Art Technology (ARTG) 8-K ATG Reports Fourth Quarter and Full Year 2008 Financial Results

Exhibit 99.1

ATG Reports Fourth Quarter and Full Year 2008 Financial Results

For the Full Year 2008, Company Achieves Record Revenue, Non-GAAP Net Income and Cash Flow from Operations

CAMBRIDGE, Mass.--(BUSINESS WIRE)--February 5, 2009--Art Technology Group, Inc. (NASDAQ: ARTG), the leading e-commerce solutions provider, today reported financial results for the fourth quarter and full year ended December 31, 2008.

Revenue for the fourth quarter of 2008 grew to $45.4 million, a 16% increase over fourth quarter 2007 revenue of $39.3 million. Revenue for the full year 2008 grew to $164.6 million, a 20% increase over full year 2007 revenue of $137.1 million.

Cash flow from operations for the fourth quarter of 2008 was $11.6 million, a 176% increase over cash flow from operations of $4.2 million in the fourth quarter of 2007. Cash flow from operations for the full year 2008 was $34.1 million, a 30% increase over full year 2007 cash flow from operations of $26.3 million.

“We are extremely pleased with ATG’s strong financial performance in the fourth quarter,” stated Bob Burke, ATG’s president and CEO. “Our results demonstrated that, even in challenging economic times, companies continued to invest in e-commerce.”

Product license revenue recognized in accordance with United States Generally Accepted Accounting Principles (GAAP) during the fourth quarter of 2008 increased 59% to $15.1 million, compared to $9.5 million in the year ago quarter. Product license revenue for the full year 2008 increased 55% to $47.4 million, compared to $30.5 million in 2007.

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 25% to $16.2 million for the fourth quarter from $13.0 million in the year ago quarter. Product license bookings for the full year 2008 were $52.8 million, a 22% increase over full year 2007 product license bookings of $43.4 million. Approximately 38% and 48% of product license bookings in the fourth quarter and full year 2008, respectively, were deferred and will be recognized ratably.

Eight new customers purchased ATG commerce solutions and 7 net new customers purchased eStara e-commerce optimization services this past quarter. New and repeat business was generated from customers including B&Q (a subsidiary of Kingfisher), Collective Brands, Corel, DirecTV, HEB Grocery, Lexmark, Shop Direct Group, and Sephora.

Net income in accordance with GAAP for the fourth quarter of 2008 increased to $3.5 million, or $0.03 per diluted share compared with net income of $782 thousand, or $0.01 per diluted share, in the fourth quarter of 2007. GAAP net income for the full year 2008 increased to $3.8 million, or $0.03 per diluted share compared with a GAAP net loss of $4.2 million, or a loss of $0.03 per share in 2007.

Non-GAAP net income increased to $8.3 million for the fourth quarter of 2008, or $0.06 per diluted share compared with non-GAAP net income of $4.1 million, or $0.03 per diluted share for the fourth quarter of 2007. Non-GAAP net income for the full year 2008 increased to $17.6 million, or $0.13 per diluted share compared with non-GAAP net income of $7.9 million, or $0.06 per diluted share in 2007.

At December 31, 2008, ATG had $61.4 million in cash, cash equivalents, and short-term marketable securities.

“ATG's ability to achieve record financial results was driven by increased demand for best of breed e-commerce solutions and our dedication to profitable revenue growth,” stated Julie Bradley, ATG’s senior vice president and CFO. “While the macroeconomic climate is uncertain, we believe that over the long term, customer demand for our products will remain strong.”

Quarterly Conference Call

ATG management will discuss the company’s fourth quarter and full year 2008 financial results, recent highlights, and business outlook 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 “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. 80128359. A replay of the call will be available on the company’s website later in the day.

About ATG

A trusted, global specialist in e-commerce, ATG (Art Technology Group, Inc., NASDAQ: ARTG) has spent the last decade focused on helping the world's premier brands maximize the success of their online businesses. The ATG Commerce application suite is the top-rated platform by industry analysts for powering highly personalized, efficient and effective e-commerce sites. The company's platform-neutral e-commerce optimization services can be easily added to any Web site to increase conversions and reduce abandonment. These services include ATG Recommendations and eStara Connections. The company is headquartered in Cambridge, Massachusetts, with additional locations throughout North America and Europe For more information, please visit http://www.atg.com.

