Exhibit 99.1
ATG Announces Strong Fourth-Quarter and Year-End 2005 Financial Results;
Grows Revenue 25% Year-over-Year;
Achieves Operating Margin of 13%
CAMBRIDGE, Mass.--(BUSINESS WIRE)--Jan. 31, 2006--ATG (Art
Technology Group, Inc., NASDAQ: ARTG), whose technology powers
outstanding e-commerce sites and corresponding e-marketing and
customer service solutions, today announced its financial results for
the fourth quarter and year ended December 31, 2005.
Total revenues for the fourth quarter of 2005 were $25.7 million,
a 25 percent increase from $20.6 million for the fourth quarter of
2004 and a 13 percent sequential increase from $22.7 million for the
third quarter of 2005. Full year 2005 total revenues were $90.6
million, a 31 percent increase from $69.2 million for the full year
2004.
Net income for the fourth quarter of 2005, in accordance with
accounting principles generally accepted in the United States (GAAP),
was $3.2 million, or $0.03 per diluted share. For the fourth quarter
of 2004, ATG reported a GAAP net loss of $3.6 million, or a loss of
$0.04 per share. For the third quarter of 2005, ATG reported GAAP net
income of $1.5 million, or $0.01 per diluted share. GAAP net income
for the full year 2005 was $5.8 million, or $0.05 per diluted share.
For the full year 2004, ATG reported a GAAP net loss of $9.5 million,
or a loss of $0.12 per share.
Cash, cash equivalents, and marketable securities as of December
31, 2005 increased $3.7 million to $33.6 million from $29.9 million as
of September 30, 2005.
"ATG capped a successful 2005 with an outstanding performance in
the fourth quarter," said Bob Burke, ATG's president and chief
executive officer. "We executed well amid a growing demand environment
for commerce and customer service solutions. In fact, ATG posted its
best performance in more than three years in the fourth quarter. We
also generated early traction with our Wisdom-enabled Services Suite,
which began shipping less than three months ago, and with our emerging
Managed Services and On-Demand business."
Julie Bradley, ATG's chief financial officer, noted, "ATG achieved
several notable financial milestones in the fourth quarter. We posted
double-digit sequential revenue growth, grew operating margin to 13
percent for the quarter, and achieved our full year objectives of
profitability and positive free cash flow."
Fourth-Quarter Highlights
-- Generated business from new and repeat customers such as AOL
Music Now, Fifth Third Bank, Finish Line, Hyatt Hotels,
OfficeMax, Perry Ellis, Royal Mail, Volvo, and Walgreens.
-- Helped several clients - including Best Buy, Cabela's, Intuit,
RSA Security, and Sage Software - earn industry recognition
for outstanding customer-centric operations. ATG software
enabled these companies to provide their customers with
exceptional commerce and service experiences, earning them
Fast Company magazine's Customers First Awards or Service &
Support Professionals Association STAR Awards for Service
Excellence.
-- Delivered a new release of its Wisdom-enabled Service Suite
and earned the commitment of over a dozen of the company's
best customers to this strategy. Several companies began
deployments in Q4, including Fannie Mae, Mars, Inc., Symantec,
and T-Mobile.
-- Gained further traction with its emerging Managed Services and
On-Demand offerings and posted sequential double digit gains
for that part of ATG's business. 1-800-Flowers and Kodak are
among the ATG customers that chose to deploy ATG On-Demand
during the fourth quarter of 2005.
Financial Guidance and Business Outlook
"ATG is positioned to extend its fourth-quarter momentum into
fiscal 2006 through our recognized industry leadership in commerce,
marketing and service, as well as our ability to deliver solutions as
applications or on demand," Burke concluded. "We are focused on
generating double-digit growth at ATG while further enhancing our
bottom line. We are encouraged by the market response to our On-Demand
offerings and our Wisdom suite of applications. In the quarters ahead,
we will continue to enhance our product set to further our competitive
advantages."
For 2006, the company expects to grow revenue to a range of $97
million to $105 million. In 2006, ATG will be required to begin
expensing stock-based compensation in accordance with Financial
Accounting Standards Board Statement No. 123R (123R). For 2006, ATG
currently anticipates a $3 million to $4 million non-cash expense from
the implementation of 123R. ATG anticipates GAAP net income for the
year ending December 31, 2006 of $6 million to $9 million, including
the impact of 123R.
Conference Call Reminder
ATG management will discuss the company's fourth-quarter and
year-end 2005 financial results, recent highlights, and business
outlook for 2006 on its quarterly conference call for investors at
10:00 a.m. ET today, January 31, 2006. The conference call will be
broadcast live over the Internet. Investors interested in listening to
the webcast should log on to the "For Investors" section of the ATG
website, www.atg.com. The live conference call also can be accessed by
dialing (706) 643-3945 or (888) 349-5690. Please refer to conference
ID # 3979815.
Use of Non-GAAP Financial Measures
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, have been normalized to
exclude the net effects of restructuring actions and the amortization
of intangible assets. Management believes that these normalized
non-GAAP financial measures better reflect its operating performance
as these non-GAAP figures exclude the effects of non-recurring or
non-cash expenses. 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 normalized 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 table below presents the most
directly comparable GAAP financial measure and reconciles the
normalized non-GAAP financial metrics to the comparable GAAP measures.
