Exhibit 99.1
ATG Announces First-Quarter 2005 Financial Results; Company Grows Revenues 31%
Year Over Year and 7% Sequentially; Achieves GAAP Profitability
CAMBRIDGE, Mass.--(BUSINESS WIRE)--April 28, 2005--ATG (Art
Technology Group, Inc., NASDAQ: ARTG) today announced its financial
results for the first quarter ended March 31, 2005. Total revenues for
the first quarter of 2005 were $22.0 million, a 31 percent increase
from $16.8 million in the first quarter of 2004 and a 7 percent
increase from $20.6 million in the fourth quarter of 2004. ATG's
financial results for the first quarter of 2005 reflect a full quarter
of contribution from Primus Knowledge Solutions, Inc. (Primus).
The company reported first-quarter 2005 net income of $1.4
million, or $0.01 per diluted share, in accordance with accounting
principles generally accepted in the United States (GAAP). During the
first quarter of 2005, ATG incurred $204,000 in net restructuring
charges for employee severance in international geographies related to
the integration of Primus. The first-quarter results compare with a
net loss of $1.8 million, or $(0.02) per diluted share, in the
year-ago quarter and a net loss of $3.6 million, or $(0.04) per
diluted share, for the fourth quarter of 2004.
Excluding amortization of intangibles and net restructuring
charges in the first quarter of 2005, ATG reported net income
(non-GAAP) of $2.2 million, or $0.02 per diluted share. This compares
with non-GAAP net income of $1.0 million, or $0.01 per diluted share,
in the fourth quarter of 2004. The first quarter of 2005 marked the
third consecutive quarter of non-GAAP profitability for ATG.
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*T
FIRST-QUARTER FINANCIALS
(In millions, except per share data and percentages)
Three Months Ended
-----------------------------------
March 31, December 31, March 31,
2005 2004 2004
-----------------------------------
Total revenues $22.0 $20.6 $16.8
License revenue 7.4 7.6 6.4
Percent of total revenues 34% 37% 38%
Services revenue 14.6 13.0 10.4
Percent of total revenues 66% 63% 62%
Net income/(loss) (GAAP) 1.4 (3.6) (1.8)
=========== ============ ==========
Net income/(loss) per diluted share
(GAAP) $0.01 $(0.04) $(0.02)
=========== ============ ==========
Amortization of intangible assets 0.6 1.0 --
Net restructuring expense 0.2 3.6 --
Net income/(loss) (non-GAAP)(a) 2.2 1.0 --
=========== ============ ==========
Net income/(loss) per share (non-
GAAP)(a) $0.02 $0.01 $(0.02)
=========== ============ ==========
Basic weighted average shares
outstanding 108,685 96,548 73,053
Diluted weighted average shares
outstanding 110,866 97,716 73,053
Cash, cash equivalents and
marketable securities $27.4 $30.5 $35.2
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(a) For further details surrounding non-GAAP financial information,
please refer to the Financial Presentation section
*T
"The first quarter of 2005 marked the first full quarter that ATG
and Primus operated as one company, and we are pleased with both our
revenue and operating profit performance," said Bob Burke, ATG's
president and chief executive officer. "We completed our integration
of Primus' operations and realized significant benefits from the
synergies that were created by the acquisition. From an expense
perspective, we improved our gross margin to 73% by more effectively
managing our cost of services."
RECENT HIGHLIGHTS
-- Generated business from new and repeat customers including
AT&T Business Services, Cablevision, Casual Male, CPPIH (UK
Dept. of Health), DirecTV, The Finish Line, Fujitsu, Hyatt, La
Petite Academy, Louis Vuitton, Sony Entertainment, Viking
Range, Sephora, Telecom Italia, TKK Insurance and USDA.
-- Launched ATG Adaptive Customer Assistance 2005, an advanced
Web self-service solution that combines ATG's transaction and
personalization technology with award-winning search
technology from Primus, which ATG acquired in November 2004.
This product release represents the first results of the
ATG/Primus technology integration plan. ATG Adaptive Customer
Assistance (ACA) allows Web visitors to ask questions and
receive answers that include not only text, but also personal
transaction information (such as account balances) and links
to other relevant documents.
