Exhibit 99.1
ATG Reports Second Quarter 2007 Results
Revenue Increased 29% Year-Over-Year
Cash Flow from Operations Increased 261% Year-Over-Year
Company Raises Annual Revenue and Cash Flow from Operations
Guidance
CAMBRIDGE, Mass.--(BUSINESS WIRE)--July 26, 2007--Art Technology
Group, Inc. (NASDAQ: ARTG), the leading eCommerce platform provider,
today reported financial results for the second quarter ended June 30,
2007.
Revenue for the second quarter of 2007 grew to $32.6 million, a 29
percent increase over second quarter 2006 revenue of $25.2 million.
Cash flow from operations for the second quarter of 2007 was $6.5
million, a 261 percent increase over second quarter 2006 cash flow
from operations of $1.8 million.
"ATG delivered another strong quarter as 2007 is shaping up to be
a great year for the company," stated Bob Burke, ATG's president and
CEO. "Growth in revenue and deferred revenue validates the increased
demand we're seeing for ATG solutions."
As previously communicated an increasing amount of product
license, on demand and related services revenue is being deferred and
recognized in future periods. This trend affects ATG's short-term
revenue and profitability but over the longer term should result in
greater stability and predictability in the Company's revenue. The
Company's recurring and ratable revenue streams are increasing due to
the fact that customers are leveraging more ATG solutions,
specifically OnDemand, eStara and professional services.
Product license revenue recognized in accordance with United
States Generally Accepted Accounting Principles (GAAP) during the
second quarter of 2007 was $6.5 million, compared to $9.1 million in
the year ago quarter. Product license bookings, a non-GAAP measure
which the Company defines as product license revenue recognized plus
net change in deferred product license revenue, grew 34 percent year
over year to $12.2 million for the quarter from $9.1 million in the
year ago quarter. Approximately 47 percent or $5.7 million of product
license bookings in the second quarter of 2007 will be recognized
ratably.
Net loss in accordance with GAAP for the second quarter of 2007
was $2.7 million, or $(0.02) per share. This compares with net income
of $2.3 million, or $0.02 per diluted share, in the second quarter of
2006.
Non-GAAP net loss was $81 thousand for the second quarter of 2007,
or breakeven on a per share basis, compared with non-GAAP net income
of $4.0 million, or $0.03 per diluted share for the second quarter of
2006.
At the end of the second quarter 2007, the Company had $41.2
million in cash, cash equivalents, and marketable securities.
This past quarter, eleven new customers purchased ATG commerce
solutions and forty net new customers purchased eStara solutions. New
and repeat business was generated from customers including AT&T, BOLS,
Cabela's, Cap Gemini, Clark American, Coke, Dell, Desigual, Hilton,
Hyatt, IdeaForest, J2 Communications, James Perse, Kodak, Lithia
Motors, National Geographic, PHH Mortgage, Restoration Hardware,
Sporting Life, Tommy Hilfiger, and Unisys.
"We are very pleased with our second quarter financial
performance," said Julie Bradley, ATG's senior vice president and CFO.
"Revenue growth and cash flow from operations have exceeded our
expectations. With two quarters behind us, we're executing very well
through our business model transition and as a result are raising
revenue and cash flow from operations guidance."
Financial Guidance and Business Outlook
Revenue for 2007 is expected to be in the range of $126 million to
$130 million. GAAP net income for the year ending December 31, 2007 is
expected to be in the range of a net loss of $3.0 million to a net
loss of $6.0 million. This guidance includes an estimated $5.0 - $6.0
million of non-cash equity-related compensation expense, amortization
of acquired intangibles of $5 million, and compensation expense
related to the eStara acquisition of $1.4 million. Cash flow from
operations for 2007 is expected to be in the range of $22.0 million to
$25.0 million.