© 2009 Art Technology Group, Inc. ATG and Art Technology Group are registered trademarks of Art Technology Group, Inc. All other product names, service marks, and trademarks mentioned herein are trademarks of their respective owners.

ART TECHNOLOGY GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(UNAUDITED)
		December 31, 2008		September 30, 2008		December 31, 2007
ASSETS
Current Assets:
	Cash, cash equivalents and marketable securities (including restricted cash of $1,669 as of December 31, 2008 and September 30, 2008)	$	60,983	$	58,232	$	50,879
	Accounts receivable, net		35,109		35,779		40,443
	Deferred costs, current		924		931		790
	Prepaid expenses and other current assets		4,374		3,411		2,741
Total current assets			101,390		98,353		94,853
	Property and equipment, net		10,098		9,583		7,208
	Intangible assets, net		7,770		8,854		11,109
	Deferred costs, less current portion		1,984		2,146		2,337
	Marketable securities (including restricted cash of $419 as of December 31, 2008 and September 30, 2008)		419		419		1,062
	Other assets		1,423		1,625		1,475
	Goodwill		65,683		67,692		59,675
Total long-term assets			87,377		90,319		82,866
Total assets		$	188,767	$	188,672	$	177,719
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
	Accounts payable	$	2,958	$	3,648	$	3,619
	Accrued expenses		18,875		18,830		19,082
	Deferred revenue, current portion		38,782		41,401		35,577
	Accrued restructuring, current portion		146		371		855
Total current liabilities			60,761		64,250		59,133
Accrued restructuring, less current portion			-		-		225
Other liabilities			1,775		498		487
Deferred revenue, less current portion			15,285		11,344		10,777
Total long-term liabilities			17,060		11,842		11,489
Stockholders' equity			110,946		112,580		107,097
Total liabilities and stockholders' equity		$	188,767	$	188,672	$	177,719

ART TECHNOLOGY GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(UNAUDITED)
		Three months ended							Twelve months ended
	December 31, 2008			September 30, 2008			December 31, 2007		December 31, 2008		December 31, 2007
Revenue:
Product licenses	$	15,108		$	10,764		$	9,532	$	47,429	$	30,529
Recurring services		23,704			23,446			21,337		91,039		76,672
Professional and education services		6,585			6,584			8,457		26,173		29,859
Total revenue		45,397			40,794			39,326		164,641		137,060
Cost of Revenue:
Product licenses		741			539			551		2,186		2,197
Recurring services		8,619			8,611			7,432		34,077		24,119
Professional and educational services		5,817			6,393			8,867		25,619		29,223
Total cost of revenue		15,177			15,543			16,850		61,882		55,539
Gross Profit		30,220			25,251			22,476		102,759		81,521
Operating Expenses:
Research and development		7,275			7,660			6,280		29,329		24,963
Sales and marketing		12,594			12,282			11,383		49,569		44,397
General and administrative		5,350			4,890			4,471		19,432		18,152
Total operating expenses		25,219			24,832			22,134		98,330		87,512
Income (loss) from operations		5,001			419			342		4,429		(5,991	)
Interest and other income, net		(140	)		232			693		960		2,237
Income (loss) before provision for income taxes		4,861			651			1,035		5,389		(3,754	)
Provision (benefit) for income taxes		1,354			(135	)		253		1,590		433
Net income (loss)	$	3,507		$	786		$	782	$	3,799	$	(4,187	)
Basic net income (loss) per share	$	0.03		$	0.01		$	0.01	$	0.03	$	(0.03	)
Diluted net income (loss) per share	$	0.03		$	0.01		$	0.01	$	0.03	$	(0.03	)
Basic weighted average common shares outstanding		127,680			129,219			128,056		128,534		127,528
Diluted weighted average common shares outstanding		130,823			135,697			135,290		133,916		127,528