-- Announced ATG On-Demand, a suite of application hosting
services that provide ATG customers with unprecedented
flexibility, convenience and performance. ATG On-Demand
delivers ATG's award-winning e-marketing, e-commerce and
e-service solutions via application hosting and managed
services, enabling customers to reap the benefits of an
application service provider (ASP) model without traditional
limitations on customization, integration and security.
-- Enhanced its service resolution capabilities with the addition
of ATG Forum, a support application designed to create and
manage online communities. With ATG Forum, companies empower
their customers to share answers, insights and ideas; and in
turn they are able to gain valuable insight regarding the
interests, needs and behaviors of their customers for use in
future marketing and service campaigns.
-- Won awards and recognition for ATG KnowledgeCenter, including
Customer Inter@ction Solutions Magazine's 2004 Product of the
Year and the WSA Industry Achievement Award for 2005 Business
Product of the Year.
-- Attained the highest rating possible from Gartner, besting all
other vendors, for the company's e-mail response management
system product, ATG Communications Center.
-- Named as "a leader" in Web Self-Service for the CRM Magazine
Service Leader Awards 2005.
-- Met existing ATG customers and those coming from Primus, at
the company's annual conference, Insight Live. Customers
attending to speak, exchange information or learn about new
products included Allstate Insurance, American Eagle
Outfitters, Best Buy, Cingular Wireless, Conseco, Dreyfus,
Elsevier, EMC, Friends Provident, HSBC, Hyatt Hotels,
InterContinental Hotels Group, Merrill Lynch, Procter &
Gamble, Symantec, Target, Verisign and Warner Music.
FINANCIAL GUIDANCE AND BUSINESS OUTLOOK
ATG is reaffirming the financial guidance it originally provided
in late December 2004 for the full year 2005. The company expects to
grow revenue by 30 percent to 45 percent over 2004 to a range of $90
million to $100 million. The total of cost of revenues and operating
expenses, excluding the amortization of intangible assets and
restructuring charges, is expected to be in the range of $85 million
to $86 million for the year ending December 31, 2005. The company
continues to anticipate that it will be profitable and cash flow
positive for the full year 2005.
Since the close of the first quarter, the company has relocated
its San Francisco office and reduced the amount of space that it now
occupies in San Francisco. As a result of this action and other minor
facilities changes, the company anticipates that it will incur a
restructuring charge in the second quarter of 2005 in the range of
$1.5 to $2.0 million. Of this amount, approximately $1.2 million will
be non-cash related. The relocation will result in an aggregate net
cash savings of approximately $400,000 through 2007, and, beginning in
the third quarter of 2005, reduce the company's annual operating
expenses by approximately $700,000 to $800,000.
"With the integration of Primus complete, our attention is now
focused on sales and marketing, and the continued expansion of our
product set," said Burke. "In the months ahead, we will build upon our
commerce, marketing and service offerings with additional product
rollouts and enhancements. We also will aggressively pursue up-selling
and cross-selling opportunities with organizations in our customer
base while cultivating relationships with new customers."
CONFERENCE CALL REMINDER
ATG management will discuss the company's first-quarter financial
results, recent highlights and business outlook for 2005 on its
quarterly conference call for investors at 5:30 p.m. ET today, April
28, 2005. The conference call will be broadcast live over the
Internet. Investors interested in listening to the Webcast should log
onto the "Investors" section of the ATG Website, www.atg.com.
FINANCIAL PRESENTATION
ATG is providing non-GAAP financial measures 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/(loss) (non-GAAP) and net
income/(loss) per share (non-GAAP), as we present them in the
financial data included in this press release, exclude the net effects
of restructuring actions and the amortization of intangible assets.
The net restructuring charge in the first quarter relates to
integration actions taken by ATG in international geographies that
were not finalized until the first quarter. Management believes that
these non-GAAP financial measures better reflect its operating
performance as these non-GAAP figures exclude the effects of non-cash
or non-recurring charges. Further, management believes that these
charges are not necessarily representative of underlying trends in the
company's performance and their exclusion provides individuals with
additional information to compare the company's results over multiple
periods. The company uses the presented 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.