(In Thousands, except per share data)
Three Months Ended Year Ended
--------------------------- -----------------
December December September December December
31, 31, 30, 31, 31,
2005 2004 2005 2005 2004
-------- ------------------ -----------------
Net Income (Loss) (GAAP) $3,178 $(3,561) $1,510 $5,769 $(9,544)
Amortization of acquired
intangibles 580 1,023 580 2,320 1,023
Net Restructuring 62 3,570 (52) 885 3,570
-------- -------- -------- -------- --------
Net Income (non-GAAP) $3,820 $1,032 $2,038 $8,974 $(4,951)
======== ======== ======== ======== ========
Net income (non-GAAP)
per share:
Basic $0.03 $0.01 $0.02 $0.08 $(0.06)
Diluted $0.03 $0.01 $0.02 $0.08 $(0.06)
Shares used in per share
calculations:
Basic 110,221 96,548 109,625 109,446 79,252
Diluted 113,049 97,716 110,987 111,345 79,252
Please note that certain amounts reported in previous periods have
been reclassified to conform to the current period presentation. Such
reclassifications were not material.
About ATG
ATG (Art Technology Group, Inc., NASDAQ: ARTG) makes the software
that the world's most customer-conscious companies use to create a
more relevant and consistent customer experience, throughout the
marketing, commerce, and service lifecycle, and across the Web,
e-mail, call center, and mobile channels. Offering an alternative to
the traditional silo-based approach to customer-facing applications,
ATG Wisdom(TM) is the company's strategy for delivering a seamless,
more compelling, and mutually valuable experience to each customer and
segment. The company fulfills this strategy by providing fully
integrated best-of-breed product suites installed on-premise or
delivered on-demand. ATG's solutions power over 600 major brands,
including A&E Networks, Airbus, American Airlines, American Eagle
Outfitters, Best Buy, Boeing, Cingular Wireless, DirecTV, France
Telecom, Friends Provident, Hewlett-Packard, Hotels.com, Hyatt Hotels,
HSBC, InterContinental Hotels Group, Kingfisher, Louis Vuitton,
Merrill Lynch, Neiman Marcus, Philips, Procter & Gamble, Symantec,
T-Mobile, Target, US Army, US Navy, Warner Music, and Wells Fargo. 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) 2006 Art Technology Group, Inc. ATG and Art Technology Group
are registered trademarks and ATG Wisdom is a trademark of Art
Technology Group, Inc. All other product names, service marks, and
trademarks mentioned herein are trademarks of their respective owners.
This press release contains forward-looking statements about the
company's estimated revenue and earnings as well as the estimated
expense impact of adoption of SFAS 123R in fiscal 2006. 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, 2005 and its quarterly report on Form 10-Q
for the period ended September 30, 2005, as filed with the SEC. These
filings are available free of charge on a website maintained by the
SEC at http://www.sec.gov.
Art Technology Group, Inc.
Condensed Consolidated Balance Sheets
(In Thousands)
(Unaudited)
December 31, December 31,
2005 2004
-------------- --------------
Assets
Current Assets:
Cash, cash equivalents and marketable
securities $33,569 $26,507
Accounts receivable, net 21,459 24,430
Prepaid expenses and other current assets 1,130 1,694
-------------- --------------
Total current assets 56,158 52,631
Property plant & equipment 2,995 3,120
Marketable securities - long-term - 4,001
Intangible assets 4,859 7,177
Other assets 1,406 3,416
Goodwill 27,347 27,458
-------------- --------------
Total long-term assets 36,607 45,172
-------------- --------------
Total assets $92,765 $97,803
============== ==============
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $2,719 $5,186
Accrued expenses & other 13,359 13,156
Deferred revenue 21,113 25,355
Accrued restructuring, short-term 3,012 6,095
Other current liabilities 254 651
-------------- --------------
Total current liabilities 40,457 50,443
Accrued restructuring, less current
portion 2,085 5,063
Capital lease obligations, less current
portion 63 112
-------------- --------------
Total long-term liabilities 2,148 5,175
Stockholders' equity 50,160 42,185
-------------- --------------
Total Liabilities and Stockholders'
equity $92,765 $97,803
============== ==============
Art Technology Group, Inc.
Condensed Consolidated Statements of Operations
(In Thousands, except per share data)
(Unaudited)
Three Months Twelve Months
Ended Ended
December December December December
31, 31, 31, 31,
2005 2004 2005 2004
-------- -------- -------- --------
Revenues:
Product license $10,051 $7,461 $29,821 $23,345
Services 15,635 13,135 60,825 45,874
-------- -------- -------- --------
Total Revenues 25,686 20,596 90,646 69,219
Cost of Revenues:
Product licenses 403 1,029 1,816 2,206
Services 6,537 5,053 23,255 19,879
-------- -------- -------- --------
Total Cost of Revenues 6,940 6,082 25,071 22,085
-------- -------- -------- --------
Gross Profit 18,746 14,514 65,575 47,134
Gross Profit % 73% 70% 72% 68%
Operating Expenses:
Research & development 4,373 4,253 17,843 16,209
Sales & marketing 8,304 8,406 30,034 29,602
General & administrative 2,792 2,127 11,231 7,742
Restructuring 62 3,570 885 3,570
-------- -------- -------- --------
Total operating expenses 15,531 18,356 59,993 57,123
Income/(loss) from operations 3,215 (3,842) 5,582 (9,989)
Interest and other income, net (53) 203 219 395
-------- -------- -------- --------
Income/(loss) before tax provision 3,162 (3,639) 5,801 (9,594)
Provision (benefit) for income
taxes (16) (78) 32 (50)
-------- -------- -------- --------
Net income/(loss) $3,178 $(3,561) $5,769 $(9,544)
======== ======== ======== ========
Earnings / (loss) Per Share
Basic $0.03 $(0.04) $0.05 $(0.12)
Diluted $0.03 $(0.04) $0.05 $(0.12)
Shares Outstanding
Basic 110,221 96,548 109,446 79,252
Diluted 113,049 96,548 111,345 79,252
CONTACT: ATG
Julie Bradley, 617-386-1005
cfo@atg.com
or
Jason Fredette, 617-542-5300
jfredette@investorrelations.com