Quarterly Conference Call
ATG management will discuss the company's second quarter 2007
financial results, recent highlights, and business outlook for the
remainder of 2007 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 "For 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. 5578179. A replay of the call will be available on
the company's website later in the day.
ART TECHNOLOGY GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(UNAUDITED)
June 30, March December June
31, 31, 30,
2007 2007 2006 2006
-------- -------- --------- -------
ASSETS
Current Assets:
Cash, cash equivalents and
marketable securities $ 41,197 $ 37,467 $ 31,223 $ 37,405
Accounts receivable, net 34,561 29,949 34,554 24,557
Term receivables, current 807 731 55 -
Prepaid expenses and other
current assets 3,695 3,604 2,446 2,148
-------- -------- --------- --------
Total current assets 80,260 71,751 68,278 64,110
Property and equipment, net 6,368 6,094 5,326 3,619
Intangible assets, net 13,561 14,787 16,013 3,832
Other assets 2,436 1,311 1,036 1,275
Goodwill 59,358 59,328 59,328 27,347
-------- -------- --------- --------
Total long-term assets 81,723 81,520 81,703 36,073
Total assets $161,983 $153,271 $ 149,981 $100,183
======== ======== ========= ========
LIABILITIES AND
STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 4,259 $ 2,996 $ 2,607 $ 3,427
Accrued expenses 14,283 12,827 15,791 12,398
Deferred revenue 34,902 27,744 23,708 22,336
Accrued restructuring, current
portion 1,050 1,050 1,213 2,423
Capital lease obligations,
current portion 21 39 56 66
-------- -------- --------- --------
Total current liabilities 54,515 44,656 43,375 40,650
Accrued restructuring, less
current portion 578 866 1,031 1,672
Long term deferred revenue
install fees 4,745 2,688 501 -
Capital lease obligations, less
current portion - - - 24
-------- -------- --------- --------
Total long-term liabilities 5,323 3,554 1,532 1,696
Stockholders' equity 102,145 105,061 105,074 57,837
Total liabilities and
stockholders' equity $161,983 $153,271 $ 149,981 $100,183
======== ======== ========= ========
ART TECHNOLOGY GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(UNAUDITED)
Three months ended Six months ended
---------------------------- ------------------
June 30, March June 30, June 30,
31,
2007 2007 2006 2007 2006
--------- --------- -------- --------- --------
Revenues:
Product licenses $ 6,515 $ 6,609 $ 9,122 $ 13,124 $ 17,222
Services 26,101 22,623 16,107 48,724 31,963
--------- --------- -------- --------- --------
Total revenues 32,616 29,232 25,229 61,848 49,185
Cost of Revenues:
Product licenses 549 540 518 1,089 1,016
Services 12,550 10,741 6,903 23,291 13,568
--------- --------- -------- --------- --------
Total cost of revenues 13,099 11,281 7,421 24,380 14,584
--------- --------- -------- --------- --------
Gross Profit 19,517 17,951 17,808 37,468 34,601
Operating Expenses:
Research and
development 5,948 5,385 5,119 11,333 9,946
Sales and marketing 12,095 9,940 7,894 22,035 14,817
General and
administrative 4,648 4,603 2,744 9,251 5,424
Restructuring charge
(benefit) - (68) 323 (68) 323
--------- --------- -------- --------- --------
Total operating
expenses 22,691 19,860 16,080 42,551 30,510
