Art Technology (ARTG) 8-K ATG Reports Second Quarter 2009 Financial Results

Exhibit 99.1

ATG Reports Second Quarter 2009 Financial Results

Company Grows Revenue and Bookings While More than Doubling Non-GAAP Net Income

CAMBRIDGE, Mass.--(BUSINESS WIRE)--July 30, 2009--Art Technology Group, Inc. (NASDAQ: ARTG), the premier provider of e-Commerce solutions, today reported financial results for the second quarter ended June 30, 2009.

Revenue for the second quarter of 2009 grew to $44.4 million, a 6% increase over second quarter 2008 revenue of $41.9 million.

Product license revenue recognized in accordance with United States Generally Accepted Accounting Principles (GAAP) during the second quarter of 2009 increased 11% to $13.6 million, compared to $12.3 million in the year ago quarter.

Product license bookings, a non-GAAP measure which the company defines as the sale of perpetual software licenses, grew 6% to $16.6 million for the second quarter from $15.7 million in the year ago quarter. Approximately 44% of product license bookings in the second quarter were deferred and will be recognized ratably.

“ATG delivered another solid quarter with expansion in both revenue and profit,” stated Bob Burke, ATG’s president and CEO. “Our results serve as evidence that healthy demand for e-Commerce solutions continued, despite a tough economy. In fact, many aspects of this economy are forcing companies to invest in e-Commerce in order to drive revenue at a lower cost.”

Net income in accordance with GAAP for the second quarter of 2009 increased to $4.6 million, or $0.03 per diluted share compared with net income of $348 thousand, or breakeven on a per diluted share basis, in the second quarter of 2008.

Non-GAAP net income increased to $7.9 million for the second quarter of 2009, or $0.06 per diluted share compared with non-GAAP net income of $3.4 million, or $0.03 per diluted share for the second quarter of 2008.

Cash flow from operations for the second quarter of 2009 was $5.0 million. At June 30, 2009, ATG had $71.8 million in cash, cash equivalents, and marketable securities.

Julie Bradley, ATG’s senior vice president and CFO stated, “Revenue, license bookings and net income results were at the high end or exceeded our previously stated guidance ranges. Based on our pipeline, healthy trends in our business and continued focus on cost containment, we remain optimistic about our ability to post revenue and earnings growth in the second half of 2009.”

Quarterly Conference Call

ATG management will discuss the company’s second quarter 2009 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. 18199601. 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)
	June 30,		March 31,		December 31,			June 30,
	2009		2009		2008			2008
ASSETS
Current Assets:
Cash, cash equivalents and marketable securities (including restricted cash of $0 at June 30, 2009, $1,300 at March 31, 2009, $1,669 at December 31, 2008 and June 30, 2008)	$	71,335	$	67,475	$	60,983	$	50,573
Accounts receivable, net		39,155		30,582		35,109		40,501
Deferred costs, current		876		822		924		777
Deferred tax assets		560		560		560		-
Prepaid expenses and other current assets		3,266		3,563		3,814		3,705
Total current assets		115,192		103,002		101,390		95,556
Property and equipment, net		10,500		10,069		10,098		8,611
Intangible assets, net		5,917		6,843		7,770		9,938
Deferred costs, less current portion		1,884		1,852		1,984		2,331
Marketable securities (including restricted cash of $419 as of June 30, 2009, March 31, 2009, December 31, 2008 and June 30, 2008)		419		419		419		2,124
Other assets		1,457		1,355		1,423		1,733
Goodwill		65,683		65,683		65,683		67,787
Total long-term assets		85,860		86,221		87,377		92,524
Total assets	$	201,052	$	189,223	$	188,767	$	188,080
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable	$	5,229	$	4,265	$	2,958	$	3,823
Accrued expenses		15,398		15,494		18,875		19,182
Deferred revenue, current portion		41,765		37,899		38,782		42,610
Accrued restructuring		-		-		146		646
Total current liabilities		62,392		57,658		60,761		66,261
Other liabilities		1,775		1,775		1,775		498
Deferred revenue, less current portion		13,046		14,170		15,285		11,558
Total long-term liabilities		14,821		15,945		17,060		12,056
Stockholders' equity		123,839		115,620		110,946		109,763
Total liabilities and stockholders' equity	$	201,052	$	189,223	$	188,767	$	188,080

ART TECHNOLOGY GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(UNAUDITED)
	Three months ended						Six months ended
	June 30,		March 31,		June 30,		June 30,		June 30,
	2009		2009		2008		2009		2008
Revenue:
Product licenses	$	13,576	$	12,930	$	12,300	$	26,506	$	21,557
Recurring services		24,028		23,103		22,946		47,131		43,889
Professional and education services		6,823		5,878		6,674		12,701		13,004
Total revenue		44,427		41,911		41,920		86,338		78,450
Cost of Revenue:
Product licenses		457		390		519		847		906
Recurring services		8,722		8,897		9,241		17,619		16,847
Professional and education services		5,505		5,302		6,495		10,807		13,409
Total cost of revenue		14,684		14,589		16,255		29,273		31,162
Gross Profit		29,743		27,322		25,665		57,065		47,288
Operating Expenses:
Research and development		7,663		7,470		7,373		15,133		14,394
Sales and marketing		12,541		12,288		13,156		24,829		24,693
General and administrative		4,670		4,489		4,863		9,159		9,192
Total operating expenses		24,874		24,247		25,392		49,121		48,279
Income (loss) from operations		4,869		3,075		273		7,944		(991	)
Interest and other income, net		339		211		240		550		868
Income (loss) before provision for income taxes		5,208		3,286		513		8,494		(123	)
Provision for income taxes		588		312		165		900		371
Net income (loss)	$	4,620	$	2,974	$	348	$	7,594	$	(494	)
Basic net income (loss) per share	$	0.04	$	0.02	$	0.00	$	0.06	$	(0.00	)
Diluted net income (loss) per share	$	0.03	$	0.02	$	0.00	$	0.06	$	(0.00	)
Basic weighted average common shares outstanding		126,877		126,113		128,805		126,497		128,620
Diluted weighted average common shares outstanding		133,111		129,368		135,010		131,242		128,620

