, Expedia, France Telecom, Harvard Business School Publishing, Hewlett-Packard, Hilton, HSBC, Intuit, Macy's, Meredith, Microsoft, Neiman Marcus, New York & Company, Nokia, OfficeMax, PayPal, Philips, Procter & Gamble, Sears, Sony, Symantec, Target, T-Mobile, Urban Outfitters, Verizon, Viacom, Vodafone and Walgreens. The company is headquartered in Cambridge, Massachusetts, with additional locations throughout North America and Europe. For more information about ATG, please visit www.atg.com.