Art Technology (ARTG) 8-K ATG Reports First Quarter 2010 Financial Results

Exhibit 99.1

ATG Reports First Quarter 2010 Financial Results

Year-Over-Year, Product License Bookings Increased 13%

Cash Flow from Operations Increased 17%

Company Appoints Greg Hughes as Director

CAMBRIDGE, Mass.--(BUSINESS WIRE)--April 29, 2010--Art Technology Group, Inc. (NASDAQ: ARTG), the premier provider of cross channel commerce solutions, today reported financial results for the first quarter ended March 31, 2010.

Revenue for the first quarter of 2010 grew to $44.7 million, a 7% increase over first quarter 2009 revenue of $41.9 million.

“ATG got off to a great start in 2010 with solid year-over-year growth in product license bookings,” stated Bob Burke, ATG’s president and CEO. “We are seeing positive market trends and strong results for ATG across both our Commerce and Optimization businesses.”

Product license bookings, a non-GAAP measure which the company defines as the sale of product license revenue, grew 13% to $13.9 million for the first quarter from $12.3 million in the year ago quarter. Approximately 38% of product license bookings, a greater than expected amount, were deferred in the first quarter and will be recognized in future periods.

Net income in accordance with GAAP for the first quarter of 2010 was $2.1 million, or $0.01 per diluted share, compared with net income of $3.0 million, or $0.02 per diluted share, in the first quarter of 2009.

Non-GAAP net income was $4.5 million for the first quarter of 2010, or $0.03 per diluted share, compared with non-GAAP net income of $5.9 million, or $0.05 per diluted share, for the first quarter of 2009.

Cash flow from operations for the first quarter of 2010 was $9.5 million, a 17% increase over cash flow from operations of $8.1 million in the first quarter of 2009.

Julie Bradley, ATG’s senior vice president and CFO stated, “We are pleased with our first quarter financial results and outlook for 2010. Our ability to grow cash flow from operations while investing in our sales and development efforts is a testament to the underlying positive market trends for e-commerce.”

ATG also announced today that Greg Hughes is joining its board of directors. Mr. Hughes’s term of office will commence immediately following ATG’s 2010 Annual Meeting of Stockholders, currently scheduled for May 24, 2010. Mr. Hughes is group president of Symantec’s Enterprise Product Group, responsible for engineering and product management for all of Symantec’s enterprise products. Mr. Hughes brings a wealth of experience in both enterprise and SaaS (software-as-a-service) product strategy and delivery, mergers and acquisitions, corporate venture funding, and strategic partnerships. Prior to Symantec, Mr. Hughes was a partner at McKinsey & Co., where he founded and led the North American Software Industry Practice.

Quarterly Conference Call

ATG management will discuss the company’s first quarter 2010 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. 64179876. A replay of the call will be available on the company’s website later in the day.

About ATG

ATG (Nasdaq: ARTG) provides the most advanced cross-channel commerce software and services to fuel the growth of the world’s top brands. Offering the industry’s leading commerce solution, ATG works in partnership with clients to drive sales via a personalized customer experience – unifying and optimizing interactions across the Web, contact center, mobile devices, social media, physical stores, and other key channels. Exclusively focused on online and cross-channel commerce, ATG is uniquely capable of powering the most innovative and successful commerce experiences, with results that outperform industry norms. ATG Commerce is the commerce platform and business user application solution top-rated by industry analysts for powering results-driven, personalized, and innovative e-commerce sites. ATG's platform-neutral optimization solutions for live help, lead performance, and product recommendations can be easily added to any website to increase conversions and reduce abandonment. ATG is headquartered in Cambridge, Massachusetts, with additional locations throughout North America and Europe. For more information, please visit http://www.atg.com.

© 2010 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)
		March 31,		December 31,		March 31,
		2010		2009		2009
ASSETS
Current Assets:
	Cash, cash equivalents and marketable securities (including restricted cash of $50, $50, and $1,300 as of March 31, 2010, December 31, 2009 and March 31, 2009, respectively)	$	138,703	$	79,094	$	67,475
	Accounts receivable, net		36,385		41,522		30,582
	Deferred costs, current portion		1,216		767		822
	Deferred tax assets, current portion		430		430		560
	Prepaid expenses and other current assets		4,934		3,359		3,563
Total current assets			181,668		125,172		103,002
	Property and equipment, net		11,347		9,934		10,069
	Intangible assets, net		9,600		4,064		6,843
	Deferred costs, less current portion		2,025		1,387		1,852
	Marketable securities (including restricted cash of $738, $738, and $419 as of March 31, 2010, December 31, 2009 and March 31, 2009, respectively)		30,412		6,439		419
	Deferred tax assets, less current portion		450		450		-
	Other assets		1,944		907		1,355
	Goodwill		77,555		65,683		65,683
Total long-term assets			133,333		88,864		86,221
Total assets		$	315,001	$	214,036	$	189,223
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
	Accounts payable	$	3,477	$	5,720	$	4,265
	Accrued expenses		17,134		18,873		15,494
	Deferred revenue, current portion		42,661		42,640		37,899
Total current liabilities			63,272		67,233		57,658
Other liabilities			1,527		536		1,775
Deferred revenue, less current portion			15,659		10,356		14,170
Total long-term liabilities			17,186		10,892		15,945
Stockholders' equity			234,543		135,911		115,620
Total liabilities and stockholders' equity		$	315,001	$	214,036	$	189,223