Art Technology Group, Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(UNAUDITED)
		Three months ended									Twelve Months Ended
		December 31, 2008			September 30, 2008			December 31, 2007			December 31, 2008			December 31, 2007
Cash Flows from Operating Activities:
Net income (loss)		$	3,507		$	786		$	782		$	3,799		$	(4,187	)
	Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization			2,377			2,299			2,102			8,895			7,862
Non-cash stock-based compensation expense			2,072			1,993			1,729			7,896			5,843
	Non-cash tax expense		2,009			-			-			2,009			-
Net changes in operating assets and liabilities			1,638			3,029			(378	)		11,484			16,743
Net cash provided by operating activities			11,603			8,107			4,235			34,083			26,261
Cash Flows from Investing Activities:
Purchases of marketable securities			(2,177	)		(2,612	)		(12,567	)		(19,402	)		(21,779	)
Maturities of marketable securities			2,427			4,892			2,944			24,919			17,569
Purchases of property and equipment			(1,398	)		(2,220	)		(1,717	)		(7,010	)		(4,840	)
Collateralization of letters of credit			-			-			-			(2,088	)		-
Payment of acquisition costs, net of cash acquired			(244	)		-			-			(9,766	)		(829	)
Increase in other assets			-			-			-			-			(22	)
Net cash provided by (used in) investing activities			(1,392	)		60			(11,340	)		(13,347	)		(9,901	)
Cash Flows from Financing Activities:
Proceeds from exercise of stock options			644			951			824			2,252			2,047
Proceeds from employee stock purchase plan			224			238			252			978			901
Repurchase of common stock			(7,429	)		-			(712	)		(8,908	)		(2,902	)
Payment of employee restricted stock tax withholdings			(24	)		(29	)		-			(529	)		-
Payments on capital leases			-			-			(4	)		-			(56	)
Net cash provided by (used in) financing activities			(6,585	)		1,160			360			(6,207	)		(10	)
Effect of foreign exchange rate changes on cash and cash equivalents			(814	)		(823	)		67			(1,535	)		158
Net increase (decrease) in cash and cash equivalents			2,812			8,504			(6,678	)		12,994			16,508
Cash and cash equivalents, beginning of period			44,601			36,097			41,097			34,419			17,911
Cash and cash equivalents, end of period		$	47,413		$	44,601			34,419		$	47,413		$	34,419

ART TECHNOLOGY GROUP, INC.
STATEMENTS OF OPERATIONS DATA
(In thousands)
(UNAUDITED)
	Three months ended							Twelve months ended
	December 31,			September 30,		December 31,		December 31,
	2008			2008		2007		2008		2007
Equity-Related Compensation:
Cost of revenue	$	411		$	400	$	354	$	1,556	$	1,102
Research and development		412			416		421		1,565		1,276
Sales and marketing		565			510		376		2,253		1,541
General and administrative		684			667		578		2,522		1,924
Total equity-related compensation	$	2,072		$	1,993	$	1,729	$	7,896	$	5,843
eStara Earn-out:
Cost of revenue	$	-		$	-	$	10	$	-	$	41
Research and development		-			-		121		-		481
Sales and marketing		-			-		143		-		570
General and administrative		-			-		73		-		287
	$	-		$	-	$	347	$	-	$	1,379
Depreciation and Amortization:
Depreciation
Cost of revenue	$	428		$	713	$	512	$	2,378	$	1,536
Research and development		409			275		182		1,120		697
Sales and marketing		307			155		103		721		472
General and administrative		148			72		78		367		253
	$	1,292		$	1,215	$	875	$	4,586	$	2,958
Amortization
Cost of revenue	$	649		$	406	$	503	$	1,921	$	2,015
Research and development		(162	)		81		-		-		-
Sales and marketing		598			597		696		2,388		2,778
General and administrative		-			-		28		-		111
	$	1,085		$	1,084	$	1,227	$	4,309	$	4,904
Total depreciation and amortization	$	2,377		$	2,299	$	2,102	$	8,895	$	7,862
Capital Expenditures:
Purchases of property and equipment	$	1,398		$	2,220	$	1,717	$	7,010	$	4,840