--------- --------- -------- --------- --------
Income (loss) from
operations (3,174) (1,909) 1,728 (5,083) 4,091
Interest and other
income, net 521 448 547 969 825
--------- --------- -------- --------- --------
Income (loss) before
provision for income
taxes (2,653) (1,461) 2,275 (4,114) 4,916
Provision for income
taxes 95 - - 95 -
--------- --------- -------- --------- --------
Net income (loss) $ (2,748) $ (1,461) $ 2,275 $ (4,209) $ 4,916
========= ========= ======== ========= ========
Basic net income (loss)
per share $ (0.02) $ (0.01) $ 0.02 $ (0.03) $ 0.04
========= ========= ======== ========= ========
Diluted net income
(loss) per share $ (0.02) $ (0.01) $ 0.02 $ (0.03) $ 0.04
========= ========= ======== ========= ========
Basic weighted average
common shares
outstanding 127,388 127,194 111,515 127,291 111,225
========= ========= ======== ========= ========
Diluted weighted
average common shares
outstanding 127,388 127,194 117,161 127,291 116,471
========= ========= ======== ========= ========
Art Technology Group, Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(UNAUDITED)
Three months ended Six Months Ended
-------------------------- -----------------
June 30, March June 30, June 30, June 30,
31,
2007 2007 2006 2007 2006
-------- -------- -------- -------- --------
Cash Flows from Operating
Activities:
Net income (loss) $(2,748) $(1,461) $ 2,275 $(4,209) $ 4,916
Adjustments to
reconcile net income
(loss) to net cash
provided by operating
activities:
Depreciation and
amortization 1,925 1,854 1,005 3,779 2,055
Non-cash stock-based
compensation expense 1,441 1,084 905 2,525 1,499
Change in operating
assets and liabilities 5,832 6,600 (2,353) 12,432 (3,865)
------- ------- ------- ------- -------
Net cash provided by
operating activities 6,450 8,077 1,832 14,527 4,605
Cash Flows from Investing
Activities:
Purchases of marketable
securities (3,931) (1,678) (3,446) (5,609) (7,089)
Maturities of marketable
securities 5,300 4,650 2,025 9,950 7,876
Purchases of property and
equipment (1,023) (1,399) (741) (2,422) (1,742)
Payment of acquisition
costs (36) (793) - (829) -
(Increase) / decrease in
other assets (31) 9 (142) (22) (151)
------- ------- ------- ------- -------
Net cash (used in)
provided by in
investing activities 279 789 (2,304) 1,068 (1,106)
Cash Flows from Financing
Activities:
Proceeds from exercise of
stock options 413 234 346 647 1,059
Proceeds from employee
stock purchase plan 234 202 161 436 311
Repurchase of common stock (2,190) - - (2,190) -
Principal payments on
notes payable - - (182) - (198)
Payments on capital leases (18) (17) (8) (35) (29)
-------- -------- -------- -------- --------
Net cash (used in)
provided by financing
activities (1,561) 419 317 (1,142) 1,143
Effect of foreign exchange
rate changes on cash and
cash equivalents (70) (68) (16) (138) (19)
Net increase (decrease) in
cash and cash equivalents 5,098 9,217 (171) 14,315 4,623
Cash and cash equivalents,
beginning of period 27,128 17,911 28,854 17,911 24,060
-------- -------- -------- -------- --------
Cash and cash equivalents,
end of period $32,226 $27,128 28,683 $32,226 $28,683
======== ======== ======== ======== ========
ART TECHNOLOGY GROUP, INC.
