Exhibit 99.1
ATG Reports First Quarter 2006 Financial Results; Revenue Grew 9 Percent
Year-Over-Year to $24 Million; GAAP Net Income Increased 86 Percent
Year-Over-Year to $2.6 Million
CAMBRIDGE, Mass.--(BUSINESS WIRE)--May 2, 2006--Art Technology
Group, Inc. (NASDAQ: ARTG) whose licensed and on demand technology
powers e-commerce sites and supporting e-marketing and customer
service solutions for the world's most customer-centric enterprises
today reported financial results for the first quarter ended March 31,
2006.
Revenue for the first quarter of 2006 was $24 million, a 9 percent
increase over first-quarter 2005 revenue of $22 million.
Net income for the first quarter of 2006, in accordance with
United States Generally Accepted Accounting Principles (GAAP), was
$2.6 million, or $0.02 per diluted share. This compares with net
income of $1.4 million, or $0.01 per diluted share, in the first
quarter of 2005. GAAP net income in the first quarter of 2006 includes
equity-related compensation charges of approximately $594,000
reflecting the company's adoption of Statement of Financial Accounting
Standards No. 123R ("SFAS 123R") on January 1, 2006.
Cash, cash equivalents, and marketable securities as of March 31,
2006 increased $2.6 million to $36.2 million from $33.6 million as of
December 31, 2005.
"ATG's first-quarter performance marks a positive start to 2006,"
said Bob Burke, ATG's president and CEO. "As evidenced by our customer
and partner response to our recent Insight Live conference, our suite
of product offerings closely aligns with the demands of the
marketplace. The market is in the midst of a growth cycle in the
commerce arena as on-line commerce becomes just plain commerce."
Julie Bradley, ATG's senior vice president and CFO, said, "Our
strong first-quarter performance reflects the success of our growth
strategy as we continue to experience healthy demand for our commerce
and service solutions, as well as our continued expense management."
First-Quarter Highlights
-- Generated business from new and repeat customers such as
Allstate, BT, Coca-Cola, GE/Genpact, Groupama, Harvard
Business School Publishing, Hewlett-Packard, The Loyalty
Group, Neiman Marcus, Orange, PayPal, Smith & Hawken,
Sony, Upromise, USDA, and Urban Outfitters.
-- Introduced three new OnDemand solutions including ATG Commerce
OnDemand, ATG Answers OnDemand and ATG Customer Care OnDemand.
ATG now offers the power of its traditional licensed products
in a software-as-a-service model.
-- Attained verification by the Consortium for Service Innovation
for ATG Knowledge, a Wisdom-enabled assisted call center
service and support solution. ATG Knowledge was among the
select few products to be "KCS Verified" for
Knowledge-Centered Support, a proven methodology that enables
organizations to improve service levels to customers, gain
operational efficiencies, and increase the organization's
value to their company.
In April, ATG hosted a record number of customers, partners, and
prospects for the third annual ATG Insight Live conference. Among the
hundreds of customers and prospects attending were AARP, Allstate,
American Eagle Outfitters, Best Buy, Cabela's, Cingular Wireless,
Coca-Cola, Deutsche Post, GE/Genpact, Hewlett-Packard, Hyatt Hotels,
Intuit, Neiman Marcus, New York & Company, Nintendo, OfficeMax,
PepsiCo, Sephora, Smith & Hawken, Symantec, Target, Urban Outfitters,
Verisign and Vodafone.
At the conference, ATG previewed new product developments in five
areas, including live chat, dynamic navigation in ATG Commerce Search
and Merchandising, a new reporting and dashboard suite, enhancements
to transactional service and offer management in its service
solutions.
Financial Guidance and Business Outlook
"Based on the underlying trends supporting our business and the
continued cost savings that we experienced in Q1, we believe we are in
a favorable position to extend our first-quarter momentum throughout
2006," Bradley concluded. "As a result, we are reaffirming our
previously announced 2006 guidance."
For 2006, the company continues to expect to grow revenue to a
range of $97 million to $105 million and produce GAAP net income for
the year ending December 31, 2006 of $6 million to $9 million. This
guidance includes an estimated $3 million to $4 million in non-cash
stock-based compensation expense, reflecting the company's adoption of
SFAS 123R effective January 1, 2006.
Forward-Looking Guidance Reconciliation
Year Ending December 31, 2006
GAAP Guidance Non-GAAP Guidance
(In FROM TO Adjustment FROM TO
millions,
except EPS)
Revenue $ 97 $ 105 $ 0 $ 97 $ 105
Net Income $ 6 $ 9 $ 5 - $6 (a) $ 11 $ 15
Diluted EPS $ 0.05 $ 0.08 $0.04 - $0.05 (b) $ 0.10 $ 0.13
Diluted
Shares 113 115 -- 113 115
(a) Estimated annual amortization of acquired intangibles of $2
million and estimated stock-based compensation expense of $3 - $4
million to be recorded for the periods indicated in accordance
with Statement of Financial Accounting Standards No. 123R,
Share-Based Payments, ("SFAS 123R") which is effective for periods
beginning January 1, 2006. Periods prior to 2006 do not include
stock-based compensation expense.
(b) Estimated per diluted share effect of amortization and stock-based
compensation noted in (a).
Conference Call Reminder
ATG management will discuss the company's first-quarter 2006
financial results, recent highlights, and business outlook for the
remainder of 2006 on its quarterly conference call for investors at
10:00 a.m. ET today, May 2, 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 # 7569220.