Art Technology Group, Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(UNAUDITED)
	Three months ended									Six Months Ended
	June 30,			March 31,			June 30,			June 30,			June 30,
	2009			2009			2008			2009			2008
Cash Flows from Operating Activities:
Net income (loss)	$	4,620		$	2,974		$	348		$	7,594		$	(494	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization		2,417			2,263			2,191			4,680			4,219
Non-cash stock-based compensation expense		2,402			1,955			2,001			4,357			3,831
Net changes in operating assets and liabilities		(4,481	)		899			2,738			(3,582	)		6,817
Net cash provided by operating activities		4,958			8,091			7,278			13,049			14,373
Cash Flows from Investing Activities:
Purchases of marketable securities		(6,926	)		(1,929	)		(5,417	)		(8,855	)		(14,613	)
Maturities of marketable securities		4,082			5,243			6,550			9,325			17,600
Purchases of property and equipment		(2,312	)		(1,329	)		(1,017	)		(3,641	)		(3,392	)
Collateralization of letters of credit		-			-			-			-			(2,088	)
Payment of acquisition costs, net of cash acquired		-			-			1,151			-			(9,522	)
Net cash (used in) provided by in investing activities		(5,156	)		1,985			1,267			(3,171	)		(12,015	)
Cash Flows from Financing Activities:
Proceeds from exercise of stock options		364			149			148			513			657
Proceeds from employee stock purchase plan		276			242			266			518			516
Repurchase of common stock		-			-			(1,479	)		-			(1,479	)
Payment of employee restricted stock tax withholdings		(445	)		(383	)		(476	)		(828	)		(476	)
Net cash provided by (used in) financing activities		195			8			(1,541	)		203			(782	)
Effect of foreign exchange rate changes on cash and cash equivalents		1,018			(276	)		(84	)		742			102
Net increase in cash and cash equivalents		1,015			9,808			6,920			10,823			1,678
Cash and cash equivalents, beginning of period		57,221			47,413			29,177			47,413			34,419
Cash and cash equivalents, end of period	$	58,236		$	57,221			36,097		$	58,236		$	36,097

ART TECHNOLOGY GROUP, INC.
STATEMENTS OF OPERATIONS DATA
(In thousands)
(UNAUDITED)
	Three months ended						Six months ended
	June 30,		March 31,			June 30,	June 30,		June 30,
	2009		2009			2008	2009		2008
Equity-Related Compensation:
Cost of revenue	$	488	$	410	$	401	$	898	$	745
Research and development		432		370		332		802		737
Sales and marketing		609		512		608		1,121		1,178
General and administrative		873		663		660		1,536		1,171
Total equity-related compensation	$	2,402	$	1,955	$	2,001	$	4,357	$	3,831
Depreciation and Amortization:
Depreciation
Cost of revenue	$	913	$	815	$	686	$	1,728	$	1,237
Research and development		301		269		223		570		436
Sales and marketing		192		176		131		368		259
General and administrative		85		77		68		162		147
	$	1,491	$	1,337	$	1,108	$	2,828	$	2,079
Amortization
Cost of revenue	$	399	$	400	$	406		799		866
Research and development		-		-		81		-		81
Sales and marketing		527		526		596		1,053		1,193
General and administrative		-		-		-		-		-
	$	926	$	926	$	1,083	$	1,852	$	2,140
Total depreciation and amortization	$	2,417	$	2,263	$	2,191	$	4,680	$	4,219
Capital Expenditures:
Purchases of property and equipment	$	2,312	$	1,329	$	1,017	$	3,641	$	3,392

RECONCILIATION OF GAAP TO NON-GAAP NET INCOME
(In thousands, except per share data)
(UNAUDITED)
	Three months ended,									Six months ended
	June 30,			March 31,			June 30,			June 30,			June 30,
	2009			2009			2008			2009			2008
Net income (loss) GAAP	$	4,620		$	2,974		$	348		$	7,594		$	(494	)
Amortization of acquired intangibles		926			926			1,083			1,852			2,140
Equity-related compensation		2,402			1,955			2,001			4,357			3,831
Net income (non-GAAP)	$	7,948		$	5,855		$	3,432		$	13,803		$	5,477
Net income (non-GAAP) per share:
Basic	$	0.06		$	0.05		$	0.03		$	0.11		$	0.04
Diluted	$	0.06		$	0.05		$	0.03		$	0.11		$	0.04
Shares used in per share calculations:
Basic		126,877			126,113			128,805			126,497			128,620
Diluted		133,111			129,368			135,010			131,242			134,551
Reconciliation of Product License Bookings
(In thousands)
(UNAUDITED)
	Three months ended,									Six months ended
	June 30,			March 31,			June 30,			June 30,			June 30,
	2009			2009			2008			2009			2008
Product license bookings	$	16,612		$	12,348		$	15,693		$	28,960		$	27,141
Increase in product license deferred revenue		(7,292	)		(4,686	)		(9,670	)		(11,978	)		(15,363	)
Product license deferred revenue recognized		4,256			5,268			6,277			9,524			9,779
Product license revenue	$	13,576		$	12,930		$	12,300		$	26,506		$	21,557

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 amortization of acquired intangible assets, equity-related compensation, and related tax adjustments. 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, 2008 and its quarterly report on Form 10-Q for the period ended March 31, 2009, 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