RECONCILIATION OF GAAP TO NON-GAAP NET INCOME
(In thousands)
(UNAUDITED)
	Three months ended,									Twelve months ended
	December 31,			September 30,			December 31,			December 31,			December 31,
	2008			2008			2007			2008			2007
Net income (loss) GAAP	$	3,507		$	786		$	782		$	3,799		$	(4,187	)
Amortization of acquired intangibles		1,085			1,084			1,227			4,309			4,904
Equity-related compensation		2,072			1,993			1,729			7,896			5,843
Tax adjustments		1,595			-			-			1,595			-
eStara earn-out		-			-			347			-			1,379
Net restructuring		-			-			-			-			(59	)
Net income (non-GAAP)	$	8,259		$	3,863		$	4,085		$	17,599		$	7,880
Net income (non-GAAP) per share:
Basic	$	0.06		$	0.03		$	0.03		$	0.14		$	0.06
Diluted	$	0.06		$	0.03		$	0.03		$	0.13		$	0.06
Shares used in per share calculations:
Basic		127,680			129,219			128,056			128,534			127,528
Diluted		130,823			135,697			135,290			133,916			132,506
Reconciliation of Product License Bookings
(In thousands)
(UNAUDITED)
	Three months ended,									Twelve months ended
	December 31,			September 30,			December 31,			December 31,
	2008			2008			2007			2008			2007
Product license bookings	$	16,155		$	9,486		$	12,953		$	52,782		$	43,412
Increase in product license deferred revenue		(6,105	)		(4,078	)		(3,612	)		(25,546	)		(14,166	)
Product license deferred revenue recognized		5,058			5,356			191			20,193			1,283
Product license revenue	$	15,108		$	10,764		$	9,532		$	47,429		$	30,529

Use of Non-GAAP Financial Measures

ATG is providing the non-GAAP historical and forward-looking financial measures presented above as the company believes that these figures are helpful in allowing individuals to better assess the ongoing nature of ATG's core operations. A "non-GAAP financial measure" is a numerical measure of a company's historical or future financial performance that excludes amounts that are included in the most directly comparable measure calculated and presented in the GAAP statement of operations.

Net income (non-GAAP) and net income per share (non-GAAP), as we present them in the financial data included in this press release, have been normalized to exclude the net effects of restructuring actions, the amortization of intangible assets, acquisition-related compensation charges, and equity-related compensation. Management believes that these normalized non-GAAP financial measures excluding these items better reflect the company’s operating performance as these non-GAAP figures exclude the effects of non-recurring or non-cash expenses. Management believes that these charges are not necessarily representative of underlying trends in the company's performance and their exclusion provides investors with additional information to compare the company's results over multiple periods.

ATG considers “product license bookings,” a non-GAAP financial measure which the company defines as product license revenue recognized plus net change in deferred license revenue during any given period, to be an important indicator of growth in its software license business, as its business increasingly evolves toward a recurring, ratable revenue model.

The company uses these non-GAAP financial measures internally to focus management on period-to-period changes in the company's core business. Therefore, the company believes that this information is meaningful in addition to the information contained in the GAAP presentation of financial information. The presentation of this additional non-GAAP financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP.

In accordance with the requirements of Regulation G issued by the Securities and Exchange Commission, the tables above present the most directly comparable GAAP financial measure and reconcile non-GAAP net income and product license bookings to the comparable GAAP measures.

ATG Statement Under Private Securities Litigation Reform Act

This press release contains forward-looking statements about the company’s estimated revenue and earnings. These statements involve known and unknown risks and uncertainties that may cause ATG’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. These risks include the effect of weakened or weakening economic conditions or perceived conditions on the level of spending by customers and prospective customers for ATG’s software and services; financial and other effects of cost control measures; quarterly fluctuations in ATG’s revenues or other operating results; customization and deployment delays or errors associated with ATG’s products; the risk of longer sales cycles for ATG’s products and ATG’s ability to conclude sales based on purchasing decisions that are delayed; satisfaction levels of customers regarding the implementation and performance of ATG’s products; ATG’s need to maintain, enhance, and leverage business relationships with resellers and other parties who may be affected by changes in the economic climate; ATG’s ability to attract and maintain qualified executives and other personnel and to motivate employees; activities by ATG and others related to the protection of intellectual property; potential adverse financial and other effects of litigation (including intellectual property infringement claims) and the release of competitive products and other activities by competitors. Further details on these risks are set forth in ATG’s filings with the Securities and Exchange Commission (SEC), including the company’s annual report on Form 10-K for the period ended December 31, 2007, and its quarterly report on Form 10-Q for the period ended September 30, 2008, as filed with the SEC. These filings are available free of charge on a website maintained by the SEC at http://www.sec.gov.

CONTACT:
Art Technology Group, Inc.
Kim Maxwell, 617-386-1006
Director, Investor Relations
kmaxwell@atg.com