Use of Non-GAAP Financial Measures
ATG is providing the non-GAAP historical financial measures
presented below 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 below included in this press
release, have been normalized to exclude the net effects of
restructuring actions and the amortization of intangible assets and
non-cash compensation charges. Management believes that these
normalized non-GAAP financial measures excluding restructuring and
amortization better reflect its operating performance as these
non-GAAP figures exclude the effects of non-recurring or non-cash
stock expenses. 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.
Also, the company's financial results have not historically reflected
the impact of non-cash compensation charges required by the adoption
of SFAS 123R effective in 2006, and management believes it may be
helpful to investors to present a measure of its financial results
that is prepared on a basis that is comparable to its reported results
for prior 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.
ART TECHNOLOGY GROUP, INC.
(In thousands, except per share data)
(UNAUDITED)
Three Months Ended
-----------------------------
March 31, December March 31,
2006 31, 2005 2005
--------- --------- ---------
Net Income (GAAP) $ 2,641 $ 3,178 $ 1,408
Amortization of Acquired Intangibles 513 580 580
Net Restructuring - 62 204
Equity Related Compensation 594 - -
-------- -------- --------
Net Income (non-GAAP) $ 3,748 $ 3,820 $ 2,192
======== ======== ========
Net Income (non-GAAP) per share:
Basic $ 0.03 $ 0.03 $ 0.02
Diluted $ 0.03 $ 0.03 $ 0.02
Shares used in per share calculations:
Basic 110,928 110,221 108,685
Diluted 113,945 113,049 110,866
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 and Europe. 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. 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, 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)
Three Months Ended
--------------------------
March December March
31, 31, 31,
2006 2005 2005
------- ------- -------
Assets
Current assets:
Cash, cash equivalents and marketable
securities $36,155 $33,569 $27,350
Accounts receivable, net 20,425 21,459 20,734
Prepaid expenses and other current assets 1,618 1,130 2,554
------- ------- -------
Total current assets 58,198 56,158 50,638
Property and equipment, net 3,458 2,995 2,705
Intangible assets, net 4,346 4,859 6,598
Other assets 1,274 1,406 2,970
Goodwill 27,347 27,347 27,458
------- ------- -------
Total long-term assets 36,425 36,607 39,731
------- ------- -------
Total assets $94,623 $92,765 $90,369
======= ======= =======
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 3,210 $ 2,719 $ 1,989
Accrued expenses 11,149 13,359 11,891
Deferred revenue 21,549 21,113 22,344
Accrued restructuring, current portion 2,243 3,012 5,398
Other current liabilities 238 254 327
------- ------- -------
Total current liabilities 38,389 40,457 41,949
Accrued restructuring, less current portion 1,938 2,085 3,903
Capital lease obligations, less current
portion 42 63 99
------- ------- -------
Total long-term liabilities 1,980 2,148 4,002
Stockholders' equity 54,254 50,160 44,418
------- ------- -------
Total liabilities and stockholders'
equity $94,623 $92,765 $90,369
======= ======= =======
ART TECHNOLOGY GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(UNAUDITED)
Three Months Ended
-----------------------------
March December March
31, 31, 31,
2006 2005 2005
-------- -------- --------
Revenues:
Product license $ 8,100 $ 10,051 $ 7,383
Services 15,856 15,635 14,611
-------- -------- --------
Total Revenue 23,956 25,686 21,994
Cost of Revenues:
Product license 498 403 593
Services 6,665 6,537 5,411
-------- -------- --------
Total cost of revenues 7,163 6,940 6,004
-------- -------- --------
Gross Profit 16,793 18,746 15,990
Gross Profit % 70% 73% 73%
Operating Expenses:
Research and development 4,827 4,373 4,589
Sales and marketing 6,923 8,304 6,799
General and administrative 2,680 2,792 2,988
Restructuring - 62 204
-------- -------- --------
Total Operating Expenses 14,430 15,531 14,580
Income from Operations 2,363 3,215 1,410
Interest and other income, net 278 (53) 11
-------- -------- --------
Income before tax provision 2,641 3,162 1,421
Provision (benefit) for income taxes - (16) 13
-------- -------- --------
Net Income $ 2,641 $ 3,178 $ 1,408
======== ======== ========
Earnings Per Share
Basic $ 0.02 $ 0.03 $ 0.01
Diluted $ 0.02 $ 0.03 $ 0.01
Shares Outstanding
Basic 110,928 110,221 108,685
Diluted 113,945 113,049 110,866
ART TECHNOLOGY GROUP, INC.
(In thousands, except per share data)
(UNAUDITED)
Three Months Ended
------------------------
March December March
31, 31, 31,
2006 2005 2005
------- -------- -------
Equity-Related Compensation:
Cost of Revenues $ 137 $ - $ -
Research and Development 154 - -
Sales and Marketing 173 - -
General and Administrative 130 - -
------ ------- ------
Total Equity-Related Compensation $ 594 $ - $ -
====== ======= ======
Depreciation and Amortization:
Depreciation $ 537 $ 476 $ 511
Amortization 513 580 580
Total Depreciation and Amortization $1,050 $ 1,055 $1,090
====== ======= ======
Capital Expenditures:
Purchases of Property and Equipment $1,001 $ 940 $ 108
====== ======= ======
Net Increase in cash, cash equivalents and
marketable securities $2,586 $ 3,653 $ 843
====== ======= ======
End of Period Statistics:
Number of Employees 321 309 313
Number of Hosted Sites 48 n/a n/a
CONTACT: Art Technology Group, Inc.
Julie Bradley, 617-386-1005
cfo@atg.com
or
Jim Buckley
617-542-5300
artg@investorrelations.com