ART TECHNOLOGY GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(UNAUDITED)
	Three months ended
	March 31,			December 31,			March 31,
	2010			2009			2009
Revenue:
Product licenses	$	12,857		$	16,974		$	12,930
Recurring services		26,670			26,500			23,103
Professional and education services		5,197			6,189			5,878
Total revenue		44,724			49,663			41,911
Cost of Revenue:
Product licenses		534			572			390
Recurring services		9,716			9,774			8,897
Professional and education services		4,840			5,487			5,302
Total cost of revenue		15,090			15,833			14,589
Gross Profit		29,634			33,830			27,322
Operating Expenses:
Research and development		8,661			7,788			7,470
Sales and marketing		14,429			14,861			12,288
General and administrative		5,125			5,000			4,489
Total operating expenses		28,215			27,649			24,247
Income from operations		1,419			6,181			3,075
Interest and other income (expense), net		(221	)		(180	)		211
Income before income taxes		1,198			6,001			3,286
(Benefit) provision for income taxes		(861	)		762			312
Net income	$	2,059		$	5,239		$	2,974
Basic net income per share	$	0.01		$	0.04		$	0.02
Diluted net income per share	$	0.01		$	0.04		$	0.02
Basic weighted average common shares outstanding		146,157			127,137			126,113
Diluted weighted average common shares outstanding		154,514			134,985			129,368

ART TECHNOLOGY GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(UNAUDITED)
		Three months ended
		March 31,		December 31,		March 31,
		2010		2009		2009
Cash Flows from Operating Activities:
Net income		$	2,059	$	5,239	$	2,974
	Adjustments to reconcile net income to net cash provided by operating activities:
	Depreciation and amortization of intangibles		2,764		2,392		2,263
	Amortization of investment premium		308		-		-
	Non-cash stock-based compensation expense		2,361		2,124		1,955
	Non-cash deferred tax (benefit) expense		(1,073)		208		-
	Net changes in operating assets and liabilities		3,130		(2,795)		899
	Net cash provided by operating activities		9,549		7,168		8,091
Cash Flows from Investing Activities:
	Purchases of marketable securities		(84,018)		(6,263)		(1,929)
	Maturities of marketable securities		2,968		5,720		5,243
	Purchases of property and equipment		(2,342)		(668)		(1,329)
	Increase in other assets		(1,000)		-		-
	Acquisition of business, net of cash acquired		(15,140)		-		-
	Net cash (used in) provided by investing activities		(99,532)		(1,211)		1,985
Cash Flows from Financing Activities:
	Proceeds from exercise of stock options		476		699		149
	Proceeds from employee stock purchase plan		298		289		242
	Net proceeds from equity offering		94,968		-		-
	Repayment of acquisition debt		(1,573)		-		-
	Payment of employee restricted stock tax withholdings		(990)		(65)		(383)
	Net cash provided by financing activities		93,179		923		8
Effect of foreign exchange rate changes on cash and cash equivalents			(266)		1		(276)
Net increase in cash and cash equivalents			2,930		6,881		9,808
Cash and cash equivalents, beginning of period			57,319		50,438		47,413
Cash and cash equivalents, end of period		$	60,249	$	57,319	$	57,221

ART TECHNOLOGY GROUP, INC.
STATEMENTS OF OPERATIONS DATA
(In thousands)
(UNAUDITED)
	Three months ended
	March 31,		December 31,		March 31,
	2010		2009		2009
Equity-Related Compensation:
Cost of revenue	$	521	$	455	$	410
Research and development		456		387		370
Sales and marketing		632		553		512
General and administrative		752		729		663
Total equity-related compensation	$	2,361	$	2,124	$	1,955
Depreciation and Amortization:
Depreciation
Cost of revenue	$	1,060	$	1,008	$	815
Research and development		323		252		269
Sales and marketing		121		139		176
General and administrative		99		66		77
	$	1,603	$	1,465	$	1,337
Amortization of intangibles
Cost of revenue	$	495	$	401	$	400
Sales and marketing		666		526		526
	$	1,161	$	927	$	926
Total depreciation and amortization	$	2,764	$	2,392	$	2,263
Capital Expenditures:
Purchases of property and equipment	$	2,342	$	668	$	1,329

RECONCILIATION OF GAAP TO NON-GAAP NET INCOME
(In thousands)
(UNAUDITED)
	Three months ended
	March 31,			December 31,			March 31,
	2010			2009			2009
Net income (GAAP)	$	2,059		$	5,239		$	2,974
Amortization of acquired intangibles		1,161			927			926
Equity-related compensation		2,361			2,124			1,955
Tax adjustments		(1,073	)		(112	)		-
Net income (non-GAAP)	$	4,508		$	8,178		$	5,855
Net income (non-GAAP) per share:
Basic	$	0.03		$	0.06		$	0.05
Diluted	$	0.03		$	0.06		$	0.05
Shares used in per share calculations:
Basic		146,157			127,137			126,113
Diluted		154,514			134,985			129,368
Reconciliation of Product License Bookings
(In thousands)
(UNAUDITED)
	Three months ended
	March 31,			December 31,			March 31,
	2010			2009			2009
Product license bookings (non-GAAP)	$	13,850		$	17,492		$	12,348
Product license bookings not recognized		(5,219	)		(5,058	)		(4,686	)
Product license deferred revenue recognized		4,226			4,540			5,268
Product license revenue	$	12,857		$	16,974		$	12,930

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, 2009. 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