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

Exhibit 99.1

ATG Reports Third Quarter 2009 Financial Results

Revenue Increased 6% and Non-GAAP Net Income Increased 41%

Company Announces a New Stock Repurchase Program

CAMBRIDGE, Mass.--(BUSINESS WIRE)--October 29, 2009--Art Technology Group, Inc. (NASDAQ: ARTG), the premier provider of commerce solutions, today reported financial results for the third quarter ended September 30, 2009.

Revenue for the third quarter of 2009 grew to $43.4 million, a 6% increase over third quarter 2008 revenue of $40.8 million.

“Revenue, bookings and net income growth exceeded our expectations in the third quarter,” stated Bob Burke, ATG’s president and CEO. “Looking ahead to the fourth quarter, we are very excited about the level of sales activity and demand we’re seeing in the market for our commerce solutions and expect a strong finish to the year.”

Product license bookings, a non-GAAP measure which the company defines as the sale of perpetual software licenses, grew 9% to $10.4 million for the third quarter from $9.5 million in the year ago quarter. Approximately 41% of product license bookings in the third quarter were deferred and will be recognized ratably.

Net income in accordance with GAAP for the third quarter of 2009 increased to $4.0 million, or $0.03 per diluted share compared with net income of $786 thousand, or $0.01 per diluted share, in the third quarter of 2008.

Non-GAAP net income increased to $5.5 million for the third quarter of 2009, or $0.04 per diluted share compared with non-GAAP net income of $3.9 million, or $0.03 per diluted share for the third quarter of 2008.

Cash flow from operations for the third quarter of 2009 was $9.9 million. At September 30, 2009, ATG had $78.1 million in cash, cash equivalents, and marketable securities.

The company’s Board of Directors has approved a new stock repurchase program that authorizes the repurchase of up to $25 million of ATG’s common stock. This new authorization is in addition to the remaining $3.9 million under the Company’s existing $20 million repurchase program authorized in April of 2007. The stock repurchase program authorizes the company to repurchase shares, in the open market or privately negotiated transactions, at times and prices considered appropriate by the company depending upon prevailing market conditions and other corporate considerations. As of October 27, 2009, ATG had approximately 127.0 million shares outstanding.

“We have executed extremely well in 2009 - consistently increasing year over year revenue while containing our costs,” stated Julie Bradley, ATG’s senior vice president and CFO. “We expect strong demand for our solutions to continue driving bookings, revenue and profit growth for the second half of 2009 as compared to the second half of 2008.”

Quarterly Conference Call

ATG management will discuss the company’s third 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. 33150677. 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. ATG Commerce is the commerce platform and business user application solution top-rated by industry analysts for powering highly personalized, efficient and effective e-commerce sites. ATG's platform-neutral optimization services can be easily added to any Web site to increase conversions and reduce abandonment. These services include ATG Recommendations and ATG’s eStara Click to Call and Click to Chat services. 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. 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)
		September 30,		June 30,		December 31,		September 30,
			2009		2009		2008		2008
ASSETS
Current Assets:
	Cash, cash equivalents and marketable securities (including restricted cash of $ 0 at September 30, 2009 and June 30, 2009 and $1,669 at December 31, 2008 and September 30, 2008)	$	73,972	$	71,335	$	60,983	$	58,232
	Accounts receivable, net		31,850		39,155		35,109		35,779
	Deferred costs, current		1,126		876		924		931
	Deferred tax assets		534		560		560		-
	Prepaid expenses and other current assets		2,910		3,266		3,814		3,411
Total current assets			110,392		115,192		101,390		98,353
	Property and equipment, net		10,168		10,500		10,098		9,583
	Intangible assets, net		4,991		5,917		7,770		8,854
	Deferred costs, less current portion		1,391		1,884		1,984		2,146
	Marketable securities (including restricted cash of $419 as of September 30, 2009, June 30, 2009, December 31, 2008 and September 30, 2008)		4,129		419		419		419
	Other assets		1,483		1,457		1,423		1,625
	Goodwill		65,683		65,683		65,683		67,692
Total assets		$	198,237	$	201,052	$	188,767	$	188,672
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
	Accounts payable	$	4,245	$	5,229	$	2,958	$	3,648
	Accrued expenses		16,203		15,398		18,875		18,830
	Deferred revenue, current portion		40,025		41,765		38,782		41,401
	Accrued restructuring		-		-		146		371
Total current liabilities			60,473		62,392		60,761		64,250
Other liabilities			249		1,775		1,775		498
Deferred revenue, less current portion			9,956		13,046		15,285		11,344
Stockholders' equity			127,559		123,839		110,946		112,580
Total liabilities and stockholders' equity		$	198,237	$	201,052	$	188,767	$	188,672