STATEMENTS OF OPERATIONS DATA
(In thousands)
(UNAUDITED)
Three months ended Six months
ended
-------------------- -------------
June March June June 30,
30, 31, 30,
2007 2007 2006 2007 2006
------ ------ ------ ------ ------
Equity-Related Compensation:
Cost of revenues $ 274 $ 200 $ 209 $ 474 $ 354
Research and development 312 233 234 545 388
Sales and marketing 370 339 264 709 429
General and administrative 485 312 198 797 328
------ ------ ------ ------ ------
Total equity-related compensation $1,441 $1,084 $ 905 $2,525 $1,499
====== ====== ====== ====== ======
Depreciation and Amortization:
Depreciation 699 628 491 1,327 1,028
Amortization 1,226 1,226 514 2,452 1,027
------ ------ ------ ------ ------
Total depreciation and amortization $1,925 $1,854 $1,005 $3,779 $2,055
====== ====== ====== ====== ======
Capital Expenditures:
Purchases of property and
equipment $1,023 $1,399 $ 741 $2,422 $1,742
End of Period Statistics:
Number of Employees 414 387 330 414 330
Number of Hosted Sites 74 73 60 74 60
RECONCILIATION OF GAAP TO NON-GAAP STATEMENT OF OPERATIONS DATA
(In thousands)
(UNAUDITED)
Three months ended, Six months ended
June 30, March June 30, June 30,
31,
2007 2007 2006 2007 2006
--------- --------- -------- --------- --------
Net income (loss) GAAP $ (2,748) (1,461) $ 2,275 $ (4,209) $ 4,916
Amortization of
acquired intangibles 1,226 1,226 514 2,452 1,027
Net restructuring - (68) 323 (68) 323
Equity-related
compensation 1,441 1,084 905 2,525 1,499
--------- --------- -------- --------- --------
Net income (loss) (non-
GAAP) $ (81) $ 781 $ 4,017 $ 700 $ 7,765
========= ========= ======== ========= ========
Net income (loss) (non-
GAAP) per share:
Basic $ (0.00) $ 0.01 $ 0.04 $ 0.01 $ 0.07
========= ========= ======== ========= ========
Diluted $ (0.00) $ 0.01 $ 0.03 $ 0.01 $ 0.07
========= ========= ======== ========= ========
Shares used in per
share calculations:
Basic 127,388 127,194 111,515 127,291 111,225
========= ========= ======== ======== =======
Diluted 127,388 131,134 117,161 131,576 116,471
========= ========= ======== ======== =======
Reconciliation of Product License Bookings
(In thousands)
(UNAUDITED)
Three months ended, Six months
ended
June March June June 30,
30, 31, 30,
2007 2007 2006 2007 2006
------- ------ ------ ------- -------
Product license revenue $ 6,515 $6,609 $9,122 $13,124 $17,222
Change in product license
deferred revenue 5,651 2,312 - 7,963 -
------- ------ ------ ------- -------
Product license bookings $12,166 $8,921 $9,122 $21,087 $17,222
======= ====== ====== ======= =======
About ATG
ATG (Art Technology Group, Inc., NASDAQ: ARTG) makes the software
and delivers the on demand solutions that the world's most
customer-conscious companies use to power their e-commerce web sites,
attract prospects, convert them to buyers and ensure their
satisfaction so they become loyal, repeat, profitable customers. Our
e-commerce suite is ranked the #1 current offering and #1 in strategy
by the industry's most influential analyst firms, and powers more of
the top 300 internet retailers than any other vendor. Our eStara brand
provides customer interaction solutions to enhance conversions and
customer support, and delivers the world's most widely used
click-to-call service. ATG's solutions are used by over 900 major
brands, including Amazon, American Eagle Outfitters, AOL, AT&T, Best
Buy, B&Q, Cabela's, Carrefour, Cingular, Coca Cola, Continental
Airlines, CVS, Dell, DirecTV, El Corte Ingles, Expedia, France
Telecom, Harvard Business School Publishing, Hewlett-Packard, Hilton,
HSBC, Intuit, J. Crew, Macy's, Meredith, Microsoft, Neiman Marcus, New
York & Company, Nokia, OfficeMax, PayPal, Philips, Procter & Gamble,
Sears, Sony, Symantec, Target, T-Mobile, Urban Outfitters, Verizon,
Viacom, Vodafone and Walgreens. 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) 2007 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.
*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 restructuring
actions, the amortization of intangible assets, acquisition-related
compensation charges, and non-cash income tax benefits. Management
believes that these normalized non-GAAP financial measures excluding
these items better reflect its 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 individuals 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 metrics 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, 2006, and its quarterly report on Form 10-Q
for the period ended March 31, 2007, 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.
Kimberly Maxwell, 617-386-1006
kmaxwell@atg.com