ABOUT ATG
ATG (Art Technology Group, Inc.)(NASDAQ:ARTG) delivers innovative
software to help high-end consumer-facing companies create a richer,
more adaptive interactive experience for their customers and partners
online, via email and messaging, and through contact centers. ATG has
delivered category-leading commerce, marketing and customer service
solutions to hundreds of the world's best-known brands including A&E
Networks, Airbus, American Airlines, American Eagle Outfitters, AT&T
Wireless, Best Buy, Boeing, France Telecom, Friends Provident, GE,
Hewlett-Packard, HSBC, InterContinental Hotels Group, Kingfisher,
Merrill Lynch, Neiman Marcus, Philips, Procter & Gamble, SBC, Target,
T-Mobile, US Army, US Federal Aviation Administration, Warner Music,
Washington Mutual, Wells Fargo and Yahoo!. The company is
headquartered in Cambridge, Massachusetts, with additional locations
throughout North America, Europe, and Asia. For more information about
ATG, please visit www.atg.com.
(C) 2005 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.
The statements in the section labeled "Financial Guidance and
Business Outlook" include forward-looking statements. 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 that ATG may not be
successful in integrating Primus' products with its own; that
depreciation, amortization and potential impairment charges associated
with the acquisition could adversely affect the combined company's
results of operations; 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 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 most recent annual report on
Form 10-K filed with the SEC for the period ended December 31, 2004.
These filings are available free of charge on a Web site maintained by
the SEC at http://www.sec.gov.
Art Technology Group, Inc.
Condensed Consolidated Statements of Operations
(In thouands of dollars, except per share data)
(Unaudited)
Three Months Ended
March 31, March 31,
2005 2004
Revenues:
Product license $ 7,383 $ 6,364
Services 14,611 10,446
------------- ------------
Total Revenues 21,994 16,810
Cost of Revenues:
Product license 593 399
Services 5,411 4,785
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Total Cost of Revenues 6,004 5,184
Gross Profit 15,990 11,626
Gross profit % 73% 69%
Operating Expenses:
Research & development 4,589 4,130
Sales & marketing 6,799 7,341
General & administrative 2,988 1,930
Restructuring expense 204 -
------------- ------------
Total Operating Expenses 14,580 13,401
Profit (Loss) from Operations 1,410 (1,775)
Interest and Other Income, net 11 (47)
------------- ------------
Income (Loss) before provision for
(benefit from) income taxes 1,421 (1,822)
Provision for (benefit from) income
taxes 13 (35)
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Net Income (loss) $ 1,408 $ (1,787)
============= ============
Basic net income/(loss) per common
share $ 0.01 $ (0.02)
Diluted net income/(loss) per common
share $ 0.01 $ (0.02)
Weighted average common
shares outstanding - Basic 108,685 73,053
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Weighted average common
shares outstanding - Diluted 110,866 73,053
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Art Technology Group, Inc.
Condensed Consolidated Balance Sheets
(In thousands of dollars)
(Unaudited)
Three Months Ended
March 31, December 31,
2005 2004
Assets
Current assets:
Cash, cash equivalents and marketable
securities $ 27,350 $ 26,507
Accounts receivable, net 20,734 24,430
Prepaid expenses and other current assets 2,554 1,694
------------ ------------
Total current assets 50,638 52,631
Property and equipment, net 2,705 3,120
Long-term marketable securities - 4,001
Intangible assets 6,598 7,177
Other assets 2,970 3,416
Goodwill 27,458 27,458
------------ ------------
Total assets $ 90,369 $ 97,803
============ ============
Liabilities and Stockholders' Equity
Current liabilities:
Accounts Payable 1,989 5,186
Accrued Expenses 11,891 13,156
Deferred revenue 22,344 25,355
Accrued restructuring short-term 5,398 6,095
Other current liabilities 327 651
------------ ------------
Total current liabilities 41,949 50,443
Accrued restructuring long-term 3,903 5,063
Long-term lease payable 99 112
------------ ------------
Total long-term liabilities 4,002 5,175
Stockholders' equity 44,418 42,185
------------ ------------
Total liabilities and stockholders'
equity $ 90,369 $ 97,803
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CONTACT: ATG
Bob Burke, 617-386-1000
CEO@atg.com
or
Sharon Merrill for ATG
Jason Fredette, 617-542-5300
jfredette@investorrelations.com