ART TECHNOLOGY GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(UNAUDITED)
	Three months ended								Nine months ended
	September 30,			June 30,		September 30,			September 30,			September 30,
		2009			2009		2008			2009			2008
Revenue:
Product licenses	$	10,890		$	13,576	$	10,764		$	37,396		$	32,321
Recurring services		24,904			24,028		23,446			72,035			67,335
Professional and education services		7,587			6,823		6,584			20,288			19,588
Total revenue		43,381			44,427		40,794			129,719			119,244
Cost of Revenue:
Product licenses		399			457		539			1,246			1,445
Recurring services		9,393			8,722		8,611			27,012			25,458
Professional and education services		6,029			5,505		6,393			16,836			19,802
Total cost of revenue		15,821			14,684		15,543			45,094			46,705
Gross Profit		27,560			29,743		25,251			84,625			72,539
Operating Expenses:
Research and development		7,599			7,663		7,660			22,732			22,054
Sales and marketing		12,503			12,541		12,282			37,332			36,975
General and administrative		4,831			4,670		4,890			13,990			14,082
Total operating expenses		24,933			24,874		24,832			74,054			73,111
Income (loss) from operations		2,627			4,869		419			10,571			(572	)
Interest and other income (expense), net		(314	)		339		232			236			1,100
Income before provision for income taxes		2,313			5,208		651			10,807			528
Provision (benefit) for income taxes		(1,650	)		588		(135	)		(750	)		236
Net income	$	3,963		$	4,620	$	786		$	11,557		$	292
Basic net income per share	$	0.03		$	0.04	$	0.01		$	0.09		$	0.00
Diluted net income per share	$	0.03		$	0.03	$	0.01		$	0.09		$	0.00
Basic weighted average common shares outstanding		127,224			126,877		129,219			126,742			128,821
Diluted weighted average common shares outstanding		134,736			133,111		135,697			132,409			134,934

Art Technology Group, Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(UNAUDITED)
	Three months ended									Nine months ended
	September 30,			June 30,			September 30,			September 30,			September 30,
		2009			2009			2008			2009			2008
Cash Flows from Operating Activities:
Net income	$	3,963		$	4,620		$	786		$	11,557		$	292
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		2,149			2,417			2,299			6,829			6,518
Non-cash stock-based compensation expense		2,463			2,402			1,993			6,820			5,824
Non-cash tax benefit		(1,871	)		-			-			(1,871	)		-
Net changes in operating assets and liabilities		3,237			(4,481	)		3,029			(345	)		9,846
Net cash provided by operating activities		9,941			4,958			8,107			22,990			22,480
Cash Flows from Investing Activities:
Purchases of marketable securities		(19,433	)		(6,925	)		(2,612	)		(28,287	)		(17,225	)
Maturities of marketable securities		5,400			4,082			4,892			14,725			22,492
Purchases of property and equipment		(978	)		(2,313	)		(2,220	)		(4,620	)		(5,612	)
Collateralization of letters of credit		-			-			-			-			(2,088	)
Payment of acquisition costs, net of cash acquired		-			-			-			-			(9,522	)
Net cash (used in) provided by investing activities		(15,011	)		(5,156	)		60			(18,182	)		(11,955	)
Cash Flows from Financing Activities:
Proceeds from exercise of stock options		915			364			951			1,428			1,608
Proceeds from employee stock purchase plan		279			276			238			797			754
Repurchase of common stock		(4,265	)		-			-			(4,265	)		(1,479	)
Payment of employee restricted stock tax withholdings		(45	)		(445	)		(29	)		(873	)		(505	)
Net cash (used in) provided by financing activities		(3,116	)		195			1,160			(2,913	)		378
Effect of foreign exchange rate changes on cash and cash equivalents		388			1,018			(823	)		1,130			(721	)
Net (decrease) increase in cash and cash equivalents		(7,798	)		1,015			8,504			3,025			10,182
Cash and cash equivalents, beginning of period		58,236			57,221			36,097			47,413			34,419
Cash and cash equivalents, end of period	$	50,438		$	58,236			44,601		$	50,438		$	44,601

ART TECHNOLOGY GROUP, INC.
STATEMENTS OF OPERATIONS DATA
(In thousands)
(UNAUDITED)
	Three months ended						Nine months ended
	September 30,		June 30,		September 30,		September 30,		September 30,
		2009		2009		2008		2009		2008
Equity-Related Compensation:
Cost of revenue	$	498	$	488	$	400	$	1,396	$	1,145
Research and development		435		432		416		1,237		1,153
Sales and marketing		653		609		510		1,774		1,688
General and administrative		877		873		667		2,413		1,838
Total equity-related compensation	$	2,463	$	2,402	$	1,993	$	6,820	$	5,824
Depreciation and Amortization:
Depreciation
Cost of revenue	$	746	$	913	$	713	$	2,474	$	1,950
Research and development		259		301		275		829		711
Sales and marketing		152		192		155		520		414
General and administrative		65		85		72		227		219
	$	1,222	$	1,491	$	1,215	$	4,050	$	3,294
Amortization
Cost of revenue	$	401	$	399	$	406		1,200		1,272
Research and development		-		-		81		-		162
Sales and marketing		526		527		597		1,579		1,790
General and administrative		-		-		-		-		-
	$	927	$	926	$	1,084	$	2,779	$	3,224
Total depreciation and amortization	$	2,149	$	2,417	$	2,299	$	6,829	$	6,518
Capital Expenditures:
Purchases of property and equipment	$	978	$	2,313	$	2,220	$	4,620	$	5,612

RECONCILIATION OF GAAP TO NON-GAAP NET INCOME
(In thousands, except per share data)
(UNAUDITED)
	Three months ended									Nine months ended
	September 30,			June 30,			September 30,			September 30,			September 30,
		2009			2009			2008			2009			2008
Net income, GAAP	$	3,963		$	4,620		$	786		$	11,557		$	292
Amortization of acquired intangibles		927			926			1,084			2,779			3,224
Equity-related compensation		2,463			2,402			1,993			6,820			5,824
Tax adjustments		(1,871	)		-			-			(1,871	)		-
Net income (non-GAAP)	$	5,482		$	7,948		$	3,863		$	19,285		$	9,340
Net income (non-GAAP) per share:
Basic	$	0.04		$	0.06		$	0.03		$	0.15		$	0.07
Diluted	$	0.04		$	0.06		$	0.03		$	0.15		$	0.07
Shares used in per share calculations:
Basic		127,224			126,877			129,219			126,742			128,821
Diluted		134,736			133,111			135,697			132,409			134,934
Reconciliation of Product License Bookings
(In thousands)
(UNAUDITED)
	Three months ended									Nine months ended
	September 30,			June 30,			September 30,			September 30,			September 30,
		2009			2009			2008			2009			2008
Product license bookings	$	10,436		$	16,612		$	9,486		$	39,396		$	36,627
Product license bookings deferred		(4,321	)		(7,292	)		(4,078	)		(16,299	)		(19,441	)
Product license deferred revenue recognized		4,775			4,256			5,356			14,299			15,135
Product license revenue	$	10,890		$	13,576		$	10,764		$	37,396		$	32,321

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 June 30, 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